Wyo. Code R. 044-0002-4
Effective Date: 11/02/2022 to Current
Rule Type: Current Rules & Regulations
Reference Number: 044.0002.4.11022022
These regulations governing business relationships with administrators supplement the provisions of W.S. §§26-1-102(a)(xxx), 26-1-103, 26-2-109, 26-2-110, 26-2-116 through 26-2-124, 26-53-101 et seq., the Wyoming Administrative Procedures Act (W.S. §§ 16-3-101 through 16-3-115), and all other applicable provisions of the Wyoming Insurance Code [title 26].
(a) 'Affiliate' or 'affiliated' means a person who directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, another specified person.
(b) 'Entity' means a corporation, association, partnership, limited liability company or other legal entity that is not an individual.
(c) 'Collateral' means funds, letters of credit or any item with economic value owned by the payor but held by an entity or Third Party Administrator (TPA) in case it needs to be used to fulfill premium, plan contributions, or loss reimbursement obligations in accordance with a contract between the entity or TPA and the payor. 'Collateral' shall include anticipated loss prepayments made prior to the payment of losses, pursuant to arrangements where reimbursement is not due until after losses have been paid.
(d) 'Control' (including the terms 'controlled by' and 'under common control with') means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or non-management services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing, ten percent (10%) or more of the voting securities of any other person. This presumption may be rebutted by a showing made in the manner provided by W.S. § 26-44-104 that control does not exist in fact.
(e) 'GAAP' means United States generally accepted accounting principles consistently applied.
(f) 'Payor' means an entity that is required to be licensed or registered under the Wyoming insurance code [title 26].
(g) 'Stop-loss insurance' means insurance protecting an employer, trust, or other person responsible for an otherwise self-insured health or life benefit plan against obligations under the plan, but 'stop-loss insurance' does not include reinsurance written for an insurance company.
(h) “Third party administrator” or “TPA” is defined pursuant to W.S. § 26-53-101(a)(i).
(i) “Underwrites” or “underwriting” means, but is not limited to, the acceptance of employer or individual applications for coverage of individuals and the overall planning and coordination of a benefits program.
Section 3. Licensing Necessary. No person shall act as a TPA in this state unless that person is licensed as a TPA pursuant to this chapter.
Section 4. Payment to a TPA. If an entity utilizes the services of a TPA, any premiums, plan contributions, or charges for coverage paid to the TPA by or on behalf of the covered party, or any collateral furnished to the TPA by or on behalf of the covered party, shall be deemed to have been received by the entity, and the return of collateral, contributions, or the payment of return premiums, plan contributions, or claim payments forwarded by the entity to the TPA shall not be deemed to have been paid to the covered party or claimant until the payments are received by the covered party or claimant. Nothing in this section limits any right of the entity against the TPA resulting from the failure of the TPA to make payments to the entity, covered parties or claimants.
(a) A TPA shall maintain and make available to the payor complete books and records of all transactions performed on behalf of the payor. The books and records shall be maintained in accordance with prudent standards of insurance record keeping and shall be maintained for a period of not less than five (5) years from the date of their creation.
(b) The commissioner shall have access to books and records maintained by a TPA for the purposes of examination, audit and inspection.
(c) Neither the commissioner nor any person who receives documents, materials or other information while acting under the authority of the commissioner shall be permitted or required to testify in any private civil action concerning confidential documents, materials, or information subject to subsection (b) of this section.
(d) In order to assist in the performance of their duties, the commissioner may share or receive documents, materials or other information pursuant to W. S. §26-2-113(d).
(e) No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in subsection (d) of this section.
(f) Nothing in this chapter shall prohibit the commissioner from releasing final, adjudicated actions including for cause terminations that are open to public inspection pursuant to
W.S. § 16-4-201 et seq. to a database or other clearinghouse service maintained by the National Association of Insurance Commissioners, its affiliates or subsidiaries.
