S.F. _____ Section 1. NEW SECTION . 8A.440 Municipal employee health 1 insurance pool. 2 1. As used in this section: 3 a. “Health benefit plan” means the same as defined in 4 section 514J.102. 5 b. “Health carrier” means the same as defined in section 6 514J.102. 7 c. “Health carrier reverse auction” means a transparent and 8 competitive bidding process conducted online that starts with 9 an opening round of bids and allows qualified health carrier 10 bidders to counteroffer a lower price for as many rounds of 11 bidding as determined by the department. 12 d. “Market check” means a technology-driven evaluation of an 13 incumbent health carrier’s health benefit plan pricing based 14 on benchmark comparators derived from health carrier reverse 15 auction processes conducted in the United States over the 16 immediately preceding twelve months. 17 e. “Municipality” means any city or county in the state. 18 f. “Participant bidding agreement” means an online agreement 19 that details common definitions, rules, data access and use 20 rights, and other optimal contract terms that benefit the 21 state and that all bidders must accept as a prerequisite for 22 participation in a health carrier reverse auction. 23 g. “Price” means the projected cost of a health carrier’s 24 bid to provide health benefit plans to allow direct comparison 25 of the comparably calculated costs of competing health 26 carriers’ proposals over the duration of the health benefit 27 plans. 28 2. Consistent with section 8A.311, and notwithstanding any 29 other law to the contrary, the department shall enter into a 30 contract with a health carrier for the administration of a 31 municipal employee health insurance pool in compliance with 32 this section. 33 3. The department shall conduct a reverse auction to accept 34 bids from health carriers to provide health benefit plans for 35 -1- LSB 5859XC (4) 91 nls/ko 1/ 6

S.F. _____ the health insurance pool before July 1, 2028, as follows: 1 a. Prior to November 1, 2027, the department shall procure 2 all of the following based on price, capabilities, and other 3 factors deemed relevant by the department: 4 (1) A technology platform with the capabilities to conduct 5 a health carrier reverse auction. The department shall ensure 6 that the technology platform possesses, at a minimum, the 7 capacity to do all of the following: 8 (a) Conduct an online reverse auction of health benefit 9 plans using a software application and high-performance 10 data infrastructure to intake, cleanse, and normalize health 11 carrier data with development methods and information security 12 standards that have been validated by receiving service 13 organization control 2 and national institute of standards and 14 technology certification, or successor information technology 15 security certifications, as identified by the office of the 16 chief information officer. 17 (b) Simultaneously evaluate diverse and complex multiple 18 proposals from health carriers. 19 (c) Produce an automated report and analysis of health 20 carriers’ bids, including ranking of health carriers’ bids 21 based on comparative costs and qualitative aspects of the bids 22 following the close of each round of reverse auction bidding. 23 (d) Perform electronic, line-by-line, claim-by-claim review 24 of one hundred percent of invoiced health benefit plan claims, 25 and identify all deviations from the specific terms of the 26 health benefit plan that resulted from the reverse auction 27 process. 28 (2) Related services from the operator of the technology 29 platform identified in subparagraph (1), which at a minimum 30 shall include all of the following: 31 (a) Evaluation of the qualifications of health carrier 32 bidders. 33 (b) Health carrier reverse auction services to support the 34 department in comparing pricing for the health benefit plan 35 -2- LSB 5859XC (4) 91 nls/ko 2/ 6

S.F. _____ procurement. 1 (c) Related professional services. 2 b. The department shall not award a contract for the 3 technology platform and technology operator services to a 4 vendor that is a health carrier or to a vendor that is managed 5 by, or a subsidiary or affiliate of, a health carrier. 6 c. The vendor awarded the contract by the department shall 7 not outsource any part of the health carrier reverse auction or 8 any part of the electronic, line-by-line, claim-by-claim review 9 of invoiced health benefit plan claims. 10 d. With technical assistance and support provided by the 11 technology platform operator, the department shall specify the 12 terms of the participant bidding agreement. The terms of the 13 participant bidding agreement shall not be modified except by 14 specific consent of the department. 15 e. (1) The technology platform used to conduct the reverse 16 auction shall be repurposed over the duration of the health 17 benefit plan as a health carrier claims adjudication engine to 18 perform electronic, line-by-line, claim-by-claim review of one 19 hundred percent of invoiced health benefit plan claims, and to 20 identify all deviations from the specific terms of the health 21 benefit plan. 22 (2) The department shall reconcile the electronically 23 adjudicated health benefit plan claims, as described in 24 subparagraph (1), with a health carrier’s invoices on a monthly 25 or quarterly basis to ensure that payments do not exceed the 26 terms specified in any health benefit plan. 27 f. (1) The first health carrier reverse auction shall 28 be completed and the services contract shall be awarded to 29 the winning health carrier with an effective date beginning 30 July 1, 2028. Subsequent contracts must be awarded no later 31 than three months prior to termination or expiration of the 32 current health benefit plan for a covered group, that includes 33 only active employees and dependents, but does not include 34 retiree participants in a Medicare part D employer group 35 -3- LSB 5859XC (4) 91 nls/ko 3/ 6

