28 CA ADC § 1300.75.4


      28 CCR s 1300.75.4

      Cal. Admin. Code tit. 28, s 1300.75.4


      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. Definitions.

      As used in these Solvency Regulations:

      (a) "External party" means the Department of Managed Health Care or its 
      designated agent, which may be contracted or appointed to fulfill the 
      functions stated in these Solvency Regulations. Whenever these Solvency 
      Regulations reference the Department of Managed Health Care that reference 
      means the Department of Managed Health Care (Department) or its designated 
      agent.

      (b) "Organization" means a risk-bearing organization as defined in Health 
      and Safety Code Section 1375.4(g).

      (c) "Plan" means full-service health care service plan, as defined by 
      Health and Safety Code section 1345(f).

      (d) "Risk arrangement" is defined to include both "risk-sharing 
      arrangement" and "risk-shifting arrangement," which are defined as 
follows:

      (1) "Risk-sharing arrangement" means any compensation arrangement between 
      an organization and a plan under which the organization shares the risk of 
      financial gain or loss with the plan.

      (2) "Risk-shifting arrangement" means a contractual arrangement between an 
      organization and a plan under which the plan pays the organization on a 
      fixed, periodic or capitated basis, and the financial risk for the cost of 
      services provided pursuant to the contractual arrangement is assumed by 
      the organization.

      (e) "Solvency Regulations" means sections 1300.75.4 through 1300.75.4.8 of 
      Title 28 of the California Code of Regulations.

      (f) "Cash-to-claims ratio" is an organization's cash, readily available 
      marketable securities and receivables, excluding all risk pool, 
      risk-sharing, incentive payment program and pay-for-performance 
      receivables, reasonably anticipated to be collected within 60 days divided 
      by the organization's unpaid claims (claims payable and incurred but not 
      reported [IBNR] claims) liability.

      (g) "Corrective action plan" (CAP) means a plan reflected in a document 
      containing requirements for correcting and monitoring an organization's 
      efforts to correct any financial solvency deficiencies in the Grading 
      Criteria or other financial or other claims payment deficiencies, 
      determined through the Department's review or audit process, indicating 
      that the organization may lack the capacity to meets its contractual 
      obligations consistent with the requirements of section 
      1300.70(b)(2)(H)(1) of Title 28, California Code of Regulations.

      (h) "Grading Criteria" means the four grading/reviewing criteria specified 
      in Health and Safety Code sections 1375.4(b)(1)(A)(i), (ii), (iii), and 
      (iv) and the cash-to-claims ratio as defined in subsection (f) above.

      (i) "In a manner that does not adversely affect the integrity of the 
      contract negotiation process" means the disclosure of an organization's 
      financial data submissions in a format that does not impair the 
      organization's ability to negotiate its contracts for the delivery of 
      health care services or does not allow a contracting party to calculate: 
      (1) an organization's precise profit/loss margins on any line of business, 
      or (2) the rates that the organization has negotiated with any contracting 
      entity or vendor during a prior accounting period.


      


      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 3-22-2001 as an emergency; operative 3-22-2001 
      (Register
      2001, No. 12). A Certificate of Compliance must be transmitted to OAL by 
7-
      20-2001 or emergency language will be repealed by operation of law on the
      following day.

      2. Certificate of Compliance as to 3-22-2001 order, including amendment of
      subsection (d)(1), transmitted to OAL 7-20-2001 and filed 8-31-2001 
      (Register
      2001, No. 35).

      3. Amendment of first paragraph and subsections (a)-(e) and new 
      subsections 
      (f)-(i) filed 8-10-2005; operative 9-9-2005 (Register 2005, No. 32).

      4. Change without regulatory effect amending subsection (i) filed 
      12-14-2005
      pursuant to section 100, title 1, California Code of Regulations (Register
      2005, No. 50).
      28 CA ADC s 1300.75.4

      END OF DOCUMENT

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