Section 10821.

(a) An entity seeking to obtain a certificate of registration to act as a purchasing alliance shall complete and file with the commissioner an application designated by the commissioner. An application will not be deemed filed until all information necessary to properly process the application has been received by the commissioner.

(b) Upon filing, the commissioner shall make a determination concerning the application and provide notice of file determination to the applicant within 180 days of the date the application is deemed filed. If approved, a copy of a certificate of registration, in a form designed by the commissioner, shall be provided to the purchasing alliance. The certificate of registration shall serve as authorization to operate pursuant to this chapter.

(c) A purchasing alliance shall maintain a minimum net worth of forty thousand dollars ($40,000) plus one months operating expenses as reserves. Net worth is defined as the excess of admitted assets over all liabilities.

(d) A purchasing alliance shall at all times maintain current assets of at least ten thousand dollars ($10,000) in excess of current liabilities, as such current assets and liabilities may be defined pursuant to regulations made by the commissioner. In making those regulations, the commissioner shall be guided by generally accepted accounting principles followed by certified public accountants in this state.

(e) The entity that is seeking to obtain a certificate of registration to act as a purchasing alliance shall file with the commissioner the following information or documents:

(1) At the time of initial registration, the entity shall provide a written description as to how the entity intends to meet the public policy objectives of increased access and improved quality of health care services.

The written description shall also demonstrate that the purchasing alliance will have the technical expertise and physical capacity to serve employers or small employers and their eligible employees in this state.

The written description shall also describe the scope of services to be offered in this state and the resources and expertise to be used to implement and administer those services.

(2) Current partnership agreements, articles of incorporation, trust documents, or similar documents establishing the group.

(3) Current bylaws of the group.

(4) A statement of grievance procedures relative to the eligibility, enrollment, premium collection, and administrative services provided by the alliance.

(5) A statement of enrollment procedures and requirements, including participation and contribution rules and requirements.

(6) A statement of disenrollment criteria and procedures.

(7) A statement of payment procedures, late payment procedures, and grace periods.

(8) A purchasing alliance shall demonstrate to the satisfaction of the commissioner that its governance makes it an appropriate and effective representative of employers or small employers and their eligible employees' interests throughout this state. A purchasing alliance shall organize and facilitate competition between multiple unaffiliated carriers.

(9) A list of owners, partners, officers, and directors of the applicant and the contracted management company or third-party administrator, if such are employed, and personal biographical information or firm descriptions for each. The owners, partners, officers, directors, and contracted managers and administrators shall not have a prior record of administrative, civil, or criminal violations within any financial service industry.

The personal biographical information and firm descriptions shall demonstrate by clear and convincing evidence that those involved in the operation of the alliance have the expertise, experience, and character to effectively and professionally represent employers or small employers and their eligible employees in a fiduciary capacity.

(10) Evidence of adequate security and prudence in the accounting, deposit, collection, handling, and transfer of moneys. A purchasing alliance shall affirmatively demonstrate adequate financial controls to the satisfaction of the commissioner as a condition of being issued a certificate of registration.

(11) A description of the employers or small employers and their eligible employees to which the purchasing alliance will be marketing. A purchasing alliance shall demonstrate to the satisfaction of the commissioner that it will fairly and affirmatively offer, market, and sell all of its available small employer health benefit plan products to all small employers throughout all the service regions in this state.

(12) Disclosure of any preexisting oral or written agreements.

(13) Any other information required by the commissioner deemed pertinent to the policies and operation of the alliance.

(f) Thirty days prior to any amendment or modification to any of the documents submitted pursuant to subdivision (e), the alliance shall file with the commissioner a copy of the amended or modified document. Any amendment or modification shall be deemed approved if the commissioner has not disapproved the document within 30 days.

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