D.C. Mun. Regs. tit. 22, r. 22-B5502

Current through Register Vol. 71, No. 49, December 6, 2024

Rule 22-B5502 - FINANCIAL REQUIREMENTS

5502.1

The QO shall assure through its contracts, subcontracts, and any other appropriate manner that neither enrollees or the Department are held liable for debts of the QO in the event of its insolvency.

5502.2

The QO shall deposit into an escrow account, cash, securities, letters of credit or an acceptable combination of these in one (1) of the amounts set forth in §§ 5502.3 and 5502.4.

5502.3

The amount held in escrow for a start-up organization shall be the greater of the following:

(a) Five percent (5%) of its estimated expenditures for health care services for its first year of operation;

(b) Twice its estimated average monthly uncovered expenditures for its first year of operation; or

(c) One-hundred thousand dollars ($100,000).

5502.4

An on-going organization shall deposit the following amounts:

(a) An initial deposit equal to the larger of one percent (1%) of the preceding twelve (12) months uncovered expenditures or one-hundred thousand dollars ($100,000);

(b) In the second contract year, the amount of the additional deposit shall be equal to two percent (2%) of its estimated annual uncovered expenditures;

(c) In the third contract year, the additional deposit shall be equal to three percent (3%) of its estimated annual uncovered expenditures for that year; and

(d) In the fourth and subsequent contract years, the additional deposit shall be equal to four percent (4%) of its estimated annual uncovered expenditures for each year.

5502.5

For the purposes of § 5502.4, each year's estimate, after the first year of operation shall reasonably reflect the prior year's operating experience and delivery arrangements.

5502.6

The deposit requirement shall not apply if any one (1) of the following situations exist:

(a) When an organization has achieved a net worth not including land, buildings and equipment of at least one million dollars ($1,000,000) or has achieved a net worth including land, buildings, and equipment of at least five million dollars ($5,000,000);

(b) If the total amount of the accumulated deposit is equal to twenty-five percent (25%) of the organization's estimated annual uncovered expenditures for the next calendar year; or

(c) If the organization has a guaranteeing organization which meets the requirement of paragraph (a) of this subsection.

5502.7

The Department may require a QO to update its insolvency deposits on a quarterly basis if the QO is experiencing rapid growth, and may order suspension of new Medicaid enrollment until the appropriate deposit is certified to the Department.

5502.8

All income from deposits shall belong to the depositing organization and shall be paid to the depositing organization as the income becomes available.

5502.9

All funds of QOs shall be invested only in securities or other investments permitted by the laws of the District for the investment of assets constituting the legal reserves of life insurance companies.

5502.10

Unless otherwise provided in this chapter, reinsurance in the form of individual stop loss protection shall be mandatory and shall be provided by the Department if the QO requests it.

5502.11

The reinsurance protection offered by the Department shall provide eighty percent (80%) coverage of hospital bills (not including physician fees) incurred on behalf of an individual enrollee in a twelve (12) month period (while a recipient is enrolled in a QO and Medicaid eligible) which collectively exceed fifteen thousand dollars ($15,000), calculated in terms of Medicaid reimbursement policy and adjusted, if necessary, from a per discharge to a per diem rate.

5502.12

A QO may elect not to accept the Department's reinsurance and have its capitation payment increased by the actuarial value of the reinsurance under any of the following conditions:

(a) The QO is a federally qualified HMO;

(b) The QO has more than forty thousand (40,000) prepaid members;

(c) The QO has more than one million dollars ($1,000,000) in reserves; or

(d) The QO has purchased equivalent reinsurance from a private carrier.

5502.13

Any director, officer, employee or partner of a QO who receives, collects, disburses, or invests funds in connection with the activities of the QO shall be responsible for the funds in a fiduciary relationship to the organization.

5502.14

The QO shall maintain in force a fidelity bond on officers and employees with a fiduciary responsibility in an amount not less than one-hundred thousand dollars ($100,000) per person.

D.C. Mun. Regs. tit. 22, r. 22-B5502

Final Rulemaking published at 34 DCR 1550, 1552 (March 6, 1987)