376.973. Administering insurer at close of fiscal year to make accounting and assessment--how calculated--excess to be held at interest for future losses or to reduce premiums--future losses, defined.
Administering insurer at close of fiscal year to make accountingand assessment--how calculated--excess to be held at interest forfuture losses or to reduce premiums--future losses, defined.
376.973. 1. Following the close of each fiscal year, thepool administrator shall determine the net premiums (premiumsless administrative expense allowances), the pool expenses ofadministration and the incurred losses for the year, taking intoaccount investment income and other appropriate gains and losses.Health insurance premiums and benefits paid by an insurancearrangement that are less than an amount determined by the boardto justify the cost of collection shall not be considered forpurposes of determining assessments. The total cost of pooloperation shall be the amount by which all program expenses,including pool expenses of administration, incurred losses forthe year, and other appropriate losses exceeds all programrevenues, including net premiums, investment income, and otherappropriate gains.
2. Each insurer's assessment shall be determined bymultiplying the total cost of pool operation by a fraction, thenumerator of which equals that insurer's premium and subscribercontract charges for health insurance written in the state duringthe preceding calendar year and the denominator of which equalsthe total of all premiums, subscriber contract charges written inthe state and one hundred ten percent of all claims paid byinsurance arrangements in the state during the preceding calendaryear; provided, however, that the assessment for each healthmaintenance organization shall be determined through theapplication of an equitable formula based upon the value ofservices provided in the preceding calendar year.
3. Each insurance arrangement's assessment shall bedetermined by multiplying the total cost of pool operationcalculated under subsection 1 of this section by a fraction, thenumerator of which equals one hundred ten percent of the benefitspaid by that insurance arrangement on behalf of insureds in thisstate during the preceding calendar year and the denominator ofwhich equals the total of all premiums, subscriber contractcharges and one hundred ten percent of all benefits paid byinsurance arrangements made on behalf of insureds in this stateduring the preceding calendar year. Insurance arrangements shallreport to the board claims payments made in this state on anannual basis on a form prescribed by the director.
4. If assessments exceed actual losses and administrativeexpenses of the pool, the excess shall be held at interest andused by the board to offset future losses or to reduce poolpremiums. As used in this subsection, "future losses" includereserves for incurred but not paid claims.
(L. 1990 H.B. 998 § 5 subsecs. 1 to 4)Effective 1-1-91