Section 149.06 - Form and Content of Annual Comprehensive Financial StatementThe Annual Comprehensive Financial Statement shall provide a detailed report on a form approved by the Commissioner of the costs incurred by the Carrier as of December 31st of the most recent calendar year.
(1) The Annual Comprehensive Financial Statement shall be itemized, where applicable, by: (a) Market group size, including: 2. Small groups of one to five, six to ten, 11 to 25 and 26 to 50; and3. Large groups of 51 to 100, 101 to 500, 501 to 1000 and greater than 1000.(b) Lines of business, including: 1. Individual, general, blanket or group policies of health, accident or sickness insurance issued by an insurer licensed under M.G.L. c. 175;2. Hospital service plans issued by a nonprofit hospital service corporation under M.G.L. c. 176A;3. Medical service plans issued by a nonprofit hospital service corporation under M.G.L. c. 176B; 4. Health maintenance contracts issued by a health maintenance organization under M.G.L. c. 176G; 5. Insured health benefit plans that include a preferred provider arrangement issued under M.G.L. c. 176I;6. Group health insurance plans issued by the commission under M.G.L. c. 32A; 7. Insured health benefit plans available to commercial accounts, including: b. point-of-service network plans; and c. open or any-willing-provider network plans;8. Insured health benefit plans available only to students at post-secondary institutions; 9. Insured health benefit plans available only to eligible young adults; and 10. Insured health benefit plans available only through government programs, including: a. Medicare Advantage plans under 42 U.S.C. 1395w-28(b)(1); b. other Medicare plans under 42 U.S.C. § 1395 et seq .; c. Commonwealth Care Program plans under M.G.L. c. 118H; andd. MassHealth (Medicaid) Program plans under Title XIX of the Social Security Act and M.G.L. c. 118E et seq .(c) The company will provide a detailed description of any method of allocation employed to attribute expenses that are not directly assigned to a group size or line of business, and the expenses, group sizes, and lines of business to which the allocation is applied.(2) The Annual Comprehensive Financial Statement shall also include the following information: (a)Enrollment Information. 1. Number of distinct employment-based groups covered on December 31st ; 2. Number of subscriber members covered; including: a. Number of subscriber members covered on December 31 st ; b. Number of subscriber member months covered in prior calendar year; and c. Average number of subscriber members for prior calendar year. 3. Number of total subscriber and dependent lives covered, including: a. Number of total subscriber and dependent covered lives on December 31st ; b. Number of total subscriber and dependent covered life months covered in calendar year; and c. Average number of subscriber and dependent covered lives in calendar year. (b)Income Statement Information. 1. Premiums, including earned premiums (Premium earned during the calendar year) and net earned premiums (Direct premiums earned plus premium assumed and less reinsurance ceded). 2. Incurred claims, including direct claims paid during the calendar year on services rendered during the calendar year, unpaid claims reserves on service rendered or claims incurred during the calendar year, changes in contract reserves, the claims-related portion of reserves for contingent benefits and lawsuits, and experience rating refunds paid or received and reserves for experience rating refunds with negative adjustment for healthcare receivables and for reinsurance recoverables. 3. Medical Loss Ratio (MLR), as defined in accordance with 211 CMR 147.00. 4. Investment Gains and Losses: a. Investment income, including that part of a Carrier's income that stems from the interest and dividends earned on the stocks and bonds it owns or the return on any other invested funds; and b. Net Realized capital gains and losses, including the difference between the amount received from the sale or disposal of an asset and its carrying value. 5. Financial administration expenses, including all costs associated with underwriting, auditing, actuarial, financial analysis, investment-related expenses (not included elsewhere), treasury, reinsurance and outside benefit consultants.6.Marketing and Sales Expenses: a. Billing and member enrollment, including all costs associated with group and individual billing, member enrollment, premium collection and reconciliation functions;b. Customer services and member relations, including all costs associated with individual, group or provider support relating to membership, enrollment, grievance resolution, specialized phone services and equipment, consumer services and consumer information;c. Product management, marketing and sales, including all costs associated with the management and marketing of current products, including product promotion and advertising, marketing materials, changes or additions to current products, sales, pricing and enrollee education regarding coverage prior to the sale; andd. Product Development, including all costs associated with product design and development for new products not currently offered, major systems development associated with the new products and integrated system network development.7. Distribution expenses, including all costs associated with the distribution and sale of products, including commissions, insurance producer and benefit consultant fees, intermediary fees, commission processing and account reporting to insurance producers.8. Claims operations expenses, including all costs associated with claims adjudication and adjustment of claims, appeals, claims settlement, coordination of benefits processing, maintenance of the claims system, printing of claims forms, claim audit function, electronic data interchange expenses associated with claims processing and fraud investigation. 