Title of Regulation: 14VAC5-211. Rules Governing Health Maintenance Organizations (amending 14VAC5-211-10, 14VAC5-211-20, 14VAC5-211-70, 14VAC5-211-90, 14VAC5-211-100, 14VAC5-211-140, 14VAC5-211-150, 14VAC5-211-180, 14VAC5-211-210, 14VAC5-211-220, 14VAC5-211-230).

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.

Public Hearing Information: A public hearing will be scheduled upon request.

Public Comment Deadline: July 15, 2011.

Agency Contact: Althelia P. Battle, Deputy Commissioner, Life and Health, Bureau of Insurance, P.O. Box 1157, Richmond, VA 23218, telephone (804) 371-9074, FAX (804) 371-9944, or email al.battle@scc.virginia.gov.

Summary:

The proposed amendments are necessary to comply with new and amended statutes in Chapter 882 of the 2011 Virginia Acts of Assembly. Specifically, the amendments include:

1. Removing dated language in the applicability and scope;

2. Adding and amending definitions to conform to the requirements of Article 6 of Chapter 34 of Title 38.2 of the Code of Virginia;

3. Creating an exception for the application of copayments and deductibles to preventive services;

4. Conforming the complaint and appeals procedures to recognize new requirements in Chapter 5 of Title 32.1 and Chapter 35.1 of Title 38.2 of the Code of Virginia;

5. Revising disclosure requirements to comply with new requirements; and

6. Adding provisions for rescission of coverage.

AT RICHMOND, JUNE 10, 2011

COMMONWEALTH OF VIRGINIA

At the relation of the

STATE CORPORATION COMMISSION

CASE NO. INS-2011-00119

Ex Parte: In the matter of Amending Rules
Governing Health Maintenance Organizations

ORDER TO TAKE NOTICE

Section 12.1-13 of the Code of Virginia provides that the State Corporation Commission ("Commission") shall have the power to promulgate rules and regulations in the enforcement and administration of all laws within its jurisdiction, and § 38.2-223 of the Code of Virginia provides that the Commission may issue any rules and regulations necessary or appropriate for the administration and enforcement of Title 38.2 of the Code of Virginia.

The rules and regulations issued by the Commission pursuant to § 38.2-223 of the Code of Virginia are set forth in Title 14 of the Virginia Administrative Code.

The Bureau of Insurance ("Bureau") has submitted to the Commission a proposal to amend certain sections in Chapter 211 of Title 14 of the Virginia Administrative Code entitled "Rules Governing Health Maintenance Organizations," specifically set forth at 14 VAC 5-211-10, 14 VAC 5-211-20, 14 VAC 5-211-70, 14 VAC 5-211-90, 14 VAC 5-211-100, 14 VAC 5-211-140, 14 VAC 5-211-150, 14 VAC 5-211-180, and 14 VAC 5-211-210 through 14 VAC 5-211-230.

The amendments to these sections of Chapter 211 are necessary to comply with the provisions of Chapter 882 of the 2011 Virginia Acts of Assembly, which in part establishes Article 6 of Chapter 34 of Title 38.2 of the Code of Virginia. These amendments clarify and implement the provisions of Chapter 882 which becomes effective on July 1, 2011.

The Commission is of the opinion that sections 10, 20, 70, 90, 100, 140, 150, 180, and 210 through 230 of Chapter 211 of Title 14 of the Virginia Administrative Code should be amended and considered for adoption.

Accordingly, IT IS ORDERED THAT:

(1) The proposal that certain sections in Chapter 211 of Title 14 of the Virginia Administrative Code be amended at 14 VAC 5-211-10, 14 VAC 5-211-20, 14 VAC 5-211-70, 14 VAC 5-211-90, 14 VAC 5-211-100, 14 VAC 5-211-140, 14 VAC 5-211-150, 14 VAC 5-211-180, and 14 VAC 5-211-210 through 14 VAC 5-211-230, is attached hereto and made a part hereof.

