| (a) The following items must be incorporated into a
guarantee from a sponsoring organization for the HMO to report expenses
and liabilities as covered:
(1) the guarantee must be approved by a board resolution
of the sponsoring organization;
(2) the sponsoring organization must have a tangible
net worth of at least $10 million for each guarantee issued;
(3) the sponsoring organization must agree to file
audited financial statements annually with the department's Financial
Analysis Section within 180 days of the end of the sponsoring organization's
fiscal year;
(4) the guarantee must be unconditional and may not
be monetarily limited;
(5) the guarantee, at a minimum, must cover otherwise
"uncovered" health care expenses and liabilities, including any present
or future contingencies that may arise from the delivery of health
care. If the HMO is offering Medicaid products, all expenses and liabilities
must be covered;
(6) the guarantee must not be limited in duration;
(7) the guarantee must provide for six-months' advance
notice to the department before its cancellation; and
(8) the guarantee must be notarized and signed by the
president and another officer of the sponsoring organization.
(b) If at any time a guarantee does not comply with
every requirement of this section, then the HMO will no longer qualify
for covered expenses and liabilities.
(c) If the sponsoring organization has guaranteed the
payment of any debts, expenses, or contingent obligations of another
person, or guaranteed the performance of any service or other obligation
of another person, then the HMO must provide a certification from
the sponsoring organization of the following:
(1) the name of each person guaranteed;
(2) the type of business of that person; and
(3) the extent of each guarantee issued, and the dollar
amount of debts and contingent obligations guaranteed individually
and in the aggregate.
(d) The HMO must also certify that the guaranteed debts
are reported as liabilities or contingent liabilities of the guarantor.
This certification must be submitted annually with the sponsoring
organization's audited financial statements. The certified copy must
be notarized and signed by the president or chief financial officer
of the sponsoring organization, with an acknowledgment of the guarantee
by the HMO's president or chief financial officer.
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