California Code of Regulations › Title 28 - Managed Health Care › Division 1 - The Department of Managed Health Care › Chapter 2 - Health Care Service Plans › Article 9 - Financial Responsibility › Risk-Bearing Organizations › Section 1300.75.4.2 - Organization Information

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
Every contract involving a risk arrangement between a
						plan and an organization shall require the organization or sub-delegating
						organization to do the following:
(a)
					 Maintain at all times a minimum "cash-to-claims ratio," as defined in section
					 1300.75.4(f), of
					 0.75 except as specified below. Beginning October 1, 2019 and ending on October
					 1, 2020, an organization shall comply with the cash-to-claims ratio definition,
					 which is defined as an organization's cash, readily available marketable
					 securities and receivables, excluding all risk pool, risk-sharing, incentive
					 payment program and pay-for-performance receivables, reasonably anticipated to
					 be collected within sixty (60) days divided by the organization's unpaid claims
					 (claims payable and incurred but not reported (IBNR) claims)
					 liability.
(b) DMHC Quarterly
					 Financial Survey Report Form ("quarterly financial survey report"). For each
					 quarter, submit to the Department, not more than forty-five (45) days after the
					 close of each quarter of the fiscal year, a quarterly financial survey report
					 on the DMHC Quarterly Financial Survey Report Form, dated September, 2018, as
					 incorporated herein by reference, and published by the Department on its
					 webpage: www.dmhc.ca.gov. The DMHC Quarterly Financial Survey Report Form shall
					 be filed pursuant to section
					 1300.41.8 of Title 28, California
					 Code of Regulations, and shall contain all of the following information:
(1) Quarterly financial survey report
					 information (including the following: a balance sheet; an income statement; a
					 statement of cash flows; a statement of net worth; cash and cash equivalent;
					 receivables and payables; risk pool and other incentives; claims aging; notes
					 to financial statements; enrollment information; mergers, acquisitions and
					 discontinued operations; the incurred but not reported (IBNR) methodology; and
					 administrative expenses), or in the case of a nonprofit entity comparable
					 financial statements and supporting schedule information (including but not
					 limited to, aging of receivable information), reflecting the results of
					 operations for the immediately preceding quarter and year-to-date, prepared in
					 accordance with generally accepted accounting principles (GAAP) and the
					 identification of the individual or office in the organization designated to
					 receive public inquiries.
(A) Sub-delegating
					 organizations shall list all contracting organizations, including their names,
					 addresses, contact persons, telephone numbers, and number of enrollees assigned
					 to the organization as of the last day of the quarter being reported.
(B) Quarterly financial survey reports of an
					 organization required pursuant to these rules shall be on a combining basis
					 with an affiliate, if either the organization or such affiliate is legally or
					 financially responsible for the payment of the organization's claims. Any
					 affiliated entity included in this report shall be separately identified and
					 reported in a combining schedule format. Upon the request of the Director, the
					 organization or affiliate subject to this subdivision shall provide financial
					 statements on a separate DMHC Quarterly Financial Survey Report Form. The
					 Director shall consider at least the following information when determining
					 whether to make the request:
(i) Whether
					 financial solvency concerns exist with the organization or the affiliate, which
					 impact the organization's ability to maintain compliance with the Grading
					 Criteria or processing and paying claims in compliance with Claims Settlement
					 Practices as detailed in section
					 1300.71 of Title 28, California
					 Code of Regulations;
(ii) Whether
					 there are concerns regarding the transparency of the affiliate relationship;
					 and,
(iii) Whether financial
					 documentation is not presented in accordance with GAAP.
(C) For the purposes of this section, an
					 organization's use:
(i) Of a "sponsoring
					 organization" arrangement to reduce its liabilities for the purposes of
					 calculating tangible net equity, working capital, and cash-to-claims ratio;
					 or
(ii) An affiliated entity to
					 provide claims processing services shall not be construed to automatically
					 create a legal or financial obligation to pay the claims liability for the
					 health care services for enrollees.