History: L. 1980, ch. 137, § 19; July 1.
(1) Merge or consolidate with any other nonprofit medical or hospital service corporation as hereinafter provided;
(2) merge or consolidate with any other nonprofit medical or hospital service corporation which is authorized to do business in this state if such merger or consolidation is authorized by the laws of the state or territory in which such nondomestic nonprofit medical or hospital service corporation is organized as hereinafter provided;
(3) by virtue of such merger or consolidation, do the kinds of business in the manner and for the purposes for which a nonprofit medical or hospital service corporation or a combination thereof, may be organized in this state or in the manner and for the purposes for which a nonprofit medical or hospital service corporation, or both, may be licensed or authorized to do business in this state.
(b) Such merger or consolidation shall be made under the conditions, provisions, and restrictions, and with the powers herein set forth to wit: The directors of each corporation shall enter into a joint agreement, under the corporate seal of each corporation for the merger or consolidation of said corporations, prescribing the terms and conditions thereof, the mode of carrying the same into effect, the name of the surviving or new corporation, the number and names of the directors and other officers thereof, and who shall be the first directors and officers, and their places of residence, and how and when directors and officers shall be chosen, with such other details as required by this act and as they shall deem necessary to perfect the said merger or consolidation. Said agreement shall not be effective unless the same shall be approved by the commissioner of insurance in the manner hereinafter provided.
(c) Upon approval of the agreement of merger or consolidation by the directors of each of such corporations, as hereinbefore provided, the merging or consolidating corporations by their officers shall file a verified joint application in duplicate for approval with the commissioner of insurance accompanied by or containing the following:
(1) Two (2) duplicate originals of the agreement;
(2) affidavits of officers of each of the corporations setting forth the facts necessary to show that all requirements of law have been complied with;
(3) if the surviving or the new corporation shall be a domestic corporation and any nondomestic corporation is a party to the merger or consolidation and the laws of the state or territory under which such nondomestic corporation is incorporated require approval of a merger or consolidation by an official of such state or territory, a certificate of approval of such official. If the laws of the domiciliary state or territory of such nondomestic corporation require prior or joint approval by the proper supervisory official of this state, the Kansas insurance commissioner may act in unison or jointly with the proper official of such other state in the consideration of the application for approval of the agreement of merger or consolidation;
(4) an instrument appointing the commissioner of insurance and the commissioner's successor or successors in office the true and lawful attorney of such corporation for service of process, containing the same provisions and having the same effect as the instrument required by K.S.A. 40-218, and amendments thereto;
(5) in the case of a merger, if the articles of incorporation of the surviving corporation are to be amended, such amendments;
(6) in the case of a consolidation, a copy of the articles of incorporation of the new corporation, and if a nondomestic corporation, such articles to be certified by the public official with whom the original is required to be filed in its domiciliary state or territory;
(7) a financial statement of each of the merging or consolidating corporations as of a date not earlier than thirty (30) days prior to the date of the application to merge or consolidate; and
(8) when the application for the approval of the merger or consolidation is filed with the commissioner of insurance for action there shall also be filed a certificate executed by the president or a vice-president and attested by the secretary or an assistant secretary, or the executive officers corresponding thereto, and under the corporate seal of each of the corporations party to the agreement of merger or consolidation, verified by the affidavits of such officers, setting forth all fees, commissions or other compensations, or valuable considerations paid or to be paid, directly or indirectly, to any person in any manner securing, aiding, promoting or assisting in any such merger or consolidation.
(d) The commissioner of insurance shall examine the application and accompanying papers, and, if the commissioner finds the same to be in accordance with the provisions of this act and not inconsistent with the laws and the constitutions of this state and the United States and not injurious to the interests of the subscribers and creditors of such corporations, the commissioner shall endorse approval thereon.
