Section 29-5303. FINANCIAL REQUIREMENTS - PREPAID, CAPITATED PROVIDERS

 

5303.1Each prepaid, capitated provider shall ensure through its contracts, subcontracts, and any other appropriate manner that neither enrollees nor the District are held liable for debts of the prepaid, capitated provider in the event of the prepaid, capitated provider’s insolvency.

 

5303.2Each start up prepaid, capitated provider shall deposit into an escrow account, established and held in trust in a financial institution in the District for the sole purpose of holding such deposits, a surety bond, cash, securities, letters of credit, or an acceptable combination of these in an amount that shall be the greater of the following:

 

(a)Five percent (5%) of its estimated expenditures for health care services rendered to Medicaid recipients in its first year of operation;

 

(b)Twice its estimated average monthly uncovered expenditures for services rendered to Medicaid recipients in its first year of operation; or

 

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

 

5303.3Each on-going prepaid, capitated provider shall deposit in an escrow account, established and held in trust in a financial institution in the District for the sole purpose of holding such deposits, a surety bond, cash, securities, letters of credit, or an acceptable combination of these in the following amounts:

 

(a)In the first year of operation, a deposit equal to the greater of a sum equal to one (1) month’s estimated expenditures or one -hundred thousand dollars ($100,000);

 

(b)In the second year of operation, a deposit equal to two percent (2%) of its estimated annual expenditures; and

 

(c)In the third and subsequent years of operation, a deposit equal to three percent (3%) of its annual expenditures for the year at issue.

 

5303.4For the purposes of §5303.3, the second and each subsequent year’s estimate shall be based on the prior year’s operating expenses and delivery arrangements.

 

5303.5The Department may require a prepaid, capitated provider to update its insolvency deposits on a quarterly basis if the organization is experiencing rapid growth and may order suspension of new Medicaid enrollments until the appropriate deposit is certified to the Department.

 

5303.6Except as specified in §5303.8, all income from deposits shall belong to the depositing organization and shall be paid to the depositing organization as the income becomes available.

 

5303.7Each provider agreement with a prepaid, capitated provider shall specifically delineate the procedures that will apply in the event of a default.

 

5303.8If a prepaid, capitated provider defaults, the Department may use the deposit to recover any capitation payments issued to the organization and to cover the cost of care for AFDC and AFDC -related Medicaid recipients enrolled in the prepaid, capitated provider’s plan until the AFDC and AFDC -related Medicaid recipients are assigned to another prepaid, capitated provider.

 

5303.9All funds held in escrow shall be invested only in securities or other investments permitted by District laws that govern the investment of assets that constitute the legal reserves of life insurance.

 

5303.10Unless otherwise provided in this chapter, each prepaid, capitated provider with a risk comprehensive or other risk contract shall obtain, at its own expense, reinsurance in the form of individual stop loss protection.

 

5303.11Any director, officer, employee, or partner of a prepaid, capitated provider who receives, collects, disburses, or invests funds in connection with the activities of the organization shall be responsible for the funds as a fiduciary of the prepaid, capitated provider.

 

5303.12Each prepaid, capitated provider shall maintain in force a fidelity bond in an amount not less than one-hundred thousand dollars ($100,000) per person for each officer and employee who has a fiduciary responsibility or duty to the organization.

 

5303.13Each prepaid, capitated provider shall provide and maintain liability and malpractice insurance, as applicable, in an amount sufficient to cover all claims that may arise out of the organization’s operations under the terms of the Medicaid provider agreement and shall provide proof of insurance coverage to the Department upon application to provide managed care services to AFDC and AFDC -related Medicaid recipients. If any carrier of liability or malpractice insurance cancels a prepaid, capitated provider’s insurance, the prepaid, capitated provider shall send written notice of the cancellation to the Department within 24 hours of the insurer’s notice to the provider of its intent to cancel.

 

5303.14Each prepaid, capitated provider shall maintain unemployment compensation coverage and workers’ compensation insurance in accordance with applicable federal and District or State laws and regulations. If any carrier of unemployment or worker’s compensation insurance cancels the provider’s insurance, the prepaid, capitated provider shall send written notice of the cancellation to the Department within 24 hours of the insurer’s notice to the provider of its intent to cancel.

 

5303.15If a prepaid, capitated provider’s liability, malpractice, worker’s compensation or unemployment compensation insurance is canceled or lapses, the organization shall cease to provide any services to AFDC and AFDC-related Medicaid recipients until the insurance is reinstated or comparable insurance is purchased. The Department shall not pay any prepaid, capitated provider for any services provided to an AFDC or AFDC -related Medicaid recipient while the organization operates without insurance. If the Department does make a payment for services rendered while the prepaid, capitated provider operated without insurance, the organization shall reimburse the Department for the payments. The Department may adjust any future payments to the managed care provider or its successors to recover any payments made while the prepaid, capitated provider operated without insurance. The Department may also use the prepaid, capitated provider’s deposit to obtain coverage for AFDC or AFDC-related recipients while the prepaid, capitated provider is operating without the required insurance.

 

5303.16Prepaid, capitated providers operated by the District government are exempt from the financial and insurance requirements in this section.

 

source

Final Rulemaking published at 42 DCR 1566, 1568 (March 31, 1995).