Alabama Administrative Code
Title 482 - ALABAMA DEPARTMENT OF INSURANCE
Chapter 482-1-080 - LIABILITIES OF HEALTH MAINTENANCE ORGANIZATIONS
Section 482-1-080-.04 - Definitions

(1) Uncovered Expenditures. The costs of health care services which are covered by a health maintenance organization, for which an enrollee would also be liable in the event of the organization's insolvency.

(2) Covered expenditures. Liabilities for the costs of health care services not included in uncovered expenditures.

(3) Accounts payable. Amounts due to creditors for the acquisition of goods and services on a credit basis from trade and other vendors other than health care providers.

(4) Accrued inpatient claims. Hospital and institutional care claims incurred which are not reported and/or booked as payables, including Incurred But Not Reported Claims.

(5) Accrued Physician Claims. Claims incurred for physicians and ancillary services (such as laboratory and x-ray) by providers under an arrangement with the Health Maintenance Organization.

(6) Accrued Referral Claims. Claims incurred for health care provider consultants and for referrals to providers outside a Health Maintenance Organization arrangement or for a professional service contract which is usually paid on a fee-for-service basis outside of the usual contractual provider arrangements of the HMO.

(7) Accrued Other Medical Expenses. Other incurred medical expenses including emergency room, out-of-area services, payroll and other miscellaneous medical expenses.

(8) Accrued Medical Incentive Pool. The accrual for withheld funds from individual practice associations, other medical groups or other such arrangements in which the Health Maintenance Organization may return incentive funds to providers.

(9) Unearned Premium. Income received or booked in advance of the applicable payment period for which a liability exists to render services in the future.

(10) Loans and Loans Payable. The principal amounts on loans signed by the Health Maintenance Organization or for which the Health Maintenance Organization is liable and are amounts which include federal loans.

(11) Capital. The par value of stock; the stated amount of owner's direct equity in the Health Maintenance Organization for a stock HMO. For a partnership HMO, capital shall mean the amount of the partners' equity or ownership accounts.

(12) Restricted Funds. Funds of the Health Maintenance Organization which have been dedicated to specific groups or purposes by the Health Maintenance Organization's governing body. This includes but is not limited to declared dividends and group trust accounts.

(13) Capital Account. Capital Account of an HMO shall be defined as the total of paid-in stated capital which is the total of the par value for stock having par value or the amount of the consideration received by the corporation for all shares of the corporation without par value which have been issued plus such amounts which have been transferred to stated capital in a manner permitted by law for a corporation or the total of the partners' equity account in the case of a partnership. The amount shall not be less than $100,000 for any licensed HMO and shall be maintained without diminution or impairment while the HMO is licensed. This is the legal capital of the HMO.

(14) Impairment or Insolvency. A Health Maintenance Organization shall be deemed to be impaired or insolvent when the HMO does not possess admitted assets at least equal to its liabilities and capital account. A Health Maintenance Organization shall be rehabilitated, liquidated or conserved under any of the reasons as set forth in Sections 27-21A-18 and 27-32-6, Code of Ala. 1975.

(15) Admitted Assets. Those assets which are assets which are legally admissible assets of life insurers and include assets as allowable only in the amounts and qualifications as described in Sections 27-41-1, et seq., Code of Ala. 1975. The valuation of admissible assets are as determined according to Sections 27-37-1, et seq., Code of Ala. 1975. Any investment limitations based on a life insurance company's capital and surplus in these preceding sections shall instead be based on the capital account and deposit requirement amounts found in Section 27-21A-12 Code of Ala. 1975.

(16) Uncovered liabilities. Obligations resulting from unpaid uncovered expenditures, the outstanding indebtedness of loans which are not specifically subordinated to uncovered medical and health care expenses or guaranteed by the sponsoring organization (guaranteeing person), and all other monetary obligations which are not similarly subordinated or guaranteed by subordination agreements, sponsoring organization guarantees, or other arrangements these covered expenditures, subordinated indebtedness, guarantees, and other arrangements must be acceptable to the Commissioner and must be accepted by written approval of the Commissioner.

Author: Commissioner of Insurance