S.F. _____ waiver program pursuant to the federal Medicare Prescription 1 Drug, Improvement, and Modernization Act of 2003, Pub. L. No. 2 108-173. 3 (2) In the event an eligible covered group that includes 4 retiree participants in a Medicare part D employer group 5 waiver program pursuant to the federal Medicare Prescription 6 Drug, Improvement, and Modernization Act of 2003, Pub. L. 7 No. 108-173, opts to use the processes and procedures under 8 this section, the relevant health carrier reverse auction 9 shall be completed and the health carrier contract shall be 10 awarded to the winning health carrier no later than six months 11 prior to termination or expiration of the health benefit plan 12 currently covering the retiree employer group waiver program 13 participants. 14 g. The department may perform a market check for providing 15 health benefit plans during the term of the current health 16 benefit plan in order to ensure continuing competitiveness of 17 incumbent health benefit plan pricing during the term of a 18 health benefit plan. 19 h. The department may elect to vacate the outcome of a 20 health carrier reverse auction if the lowest-cost health 21 carrier’s bid is not less than the projected cost trend 22 for the incumbent health benefit plan as verified by the 23 department. The department may utilize a consultant to conduct 24 the verification. The cost trend shall be projected by the 25 technology platform operator using industry-recognized data 26 sources and shall be subject to review and approval by the 27 department in advance of the health carrier reverse auction. 28 Methodology shall be applied consistently in projection of cost 29 and savings with regard to the incumbent health benefit plan 30 and competing health carrier reverse auction bids. 31 4. A municipality shall submit a letter of intent to opt 32 in or opt out of participating in the health insurance pool to 33 the department before July 1, 2027. A health insurance pool 34 shall not be established unless ten percent of the counties in 35 -4- LSB 5859XC (4) 91 nls/ko 4/ 6

S.F. _____ the state and ten percent of the cities in the state submit a 1 letter of intent to opt in to the health insurance pool. 2 5. If the required percentage of counties and cities under 3 subsection 4 submit a letter of intent to opt in to the health 4 insurance pool, the department shall establish the health 5 insurance pool on or before July 1, 2028. Once established, 6 any municipality may participate in the health insurance pool. 7 6. a. The department shall establish and administer the 8 health insurance pool, including administration of the health 9 benefit plan selected through the reverse auction. 10 b. Each municipality shall reimburse the department for 11 all administrative costs, including costs associated with the 12 reverse auction, in an amount proportional to the size of the 13 municipality. 14 c. Each municipality shall reimburse the department for the 15 municipality’s actual cost of employee health benefit plans. 16 7. The commissioner of insurance shall adopt rules pursuant 17 to chapter 17A to administer this section. 18 EXPLANATION 19 The inclusion of this explanation does not constitute agreement with 20 the explanation’s substance by the members of the general assembly. 21 This bill relates to the establishment of a health insurance 22 pool for municipal employees. 23 The bill requires the department of administrative services 24 (department) to enter into a contract with a health carrier 25 (carrier) for the administration of a municipal employee health 26 insurance pool (insurance pool) in compliance with the bill. 27 The department shall conduct a reverse auction to accept 28 bids from carriers to provide health benefit plans (plans) for 29 the insurance pool pursuant to the requirements of the bill. 30 A municipality shall submit a letter of intent to opt in 31 or opt out of participating in the insurance pool to the 32 department before July 1, 2027. An insurance pool shall not be 33 established unless 10 percent of the counties in the state and 34 10 percent of the cities in the state submit a letter of intent 35 -5- LSB 5859XC (4) 91 nls/ko 5/ 6

S.F. _____ to opt in to the insurance pool. 1 If the required percentage of counties and cities submit 2 a letter of intent to opt in to the insurance pool, the 3 department shall establish the insurance pool on or before July 4 1, 2028. Once established, any municipality may participate 5 in the insurance pool. 6 The department shall establish and administer the insurance 7 pool, including the plan selected through the reverse auction. 8 Each municipality shall reimburse the department for all 9 administrative costs in an amount proportional to the size 10 of the municipality. Each municipality shall reimburse the 11 department for the municipality’s actual costs of employee 12 plans. 13 The commissioner of insurance shall adopt rules to 14 administer the bill. 15 -6- LSB 5859XC (4) 91 nls/ko 6/ 6