(g) Notwithstanding any contractual agreements between the payor and the TPA that operate to the contrary, the TPA shall retain the right to sufficient continuing access to books and records to permit the TPA to fulfill all of its contractual obligations to insured parties, claimants, and the payor.
(h) In the event the payor or the TPA cancel their agreement; notwithstanding the provisions of subsection (a) of this section, the TPA may, by written agreement with the payor, transfer all records to a new TPA rather than retain them for five (5) years. In such cases, the new TPA shall acknowledge, in writing, that it is responsible for retaining the records of the prior TPA as required in subsection (a) of this section.
Section 6. Entity Approval of Advertising. A TPA that advertises on behalf of an entity may only use advertising that has been approved in writing by the entity in advance of its use. A TPA that mentions any current or formerly contracted entity in its advertising must obtain the entity’s prior written consent.
(a) No TPA shall act as such without a written agreement between the TPA and the payor. A copy of the agreement shall be retained by the TPA for the duration of the agreement and for five (5) years thereafter. The agreement shall contain all provisions required by this section, except insofar as the TPA does not perform all of the functions referenced in this section.
(b) A payor that utilizes the services of a TPA shall retain responsibility for the benefits, premium rates, plan contribution amounts, collateral and reimbursement procedures, underwriting criteria and claims payment procedures applicable to the coverage and for securing reinsurance or stop-loss insurance, if any. The rules pertaining to these matters, to the extent that they are relevant to the duties of the TPA, shall be agreed to in writing by the payor and the TPA.
(c) A payor utilizing the services of a TPA is responsible for the acts of the TPA and is responsible for providing, upon request of the commissioner, any books and records relevant to its relationship with the TPA.
(d) The written agreement between the TPA and the payor shall provide that communications between the TPA and claimants shall avoid deceptive statements with regard to the responsibilities of the TPA, payor and any entity with regard to claims, premiums, or plan contributions.
(e) In the event of a dispute between the payor and the TPA regarding which of them is to fulfill a lawful obligation with respect to a policy, certificate or claim subject to the written agreement, the payor shall fulfill such obligation.
(f) The payor has the duty to provide for competent administration of its programs administered by a TPA and within the scope of this chapter.
(a) All monies or collateral collected by a TPA on behalf of or for a payor, the return of monies or collateral received from a payor, and any funds held by the TPA for the payment of claims, shall be held by the TPA in a fiduciary capacity. Funds shall be immediately remitted to the person entitled to them or shall be deposited promptly in a fiduciary account established and maintained by the TPA in a federally insured financial institution. The TPA shall render an accounting to the payor, at intervals acceptable to the payor, detailing all transactions performed by the TPA pertaining to the business of the payor, and the written agreement between the payor and the TPA shall include the specifications of this reporting.
(b) The TPA shall keep copies of all records of any fiduciary account maintained or controlled by the TPA, and, upon request of a payor, shall furnish the payor with copies of the records pertaining to the deposits and withdrawals made on behalf of the payor. If funds deposited in a fiduciary account have been collected on behalf of or for more than one payor, or for the payment of claims associated with more than one policy, the TPA shall keep records clearly recording the deposits in and withdrawals from the account on behalf of each payor and relating to each policyholder.
(c) The TPA shall not pay any claim by withdrawals from a fiduciary account in which premiums, plan contributions, or charges are deposited. Withdrawals from a fiduciary account shall be made as provided in the written agreement between the TPA and the payor, and only for the following purposes:
(d) All claims paid by the TPA from funds collected on behalf of or for a payor shall be paid only as authorized by the payor. Payments from an account maintained or controlled by the TPA for purposes including the payment of claims may be made only for the following purposes:
(i) Payment of valid claims;
(ii) Payment of expenses associated with claims handling to the TPA or to other service providers approved by the payor;
(iii) Remittance to the payor, or transfer to a successor TPA as directed by the payor, for the purpose of paying claims and associated expenses; and
(iv) Return of funds held as collateral or prepayment, to the person entitled to those funds, upon a determination by the payor that those funds are no longer necessary to secure or facilitate the payment of claims and associated expenses.
