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.

(Added by Stats. 1996, Ch. 916, Sec. 1. Effective January 1, 1997.)