
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 23, 2000]
[Document not affected by Public Laws enacted between
  January 23, 2000 and December 4, 2001]
[CITE: 42USC300e-17]

 
                 TITLE 42--THE PUBLIC HEALTH AND WELFARE
 
                    CHAPTER 6A--PUBLIC HEALTH SERVICE
 
             SUBCHAPTER XI--HEALTH MAINTENANCE ORGANIZATIONS
 
Sec. 300e-17. Financial disclosure


(a) Financial information reported to Secretary

    Each health maintenance organization shall, in accordance with 
regulations of the Secretary, report to the Secretary financial 
information which shall include the following:
        (1) Such information as the Secretary may require demonstrating 
    that the health maintenance organization has a fiscally sound 
    operation.
        (2) A copy of the report, if any, filed with the Health Care 
    Financing Administration containing the information required to be 
    reported under section 1320a-3 of this title by disclosing entities 
    and the information required to be supplied under section 
    1396a(a)(38) of this title.
        (3) A description of transactions, as specified by the 
    Secretary, between the health maintenance organization and a party 
    in interest. Such transactions shall include--
            (A) any sale or exchange, or leasing of any property between 
        the health maintenance organization and a party in interest;
            (B) any furnishing for consideration of goods, services 
        (including management services), or facilities between the 
        health maintenance organization and a party in interest, but not 
        including salaries paid to employees for services provided in 
        the normal course of their employment and health services 
        provided to members by hospitals and other providers and by 
        staff, medical group (or groups), individual practice 
        association (or associations), or any combination thereof; and
            (C) any lending of money or other extension of credit 
        between a health maintenance organization and a party in 
        interest.

The Secretary may require that information reported respecting a health 
maintenance organization which controls, is controlled by, or is under 
common control with, another entity be in the form of a consolidated 
financial statement for the organization and such entity.

(b) ``Party in interest'' defined

    For the purposes of this section the term ``party in interest'' 
means:
        (1) any director, officer, partner, or employee responsible for 
    management or administration of a health maintenance organization, 
    any person who is directly or indirectly the beneficial owner of 
    more than 5 per centum of the equity of the organization, any person 
    who is the beneficial owner of a mortgage, deed of trust, note, or 
    other interest secured by, and valuing more than 5 per centum of the 
    health maintenance organization, and, in the case of a health 
    maintenance organization organized as a nonprofit corporation, an 
    incorporator or member of such corporation under applicable State 
    corporation law;
        (2) any entity in which a person described in paragraph (1)--
            (A) is an officer or director;
            (B) is a partner (if such entity is organized as a 
        partnership);
            (C) has directly or indirectly a beneficial interest of more 
        than 5 per centum of the equity; or
            (D) has a mortgage, deed of trust, note, on other interest 
        valuing more than 5 per centum of the assets of such entity;

        (3) any person directly or indirectly controlling, controlled 
    by, or under common control with a health maintenance organization; 
    and
        (4) any spouse, child, or parent of an individual described in 
    paragraph (1).

(c) Information availability

    Each health maintenance organization shall make the information 
reported pursuant to subsection (a) of this section available to its 
enrollees upon reasonable request.

(d) Evaluation of transactions

    The Secretary shall, as he deems necessary, conduct an evaluation of 
transactions reported to the Secretary under subsection (a)(3) of this 
section for the purpose of determining their adverse impact, if any, on 
the fiscal soundness and reasonableness of charges to the health 
maintenance organization with respect to which they transpired. The 
Secretary shall evaluate the reported transactions of not less than 
five, or if there are more than twenty health maintenance organizations 
reporting such transactions, not less than one-fourth of the health 
maintenance organizations reporting any such transactions under 
subsection (a)(3) of this section.

(e) Repealed. Pub. L. 99-660, title VIII, Sec. 810, Nov. 14, 1986, 100 
        Stat. 3801

(f) Rates

    Nothing in this section shall be construed to confer upon the 
Secretary any authority to approve or disapprove the rates charged by 
any health maintenance organization.

(g) Annual financial statement

    Any health maintenance organization failing to file with the 
Secretary the annual financial statement required in subsection (a) of 
this section shall be ineligible for any Federal assistance under this 
subchapter until such time as such statement is received by the 
Secretary and shall not be a qualified health maintenance organization 
for purposes of section 300e-9 of this title.

(h) Penalties

    Whoever knowingly and willfully makes or causes to be made any false 
statement or representation of a material fact in any statement filed 
pursuant to this section shall be guilty of a felony and upon conviction 
thereof shall be fined not more than $25,000 or imprisoned for not more 
than five years, or both.

(July 1, 1944, ch. 373, title XIII, Sec. 1318, as added Pub. L. 95-559, 
Sec. 9(a), Nov. 1, 1978, 92 Stat. 2135; amended Pub. L. 97-35, title IX, 
Sec. 948, Aug. 13, 1981, 95 Stat. 577; Pub. L. 99-660, title VIII, 
Sec. 810, Nov. 14, 1986, 100 Stat. 3801.)


                               Amendments

    1986--Subsec. (e). Pub. L. 99-660 struck out subsec. (e) which read 
as follows: ``The Secretary shall file an annual report with the 
Congress on the operation of this section. Such report shall include--
        ``(1) an enumeration of standards and norms utilized to make the 
    evaluations required under subsection (d) of this section;
        ``(2) an assessment of the degree of conformity or nonconformity 
    of each health maintenance organization evaluated by the Secretary 
    under subsection (d) of this section with such standards and norms;
        ``(3) what action, if any, the Secretary considers necessary 
    under section 300e-11 of this title with respect to health 
    maintenance organizations evaluated under subsection (d) of this 
    section.''
    1981--Subsec. (a). Pub. L. 97-35, Sec. 948(a), (b), in par. (2) 
inserted reference to copy of the report, if any, filed with the Health 
Care Financing Administration, and in par. (3)(B) reorganized excluding 
provisions and, among revisions, inserted salaries paid to employees for 
services.
    Subsec. (b)(1). Pub. L. 97-35, Sec. 948(c), inserted ``responsible 
for management or administration'' after ``employee''.
    Subsec. (b)(4). Pub. L. 97-35, Sec. 948(d), substituted ``spouse, 
child, or parent'' for ``member of the immediate family''.


                    Effective Date of 1986 Amendment

    Amendment by Pub. L. 99-660 effective Oct. 1, 1985, see section 
815(a) of Pub. L. 99-660, set out as an Effective and Termination Dates 
of 1986 Amendment note under section 300e-1 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 1395mm, 1396b of this title.
