Chapter Ins 57

Chapter Ins 57

CARE MANAGEMENT ORGANIZATIONS

Ins 57.01   Definitions.

Ins 57.04   Financial requirements.

Ins 57.05   Business plan.

Ins 57.06   Changes in the business plan.

Ins 57.07   Copies of provider agreements.

Ins 57.10   Acquisition of control of or merger with a care management organization.

Ins 57.12   Standards for transactions within a holding company system.

Ins 57.13   Privileged information.

Ins 57.20   Forms and Instructions.

Ins 57.22   Forms — incorporation by reference, summaries and omissions.

Ins 57.23   Transactions subject to prior notice — notice filing.

Ins 57.24   Dividends and other distributions.

Ins 57.25   Consent to jurisdiction.

Ins 57.26   General requirements related to filing and extensions for filing of annual audited financial reports.

Ins 57.30   Contents of annual audited financial report.

Ins 57.31   Designation of independent certified public accountant.

Ins 57.32   Qualifications of independent certified public accountants.

Ins 57.33   Scope of audit and report of independent certified public accountant.

Ins 57.35   Notification of adverse financial condition.

Ins 57.37   Accountant’s letter of qualifications.

Ins 57.38   Availability and maintenance of CPA work papers.

Ins 57.39   Conduct of care management organization in connection with the preparation of required reports and documents.

Ins 57.40   Care management organizations to file financial statements.

Ins 57.41   Exemptions and effective dates.

Ins 57.01 Ins 57.01 Definitions. In addition to the definitions in s. 648.01, Stats., in this chapter:

Ins 57.01(1) (1) “Affiliate” of, or person “affiliated” with, a specific person means a person that directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified.

Ins 57.01(2) (2) “Care management organization” or “CMO” means an entity defined at s. 648.01 (1), Stats.

Ins 57.01(3) (3) “Commissioner” means the commissioner of insurance of this state or the commissioner’s designee.

Ins 57.01(4) (4) “Department” means the department of health services of this state.

Ins 57.01(5) (5) “Independent certified public accountant” means an independent certified public accountant, or independent accounting firm, in good standing with the American Institute of Certified Public Accountants in this state, and in the states in which the accountant or firm is licensed, or required to be licensed, to practice.

Ins 57.01(6) (6) “Net assets” means assets minus liabilities.

Ins 57.01(7) (7) “Restricted reserve” means liquid assets maintained in a segregated account by a care management organization.

Ins 57.01(8) (8) “Subsidiary” of a person means a person which is controlled, directly or indirectly through one or more intermediaries, by the first person.

Ins 57.01(9) (9) “Ultimate controlling person” means a person who is not controlled by any other person.

Ins 57.01(10) (10) “Work papers” means records kept by the independent certified public accountant of the procedures followed, the tests performed, the information obtained, and the conclusions reached pertinent to the independent certified public accountant’s examination of the financial statements of a care management organization. “Work papers” includes audit planning documentation, audit guides, work programs, analyses, memoranda, letters of confirmation and representation, abstracts of company documents and schedules or commentaries prepared or obtained by the independent certified public accountant in the course of examination of the financial statements of a care management organization or which support the opinion of the independent certified public accountant regarding the financial statements.

Ins 57.01(11) (11) “Working capital” means a measure calculated as current assets minus current liabilities.

Ins 57.01 History History: EmR0927: emerg. cr. eff. 10-10-09; CR 09-093: cr. Register May 2010 No. 653, eff. 6-1-10.

Ins 57.04 Ins 57.04 Financial requirements. All of the following are the minimum financial requirements for compliance with this section unless a different amount is ordered by the commissioner, after consultation with the department:

Ins 57.04(1) (1) Working capital. Unless otherwise ordered by the commissioner the care management organization shall maintain working capital of not less than 3% of the projected annual capitation made over the effective contract period.

Ins 57.04(2) (2) Restricted reserve. Unless otherwise ordered by the commissioner the care management organization shall maintain a restricted reserve of not less than the sum of the following:

Ins 57.04(2)(a) (a) 8% of the first $5 million of annual budgeted capitation revenue.

Ins 57.04(2)(b) (b) 4% of the next $5 million annual budgeted capitation revenue.

Ins 57.04(2)(c) (c) 3% of the next $10 million annual budgeted capitation revenue.

Ins 57.04(2)(d) (d) 2% of the next $30 million annual budgeted capitation revenue.

Ins 57.04(2)(e) (e) 1% of annual budgeted capitation revenue in excess of $50 million.

Ins 57.04(3) (3) Accessing restricted reserve funds. A care management organization may not access the restricted reserve unless:

Ins 57.04(3)(a) (a) A plan for accessing the funds is filed with the commissioner at least 30 days prior to the proposed effective date; and

Ins 57.04(3)(b) (b) The commissioner, after consulting with the department, does not disapprove the plan in the 30 day timeframe.

Ins 57.04(4) (4) Risks. Risks and factors the commissioner may consider in determining whether to require greater restricted reserves by order include all of the following:

Ins 57.04(4)(a) (a) Types of contingencies. The commissioner shall consider the risks of:

Ins 57.04(4)(a)1. 1. Increases in the frequency or severity of losses beyond the levels contemplated by the capitation payments received;

Ins 57.04(4)(a)2. 2. Increases in expenses beyond those contemplated by the capitation payments received; and

Ins 57.04(4)(a)3. 3. Any other contingencies the commissioner can identify which may affect the care management organization’s operations.

Ins 57.04(4)(b) (b) Controlling factors. In making the determination under this subsection, the commissioner shall take into account the following factors:

Ins 57.04(4)(b)1. 1. The most reliable information available as to the magnitude of the various risks under par. (a);

Ins 57.04(4)(b)2. 2. The extent to which the risks in par. (a) are independent of each other or are related, and whether any dependency is direct or inverse;

Ins 57.04(4)(b)3. 3. The care management organization’s recent history of profits or losses;

Ins 57.04(4)(b)4. 4. The extent to which the care management organization has provided protection against the contingencies in ways other than the establishment of restricted reserves, including the use of conservative actuarial assumptions to provide a margin of security; and

Ins 57.04(4)(b)5. 5. Any other relevant factors.

Ins 57.04(5) (5) Corrective action plan. A care management organization that does not meet the requirements in sub. (1) or (2) shall file a corrective action plan with the commissioner. The corrective action plan shall include all of the following:

Ins 57.04(5)(a) (a) Identification of the conditions which contribute to the deficiency.

Ins 57.04(5)(b) (b) Proposals of corrective actions which the care management organization intends to take and would be expected to result in compliance with subs. (1) and (2).

Ins 57.04(5)(c) (c) Projections of the care management organization’s financial results in the current year and at least the first succeeding year.

Ins 57.04(5)(d) (d) Identification of the key assumptions impacting the care management organization’s projections and the sensitivity of the projections to the assumptions.

Ins 57.04(5)(e) (e) Such other information as is requested by the commissioner, after consultation with the department.

Ins 57.04 History History: EmR0927: emerg. cr. eff. 10-10-09; CR 09-093: cr. Register May 2010 No. 653, eff. 6-1-10.

Ins 57.05 Ins 57.05 Business plan. All applications for permits of a care management organization shall include a proposed business plan. In addition to the items listed in s. 648.05 (2), Stats., the following information shall be contained in the business plan: