42 U.S.C. § 300e–17 — Financial disclosure

(a) Financial information reported to Secretary Every HMO must report financial information to the Secretary, under the Secretary's regulations, including: (1) whatever information the Secretary requires to show the HMO has a fiscally sound operation; (2) a copy of any report the HMO filed with the Centers for Medicare & Medicaid Services under section 1320a-3 (for disclosing entities) or section 1396a(a)(38) (Medicaid reporting); and (3) a description of transactions -- as the Secretary specifies -- between the HMO and a "party in interest." These transactions include: (A) any sale, exchange, or lease of property between the HMO and a party in interest; (B) any paid exchange of goods, services (including management services), or facilities between them -- but not employee salaries for normal work, or health services given to members by hospitals, providers, staff, medical groups, or individual practice associations; and (C) any loan or other extension of credit between them. The Secretary may require that, if an HMO controls, is controlled by, or shares common control with another entity, its reported information take the form of a consolidated financial statement covering both. (b) "Party in interest" defined For this section, "party in interest" means: (1) any director, officer, partner, or employee responsible for managing or administering the HMO; anyone who directly or indirectly owns more than 5% of the HMO's equity; anyone who owns a mortgage, deed of trust, note, or similar interest worth more than 5% of the HMO's value; and, for a nonprofit HMO, an incorporator or corporate member under state law; (2) any entity where a person described in (1) is: (A) an officer or director, (B) a partner, (C) a direct or indirect owner of more than 5% of the entity's equity, or (D) the holder of a mortgage, deed of trust, note, or similar interest worth more than 5% of that entity's assets; (3) anyone directly or indirectly controlling, controlled by, or under common control with the HMO; and (4) any spouse, child, or parent of a person described in (1). (c) Information availability Each HMO must make the information it reported under subsection (a) available to its members if they reasonably ask for it. (d) Evaluation of transactions The Secretary must, as needed, evaluate the party-in-interest transactions reported under (a)(3), to check whether they harm the HMO's fiscal soundness or make its charges unreasonable. The Secretary must evaluate the reported transactions of at least five HMOs -- or, if more than 20 HMOs report such transactions, at least one-fourth of them. (e) Repealed. (f) Rates Nothing in this section gives the Secretary authority to approve or disapprove the rates an HMO charges. (g) Annual financial statement Any HMO that fails to file the annual financial statement required by subsection (a) becomes ineligible for federal assistance under this subchapter, and stops being a "qualified" HMO under section 300e-9, until the Secretary receives that statement. (h) Penalties Anyone who knowingly and willfully makes, or causes to be made, a false statement of material fact in any filing under this section commits a felony. On conviction, the penalty is a fine of up to $25,000, imprisonment for up to 5 years, or both.