Chapter Five: Financing of Insurance Companies
Premiums and additional charges collected as well as investment proceeds shall be included within the resources of insurance companies.
Every insurance company shall abide by what the Board determines - in coordination with other control authorities - in terms of commonly accepted technical allowance in the insurance sector.
A. The insurance premium (subscription) shall be fixed in agreement between the insurance company and the employer.
B. If the premium rate is different from what the company had submitted in the work plan, then it shall obtain the consent of the Board’s Secretariat General to the rate of the premium and the Board may review such premium from time to time.
C. The maximum limit of the benefit for every beneficiary shall be SR. 250,000 only.
The employer shall be obligated to pay premiums for its contracted employees and for its dependent to the insurance company which it chooses for this purpose. This provision shall apply to non-working persons or to those individuals who are supported by them and the employer shall alone be the one responsible for payment of the premiums which must be paid at the beginning of every insurance year unless otherwise agreed.
In the event of non-payment of the premiums at the times agreed upon, it shall be permissible for the insurance company to cancel the policy after the expiry of the validity of the policy and to retrieve the insurance cards and collect the premium due. The insurance company should inform the insurance board and the approved service providers' network about the same.
A part of the surplus of the insurance transactions shall be transferred to the cooperative health insurance fund pursuant to the principles of cooperative insurance. This part shall be calculated in the light of the results of the insurance company transactions and following the consent of the other control authorities.
The health insurance board shall issue the regulations determining the goals of the fund which regulate its activities pursuant to Article 38.
Chapter Six: Carrying out the health insurance activities
Insurance companies which are authorized to practice insurance activities in the Kingdom shall undertake health insurance activities. The provisions of the regulations for companies and other relevant laws prevalent in the Kingdom shall apply to any provisions which have not been provided for in this bill or in any subsequent bills that are approved in the future.
Insurance companies shall not be allowed to carry out health insurance activities except after their qualification by the board and such qualification shall be limited to a period of 3 years renewable for similar other periods.
A. The Board shall receive a financial remuneration for qualifying cooperative health insurance companies, namely SR. 150,000 only.
B. The Board shall receive a financial remuneration against the annual renewal for the cooperative health insurance companies of SR. 50,000 only.
It shall be permissible for insurance companies operating in the field of health insurance to carry out other insurance activities provided that they shall conform to separating the financial aspects of health insurance activities from other activities as prescribed by the control authority.
Insurance companies (authorized to carry out insurance activities in the Kingdom) shall be qualified to practice health insurance pursuant to a request to be submitted for this purpose. The board may determine whatever details it deems fit which relates to nature and scope of the particulars which must be included in the applications within the limits of what is necessary for the evaluation thereof. The board shall decide upon the application for qualification within 180 days of the date of submitting the application.
The insurance company shall be obliged to submit the following documents as part of its application to obtain qualification.
1. Name and address of the company.
2. Memorandum of Articles of Association.
3. Names of the Chairman, Board Members and Managing Director and the Executive Management.
4. Annual accounts audited by a chartered accountant for the 3 years preceding the submission of the application as regards existing companies and the plan of work as regards new companies.
5. Name of the independent actuarian expert or companies specialized in actuarian studies.
6. Names of the certified auditors.
The plan of work must contain a statement which should include an estimate of the revenues, expenses, technical appropriations and the results expected for the three years succeeding the submission of the application as per the specimen prepared by the board specially for this purpose as well as a plan for reinsurance arrangements.
The insurance company shall attach a statement by the other control authority to the effect that the company is committed to preserving the minimum level of financial solvency.
The board shall choose from the applicant companies those which satisfy the following:
1. License to carry out insurance activities.
2. Technical, administrative and medical machinery as well as the approval systems, processing of applications and payment of dues, and all of these assignments may be carried out through concluding a contract with a medical claims management company licensed by the board.
