(a) A prepaid health plan contractor may not enter into subcontracts when such an action would remove from the contractor his obligation to bear a significant portion of the risk encountered in providing the covered services.
(b) The prepaid health plan may obtain reinsurance for the cost of providing covered services. Such reinsurance shall not limit the contractor’s liability below five thousand dollars ($5,000) per enrollee for any one 12-month period, except that the contractor may also obtain reinsurance for the total cost of services provided to enrollees by noncontractor emergency service providers, and for 90 percent of all costs exceeding 115 percent of its income during any contractor fiscal year.
(Added by Stats. 1977, Ch. 1036.)
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