9.Medical Administration Expenses: a. Quality assurance and cost containment, including all costs associated with health and disease management and wellness initiatives (other than for education), health care quality assurance, appeals, case management, network access fees, fraud detection and prevention, utilization review, practice protocol development, peer review, outcomes analysis related to existing products, nurse triage, medical management and other medical care evaluation activities;b. Wellness and health education, including all costs associated with wellness and health promotion, disease prevention, member education and materials, provide education and outreach services; and c. Medical research, including all costs associated with outcomes research, medical research programs and development of new medical management programs not currently offered, major systems development and integrated system network development.10. Network operational expenses, including all costs associated with provider contracting negotiation and preparation, monitoring of provider compliance, field training with providers, provider communication materials and bulletins, administration of provider capitation and settlements, medical policy procedures, hospital and physician relations, medical policy procedures, network access fees, and credentialing. 11. Charitable expenses, including all costs associated with contributions to tax exempt foundations, charities, not related to the company business enterprises and community benefits. 12.Taxes, Assessments and Fines Paid to Federal, State or Local Government: a. Taxes (premium, real estate, other non-payroll) paid, including all costs associated with state premium taxes, state and local insurance taxes, federal taxes, except taxes on capital gains, state income tax, state sales tax and other sales taxes not included with the cost of goods purchased; b. Assessments, fees and other amounts paid to government agencies, including all assessments, fees or other amounts paid to state or local government and does not include any taxes or fines or penalties paid to any government agency; and c. Fines and penalties paid to government agencies, including all costs associated with penalties and fines paid to government agencies. 13.General Administration: a. Payroll administration expenses and payroll taxes, including all costs associated with salaries, benefits and payroll taxes (not allocated elsewhere);b. Real estate expenses, including all costs associated with company building and other taxes and expenses of owned real estate, excluding home office employee expenses and rent (not allocated elsewhere) and insurance on real estate;c. Regulatory compliance and government relations, including all costs associated with Federal and State reporting, rate filing, state and federal audits, tax accounting, lobbying, licensing and filing fees, preparation and filing of financial, utilization, statistical and quality reports and administration of government programs;d. Board, bureau or association fees, including all board of directors, bureau and association fees paid or expensed during the calendar year;e. Other administration, including all cost associated with information technology, senior management, outsourcing (not allocated elsewhere), insurance except on real estate, equipment rental, travel (not allocated elsewhere), certification and accreditation fees, legal fees and expenses before administrative and legal bodies, and other general administrative expenses;f. Reimbursement from uninsured plans, representing a negative adjustment that would include all revenue receipts from uninsured plans (including excess pharmaceutical rebates and administrative fees net of expenses) and reimbursements from fiscal intermediaries (including administrative fees net of expenses from the government); andg. Number of employees on the Carrier's payroll on December 31st of the preceding year, including the number of full-time employees whose normal work week is 30 or more hours, but not including any employee who works on a part-time, temporary or substitute basis. 14. Detailed miscellaneous expenses, including, but not limited to, all collection and bank service charges, printing and office supplies not allocated elsewhere, postage and telephone not allocated elsewhere. 15.Capital Expenses and Depreciation: a. Depreciation, including all costs associated with depreciation for electronic data processing, equipment, software, and occupancy;b. Capital acquisitions, including all expenditures for the acquisition of capital assets, including lease payments that were paid or incurred during the calendar year;c. Capital costs on behalf of a hospital or clinic, including all expenditures for capital and lease payments incurred or paid during the calendar year on behalf of a hospital or clinic (or part of a partnership, joint venture, integration or affiliation agreement); andd. Other capital costs, including expenditures for other costs that are directly associated with the incurring of capital costs, such as legal or administrative costs, incurred or paid during the calendar year.16. Net income, which equals direct premiums earned less direct claims incurred less expenses plus investment gains and losses.(c)Balance Sheet. 1. Accumulated surplus, including common stock, preferred stock, gross paid in and contributed surplus, surplus notes, unassigned funds and other capital or surplus items.2. Accumulated reserves, including all reserves, including claim reserves, premium reserves and contract reserves.3. Risk based capital ratio, as derived in accordance with 211 CMR 25.00.(d) Any other information requested by the Commissioner.(3) If a Carrier is unable to provide any of the required information set forth in 211 CMR 149.06 in its Annual Comprehensive Financial Statement, the Carrier shall provide a detailed explanation, within the Annual Comprehensive Financial Statement, of the reason(s) that such required information is not available.(4) A Carrier that fails to submit its Annual Comprehensive Financial Statement to the Division on or before April 1st of each year shall be assessed a late penalty by the Commissioner not to exceed $100.00 per day.