(a) A TPA shall not enter into an agreement or understanding with a payor in which the effect is to make the amount of the TPA's commissions, fees, or charges contingent upon savings effected in the payment of losses covered by the payor's obligations. This provision shall not prohibit a TPA from receiving performance-based compensation for providing hospital or other auditing services, from providing managed care or related services, or from being compensated for subrogation expenses.
(b) A payor shall not enter into an agreement with a TPA in violation of this section.
(c) This section shall not prevent the compensation of a TPA from being based on premiums, plan contributions, or charges collected or the number of claims paid or processed.
(a) When a TPA collects funds, the reason for collection of each item shall be identified to the insured party and each item shall be shown separately from any premiums or plan contributions. Additional charges may not be made for services to the extent the services have been already paid for by the payor.
(b) The TPA shall disclose to the payor all charges, fees and commissions that the TPA receives arising from services it provides for the payor, including any fees or commissions paid by payors providing reinsurance or stop-loss insurance.
Section 11. Delivery of Materials to Covered Individuals. Any policies, certificates, booklets, termination notices or other written communications delivered by the payor to the TPA for delivery to insured parties and covered individuals shall be delivered by the TPA within fourteen (14) calendar days of receipt of instructions from the payor to deliver them.
(a) A TPA applying to this state shall apply for licensure using forms prescribed by the commissioner and designate an individual as the TPA’s contact person for department communications.
(b) The application forms shall include or be accompanied by the following information and documents:
(i) Verification of registration with the Wyoming Secretary of State or documentation from the Wyoming Secretary of State verifying that registration is not necessary;
(ii) Audited annual financial statements or reports for the two (2) most recent fiscal years that prove that the applicant has a positive net worth. If the applicant has been in existence for less than two (2) fiscal years, the application shall include financial statements or reports, certified by an officer of the applicant and prepared in accordance with GAAP, for any completed fiscal years, and for any month during the current fiscal year for which such financial statements or reports have been completed. An audited financial report prepared on a consolidated basis shall include a columnar consolidating or combining worksheet that shall be filed with the application for licensure and include the following:
(A) Amounts shown on the consolidated audited financial report shall be shown on the worksheet;
(B) Amounts for each entity shall be stated separately; and
(C) Explanations of consolidating and eliminating entries shall be included. The applicant shall also include such other information as the commissioner may require to review the current financial condition of the applicant;
(iii) Completed Designation of Third Party Administrator Form for each active contract. A TPA license shall not be issued without at least one (1) active designation;
(iv) Completed Entity/Third Party Administrator Contract Checklist for each active contract. A TPA license shall not be issued without at least one (1) active written agreement; and
(v) Such other pertinent information as may be required by the commissioner.
(c) A TPA licensed or applying for licensure under this section shall make available for inspection by the commissioner copies of all contracts with payors or other persons utilizing the services of the TPA.
(d) A TPA licensed or applying for licensure under this section shall produce its accounts, records and files for examination, and make its officers available to give information with respect to its affairs, as often as reasonably required by the commissioner.
(e) The commissioner may refuse to issue a license if the commissioner determines that the TPA or any individual responsible for the conduct of affairs of the TPA is not competent, trustworthy, financially sound or of good personal and business reputation, or has had an insurance or a TPA certificate of authority or license denied or revoked for cause by any jurisdiction, or if the commissioner determines that any of the grounds set forth in section 14 of this chapter exists with respect to the TPA.
(f) A license issued under this section shall continue in force until renewed, expired, surrendered, suspended, revoked or otherwise terminated.
(g) Any license referred to in subsection (f) of this section is considered expired if the commissioner does not receive the renewal application as required in section 13 of this chapter by June 30 of the renewal year.
(h) An individual may not qualify for licensure under this section.
(i) A TPA licensed or applying for licensure under this section shall notify the commissioner within thirty days of any material change in its contact person for the TPA or other fact or circumstance affecting its qualification for a license in this state.