(e) The commissioner of insurance, upon approval or disapproval of said application, shall cause the same to be so endorsed and the entire proceedings to be filed and recorded in the office of the secretary of state and a copy of the same certified by the secretary of state to be filed in the office of the commissioner of insurance. Within fifteen (15) days after approval by the commissioner of insurance, a certified copy of the approved application and agreement shall also be filed by the officers of the new or surviving corporation in the office of the register of deeds in the county wherein the registered office and home offices of the merging or consolidating corporations were located and in the county wherein the registered office and home office of the surviving or new corporation shall be located and in the office of the register of deeds of each county in this state in which any of the corporations, parties to the agreement, shall have real property at the time of merger or consolidation. When approved by the commissioner of insurance, the said agreement shall be deemed effective and the date when so approved shall be the date of consolidation or merger of said corporations, and:
(1) The said corporations shall thereupon be one (1) corporation under the name adopted in and by said agreement, possessing all the rights, privileges, immunities, powers, and franchises theretofore vested in each of them.
(2) The separate existence of all the corporations to the agreement of merger or consolidation except the surviving or new corporation shall cease.
(3) All property, real, personal and mixed, and all debts due on whatever account, including premiums due from subscribers and all other choses in action and all and every other interest of, or belonging to or due to, each of the corporations merged or consolidated shall be deemed to be transferred to and vested in such surviving or new corporation without further act or deed; and the title to any real estate, or any interest therein, under the laws of this state vested in any of the corporations shall not revert or be in any way impaired by reason of such merger or consolidation.
(4) Such surviving or new corporation shall thenceforth be responsible and liable for all of the liabilities and obligations of each of the corporations so merged or consolidated; any claim existing or action pending by or against any of such corporations may be prosecuted to judgment as if such merger or consolidation had not taken place, or such surviving or new corporation may be substituted in its place; neither the rights of creditors nor liens upon the property of any of such corporations shall be impaired by such merger or consolidation, but such liens shall be limited to the property upon which they were liens immediately prior to the time of such merger or consolidation, unless otherwise provided in the agreement of merger or consolidation.
(5) In the case of merger, the articles of incorporation of the surviving corporation shall be supplanted, amended or superseded to the extent, if any, that any provision or provisions of such articles of incorporation shall be revised in the agreement of merger and the articles of incorporation shall be deemed to be thereby and to that extent amended.
(6) In the case of a consolidation the new articles of incorporation shall be deemed to be the articles of incorporation of such new corporation.
(7) The surviving or new corporation may, for the purpose of complying with the requirements of the law relating to age of a corporation, elect to be the age of any of the merging or consolidating corporations and shall for this purpose be considered as having such age. Such election shall be set forth in the application for approval of the agreement of merger or consolidation.
(8) The surviving or new corporation shall maintain the reserves and deposits as required by law of other like kinds of corporations doing like kinds of business.
(9) The surviving or new corporation after merger or consolidation shall be subject to the same fees, taxes, or penalties and other requirements of law as other like kinds of corporations doing like kinds of business.
(f) (1) No director or officer of any corporation party to a merger or consolidation, except as fully expressed in the agreement of merger or consolidation, shall receive any fee, commission, other compensation or valuable consideration, whatever, directly or indirectly, for in any manner aiding, promoting or assisting in such merger or consolidation.
(2) Any person violating the provisions of paragraph (1) of subsection (f) shall be fined not less than one thousand dollars ($1,000), and not more than five thousand dollars ($5,000) or imprisoned in the county jail for not more than one (1) year, or both, and shall forfeit any office such person holds in the merged or consolidated corporation.
(g) Nothing contained in this section shall be construed to enlarge the charter powers of any nonprofit medical or nonprofit hospital service corporation except in conformity with the provisions of the proposed articles of incorporation of the merged or consolidated corporation as provided in this act, nor to authorize any such corporation to do any kind of business not authorized by its charter or articles of incorporation, nor to authorize any such corporation to do any kind of business in this state not authorized by its license or certificate of authority to do business in this state.
History: L. 1980, ch. 137, § 20; July 1.
History: L. 1980, ch. 137, § 21; L. 1990, ch. 168, § 1; July 1.
