HLS 14RS-1549 ENGROSSED
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CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
Regular Session, 2014
HOUSE BILL NO. 1057
BY REPRESENTATIVE THIERRY
INSURANCE/HEALTH: Provides relative to risk-based capital for health organizations
AN ACT1
To amend and reenact the heading of Subpart D of Part III of Chapter 2 of Title 22 of the2
Louisiana Revised Statutes of 1950, R.S. 22:631(introductory paragraph), (4), and3
(6)(c) and (d) and 634(A)(1), relative to risk-based capital for health organizations;4
to define "health organization"; to amend certain formulas to determine risk-based5
capital; to define a "company-action level event"; and to provide for related matters.6
Be it enacted by the Legislature of Louisiana:7
Section 1. The heading of Subpart D of Part III of Chapter 2 of Title 22 of the8
Louisiana Revised Statutes of 1950 and R.S. 22:631(introductory paragraph), (4), and (6)(c)9
and (d) and 634(A)(1) are hereby amended and reenacted to read as follows: 10
SUBPART D. RISK-BASED CAPITAL FOR HEALTH 11
MAINTENANCE ORGANIZATIONS12
§631. Definitions13
As used in this Subpart, these terms shall have the following meanings:14
* * *15
(4) "Health organization" means a health maintenance organization licensed16
under Subpart I of Part I of this Chapter., a limited health service organization which17
bears risk, dental or vision plan which bears risk, hospital, medical and dental18
indemnity or service corporation which bears risk, provider sponsored organization19
which bears risk, or other risk bearing managed care organization licensed under this20 HLS 14RS-1549 ENGROSSED
HB NO. 1057
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Title. "Health organization" shall not include an organization that is licensed as1
either a life, health and accident, or property and casualty insurer under this Title and2
that is otherwise subject to either the life or property and casualty risk-based capital3
requirements.4
* * *5
(6) "Risk-based capital level" means a health organization's company-action6
level risk-based capital, regulatory-action level risk-based capital, authorized-control7
level risk-based capital, or mandatory-control level risk-based capital where:8
* * *9
(c) "Authorized-control level risk-based capital" means the product of one10
and one quarter and the number determined under the risk-based capital formula in11
accordance with the risk-based capital instructions.12
(d) "Mandatory-control level risk-based capital" means the product of13
ninety-five seventy hundredths and the number determined under the risk-based14
capital formula in accordance with the risk-based capital instructions.15
* * *16
§634. Company-action level event17
A. A "company-action level event" means any of the following:18
(1) The filing of a risk-based capital report by a health organization that19
indicates that the health organization's total adjusted capital is greater than or equal20
to its regulatory action level risk-based capital but less than its company-action level21
risk-based capital. If a health organization has total adjusted capital which is greater22
than or equal to its company-action level risk-based capital but less than the product23
of its authorized-control level risk-based capital and three, and triggers the trend test24
determined in accordance with the trend test calculation included in the health25
risk-based capital instructions.26
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HB NO. 1057
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CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Thierry HB No. 1057
Abstract: Defines health organizations, changes the formula for determining risk-based
capital for health organizations, and clarifies what constitutes a company-action level
event.
Present law provides for regulation of health maintenance organizations.
Proposed law deletes "maintenance" from the title of the Subpart and provides an expanded
definition of health organizations subject to regulation.
Present law provides that "authorized-control level risk-based capital" means the product of
1.25 and the number determined under the risk-based capital formula in accordance with the
risk-based capital instructions.
Proposed law changes present law to provide that "authorized-control level risk-based
capital" means the number determined under the risk-based capital formula in accordance
with the risk-based capital instructions.
Present law provides that "mandatory-control level risk-based capital" is the product of
ninety-five hundredths (.95) and the number determined under the risk-based capital formula
in accordance with the risk-based capital instructions.
Proposed law changes present law to require the use of seventy hundredths (.70) in the
formula to determine mandatory-control risk-based capital.
Present law provides that one instance of "company-action level event" means the filing of
a risk-based capital report by a health organization that indicates that the health
organization's total adjusted capital is greater than or equal to its regulatory action level risk-
based capital but less than its company-action level risk-based capital.
Proposed law clarifies that a "company-action level event" means if a health organization
has total adjusted capital which is greater than or equal to its company-action level risk-
based capital but less than the product of its authorized-control level risk-based capital and
three, and triggers the trend test determined in accordance with the trend test calculation
included in the health risk-based capital instructions.
Proposed law clarifies that the risk-based capital requirements are for health organizations
that bear risk.
(Amends the heading of Subpart D of Part III of Chapter 2 of Title 22 of the La. Revised
Statutes of 1950 and R.S. 22:631(intro. para.), (4), and (6)(c) and (d) and 634(A)(1))
Summary of Amendments Adopted by House
Committee Amendments Proposed by House Committee on Insurance to the original
bill.
1. Clarified that the risk-based capital requirements are for health organizations that
bear risk.