CA Health & Safety Code Section 1375.1

(a)

Every plan shall have and shall demonstrate to the director that it has all of the following:

(1)

A fiscally sound operation and adequate provision against the risk of insolvency.

(2)

Assumed full financial risk on a prospective basis for the provision of covered health care services, except that a plan may obtain insurance or make other arrangements for the cost of providing to any subscriber or enrollee covered health care services, the aggregate value of which exceeds five thousand dollars ($5,000) in any year, for the cost of covered health care services provided to its members other than through the plan because medical necessity required their provision before they could be secured through the plan, and for not more than 90 percent of the amount by which its costs for any of its fiscal years exceed 115 percent of its income for that fiscal year.

(3)

A procedure for prompt payment or denial of provider and subscriber or enrollee claims, including those telehealth services, as defined in subdivision (a) of Section 2290.5 of the Business and Professions Code, covered by the plan. Except as provided in Section 1371, a procedure meeting the requirements of Subchapter G of the regulations (29 C.F.R. Part 2560) under Public Law 93-406 (88 Stats. 829-1035, 29 U.S.C. Secs. 1001 et seq.) shall satisfy this requirement.

(b)

In determining whether the conditions of this section have been met, the director shall consider, but not be limited to, the following:

(1)

The financial soundness of the plan’s arrangements for health care services and the schedule of rates and charges used by the plan.

(2)

The adequacy of working capital.

(3)

Agreements with providers for the provision of health care services.

(c)

For the purposes of this section, “covered health care services” means health care services provided under all plan contracts.