Such corporations may also enter into contracts with any health maintenance organization, partnership, domestic or foreign corporation or association in the state of Kansas or in other states, territories, possessions of the United States or in Canada, or with any local, state or federal governments or units thereof, so that:
(1) Reciprocity of benefits may be provided to subscribers of such corporations;
(2) transfer of subscribers from one corporation to another may be effected to conform to the subscriber's place of residence;
(3) uniform benefits may be provided for all employees and the dependents of such employees of corporations and other organizations transacting business in Kansas and elsewhere, and a composite rate (a rate representing the composite experience) of the areas involved may be charged for such employees and their dependents;
(4) service or indemnity benefits for medical care or other health services for the subscribers, members or policyholders of such corporations or associations may be provided but not to exceed reasonable and customary charges that a subscriber may incur for these services;
(5) administrative, accounting, data processing, cost control, marketing, claims processing, fiscal and other services may be provided for a hospital care or other health service plan with any agency, instrumentality or political subdivision of the United States or the state of Kansas, or with any person, corporation, health maintenance organization, partnership, group, or association providing such hospital care or other health service plan under any applicable state or federal law. Such contract may authorize such corporation to accept, receive, and administer in trust, funds directly or indirectly made available for the purposes set forth in said contract;
(6) reinsurance or joint assumption of risks may be undertaken between two or more corporations organized under the provisions of this act. Such contracts may provide for experience rating, the sharing of premiums, claims and expenses by the participating corporation, or for acceptance or ceding of the whole or portions of the risk on a reinsurance basis;
(7) administrative, accounting, data processing, cost control, marketing, claims processing, fiscal and other services may be provided to employers or voluntary employees' beneficiary associations where such employers or voluntary employees' beneficiary associations provide indemnity for hospital care or other health services to their employees or members under the terms of a plan of indemnification. Such contract may authorize such corporation to accept, receive and administer in trust, funds directly or indirectly made available for the purposes set forth in said contract. Contracts entered into pursuant to the provisions of this subsection shall provide for recoupment of all expenses incurred by the corporation in performing the services required by said contract and shall not adversely affect the interests of subscribers. Such corporation may enter into contracts with participating hospitals and health care providers to provide hospital services, professional services and other health services for such employees or members; and
(8) experimental and demonstration projects may be undertaken to determine the relative advantages and disadvantages of various alternative methods of providing service or indemnity benefits for hospital care or other health services. Such projects may include payment systems to providers designed to encourage providers to use their facilities and personnel more efficiently and thereby to reduce the total costs of hospital care, professional services and other health services involved without adversely affecting the quality of such services.
History: L. 1980, ch. 137, § 22; L. 1990, ch. 168, § 2; July 1.
Before issuing a certificate of authority the commissioner shall cause an examination to be made of the affairs of the corporation as provided by K.S.A. 40-208, and amendments thereto.
History: L. 1980, ch. 137, § 23; L. 1990, ch. 168, § 3; July 1.
(b) Every subscription agreement entered into by any such corporation with any subscriber shall be in writing and a certificate stating the terms and conditions shall be furnished to the subscriber to be kept by the subscriber. No such certificate form shall be made, issued or delivered in this state unless it contains the following provisions: (1) A statement of the nature of the benefits to be furnished and the period during which they will be furnished, and if there are any benefits to be excepted, a detailed statement of such exceptions printed as hereinafter specified; (2) a statement of the terms and conditions, if any, upon which the subscription agreement may be canceled or otherwise terminated at the option of either party; (3) a statement that the subscription agreement includes the endorsements and attached papers, if any, and contains the entire contract; (4) a statement that no statement by the subscriber in the application for a subscription agreement shall avoid the subscription agreement or be used in any legal proceeding, unless such application or an exact copy is included in or attached to such subscription agreement, and that no agent or representative of such corporation, other than an officer or officers designated therein, is authorized to change the subscription agreement or waive any of its provisions; (5) a statement that if the subscriber defaults in making any payments under the subscription agreement, the subsequent acceptance of a payment by the corporation or by one of its duly authorized agents shall reinstate the subscription agreement but with respect to sickness and injury, only to cover such sickness as may be first manifested more than 10 days after the date of such acceptance; (6) a statement of the period of grace which will be allowed the subscriber for making any payment due under the subscription agreement. Such period shall not be less than 10 days; and (7) if applicable, a statement of the kind of hospital in which the subscriber may receive benefits and the types of benefits to which the subscriber may be entitled to in such kinds of hospitals. The subscriber shall be entitled to benefits in any nonparticipating hospital in Kansas which is licensed by the secretary of health and environment and in which the average length of stay of patient is similar to the average length of stay in participating hospitals. The agreements issued by any corporation currently or previously organized under this act may include provisions allowing for direct payment of benefits only to contracting health care providers.