It shall be permissible to refuse qualification of the insurance company by virtue of a letter indicating the grounds for the refusal in the following cases.
1. Obtainment by the board of information from the other control authority that the executive managers are not qualified and that they do not satisfy the necessary professional requirements.
2. Obtainment by the board of information from the other control authority indicating that the company is unable to properly maintain the interest of the beneficiaries or that it is unable to permanently meet its undertakings.
3. In the case of failure to pay the fees prescribed for granting or renewing the qualification indicated in Article 42 of this bill.
Every insurance company shall seek the assistance of an actuarian expert or a company specialized in actuarian services as determined by the control authority so that such an expert may submit to the control authority an actuarian report on the health insurance activity of the company indicating the adequacy of the appropriations and pricing policy.
The independent actuarian expert shall ensure that the insurance practices in calculating insurance subscription and technical appropriation are complied with, and the expert must within the context of such activity review and audit the financial matters of the company, specially verifying at all times that the company is continuously meeting the undertakings arising out of the insurance policies and that the company has at its disposal sufficient financial assets at the level of the solvency margin fixed by the control authority. Should the actuarian expert realized that the required appropriations are no longer available then he must immediately notify the control authority.
Every insurance company shall prepare accounts audited by a firm of chartered accountants who are licensed to practice in the Kingdom and submit an activity covering the events of the preceding year to be submitted to the board within the first 3 months of the year following the end of the fiscal year of the insurance company.
Every licensed insurance company must submit to the board a statement that it is conforming to the following:
1. It has a share capital which is common, free and unencumbered and is equivalent to at least the margin of its solvency.
2. The solvency margin has been calculated in such a manner as to indicate the company’s ability to continuously meet its obligations.
3. To submit a letter of financial guarantee to the cooperative health insurance board which is equivalent to 1/3 of the solvency margin provided that the amount of such guarantee should not be less than SR. 25,000,000.
The board shall approve the non-government health care services providers within the limits of the following conditions:
1. That the health care facility should have been licensed by the Ministry of Health.
2. That the individuals concerned with providing health care must have been registered by the Saudi Board of health specializations.
3. That the health care facility should satisfy the minimum quality requirements pursuant to Article 109 & 110 of this bill.
The health care services providers shall be approved by virtue of a written notice to be issued by the board. The annual financial fee for such purpose must be paid to the board in the following manner:
1. SR. 2,000 for the clinic of one doctor.
2. SR. 5,000 to SR. 10,000 for a dispensary.
3. SR. 10,000 to SR. 20,000 for one day surgery centers.
4. SR. 20,000 to SR. 50,000 for hospitals subject to the number of beds.
The board shall fix the financial fee prescribed for each case pursuant to Article 55 and the board shall also fix the financial fee for the rest of the service providers such as a diagnostic center, a pharmacy and the laboratory.
The health facility approval shall be cancelled if the ministry of health withdraws the license of the facility, and the board should notify all of the insurance companies accordingly.
Chapter Seven: Supervision of the Parties to the Insurance Relationship (Goals and Scope of Supervision)
The health insurance board shall be in charge of controlling the comprehensive health insurance coverage and insuring that the parties to the health insurance relationship have executed the assignments and responsibilities cast on them by virtue of this bill.
The control authority shall undertake the responsibility of controlling insurance companies carrying out health insurance activities to ensure that the company is solvent, that its share capital is adequate and that its assets and technical appropriations are sound and that it is capable to meet its obligations towards those benefiting from its health insurance. The control authority shall inform the board of any imbalance that might affect the standing of any insurance company to what has been previously referred to in this paragraph.
The board may request a health insurance company to amend the work plan before concluding new insurance policies in such a manner as it deems necessary in order to protect the interest of beneficiaries so that the consequences of such may extend to the existing insurance policies or the policies that have not been yet concluded.
