SB1244 - Public Agency Benefits Intermediary Compensation Disclosure Act.

Enrolled August 28, 2026 Passed IN Senate August 26, 2026 Passed IN Assembly August 25, 2026 Amended IN Assembly August 19, 2026 Amended IN Assembly June 11, 2026 Amended IN Senate March 25, 2026 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Senate Bill No. 1244 Introduced by Senator Allen (Coauthor: Assembly Member Patel) February 19, 2026 An act to add Article 3.9 (commencing with Section 53059) to Chapter 1 of Part 1 of Division 2 of Title 5 of the Government Code, relating to health care coverage. LEGISLATIVE COUNSEL'S DIGEST SB 1244, Allen. Public Agency Benefits Intermediary Compensation Disclosure Act. Existing law requires various disclosures to be made regarding health care service plan and health insurance benefits and coverages. Existing law generally regulates the conduct of business between health care service plans and solicitors and health insurers and broker-agents, including requirements regarding contracts in which the solicitor represents the health care service plan or the broker-agent represents the insurer. This bill, the Public Agency Benefits Intermediary Compensation Disclosure Act, would require a covered service provider, defined to mean a broker, agent, consultant, or advisor that meets specified criteria, to disclose to a public agency, as defined, or its group health plan the direct and indirect compensation it expects to receive for providing brokerage or consulting services, among other information, before it enters into, extends, renews, or materially amends a contract or arrangement for brokerage services or consulting services with the public agency or its plan. The bill would also require a covered service provider to disclose compensation and material financial interests related to a covered health care benefits arrangement that the covered service provider recommends, places, renews, services, or materially influences for the public agency or its group health plan. Disclosure would be required under these provisions if the covered service provider reasonably expects it would receive $1,000 or more in compensation during the term of the contract or arrangement. The bill would require these disclosures at specified times. This bill would prohibit a covered service provider from requesting, accepting, or receiving direct or indirect compensation in connection with brokerage services or consulting services provided to a public agency or its plan unless the compensation is disclosed, and would prohibit evasion of disclosure requirements. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. This act shall be known, and may be cited, as the Public Agency Benefits Intermediary Compensation Disclosure Act. SEC. 2. The Legislature finds and declares all of the following: (a) Public agencies expend significant public funds on employee health care benefits and health care benefits-related services and must make procurement decisions transparently and in the public interest. (b) Public agencies frequently rely on brokers, agents, consultants, and advisors to recommend, procure, renew, and service health care employee benefits arrangements and benefits-related vendors. (c) Compensation arrangements, including indirect, contingent, or noncash compensation paid by carriers and vendors, including compensation not solely attributable to a particular public agency contract, can create conflicts of interest that may not be visible to public purchasers and their governing bodies. (d) Brokers, agents, consultants, and advisors currently receive compensation from multiple sources connected to their recommendations, including overrides, contingent or volume-based bonuses, retention bonuses, market-derived income, revenue sharing, referral fees, marketing allowances, administrative allowances, rebates, technology subsidies, and noncash benefits, which may create incentives misaligned with the interests of public agencies and their plan members. (e) Under current federal law, the Employee Retirement Income Security Act of 1974 (ERISA), group health plans are entitled to comprehensive broker and consultant compensation disclosure under Section 202 of the Consolidated Appropriations Act, 2021 (Public Law 116-260). Public agencies sponsoring nonfederal governmental plans are not covered by ERISA and do not receive equivalent transparency protections, regardless of whether or not those responsible for procuring health care benefits owe fiduciary duties to plan members. (f) Existing California law requires health care service plans and insurers to disclose broker compensation to public agency governing boards, but this plan-side disclosure does not capture the full scope of compensation that intermediaries receive from third-party sources, including vendors, pharmacy benefit managers, joint powers authorities, and other entities that may pay referral fees, revenue sharing, or other indirect compensation. (g) It is in the public interest to require transparent, proactive disclosure of direct and indirect compensation and material financial interests so that public agencies and their governing bodies can appropriately evaluate recommendations before acting on them. Unlike federal law, which requires disclosure only upon request by the plan, public agencies should receive disclosure automatically and in advance of any recommendations. (h) Intermediaries should not be permitted to avoid disclosure obligations by restructuring compensation arrangements, relabeling services, or routing payments through affiliated or unaffiliated entities. (i) It is the intent of the Legislature to bring parity in compensation transparency protections to California public agencies comparable to those applicable to ERISA plans under federal law, without imposing ERISA-style fiduciary duties, burdensome monitoring responsibilities, or reporting obligations on public agencies that may inadvertently raise health care costs for plan members. (j) Transparency improves public purchasing outcomes and deters compensation structures that undermine competitive procurement for the benefit of public agencies, their plan members, and California taxpayers. SEC. 3. Article 3.9 (commencing with Section 53059) is added to Chapter 1 of Part 1 of Division 2 of Title 5 of the