(2) All interested persons who desire to comment in support of or in opposition to, or request a hearing to oppose amending sections 10, 20, 70, 90, 100, 140, 150, 180, and 210 through 230 of Chapter 211 of Title 14 of the Virginia Administrative Code shall file such comments or hearing request on or before July 15, 2011, with the Clerk of the Commission, Document Control Center, P.O. Box 2118, Richmond, Virginia 23218-2118, and shall refer to Case No. INS-2011-00119. Interested persons desiring to submit comments electronically may do so by following the instructions at the Commission's website: http://www.scc.virginia.gov/caseinfo.htm.

(3) If no written request for a hearing on the proposed amendments is filed on or before July 15, 2011, the Commission, upon consideration of any comments submitted in support of or in opposition to the proposal, may amend sections 10, 20, 70, 90, 100, 140, 150, 180, and 210 through 230 of Chapter 211 of Title 14 of the Virginia Administrative Code as proposed by the Bureau of Insurance.

(4) AN ATTESTED COPY hereof, together with a copy of the proposal to amend rules, shall be sent by the Clerk of the Commission to the Bureau of Insurance in care of Deputy Commissioner Althelia P. Battle, who forthwith shall give further notice of the proposal to amend rules by mailing a copy of this Order, together with the proposal, to all health maintenance organizations licensed by the Commission to conduct the business of a health maintenance organization in the Commonwealth of Virginia, as well as all interested parties.

(5) The Commission's Division of Information Resources forthwith shall cause a copy of this Order, together with the proposal to amend rules, to be forwarded to the Virginia Registrar of Regulations for appropriate publication in the Virginia Register of Regulations.

(6) The Commission's Division of Information Resources shall make available this Order and the attached proposed amendments to the rules on the Commission's website, http://www.scc.virginia.gov/case.

(7) The Bureau of Insurance shall file with the Clerk of the Commission an affidavit of compliance with the notice requirements of paragraph (4) above.

Part I
Applicability and Definitions

14VAC5-211-10. Applicability and scope.

A. This chapter sets forth rules to carry out the provisions of Chapter 43 (§ 38.2-4300 et seq.) of Title 38.2 of the Code of Virginia, and applies to all health maintenance organizations and to all health maintenance organization contracts and evidences of coverage delivered or issued for delivery by a health maintenance organization established or operating in this Commonwealth on and after January 1, 2006.

B. A new contract or evidence of coverage issued or put in force on or after January 1, 2006, shall comply with this chapter.

C. A contract or evidence of coverage reissued, renewed, or extended in this Commonwealth on or after January 1, 2006, shall comply with this chapter. A contract or evidence of coverage written before January 1, 2006, shall be deemed to be reissued, renewed, or extended on the date it allows the health maintenance organization to change its terms or adjust the premiums charged.

D. B. In the event of conflict between the provisions of this chapter and the provisions of any other rules issued by the commission, the provisions of this chapter shall be controlling as to health maintenance organizations.

14VAC5-211-20. Definitions.

The following words and terms when used in this chapter shall have the following meanings unless the context clearly indicates otherwise:

"Basic health care services" means in-area and out-of-area emergency services, inpatient hospital and physician care, outpatient medical services, laboratory and radiologic services, and preventive health services as further described in 14VAC5-211-160. "Basic health care services" also means limited treatment of mental illness and substance abuse in accordance with the minimum standards as may be prescribed by the commission, which shall not exceed the level of services mandated for insurance carriers pursuant to Chapter 34 (§ 38.2-3400 et seq.) of Title 38.2 of the Code of Virginia. In the case of a health maintenance organization that has contracted with this Commonwealth to furnish basic health care services to recipients of medical assistance under Title XIX of the Social Security Act (42 USC § 1396 et seq.) pursuant to § 38.2-4320 of the Code of Virginia, the basic health care services to be provided by the health maintenance organization to program recipients may differ from the basic health care services required by this chapter to the extent necessary to meet the benefit standards prescribed by the state plan for medical assistance services authorized pursuant to § 32.1-325 of the Code of Virginia.

