(b) The average relative cost factor is determined for each carrier participating in a pool, with respect to its participation in each pool separately, as follows:

1. (1) Assign the relative cost factor, according to Table 7 of this section, to each individual covered by a particular carrier under all pooled insurance contracts for policies in force on the date as of which the average relative cost factor is being calculated (the calculation date), which is the beginning of each six-month period starting January 1, 1999. The term individual shall mean each and every person covered under the subscriber contract or policy form including, but not limited to, a spouse, dependent children or other persons covered as a result of their relationship to the person to whom the subscriber contract or policy form was issued or the employee or other person issued a certificate of coverage by virtue of their membership within a group which has purchased coverage. If the carrier does not maintain records of the exact number of spouses, children and other persons covered under family coverage contracts then the carrier shall assume there are 2.3 persons covered in addition to the one employee, subscriber or policyholder. In such cases, data filed with the pool administrator must be accompanied by an attestation of either the carrier's chief financial officer or chief actuary that the carrier is unable to report accurate data concerning dependents.
2. (2) Each such individual who has had an eligible claim paid in the six-month period immediately preceding the calculation date for an ICD9 code listed on Table 7 of this section should be assigned the relative cost factor corresponding to the ICD9 code. Each individual will be assigned only one relative cost factor. If an individual has multiple conditions, assign the relative cost factor for the condition with the largest factor for the conditions pertaining to the individual. If an individual has had no claims paid for any of the ICD9 codes listed in Table 7, the relative cost factor for individuals without specified medical conditions should be assigned. For the claim(s) to be considered eligible the individual must have either had an overnight inpatient hospital stay or, for certain conditions, had total paid claims for the condition which together with paid claims for all other conditions exceed $5,000 in the six-month period. The certain conditions are AIDS/HIV, Asthma, Diabetes, Gaucher's Disease, Hemophilia, Lupus or Multiple sclerosis. These conditions are marked with an asterisk in Table 7.
3. (3) Determine the carrier's average relative cost factor by taking the sum of the relative cost factors for all individuals covered by the carrier and dividing that sum by the total number of individuals covered by the particular carrier under all pooled insurance contracts or policies in force as of the calculation date.

(c) The regional average relative cost factor for all carriers combined is determined for each pool based upon the average relative cost factors of all carriers participating in that pool weighted by their total annualized premiums as of the calculation date. Annualized premium means one of the following, as appropriate for a particular policy or contract:

1. (1) The average relative cost factor for each carrier participating in a pool shall be determined as of the beginning of each six-month period, starting January 1, 1999. This is the calculation date. The regional average relative cost factor for each pool shall also be determined as of the beginning of a six-month period, starting January 1, 1999. The claims data to be used for the January 1st calculation date shall be the claims data for the six-month period ending on the December 31st prior to the January 1st calculation date. The claims data to be used for the July 1st calculation date shall be the claims data for the six-month period ending on the June 30th prior to the July calculation date.

2. (2) If the average relative cost factor of a carrier participating in a specified medical condition pool, determined as of the beginning of a six-month period starting on or after January 1, 1999, is less than the regional average relative cost factor for that pool as of the beginning of that six-month period, the carrier shall pay to the specified medical condition pooling fund a percentage of its premium earned for pooled insurance during that period. For example, the determination of average relative cost factors as of January 1, 1999 based on the claims data for the six-month period ending December 31, 1998 and membership data as of January 1, 1999 affects payments to the specified medical condition pooling fund attributable to the period January 1, 1999 through June 30, 1999. The premiums to be used to determine the payments to the specified medical condition pooling fund are the premiums for the current six-month period (e.g., the premiums to be used for payments to the pool for the January 1, 1999 through June 30, 1999 period are the earned premiums for the six-month period ending June 30, 1999). The percentage of premium earned during a particular six-month period to be paid to the specified medical condition pooling fund is calculated as the product of subparagraphs (i), (ii) and (iii) of this paragraph.

