SECTIONS 10840-10845 - California Statutes

INSURANCE CODE

SECTION 10840-10845

10840. A purchasing alliance shall do all of the following:
(a) Set reasonable fees, which may vary by employer or small
employer size, in the purchasing alliance that will finance
reasonable and necessary costs incurred in marketing, selling,
servicing, and administering the purchasing alliance. Fees may not
vary based upon the small employer or his or her enrollees and
dependents' actual or expected health status, medical utilization,
claims experience, industry, occupation, or the geographic location
of participating small employers within the same service region.
(b) Define, market, offer, and sell to small employers the health
benefit plans purchased from participating carriers. The purchasing
alliance may also incidentally offer optional ancillary benefit
plans. The purchasing alliance may also define, market, and offer
health benefit plans and ancillary benefit plans to employers.
(c) Require as a condition of participation that all employers or
small employers include all their eligible employees or a minimum
percentage of eligible employees in coverage purchased through the
purchasing alliance.
(d) With respect to small employers, the purchasing alliance shall
require that the application of participation requirements be
uniformly applied to all small employers.
(e) Provide premium collection services for health benefit plans
and ancillary benefit plans offered through the purchasing alliance.
(f) Establish administrative and accounting procedures for
operating the purchasing alliance and for services to employers and
small employers and enrollees, including billing, administration,
underwriting, marketing, enrollment, sales, regulatory compliance,
and ensuring carrier and member compliance with the purchasing
alliance requirements.
(g) Establish rules, conditions, and procedures for participating
members. The rules, conditions, and procedures for participating
small employers shall be uniformly applied.
(h) Establish rules, conditions, and procedures for participating
carriers.
(i) Reject or allow a participating carrier to reject an employer
or small employer from participation or drop or allow a participating
carrier to drop a participating employer if the participating
employer or any of its eligible employees fail to pay premiums, or if
the participating employer fails to maintain the minimum
participation and contribution requirements or if the participating
employer has engaged in fraud or material misrepresentation in
connection with a health benefit plan or ancillary benefit plan
purchased through the purchasing alliance. If a participating
employer or enrollee is dropped from coverage, the enrollee shall be
entitled to continuation and conversion coverage to the extent
provided for under applicable state or federal continuation laws and
the state conversion law.
(j) Contract with at least three unaffiliated participating
carriers offering health benefit plans to provide benefits in all
regions of the state in which each carrier is licensed to operate and
together to provide health benefit plans throughout all service
regions in this state to ensure that enrollees have a personal choice
from among a reasonable number of competing carriers. The
commissioner may, upon a showing of good cause, waive the requirement
to have at least three unaffiliated participating medical carriers.
(k) Fairly and affirmatively offer, market, and sell all the
health benefit plans sponsored by the purchasing alliance that are
sold or offered to small employers to all small employers, in all
service regions. In addition, the alliance shall require all
participating carriers to make their purchasing alliance products
available in all portions of each of the alliances service regions
where the carrier offers health care benefits.
(l) Be registered to operate in all service regions in this state
and throughout each service region.
(m) Develop standard enrollment procedures.
(n) Publish educational materials, plan descriptions, and
comparison sheets describing participating carriers and the benefit
plan designs available through the purchasing alliance for use in
enrolling employers or small employers and their eligible employees.
The information may include an assessment of utilization management
procedures and the level of quality and cost-effective care.
(o) Establish conditions for participation of employers or small
employers that conform to the requirements of this chapter and that
include, but are not limited to, assurances that the employer or
small employer is a bona fide employer or small employer group and
