Section 1357.516 Of Article 3.16. Nongrandfathered Small Employer Plans From California Health And Safety Code >> Division 2. >> Chapter 2.2. >> Article 3.16.
1357.516
. (a) Health care service plans may enter into contractual
agreements with qualified associations, as defined in subdivision
(b), under which these qualified associations may assume
responsibility for performing specific administrative services, as
defined in this section, for qualified association members. Health
care service plans that enter into agreements with qualified
associations for assumption of administrative services shall
establish uniform definitions for the administrative services that
may be provided by a qualified association or its third-party
administrator. The health care service plan shall permit all
qualified associations to assume one or more of these functions when
the health care service plan determines the qualified association
demonstrates the administrative capacity to assume these functions.
For the purposes of this section, administrative services provided
by qualified associations or their third-party administrators shall
be services pertaining to eligibility determination, enrollment,
premium collection, sales, or claims administration on a per-claim
basis that would otherwise be provided directly by the health care
service plan or through a third-party administrator on a commission
basis or an agent or solicitor workforce on a commission basis. Each
health care service plan that enters into an agreement with any
qualified association for the provision of administrative services
shall offer all qualified associations with which it contracts the
same premium discounts for performing those services the health care
service plan has permitted the qualified association or its
third-party administrator to assume. The health care service plan
shall report to the department its schedule of discounts for each
administrative service.
In no instance may a health care service plan provide discounts to
qualified associations that are in any way intended to, or
materially result in, a reduction in premium charges to the qualified
association due to the health status of the membership of the
qualified association. In addition to any other remedies available to
the director to enforce this chapter, the director may declare a
contract between a health care service plan and a qualified
association for administrative services pursuant to this section null
and void if the director determines any discounts provided to the
qualified association are intended to, or materially result in, a
reduction in premium charges to the qualified association due to the
health status of the membership of the qualified association.
(b) For the purposes of this section, a qualified association is a
nonprofit corporation comprised of a group of individuals or
employers who associate based solely on participation in a specified
profession or industry that conforms to all of the following
requirements:
(1) It accepts for membership any individual or small employer
meeting its membership criteria.
(2) It does not condition membership directly or indirectly on the
health or claims history of any person.
(3) It uses membership dues solely for and in consideration of the
membership and membership benefits, except that the amount of the
dues shall not depend on whether the member applies for or purchases
insurance offered by the association.
(4) It is organized and maintained in good faith for purposes
unrelated to insurance.
(5) It existed on January 1, 1972, and has been in continuous
existence since that date.
(6) It has a constitution and bylaws or other analogous governing
documents that provide for election of the governing board of the
association by its members.
(7) It offered, marketed, or sold health coverage to its members
for 20 continuous years prior to January 1, 1993.
(8) It agrees to offer only to association members any plan
contract.
(9) It agrees to include any member choosing to enroll in the plan
contract offered by the association, provided that the member agrees
to make required premium payments.
(10) It complies with all provisions of this article.
(11) It had at least 10,000 enrollees covered by association
sponsored plans immediately prior to enactment of Chapter 1128 of the
Statutes of 1992.
(12) It applies any administrative cost at an equal rate to all
members purchasing coverage through the qualified association.
(c) A qualified association shall comply with Section 1357.52.