Ala. Admin. Code r. 560-X-64-.06

Current through Register Vol. 43, No. 1, October 31, 2024

Section 560-X-64-.06 - Solvency And Financial Requirements For Integrated Care Networks

(1) The Integrated Care Network (ICN) as a condition to the risk contract between the Medicaid Agency and the ICN, shall maintain minimum capital, surplus, or any combination thereof, of one million dollars ($1,000,000), unless otherwise specified by the Medicaid Agency as provided in section (2).

(2) The Medicaid Agency may, in its sole discretion, add to, reduce, or otherwise alter, amend, adjust, or modify the minimum capital or surplus described in section (1) of this rule to account for the level of financial and/or other risk the ICN bears with regard to the populations to be served or the services to be provided by the ICN, or any other factor the Agency considers relevant to the financial solvency of the ICN.

(3) For purposes of section (1) of this rule, an ICN's capital and surplus is the difference between the admitted assets of the ICN and the liabilities of the ICN, determined as follows:

(a) The classification and value of the ICN's assets and liabilities shall be determined in accordance with Generally Accepted Accounting Principles (GAAP) and Generally Accepted Auditing Standards (GAAS), as modified by the provisions of this section (3).

(b) For purposes of this rule, "admitted assets" means only assets owned exclusively by the ICN consisting of:

1. Cash, including the true balance of deposits in solvent banks and trust companies;

2. Bonds, notes, warrants, debentures, and other evidences of indebtedness which are direct obligations of the United States of America for which the full faith and credit of the United States of America is pledged for the payment of principal and interest ("U.S. Treasury Securities");

3. Investment grade bonds or other evidences of indebtedness other than U.S. Treasury Securities, satisfying standards approved by the Medicaid Agency;

4. Marketable equity securities, satisfying standards approved by the Medicaid Agency;

5. Due or deferred Per Member Per Month (PMPM) payments pursuant to the risk contract between the ICN and the Medicaid Agency;

6. The acquisition cost of land and depreciated cost of improvements thereon owned by the ICN and used in connection with the performance of the risk contract, in excess of any liabilities secured by encumbrances on such assets, in an aggregate amount not greater than 50 percent of the required minimum capital and surplus of the ICN; and

7. Such other assets as may be approved by the Medicaid Agency.

(c) In addition to assets not described in subsection 3(b) of this rule, an ICN's admitted assets shall not include:

1. Any single investment or asset, or any combination of investments in or secured by the securities, obligations, and/or property of one person, entity, or governmental unit, to the extent any such investment or combination of investments would exceed 20 percent of the ICN's admitted assets, provided that the foregoing restriction shall not apply to U.S. Treasury Securities or cash; or

2. Goodwill and other intangible assets.

(d) In any determination of the capital and surplus of an ICN, liabilities to be charged against the ICN's admitted assets shall include, in addition to other liabilities chargeable in accordance with GAAP and GAAS:

1. The amount necessary to pay all of the ICN's unpaid losses and claims incurred on or prior to the date of the statement, together with the expenses of adjustment or settlement thereof;

2. Federal, state, and local taxes, expenses and other obligations due or accrued at the date of the statement; and

3. Any additional reserves for asset valuation contingencies or loss contingencies required by the Medicaid Agency.

(4) No ICN shall reduce its combined capital and surplus, by distribution of its assets to the members, owners, or risk-bearing participants of the ICN or otherwise, below the ICN's required capital and surplus under the rules of the Medicaid Agency.

Ala. Admin. Code r. 560-X-64-.06

Amended by Alabama Administrative Monthly Volume XXXV, Issue No. 09, June 30, 2017, eff. 7/24/2017.

Amended by Alabama Administrative Monthly Volume XXXVI, Issue No. 10, July 31, 2018, eff. 8/26/2018.

Author: Stephanie Lindsay, Administrator, Administrative Procedures Office

Statutory Authority:Code of Ala. 1975, §§ 22-6-220 et seq.