28 CA ADC § 1300.75.4.8
28 CCR s 1300.75.4.8
Cal. Admin. Code tit. 28, s 1300.75.4.8
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
RISK-BEARING ORGANIZATIONS
This database is current through 06/09/06, Register 2006, No. 23.
s 1300.75.4.8. Corrective Action.
Every contract involving a risk arrangement between a plan and an
organization shall require the plan and the organization to comply with a
process, set forth in this regulation and administered by the Department,
for the development and implementation of Corrective Action Plans (CAPs).
(a) Unless the organization has proactively demonstrated to the
Department's written satisfaction that necessary and prudent capital
investments has or may cause a temporary deficiency in its TNE, working
capital or cash-to-claims ratios and that it has implemented an
appropriate business plan that will correct the deficiency within a
reasonable time period without causing a deficiency in its claim payment
timeliness, beginning with the financial survey submission filed for the
third quarter of calendar year 2005, organizations reporting deficiencies
in any of the Grading Criteria shall simultaneously submit a
self-initiated CAP proposal, in an electronic format developed by the
Department, to the Department and every plan with which the organization
maintains a contract involving a risk arrangement that meets the following
requirements:
(1) Identifies the Grading Criteria that the organization has failed to
meet;
(2) Identifies the amount by which the organization has failed to meet the
Grading Criteria;
(3) Identifies all plans with which the organization has contracts
involving a risk arrangement, including the identification of the name,
title, telephone and facsimile numbers, and postal and e-mail addresses
for the person responsible at each contracting health plan for monitoring
compliance with the final CAP;
(4) Describes the specific actions the organization has taken or will take
to correct any deficiency identified in subsections (1) and (2) of this
section. This description should include any written representations made
by contracting health plans to assist the organization in the
implementation of its CAP. The actions shall be appropriate and reasonable
in scope and breadth depending upon the nature and degree of the
deficiency, and acceptable to the Department;
(5) Describes the timeframe for completing the corrective action and
specifies a schedule for submitting progress reports to the Department and
the organization's contracting health plans. Except in situations where
the organization can demonstrate to the Department's satisfaction and
written approval that an extended period of time is necessary and
appropriate to correct the deficiency, that:
(A) Timetables specified in the self-initiated CAP for correcting working
capital deficiencies shall not exceed 12 months;
(B) Timetables specified in the self-initiated CAP for correcting tangible
net equity (TNE) deficiencies shall not exceed 12 months;
(C) Timetables specified in the self-initiated CAP for incurred but not
reported (IBNR) deficiencies shall not exceed three (3) months;
(D) Timetables specified in the self-initiated CAP for correcting claims
timeliness deficiencies shall not exceed six (6) months;
(E) Timetables specified in the self-initiated CAP for correcting
cash-to-claims ratio deficiencies shall not exceed twelve (12) months.
(6) Identifies the name, title, telephone and facsimile numbers, and
postal and e-mail addresses for the person responsible at the organization
for ensuring compliance with the final CAP; and
(7) Describe:
(A) the organization's patient record retention and storage policies;
(B) the procedures and the steps the organization will take to ensure that
patient medical records are appropriately stored and maintained; and
(C) the procedures and the steps the organization will take to ensure that
patient medical records will be readily available and transferable to
patients in the event the organization ceases operations or the
organization fails to meet its obligations set forth in the final CAP. At
a minimum, an organization's patient medical records policies and
procedures shall be consistent with existing laws relating to the
responsibilities for the preservation and maintenance of medical records
and the protection of the confidentiality of medical information.
(b) To the extent possible, the self-initiated CAP proposal shall be set
forth in a single document that addresses the concerns of all plans with
which the organization maintains a contract that includes a risk
arrangement.
(c) Unless, within 15 days of the receipt of an organization's
self-initiated CAP proposal, a contracting health plan provides written
notice to the Department and the risk-bearing organization stating the
reason for its objections and recommendations for revisions, the
self-initiated CAP shall be considered a final CAP, subject to the
Department's approval process as set forth in sections (g) and (h) below.
