Common use of Financial Viability Clause in Contracts

Financial Viability. Minimum Net Worth. The Contractor must demonstrate and maintain minimum net worth as specified below. For the purposes of this Contract, minimum net worth is defined as assets minus liabilities. Throughout the term of this Contract, the Contractor must maintain a minimum net worth of $1,500,000, subject to the following conditions: A minimum of $1,200,000 of this requirement must be in cash; The Contractor may include one hundred (100%) percent of the book value (the depreciated value according to generally accepted accounting principles (GAAP)) of tangible health care delivery assets carried on its balance sheet; The GAAP value of intangible assets up to ten (10%) percent of the minimum net worth required may be allowed. Working Capital Requirements. The Contractor must demonstrate and maintain working capital as specified below. For the purposes of this Contract, working capital is defined as current assets minus current liabilities. Throughout the term of this Contract, the Contractor must maintain a positive working capital, subject to the following conditions: If a Contractor's working capital falls below zero, the Contractor must immediately notify EOHHS and submit for EOHHS approval a written plan within thirty (30) days of findings, addressing the action steps being taken to reestablish a positive working capital balance. EOHHS may take any action it deems appropriate, including termination of the Contract, if the Contractor: Fails to report a negative working capital balance that is subsequently identified through an audit; Does not propose a plan to reestablish a positive working capital balance within a reasonable period of time as determined by EOHHS; Violates a corrective plan approved by EOHHS or EOHHS determines that negative working capital cannot be corrected within a reasonable amount of time as determined by EOHHS. Notwithstanding the foregoing, CMS may take any action it deems appropriate, at any time, in order to protect beneficiary access to needed medical care. Financial Stability Financial Stability Plan Throughout the term of this Contract, the Contractor must: Remain financially stable; Maintain adequate protection against insolvency in an amount determined by EOHHS, as follows: Provide to Enrollees all Covered Services required by this Contract for a period of at least forty‑five (45) calendar days following the date of insolvency or until written approval to cease providing such services is received from EOHHS, whichever comes sooner; Continue to provide all such services to Enrollees who are receiving inpatient services at the date of insolvency until the date of their discharge or written approval to cease providing such services is received from EOHHS, whichever comes sooner; and Guarantee that Enrollees and EOHHS do not incur liability for payment of any expense that is the legal obligation of the Contractor, any of its subcontractors, or other entities that have provided services to Enrollees at the direction of the Contractor or its subcontractors; Immediately notify CMS and EOHHS when the Contractor has reason to consider insolvency or otherwise has reason to believe it or any subcontractor is other than financially sound and stable, or when financial difficulties are significant enough for the chief executive officer or chief financial officer to notify the Contractor’s board of the potential for insolvency; and Maintain liability protection sufficient to protect itself against any losses arising from any claims against itself or any provider, including, at a minimum, workers’ compensation insurance, comprehensive liability insurance, and property damage insurance; and annually demonstrate required liability protection to EOHHS. Insolvency Reserve The Insolvency Reserve shall be defined as the funding resources available to meet costs of providing services to Enrollees for a period of forty‑five (45) days in the event that the Contractor is determined insolvent. Funding the Insolvency Reserve shall be the sole responsibility of the Contractor, regardless of any risk sharing arrangements with EOHHS or CMS. EOHHS shall calculate the amount of the Insolvency Reserve annually and provide this calculation to the Contractor within forty‑five (45) days of the start of the Contract Year. The Insolvency Reserve calculation shall be an amount equal to forty‑five (45) days of the Contractor’s estimated medical expenses, not to exceed eighty‑eight (88%) percent of the calculated value of forty‑five (45) days of capitation payment revenue. Within thirty (30) calendar days of receipt of the Insolvency Reserve calculation, the Contractor must submit to EOHHS written documentation of its ability to satisfy EOHHS’ Insolvency Reserve Requirement. The documentation must be signed and certified by the Contractor’s chief financial officer.

