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Kansas Strengthens Third Party Administrator Laws

Kansas Senate Bill No. 22, which became effective on March 9, 2017, amends the Kansas Third Party Administrator laws and appears designed to make them more robust by incorporating much of the language from the new National Association of Insurance Commissioners' Third Party Administrator Model Act.

One of the most significant provisions in Senate Bill 22 is that it implements a provision in Section 3(b) that an administrator is not eligible for a nonresident license in Kansas if its home state has not adopted laws that are substantially similar governing administrators.

Other items of interest regarding Kansas Senate Bill 22 include, but are not limited to, the following:

  • Requires submission of audited financial statements for the two most recent fiscal years, unless the applicant has not been in existence for two years. The Commissioner may grant a hardship exemption and permit applicants to file unaudited financial statements, but surety bonds will be required.

  • Requires the submission of business plan statements.

  • Specifies that applicants and licensees will be required to make available for the Department's inspection copies of all contracts with payors, as well as any other persons utilizing their services, and requires that they produce their accounts, records, and files for the Department's examination.

  • Sets forth filing requirements for annual reports, including financial statements, that must be submitted on or before July 1 of each year.

  • Allows the Commissioner to revoke a license under Section 5(b)(4) in the event that a TPA fails at any time to meet a qualification for which issuance of a license could have been refused.

  • Specifies conditions under which TPA license must or may be, denied, suspended, or revoked and details conditions under which the Department will be authorized to suspend a TPA's license without giving advance notice or an opportunity for a hearing. Authorizes the Department to impose other types of administrative penalties in accordance with the state's administrative procedure act.

  • Changes the requirements for written agreements between TPA and insurers, and the contractual provisions they must include. Adds provisions regarding the termination of agreements and disputes between insurers and TPAs. Requires that either the TPA or insurer notify the Department of the termination of an agreement.

  • Specifies that written agreements between TPAs and payors must require that TPAs render periodic accountings to payors, as further described. Expands record keeping requirements for TPAs who collect charges or premiums on behalf of multiple payors. Revises the scope of conditions under which withdrawals or payments may be made from fiduciary accounts.

  • Revises and clarifies scope of prohibited or permitted compensation arrangements for TPAs.

© Polsinelli PC, Polsinelli LLP in California

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About this Author

Steven L. Imber, Polsinelli PC, Insurance Regulatory Attorney, Enforcement Actions Lawyer,
Shareholder

Steve Imber chairs Polsinelli's Insurance Business and Regulatory group.  As a former General Counsel at a state insurance department, Steve Imber has the knowledge and experience to provide quality counsel to insurers, third party administrators, insurance agencies, medical discount plans and other insurance regulated entities. His practice includes representing and assisting clients on multi-state and national licensing projects, research projects, enforcement actions, market conduct examinations, audits and compliance programs and various other regulatory and...

913.234.7469
Shareholder

Justin Liby has a talent for organizing and managing large national and multi-state licensure and research projects. This knack provides him with a solid foundation for crafting and implementing sound, efficient strategies that achieve success for his clients. Justin concentrates his efforts on helping the insurance industry navigate the formidable federal and state regulatory maze to achieve the industry’s business needs. He stays current in the insurance industry's evolution, as well as the legislation and regulatory activity impacting the industry.

Justin is a former regulator for the Kansas Insurance Department and in-house counsel for a national third-party administrator.

913-234-7427
Counsel

Jennifer Osborn Nix works diligently for insurance companies, third-party administrators, and other regulated entities to further their goals and help them remain compliant within the 50-state regulatory scheme. She focuses on insurance regulatory and compliance issues, with a primary emphasis on life and health insurance matters.

Jennifer works with many regulated entities, including many in the health care sector, who rely on her for research, advice, strategic counsel, and licensing.

913.234.7472