provision for prepayment of premiums or other mechanisms to ensure
that payment will be made for coverage. Conditions for participating
small employers shall be uniformly applied to all small employers.
(p) Provide that each eligible employee may choose from any
participating medical carrier as long as the participating carrier
provides coverage where the employee works or lives.
(q) Receive, review, and act, as appropriate, on grievances by
participating employers or enrollees.
(r) Review information and recommendations from consumers,
employers, small employers, participating carriers, health care
providers, and other sources. After the review, the board may issue
reports or otherwise make recommendations to improve the delivery or
purchase of health care.
(s) Establish administrative and accounting procedures for
operating the purchasing alliance and for providing services to
employers, small employers, and enrollees.
(t) Prepare an annual report on the operations of the purchasing
alliance to the commissioner, which shall include an accounting of
all outside revenues received by the board and internal and
independent audits and any other information the commissioner may
require.
(u) Establish procedures for billing and collection of premiums
from employers and small employers, including any share of the
premium paid by enrollees.
(v) Establish procedures for annual open enrollment periods during
which an employee enrolled in a health benefit plan through the
purchasing alliance may elect to enroll in any health benefit plan
that is available to that size group through the purchasing alliance,
and that provides health coverage where the employee lives or works
and during which any enrollee may elect to enroll in any health
benefit plan that is available to that size group through the
purchasing alliance, and that provides health coverage where the
enrollee lives or works. For purposes of this subdivision, "size
group" refers to whether the employer is a small employer or any
other employer covered by this chapter.
(w) Provide that in the event an employer or small employer
terminates coverage purchased through the purchasing alliance, the
former employer or small employer shall be ineligible to purchase a
health benefit plan or ancillary benefit plan through the purchasing
alliance for a period determined by the alliance, but not to exceed
12 months.
(x) Maintain a trust account or accounts in a California bank for
deposit of all moneys received and collected for operation of the
purchasing alliance. A purchasing alliance, its owners, operators,
partners, board members, employees, and agents shall have a fiduciary
duty with respect to all moneys received or owed to it to ensure
payment of its obligations and a full accounting to its participating
employers, health plans, and the commissioner.
(y) With respect to small employers, ensure that all carrier rates
for purchasing alliance small group health benefit plans are
consistent with the requirements of Sections 1357.12 and 1357.13 of
the Health and Safety Code and Sections 10714 and 10715.
(z) Treat all members within an employer or small employer group
equally with regard to administrative fees and benefits of
participation.
(aa) Every purchasing alliance shall offer at least one health
plan that compensates its providers on an other than capitated basis
in every region in which the alliance operates.
(ab) Have the authority to develop or contract for the development
of uniform standards for data to be provided by participating
carriers and providers. The purchasing alliance may collect or
contract for the collection of data necessary for evaluation of the
performance of participating carriers and their provider networks by
consumers, providers, employers, small employers, and the
commissioner. In formulating data collection standards, the board may
use standards based on, and consistent with, existing state,
National Association of Insurance Commissioners, and national health
care data collection initiatives, and shall take into account their
feasibility and cost-effectiveness.
(ac) Not expend for administrative purposes and profits in any
fiscal year an excessive amount of the aggregate premiums, fees, and
other periodic payments received by the purchasing alliance for
providing health benefits to employers, small employers, and their
employees, through a contract with participating carriers. As used in
this subdivision, "administrative costs" includes costs in
connection with marketing and sales of the health benefit plans
offered by the purchasing alliance.
(ad) Exercise all powers reasonably necessary to carry out the
powers and responsibilities expressly granted or imposed by this
chapter.

