CHAPTER 13. PROTECTION AGAINST INSOLVENCY; DEPOSIT REQUIREMENTS
IC 27-13-13
Chapter 13. Protection Against Insolvency; Deposit Requirements
IC 27-13-13-1
Items deposited; minimum value
Sec. 1. Except as provided in this chapter, a health maintenanceorganization shall deposit with the commissioner or, at the discretionof the commissioner, with any bank or bank and trust company orother trustee acceptable to the commissioner through which acustodial or controlled account is used:
(1) cash;
(2) certificates of deposit;
(3) United States government obligations acceptable to thecommissioner;
(4) any other securities acceptable to the commissioner; or
(5) a combination of items described in subdivisions (1) through(4);
which at all times must have a value of at least five hundred thousanddollars ($500,000).
As added by P.L.26-1994, SEC.25.
IC 27-13-13-2
Deposit schedule
Sec. 2. A health maintenance organization that is in operation onJuly 1, 1994, shall make:
(1) a deposit with the commissioner equal to two hundred fiftythousand dollars ($250,000) on July 1, 1994; and
(2) an additional deposit with the commissioner equal to twohundred fifty thousand dollars ($250,000) by December 31,1995.
As added by P.L.26-1994, SEC.25.
IC 27-13-13-3
Deposits considered admitted asset
Sec. 3. Deposits made under this chapter shall be considered anadmitted asset of the health maintenance organization in thedetermination of the net worth of the organization.
As added by P.L.26-1994, SEC.25.
IC 27-13-13-4
Income from deposits; replacing deposits
Sec. 4. (a) All income from deposits made under this chapter is anasset of the organization that made the deposits.
(b) A health maintenance organization that has made a depositunder this chapter may replace the deposit or any part of the depositwith an equal amount and value of:
(1) cash;
(2) certificates of deposit;
(3) United States government obligations acceptable to thecommissioner; (4) any other securities acceptable to the commissioner; or
(5) any combination of subdivisions (1) through (4).
(c) Any obligations of the United States government must beapproved by the commissioner before being deposited or substitutedunder this chapter.
As added by P.L.26-1994, SEC.25.
IC 27-13-13-5
Use of deposit
Sec. 5. (a) A deposit made by a health maintenance organizationunder this chapter must be used:
(1) to protect the interest of the enrollees of the healthmaintenance organization; and
(2) to ensure continuation of health care services to enrollees ofthe health maintenance organization, if the health maintenanceorganization is in supervision, rehabilitation, or liquidation.
(b) The commissioner may use the deposit for administrative coststhat are attributable to a receivership of the health maintenanceorganization.
(c) If the health maintenance organization is placed inreceivership, the deposit made by the organization must be treated asan asset of the organization subject to IC 27-9.
As added by P.L.26-1994, SEC.25.
IC 27-13-13-6
Reduction or elimination of deposit requirements for foreigncorporations
Sec. 6. The commissioner may reduce or eliminate therequirement of a deposit under this chapter for a health maintenanceorganization that is a foreign corporation as defined in IC 27-1-2-3if:
(1) the organization makes a deposit that meets therequirements of section 1 of this chapter with the treasurer ofstate, insurance commissioner, or other official body of the stateor jurisdiction in which the organization is domiciled for theprotection of all subscribers and enrollees of the healthmaintenance organization; and
(2) the organization delivers to the commissioner a certificate,duly authenticated by the appropriate state official holding thedeposit, that the requirements of this section have been met.
As added by P.L.26-1994, SEC.25.
IC 27-13-13-7
Return of deposit
Sec. 7. If:
(1) a health maintenance organization ceases operation forreasons other than:
(A) insolvency; or
(B) receivership;
(2) the organization is not a debtor in any pending bankruptcy
proceeding;
(3) the health maintenance organization submits a request inwriting to the commissioner for the return of the deposit madeby the organization; and
(4) the health maintenance organization has furnished thecommissioner with written proof that all claims liabilities of thehealth maintenance organization have been paid;
the commissioner shall return all or a part of the deposit to the healthmaintenance organization not more than thirty (30) days after thecommissioner receives written proof from the organization undersubdivision (4).
As added by P.L.26-1994, SEC.25.
IC 27-13-13-8
Additional financial requirements
Sec. 8. (a) In addition to meeting all other financial requirementsimposed by IC 27-13-12 and this chapter, a health maintenanceorganization that offers a point of service product shall maintaineither of the following:
(1) A reinsurance agreement, which must be satisfactory to thecommissioner, that cedes one hundred percent (100%) of theliability for out-of-plan services.
(2) A ratio of the revenues of the health maintenanceorganization from the point of service product to the net worthof the organization of not more than three (3) to one (1).
(b) The reinsurance to which subsection (a)(1) refers may be usedto:
(1) directly make payments for out-of-plan services; or
(2) reinsure coverage for out-of-plan services.
(c) To achieve the ratio referred to in subsection (a)(2), a healthmaintenance organization may use reinsurance to cede part or all ofthe liability for out-of-plan services.
As added by P.L.26-1994, SEC.25.
IC 27-13-13-9
Deposit of cash or securities for noncovered health careexpenditures
Sec. 9. (a) As used in this section, "noncovered health careexpenditures" means the costs to a health maintenance organizationfor health care services:
(1) that are the obligation of the health maintenanceorganization;
(2) for which the enrollee may be liable in the event of thehealth maintenance organization's insolvency; and
(3) for which:
(A) no alternative arrangements have been made that areacceptable to the commissioner; or
(B) statutory deposits and net worth of the healthmaintenance organization are determined by thecommissioner to be inadequate. (b) If noncovered health care expenditures exceed ten percent(10%) of total health care expenditures, a health maintenanceorganization shall deposit cash or securities that are acceptable to thecommissioner with:
(1) the commissioner; or
(2) an organization or trustee approved by the commissionerthrough which a custodial or controlled account is maintained.
(c) The deposit made under subsection (b) must have a fair marketvalue:
(1) calculated on the first day of each month; and
(2) maintained for the remainder of the month;
of not less than one hundred twenty percent (120%) of the healthmaintenance organization's outstanding liability for noncoveredhealth care expenditures for enrollees in Indiana, including incurredbut not reported claims.
(d) The commissioner may require a health maintenanceorganization to file periodic reports, including reports on liability fornoncovered health care expenditures and audit opinions, that thecommissioner considers necessary to monitor compliance with thissection.
As added by P.L.203-2001, SEC.24.