Alabama Administrative Code › Title 560 - ALABAMA MEDICAID AGENCY › Chapter 560-X-62 - REGIONAL CARE ORGANIZATIONS › Section 560-X-62-.18 - Hazardous Financial Condition And Insolvency

Current through Register Vol. 42, No. 9, June 28, 2024
(1) A regional care organization ("RCO")
			 shall be deemed to be in a hazardous financial condition if the continued
			 operation of the RCO is determined by the Medicaid Agency to be hazardous to
			 the RCO's enrollees, participating providers, or the State. The Medicaid Agency
			 may in its discretion consider any factor or finding determined by the Medicaid
			 Agency to be hazardous to enrollees, participating providers, or the State to
			 determine whether an RCO is in a hazardous financial condition, including but
			 not limited to one or more of the following factors:
(a) Nonpayment or recurring delinquency in
			 the RCO's payments to providers;
(b) Adverse findings reported in financial
			 condition examination reports, audit reports, or actuarial opinions, reports or
			 summaries;
(c) Whether the RCO has
			 made adequate provision, according to presently accepted actuarial standards of
			 practice, for the anticipated cash flows required by the contractual
			 obligations and related expenses of the RCO, when considered in light of the
			 assets held by the RCO with respect to such reserves and related actuarial
			 items including but not limited to the investment earnings on such assets, and
			 the considerations anticipated to be received and retained under such
			 contracts;
(d) The inability of a a
			 stop loss insurance carrier or assuming reinsurer to perform, other than stop
			 loss insurance or reinsurance administered by the Medicaid Agency;
(e) Whether the RCO's operating losses in the
			 last 12-month period or any shorter period of time is greater than 50 percent
			 of the RCO's remaining capital and surplus in excess of the minimum
			 required;
(f) Whether a
			 risk-bearing participant which has contributed cash, capital, or other assets
			 to the RCO, or a guarantor, surety, insurer, reinsurer, obligor, or any entity
			 that has a direct or indirect ownership interest in a risk-bearing participant
			 which has contributed cash, capital, or other assets to an RCO, is insolvent,
			 threatened with insolvency or delinquent in payment of its monetary or other
			 obligations and which, in the opinion of the Medicaid Agency, may affect the
			 solvency of the RCO;
(g) Contingent
			 liabilities, pledges or guaranties that either individually or collectively
			 involves a total amount that, in the opinion of the Medicaid Agency, may affect
			 the solvency of the RCO;
(h) An
			 adverse change in the age and collectability of receivables other than from the
			 Medicaid Agency;
(i) Whether the
			 management of an RCO, including officers, directors or any other person who
			 directly or indirectly controls the operation of the RCO, fails to possess and
			 demonstrate the competence, fitness and reputation determined by the Medicaid
			 Agency to be necessary to serve the RCO in such position;
(j) Whether management of an RCO has failed
			 to respond properly to inquiries relating to the condition of the RCO or has
			 furnished false and misleading information concerning an inquiry;
(k) Whether the RCO has failed to meet
			 financial responsibility, accountability or filing requirements in the absence
			 of a reason satisfactory to the Medicaid Agency;
(l) Whether management or any other agent of
			 an RCO either has filed a false or misleading sworn financial statement or has
			 released a false or misleading financial statement to lending institutions or
			 to the general public, or has made a false or misleading entry, or has omitted
			 an entry of material amount in the books of the RCO;
(m) Whether the RCO has grown so rapidly and
			 to such an extent that it lacks adequate financial and administrative capacity
			 to meet its obligations in a timely manner;
(n) Whether the RCO has experienced or there
			 is sufficient evidence that the RCO will likely experience in the foreseeable
			 future cash flow or liquidity problems, or both;
(o) Whether management has established
			 reserves that do not comply with minimum standards established by state laws,
			 regulations, accounting standards, sound actuarial principles and standards of
			 practice;
(p) Whether transactions
			 among affiliates, subsidiaries or controlling persons for which the RCO
			 receives assets or capital gains, or both, do not provide sufficient value,
			 liquidity or diversity to assure the RCO's ability to meet its outstanding
			 obligations as they mature; and
(q)
			 Any significant monetary judgment or fine filed against the RCO or any
			 significant civil or criminal action brought against or concluded adversely to
			 the RCO.