(c) In every such subscription agreement made, issued or delivered in this state: (1) All printed portions shall be plainly printed; (2) the exceptions of the subscription agreement shall appear with the same prominence as the benefits to which they apply; (3) if the subscription agreement contains any provisions purporting to make any portion of the articles of incorporation or bylaws of the corporation a part of the subscription agreement, such portion shall be set forth in full; and (4) there shall be a brief description of the subscription agreement on the first page and on its filing back.
(d) Any such corporations may issue a group or blanket subscription agreement, provided the group of persons insured conforms to the requirements of law applicable to other companies writing group or blanket sickness and accident insurance policies and provided such subscription agreement and the individual certificates issued to members of the group shall comply in substance with this section. Any such subscription agreement may provide for the adjustment of the premiums based upon the experience at the end of the first year or of any subsequent year of insurance, and such readjustment may be made retroactive in the form of a rate credit or a cash refund.
(e) (1) Any group subscription agreement issued pursuant to subsection (d) shall provide that an employee or member or such employee's or member's covered dependents whose insurance under the group subscription agreement has been terminated for any reason, including discontinuance of the group in its entirety or with respect to an insured class, and who has been continuously insured under the group subscription agreement or under any group policy or subscription agreement providing similar benefits which it replaces for at least three months immediately prior to termination, shall be entitled to have such coverage nonetheless continued under the group policy for a period of six months and at the end of such six-month period of continuation, such employee or member or such employee's or member's covered dependents shall be entitled to obtain, at the employee's, member's or dependent's option either:
(A) A converted subscription agreement providing coverage equal to 80% of that afforded under the group subscription agreement for basic hospital, surgical and medical benefits. Persons selecting this option shall also be entitled to obtain major medical expense coverage which will provide hospital, medical and surgical expense benefits to an aggregate maximum of not less than $50,000. The major medical expense coverage may be subject to a copayment by the covered person of not more than 20% of covered charges and a deductible stated on a per person, per family, per illness, per benefit period, or per year basis or a combination of such bases of not more than $500 per person subject to a maximum annual deductible of $750 per family; or
(B) a subscription agreement which imposes a deductible of not less than $1,000 per subscriber and not less than $2,000 per family and subjects the covered person to a copayment of not more than 20% of covered charges with a $1,000 maximum copayment per subscriber and $2,000 maximum copayment per family per contract year and providing a lifetime maximum benefit of not less than $1,000,000.
(2) The requirements imposed by this subsection (e) shall not apply to a group subscription agreement which provides benefits for specific diseases or for accidental injuries only or any group subscription agreement issued to an employer subject to the continuation and conversion obligations set forth at title I, subtitle B, part 6 of the employee retirement income security act of 1974 or at title XXII of the public health service act, as each act was in effect on January 1, 1987, to the extent federal law provides the employee or member or such employee's or member's covered dependents with equal or greater continuation or conversion rights, or any employee or member or such employee's or member's covered dependents whose termination of insurance under the group subscription agreement occurred because:
(A) Such person failed to pay any required contribution after receiving reasonable notice of such required contribution from the insurer in accordance with rules and regulations adopted by the commissioner of insurance;
(B) any discontinued group coverage was replaced by similar group coverage within 31 days; or the employee or member is or could be covered by medicare (title XVIII of the United States social security act as added by the social security amendments of 1965 or as later amended or superseded);
(C) coverage for the employee or member, or any covered dependent thereof, was terminated for cause as permitted by the group policy or certificate of coverage approved by the commissioner; or
(D) the employee or member is or could be covered to the same extent by any other insured or lawful self-insured arrangement which provides expense incurred hospital, surgical or medical coverage and benefits for individuals in a group under which the person was not covered prior to such termination. In the event the group policy is terminated and not replaced the insurer may issue an individual policy or certificate in lieu of a conversion policy or the continuation of group coverage required herein if the individual policy or certificate provides substantially similar coverage for the same or less premium as the group subscription agreement. In any event, the employee or member shall have the option to be issued a conversion policy which meets the requirements set forth in this subsection (e) in lieu of the right to continue group coverage.
