Section 45-06-13-05 - Financial plan requirements1. 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; 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. N.D. Admin Code 45-06-13-05
Effective August 1, 2000.General Authority: NDCC 26.1-01-07.6
Law Implemented: NDCC 26.1-01-07.6