806 KAR 18:020. Preferred and exclusive provider arrangements.

 

      RELATES TO: KRS 304.12-010, 304.18-040, 304.32-080

      STATUTORY AUTHORITY: KRS Chapter 13A, 304.2-110, 304.32-250

      NECESSITY, FUNCTION, AND CONFORMITY: KRS 304.2-110 provides that the Executive Director of Insurance may make reasonable administrative regulations necessary for or as an aid to the effectuation of any provision of the Kentucky Insurance Code. KRS 304.32-250 provides that the Executive Director of Insurance may promulgate reasonable administrative regulations that he deems necessary for the proper administration of KRS Chapter 304.32. This administrative regulation establishes guidelines for the use of preferred provider arrangements for group health insurers and nonprofit hospital, medical-surgical, dental, and health service corporations.

 

      Section 1. Definitions. As used in this administrative regulation:

      (1) "Alternative delivery system" means a health care delivery system characterized by alliances between selected health care providers and insurers, employers, or both, managed care through greater utilization controls, or discounted fee or capitation payment arrangements with health care providers, as distinguished from the traditional fee-for-service delivery approach.

      (2) "Exclusive provider arrangement" means an alternative delivery system in which an insurer contracts with health care providers for alternative rates of payment and requires insureds or subscribers to use the health care providers under contract with the insurer.

      (3) "Insurer" means health insurers and nonprofit hospital, medical-surgical, dental, and health service corporations delivering or issuing for delivery contracts under KRS Chapter 304.

      (4) "Preferred provider arrangement" means an alternative delivery system under which an insurer contracts with health care providers for alternative rates of payment and allows insureds or subscribers to choose between contract health care providers and noncontract health care providers.

 

      Section 2. Health insurers shall not issue contracts offering any preferred provider arrangement under which the difference between the benefit payable for services rendered by noncontract health care providers and the benefit payable for services rendered by contract health care providers exceeds twenty-five (25) percent.

 

      Section 3. Health insurers shall not issue contracts offering any exclusive provider arrangement. (12 Ky.R. 1710; Am. 1840; eff. 6-10-86; TAm eff. 8-9-2007.)