28 CA ADC § 1300.75.1


      28 CCR s 1300.75.1

      Cal. Admin. Code tit. 28, s 1300.75.1


      CALIFORNIA CODE OF REGULATIONS
      TITLE 28. MANAGED HEALTH CARE
      DIVISION 1. THE DEPARTMENT OF MANAGED HEALTH CARE
      CHAPTER 2. HEALTH CARE SERVICE PLANS
      ARTICLE 9. FINANCIAL RESPONSIBILITY
      This database is current through 06/09/06, Register 2006, No. 23.

      s 1300.75.1. Fiscal Soundness, Insurance, and Other Arrangements.

      (a) A plan shall demonstrate fiscal soundness and assumption of full 
      financial risk as follows:

      (1) Demonstrate through its history of operations and through projections 
      (which shall be supported by a statement as to the facts and assumptions 
      upon which they are based) that the plan's arrangements for health care 
      services and the schedule of its rates and charges are financially sound, 
      and provide for the achievement and maintenance of a positive cash flow, 
      including provisions for retirement of existing and proposed indebtedness.

      (2) Demonstrate that its working capital is adequate, including provisions 
      for contingencies.

      (3) Demonstrate an approach to the risk of insolvency which allows for the 
      continuation of benefits for the duration of the contract period for which 
      payment has been made, the continuation of benefits to subscribers and 
      enrollees who are confined on the date of insolvency in an in-patient 
      facility until their discharge, and payments to unaffiliated providers for 
      services rendered.

      (b) As a part of its program pursuant to subsection (a), a plan may obtain 
      insurance or make other arrangements:

      (1) For the cost of providing to any member covered health care services 
      the aggregate value of which exceeds $5,000 in any year;

      (2) For the cost of covered health care services provided to its members 
      other than through the plan because medical necessity required their 
      provision before they could be secured through the plan; and

      (3) For not more than 90 percent of the amount by which its costs for any 
      of its fiscal years exceed 115 percent of its income for such fiscal year.

      (c) In passing upon a plan's showing pursuant to this section, the 
      Director will consider all relevant factors, including but not limited to:

      (1) The method of compensating providers and the terms of provider 
      contracts, especially as to the obligations of providers to subscribers 
      and enrollees in the event of plan insolvency.

      (2) The methods by which the plan controls and monitors the utilization of 
      health care services.

      (3) The administrative expenses (actual and projected) of the plan and 
      especially as to new or expanding plans, the fiscal soundness of its 
      program to acquire and service an expanded subscriber population.


      


      Note: Authority cited: Section 1344, Health and Safety Code. Reference: 
      Section 1375.1, Health and Safety Code. 


       HISTORY 
         
      1. Repealer and new section filed 9-27-79; effective thirtieth day 
      thereafter 
      (Register 79, No. 39).

      2. Amendment filed 12-8-82; effective thirtieth day thereafter (Register 
      82, 
      No. 50).

      3. Change without regulatory effect amending subsection (c) filed 
7-18-2000
      pursuant to section 100, title 1, California Code of Regulations (Register
      2000, No. 29).
      28 CA ADC s 1300.75.1

      END OF DOCUMENT

      (C) Copyright 2006, Result Oriented Marketing, Inc.
      For Further Assistance Visit : www.mcmillanlaw.us and www.fearnotlaw.com