Financial Viability. Minimum Net Worth. The Contractor must demonstrate and maintain minimum net worth as specified below. For the purposes of this Contract, minimum net worth is defined as assets minus liabilities. Throughout the term of this Contract, the Contractor must maintain a minimum net worth of $1,500,000, subject to the following conditions: A minimum of $1,200,000 of this requirement must be in cash; The Contractor may include one hundred (100%) percent of the book value (the depreciated value according to generally accepted accounting principles (GAAP)) of tangible health care delivery assets carried on its balance sheet; The GAAP value of intangible assets up to ten (10%) percent of the minimum net worth required may be allowed. Working Capital Requirements. The Contractor must demonstrate and maintain working capital as specified below. For the purposes of this Contract, working capital is defined as current assets minus current liabilities. Throughout the term of this Contract, the Contractor must maintain a positive working capital, subject to the following conditions: If a Contractor's working capital falls below zero, the Contractor must immediately notify EOHHS and submit for EOHHS approval a written plan within thirty (30) days of findings, addressing the action steps being taken to reestablish a positive working capital balance. EOHHS may take any action it deems appropriate, including termination of the Contract, if the Contractor: Fails to report a negative working capital balance that is subsequently identified through an audit; Does not propose a plan to reestablish a positive working capital balance within a reasonable period of time as determined by EOHHS; Violates a corrective plan approved by EOHHS or 2.15.1.2.2.4. EOHHS determines that negative working capital cannot be corrected within a reasonable amount of time as determined by EOHHS. Notwithstanding the foregoing, CMS may take any action it deems appropriate, at any time, in order to protect beneficiary access to needed medical care. Financial Stability Financial Stability Plan Throughout the term of this Contract, the Contractor must: Remain financially stable; Maintain adequate protection against insolvency in an amount determined by EOHHS, as follows: Provide to Enrollees all Covered Services required by this Contract for a period of at least forty‑five (45) calendar days following the date of insolvency or until written approval to cease providing such services is received from EOHHS, whichever comes sooner; Continue to provide all such services to Enrollees who are receiving inpatient services at the date of insolvency until the date of their discharge or written approval to cease providing such services is received from EOHHS, whichever comes sooner; and Guarantee that Enrollees and EOHHS do not incur liability for payment of any expense that is the legal obligation of the Contractor, any of its subcontractors, or other entities that have provided services to Enrollees at the direction of the Contractor or its subcontractors; Immediately notify CMS and EOHHS when the Contractor has reason to consider insolvency or otherwise has reason to believe it or any subcontractor is other than financially sound and stable, or when financial difficulties are significant enough for the chief executive officer or chief financial officer to notify the Contractor’s board of the potential for insolvency; and Maintain liability protection sufficient to protect itself against any losses arising from any claims against itself or any provider, including, at a minimum, workers’ compensation insurance, comprehensive liability insurance, and property damage insurance; and annually demonstrate required liability protection to EOHHS. Insolvency Reserve The Insolvency Reserve shall be defined as the funding resources available to meet costs of providing services to Enrollees for a period of forty‑five (45) days in the event that the Contractor is determined insolvent. Funding the Insolvency Reserve shall be the sole responsibility of the Contractor, regardless of any risk sharing arrangements with EOHHS or CMS. EOHHS shall calculate the amount of the Insolvency Reserve annually and provide this calculation to the Contractor within forty‑five (45) days of the start of the Contract Year. The Insolvency Reserve calculation shall be an amount equal to forty‑five (45) days of the Contractor’s estimated medical expenses, not to exceed eighty‑eight (88%) percent of the calculated value of forty‑five (45) days of capitation payment revenue. Within thirty (30) calendar days of receipt of the Insolvency Reserve calculation, the Contractor must submit to EOHHS written documentation of its ability to satisfy EOHHS’ Insolvency Reserve Requirement. The documentation must be signed and certified by the Contractor’s chief financial officer.Plan