Administrative History Effective date: July 12, 1998 (25:14 Md. R. 1132) —————— Chapter recodified from COMAR 09.31.26 to COMAR 31.10.17 effective September 7, 1998 (25:18 Md. R. 1439) Authority Insurance Article, §§ 2-109 and 15-121 ; Health-General Article, §19-706; Annotated Code of Maryland

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.01 Scope. This chapter applies to all carriers that provide health care services to enrollees or otherwise make health care services available to enrollees through contracts with providers.

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.02 Definitions. A. In this chapter, the following terms have the meanings indicated. B. Terms Defined. (1) "Carrier" means: (a) An insurer; (b) A nonprofit health service plan; (c) A health maintenance organization; (d) A dental plan organization; (e) Any person or entity acting as a third-party administrator; or (f) Except for a managed care organization as defined in Health-General Article, Title 15, Subtitle 1, Annotated Code of Maryland, any other person that provides health benefit plans subject to regulation by the State. (2) "Enrollment sales materials" means any materials provided by a carrier to: (a) An employer at the time of plan selection; or (b) Enrollees at the time of enrollment.

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.03 Information to be Disclosed. A. Each carrier that provides health care services to enrollees, or otherwise makes health care services available to enrollees through contracts with providers, shall disclose in its enrollment sales material the: (1) Methodology or methodologies that the carrier uses to compensate the physicians for health care services rendered to enrollees; and (2) Distribution of each $100 it receives in premium dollars from enrollees for the preceding calendar year. B. The information required to be disclosed under §A of this regulation shall be based on Maryland-specific information.

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.04 Disclosure of Compensation Methodologies. A. Each carrier shall include the following in its enrollment sales materials: (1) The following disclosure statement typeset in bold italic type: "Our compensation to physicians who offer health care services to our insured members or enrollees may be based on a variety of payment mechanisms such as fee-for-service payments, salary, or capitation. Bonuses may be used with these various types of payment methods. If you desire additional information about our methods of paying physicians, or if you want to know which method(s) apply to your physician, please call us (name) at (phone number) or write (address)."; (2) The table, specified in §C of this regulation , defining methods of paying physicians and giving an example of each method; and (3) A statement of: (a) The payment method or methods used to compensate physicians during the preceding year, and (b) An estimated percentage of physicians under contract with the carrier compensated by each payment method. B. Requests Pursuant to Disclosure. (1) Each carrier shall provide information in response to requests made pursuant to the disclosure requirement set forth in §A(1) of this regulation with respect to provider compensation by disclosing the method by which a specific physician is compensated. (2) A carrier is not required to state the dollar amount of compensation or otherwise provide more specific information about the compensation arrangement it has with a specific physician. C. Methods of Paying Physicians.

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This table shows definitions of how insurance carriers may pay physicians for your health care services with a simple example of how each payment mechanism works.

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Terms The example shows how Dr. Jones, an obstetrician gynecologist, would be compensated under each method of payment.

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Salary A physician is an employee of the HMO and is paid compensation (monetary wages) for providing specific health care services. Since Dr. Jones is an employee of an HMO, she receives her usual bi-weekly salary regardless of how many patients she sees or the number of services she provides. During the months of providing prenatal care to Mrs. Smith, who is a member of the HMO, Dr. Jones' salary is unchanged. Although Mrs. Smith's baby is delivered by Cesarean section, a more complicated procedure than a vaginal delivery, the method of delivery will not have any effect upon Dr. Jones' salary.

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Capitation A physician (or group of physicians) is paid a fixed amount of money per month by an HMO for each patient who chooses the physician(s) to be his or her doctor. Payment is fixed without regard to the volume of services that an individual patient requires. Under this type of contractual arrangement, Dr. Jones participates in an HMO network. She is not employed by the HMO. Her contract with the HMO stipulates that she is paid a certain amount each month for patients who select her as their doctor. Since Mrs. Smith is a member of the HMO, Dr. Jones' monthly payment does not change as a result of her providing ongoing care to Mrs. Smith. The capitation amount paid to Dr. Jones is the same whether or not Mrs. Smith requires obstetric services.

