State Codes and Statutes

State Codes and Statutes

Statutes > North-carolina > Chapter_131E > GS_131E-282

§ 131E‑282. Issuance of license.

(a)        Before issuing a PSO license, the Division may make anexamination or investigation as it deems expedient. The Division shall issue alicense after receipt of a substantially complete application and uponsatisfaction of the following requirements:

(1)        The applicant is duly organized as a provider sponsoredorganization as defined by this Article.

(2)        The PSO has initially a minimum net worth of one millionfive hundred thousand dollars ($1,500,000). In the event the PSO submits afinancial plan that demonstrates that the PSO does not have to create but hasor has available to it an administrative infrastructure that shall reduce thePSO's start‑up costs, the Division may lower the initial minimum networth required to one million dollars ($1,000,000) or to any lower amount asdetermined by the Division if the PSO operates primarily in rural areas.

(3)        The PSO shall have at least seven hundred fifty thousanddollars ($750,000) in cash or equivalents on its balance sheet, except that theDivision may permit a PSO operating primarily in rural areas to have a lesseramount held in cash or equivalents on its balance sheets.

(4)        The applicant submits a financial plan satisfactory to theDivision which covers the first 12 months of operation of the PSO's Medicarecontract and which meets the requirements of G.S. 131E‑283. If the planprojects losses, the financial plan shall cover the period through 12 monthsbeyond projected breakeven.

(5)        The Division determines that the applicant has sufficientcash flow to meet its obligations as they become due. In making thatdetermination, the Division shall consider the following:

a.         The timeliness of payment;

b.         The extent to which the current ratio is maintained at one‑to‑one,or whether there is a change in the current ratio over a period of time; and

c.         The availability of outside financial resources.

(b)        In calculating the net worth of a PSO, the Division shalladmit the following:

(1)        One hundred percent (100%) of the book value of health caredelivery assets on the balance sheet of the applicant.

(2)        One hundred percent (100%) of the value of cash and cashequivalents on the balance sheet of the applicant.

(3)        If at least one million dollars ($1,000,000) of the initialminimum net worth requirement is met by cash or cash equivalents, then onehundred percent (100%) of the book value of the PSO's intangible assets up totwenty percent (20%) of the minimum net worth amount required. If less than onemillion dollars ($1,000,000) of the initial minimum net worth requirement ismet by cash or cash equivalents or if the Division has used its discretion toreduce the initial net worth requirement below one million five hundredthousand dollars ($1,500,000), then the Division shall admit one hundredpercent (100%) of the book value of intangible assets of the PSO up to tenpercent (10%) of the minimum net worth amount required.

(4)        Standard accounting principles treatment shall be given toother assets of the PSO not used in the delivery of health care for thepurposes of meeting the minimum net worth requirement.

(5)        Deferred acquisition costs shall not be admitted. (1998‑227, s. 1.)