{"data":{"id":"us-ky/krs-304.17a-310","jurisdiction":"us-ky","citation":"KRS 304.17A-310","heading":"Financial solvency requirements for network.","body":"To qualify as a provider -sponsored integrated health delivery network, the network shall\nmeet the following financial solvency requirements:\n(1) Maintenance of a fidelity bond or fidelity insurance in an amount not less than two\nhundred fifty thousand dollars ($250,000) on employees and officers, directors, and\npartners who receive, collect, disburse, or invest funds of the provider -sponsored\nnetwork;\n(2) (a) The provider-sponsored network shall have an initial net worth requirement of\none million five hund red thousand dollars ($1,500,000) and shall thereafter\nmaintain the minimum net worth required under paragraph (b) of this\nsubsection.\n(b) Every provider-sponsored network shall maintain a minimum net worth equal\nto the greater of:\n1. One million dollars ($1,000,000);\n2. Two percent (2%) of annual premium revenues as reported on the most\nrecent annual financial statement filed with the commissioner on the\nfirst one hundred fifty million dollars ($150,000,000) of premiums and\none percent (1%) of annual premi ums on the premiums in excess of one\nhundred fifty million dollars ($150,000,000);\n3. An amount equal to the sum of three (3) months' uncovered health care\nexpenditures as reported on the most recent financial statement filed\nwith the commissioner of insurance; or\n4. An amount equal to the sum of eight percent (8%) of annual health care\nexpenditures except those paid on a capitated basis or managed hospital\npayment basis and four percent (4%) of annual hospital expenditures\npaid on a managed hospital payment basis as reported on the most recent\nfinancial statement filed with the commissioner.\n(c) In determining net worth, no debt shall be considered fully subordinated\nunless the subordination clause is in a form acceptable to the commissioner.\nAny interest o bligation relating to the repayment of any subordinated debt\nshall be similarly subordinated.\n1. The interest expenses relating to the repayment of any fully subordinated\ndebt shall be considered covered expenses.\n2. Any debt incurred by a note meeting the requirements of this section,\nand otherwise acceptable to the commissioner, shall not be considered a\nliability and shall be recorded as equity.\n(3) (a) Unless otherwise provided below, each provider -sponsored network shall\ndeposit with the commissioner or, at the discretion of the commissioner, with\nany organization or trustee acceptable to the commissioner through which a\ncustodial or controlled account is utilized, cash, securities, or any combination\nof these or other measures that are acceptable to the commissioner which at all\ntimes shall have a value of not less than three hundred thousand dollars\n($300,000).\n(b) The deposit shall be an admitted asset of the provider -sponsored network in\nthe determination of net worth.\n(c) All income from deposits shall be an asset of the provider -sponsored network.\nA provider -sponsored network that has made a securities deposit may\nwithdraw that deposit or any part thereof after making a substitute deposit of\ncash, securities, or any combination of these or other measures of equal\namount and value. Any securities shall be approved by the commissioner\nbefore being deposited or substituted.\n(d) The deposit shall be used to protect the interests of the provider -sponsored\nnetwork's enr ollees and to assure continuation of health care services to\nenrollees of a provider -sponsored network which is in rehabilitation or\nconservation. The commissioner may use the deposit for administrative costs\ndirectly attributable to a receivership or liqu idation. If the provider-sponsored\nnetwork is placed in receivership or liquidation, the deposit shall be an asset\nsubject to the provisions of Subtitle 33 of this chapter.\n(4) Every provider-sponsored network shall, when determining liabilities, include a n\namount estimated in the aggregate to provide for any unearned premium and for the\npayment of all claims for health care expenditures which have been incurred,\nwhether reported or unreported, which are unpaid and for which the provider -\nsponsored network is or may be liable, and to provide for the expense of adjustment\nor settlement of such claims.\n(5) (a) Every contract between a provider -sponsored network and a participating\nprovider of health care services shall be in writing and shall set forth that in\nthe event the provider -sponsored network fails to pay for health care services\nas set forth in the contract, the enrollee shall not be liable to the provider for\nany sums owed by the provider-sponsored network.\n(b) If the participating provider contract ha s not been reduced to writing as\nrequired by this subsection or if the contract fails to contain the required\nprohibition, the participating provider shall not collect or attempt to collect\nfrom the enrollee sums owed by the provider-sponsored network.\n(6) Each provider-sponsored network shall have a plan for handling insolvency which\nguarantees the continuation of benefits for the duration of the contract period for\nwhich premiums have been paid and continuation of benefits to members who are\nconfined on t he date of insolvency in an inpatient facility until their discharge or\nexpiration of benefits.\n(7) If at any time uncovered expenditures exceed ten percent (10%) of total health care\nexpenditures, a provider -sponsored network shall place an uncovered expe nditures\ninsolvency deposit with the commissioner or with any organization or trustee\nacceptable to the commissioner through which a custodial or controlled account is\nmaintained, in cash or securities that are acceptable to the commissioner. This\ndeposit shall at all times have a fair market value in an amount of one hundred\ntwenty percent (120%) of the provider -sponsored network's outstanding liability for\nuncovered expenditures for enrollees, including incurred but not reported claims,\nand shall be calcu lated as of the first day of the month and maintained for the\nremainder of the month. The provider -sponsored network shall file a report within\nforty-five (45) days of the end of the calendar quarter with information sufficient to\ndemonstrate compliance wi th this subsection. The provisions of subsection (6) of\nthis section shall apply to the deposit required in this subsection.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=17412","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:57:47Z","sha256":"86f4a56f9c1b618009dea6bce6d7145749c692b382ef667d3f85aa6643c35a67","source_id":"us-ky","stale":false,"prev":"us-ky/krs-304.17a-300","next":"us-ky/krs-304.17a-320"},"notice":"GroundRules: Original legal text. Not legal advice."}