"Coinsurance" means a copayment, expressed as a percentage of the allowable charge for a specific health care service.

"Commission" means the State Corporation Commission.

"Conversion contract" means an individual contract that the health maintenance organization issues after a conversion option has been exercised.

"Copayment" means an amount an enrollee is required to pay in order to receive a specific health care service.

"Deductible" means an amount an enrollee is required to pay out of pocket before the health care plan begins to pay the costs associated with health care services.

"Emergency services" means those health care services that are rendered by affiliated or nonaffiliated providers after the sudden onset of a medical condition that manifests itself by symptoms of sufficient severity, including severe pain, that the absence of immediate medical attention could reasonably be expected by a prudent layperson who possesses an average knowledge of health and medicine to result in (i) serious jeopardy to the mental or physical health of the individual, (ii) danger of serious impairment of the individual's bodily functions, (iii) serious dysfunction of any of the individual's bodily organs, or (iv) in the case of a pregnant woman, serious jeopardy to the health of the fetus. Emergency services provided within the plan's service area shall include covered health care services from nonaffiliated providers only when delay in receiving care from a provider affiliated with the health maintenance organization could reasonably be expected to cause the enrollee's condition to worsen if left unattended.

"Enrollee" or "member" means an individual who is enrolled in a health care plan.

"Evidence of coverage" means a certificate, individual or group agreement or contract, or identification card issued in conjunction with the certificate, agreement or contract, issued to a subscriber setting out the coverage and other rights to which an enrollee is entitled.

"Excess insurance" or "stop loss insurance" means insurance issued to a health maintenance organization by an insurer licensed in this Commonwealth, on a form approved by the commission, or a risk assumption transaction acceptable to the commission, providing indemnity or reimbursement against the cost of health care services provided by the health maintenance organization.

"Group contract" means a contract for health care services issued by a health maintenance organization, which by its terms limits the eligibility of subscribers and enrollees to a specified group.

"Health care plan" means an arrangement in which a person undertakes to provide, arrange for, pay for, or reimburse a part of the cost of health care services. A significant part of the arrangement shall consist of arranging for or providing health care services, including emergency services and services rendered by nonparticipating referral providers, as distinguished from mere indemnification against the cost of the services, on a prepaid basis. For purposes of this chapter, a significant part shall mean at least 90% of total costs of health care services.

"Health care professional" means a physician or other health care practitioner licensed, accredited, or certified to perform specified health care services consistent with state law.

"Health care services" means the furnishing of services to an individual for the purpose of preventing, alleviating, curing, or healing human illness, injury or physical disability.

"Health maintenance organization" means a person who undertakes to provide or arrange for one or more health care plans. A health maintenance organization is deemed to be offering one or more managed care health insurance plans and is subject to Chapter 58 (§ 38.2-5800 et seq.) of Title 38.2 of the Code of Virginia.

"Limited health care services" means dental care services, vision care services, mental health services, substance abuse services, pharmaceutical services, and other services as may be determined by the commission to be limited health care services. Limited health care services shall not include hospital, medical, surgical or emergency services unless the services are provided incidental to the limited health care services set forth in the preceding sentence.

"Medical necessity" or "medically necessary" means appropriate and necessary health care services that are rendered for a condition which, according to generally accepted principles of good medical practice, requires the diagnosis or direct care and treatment of an illness, injury, or pregnancy-related condition, and are not provided only as a convenience.

"NAIC" means the National Association of Insurance Commissioners.

"Net worth" or "capital and surplus" means the excess of total admitted assets over the total liabilities of the health maintenance organization, provided that surplus notes shall be reported and accounted for in accordance with § 38.2-4300 of the Code of Virginia.

