Section 151.08 - Application to be Certified Group Purchasing Cooperative(1) Any Qualified Association, or any Massachusetts nonprofit, or Massachusetts not-for-profit corporation that seeks certification as a Group Purchasing Cooperative pursuant to M.G.L. c. 176J, § 12 shall submit to the Division an application that contains at least the following, and any other information required by the Commissioner. The Commissioner may at any time specify an application format. (a)Internal Operations Plan.1. A copy of basic organizational documents, such as articles of incorporation, articles of association, partnership agreement, trust agreement or any other applicable documents establishing the applicant and all amendments thereto;2. A list of the Board of Directors or similar policy-making body of the applicant, including the name, principal occupation and employer of each person;3. A copy of the bylaws, rules and regulations, or other similar document regulating the conduct of the applicant's internal affairs;4. A copy of the organizational chart of the applicant, including titles in the areas of marketing, administration, enrollment, grievance procedures, contract negotiation and financial matters;5. A narrative of the facilities and personnel of the applicant, including but not limited to the organizational structure of the applicant;6. A description and map of the Service Area in which the applicant would propose to offer Health Benefit Plans and Wellness Programs to Eligible Association Members and Qualified Association Members' Eligible Employees and Eligible Dependents;7. A power of attorney authorizing the Commissioner to accept service of process for any legal actions commenced against the applicant, if the applicant is not domiciled in the Commonwealth;8. A plan for the Group Purchasing Cooperative to arrange for information about Health Benefit Plan options to be published and distributed to contracting Qualified Associations on an annual basis;9. A statement of the Group Purchasing Cooperative's procedures used to maintain member confidentiality including, but not limited to, any health information or other personal information protected under laws or regulations of the Commonwealth or under the Health Insurance Portability and Accountability Act of 1996, as it is amended, or by regulations promulgated under that act;10. Procedures the Group Purchasing Cooperative plans to undertake to study and improve its processes; and11. A detailed description of the Group Purchasing Cooperative's formal internal grievance systems, including procedures for the registration of grievances other than grievances related to claims and benefit administration.(b)Wellness Program. 1. A description of the impact the Wellness Program is expected to have on the overall health and utilization of Wellness Program participants and the impact that will have on reducing the overall cost of care provided to Wellness Program participants; and2. A description of wellness monitoring and information technology systems and how such systems are in compliance with the requirements of 211 CMR 151.15.(c)Marketing Plan. 1. A marketing plan describing the projected number of persons to be enrolled in coverage through the Group Purchasing Cooperative and the Service Area in which the Group Purchasing Cooperative will market its Health Benefit Plans;2. A marketing plan describing how the Group Purchasing Cooperative and/or Qualified Associations will communicate with Eligible Employers and Eligible Association Members and the procedures that will be used to ensure that marketing methods are compliant with all relevant statutes and regulations;3. The anticipated enrollment in Health Benefit Plans offered by the applicant in each Service Area in which the applicant will operate; and4. A statement of the size, organization, accountability and marketing methods of the marketing staff of the applicant.(d)Member Agreements and Services. 1. A copy of the proposed agreement between the applicant and the Qualified Association(s), which agreement shall not have rules that are more restrictive than the following: a. The Group Purchasing Cooperative shall not charge a Qualified Association a fee greater than $10,000 to join the Group Purchasing Cooperative;b. The Group Purchasing Cooperative shall not charge a Qualified Association an annual enrollment fee that is greater than the reasonable cost of administering group purchasing programs;c. The Group Purchasing Cooperative shall not require more than one year's notice from a Qualified Association that it intends to withdraw from the Group Purchasing Cooperative;d. The Group Purchasing Cooperative shall not require that Eligible Employers or Eligible Association Members apply employer contribution levels based on participation in the Group Purchasing Cooperative Wellness Program that are greater than those permitted under federal law or under laws or regulations of the Commonwealth; ande. The Group Purchasing Cooperative shall not impose penalties on a Qualified Association that withdraws from the Group Purchasing Cooperative that are more restrictive than precluding such Qualified Association from contracting with the same Group Purchasing Cooperative for a period of three years after withdrawal.2. A copy of all proposed agreement(s) between the applicant and the Qualified Association Members, which agreement(s) shall not have rules that are more