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(a) STATUTORY FINANCIAL STATEMENTS Increasingly, HMOs and provider-sponsored networks are coming under regulation by state departments of insurance Generally speaking, regulated insurers are required by their state of domicile to submit annually a set of audited nancial statements that are prepared using that state s prescribed regulatory accounting principles ( statutory nancial statements ) In 1999, the National Association of Insurance Commissioners completed a process to codify statutory accounting practices (SAP) for managed care organizations, resulting in a revised Accounting Practices and Procedures Manual Nine of the Statements of Statutory Accounting Principles (SSAPs) included in the Manual have been speci cally modi ed or written to address issues related to managed care These include SSAP No 25, Accounting for and Disclosures about Transactions with Af liates and Other Related Parties, No 35, Guaranty Fund and Other Assessments, No 47, Uninsured Plans, No 50, Classi cations and De nitions of Insurance or Managed Care Contracts in Force, No 54, Individual and Group Accident and Health Contracts, No 55, Unpaid Claims, Losses and Loss Adjustment Expenses, No 66, Retrospectively Rated Insurance Contracts, No 73, Health Care Delivery Assets Supplies, Pharmaceuticals and Surgical Supplies, Durable Medical Equipment, Furniture, Medical Equipment and Fixtures, and Leasehold Improvements in Health Care Facilities, and No 84, Health Care Receivables All other SSAPs should be considered that are applicable to the particular managed care entity The Manual is updated annually to re ect revisions or additions to SAP It is expected that most states will require insurers to comply with most, if not all, provisions of the Manual States may adopt the Manual in whole, or in part, as an element of prescribed SAP in those states If, however, the requirements of state laws, regulations, and administrative rules differ from guidance provided in the Manual, those state laws, regulations, and administrative rules preempt the guidance in the Manual (b) RISK-BASED CAPITAL FOR MANAGED CARE ORGANIZATIONS State laws generally require insurers to maintain minimum levels of capital or surplus The NAIC has implemented a risk-based capital (RBC) formula for managed care organizations under which affected managed care organizations must calculate and report to regulators its capital requirement and total adjusted capital There are ve principal elements to the RBC formula: af liated investment risk, asset risk,.

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underwriting risk, credit risk, and general business risk Four action levels (in order of increasingly stringent level of regulatory response) are: company action level, regulatory action level, authorized control level, and mandatory control level At a minimum, the company action-level event requires the ling of an RBC plan that details conditions leading to the event and proposals of corrective action with the state insurance commissioner (c) OFFICE OF MANAGEMENT AND BUDGET CIRCULAR A-133 HCOs that receive nancial assistance from a governmental agency may be subject to audit requirements in accordance with the Single Audit Act of 1996 and Of ce of Management and Budget (OMB) Circular A-133, Audits of Institutions of Higher Education and Other Nonpro t Organizations Financial assistance may take the form of grants, contracts, loans, loan guarantees, property, cooperative agreements, interest subsidies, and insurance or direct appropriations

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disorders and sexual pain In: Lue TF, Basson R, Rosen R, Giuliano F, Khoury S, Montorsi F, eds Sexual Medicine: Sexual Dysfunctions in Men and Women, 2nd edn Paris: Health Publications, 2004, pp 851 990 Basson R, Brotto LA Sexual psychophysiology and effects of sildena l citrate in oestrogenised women with acquired genital arousal disorder and impaired orgasm: a randomised controlled trial Br J Obst Gyn 2003; 110(11):1014 1024 Brotto L Psychological-based desire and arousal disorders: treatment strategies and outcome results In: Goldstein I, Meston C, Davis SR, Traish A, eds Women s Sexual Function and Dysfunction: Study, Diagnosis and Treatment, 1st edn London: Taylor & Francis, 2006, pp 441 448 American Psychiatric Association DSM-1: Diagnostic and Statistical Manual of Mental Disorders Washington, DC: American Psychiatric Association, 2000 Basson R, Berman J, Burnett A, Derogatis L, Ferguson D, Fourcroy J, Goldstein I, Graziottin A, Heiman J, Laan E, Leiblum S, Padma-Nathan H, Rosen R, Segraves K, Segraves RT, Shabsigh R, Sipski M, Wagner G, Whipple B Report of the International Consensus Development Conference on Female Sexual Dysfunction: de nitions and classi cations J Urol 2000;163(3): 888 893 Basson R, Leiblum S, Brotto L, Derogatis L, Fourcroy J, Fugl-Meyer K, Graziottin A, Heiman J, Laan E, Meston C, Schover L, van Lankveld J, Weijmar Schultz W Revised de nitions of women s sexual dysfunction J Sex Med 2004;1(1):40 48 Basson R, Althof SE, Davis SR, Fugl-Meyer K, Goldstein I, Heiman J, Leiblum S, Meston C, Rosen R, Wagner G, Weijmar Schultz WCM Summary of the recommendations on women s sexual dysfunctions In: Lue TF, Basson R, Rosen R, Giuliano F, Khoury S, Montorsi F, eds Sexual Medicine: Sexual Dysfunctions in Men and Women, 2nd edn Paris: Health Publications, 2004, pp 975 990 Leiblum S Classi cation and diagnosis of female sexual disorders In: Goldstein I, Meston C, Davis SR, Traish A, eds Women s Sexual Function and Dysfunction: Study, Diagnosis and Treatment, 1st edn London: Taylor & Francis, 2006, pp 323 330 Lewis RW, Fugl-Meyer KS, Bosch R, Fugl-Meyer AR, Laumann EO, Lizza E, Martin-Morales A De nitions, classi cation, and epidemiology of sexual dysfunction In: Lue TF, Basson R, Rosen R, Giuliano F, Khoury S, Montorsi F, eds Sexual Medicine: Sexual Dysfunctions in Men and Women, 2nd edn Paris: Health Publications, 2004, pp 37 72.

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