Current through Register Vol. 48, No. 12, March 22, 2024
a) This Section outlines requirements for
administrators who must establish either a bond or a fiduciary account pursuant
to Section 370l of the Act. Administrators who administer only DHCSPs need not
comply with these requirements because, by definition, they do not handle money
for purposes of payment for provider services. Employers and insurers
contracting directly with providers or with multiple administrators to
implement a WC PPP need not comply with these requirements, as they are
exempted by Section
8.1 a of the Worker's
Compensation Act.
b) Administrators
who establish and maintain a fiduciary account pursuant to Section 370l of the
Act are subject to the following requirements:
1) Monies collected for reimbursement under
preferred provider programs that the administrator holds more than 15 days
shall be deposited in a special fiduciary account in a financial institution
located in this State. The account shall be designated as an Administrator
Trust Fund or ATF. All checks drawn on the ATF shall indicate on their face
that they are drawn on the ATF of the administrator.
2) An administrator that operates more than
one preferred provider program may establish separate fiduciary accounts for
each program, or may maintain a consolidated fiduciary account for multiple
programs. If a consolidated ATF account is maintained, the administrator's
records shall clearly indicate fund deposits and disbursements for each
program.
3) No disbursement shall
be made from the ATF account other than payment for provider services under the
preferred provider program operated by the administrator and administrative
fees due the administrator pursuant to a written agreement.
4) For each preferred provider program for
which an ATF is maintained, the balance in the ATF shall at all times be the
amount of funds deposited plus accrued interest, if any, less authorized
disbursements.
5) If the ATF is
interest bearing or income producing, the full nature of the account must first
be disclosed to the principal, whether insurer or other payor of services under
the preferred provider program, on whose behalf the funds are or will be held.
At this time the administrator must procure the written consent and
authorization from the principal for the investment of money and retention of
interest or earnings.
6) An
administrator may place ATF funds in interest-bearing or income-producing
investments and retain the interest or income, providing the administrator
obtains the prior written authorization of the principals on whose behalf the
funds are to be held. In addition to savings and checking accounts, an
administrator may invest in the following:
A)
Direct obligations of the United States of America or U.S. Government agency
securities with maturities of not more than one year;
B) Certificates of deposit, with a maturity
of not more than one year, issued by the Federal Deposit Insurance Corporation
(FDIC) or Federal Savings and Loan Insurance Corporation (FSLIC), so long as
any deposit does not exceed the maximum level of insurance protection provided
to certificates of deposits held by the institutions;
C) Repurchase agreements with financial
institutions or government securities dealers recognized as primary dealers by
the Federal Reserve System, provided:
i) The
value of the repurchase agreement is collateralized with assets that are
allowable investments for ATF funds;
ii) The collateral has a market value at the
time the repurchase agreement is entered into at least equal to the value of
the repurchase agreement;
iii) The
repurchase agreement does not exceed 30 days;
D) Commercial paper, provided the commercial
paper is rated at least P-l by Moody's Investors Service, Inc. or at least A-1
by Standard & Poor's Corporation;
E) Money market funds, provided the money
market fund invests exclusively in assets that are allowable investments
pursuant to subsections (b)(6)(A) through (D) of this Section for ATF
funds;
F) Each investment
transaction must be made in the name of the administrator's ATF. The
administrator must maintain evidence of any such investments. Each investment
transaction must flow through the administrator's ATF.
7) Recordkeeping
A) Administrators shall maintain detailed
books and records that reflect all transactions involving the receipt and
disbursement of funds from the ATF.
B) The detailed preparation, journalizing and
posting of the books and records must be maintained on a timely basis and all
journal entries for receipts and disbursements shall be supported by evidential
matter, which must be referenced in the journal entry so that it may be traced
for verification. Administrators shall prepare and maintain monthly financial
institution account reconciliations of any ATF established by the
administrator. The minimum detail required shall be as follows:
i) The sources, amounts and dates of monies
received and deposited by the administrator.
ii) The date and person to whom a
disbursement is made. If the amount disbursed does not agree with the amount
billed or authorized, the administrator shall prepare a written record as to
the reason.
iii) A description of
the disbursement in such detail to identify the source document substantiating
the purpose of the disbursement.
c) An administrator who posts or causes to be
posted a bond of indemnity pursuant to Section 370l of the Act shall do so
subject to the following requirements:
1) An
administrator who operates more than one preferred provider program subject to
the Act may maintain a bond of indemnity for any such programs.
2) The bond shall be held by the Director in
favor of the beneficiaries and payors of services under the preferred provider
program operated by the administrator. The bond shall be executed by a surety
company and payable to any party injured under the terms of the bond.
3) The bond shall be in continuous form and
shall be in an amount of not less than 10% of the total estimated annual
reimbursements under the preferred provider program covered by the bond. The
amount of the bond shall be determined in accordance with the methodology
submitted by the administrator pursuant to Section
2051.260(c)(5).
4) The bond shall remain in force and effect
until the surety is released from liability by the Director or until the bond
is cancelled by the surety. The surety may cancel the bond and be released from
further liability under the bond upon 30 days advance written notice to the
Director. The cancellation shall not affect any liability incurred or accrued
under the bond before the termination of the 30-day period. Upon receipt of any
notice of cancellation, the Director shall immediately notify the
administrator.