(d) In the event that a contracting health plan files a written objection
with the Department and the risk-bearing organization, the organization
shall within twenty (20) days: (1) implement all corrective action
strategies contained in its self-initiated CAP proposal that were not
objected to by a contracting health plan; and (2) submit to each of its
contracting health plans and the Department a revised CAP proposal that
addresses the concerns raised by the objecting contracting health plan(s).
To the extent possible, the revised CAP proposal shall be prepared as a
single document that addresses the concerns of all plans with which the
organization maintains a contract that includes a risk arrangement.
(e) Each contracting health plan shall have ten (10) days to submit to the
organization and the Department its objections and recommended revisions,
in an electronic format prepared by the Department, to the self-initiated
revised CAP proposal.
(f) Within fifteen (15) days of receipt of any contracting health plans'
objections and recommended revisions to the revised CAP proposal, the
Department shall schedule a meeting ( "CAP Settlement Conference") with
the organization and all of its contracting health plans to discuss and
reconcile the differences.
(g) Within seven (7) days of the CAP Settlement Conference, the
organization shall submit a final self-initiated CAP proposal to all of
its contracting health plans and the Department.
(h) Within ten (10) days of receipt of the organization's final
self-initiated CAP proposal, the external party shall submit its
recommendation to the Department to approve, disapprove or modify the
organization's final self-initiated CAP proposal.
(i) Within ten (10) days of receipt of the external party's
recommendation, the Department shall approve, disapprove or modify the
organization's final self-initiated CAP proposal, which shall then become
the final CAP. If the Department does not act upon the recommendations of
the external party within ten (10) days, the external party's
recommendation shall be deemed approved.
(j) A final CAP shall remain in effect until the organization demonstrates
compliance with the requirements of the CAP, or the CAP expires in
accordance with its own terms.
(k) In addition to the CAP requirements specified in subsection (a) above,
the Department may direct an organization to initiate a CAP whenever its
determines that an organization has experienced an event that materially
alters its ability to remain compliant with the Grading Criteria or when
the Department's review process indicates that the organization may lack
sufficient financial capacity to meet its contractual obligations
consistent with the requirements of section 1300.70(b)(2)(11)(1) of Title
28 of the California Code of Regulations.
(l) CAP Reporting:
(1) Each periodic progress report prepared pursuant to a final CAP shall
be submitted to the Department and all plans with which the organization
has a contract involving a risk arrangement, and shall include a written
verification stating that the periodic progress report is true and correct
to the best knowledge and belief of a principal officer of the
organization, as defined by section 1300.45(o) of Title 28 California Code
of Regulations.
(2) In addition to the quarterly progress reports specified in a CAP,
every contract involving a risk arrangement between a plan and an
organization shall require that:
(A) the organization advise the plan and the Department in writing within
five (5) days if the organization experiences an event that materially
alters the organization's ability to remain compliant with the
requirements of a final CAP; and
(B) the organization, upon the Department's request, provides additional
documentation to the Department and its contracting plans to demonstrate
the organization's progress towards fulfilling the requirements of a CAP.
(3) Non-disclosure of CAP documentation and supporting work papers:
(A) All draft, preliminary and final CAPs and all CAP compliance reports
required by a final CAP, including supporting documentation and
supplemental financial information, submitted to the Department shall be
received and maintained on a confidential basis and shall not be
disclosed, except for the information outlined in section
1300.75.4.4(c)(3) to any party other than the organization and, as
necessary, to its contracting health plans that are participating in the
CAP.
Note: Authority cited: Sections 1344 and 1375.4, Health and Safety Code.
Reference: Section 1375.4, Health and Safety Code.
HISTORY
1. New section filed 8-10-2005; operative 9-9-2005 (Register 2005, No.
32).
28 CA ADC s 1300.75.4.8
END OF DOCUMENT
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