   1. (i) 100;
   2. (ii) 1.0 minus the ratio of the carriers average relative cost factor divided by the regional average relative cost factor; and
   3. (iii) the ratio of claims projected to be incurred during the six-month period commencing at the calculation date under its pooled insurance to the premiums projected to be earned during that period for pooled insurance, without consideration of this additional percentage (i.e., the projected insured loss ration, exclusive of specified medical condition pooling).
3. (3) Payment to the specified medical condition pooling fund, in accordance with paragraph (2) of this subdivision, shall be due the first day of the second month after the end of each six-month period. However, the payment dates preceding the effective date of this section will be due as provided in subdivision (i) of this section. Payment made after the due date shall include the amount calculated in accordance with paragraph (2) of this subdivision, plus interest at the rate of one percent per month, or portion thereof, beyond the date the payment was due.

4. (4) Individual carrier's payments to the specified medical condition pooling fund for calender years 1999, 2000, 2001, and 2002 shall be limited to five percent of the carrier's incurred losses on its pooled business in each respective year.

   (e) Initial collections from the pools.

5. (1) In August of 1999 and every six months thereafter, a carrier participating in a specified medical condition pool shall be entitled to collect from a specified medical condition pooling fund if its average relative cost factor for that pool at the beginning of the preceding six-month period (i.e., January 1, 1999 calculation date and every six months thereafter) is greater than the regional average relative cost factor for that pool as of that date. However, collection dates preceding the effective date of this section shall be postponed as provided in subdivision (i) of this section.

6. (2) Subject to the limitation in paragraph (3) of this subdivision, a carrier who is entitled to collect from a specified medical condition pooling fund may collect the product of subparagraphs (i), (ii) and (iii) of this paragraph:

   1. (i) the premiums earned under its pooled insurance during the six-month period commencing on the calculation date of the average relative cost factor;
   2. (ii) the ratio of the carrier's average relative cost factor for that pool at the calculation date to the regional average relative cost factor for that pool as of the calculation date minus 1.0; and
   3. (iii) the ratio of claims projected to be incurred during the six-month period commencing at the calculation date under its pooled insurance to the premiums projected to be earned during that period for pooled insurance, without consideration of this additional percentage (i.e., the projected incurred loss ration, exclusive of specified medical condition pooling).
7. (3) If the amount of money in the specified medical condition pooling fund is not sufficient to pay all carriers the amounts they are entitled to collect in accordance with this paragraph, the amounts they are entitled to collect are reduced proportionately to match the fund.

(d) Initial payments to the pools.

(f) Each carrier shall transmit every six months to the pool administrator, in forms and formats designated by the superintendent, the following data, within the following timeframes, for all pooled insurance policies within each region:

1. (1) the average relative cost factor computed in accordance with subdivision (b) of this section, as of the first day of the following six-month period (e.g., July 1, 1999);
2. (2) the annualized premium as of the first day of the following six-month period (e.g., July 1, 1999);
3. (3) premium earned during the six-month period, (e.g., January 1, 1999 to June 30, 1999) identifying separately the earned premium charged for anticipated payments to the specified medical condition pooling fund;
4. (4) the ratio of claims projected to be incurred during the six-month period commencing at the calculation date (e.g., January 1, 1999) under its pooled insurance to the premiums projected to be earned during that period for pooled insurance, without consideration of this additional percentage (i.e., the projected incurred loss ration, exclusive of specified medical condition pooling); and
5. (5) such data reports shall be provided to the pool administrator no later than 30 days after the end of each six-month period (e.g., July 30, 1999), beginning with the last six-month period of 1999. For carriers providing such reports later than 30 days after the end of any six-month period, payment for those carriers that pay into the pools will be plus one percent interest per month, and for those carriers that collect from the pools distributions will be reduced by one percent per month, unless waived by the superintendent for special circumstances. In addition, each carrier shall transmit to the pool administrator as provided in subdivision (i) of this section, the data stated in paragraphs (1) and (2) of this subdivision for the period July 1, 1998 to December 31, 1998 computed as of January 1, 1999, the data stated in paragraphs (1) and (2) of this subdivision for the period January 1, 1999 to June 30, 1999 computed as of July 1, 1999, and the data stated in paragraphs (3) and (4) of this subdivision for the six-month period ending June 30, 1999.