"Nonparticipating referral provider" means a provider who is not a participating provider but with whom a health maintenance organization has arranged, through referral by its participating providers, to provide health care services to enrollees. Payment or reimbursement by a health maintenance organization for health care services provided by nonparticipating referral providers may exceed 5.0% of total costs of health care services, only to the extent that any excess payment or reimbursement over 5.0% shall be combined with the costs for services that represent mere indemnification, with the combined amount subject to the combination of limitations set forth in this definition and in this section's definition of health care plan.

"Out-of-area services" means the health care services that the health maintenance organization covers when its members are outside the geographical limits of the health maintenance organization's service area.

"Participating provider" or "affiliated provider" means a provider who has agreed to provide health care services to enrollees and to hold those enrollees harmless from payment with an expectation of receiving payment, other than copayments or deductibles, directly or indirectly from the health maintenance organization.

"Primary care physician health care professional" means a physician health care professional who provides initial and primary care to enrollees; who supervises, coordinates, and maintains continuity of patient care; and who may initiate referrals for specialist care, if referrals are a requirement of the enrollee's health care coverage.

"Provider" or "health care provider" means a physician, hospital, or other person that is licensed or otherwise authorized to furnish health care services.

"Rescission" means a cancellation or discontinuance of coverage under a health care plan that has a retroactive effect. "Rescission" does not include: (i) a cancellation or discontinuance of coverage under a health care plan if the cancellation or discontinuance of coverage has only a prospective effect, or the cancellation or discontinuance of coverage is effective retroactively to the extent it is attributable to a failure to timely pay required premiums or contributions towards the cost of coverage; or (ii) a cancellation or discontinuance of coverage when the health care plan covers active employees and, if applicable, dependents and those covered under continuation coverage provisions, if the employee pays no premiums for coverage after termination of employment and the cancellation or discontinuance of coverage is effective retroactively back to the date of termination of employment due to a delay in administrative recordkeeping.

"Service area" means a clearly defined geographic area in which the health maintenance organization has directly or indirectly arranged for the provision of health care services to be generally available and readily accessible to enrollees.

"Specialist" means a licensed health care provider to whom an enrollee may be referred by his primary care physician health care professional and who is certified or eligible for certification by the appropriate specialty board, where applicable, to provide health care services in a specialized area of health care.

"Subscriber" means a contract holder, an individual enrollee, or the enrollee in an enrolled family who is responsible for payment to the health maintenance organization or on whose behalf the payment is made.

"Supplemental health care services" means health care services that may be offered by a health maintenance organization in addition to the required basic health care services.

"Surplus notes" means those instruments that meet the requirements of 14VAC5-211-40.

14VAC5-211-70. Conversion of coverage.

A. A health care plan shall offer to its group contract holders, for an enrollee whose eligibility for coverage terminates under the group contract, the options to convert to an individual policy or continue coverage as set forth in this section. The group contract holder shall select one of the following options:

1. Conversion of coverage within 31 days after issuance of the written notice required in subsection C of this section, but in no event beyond the 60-day period following the date of termination of the enrollee's coverage under the group contract, to an individual contract that provides benefits which, at a minimum, meet the requirements of basic or limited health care services as applicable, in accordance with this chapter. Coverage shall not be refused on the basis that the enrollee no longer resides or is employed in the health maintenance organization's service area. The conversion contract shall cover the enrollee covered under the group contract as of the date of termination of the enrollee's coverage under the group contract. Coverage shall be provided without additional evidence of insurability, and no preexisting condition limitations or exclusions may be imposed other than those remaining unexpired under the contract from which conversion is exercised. A probationary or waiting period set forth in the conversion contract shall be deemed to commence on the effective date of coverage under the original contract.

