Site Map > About DMHC > Organization > SB 260 Regulations Summary
- Welcome
-
Welcome
Californians are fortunate to have the strongest patients' rights laws in the nation. The DMHC is here to make sure these laws are followed and that all health plan members get the right care at the right time. Find out how in this section.
- Organization
- Laws
- General Information
- In the News
SB 260 Regulations Summary
On September 9, 2005,
SB 260 regulations for data collection, disclosure language,
grading/reviewing and corrective action for risk-bearing organizations
became effective. The regulations essentially address the following:
- Provider reporting of specified organizational and financial
information to the Department of Managed Health Care;
Click here for a list of RBOs
and their assigned DMHC identification numbers.
The SB 260 regulations require RBOs to provide certain organizational
and financial information to the Department as follows:
- On a quarterly basis (within 45 days of the end of each quarter,
beginning on or after July 1, 2005) a financial survey report in an
electronic format to be supplied by the Department containing all of
the following:
For organizations serving at least 10,000 covered lives under
all risk arrangements as of December 31 of the preceding calendar
year:
- Financial survey report (including a balance sheet,
an income statement, and a statement of cash flows) prepared
in accordance with generally accepted accounting principles
(GAAP);
- A statement as to (i) what percentage of completed
claims the organization has timely reimbursed, contested,
or denied during the quarter; (ii) whether or not the
organization has estimated and documented, on a monthly
basis, its liability for incurred but not reported claims;
(iii) whether or not the organization has at all times
during the quarter maintained positive tangible net equity
and positive working capital; (iv) whether or not the
organization has, at all times during the quarter,
maintained a cash-to-claims ratio.
For organizations serving less than 10,000 covered lives under
all risk arrangements as of December 31 of the preceding calendar
year:
- A statement as to (i) what percentage of completed claims
the organization has timely reimbursed, contested, or denied
during the quarter; (ii) whether or not the organization has
estimated and documented, on a monthly basis, its liability for
incurred but not reported claims; (iii) whether or not the
organization has at all times during the quarter maintained
positive tangible net equity and positive working capital;
(iv) whether or not the organization has, at all times during
the quarter, maintained a cash-to-claims ratio.
Regardless of the number of covered lives served under all risk
arrangements:
- On an annual basis (within 150 days of the close of the
provider organization's fiscal year beginning on or after
January 1, 2005 and not more than 150 days after the close of
each of the organization's subsequent fiscal years) an annual
financial survey report in an electronic format supplied by the
Department containing all of the following:
- A financial survey report, based upon the provider's
annual audited financial statements, (including at least a
balance sheet, income statement, statement of cash flows and
footnote disclosures) prepared in accordance with GAAP;
- Financial survey report on a combined basis with an affiliate
if the organization or such affiliate is legally or financially
responsible for the payment of the organization's claims;
- A statement as to (i) whether or not the organization
has estimated and documented its liability for incurred but
not reported claims; (ii) whether or not the organization has
at all times during the year maintained positive tangible net
equity and positive working capital; (iii) whether or not the
organization has at all times during the year maintained a
cash-to-claims ratio; (iv) the organization maintains
reinsurance and/or professional stop-loss coverage;
(v) copy of the complete annual audited financial statement,
including footnotes and the certificate or opinion of the
independent certified public accountant.
A "Statement of Organization Survey" which details various
characteristics of the organization including, but not limited to
its name and address, contact information, list of health plans with
which the organization maintains risk arrangements; organizational
structure; number of enrollees, basic geographic area served, and
number of physicians.
Risk-Bearing Organizations - Financial Reporting Results
Understanding the Summary Information
The Quarterly Survey results for the period October 1, 2005 to
December 31, 2005 represent the second quarter that Risk Bearing Organizations
('RBOs') were required to submit financial data to the Department of
Managed Health Care ('Department') under the revised SB 260 regulations.
The financial disclosures are all self-reported information.
RBOs are compensated on a preset monthly amount of money for each health
plan member for whom they have agreed to provide health care services, rather
than the amount of health care services the organizations actually provide.
This type of compensation arrangement is known as capitation. Capitation
arrangements, as well as other factors, may result in a single Quarterly
Financial Survey submission that does not necessarily reflect the overall
long-term viability of an RBO. Quarterly submissions reflect a snap shot
of the RBO at the end of the reporting period. These submissions are not
necessarily designed to equalize or average seasonal fluctuations in
patient services or expenses.
