1. (a) Upon receipt of a financial statement indicating that a delegated entity or delegated third party has an amount of total liabilities greater than its total assets, the HMO shall immediately forward a copy of the financial statement to the department.

2. (b) An HMO that becomes aware of any information, including the information described in subsection (a) of this section, that suggests or indicates that the delegated entity or delegated third party is not operating in accordance with its written agreement or is operating in a condition that may render the continuance of its business hazardous to the enrollees, shall immediately:

   1. (1) notify the delegated entity in writing of those findings; and

   2. (2) request, in writing, a written explanation with supporting documentation of:

      1. (A) the delegated entity's or delegated third party's apparent noncompliance with the written agreement; or
      2. (B) the existence of the condition that apparently renders the continuance of the delegated entity's or delegated third party's business hazardous to the enrollees.
3. (c) A delegated entity shall respond in writing to a request from an HMO under subsection (b) of this section not later than the 30th day after the date the request is received. The response shall include a corrective action plan.
4. (d) A copy of all written communications required by subsections (b) and (c) of this section shall be sent to the department simultaneously with transmission to the HMO or delegated entity or delegated third party.

5. (e) The HMO shall cooperate with the delegated entity to correct any failure by the delegated entity to comply with the applicable statutes and rules relating to any matters:

   1. (1) delegated to the delegated entity by the HMO; or
   2. (2) necessary for the HMO to ensure compliance with statutory or regulatory requirements.

Source Note:The provisions of this §11.2606 adopted to be effective October 13, 2002, 27 TexReg 9585.