Current through August 26, 2024
All of the following are the minimum financial requirements for
compliance with this section unless a different amount is ordered by the
commissioner, after consultation with the department:
(1) WORKING CAPITAL. Unless otherwise ordered
by the commissioner the care management organization shall maintain working
capital of not less than 3% of the projected annual capitation made over the
effective contract period.
(2)
RESTRICTED RESERVE. Unless otherwise ordered by the commissioner the care
management organization shall maintain a restricted reserve of not less than
the sum of the following:
(a) 8% of the first
$5 million of annual budgeted capitation revenue.
(b) 4% of the next $5 million annual budgeted
capitation revenue.
(c) 3% of the
next $10 million annual budgeted capitation revenue.
(d) 2% of the next $30 million annual
budgeted capitation revenue.
(e) 1%
of annual budgeted capitation revenue in excess of $50 million.
(3) ACCESSING RESTRICTED RESERVE
FUNDS. A care management organization may not access the restricted reserve
unless:
(a) A plan for accessing the funds is
filed with the commissioner at least 30 days prior to the proposed effective
date; and
(b) The commissioner,
after consulting with the department, does not disapprove the plan in the 30
day timeframe.
(4)
RISKS. Risks and factors the commissioner may consider in determining whether
to require greater restricted reserves by order include all of the following:
(a) Types of contingencies. The commissioner
shall consider the risks of:
1. Increases in
the frequency or severity of losses beyond the levels contemplated by the
capitation payments received;
2.
Increases in expenses beyond those contemplated by the capitation payments
received; and
3. Any other
contingencies the commissioner can identify which may affect the care
management organization's operations.
(b) Controlling factors. In making the
determination under this subsection, the commissioner shall take into account
the following factors:
1. The most reliable
information available as to the magnitude of the various risks under par. (a);
2. The extent to which the risks
in par. (a) are independent of each other or are related, and whether any
dependency is direct or inverse;
3. The care management organization's recent
history of profits or losses;
4.
The extent to which the care management organization has provided protection
against the contingencies in ways other than the establishment of restricted
reserves, including the use of conservative actuarial assumptions to provide a
margin of security; and
5. Any
other relevant factors.
(5) CORRECTIVE ACTION PLAN. A care management
organization that does not meet the requirements in sub. (1) or (2) shall file
a corrective action plan with the commissioner. The corrective action plan
shall include all of the following:
(a)
Identification of the conditions which contribute to the deficiency.
(b) Proposals of corrective actions which the
care management organization intends to take and would be expected to result in
compliance with subs. (1) and (2).
(c) Projections of the care management
organization's financial results in the current year and at least the first
succeeding year.
(d) Identification
of the key assumptions impacting the care management organization's projections
and the sensitivity of the projections to the assumptions.
(e) Such other information as is requested by
the commissioner, after consultation with the department.
