Current through Register Vol. 43, No. 02, November 27, 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.
(2) For the
purposes of making a determination of the financial condition of an RCO under
these rules or the RCO's contract with the Medicaid Agency, the Medicaid Agency
may in its discretion do one or more of the following:
(a) Disregard any credit or amount receivable
resulting from transactions with a reinsurer or stop loss carrier that is
insolvent, impaired or otherwise subject to a delinquency proceeding;
(b) Make appropriate adjustments to asset
values attributable to investments in or transactions with parents,
subsidiaries or affiliates; and
(c)
Increase the RCO's liability in an amount equal to any contingent liability,
pledge, or guarantee not otherwise included if there is a substantial risk that
the RCO will be called upon to meet the obligation undertaken within the next
12-month period.
(3) In
addition to the other requirements that the Medicaid Agency may impose and
actions that the Medicaid Agency may take under the rules of the Medicaid
Agency, the risk contract between the RCO and the Medicaid Agency, and
applicable state and federal law, if the Medicaid Agency determines that an RCO
is in a hazardous financial condition, the Medicaid Agency may in its
discretion require the RCO to do one or more of the following:
(a) Reduce the total amount of present and
potential liability for enrollee benefits by reinsurance or stop loss
insurance;
(b) Reduce, suspend or
limit the volume of business being accepted or renewed;
(c) Increase the capital and surplus of the
RCO above the level required by Rule No.
560-X-62-.16;
(d) Increase the restricted reserves of the
RCO above the level required by Rule No.
560-X-62-.16;
(e) Suspend or limit distributions and any
other payments to members, risk-bearing participants, and other related persons
and entities of the RCO, other than payments to providers for covered
services;
(f) Limit or withdraw
from certain investments or discontinue certain investment practices if and to
the extent the Medicaid Agency determines such action is necessary;
(g) File reports in a form acceptable to the
Medicaid Agency concerning the market value of the RCO's assets;
(h) In addition to regular annual statements
and such other financial statements as may be required by the Medicaid Agency,
file interim reports regarding financial and other matters on a form specified
by the Medicaid Agency;
(i) Correct
corporate governance practice deficiencies, and adopt and utilize the
governance practices acceptable to the Medicaid Agency; and
(j) Provide a business plan to the Medicaid
Agency demonstrating the corrective actions the RCO will take to improve its
financial condition and a schedule for taking such actions.
(4) An RCO shall be deemed to be
insolvent when such organization is not possessed of admitted assets at least
equal in value to the sum of all its liabilities and minimum capital and
surplus required by Rule No.
560-X-62-.16 or this rule and the
Medicaid Agency declares that the RCO is insolvent. If the Medicaid Agency
determines that an RCO is insolvent, the Medicaid Agency shall give notice of
the insolvency to all of the RCO's participating providers.
(5) If and when the Medicaid Agency
determines from any information, report, document or statement made to the
Medicaid Agency or from any audit conducted or contracted for by the Medicaid
Agency that an RCO is insolvent, the Medicaid Agency may in its discretion do
one or more of the following:
(a) Immediately
proceed to terminate the risk contract between the Medicaid Agency and the
RCO;
(b) Allow the RCO a period of
time in which to cure the deficiency with cash or authorized investments;
provided that if such deficiency is not cured within the time prescribed, the
Medicaid Agency may proceed to terminate the risk contract between the Medicaid
Agency and the RCO; and
(c)
Exercise any other remedy provided by the risk contract between the Medicaid
Agency and the RCO or applicable law.
(6) The RCO shall be responsible for
continuation of services to enrollees during insolvency, for the duration of
the period for which payment may be due to providers for covered
services.
(7) If the Medicaid
Agency determines that an RCO is insolvent, is in a hazardous financial
condition, or is otherwise in default under the risk contract between the
Medicaid Agency and the RCO, the Medicaid Agency may, in addition to its other
rights and remedies, access and disburse the RCO's restricted reserves for the
payment of providers in accordance with terms of the Model Depository Agreement
provided by the Medicaid Agency.
(8) No enrollee shall be liable for any of
the following:
(a) The RCO's debts, in the
event of the RCO's insolvency;
(b)
Covered services provided to the enrollee, for which the Medicaid Agency does
not pay the RCO;
(c) Covered
services provided to the enrollee, for which the Medicaid Agency or the RCO
does not pay the individual or health care provider that furnishes the services
under a contractual, referral, or other arrangement; and
(d) Payments for covered services furnished
under a contract, referral, or other arrangement, to the extent that those
payments are in excess of the amount that the enrollee would owe if the RCO
provided the services directly.
(9) The Medicaid Agency may exercise
authority under this rule in addition to or in lieu of any other authority that
the Medicaid Agency may exercise under other rules promulgated by the Medicaid
Agency, other applicable state and federal laws and regulations, or the risk
contract between the Medicaid Agency and the RCO, including without limitation
calling for payment under any performance bond securing the RCO's performance
of the risk contract, in accordance with the terms thereof. Without limiting
the foregoing, the Medicaid Agency may impose any of the sanctions described in
42 CFR §§
438.700 -
438.708,
as in effect from time to time, in accordance with the provisions thereof and
consistent with the risk contract and rules promulgated by the Medicaid Agency,
including the appointment of temporary management for the RCO if the Medicaid
Agency has made a finding described in
42 CFR §
438.706 permitting or requiring the
imposition of temporary management.