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CALIFORNIA STATUTES AND CODES

SECTIONS 10730-10749

INSURANCE CODE
SECTION 10730-10749
10730. (a) The Voluntary Alliance Uniting Employers Purchasing Program is hereby created and shall be administered by the Major Risk Medical Insurance Board. (b) No member of the Major Risk Medical Insurance Board and no decisionmaker for any nonprofit entity that assumes administrative and fiscal responsibility for operation of the program pursuant to Sections 10748.5 and 10748.6 shall make, participate in making, or in any way attempt to use his or her official position to influence the making of any decision that he or she knows or has reason to know will have a reasonably foreseeable material financial effect, distinguishable from its effect on the public generally, on him or her or a member of his or her immediate family, or on any of the following: (1) Any source of income, other than gifts and other than loans by a commercial lending institution in the regular course of business on terms available to the public without regard to official status aggregating two hundred fifty dollars ($250) or more in value provided to, received by, or promised to the member of the Major Risk Medical Insurance Board or decisionmaker for a nonprofit entity that assumes administrative and fiscal responsibility for operation of the program pursuant to Sections 10748.5 and 10748.6 within 12 months prior to the time when the decision is made. (2) Any business entity in which the member of the Major Risk Medical Insurance Board or decisionmaker for a nonprofit entity that assumes administrative and fiscal responsibility for operation of the program pursuant to Sections 10748.5 and 10748.6 is a director, officer, partner, trustee, employee, or holds any position of management. (c) Commencing January 1, 1994, no member of the Major Risk Medical Insurance Board and no decisionmaker for any nonprofit entity that assumes administrative and fiscal responsibility for the program pursuant to Sections 10748.5 and 10748.6, may be an employee, a consultant or a member of the board of directors of any insurer, hospital service plan or health care service plan, or an insurance broker or agent doing business in California. 10731. The board may do any of the following: (a) Enter into contracts with carriers to provide health benefits coverage to eligible employees and their dependents. Any contract entered into pursuant to this part shall be exempt from any provision of law relating to competitive bidding, and shall be exempt from the review or approval of any division of the Department of General Services. The board shall not be required to specify the amounts encumbered for each contract, but may allocate funds to each contract based on projected and actual subscriber enrollments. (b) Enter into other contracts as are necessary or proper to carry out the provisions of this part. (c) Employ necessary staff. (d) Sue or be sued, including taking any legal actions necessary or proper for recovering any penalties for, on behalf of, or against, the program or any board member. (e) Define the health benefits coverage which the program will contract to purchase from participating carriers. (f) Appoint committees, as necessary, to provide technical assistance in the operation of the program. (g) Assess participating employers a reasonable fee for necessary costs in connection with the program. (h) Undertake activities necessary to administer the program, including marketing and publicizing the program, and assuring carrier, employer, and enrollee compliance with program requirements. (i) Establish rules, conditions, and procedures for participation for small employers. (j) Establish rules, conditions, and procedures for participation for participating carriers. (k) Establish a financial relationship directly with agents or brokers to provide services pursuant to this program. (l) Approve the benefit plan designs sold by carriers participating in the pool. (m) Issue rules and regulations as necessary to administer the program. Any rules and regulations issued pursuant to this subdivision may be adopted as emergency regulations in accordance with the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code). Until December 31, 1994, the adoption of these regulations shall be deemed an emergency and necessary for the immediate preservation of the public peace, health, and safety, or general welfare. (n) Exercise all powers reasonably necessary to carry out the powers and responsibilities expressly granted or imposed by this part. (o) From money appropriated to the Major Risk Medical Insurance Fund, the Major Risk Medical Insurance Board may loan funds for operating expenses to establish the program. These funds shall be repaid to the Major Risk Medical Insurance Fund prior to transitioning administrative and financial responsibility for the program to a qualified nonprofit entity pursuant to Sections 10748.5 and 10748.6. 10731.2. Any person or entity subject to the requirements of this chapter shall comply with the standards set forth in Chapter 7 (commencing with Section 3750) of Part 1 of Division 9 of the Family Code and Section 14124.94 of the Welfare and Institutions Code. 10732. The board shall establish geographic areas within which participating carriers may offer health coverage to eligible employees and dependents. 10733. On or after the effective date of this chapter, the board shall enter into contracts with carriers for the purpose of providing health benefits coverage to eligible employees and dependents. Participating carriers shall have, but need not be limited to, all of the following operating characteristics satisfactory to the board: (a) Strong financial condition, including the ability to assume the risk of providing and paying for covered services. A participating carrier may utilize reinsurance, provider risk sharing, and other appropriate mechanisms to share a portion of the risk. (b) Adequate administrative management. (c) In the case of the health care service plan, the following requirements must be met: (1) on the effective date of the contract, the health care service plan must be in compliance with the minimum tangible net equity requirements of the Director of the Department of Managed Health Care as those requirements will be in effect on January 1, 1995, and must remain in compliance with these requirements throughout the duration of the contract; (2) (A) before the effective date of the contract, the health care service plan must have devised a system for identifying in a simple and clear fashion both in its own records and in the medical records of subscribers and enrollees the fact that the services provided are provided under the program; and (B) throughout the duration of the contract, the health care service plan must use that system; and (3) at least 30 days before the effective date of any contract with the board, the health care service plan must inform the Director of the Department of Managed Health Care in writing of the health care service plan's intent to enter into the contract and must demonstrate in that letter, to the satisfaction of the Director of the Department of Managed Health Care, that it has complied with the requirements of paragraphs (1) and (2). (d) A satisfactory grievance procedure. (e) Participating carriers that contract with or employ health care providers shall have mechanisms to accomplish all of the following, in a manner satisfactory to the board, in consultation with the carrier's licensing agency. (1) Review the quality of care covered. (2) Review the appropriateness of care covered. (3) Provide accessible health care services. 