§ 4406. Health maintenance organizations; regulation of contracts. 1.\nThe contract between a health maintenance organization and an enrollee\nshall be subject to regulation by the superintendent as if it were a\nhealth insurance subscriber contract, and shall include, but not be\nlimited to, all mandated benefits required by article forty-three of the\ninsurance law. Such contract shall fully and clearly state the benefits\nand limitations therein provided or imposed, so as to facilitate\nunderstanding and comparisons, and to exclude provisions which may be\nmisleading or unreasonably confusing. Such contract shall be issued to\nany individual and dependents of such individual and any group of one\nhundred or fewer employees or members, exclusive of spouses and\ndependents, or to any employee or member of the group, including\ndependents, applying for such contract at any time throughout the year.\nAn individual direct payment contract shall be issued only in accordance\nwith section four thousand three hundred twenty-eight of the insurance\nlaw. The superintendent may, after giving consideration to the public\ninterest, exempt a health maintenance organization from the requirements\nof this section provided that another health insurer or health\nmaintenance organization within the health maintenance organization's\nsame holding company system, as defined in article fifteen of the\ninsurance law, including a health maintenance organization operated as a\nline of business of a health service corporation licensed under article\nforty-three of the insurance law, offers coverage that, at a minimum,\ncomplies with this section and provides all of the consumer protections\nrequired to be provided by a health maintenance organization pursuant to\nthis chapter and regulations, including those consumer protections\ncontained in sections four thousand four hundred three and four thousand\nfour hundred eight-a of this chapter. The requirements shall not apply\nto a health maintenance organization exclusively serving individuals\nenrolled pursuant to title eleven of article five of the social services\nlaw, title eleven-D of article five of the social services law, title\none-A of article twenty-five of this chapter or title eighteen of the\nfederal Social Security Act, and, further provided, that such health\nmaintenance organization shall not discontinue a contract for an\nindividual receiving comprehensive-type coverage in effect prior to\nJanuary first, two thousand four who is ineligible to purchase policies\noffered after such date pursuant to this section or section four\nthousand three hundred twenty-eight of the insurance law due to the\nprovision of 42 U.S.C. 1395ss in effect prior to January first, two\nthousand four.\n 2. (a) Upon approval of the commissioner, an organization may\nimplement an out-of-plan benefits system that allows enrollees to use\nproviders not participating in the plan pursuant to a contract,\nemployment or other association. The commissioner, in consultation with\nthe superintendent, shall not approve an organization to implement an\nout-of-plan benefits system unless the organization demonstrates that:\n (i) the requirements of this article and any regulations promulgated\nthereunder have been met and will continue to be met;\n (ii) it can establish and maintain a contingent reserve fund of not\nless than two percent of the entire net premium income for the calendar\nyear of the organization in addition to any other contingent reserve\nfund required by the commissioner in regulations subject to the approval\nof the superintendent; and\n (iii) it has established mechanisms to ensure and monitor compliance\nwith the provisions of paragraph (b) of this subdivision.\n (b) Except as provided in paragraph (c) of this subdivision, an\norganization may not permit the benefits provided pursuant to such\nout-of-plan system to exceed ten percent of the total health care\nexpenditures of the organization, as
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