Oregon Bulletin
January 1, 2011
Rule
Caption: Changes to Risk Based Capital
Trend Test for Health Care Service Contractors.
Adm.
Order No.: ID 21-2010
Filed with Sec. of
State: 12-15-2010
Certified to be
Effective: 12-15-10
Notice Publication
Date: 11-1-2010
Rules Amended: 836-011-0515
Subject: This rule amends Oregon’s risk based capital reporting
requirements for health care service contractors to add a recent change to the
National Association of Insurance Commissioners (NAIC) Risk-Based Capital (RBC)
for Health Organizations Model Act #315. The rule allows a company action level
event to be triggered if the risk based capital ratio of a health care service
contractor falls between 200% and 300% and has a combined ratio (underwriting
deductions /total revenue) above 105%. This provides an additional tool for
determining whether a company is maintaining adequate capital and surplus to
meet statutory requirements and policyholder obligations.
Rules Coordinator: Sue Munson—(503) 947-7272
836-011-0515
Company Action Level Event
(1) “Company Action Level Event” means any of the
following events:
(a)(A) The filing of an RBC report by a health care
service contractor that indicates that the health care service contractor’s
total adjusted capital is greater than or equal to its Regulatory Action Level
RBC but less than its Company Action Level RBC; or
(B) If a health care service contractor has total
adjusted capital that is greater than or equal to its Company Action Level RBC
but less than the product of its Authorized Control Level RBC and 3.0 and
triggers the trend test determined in accordance with the trend test
calculation included in the Health RBC instructions;
(b) Notification by the Director to the health care
service contractor of an adjusted RBC report that indicates an event in
subsection (a) of this subsection, if the health care service contractor does
not challenge the adjusted RBC report under OAR 836-011-0535; or
(c) If, pursuant to OAR 836-011-0535, a health care
service contractor challenges an adjusted RBC report that indicates the event
in subsection (a) of this section, the notification by the Director to the
health care service contractor that the Director has, after a hearing, rejected
the health care service contractor’s challenge.
(2) In the event of a Company Action Level Event, the
health care service contractor shall prepare and submit to the Director an RBC
plan that shall:
(a) Identify the conditions that contribute to the
Company Action Level Event;
(b) Contain proposals of corrective actions that the
health care service contractor intends to take and that would be expected to
result in the elimination of the Company Action Level Event;
(c) Provide projections of the health care service
contractor’s financial results in the current year and at least the two
succeeding years, both in the absence of proposed corrective actions and giving
effect to the proposed corrective actions, including projections of statutory
balance sheets, operating income, net income, capital and surplus, and RBC
levels. The projections for both new and renewal business might include
separate projections for each major line of business and separately identify
each significant income, expense and benefit component;
(d) Identify the key assumptions impacting the health
care service contractor’s projections and the sensitivity of the projections to
the assumptions; and
(e) Identify the quality of, and problems associated
with, the health care service contractor’s business, including but not limited
to its assets, anticipated business growth and associated surplus strain,
extraordinary exposure to risk, mix of business and use of reinsurance, if any,
in each case.
(3) The RBC plan shall be submitted
(a) Within 45 days of the Company Action Level Event;
or
(b) If the health care service contractor challenges an
adjusted RBC report pursuant to OAR 836-011-0535, within 45 days after
notification to the health care service contractor that the Director has, after
a hearing, rejected the health care service contractor’s challenge.
(4) Within 60 days after the submission by a health
care service contractor of an RBC plan to the Director, the Director shall
notify the health care service contractor whether the RBC plan shall be
implemented or is, in the judgment of the Director, unsatisfactory. If the
Director determines the RBC plan is unsatisfactory, the notification to the
health care service contractor shall set forth the reasons for the
determination and may set forth proposed revisions that will render the RBC
plan satisfactory, in the judgment of the Director. Upon notification from the
Director, the health care service contractor shall prepare a revised RBC plan,
which may incorporate by reference any revisions proposed by the Director, and
shall submit the revised RBC plan to the Director:
(a) Within 45 days after the notification from the
Director; or
(b) If the health care service contractor challenges
the notification from the Director under OAR 836-011-0535, within 45 days after
a notification to the health care service contractor that the Director has,
after a hearing, rejected the health care service contractor’s challenge.
(5) In the event of a notification by the Director to a
health care service contractor that the health care service contractor’s RBC
plan or revised RBC plan is unsatisfactory, the Director may at the Director’s
discretion, subject to the health care service contractor’s right to a hearing
under OAR 836-011-0535, specify in the notification that the notification
constitutes a Regulatory Action Level Event.
(6) Every domestic health care service contractor that
files an RBC plan or revised RBC plan with the Director shall file a copy of
the RBC plan or revised RBC plan with the insurance commissioner in any state
in which the health care service contractor is authorized to do business if:
(a) The state has an RBC provision substantially
similar to ORS 731.752; and
(b) The insurance commissioner of that state has
notified the health care service contractor of its request for the filing in
writing, in which case the health care service contractor shall file a copy of
the RBC plan or revised RBC plan in that state no later than the later of:
(A) Fifteen days after the receipt of notice to file a
copy of its RBC plan or revised RBC plan with the state; or
(B) The date on which the RBC plan or revised RBC plan
is filed under sections (3) and (4) of this rule.
Stat. Auth.: ORS 731.244 &
750.045
Stats. Implemented: ORS 731.574,
733.210 & 750.045
Hist.: ID 22-2002, f. & cert.
ef. 11-27-02; ID 21-2010, f. & cert. ef. 12-15-10
Notes
1.) This online version of the OREGON BULLETIN is provided for convenience of reference and enhanced access. The official, record copy of this publication is contained in the original Administrative Orders and Rulemaking Notices filed with the Secretary of State, Archives Division. Discrepancies, if any, are satisfied in favor of the original versions. Use the OAR Revision Cumulative Index found in the Oregon Bulletin to access a numerical list of rulemaking actions after November 15, 2010.
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