| (a) An HCC must maintain working capital composed of
current assets with a ratio of current assets to current liabilities
of 1.25:1, based on the greater of the prior year's actual liabilities
or the projected liabilities for the subsequent year, subject to the
following requirements, as applicable:
(1) an HCC consisting of physicians and one or more
facilities must maintain unencumbered net equity of not less than
$200,000; and
(2) an HCC must base its ratio of assets to liabilities
on the projected liabilities for the subsequent year if the HCC has
not been certified for more than one year.
(b) An HCC must have reserves sufficient to operate
and maintain the HCC and to arrange for services and expenses it incurs.
An HCC must maintain financial reserves computed in accord with Generally
Accepted Accounting Principles in an amount not less than 100 percent
of incurred but not paid claims of nonparticipating physicians and
providers.
(c) Any HMO or insurer certified by the department
that forms an HCC pursuant to Insurance Code §848.001(2)(C)(iii)
and (iv) or enters into a contract with an HCC pursuant to Insurance
Code §848.103 must maintain a reserve that is:
(1) equivalent in value to three months of prepaid
funding or capitation payments;
(2) phased in over a no-more-than 36-month period;
(3) maintained separately from and in addition to all
other reserves and liabilities of the HMO or insurer;
(4) unencumbered and dedicated to assure its availability
for its intended purpose; and
(5) reported in the aggregate separately from all other
reserves and liabilities of the HMO or insurer.
(d) For the purpose of meeting the minimum working
capital requirements of this section, current assets of an HCC are
limited to U.S. currency, certificates of deposit with fixed terms
of one year or less, money market accounts, accounts receivable from
government payors, and other accounts receivable that have remained
due 90 days or less. Accounts receivable must be reported net of all
allowances. Assets with a maturity period or fixed term that is greater
than one year are not current assets for purposes of this section.
(e) For the purpose of meeting the minimum reserve
and minimum net equity requirements of this section, investments in
capital assets, mortgages, notes, and loan-backed securities must
be excluded from the calculation of reserves and net equity in determining
satisfaction of minimum requirements.
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