restrictive than the following: a. The Group Purchasing Cooperative shall not charge a Qualified Association Member an initial membership fee greater than $500 per Eligible Employee or Eligible Association Member to join the Group Purchasing Cooperative;b. The Group Purchasing Cooperative shall not charge a Qualified Association Member an annual health plan administration fee that is greater than the reasonable cost of administering group purchasing programs;c. The Group Purchasing Cooperative shall not require more than 60 days notice from a Qualified Association Member that the member intends to terminate the health coverage obtained through the Group Purchasing Cooperative; andd. The Group Purchasing Cooperative shall not impose penalties on a Qualified Association Member terminating health coverage obtained through the Group Purchasing Cooperative that are more restrictive than precluding such Qualified Association Member from obtaining health coverage through the same Group Purchasing Cooperative for a period of three years.(e)Contractual Arrangements. 1. Contracts between the applicant and any entity that is responsible for conducting member enrollment, administration, coordination of Wellness Programs, or similar activities; and2. Written procedures, including but not limited to reasonable enrollment and Wellness Program participation requirements, which the applicant will employ to determine Qualified Association Member eligibility to obtain health coverage through the certified Group Purchasing Cooperative.(f)Financial Plan. 1. Audited financial reports for the prior three fiscal years or since the applicant's formation;2. Business plan regarding the fees that the applicant will charge Qualified Associations, Eligible Association Members, Eligible Small Businesses, Eligible Employees and Eligible Dependents who obtain health coverage through the applicant, including, but not limited to all billing, administrative, payment, credit card, and Wellness Program participation fees;3. Financial statements, as listed in 211 CMR 151.08(1)(f)3.a. through f., which project the results of the applicant's operations for the next three calendar years: b. Statement of income and expense;c. Statement of changes in capital and surplus;d. Statement of cash flow;e. Capital expenditure; andf. Repayment schedule for any existing or anticipated loans. The projection for year one shall consist of projected results for quarters one, two, three and four;
4. A statement indicating when the applicant estimates that revenue from fees and other income from operations will equal expenses;5. Projections must be accompanied by detailed statements of underlying assumptions used and the bases thereof, including, but not limited to, projected administrative fees and documentation of the method used to derive the administrative fees and the number of Qualified Associations, Eligible Association Members, Eligible Small Businesses, Eligible Employees and Eligible Dependents that pay those fees. If available, independent evaluations and assessment of these statements also should be included;6. A copy of the vote of the applicant's board of directors or governing body designating the permissible forms of investments of the Group Purchasing Cooperative's funds and any limitations thereon;7. Letters of financial support, credit, bond, or loan guarantee or other financial guarantee to the applicant;8. Written procedures and policies for appropriate financial controls;9. A detailed statement of the applicant's plan to establish and maintain reserves or other funds as determined necessary pay for the Group Purchasing Cooperative's services and other costs;10. A detailed statement of current and projected reserve establishment calculations, amounts, purpose and use of reserve, and assumptions and bases thereof, including, but not limited to, identification of reserves set aside pay for the Group Purchasing Cooperative's services and other costs;11. A statement of the applicant's plans for a surety bond or a deposit of cash or sureties as a guarantee that the obligation to the members will be performed;12. A statement of insurance or funded self-insurance coverage for: a. Protection against loss of property and liability; andb. Worker's compensation to protect against claims arising from work-related injuries;13. A listing of the applicant's legal, accounting and actuarial representatives by name and address;14. A statement of the applicant's accounting system and organization, management and internal controls, and method of estimating and handling incurred but not reported liabilities; and15. A statement of fidelity bond coverage of all of the applicant's officers and employees entrusted with the handling of funds.(2) A Group Purchasing Cooperative's application will not be considered complete until all information required by 211 CMR 151.00 has been received by the Division. The applicant shall respond to any request for additional information from the Division within 15 days of receipt of the request.(3) A Group Purchasing Cooperative applicant shall submit any material change(s) to the application to the Division within 30 days after any officer or employee first becomes aware of the material change(s) to the application.(4) The Division shall notify an applicant, in writing, that it has been certified as a Group Purchasing Cooperative or denied certification as a Group Purchasing Cooperative.