California Code of Regulations › Title 22 - Social Security › Division 3 - Health Care Services › Subdivision 1 - California Medical Assistance Program › Chapter 4.1 - Two-Plan Model Managed Care Program › Article 6 - Operational Requirements › Section 53865 - Financial Performance Guarantee

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) Each plan shall provide evidence of and
					 maintain an acceptable financial performance guarantee to the department as
					 specified below.
(b) The department
					 shall approve the form and amount of financial performance guarantee required
					 for each plan contract.
(c) The
					 department may waive the requirement for a financial performance guarantee for
					 a plan which is qualified as an HMO under Title XIII, Public Health Service Act
					 (42 U.S.C. Section
					 300e et seq.).
(d) The department shall take possession of
					 the financial performance guarantee sufficient to indemnify the department in
					 the event that the plan defaults on any contractual obligation to the
					 department.
(e) A financial
					 performance guarantee is required, and shall be equal to at least one month's
					 capitation as determined by the department and may be in the form of, but not
					 limited to, one of the following options cited below. The department may extend
					 the time periods for compliance if the department determines that such
					 extension or phase-in will not present a significant financial risk to the
					 State, and if it will not cause the plan to be operated in a manner that may be
					 hazardous to its members.
(1)
					 Guarantee/Performance Bond, or
(2)
					 A guaranteed letter of credit, or
(3) A time certificate of deposit.
A plan electing the time certificate of deposit option
						may fulfill this requirement by making a deposit with the department, or at the
						discretion of the department, with any bank authorized to do business in this
						State and insured by the Federal Deposit Insurance Corporation, or savings and
						loan association doing business in this State and insured by the Savings
						Association Insurance Fund. Cash, investment certificates, accounts, or any
						combination of these shall be assigned to the department, upon those terms as
						the department may prescribe, until released by the department. The deposit
						required shall be an allowable asset of the plan in the determination of
						tangible net equity and all income from the deposit shall be an asset of the
						plan. A plan that has made a deposit pursuant to this option may withdraw that
						deposit or any part thereof, after making a substitute deposit of cash,
						investment certificates, accounts or any combination of these. Any substitute
						deposit shall be approved by the department before being deposited or
						substituted.
(4) A trust
					 agreement under a Financial Security Agreement with an approved financial
					 institution.
(5) Withhold from
					 capitation by the department an amount equal to the required amount and
					 retained by the department until completion of the contractual obligations
					 associated with the contract.