When the Annual Audited Financial Statements are submitted to the
Department, a more complete picture of each RBO's overall financial
viability should emerge. In addition, as additional quarterly filings are
reported, RBO's compliance with the financial solvency criteria can be
trended to provide better insight into the organization's long-term
financial viability. To assist consumers in understanding the significance
of the quarterly survey results for the period October 1, 2005 to December
31, 2005, the Department has prepared some aggregated compliance information.
The quarterly survey results are not intended to suggest that an RBO that
fails to meet all of the solvency criteria is necessarily on the verge of
bankruptcy or likely to cease providing their patients with health care services. Consumers should consider these results as a starting
point for understanding the financial viability of medical providers who
have entered into risk arrangements with health plans to provide health
care services for members of managed care programs.
RBOs reporting deficiencies in any of the four grading criteria (five
grading criteria, effective 1/1/06) are required to implement, with the
agreement of their contracting health plans and the approval of the Department,
a "Corrective Action Plan" ('CAP') to remedy these deficiencies so that the
organization is compliant with SB 260. The Department and the contracting
health plans will monitor the progress of RBOs in meeting the terms and
representations contained in their Corrective Action Plans.
Map and County Breakdown
View the seven regions for financial and comparative purposes:
Map and County Breakdown
Individual Risk-Bearing Organization Results
The chart lists the RBO (provider identification number, name, region,
county and reporting period) and whether the RBO has 'met' or 'not met'
the four grading criteria (maintained positive working capital at all times;
maintained positive TNE at all times; calculated and documented IBNR; and
reimbursed, contested or denied at least 95 percent of its claims within
45 working days). In addition, the Relative Working Capital and TNE ratios
are calculated (by the Department) for each RBO.
Financial Surveys Received for the following periods:
The RBOs that serve less than 10,000 covered lives under all risk
arrangements as of December 31 of the preceding calendar year are required
to file disclosure statements indicating if they have met or not met the
Grading Criteria (listed above). Based on the information submitted,
the Department can require the RBO to file Quarterly Survey Reports
for additional information about the RBOs financial status.
The chart below contains the self-reported information from the disclosure
statements ('Compliance Statements') received for RBOs with less than
10,000 lives. It summarizes whether the RBO has 'met' or 'not met' the
Grading Criteria and if the RBO was provided written notice to file
Quarterly Survey Reports to the Department.
Compliance Statements Received for the following periods:
The chart lists RBOs that have not filed either a Compliance Statement or
a Quarterly Survey.
List of Non-Filing RBO's for the following periods:
Summary of Comparative Aggregated Data
The information below allows consumers to assess summarized information
on a statewide and region
basis.
Summary of Comparative Aggregated Data for the following periods:
Plan Reporting to Department
On August 31, 2001, the Department of Managed Health Care's proposed
regulations implementing the first phase of SB 260 (Speier-1999) became
effective. The regulations require plans to provide certain information
to the Department related to the risk a plan has assigned to its
provider network, including the following:
- On a quarterly basis (within 45 days of the end of each calendar
quarter, beginning with the first quarter of 2001), the name and
address of each risk-bearing organization a plan contracts with,
plus the number of enrollees assigned to the organization.
- On an annual basis (within 45 days of the end of the first
calendar quarter), a matrix which details, for each of the plan's
provider organizations, the risk arrangement between the plan and
provider by major expense category (i.e., primary care, radiology,
pharmacy, etc.).
Plan Reporting to Providers
The regulations require that plans provide the following information
to risk-bearing organizations (RBOs) in their network:
- On a monthly basis (within 10 days of the beginning of each
month):
- Specified information regarding each enrollee assigned to
the provider, including, name, birth date, plan contract
selected, enrollment/disenrollment dates, etc.; and
- Names and total numbers of enrollees added or terminated
during the month.
- On a quarterly basis (within 45 days of the end of each quarter),
a description of amounts allocated to the plan and the provider
under each risk
- Disclose, as part of the contract, specified information
regarding the
- A matrix of responsibility for medical expenses;
- Projected utilization rates and unit costs for major
expense service groups (i.e., inpatient, outpatient,
primary care, etc.)
- Factors used to adjust payments, including age, sex
and geographic area.
- Additional disclosures, including:
- Specified information related to fee schedules used to determine
payment under risk-pool arrangements; and
- Monthly capitation payment amounts, plus details regarding any
deductions made from those capitation payments.