It shall be permissible for the board to request information and data on all the questions of work relating to health insurance from the control authority. Individual and particular cases with regard to the general clauses of health insurance, the board may request the forms and other publications used by the health insurance company in its correspondences with employers, the beneficiary and service providers as well as the contracts signed with the health insurance claims management company.
The board or those appointed by it shall have the right to conduct regularly and at any time a revision and audit of all insurance company within the scope of the functions of the board and also to request other control authorities to do the same and to provide the board with a report to that effect.
The board shall have the right to make its reservation with regard to any executive officials of any insurance company and to inform the other control authorities accordingly.
Neither the board members nor the persons employed by the board shall be allowed to divulge or disclose confidential information obtained by them within the context of implementing this bill, and such a provision shall apply to any other person who may come across such information in the context of official reports. These provisions shall not apply to the disclosure of information in general terms which make it impossible to single out a particular insurance company.
The board may use the information referred to in Article 64 in such a manner as to confine the use thereof to the following purposes:
1. Checking the application made by the insurance company to obtain or renew the qualification.
2. The directives issued by the board.
3. To follow up infraction of the obligations arising out of the insurance contract pursuant to the Article 14 of the law.
4. Within the frame of the procedures to look into the complaints filed in connection with a decision taken by an insurance company.
5. Within the frame work of the procedures to look into and decide upon the infractions in accordance with Article 14 of the law.
The obligation to maintain the secrecy of information contained in Article 64 does not particularly preclude the provision of information to:
1. Judicial authorities, courts or other relevant authorities.
2. The organs responsible for the application of the law pursuant to its provision or of the other relevant laws so long as such organs were asking for the information in order complete their tasks provided that they shall abide by the secrecy checks contained in Article 64 of this bill.
The other control authority shall have the right to supervise what is relating to the existing insurance policies in the event that the activities of the insurance company have been banned or stopped or in the event that its license to carry-out its activities has been withdrawn and it has to coordinate with the cooperative health insurance board in this respect.
It shall be permissible for the board to withdraw the qualification for carrying out health insurance activities if the insurance company has violated the qualification stipulations and in the event of withdrawal of the qualification then the affiliation of the beneficiaries to the company shall be transferred to the another insurance company to be chosen by the employer. This also applies where the insurance company ceases to carry-out its activities without having the qualification withdrawn from it.
It shall be permissible for the board also to withdraw the qualification for carrying out health insurance activities if the insurance company fails to use the qualification within 12 months or if it expressly abandons the qualification or ceases to carry out its activities for a period of 6 months.
With the exception of the cases referred to in Articles 68 and 69, coordination with regard to the withdrawal of qualification take place with the competent authorities.
The Board shall be financed through the following:
1. The fee for qualification and annual renewal of the insurance companies.
2. The fee for the annual accreditation approval of the non-government health services providers.
3. The fee for the supervision and control of insurance companies at the rate of 1% of the health insurance premium as per the audited financial lists of the previous year.
4. The financial fee obtained by the Board for its study of exempting the authorities owning medical facilities from the insurance coverage or part thereof. The Board shall fix such fee.
5. Other fines due to the Board and also those fines imposed by the Committee for the Infractions against the Cooperative Health Insurance Law specified in Article 111 of this bill.
6. Donations, gifts and investment proceeds.
7. Amounts of money collected from any other sources such as the issuance of magazines, booklets or consultative or training works carried out by the Board.
The Board shall publish general information about the activities of the insurance companies qualified by the Board. Coordination in this respect may take place with other control authorities, and the Board shall - whenever necessary - interpret the Bill of Implementation of the Law.
The Board shall publish whatever it deems in terms of statistical schedules and data relevant to insurance for every year of work without limitation to certain insurance companies.
Chapter Eight: Relation Between Parties to the Insurance Issue
The Board shall determine the stipulation for designing the health insurance card and the contents thereof in common agreement with the insurance companies under health services providers.