10733.5. Notwithstanding any other provision of law, an employer purchasing coverage through the program shall not be determined to be no longer eligible to participate in the program solely because the employer employs more than 50 eligible employees, provided the employer employs no more than 100 eligible employees. 10734. (a) Notwithstanding any other provision of law, the board shall not be subject to licensure or regulation by the Department of Insurance or the Department of Managed Health Care, as the case may be. (b) Participating carriers that contract with the program shall be licensed and in good standing with their licensing agencies. 10735. The board shall contract with a broad range of carriers in an area, if available, to ensure that enrollees have a choice from among a reasonable number and types of competing carriers. The board shall develop and make available objective criteria for carrier selection and provide adequate notice of the application process to permit all carriers a reasonable and fair opportunity to participate. The criteria and application process shall allow participating carriers to comply with their state and federal licensing and regulatory obligations, except as otherwise provided in this chapter. Carrier selection shall be based on the criteria developed by the board. The administrator shall not eliminate any carrier from selection solely because of the carrier's size or limited service area. 10737. The board shall use appropriate and efficient means to notify small employers of the availability of sponsored health coverage from the program. 10738. The board shall make available to small employers marketing materials that accurately summarize the benefits plans and rates that are offered by the carrier through the program. 10739. Unless authorized by the board, no participating carrier shall, in an area served by the program, directly, or through an employee, agent, or contractor, provide a small group or enrollee with any marketing material relating to benefits or rates provided under the program. 10740. Participating carriers may contract with agents or brokers to provide marketing and servicing of health benefits coverage offered through the program. Any commissions set and paid pursuant to this section shall be determined by the participating carrier and the agent or broker. 10741. The board shall enforce conditions of participation in the program for small employers and enrollees which shall conform with the requirements of this chapter. 10742. The board shall establish a mechanism to collect premiums from small employers, including remittance of the share of the premium paid by the enrollee. 10743. The board may prohibit employers or employees who drop coverage after enrolling in the pool from reenrolling in the program for up to 12 months. 10744. The board shall arrange to pay contractors as specified in program contracts. 10745. The board shall pay participating carriers their contracted rates. 10746. Participating carriers shall offer rates to small employers or enrollees in the program that, at a minimum, are consistent with the program regulations and existing statutes and regulations regulating health insurance offerings to small employers. 10747. The board may adjust payments made to a carrier if the board finds that the carrier has a significantly disproportionate share of high- or low-risk enrollees. Prior to making this finding, the program shall obtain valid data from participating carriers. Reporting requirements shall be administratively compatible with the methods of operation of the carrier. Any adjustments to payments shall be prospective and shall utilize demographic and other factors which are actuarially related to risk. 10748. If a small employer, employee, or dependent of a small employer is dissatisfied with any action or failure to act which has occurred in connection with eligibility for, or enrollment in the program, the employer or employee shall have the right to appeal to the board and shall be accorded an opportunity for a fair hearing. Hearings shall be conducted, insofar as practicable, pursuant to the provisions of Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. 10748.5. No later than three years from the effective date of this article, the board shall issue a request for proposals that solicits nonprofit entities to submit bids to assume administrative and fiscal responsibility for operation of the program on a regional basis. The geographic boundaries of the regions shall be designated by the board. The board shall assess bidder's qualifications in the areas of administrative capacity, financial responsibility, local experience, and demonstrated ability. Within six months of issuing the request for proposals, the board shall select from among the qualified bidders and award administrative and financial responsibility for the program to the selected regional nonprofit entities. If no qualified nonprofit entity submits a bid pursuant to the board's request for proposals, one year from the date that bids were due the board shall reissue a request for proposals if the board has reason to believe that there is a possibility for a response from a qualified nonprofit entity. The board shall provide for an orderly transition of administrative and financial responsibility for the program. 10748.6. The board shall accept and review proposals submitted from nonprofit entities for assumption of administrative and financial responsibility of the program at any time prior to the process described in Section 10748.5. If the board determines that a qualified entity exists, the board may relinquish administrative and financial responsibility for the program to the nonprofit entity. Any contract entered into pursuant to this section shall be exempt from any provision of law relating to competitive bidding and shall be exempt from the review or approval of any division of the Department of General Services. 10748.7. There is in the program a five-member small employer advisory panel to be appointed by the board to provide consultation to the board on program design and implementation. The composition of the panel shall reflect varying sizes of small employers and a variety of occupational categories. 10749. There is created a Voluntary Alliance Uniting Employers Fund which shall consist of moneys collected pursuant to this article and any funds loaned by the board for operating expenses. Moneys in the fund shall be continuously appropriated without regard to fiscal year, to the board for the purposes specified in this part. Costs of the Voluntary Alliance for Uniting Employers Purchasing Program shall not be paid with state funds other than funds loaned by the board for operating expenses. Moneys within the fund shall be utilized for the purposes of this article.

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