(3) Written application for the converted subscription agreement shall be made and the first premium paid to the insurer not later than 31 days after termination of the group coverage and shall become effective the day following the termination of insurance under the group subscription agreement. In addition, the converted subscription agreement shall be subject to the provisions contained in paragraphs (2), (3), (4), (5), (6), (7), (8), (9), (10), (13), (14), (15), (16), (17), (18), (19), and (20) of subsection (j) of K.S.A. 40-2209, and amendments thereto.
History: L. 1980, ch. 137, § 24; L. 1984, ch. 172, § 3; L. 1987, ch. 169, § 1; L. 1988, ch. 157, § 1; L. 1992, ch. 196, § 1; L. 1998, ch. 174, § 2; L. 2005, ch. 145, § 1; July 1.
History: L. 1980, ch. 137, § 25; L. 1986, ch. 318, § 35; L. 1988, ch. 356, § 102; L. 1990, ch. 168, § 4; Repealed, L. 1991, ch. 134, § 13; July 1.
History: L. 1980, ch. 137, § 26; July 1.
(b) No policy, agreement, contract or certificate issued by a corporation to which this section applies shall contain a provision which excludes, limits or otherwise restricts coverage because medicaid benefits as permitted by title XIX of the social security act of 1965 are or may be available for the same accident or illness.
(c) Violation of subsection (b) shall be subject to the penalties prescribed by K.S.A. 40-2407 and 40-2411, and amendments thereto.
History: L. 1980, ch. 137, § 27; L. 1984, ch. 173, § 5; L. 1986, ch. 178, § 2; L. 1988, ch. 159, § 3; L. 1990, ch. 162, § 5; L. 1990, ch. 162, § 6; L. 1991, ch. 133, § 2; L. 1991, ch. 134, § 3; L. 1993, ch. 231, § 2; L. 1994, ch. 18, § 4; L. 1994, ch. 321, § 1; L. 1996, ch. 96, § 4; L. 1997, ch. 156, § 83; L. 1998, ch. 174, § 3; L. 1999, ch. 128, § 6; L. 1999, ch. 162, § 4; L. 2001, ch. 178, § 6; Jan. 1, 2002.
History: L. 1980, ch. 137, § 27; L. 1984, ch. 173, § 5; L. 1986, ch. 178, § 2; L. 1988, ch. 158, § 3; Repealed, L. 1990, ch. 162, § 7; Repealed, L. 1990, ch. 170, § 4; Repealed, L. 1990, ch. 169, § 2; July 1.
(b) No such corporation shall, during any one year, disburse a sum greater than 10% of the payments received from subscribers during that year as administrative expenses. As used in this section the term "administrative expenses" shall include all expenditures for nonprofessional services including all activities, contractual arrangements and projects authorized by K.S.A. 40-19c04, and in general, all expenses not directly connected with the furnishing of the benefits specified in this act, but not including expenses referred to in subsection (a) hereof.
(c) Each corporation organized under the nonprofit medical and hospital service corporation act shall devote a reasonable effort to control costs, including both its administrative costs and cost charged to it by participating hospitals and health care providers. Such effort shall include, but not be limited to, a continuing attempt by such corporation through a combination of education, persuasion and financial incentives and disincentives to control cost and to encourage participating health care providers and hospitals to control cost by: (1) Elimination of duplicative or unnecessary services, facilities, and equipment; (2) nonprovider participation in the affairs of the corporation; (3) subscriber support of cost containment activities; (4) promotion of sound management practices in participating hospitals; (5) promotion of efficient delivery of health care services by participating health care providers; (6) implementation of sound management practices within the nonprofit medical and hospital service corporation; (7) promotion of alternative forms of health care; and (8) engagement in, and evaluation of, cost control experiments, including incentive reimbursement and utilization and peer review programs.
History: L. 1980, ch. 137, § 28; L. 1990, ch. 168, § 5; July 1.
History: L. 1980, ch. 137, § 29; July 1.
History: L. 1991, ch. 134, § 8; July 1.