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 1300.75.4.8 - Corrective Action

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
Every contract involving a risk arrangement between a
						plan and an organization or a sub-delegating organization and an organization
						shall require the plan and the organization or the sub-delegating organization
						and the organization to comply with a process, set forth in this regulation and
						administered by the Department, for the development and implementation of
						Corrective Action Plans (CAPs).
(a)
					 Organizations reporting deficiencies in any of the Grading Criteria shall
					 submit a self-initiated CAP proposal on the DMHC Corrective Action Plan (CAP)
					 Form, dated May, 2018, and incorporated by reference herein, published by the
					 Department on its webpage at www.dmhc.ca.gov to the Department and to every
					 plan and sub-delegating organization with which the organization maintains a
					 contract involving a risk arrangement that meets the following requirements:
(1) Identifies the Grading Criteria that the
					 organization has failed to meet;
(2) Identifies the amount by which the
					 organization has failed to meet the Grading Criteria;
(3) Identifies all plans and sub-delegating
					 organizations with which the organization contracts with, including the
					 identification of the name, title, telephone and facsimile numbers, and postal
					 and e-mail addresses for the person responsible at each contracting plan and
					 sub-delegating organization for monitoring compliance with the final
					 CAP;
(4) Describes the specific
					 actions the organization has taken or will take to correct any deficiency
					 identified in subsections (1) and (2) of this section. This description should
					 include any written representations made by contracting plans and
					 sub-delegating organizations to assist the organization in the implementation
					 of its CAP. The actions shall be appropriate and reasonable in scope and
					 breadth depending upon the nature and degree of the deficiency, and acceptable
					 to the Department;
(5) Describes
					 the timeframe for completing the corrective action and specifies a schedule for
					 submitting progress reports to the Department and the organization's
					 contracting plans and sub-delegating organizations. Except in situations where
					 the organization can demonstrate to the Department's satisfaction and written
					 approval that an extended period of time is necessary and appropriate to
					 correct the deficiency, that:
(A) Timetables
					 specified in the self-initiated CAP for correcting working capital deficiencies
					 shall not exceed twelve (12) months;
(B) Timetables specified in the
					 self-initiated CAP for correcting tangible net equity (TNE) deficiencies shall
					 not exceed twelve (12) months;
(C)
					 Timetables specified in the self-initiated CAP for incurred but not reported
					 (IBNR) deficiencies shall not exceed three (3) months;
(D) Timetables specified in the
					 self-initiated CAP for correcting claims timeliness deficiencies shall not
					 exceed six (6) months;
(E)
					 Timetables specified in the self-initiated CAP for correcting cash-to-claims
					 ratio deficiencies shall not exceed twelve (12) months.
(6) Identifies the name, title, telephone and
					 facsimile numbers, and postal and e-mail addresses for the person responsible
					 at the organization for ensuring compliance with the final CAP; and
(7) An organization may avoid submitting a
					 self-initiated CAP proposal if it demonstrates to the Department that necessary
					 and prudent capital investments have caused or may cause a temporary deficiency
					 in its TNE, working capital, or cash-to-claims ratios and that the organization
					 has implemented an appropriate business plan that will correct the deficiency
					 within a reasonable time period without causing a deficiency in the
					 organization's claims processing timeliness. The organization shall seek and
					 receive written approval from the Department to avoid submitting a
					 self-initiated CAP proposal.