Forms and Instructions.
Forms — incorporation by reference, summaries and omissions.
Transactions subject to prior notice — notice filing.
Dividends and other distributions.
Consent to jurisdiction.
General requirements related to filing and extensions for filing of annual audited financial reports.
Contents of annual audited financial report.
Designation of independent certified public accountant.
Qualifications of independent certified public accountants.
Scope of audit and report of independent certified public accountant.
Notification of adverse financial condition.
Accountant's letter of qualifications.
Availability and maintenance of CPA work papers.
Conduct of care management organization in connection with the preparation of required reports and documents.
Care management organizations to file financial statements.
Exemptions and effective dates.
Ins 57.01 Definitions.
In addition to the definitions in s. 648.01
, Stats., in this chapter:
“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.
“Commissioner" means the commissioner of insurance of this state or the commissioner's designee.
“Department" means the department of health services of this state.
“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.
“Net assets" means assets minus liabilities.
“Restricted reserve" means liquid assets maintained in a segregated account by a care management organization.
“Subsidiary" of a person means a person which is controlled, directly or indirectly through one or more intermediaries, by the first person.
“Ultimate controlling person" means a person who is not controlled by any other person.
“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.
“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:
(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.
(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:
8% of the first $5 million of annual budgeted capitation revenue.
4% of the next $5 million annual budgeted capitation revenue.
3% of the next $10 million annual budgeted capitation revenue.
2% of the next $30 million annual budgeted capitation revenue.
1% of annual budgeted capitation revenue in excess of $50 million.
(3) Accessing restricted reserve funds.
A care management organization may not access the restricted reserve unless:
A plan for accessing the funds is filed with the commissioner at least 30 days prior to the proposed effective date; and
The commissioner, after consulting with the department, does not disapprove the plan in the 30 day timeframe.
Risks and factors the commissioner may consider in determining whether to require greater restricted reserves by order include all of the following:
Types of contingencies.
The commissioner shall consider the risks of:
Increases in the frequency or severity of losses beyond the levels contemplated by the capitation payments received;
Increases in expenses beyond those contemplated by the capitation payments received; and
Any other contingencies the commissioner can identify which may affect the care management organization's operations.
In making the determination under this subsection, the commissioner shall take into account the following factors:
The most reliable information available as to the magnitude of the various risks under par. (a)
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;
The care management organization's recent history of profits or losses;
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
(5) Corrective action plan.
A care management organization that does not meet the requirements in sub. (1)
shall file a corrective action plan with the commissioner. The corrective action plan shall include all of the following:
Identification of the conditions which contribute to the deficiency.
Proposals of corrective actions which the care management organization intends to take and would be expected to result in compliance with subs. (1)
Projections of the care management organization's financial results in the current year and at least the first succeeding year.
Identification of the key assumptions impacting the care management organization's projections and the sensitivity of the projections to the assumptions.
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:
(1) Organizational information.
All care management organization business plans shall include:
A narrative that discusses the business environment, the strategies and tactics that will be employed to manage the business including a plan to utilize mandated care principles and targets associated with that plan, and other areas of focus, stress, change, efficiency or any other information that supports or affects the financial projections.
A description of the general business model to be employed by the care management organization.
A brief organizational history, providing and describing major milestones in the development of the care management organization including organizational strengths and deficits, as they relate to the ongoing delivery of the Family Care program.
A description of the care management organization's governance structure, including organizing documents (e.g., articles, by-laws, mission statement, etc.), and an organizational chart that clearly demonstrates reporting lines and domains of management authority, with names of current incumbents for management positions.
Information for all persons or entities who are in direct control of the care management organization, including the names, addresses and occupations of all controlling persons, directors and principal officers of the care management organization currently and for the preceding 10 years. The care management organization information shall also include the position held and target group representation, if applicable, for each member of the board of directors.
(2) Geographical service area.
The geographical service area by county including a chart showing the number of providers with locations and service areas by county. A description and the method of handling out–of–area services shall also be included.
A description of the target populations being served by the care management organization, in what proportions these target groups are currently being served, what the long range expectations of the care management organization are in serving each target group (i.e., anticipated program growth), and how historical trends or projections are similar to, or different, from program averages.
(4) Provider agreements.
The extent to which any of the following are included in provider agreements and the form of any provisions that do any of the following:
Permit or require the provider to assume a financial risk in the care management organization, including any provisions for assessing the provider, adjusting capitation or fee–for–service rates, or sharing in the earnings or losses.
Govern amending or terminating agreements with providers.
(5) Provider availability.
A description of the care management organization's general plan for delivering care management services to its members. Differences in the delivery of this service across target groups or counties shall be described. Changes in the delivery of care management over time, either completed or anticipated shall be described.
(6) Plan administration.
A summary of how administrative services are provided, including the size and qualifications of the administrative staff and the projected cost of administration in relation to capitation income. If administrative services are to be provided by a person outside the organization, the business plan shall include a copy of the contract. The contract shall include all of the following:
Any provisions for modifying, terminating or renewing the contract.
(7) Financial projections.
A summary of all of the following:
Expenses associated with providing services to enrollees. A budget narrative that accompanies any projections related to care management utilization shall be provided. The narrative will identify assumed staff-to-member ratios, by type of staff; historical trends and projections regarding care management utilization; explanations regarding any major changes; and unit cost trends for each time period and target group.
The estimated break even point if a loss is being projected.
A summary of the assumptions made in developing projected operating results.
(8) Strengths, Weaknesses, Opportunities and Threats analysis.
An analysis of the CMO's strengths, weaknesses, opportunities and threats, a description of the major challenges the CMO faces, both internal and external to the organization, in providing services to each target group, and the strategies it is employing, or plans to employ, to address those challenges.
(9) Financial guarantees.
A summary of all financial guarantees by providers, sponsors, affiliates or parents within a holding company system, or any other guarantees which are intended to ensure the financial success of the care management organization. These include hold harmless agreements by providers, stop loss insurance, or other guarantees.