Current through Supplement No. 394, October, 2024
1. General
rule. At the time of application under section
45-06-13-03, an applicant must
submit a financial plan acceptable to the department.
2. A financial plan must include:
a. A detailed marketing plan;
b. Statements of revenue and expense on an
accrual basis;
c. Statements of
sources and uses of funds;
d.
Balance sheets;
e. Detailed
justifications and assumptions in support of the financial plan including, when
appropriate, certification of reserves and actuarial liabilities by a qualified
health maintenance organization actuary; and
f. If applicable, statements of the
availability of financial resources to meet projected losses.
3. Period covered by the plan. A
financial plan shall:
a. Cover the first
twelve months after the estimated effective date of a provider-sponsored
organization's medicare+choice contract; or
b. If the provider-sponsored organization is
projecting losses, cover twelve months beyond the end of the period for which
losses are projected.
4. Funding for projected losses. Except for
the use of guarantees, letters of credit, and other means as provided in
section 45-06-13-08, an organization shall
have the resources for meeting projected losses on its balance sheet in cash or
a form that is convertible to cash in a timely manner, in accordance with the
provider-sponsored organization's financial plan.
5. Guarantees and projected losses.
Guarantees will be an acceptable resource to fund projected losses, provided
that a provider-sponsored organization:
a.
Meets the department's requirements for guarantors and guarantee documents as
specified in section
45-06-13-08; and
b. Obtains from the guarantor cash or cash
equivalents to fund the projected losses timely, as follows:
(1) Prior to the effective date of a
provider-sponsored organization's medicare+choice contract, the amount of the
projected losses for the first two quarters;
(2) During the first quarter and prior to the
beginning of the second quarter of a provider-sponsored organization's
medicare+choice contract, the amount of projected losses through the end of the
third quarter; and
(3) During the
second quarter and prior to the beginning of the third quarter of a
provider-sponsored organization's medicare+choice contract, the amount of
projected losses through the end of the fourth quarter.
c. If the guarantor complies with the
requirements in subdivision b, the provider-sponsored organization, in the
third quarter, may notify the department of its intent to reduce the period of
advance funding of projected losses. The department shall notify the
provider-sponsored organization within sixty days of receiving the
provider-sponsored organization's request if the requested reduction in the
period of advance funding will not be accepted.
d. If the guarantee requirements in
subdivision b are not met, the department may take appropriate action, such as
requiring funding of projected losses through means other than a guarantee. The
department retains discretion to require other methods or timing of funding,
considering factors such as the financial condition of the guarantor and the
accuracy of the financial plan.
6. Letters of credit. Letters of credit are
an acceptable resource to fund projected losses, provided they are irrevocable,
unconditional, and satisfactory to the department. They shall be capable of
being promptly paid upon presentation of a sight draft under the letters of
credit without further reference to any other agreement, document, or entity.
7. Other means. If satisfactory to
the department, and for periods beginning one year after the effective date of
a provider-sponsored organization's medicare+choice contract, a
provider-sponsored organization may use the following to fund projected losses:
a. Lines of credit from regulated financial
institutions;
b. Legally binding
agreements for capital contributions; or
c. Legally binding agreements of a similar
quality and reliability as permitted in subdivisions a and b.
8. Application of guarantees,
letters of credit, or other means of funding projected losses. Notwithstanding
any other provision of this section, a provider-sponsored organization may use
guarantees, letters of credit, and, beginning one year after the effective date
of a provider-sponsored organization's medicare+choice contract, other means of
funding projected losses, but only in a combination or sequence that the
department considers appropriate.
General Authority: NDCC 26.1-01-07.6
Law Implemented: NDCC
26.1-01-07.6