(j) A TPA licensed or applying for a license under this section shall maintain a surety bond with the State of Wyoming as obligee for its use and benefit to cover persons in this state who have remitted premiums, plan contributions, or insurance charges or other monies to the TPA in the course of the TPA's business. The bond shall be the greater of the following amounts:
(i) One hundred thousand dollars ($100,000); or
(ii) Ten percent (10%) of the aggregate total amount of funds handled in this state, not to exceed one million dollars ($1,000,000) unless a larger amount is deemed by the commissioner to be necessary for the protection of the payor's policyholders or members in this state.
(k) For the purposes of fixing the amount of the bond described in paragraph (j) of this section, the amount of funds handled shall be determined by the total funds handled by the TPA within the borders of and on behalf of the citizens of Wyoming during the preceding year. If no funds were handled during the preceding year the amount of funds reasonably estimated to be handled during the current licensing year by the TPA. Such bond or deposit shall provide protection to the payor's policyholders or members in this state against loss by reason of acts of fraud or dishonesty and negligence by the TPA.
(a) Each TPA licensed under section 12 shall file a license renewal application on or before June 30 of the renewal year, or within such extension of time as the commissioner for good cause may grant. The renewal application shall include an audited financial statement performed by an independent certified public accountant for the preceding two (2) fiscal years. An audited financial report prepared on a consolidated basis shall include a columnar consolidating or combining worksheet that shall be filed with the report and include the following:
(i) Amounts shown on the consolidated audited financial report shall be shown on the worksheet;
(ii) Amounts for each entity shall be stated separately; and
(iii) Explanations of consolidating and eliminating entries shall be included. The renewal application shall be in the form and contain such matters as the commissioner prescribes and shall be verified by at least two (2) officers of the TPA.
(b) The renewal shall include the complete names and addresses of all payors with which the TPA had agreements, and funds handled on behalf of Wyoming citizens for each during the two (2) preceding fiscal years.
(c) The renewal shall include the verification of the bond amount required by section 12 of this chapter and a copy of the bond itself.
(d) The renewal shall include an updated appointment verification for all payors with which the TPA has current agreements.
(e) At the time of filing its renewal, the TPA shall pay a filing fee as required by W.S. § 26-4-101.
(a) The commissioner may, deny, suspend or revoke the license of a TPA if, after notice and opportunity for hearing pursuant to Chapter 32 of the Wyoming Insurance Regulations, the commissioner finds that the TPA:
(i) Has a negative net worth;
(ii) Is using such methods or practices in the conduct of its business so as to render its further transaction of business in this state hazardous or injurious to insured persons or the public;
(iii) Has failed to pay any judgment rendered against it in this state within sixty (60) days after the judgment has become final;
(iv) Has violated any lawful rule or order of the commissioner or any provision of the insurance laws of this state;
(v) Has refused to produce its accounts, records and files for examination or investigation by the commissioner;
(vi) Has, without just cause, refused to pay proper claims or perform services arising under its contracts or has, without just cause, caused covered individuals to accept less than the amount due them or caused covered individuals to employ attorneys or bring suit against the TPA or a payor which it represents to secure full payment or settlement of such claims;
(vii) Is required pursuant to this chapter to have a license and fails at any time to meet any qualification for which issuance of a license could have been refused had the failure then existed and been known to the commissioner, unless the commissioner issued a license with knowledge of the ground for disqualification and had the authority to waive it;
(viii) Has one or more of the individuals responsible for the conduct of its affairs has been convicted of, or has entered a plea of guilty or nolo contendere to, any felony, without regard to whether adjudication was withheld;
(ix) Is under suspension or revocation in another state; or
(x) Has failed to file a timely renewal application pursuant to section 13.
(b) If the commissioner finds that sufficient grounds exist for the suspension or revocation of a license issued under this section the commissioner may, in lieu of or in addition to the suspension or revocation, impose a fine upon the TPA pursuant to W.S. § 26-1-107.
(c) The provisions of this section are in addition to and not instead of any other enforcement provisions contained in the Wyoming Insurance Code [title 26].