§ 131E-299. Hold harmless agreements or special deposit. - North Carolina Statutes

§ 131E‑299.  Holdharmless agreements or special deposit.

(a)        Unless the PSO maintains a special deposit in accordancewith subsection (b) of this section, each contract between every PSO and aparticipating provider of health care services shall be in writing and shallset forth that in the event the PSO fails to pay for health care services asset forth in the contract, the Medicare subscriber or beneficiary shall not beliable to the provider for any sums owed by the PSO. No other provisions ofthese contracts shall, under any circumstances, change the effect of thisprovision. No participating provider or agent, trustee, or assignee thereof maymaintain any action at law against a subscriber or beneficiary to collect sumsowed by the PSO.

(b)        In the event that the participating provider contract hasnot been reduced to writing or that the contract fails to contain the requiredprohibition, the PSO shall maintain a special deposit in cash or cashequivalent as follows:

(1)        If at any time uncovered expenditures exceed ten percent(10%) of total health care expenditures the PSO shall either:

a.         Place an uncovered expenditures insolvency deposit with theDivision, or with any organization or trustee acceptable to the Divisionthrough which a custodial or controlled account is maintained, cash orsecurities that are acceptable to the Division. This deposit shall at all timeshave a fair market value in an amount of one hundred twenty percent (120%) ofthe PSO's outstanding liability for uncovered expenditures for enrollees,including incurred but not reported claims, and shall be calculated as of thefirst day of the month and maintained for the remainder of the month. If a PSOis not otherwise required to file a quarterly report, it shall file a reportwithin 45 days of the end of the calendar quarter with information sufficientto demonstrate compliance with this section; or

b.         Maintain adequate insurance or a guaranty arrangementapproved in writing by the Division, to pay for any loss to beneficiariesclaiming reimbursement due to the insolvency of the PSO. The Division shallapprove a guaranty arrangement if the guarantying organization is a sponsoringprovider, has been operating for at least 10 years, and has a net worth,including organization‑related land, buildings, and equipment of at leastfifty million dollars ($50,000,000), unless the Division finds that theapproval of this guaranty may be financially hazardous to beneficiaries.

(2)        The deposit required under sub‑subdivision a. ofsubdivision (1) of this subsection is an admitted asset of the PSO in thedetermination of net worth. All income from these deposits or trust accountsshall be assets of the PSO and may be withdrawn from the deposit or accountquarterly with the approval of the Division;

(3)        A PSO that has made a deposit may withdraw that deposit orany part of the deposit if (i) a substitute deposit of cash or securities ofequal amount and value is made, (ii) the fair market value exceeds the amountof the required deposit, or (iii) the required deposit under this subsection isreduced or eliminated. Deposits, substitutions, or withdrawals may be made onlywith the prior written approval of the Division;

(4)        The deposit required under sub‑subdivision a. ofsubdivision (1) of this section is in trust and may be used only as providedunder this section. The Division may use the deposit of an insolvent PSO foradministrative costs associated with administering the deposit and payment ofclaims of enrollees of the PSO.

(c)        Whenever the reimbursements described in this section exceedten percent (10%) of the PSO's total costs for health care services over theimmediately preceding six months, the PSO shall file a written report with theDivision containing the information necessary to determine compliance with sub‑subdivisiona. of subdivision (1) of subsection (b) of this section no later than 30business days from the first day of the month. Upon an adequate showing by thePSO that the requirements of this section should be waived or reduced, the Divisionmay waive or reduce these requirements to an amount it deems sufficient toprotect beneficiaries of the PSO consistent with the intent and purpose of thisArticle. (1998‑227, s.1.)