Insurance companies and service providers shall take care of the following:
1. Provide services pursuant to the generally accepted professional and moral standards which are compatible with modern medical approaches that are accepted and acknowledged with due regard to the progress realized in the field of medicine. Service providers may not make request to insurance companies to render services that are not compatible with what has been referred to above.
2. The medical procedures must be confined to what is required by the treatment condition that is necessary for achieving the assignment.
The parties to the insurance relationship, namely the policy holders, insurance companies and service providers shall each follow the commonly known professional criteria in executing the following:
1. Payment of the premiums on time by the policy holders to insurance companies.
2. Expedition in giving approvals by insurance companies to service providers for extending treatment to beneficiaries and expedition to settle the claims filed by service providers.
3. Expedition and simplicity in providing treatment services by the providers of service to the beneficiaries and expedition in filing claims by service providers against insurance companies for payment of the entitlements.
Insurance companies shall not be allowed to own or operate facilities for the health care of the insured nor shall private health facilities be allowed to own health insurance companies.
The two parties to the insurance policy contract are the policy holder (employer) and the insurance company.
The employer shall provide the insurance company with all the information required by the company. Should the insurance company have sufficient grounds to doubt the authenticity of such information, then the company may put the matter before the Health Insurance Board to verify the same. The employer shall - upon the request of the Board - submit all of the required documents and acquaint the representative of the Board with such documents at the employer’s head quarters.
The employer shall explain and clarify the policy as well as the limits of the coverage for the beneficiaries concerned.
Without prejudice to the provisions of the laws and regulations, the employer shall impose the penalties against a beneficiary who is legally proven to have misuse the service.
The employer shall return the insurance cards to the insurance company when the beneficiary quits his job with him or upon the expiry of the insurance policy period. Employer shall be responsible for any expenses arising out of failure to comply with this condition.
In order to meet its obligations for providing the benefits, the insurance company shall conclude health services contract with an approved service providers. Hospitals and government health care centers that are open to the public may treat the beneficiaries for a fee to be borne by the insurance company.
In emergencies only it is possible to receive treatment at the hands of specialists and hospitals without referral from an elementary care center. This provision applies also to treatment through service providers with whom no contracts for health services have been signed by the insurance company. Should the insurance company refuse to continue the treatment at this center, then they shall be transferred following the stabilization of their health conditions, to one of the centers of the service providers' network.
Liability shall be borne by the service providers should one of its employees or doctors commits fraud, forgery or abuse of the service.
The health services contract shall at least contain the following elements, and it shall be permissible for the Board to suggest a guideline services contract to organize the relationship between the parties concerned:
1. Joint rights and obligations and the penalties that should be imposed in the event of violating of the same.
2. An undertaking by the service providers as regards quality pursuant to the conditions and procedures contained in Articles 109 and 110 of this bill.
3. An undertaking by the service providers to take into account the costs effective requirements in accordance with the provisions of Article 75 of this Bill, and to provide such treatment and medical prescriptions as to be in conformity to that.
4. The wages and settlements procedures and payment of the amounts due for the medical prescriptions that had been dispensed with.
5. Stipulations preceding the addressing of warnings and the time for such warnings.
6. Method of settling disputes arising out of the health services contract.
The service provider shall verify the identity of the beneficiary, and should the service provider extend treatment to a person other than the beneficiary then it shall bear the costs of such treatment.
The service provider shall claim its entitlements for the treatment of beneficiaries in the manner agreed upon with the insurance company within a period not exceeding 90 days as of the date of maturity.
The service provider shall conform to the coding systems issued by the Board in describing the conditions of treatment and costs and in claiming the entitlements.
It shall be permissible for the service provider to cancel the health services provision contract with the insurance company subject to the conditions for cancellation in case of a delay in the payment of its entitlements, and in such a case the insurance company should inform the employer about the same.
