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.