2. Continuation of coverage under the existing group contract for a period of at least 12 months immediately following the date of termination of the enrollee's eligibility for coverage under the group contract. Continuation coverage shall not be applicable if the group contract holder is required by federal law to provide for continuation of coverage under its group health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act (COBRA) (P.L. 99-272). Coverage shall be provided without additional evidence of insurability subject to the following requirements:

a. The application and payment for the extended coverage is made to the group contract holder within 31 days after issuance of the written notice required in subsection C of this section, but in no event beyond the 60-day period following the date of the termination of the person's eligibility;

b. Each premium for the extended coverage is timely paid to the group contract holder on a monthly basis during the 12-month period; and

c. The premium for continuing the group coverage shall be at the health care plan's current rate applicable to the group contract plus any applicable administrative fee not to exceed 2.0% of the current rate.

B. A conversion contract or continuation of coverage shall not be required to be made available when:

1. The enrollee is covered by or is eligible for benefits under Title XVIII of the Social Security Act (42 USC § 1395 et seq.) known as Medicare;

2. The enrollee is covered by or is eligible for substantially the same level of hospital, medical, and surgical benefits under state or federal law;

3. The enrollee is covered by substantially the same level of benefits under any policy, contract, or plan for individuals in a group;

4. The enrollee has not been continuously covered during the three-month period immediately preceding the enrollee's termination of coverage;

5. The enrollee was terminated by the health care plan for any of the reasons stated in 14VAC5-211-230 A 1, 2, 3, or 6 5, or coverage was rescinded; or

6. The enrollee was terminated from a plan administered by the Department of Medical Assistance Services that provided benefits pursuant to Title XIX or XXI of the Social Security Act (42 USC § 1396 et seq. or § 1397 aa et seq.).

C. The group contract holder shall provide each enrollee or other person covered under the group contract written notice of the availability of the option chosen and the procedures and timeframes for obtaining continuation or conversion of the group contract. The notice shall be provided within 14 days of the group contract holder's knowledge of the enrollee's or other covered person's loss of eligibility under the group contract.

14VAC5-211-90. Copayments.

A. A Except for preventive services required by § 38.2-3442 of the Code of Virginia, a health maintenance organization may require a copayment of enrollees as a condition for the receipt of a specific health care service. A copayment shall be shown in the evidence of coverage as either a specified dollar amount or as coinsurance.

B. If the health maintenance organization has an established copayment maximum, it shall keep accurate records of each enrollee's copayment expenses and notify the enrollee when his copayment maximum is reached. The notification shall be given no later than 30 days after the health maintenance organization has processed sufficient claims to determine that the copayment maximum is reached. The health maintenance organization shall not charge additional copayments for the remainder of the contract or calendar year, as appropriate. The health maintenance organization shall also promptly refund to the enrollee all copayments charged after the copayment maximum is reached. Any maximum copayment amount shall be shown in the evidence of coverage as a specified dollar amount, and the evidence of coverage shall clearly state the health maintenance organization's procedure for meeting the requirements of this subsection.

C. The provisions of this subsection shall not apply to any Family Access to Medical Insurance Security (FAMIS) Plan (i) authorized by the United States Centers for Medicare and Medicaid Services pursuant to Title XXI of the Social Security Act (42 USC § 1397aa et seq.) and the state plan established pursuant to Chapter 13 (§ 32.1-351 et seq.) of Title 32.1 of the Code of Virginia and (ii) underwritten by a health maintenance organization.

14VAC5-211-100. Deductibles.

A Except for preventive services required by § 38.2-3442 of the Code of Virginia, a health maintenance organization may require an enrollee to pay an annual deductible in accordance with § 38.2-4303 A 8 of the Code of Virginia.

14VAC5-211-140. Freedom of choice.

A. At the time of enrollment an enrollee shall have the right to select a primary care physician health care professional from among the health maintenance organization's affiliated primary care physicians health care professionals, subject to availability and in accordance with § 38.2-3443 of the Code of Virginia.

B. An enrollee who is dissatisfied with his primary care physician health care professional shall have the right to select another primary care physician health care professional from among the health maintenance organization's affiliated primary care physicians health care professionals, subject to availability. The health maintenance organization may impose a reasonable waiting period for this transfer.

14VAC5-211-150. Grievance Complaint and appeals procedure.