The insurance company shall - upon the start of the validity of the insurance coverage - provide the policy holder with an insurance card for the beneficiary and with a illustrated booklet containing the policy, scope of insurance cover and the limits thereof and the approved service provider network. The employer shall officially and physically deliver the same to the beneficiary at the start of the insurance cover. The insurance company shall inform the approved service provider network of the accession of the policy to the insurance cover and also of the additional coverages, if any.
The insurance company and policy holder shall take into account the circumstances of the beneficiaries by extending a service providers’ network that is compatible with the needs of the beneficiaries and their places of work in such a manner that they are not compelled to obtain the service from a service provider outside the network.
The insurance company shall not be obligated to conclude a health service contract with every service provider approved by the Board, and the company may choose from amongst those approved service providers the one in which it deems the ability to extend the best services which respond to the requirements of the health service contact.
The insurance company shall not be obligated to use all service providers with whom contracts have been concluded for every policy.
The insurance company must reply to the approval request to bear the treatment costs within sixty minutes and in the event of a refusal to do so then the reasons must be explained in writing, and the Board shall lay down the service criteria in this respect.
Insurance companies may employ individually or collectively Saudi physicians to control the extent of conformity to the treatment stipulation within the costs effective limits indicated in Article 75 of the Bill during the treatment of a beneficiary. Should it be impossible to appoint Saudi physicians, insurance companies may apply to the Board for an exception to conclude contracts with non-Saudi physicians. As regards special medical qualifications they must be from amongst Saudi specialists and consultants. In the event of requesting freelance consultations, insurance companies may seek the help of Saudi specialists and consultants working in the private sectors.
Physicians employed by insurance companies shall have professional independence and shall not be subject in their opinions except to the medical dictates in assuming the assignment of control and shall have no right to interfere in the medical treatment or the treatment of beneficiaries.
Service providers and beneficiaries shall provide the physicians working in insurance companies with all the required information and shall place at their disposal all the documents that are necessary to undertake the control activities pursuant to the provisions of Article 96 of this Bill. Physicians may enter the hospital’s wards and the medical supervisory and medical records offices of a licensed hospital in which a beneficiary had been treated or where he is receiving treatment when the need arises to complete the control missions assigned to them in coordination with the hospital concerned.
The Board shall have the right to object to anyone who is not medically qualified or who has violated the ethics of the profession.
The insurance company shall pay the entitlements of the service providers within a period not exceeding 60 days as of the date making the demand.
The insurance company and service providers shall agree on the settlement of the amounts of the claims and in the event of a disagreement, then either of them may refer the dispute to the Cooperative Health Insurance Board.
The insurance company shall have the right to cancel the health services contract with a service provider subject to period fixed for notice and also to the cancellation conditions provided for in the contract concluded between them should it notice from the service provider total or partial violation of the provision of the service following the approval of the policy holder and the appointment of a replacement of this same standard.
The beneficiary undertakes to provide the insurance company with all the information requested by it to determine details of the emergency or the obligations of the services to be shouldered by the insurance and the scope of such obligations.
The beneficiary undertakes to undergo examination by a physician who is legally licensed and approved by the Board and who is appointed by the insurance company if the company wishes to do so which company shall bear the costs of examination in such a case.
Upon requesting treatment, the beneficiary undertakes to provide the insurance card and identification to the service provider who shall return it to the beneficiary after recording the particulars that are necessary for treatment.
Beneficiary shall approach one of the elementary care facilities or physicians working within the service providers network approved for him. Referral to a specialist or a hospital shall be by a general practitioner.
Beneficiary shall bear the difference in the cost of examination should he directly approach the specialist or consultant, as indicated in the policy.
The recommendation for hospitalization shall be confined to the cases where the treatment of the beneficiary at the out-patient clinic is insufficient, and in such a case use shall be made of the one day surgeries or treatments. Should the beneficiary approach the hospital other than the one stated in the referral papers, then he shall bear the difference in the treatment costs.
