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VETOES
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S.B. 707
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(2) IF A MANAGED CARE ORGANIZATION DOES NOT REPORT MEDICAL
ADMINISTRATION EXPENSES ON A HEALTHCHOICE FINANCIAL MONITORING
REPORT, THE MANAGED CARE ORGANIZATION SHALL REPORT ALL MEDICAL
ADMINISTRATION EXPENSES TO THE SECRETARY ON THE FORM REQUIRED BY THE
SECRETARY.
(C) PRIOR TO IMPOSING AN ADJUSTMENT TO THE CAPITATION PAYMENT TO A
MANAGED CARE ORGANIZATION UNDER THIS SECTION, THE SECRETARY SHALL;
(1) CONSULT WITH THE COMMISSIONER;
(2) SUBMIT TO THE COMMISSIONER THE CALCULATION OF THE
MEDICAL LOSS RATIO THAT IS THE BASIS FOR THE ADJUSTMENT IN ORDER FOR THE
COMMISSIONER TO VERIFY THE CALCULATION; AND
(3) OBTAIN FROM THE COMMISSIONER A DETERMINATION THAT THE
IMPOSITION OF AN ADJUSTMENT WOULD NOT IMPAIR THE FINANCIAL CONDITION
OF THE MANAGED CARE ORGANIZATION.
(D) A CAPITATION ADJUSTMENT UNDER THIS SECTION MAY NOT EXCEED:
(1) IN THE FIRST YEAR IN WHICH AN ADJUSTMENT IS MADE, THE
LESSER OF:
(I) 50% OF THE DIFFERENCE BETWEEN THE CAPITATION PAID TO
THE MANAGED CARE ORGANIZATION AND THE CAPITATION THAT WOULD HAVE
RESULTED IN AN 80% MEDICAL LOSS RATIO; OR
(II) 25% OF THE NET INCOME OF THE MANAGED CARE
ORGANIZATION FOR THE YEAR FOR WHICH THE MEDICAL LOSS RATIO WAS
CALCULATED;
(2) IN THE SECOND YEAR IN WHICH AN ADJUSTMENT IS MADE, THE
LESSER OF:
(I) 75% OF THE DIFFERENCE BETWEEN THE CAPITATION PAID TO
THE MANAGED CARE ORGANIZATION AND THE CAPITATION THAT WOULD HAVE
RESULTED IN AN 80% MEDICAL LOSS RATIO; OR
(II) 35% OF THE NET INCOME OF THE MANAGED CARE
ORGANIZATION FOR THE YEAR FOR WHICH THE MEDICAL LOSS RATIO WAS
CALCULATED; AND
(3) IN ANY SUBSEQUENT YEAR IN WHICH AN ADJUSTMENT IS MADE, 50%
OF THE AVERAGE NET INCOME OF THE MANAGED CARE ORGANIZATION FOR THE
YEAR FOR WHICH THE MEDICAL LOSS RATIO WAS CALCULATED.
(E) IN EXERCISING DISCRETION TO MAKE A CAPITATION ADJUSTMENT
UNDER THIS SECTION, THE SECRETARY MAY NOT MAKE AN ADJUSTMENT UNLESS
THE SECRETARY DETERMINES THAT THE OBJECTIVES OF THE HEALTHCHOICE
PROGRAM WOULD BE ADVANCED BY THE ADJUSTMENT.
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- 3784 -
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