Illinois Administrative Code › Title 50 - INSURANCE › Part 2051 - PREFERRED PROVIDER PROGRAMS › Section 2051.340 - Fiduciary and Bond Requirements

Current through Register Vol. 48, No. 28, July 12, 2024
a)
			 This Section outlines requirements for administrators who must establish either
			 a bond or a fiduciary account pursuant to Section 370l of the Act.
			 Administrators who administer only DHCSPs need not comply with these
			 requirements because, by definition, they do not handle money for purposes of
			 payment for provider services. Employers and insurers contracting directly with
			 providers or with multiple administrators to implement a WC PPP need not comply
			 with these requirements, as they are exempted by Section
			 8.1 a of the Worker's
			 Compensation Act.
b) Administrators
			 who establish and maintain a fiduciary account pursuant to Section 370l of the
			 Act are subject to the following requirements:
1) Monies collected for reimbursement under
			 preferred provider programs that the administrator holds more than 15 days
			 shall be deposited in a special fiduciary account in a financial institution
			 located in this State. The account shall be designated as an Administrator
			 Trust Fund or ATF. All checks drawn on the ATF shall indicate on their face
			 that they are drawn on the ATF of the administrator.
2) An administrator that operates more than
			 one preferred provider program may establish separate fiduciary accounts for
			 each program, or may maintain a consolidated fiduciary account for multiple
			 programs. If a consolidated ATF account is maintained, the administrator's
			 records shall clearly indicate fund deposits and disbursements for each
			 program.
3) No disbursement shall
			 be made from the ATF account other than payment for provider services under the
			 preferred provider program operated by the administrator and administrative
			 fees due the administrator pursuant to a written agreement.
4) For each preferred provider program for
			 which an ATF is maintained, the balance in the ATF shall at all times be the
			 amount of funds deposited plus accrued interest, if any, less authorized
			 disbursements.
5) If the ATF is
			 interest bearing or income producing, the full nature of the account must first
			 be disclosed to the principal, whether insurer or other payor of services under
			 the preferred provider program, on whose behalf the funds are or will be held.
			 At this time the administrator must procure the written consent and
			 authorization from the principal for the investment of money and retention of
			 interest or earnings.
6) An
			 administrator may place ATF funds in interest-bearing or income-producing
			 investments and retain the interest or income, providing the administrator
			 obtains the prior written authorization of the principals on whose behalf the
			 funds are to be held. In addition to savings and checking accounts, an
			 administrator may invest in the following:
A)
			 Direct obligations of the United States of America or U.S. Government agency
			 securities with maturities of not more than one year;
B) Certificates of deposit, with a maturity
			 of not more than one year, issued by the Federal Deposit Insurance Corporation
			 (FDIC) or Federal Savings and Loan Insurance Corporation (FSLIC), so long as
			 any deposit does not exceed the maximum level of insurance protection provided
			 to certificates of deposits held by the institutions;
C) Repurchase agreements with financial
			 institutions or government securities dealers recognized as primary dealers by
			 the Federal Reserve System, provided:
i) The
			 value of the repurchase agreement is collateralized with assets that are
			 allowable investments for ATF funds;
ii) The collateral has a market value at the
			 time the repurchase agreement is entered into at least equal to the value of
			 the repurchase agreement;
iii) The
			 repurchase agreement does not exceed 30 days;
D) Commercial paper, provided the commercial
			 paper is rated at least P-l by Moody's Investors Service, Inc. or at least A-1
			 by Standard & Poor's Corporation;
E) Money market funds, provided the money
			 market fund invests exclusively in assets that are allowable investments
			 pursuant to subsections (b)(6)(A) through (D) of this Section for ATF
			 funds;
F) Each investment
			 transaction must be made in the name of the administrator's ATF. The
			 administrator must maintain evidence of any such investments. Each investment
			 transaction must flow through the administrator's ATF.
7) Recordkeeping
A) Administrators shall maintain detailed
			 books and records that reflect all transactions involving the receipt and
			 disbursement of funds from the ATF.
B) The detailed preparation, journalizing and
			 posting of the books and records must be maintained on a timely basis and all
			 journal entries for receipts and disbursements shall be supported by evidential
			 matter, which must be referenced in the journal entry so that it may be traced
			 for verification. Administrators shall prepare and maintain monthly financial
			 institution account reconciliations of any ATF established by the
			 administrator. The minimum detail required shall be as follows:
i) The sources, amounts and dates of monies
			 received and deposited by the administrator.
ii) The date and person to whom a
			 disbursement is made. If the amount disbursed does not agree with the amount
			 billed or authorized, the administrator shall prepare a written record as to
			 the reason.
iii) A description of
			 the disbursement in such detail to identify the source document substantiating
			 the purpose of the disbursement.