SECTION 11.810. Guarantee from a Sponsoring Organization

(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.

Source Note: The provisions of this §11.810 adopted to be effective August 1, 2017, 42 TexReg 2169