Current through Register Vol. 43, No. 02, November 27, 2024
(1) The Integrated
Care Network (ICN) as a condition to the risk contract between the Medicaid
Agency and the ICN, shall maintain minimum capital, surplus, or any combination
thereof, of one million dollars ($1,000,000), unless otherwise specified by the
Medicaid Agency as provided in section (2).
(2) The Medicaid Agency may, in its sole
discretion, add to, reduce, or otherwise alter, amend, adjust, or modify the
minimum capital or surplus described in section (1) of this rule to account for
the level of financial and/or other risk the ICN bears with regard to the
populations to be served or the services to be provided by the ICN, or any
other factor the Agency considers relevant to the financial solvency of the
ICN.
(3) For purposes of section
(1) of this rule, an ICN's capital and surplus is the difference between the
admitted assets of the ICN and the liabilities of the ICN, determined as
follows:
(a) The classification and value of
the ICN's assets and liabilities shall be determined in accordance with
Generally Accepted Accounting Principles (GAAP) and Generally Accepted Auditing
Standards (GAAS), as modified by the provisions of this section (3).
(b) For purposes of this rule, "admitted
assets" means only assets owned exclusively by the ICN consisting of:
1. Cash, including the true balance of
deposits in solvent banks and trust companies;
2. Bonds, notes, warrants, debentures, and
other evidences of indebtedness which are direct obligations of the United
States of America for which the full faith and credit of the United States of
America is pledged for the payment of principal and interest ("U.S. Treasury
Securities");
3. Investment grade
bonds or other evidences of indebtedness other than U.S. Treasury Securities,
satisfying standards approved by the Medicaid Agency;
4. Marketable equity securities, satisfying
standards approved by the Medicaid Agency;
5. Due or deferred Per Member Per Month
(PMPM) payments pursuant to the risk contract between the ICN and the Medicaid
Agency;
6. The acquisition cost of
land and depreciated cost of improvements thereon owned by the ICN and used in
connection with the performance of the risk contract, in excess of any
liabilities secured by encumbrances on such assets, in an aggregate amount not
greater than 50 percent of the required minimum capital and surplus of the ICN;
and
7. Such other assets as may be
approved by the Medicaid Agency.
(c) In addition to assets not described in
subsection 3(b) of this rule, an ICN's admitted assets shall not include:
1. Any single investment or asset, or any
combination of investments in or secured by the securities, obligations, and/or
property of one person, entity, or governmental unit, to the extent any such
investment or combination of investments would exceed 20 percent of the ICN's
admitted assets, provided that the foregoing restriction shall not apply to
U.S. Treasury Securities or cash; or
2. Goodwill and other intangible
assets.
(d) In any
determination of the capital and surplus of an ICN, liabilities to be charged
against the ICN's admitted assets shall include, in addition to other
liabilities chargeable in accordance with GAAP and GAAS:
1. The amount necessary to pay all of the
ICN's unpaid losses and claims incurred on or prior to the date of the
statement, together with the expenses of adjustment or settlement
thereof;
2. Federal, state, and
local taxes, expenses and other obligations due or accrued at the date of the
statement; and
3. Any additional
reserves for asset valuation contingencies or loss contingencies required by
the Medicaid Agency.
(4) No ICN shall reduce its combined capital
and surplus, by distribution of its assets to the members, owners, or
risk-bearing participants of the ICN or otherwise, below the ICN's required
capital and surplus under the rules of the Medicaid Agency.
Author: Stephanie Lindsay, Administrator,
Administrative Procedures Office
Statutory Authority:
Code of Ala.
1975, §§
22-6-220 et
seq.