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Fee-for-Service A physician charges a fee for each patient visit, medical procedure, or medical service provided. An HMO pays the entire fee for physicians it has under contract and an insurer pays all or part of that fee, depending on the type of coverage. The patient is expected to pay the remainder. Dr. Jones' contract with the insurer or HMO states that Dr. Jones will be paid a fee for each patient visit and each service she provides. The amount of payment Dr. Jones receives will depend upon the number, types, and complexity of services, and the time she spends providing services to Mrs. Smith. Because Cesarean deliveries are more complicated than vaginal deliveries, Dr. Jones is paid more to deliver Mrs. Smith's baby than she would be paid for a vaginal delivery. Mrs. Smith may be responsible for paying some portion of Dr. Jones' bill.

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Discounted Fee-for-Service Payment is less than the rate usually received by the physician for each patient visit, medical procedure, or service. This arrangement is the result of an agreement between the payer, who gets lower costs and the physician, who usually gets an increased volume of patients. Like fee-for-service, this type of contractual arrangement involves the insurer or HMO paying Dr. Jones for each patient visit and each delivery; but, under this arrangement, the rate, agreed upon in advance, is less than Dr. Jones' usual fee. Dr. Jones expects that in exchange for agreeing to accept a reduced rate, she will serve a certain number of patients. For each procedure that she performs, Dr. Jones will be paid a discounted rate by the insurer or HMO.

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Bonus A physician is paid an additional amount over what he or she is paid under salary, capitation, fee-for-service, or other type of payment arrangement. Bonuses may be based on many factors, including member satisfaction, quality of care, control of costs, and use of services. An HMO rewards its physician staff or contracted physicians who have demonstrated higher than average quality and productivity. Because Dr. Jones has delivered so many babies and she has been rated highly by her patients and fellow physicians, Dr. Jones will receive a monetary award in addition to her usual payment.

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Case Rate The HMO or insurer and the physician agree in advance that payment will cover a combination of services provided by both the physician and hospital for an episode of care. This type of arrangement stipulates how much an insurer or HMO will pay for a patient's obstetric services. All office visits for prenatal and postnatal care, as well as the delivery, and hospital-related charges are covered by one fee. Dr. Jones, the hospital, and other providers (such as an anesthesiologist) will divide payment from the insurer or HMO for the care provided to Mrs. Smith.

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.05 Disclosure of Distribution of Premium Dollars. A. The disclosure required under this regulation shall: (1) Be in the form of a pie chart or bar graph; and (2) Identify, in layman's terms, the proportion of every $100 in premium dollars that the carrier uses to pay: (a) Providers for the provision of health care services to enrollees, including what proportion is for direct medical care expenses, and (b) For plan administration. B. The computation used in the pie chart or bar graph shall be in accordance with the National Association of Insurance Commissioners' instructions and formulas used in deriving the 5-year historical data page of the carrier's annual statement. C. The pie chart or bar graph to be included in enrollment sales material shall be based on the annual statement of the: (1) Immediate prior year for enrollment sales material used on or after July 1 of each year; and (2) Year before the immediate prior year for enrollment sales material used before July 1 of each year. D. The computation used under §B of this regulation shall be limited to benefits under policies which make health care services available through contracts with providers.

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.06 Manner of Disclosure. The disclosures required by this chapter may be on a separate form, which shall be provided to employers at the time of plan selection and to enrollees at the time of enrollment.

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.07 Other Permitted Disclosures. A. A carrier may disclose on the pie chart or bar graph that the administrative expenses do not include taxes. B. A carrier may disclose on the pie chart or bar graph whether the carrier includes dental benefits as part of the underlying benefit plan.

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Previous Chapter 16 Carrier Provider Panels — Application Process

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Next Chapter 18 Denials of Coverage Based on Medical Necessity

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