A. A health maintenance organization shall establish and maintain a grievance or complaint system to provide reasonable procedures for the prompt and effective resolution of written complaints in accordance with Chapter 5 (§ 32.1-137.1 et seq.) of Title 32.1 and Chapters Chapter 58 (§ 38.2-5800 et seq.) and 59 (§ 38.2-5900 et seq.) of Title 38.2 of the Code of Virginia. In addition, a health maintenance organization shall establish and maintain an internal appeals procedure in accordance with Chapter 5 (§ 32.1-137.1 et seq.) of Title 32.1 and Chapter 35.1 (§ 38.2-3556 et seq.) of Title 38.2 of the Code of Virginia and applicable regulations. A record of all written complaints shall be maintained for the period specified in § 38.2-511 of the Code of Virginia. A record of all requests for internal appeal shall be maintained in accordance with the provisions of § 32.1-137.16 of the Code of Virginia.

B. Pending the resolution of a written complaint filed by a subscriber or enrollee, coverage may not be terminated for the subscriber or enrollee for any reason that is the subject of the written complaint, except where the health maintenance organization has in good faith made an effort to resolve the complaint and coverage is being terminated or rescinded in accordance with 14VAC5-211-230.

14VAC5-211-180. Out-of-area services.

In addition to out-of-area emergency services required to be provided as basic health care services, a health maintenance organization may offer to its enrollees indemnity benefits covering out-of-area services. A description of the procedure for obtaining out-of-area services and notification requirements before obtaining these services shall be included in the evidence of coverage as well as a description of restrictions or limitations on out-of-area services. A Except for out-of-area emergency services, a health care plan that requires the enrollee to contact the health maintenance organization before obtaining out-of-area services shall provide for emergency telephone consultation on a 24-hour per day, seven-day per week basis.

Part V
Disclosure and Prohibitions

14VAC5-211-210. Disclosure requirements.

A. A subscriber shall be entitled to an evidence of coverage under a health care plan provided by a health maintenance organization established or operating in this Commonwealth, including any amendments to it. The evidence of coverage excluding the identification card shall be delivered or issued for delivery within a reasonable period of time after enrollment, but not more than 60 days from the later of the effective date of coverage or the date on which the health maintenance organization is notified of enrollment. The identification card shall be delivered or issued for delivery within 15 days from the later of the effective date of coverage or the date on which the health maintenance organization is notified of enrollment.

B. An evidence of coverage delivered or issued for delivery shall contain the following:

1. The name, address, and telephone number of the health maintenance organization;

2. The health care services and other benefits to which the enrollee is entitled under the health care plan;

3. Exclusions or limitations on the services, kind of services, benefits, or kind of benefits to be provided, including any deductible or copayment features;

4. Where and in what manner information is available as to how services may be obtained;

5. The effective date and the term of coverage;

6. The total amount of payment for health care services and any indemnity or service benefits that the enrollee is obligated to pay with respect to individual contracts, or an indication whether the plan is contributory or noncontributory for group certificates;

7. A description of the health maintenance organization's method of resolving enrollee complaints, including a description of any arbitration procedure if complaints and grievances may be resolved through a specified arbitration agreement;

8. A list of providers and a description of the service area that shall be provided with the evidence of coverage if the information is not given at the time of enrollment;

9. The right of an enrollee to convert to an individual contract issued by the health maintenance organization or to continue group coverage, as applicable, including the terms and conditions under which coverage may be converted or continued;

10. The terms and conditions under which coverage may be terminated or rescinded;

11. Coordination of benefits provisions, if applicable;

12. Assignment restrictions in the contract;

13. The health maintenance organization's procedure for filing claims, including any requirements for notifying the health maintenance organization of a claim and requirements for filing proof of loss;

14. The health maintenance organization's eligibility requirements, including the conditions under which dependents may be added and the limiting age for dependents and subscribers covered under an individual or group contract;

