Shared Risk Reinsurance

Health Net shared-risk reinsurance limits the participating physician group's (PPG's) responsibility under the shared-risk program to a negotiated limit for shared-risk services and out-of-area emergency services. Unless otherwise provided in the PPG's Provider Participation Agreement (PPA), the terms of the shared-risk reinsurance program are described below.

Shared-risk PPGs are required to purchase reinsurance from Health Net. The cost of shared-risk reinsurance is deducted from the PPG's shared-risk budget. However, if permitted under the PPG's PPA, the PPG may elect to purchase reinsurance from a third party. It must provide Health Net with a copy of the declaration page from the reinsurance policy on an annual basis. Self-insurance or stated reserves for Incurred But Not Reported (IBNR) is not reinsurance.

Out-of-Area Urgent and Emergency Services

Out-of-area urgent and emergency (collectively, emergency) services are covered under the shared-risk reinsurance program. Health Net processes and pays treating provider claims for hospital and professional emergency services provided more than 30 air miles from the member's primary care physician's (PCP's) office or outside the PPG's service area as defined in the PPG's PPA. Ambulance charges for transporting the member are also included in costs eligible for shared-risk reinsurance.

When a member gives birth (including cesarean section) outside the member's PPG's service area, professional and institutional charges are treated as arising from an out-of-area emergency and are eligible for shared-risk reinsurance. The member's PPG must arrange for or authorize any follow up care in order for the delivery and follow up care to be eligible for shared-risk reinsurance.

The costs of treating providers' claims for non-emergency treatment outside a 30 air mile radius from the member's PCP's office, or outside the PPG's service area as defined in the PPG's PPA, are excluded from the shared-risk reinsurance program and are the responsibility of the member unless authorized by the PPG. Refer to the Out-of-Area Emergency Services topic in the PPA for additional information.

Shared-Risk Claims from Treating Providers

The PPG must forward shared-risk claims received from providers of service or members to the Medicare Advantage Claims Department, HMO Claims Department for processing within 10 business days following the receipt of the claims.

All shared-risk claim payments are made directly to the provider of the service, unless it is indicated that the member has already made payment. Incomplete claims are returned to the provider of service. Out-of-area claims payments in conjunction with a non-participating hospital are paid to the member, unless there is an assignment of benefits. Health Net pays claims included in the shared-risk reinsurance program throughout the year.

Settlement of Reinsurance

The monthly Shared-Risk Report sent to PPGs shows claims over the attachment point included as the PPG's shared-risk costs for shared-risk services. At the end of each year, these claims are removed from the shared-risk cost account. Out-of-area emergency claims do not appear on the monthly Shared-Risk Services Report.

Health Net settles costs associated with payments it makes to treating providers under the shared-risk reinsurance program, which exceed the attachment point for a calendar year at the same time Health Net makes the shared-risk settlement. At that time, Health Net identifies costs attributable to members' claims that have exceeded the attachment point and issues a report. Adjustments are made to the PPG's shared-risk budget based on this report.