PURPOSE: This rule sets forth the health maintenance organization bond requirements and when those requirements will be deemed satisfied. This rule is promulgated pursuant to sections 354.425 and 354.485, RSMo.

1. (1) The requirement of section 354.425, RSMo that every health maintenance organization (HMO) shall maintain in force a surety bond on any director, officer or partner who receives, collects, disburses or invests funds in connection with the activities of the HMO will be deemed to be satisfied by a fidelity bond or contract of equal purpose. This bond or contract shall—

   1. (A) Be in an amount of not less than one hundred thousand dollars ($100,000) or other sum as may be prescribed by the director;
   2. (B) Be written with at least a one (1)-year discovery period. If written with less than a three (3)-year discovery period, the bond or contract shall contain a provision that no cancellation or termination of the bond, whether by or at the request of the insured or by the underwriter, shall take effect prior to the expiration of ninety (90) days after written notice of the cancellation or termination has been filed with the director of the Department of Insurance, unless an earlier date is approved by the director; and
   3. (C) Specify on the declaration page of the bond or contract the length of the discovery period and, if less than three (3) years, that the bond or contract complies with the ninety (90)-day notification of cancellation or ter- 20 CSR 400-7

mination provision of section 354.425, RSMo.

AUTHORITY: sections 354.425 and 354.485, RSMo 1986.* This rule was previously filed as 4 CSR 190-15.140. Original rule filed Nov. 2, 1987, effective April 11, 1988.

*Original authority: 354.425, RSMo 1983 and 354.485, RSMo 1983.