Current through Supplement No. 394, October, 2024
1.
General policy. A
provider-sponsored organization, or the legal entity of which the
provider-sponsored organization is a component, may apply to the department to
use the financial resources of a guarantor for the purpose of meeting the
requirements in section
45-06-13-05. The department has
the discretion to approve or deny approval of the use of a guarantor.
2.
Request to use a
guarantor. To apply to use the financial resources of a guarantor, a
provider-sponsored organization must submit to the department the following
material:
a. Documentation that the guarantor
meets the requirements for a guarantor under subsection 3; and
b. The guarantor's independently audited
financial statements for the current year-to-date and for the two most recent
fiscal years. The financial statements must include the guarantor's balance
sheets, the profit and loss statements, and cash flow statements.
3.
Requirements for
guarantor. To serve as a guarantor, an organization must meet the
following requirements:
a. Be a legal entity
authorized to conduct business within a state of the United States.
b. Not be under federal or state bankruptcy
or rehabilitation proceedings.
c.
Have a net worth, not including other guarantees, intangibles, and restricted
reserves, equal to three times the amount of the provider-sponsored
organization guarantee.
d. If the
guarantor is regulated by a state insurance commissioner, or other state
official with authority for risk-bearing entities, it must meet the net worth
requirement in subdivision c with all guarantees and all investments in and
loans to organizations covered by guarantees excluded from its assets.
e. If the guarantor is not
regulated by a state insurance commissioner or other similar state official, it
must meet the net worth requirement in subdivision c with all guarantees and
all investments in and loans to organizations covered by a guarantee and to
related parties, subsidiaries, and affiliates excluded from its assets.
4.
Guarantee
document. If the guarantee request is approved, a provider-sponsored
organization must submit to the department a written guarantee document signed
by an appropriate authority of the guarantor. The guarantee document must
contain the following provisions:
a. State
the financial obligation covered by the guarantee;
b. Agree to unconditionally fulfill the
financial obligation covered by the guarantee;
c. Agree not to subordinate the guarantee to
any other claim on the resources of the guarantor;
d. Declare that the guarantor must act on a
timely basis, in any case not more than five business days, to satisfy the
financial obligation covered by the guarantee; and
e. Meet other conditions as the department
may establish from time to time.
5.
Reporting requirement. A
provider-sponsored organization shall submit to the department the current
internal financial statements and annual financial statements of the guarantor
according to the schedule, manner, and form that the department requests.
6.
Modification,
substitution, and termination of a guarantee. A provider-sponsored
organization may not modify, substitute, or terminate a guarantee unless the
provider-sponsored organization:
a. Requests
the department's approval at least ninety days before the proposed effective
date of the modification, substitution, or termination;
b. Demonstrates to the department's
satisfaction that the modification, substitution, or termination will not
result in insolvency of the provider-sponsored organization; and
c. Demonstrates how the provider-sponsored
organization will meet the requirements of this section.
7.
Nullification. If at any time
the guarantor or the guarantee ceases to meet the requirements of this section,
the department shall notify the provider-sponsored organization that it ceases
to recognize the guarantee document. In the event of this nullification, a
provider-sponsored organization shall:
a.
Meet the applicable requirements of this section within fifteen business days;
and
b. If required by the
department, meet a portion of the applicable requirements in less than the time
period granted in subdivision a.
General Authority: NDCC 26.1-01-07.6
Law Implemented: NDCC
26.1-01-07.6