15. An incontestability clause that states that, in the absence of fraud, all statements made by a subscriber shall be considered representations and not warranties and that no statement shall be the basis for voiding terminating coverage or denying a claim after the contract has been in force for two years from its effective date, unless the statement was material to the risk and was contained in a written application contract can be rescinded under § 38.2-3441 of the Code of Virginia;

16. A provision that the contract or evidence of coverage and any amendments to it constitutes the entire contractual agreement between the parties involved and that no portion of the charter, bylaws, or other document of the health maintenance organization shall constitute part of the contract unless it is set forth in full in the contract; and

17. Except for an evidence of coverage that does not provide for the periodic payment of premium or for the payment of any premium, a provision that the contract holder is entitled to a grace period of not less than 31 days for the payment of any premium due except the first premium. The provision shall also state that during the grace period the coverage shall continue in force unless the contract holder has given the health maintenance organization written notice of discontinuance in accordance with the terms of the contract and in advance of the date of discontinuance. The contract may provide that the contract holder shall be liable to the health maintenance organization for the payment of a pro rata premium for the time the contract was in force during the grace period. ; and

18. Terms and conditions related to the designation of a primary care health care professional.

14VAC5-211-220. Exclusions for preexisting conditions.

In addition to the limitations on preexisting conditions exclusions set forth in §§ 38.2-3432.3, 38.2-3444, and 38.2-3514.1 of the Code of Virginia, a health maintenance organization shall not exclude or limit health care services for a preexisting condition when the enrollee transfers coverage from one health care plan to another during open enrollment or when the enrollee converts coverage under his conversion option, except to the extent that a preexisting condition limitation or exclusion remains unexpired under the original contract. Any required probationary or waiting period is deemed to commence on the effective date for individual coverage, and on the enrollment date of the contract for group coverage.

14VAC5-211-230. Reasons for termination or rescission.

A. A health maintenance organization shall not terminate an enrollee's coverage for services provided under a health maintenance organization contract except for one or more of the following reasons:

1. Failure to pay the amounts due under the contract, including failure to pay a premium required by the contract as shown in the contract or evidence of coverage;

2. Fraud or material misrepresentation in enrollment or in the use of services or facilities;

3. 2. Material violation of the terms of the contract;

4. 3. Failure to meet the eligibility requirements under a group contract, provided that a conversion or continuation option is offered;

5. 4. Termination of the group contract under which the enrollee was covered; or

6. 5. Other good cause as agreed upon in the contract between the health care plan and the group or the subscriber. Coverage shall not be terminated on the basis of the status of the enrollee's health or because the enrollee has exercised his rights under the plan's grievance complaint or appeals system by registering a complaint against the health maintenance organization. Failure of the enrollee and the primary care physician health care professional to establish a satisfactory relationship shall not be deemed good cause unless the health maintenance organization has in good faith made an effort to provide the opportunity for the enrollee to establish a satisfactory patient-physician relationship, including assigning the enrollee to other primary care physicians health care professionals from among the organization's participating providers.

B. A health maintenance organization shall not terminate coverage for services provided under a contract without giving the subscriber written notice of termination, effective at least 31 days from the date of mailing or, if not mailed, from the date of delivery, except that:

1. For termination due to nonpayment of premium, the grace period as required in 14VAC5-211-210 B 17 shall apply;

2. For termination due to nonpayment of premium by an employer, the notice provisions required in § 38.2-3542 C of the Code of Virginia shall apply;

3. For termination due to activities that endanger the safety and welfare of the health maintenance organization or its employees or providers, immediate notice of termination may be given; or

4. For termination due to change of eligibility status, immediate notice of termination may be given.

C. A health maintenance organization shall not rescind coverage for services provided under a contract unless the enrollee or a person seeking coverage on behalf of an enrollee performs an act, practice, or omission that constitutes fraud, or the person makes an intentional misrepresentation of material fact, as prohibited by the terms of the plan. Notice of any rescission shall comply with the requirements of § 38.2-3441 of the Code of Virginia.