10841. (a) A purchasing alliance shall comply with all requirements
pertaining to the underwriting, rating and renewal practices for
small employers, pursuant to subdivisions (a) and (b) of Section
1357.12 of , and subdivision (f) of Section 1357.03 of, the Health
and Safety Code, and subdivisions (a) and (b) of Section 10714.
(b) A purchasing alliance shall comply with all requirements
pertaining to the marketing practices for small employers who
participate in the purchasing alliance, pursuant to subdivision (d)
of Section 1357.03 of the Health and Safety Code and subdivisions (f)
and (j) of Section 10705.
(c) A purchasing alliance shall comply with all requirements
pertaining to the participation requirements for small employers who
participate in the purchasing alliance, pursuant to subdivision (b)
of Section 1357.03 of the Health and Safety Code and Section 10706. A
carrier participating in a purchasing alliance shall be deemed to be
in compliance with this requirement.

10842. A purchasing alliance may do any of the following:
(a) Contract with qualified independent third parties for any
services necessary to carry out the powers and duties authorized or
required by this chapter.
(b) Employ necessary staff.
(c) Sue or be sued, including taking any legal actions necessary
or proper for recovering any penalties for or on behalf of the health
insurance purchasing group.
(d) Allow a participating employer to choose the benefit plan
design, from those offered by the purchasing alliance, to be made
available to their eligible employees.
(e) Allow eligible employees to enroll in any benefit plan design
offered by the purchasing alliance.
(f) Contract with licensed insurance agents or brokers to market
and service coverage made available through the purchasing alliance
to its members. Compensation for agents and brokers may not vary
based on the small employer or his or her enrollees and dependents'
actual or expected health status, industry, occupation, medical
utilization, claims experience, or geographic location within the
service region. This subdivision shall not apply with respect to a
compensation arrangement that provides compensation to an agent or
broker on the basis of percentage of premium; provided that
percentage shall not vary because of the health status, industry,
occupation, medical utilization, claims experience, or geographic
location within the service region.
(g) Exclude a carrier or freeze enrollment in a carrier for
failure to achieve established quality, access, or information
reporting standards of the purchasing alliance.

10843. A purchasing alliance shall not do any of the following:
(a) Purchase health care services, assume risk for the cost or
provision of health services, or otherwise contract with health care
providers for the provision of health care services directly to
enrollees.
(b) Exclude a small employer or eligible employee or dependent of
an eligible employee of a small employer from membership in the
purchasing alliance who agrees to pay fees for membership and the
premium for coverage through the purchasing alliance and who abides
by the bylaws and rules of the purchasing alliance.
(c) Prohibit the participation of small employers, as described in
subdivision (a) of Section 1357.03 of the Health and Safety Code and
in subdivision (b) of Section 10705, or utilize risk adjustment
practices that conflict with the small employer group health
provisions described in subdivisions (a) and (b) of Section 1357.12
of the Health and Safety Code and subdivision (b) of Section 10714.
(d) Charge a fee not directly related to the operation of the
purchasing alliance.
(e) As a condition of participation, require an employer or small
employer, eligible employee or dependent to subscribe to nonhealth
care or nonhealth insurance related products or services.
(f) Operate the purchasing alliance or market the purchasing
alliance in a service region in a way that would cause the purchasing
alliance to select a risk pool with health care utilization that is
significantly below the average for all similar groups with similar
coverage in the same region.
(g) Engage in any competitive act or practice that results in the
selection of small employers and his or her enrollees and dependents
based on actual or expected health status, claims experience, medical
utilization, industry, occupation, or geographic location within the
service region.
(h) Require or take any action inconsistent or in conflict with
state laws or regulations.

10844. A purchasing alliance may offer coverage pursuant to Chapter
9.5 (commencing with Section 10900).

10845. (a) The commissioner shall require every purchasing
alliance, as a condition precedent to receiving and holding a
certificate of registration, to file and maintain in the commissioner'
s office a writing designating an agent for service of process. The
writing shall state the name of the agent and his or her place of
business in this state with sufficient particularity so that he or
she can readily be found by peace officers or process servers.
Appointment of the agent reasonably available for service of papers,
notice, proof of loss, summons or other process during business hours
shall be continuously maintained by every registered purchasing
alliance subject to this article while it holds a valid and unrevoked
certificate of registration.
(b) An agent designated by a purchasing alliance as provided in
this article may file with the commissioner a written statement of
resignation as that agent, which shall be signed and execution
thereof shall be duly acknowledged by the agent. Thereupon, the
authority of the agent to act in such capacity shall cease and the
commissioner shall forthwith give written notice of the resignation
by mail to the purchasing alliance addressed to its principal office
as shown by the commissioner's records. If an agent who has been
appointed by a purchasing alliance as provided by this article dies
or resigns or removes his or her residence from the state, the
purchasing alliance shall forthwith file with the commissioner an
appointment of a new agent on a form provided by the commissioner for
such purpose and pay the filing fee therefor, and the filing shall
be deemed to revoke any prior designation of agent.
(c) No fee shall be charged, except as included in the application
for certificate of registration fee provided in this article, for
filing the initial appointment under this article by an applicant for
registration. Thereafter the commissioner shall require the payment
of forty-five dollars ($45) in advance as a fee for filing
appointment of agent or stipulation or both by every registered
purchasing alliance.