(g) In may of each year, a carrier's initial payments to or from a specified medical condition pooling fund as descried in subdivisions (d) and (e) of this section for each of the two preceding years shall be reconciled with payments determined pursuant to paragraphs (1)-(6) of this subdivision (e.g., in May 2002, reconciliations will be done for 2000 and 2001 payments).

1. (1) A carrier's final average relative cost factor each year shall be determined based on the average of its average relative cost factors as of the beginning of each six-month period of the previous calendar year, weighted by its total annualized premium as of each calculation date.
2. (2) The regional average relative cost factor during the previous calendar year is calculated as the average of the regional average relative cost factors for that pool as of the beginning of each six-month period of the previous calendar year, weighted by the total annualized premium of all carriers participating in the pool as of the calculation date.

3. (3) For reconciliation purposes, a carrier's total payment to (+ ) or from (−) the specified medical condition pooling fund for the previous calendar year shall be determined as the product of subparagraphs (i) and (ii) of this paragraph:

   1. (i) the claims incurred, as prepared for and consistent with the carrier's annual statement for the preceding calendar year, under its pooled insurance during that year exclusive of payments to or from the specified medical condition pools;
   2. (ii) 1.0 minus the ratio of the carrier's average relative cost factor for that pool during that year to the regional average relative cost factor for that pool during that year.
4. (4) Carriers shall pay additional amounts to, or collect additional amounts from, the specified medical condition pooling fund so that these amounts, combined with amounts initially paid or collected pursuant to subdivisions (d) and (e) of this section, equal the total payment to or from the specified medical condition pooling fund for reconciliation purposes.
5. (5) The additional payment to the specified medical condition pooling fund shall be paid by the carrier during the 12 months beginning with the next July 1st (e.g., for the May 2002 reconciliations of pool years 2000 and 2001, payments shall be made from July 1, 2002 through June 1, 2003). That amount shall be in addition to the carrier's payments to the specified medical condition pooling fund pursuant to subdivision (d) of this section.
6. (6) If the amount of money in the specified medical condition pooling fund is not sufficient to pay all carriers the amounts they are entitled to collect in accordance with this paragraph, the amounts they are entitled to collect are reduced proportionately to match the fund.
7. (7) In the event excess funds remain in the specified medical condition pooling fund after the second reconciliation of any calendar year in any region, such excess shall be refunded to carriers in the region in an amount equal to the respective carrier's proportion of the total amount paid in by all carriers in the region for that calendar year. This provision does not apply to excesses, if any, of deposit contributions based on demographics for 1999 over required contributions determined based on the provisions of this section. Such excesses shall be refunded to each carrier in the entire amount of the respective carrier's excess deposit payment.

(h) In order to implement the phase in of the specified medical condition pooling process pursuant to chapter 504 of the Laws of 1995, the payments to, or from, the specified medical condition pools otherwise determined pursuant to subdivisions (e), (f) and (g) of this section shall be reduced by the percentages set forth below:

1. (1) 1999 - 22½ percent reduction.
2. (2) 2000 - and thereafter - no reduction.

(i) Reporting of data due for calendar years 1999, 2000, and 2001 and associated dates of submission and payments, may be determined by the superintendent in recognition of the effective date of this section.

(j) Table 7.

*Condition may be satisfied via overnight inpatient stay OR $5,000 in paid claims in the 6-month period where a portion are for the given diagnosis.

NEC = Not Elsewhere Classified

NOS = Not Otherwise Specified