28 CA ADC § 1300.76
28 CCR s 1300.76
Cal. Admin. Code tit. 28, s 1300.76
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 1300.76. Plan Tangible Net Equity Requirement.
(a) Except as provided in subsection (b) or (c), each plan licensed
pursuant to the provisions of the Act shall, at al times, have and
maintain a tangible net equity at least equal to the greater of:
(1) $1 million; or
(2) the sum of two percent of the first $150 million of annualized premium
revenues plus one percent of annualized premium revenues in excess of $150
million; or
(3) an amount equal to the sum of:
(A) eight percent of the first $150 million of annualized health care
expenditures except those paid on a capitated basis or managed hospital
payment basis; plus
(B) four percent of the annualized health care expenditures, except those
paid on a capitated basis or managed hospital payment basis, which are in
excess of $150 million; plus
(C) four percent of annualized hospital expenditures paid on a managed
hospital payment basis.
(b) Except as provided in subsection(c), each plan licensed pursuant to
the provisions of the Act and which only offers specialized health care
service contracts shall, at all times, have and maintain a tangible net
equity at least equal to the greater of:
(1) $50,000; or
(2) the sum of two percent of the first $7,500,000 of annualized premium
revenues plus one percent of annualized premium revenues in excess of
$7,500,000; or
(3) an amount equal to the sum of:
(A) eight percent of the first $7,500,000 of annualized health care
expenditures, except those paid on a capitated or managed hospital payment
basis; plus
(B) four percent of the annualized health care expenditures, except those
paid on a capitated basis or managed hospital payment basis, which are in
excess of $7,500,000; plus
(C) four percent of annualized hospital expenditures paid on a managed
hospital payment basis.
(c) Each plan licensed pursuant to the provisions of the Act prior to the
effective date of this section must maintain a minimum tangible net equity
of:
(1) 20 percent of the amount required by subsection (a) or (b), as
applicable within 6 months of the effective date of this section.
(2) 36 percent of the amount required by subsection (a) or (b), as
applicable within 12 months of the effective date of this section.
(3) 52 percent of the amount required by subsection (a) or (b), as
applicable within 18 months of the effective date of this subsection.
(4) 68 percent of the amount required in subsection (a) or (b), as
applicable within 24 months of the effective date of this section.
(5) 84 percent of the amount required in subsection (a) or (b), as
applicable within 30 months of the effective date of this section.
(6) 100 percent of the amount required in subsection (a) or (b), as
applicable within 36 months of the effective date of this section.
(d) The Director may extend the time periods noted in subsection (c) if
the Director determines that such extension is in the best interests of
the plan and its enrollees and if it will not cause the plan to operated
in a manner that may be hazardous to its enrollees.
(e) For the purpose of this section "net equity" means the excess of total
assets over total liabilities, excluding liabilities which have been
subordinated in a manner acceptable to the Director. "Tangible net equity"
means net equity reduced by the value assigned to intangible assets
including, but not limited to, goodwill; going concern value;
organizational expense; starting-up costs; obligations of officers,
directors, owners, or affiliates which are not fully secured, except
short-term obligations of affiliates for goods or services arising in the
normal course of business which are payable on the same terms as
equivalent transactions with nonaffiliates and which are not past due;
long term prepayments of deferred charges, and nonreturnable deposits. An
obligation is fully secured for the purposes of this subsection if it is
secured by tangible collateral, other than by securities of the plan or an
affiliate, with an equity of at least 110 percent of the amount owing.
(f) For the purpose of this section, "capitated basis" means fixed per
member per month payment or percentage of premium payment wherein the
provider assumes the full risk for the cost of contracted services without
regard to the type, value or frequency of services provided. For purposes
of this definition, capitated basis includes the cost associated with
operating staff model facilities.
(g) For the purpose of this section, "managed hospital payment basis"
means agreements wherein the financial risk is primarily related to the
degree of utilization rather than to the cost of services.
Note: Authority cited: Section 1344, Health and Safety Code. Reference:
Section 1376, Health and Safety Code.
HISTORY
1. Amendment of subsections (b) and (c) filed 4-27-79; effective thirtieth
day
thereafter (Register 79, No. 17).
2. Amendment of subsection (a), new subsections (b), (c),(d), (f) and (g),
renumbering of former subsection (b) and repealer of former subsection (c)
filed 12-14-90; operative 12-31-91 (Register 91, No. 6).
3. Editorial correction of printing error (Register 91, No. 17).
4. Change without regulatory effect amending subsections (d)-(e) filed
7-18-
2000 pursuant to section 100, title 1, California Code of Regulations
(Register 2000, No. 29).
28 CA ADC s 1300.76
END OF DOCUMENT
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