Chapter Nine: Guaranteeing Quality of the Services Provided
The Board shall - in co-operation with the able government health institutions - lay down the conditions that should be available in advance to maintain the quality of the services provided as regards the implementation of the provisions of Article 16 of the Law. Within the context of determining such stipulation in particular, the following should be taken into account:
1. Availability of the minimum quality requirements which must be complied with by the service providers.
2. Approval of the diagnostic and treatment services which must be available or which are intended to be extended at the expense of the insurance company.
3. Observers by the service providers of the procedures relating to the maintenance of quality.
The procedures pertaining to the maintenance of quality shall, as a minimum, cover the following:
1. Special standards of the medical examination rooms for the approved service providers.
2. Regular inspection of the approved hospitals, clinics and dispensaries on site and without prior warning by the staff of the Board or those who are qualified and appointed by it from outside by the Board.
3. Evaluation of the health services contracts in terms of their undertaking to maintain quality control.
4. The service providers shall - every three years and at their own expense - conclude a contract through the Board with a specialized consultant office to asses and gauge the extent of conformity by the service providers to the quality requirements and to provide the Board with a copy of the report relating to that. Should the service providers violate this condition, then the Board may cancel the approval.
Chapter Ten: Penalties and Settlement of Disputes
One or more committees shall be set up by a resolution to be passed by the Chairman of the Board which committee shall consist of six members from the authorities indicated in Article 14 of the Law to be called the Cooperative Health Insurance Law Violations Committee to consider violations against the provisions of the Law and to impose the appropriate penalty. Such penalty shall be imposed by a resolution to be passed by the Chairman of the Board, and a grievance may be lodged against such resolution with the Board of Grievances within 60 days of the notification thereof.
This committee shall consider the violations arising between the beneficiaries, policy holders, insurance companies and service providers.
Complaints by the parties to this relationship shall be filed in writing with the Secretary General of the Board within 90 days of the date of the dispute giving rise to the complaint.
The Secretary General of the Board shall refer the filed complaint to the committee which considers the violations against the provisions of this Law.
The fines pertaining to the violations committed against the provisions of this Law and also the fines fixed in Article 111 and 116 shall be paid to the Board and according to what has been provided for by the financial regulations.
Should the committee find that the complaint was untrue and was not based on any acceptable ground, then it may take the necessary statutory procedures or propose the appropriate penalty against the complainant.
The committee shall hold a hearing whenever the need arises and the Board shall pay a remuneration of SR. 1,000 for every member in respect of every hearing provided that this shall not exceed SR. 20,000 a year for each member.
The Board shall prepare the detailed procedures for the lodging of complaints with the committee.
Chapter Eleven: Transitory Provisions and Implementation of the Bill
The qualification procedure for the health insurance companies and the approval of the service providers covered by the provisions of this Law shall start after the issuance of this Bill.
This Bill shall apply to the employer according to the following schedule:
1. Companies and individual establishments the number of whose foreign manpower exceeds five hundred persons within one year of the date of issue of the Bill.
2. Companies and establishments whose foreign manpower exceeds one hundred persons within two years of the issue of the Bill.
3. All employers and individuals covered by the Law within three years of the issue of the Bill.
In case of concluding insurance policies prior to the execution of the Law, the contracting parties shall be responsible for terminating their obligations within one year of the issue of this Bill subject to the contents of Article 120 of this Bill. It shall be permissible for them to continue the same obligations if they obtain the approval of the Board to go on with their previous arrangements, provided that in such a case the insurance companies shall be qualified and that the service providers shall have been approved and that they both could continue their obligations pursuant to the provisions of the Law and the Bill of Implementation.
The Board shall be competent to propose amendments to this Bill and a resolution to the effect shall be passed by the Minister of Health.
This Bill shall be passed by virtue of a resolution by the Minister of Health and published in the Official Gazette and come into effect as of the beginning of the implementation of the Law after 90 days of the date of its issue.