SB 950
Allows for the formation of small employer purchasing alliances to purchase health insurance
LR Number:
Last Action:
1/30/2006 - Second Read and Referred S Pensions, Veterans' Affairs and General Laws Committee
Journal Page:
Calendar Position:
Effective Date:
August 28, 2006

Current Bill Summary

SB 950 - FORMATION OF SMALL EMPLOYER PURCHASING ALLIANCES - This act allows groups of small employers to join together to form a small employer purchasing alliance for the purposes of delivering health insurance coverage and negotiating reduced premium rates for its members. The purchasing alliance shall be a nonprofit corporation formed under the provisions of Chapter 355, RSMo.

BOARD OF DIRECTORS - The alliance shall be governed by a board of directors, elected by the members of the purchasing alliance. No person may serve as an officer or director of an alliance who has a prior record of administrative, civil, or criminal violations within the financial services or insurance industry. No person may be a board director or employee of an alliance if that person has a material direct or indirect ownership interest in a carrier, health insurance company or health care provider. The directors shall serve for terms of three years, and shall serve until their successors are elected and qualified (Section 379.1006).

BOARD BYLAWS - The board shall adopt bylaws for the operation of the purchasing alliance. The bylaws shall include procedures for the organization and administration of the alliance; procedures for the qualifications and admission of the members of the alliance; procedures for the expulsion of members from the alliance; and procedures for the termination of the alliance.

LICENSURE OF ALLIANCES - All alliances shall be licensed with the Department of Insurance. An alliance established under sections 379.1000 to 379.1030 shall be organized as a nonprofit corporation under chapter 355, RSMo. The act requires the purchasing alliance board shall to file with the director of the Department of Insurance a certificate which shall list the members of the alliance, the names of the board of directors, and the chairman, treasurer, and secretary of the purchasing alliance; the address at which communications for the purchasing alliance are to be received; a copy of the certificate of incorporation of the purchasing alliance, if any; and a copy of the joint contract executed by all of the members. The board shall also file with the director within thirty days of its organization, and annually thereafter, the following:

(1) A description of its plan of operation, including each of the products it intends to sell;

(2) A description of its marketing methods and materials; and

(3) A description of its membership and disclosure requirements or other information as required by the director through rules and regulations.

POWER OF THE ALLIANCE BOARD - A small employer purchasing alliance board may set reasonable fees for membership in the alliance for financing reasonable and necessary costs incurred in administering the alliance. The board may provide premium collection services for health benefit plans offered through the alliance if the carrier gives express written authorization to the alliance. The board may contract with qualified third-party administrators for any service necessary to carry out the powers and duties authorized by the act. The board may negotiate with participating carriers the premium rates charged for coverage offered through the alliance, consistent with rules adopted by the director. The board may negotiate and enter into agreements with one or more qualified carriers to offer and provide one or more health benefit plans to small employers for their employees and retirees, and the dependents and members of the families of such employees and retirees.

RESTRICTIONS ON ALLIANCES - A small employer purchasing alliance shall not:

(1) Purchase health care services, assume risk for the cost or provision of health care services, or otherwise contract with health care providers for the provision of health care services to eligible employees or their dependents;

(2) Exclude a small employer, eligible employee, or dependent from membership in the purchasing alliance who agrees to pay fees for membership and the premium for health benefits coverage and who abides by the bylaws and rules of the purchasing alliance;

(3) Engage in any act or practice that results in the selection of member small employers or eligible employees based on any health status-related factor;

(4) Vary conditions of eligibility, including premium rates and membership fees, for any employer meeting the membership requirements of the alliance, nor may it vary conditions of eligibility for any employee to qualify for a health benefits plan offered to the eligible employer by the alliance; or

(5) Condition alliance membership on the purchase or subscription or a product or service unrelated to health insurance.

CARRIER PARTICIPATION WITH ALLIANCES - An alliance shall develop and make available a list of objective criteria, subject to rules adopted by the director, that participating carriers must meet in order to be eligible to participate in the alliance. An alliance shall ensure that enrollees have a choice among a reasonable number of competing carriers and types of health benefit plans. Any carrier selected by a small employer purchasing alliance shall be licensed to transact business within this state and shall be in good standing with the Department of Insurance.

An alliance shall establish eligibility standards for membership in accordance with rules adopted by the director. The alliance shall accept all applicants for membership that meet the alliance's eligibility standards. All alliances shall maintain a trust account or accounts for deposit of all money received and collected for the operation of the alliance. An alliance and its board members, employees, and agents have a fiduciary duty with respect to all money received or owed to it to ensure payments of its obligations and a full accounting to its members and the director.

HEALTH BENEFIT PLANS OFFERED BY ALLIANCES - A small employer purchasing alliance shall not offer a health benefits plan which unfairly discriminates against eligible employees. The small employer purchasing alliance shall offer at least two types of plans to its members, including one plan providing a choice of deductibles with state-mandated health benefits.

MISREPRESENTATION BY NON-LICENSED ENTITIES - A person or entity not licensed by the director as an alliance that engages in the purchase, sale, marketing, or distribution of health insurance or health care benefit plans may not represent itself as an alliance, health insurance purchasing alliance, purchasing alliance, health insurance purchasing cooperative, or purchasing cooperative, or otherwise use a confusingly similar name.