Government Code, to read: Article 3.9. Local Agency Benefits Intermediary Compensation Disclosure 53059. For purposes of this article: (a) “Affiliate” means an entity that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with another entity, or is an officer, director, or employee of, or partner in, that entity. Unless otherwise specified, “affiliate” refers to an affiliate of the covered service provider. “Affiliate” includes a person or entity created, recruited, or designated with the intent to avoid the disclosure requirements of this article. (b) “Brokerage services” includes soliciting, recommending, placing, arranging, enrolling, renewing, extending, or otherwise materially influencing the selection of a covered health care benefits arrangement or vendor for a covered plan or public agency, and related assistance with procurement, marketing, negotiation, or implementation of those arrangements. (c) “Compensation” means anything of monetary value paid in cash or noncash form, including money, fees, commissions, consulting payments, retainers, overrides, contingent or volume-based compensation, bonuses including retention bonuses, referral fees, revenue sharing, marketing allowances, administrative allowances, rebates, technology subsidies, gifts, awards, trips, profit sharing, data access or data monetization payments, and any other remuneration or economic benefit received in connection with services provided to a public agency or covered plan, including credits, allowances, expense reimbursements, and expense offset. (d) “Consulting services” includes advising a covered plan or public agency on plan design, vendor selection, procurement strategy, benefits administration, evaluation of proposals, compliance support, or any other advisory service related to covered health care benefits arrangements. (e) “Contract or arrangement” means an agreement, whether written, oral, or implied, pursuant to which a covered service provider provides or agrees to provide brokerage services or consulting services, and includes a broker of record letter, agent of record designation, or any similar authorization. The effective date of a broker of record letter or similar designation shall be treated as the date of entering into a contract or arrangement for purposes of the timing requirements in Section 53059.4. (f) “Covered health care benefits arrangement” means a contract, policy, program, or arrangement for health care employee benefits or health care benefits-related services that is recommended, placed, renewed, extended, or materially influenced by a covered service provider for a covered plan or public agency, including all of the following: (1) Medical coverage, whether insured, self-funded, or both. (2) Stop-loss, captive, or reinsurance arrangements. (3) Dental coverage. (4) Vision coverage. (5) Voluntary or worksite benefits, including life insurance, disability insurance, accident insurance, critical illness insurance, and hospital indemnity insurance. (6) Third-party administration services, including trust or joint powers authority administration, health reimbursement arrangements, health savings accounts, flexible spending accounts, continuation coverage, and leave administration. (7) Network administration services. (8) Network access vendors and rental network arrangements. (9) Provider aggregators, including centers of excellence and direct contract aggregators. (10) Pharmacy benefit management services and related rebate programs. (11) Pharmacy benefit cost containment programs. (12) Recordkeeping services. (13) Medical management and utilization review vendors. (14) Wellness services and programs. (15) Transparency tools and data analytics vendors. (16) Group purchasing organization preferred vendor panels. (17) Disease management vendors and products. (18) Care navigation and care management services. (19) Telehealth services and platforms. (20) Compliance services. (21) Employee assistance programs. (22) Human resource information systems. (23) Benefits or coverages purchased through a multiemployer purchasing arrangement, such as a joint powers authority, trust fund, or cooperative. (24) Benefits or coverage for retirees, including Medicare supplement plans, Medicare Advantage plans, retiree health exchanges, and other retiree coverage programs. (25) Actuarial services, including actuarial valuations, ratesetting analysis, reserve certifications, and other actuarial consulting related to covered health care benefits arrangements. (26) Enrollment services and benefit enrollment platforms. (27) Digital health and specialty condition management programs, including mental health, musculoskeletal, fertility and family-building, diabetes management, weight management, and substance use disorder programs. (28) Reference-based pricing and direct contracting programs. (29) Onsite, near-site, or shared-site clinic services. (30) Claims auditing, claims repricing, and subrogation services. (31) Dependent eligibility verification and audit services. (32) Patient advocacy, health care concierge, and medical bill negotiation services. (33) Benefits communication and employee education services. (34) Banking and custodial services for health-related accounts, including health reimbursement arrangement, health savings account, and flexible spending account custodians. (35) Captive insurance management and captive feasibility consulting services. (36) Any other product, service, or vendor recommended if compensation is paid, directly or indirectly, because of the covered service provider’s recommendation, placement, renewal, or material influence. For purposes of this paragraph, “materially influence” includes providing advice, analysis, recommendations, or other input that was relied upon or adopted by the public agency in making a procurement, renewal, or vendor selection decision. (g) “Covered plan” means a group health plan sponsored by a public agency in this state, including a nonfederal governmental plan, without regard to if the plan is self-funded, fully insured, or a combination of funding arrangements. “Covered plan” includes coverage purchased through a joint powers authority or public joint labor management trust. (h) “Covered service provider” means a broker, agent, consultant, or advisor that enters into a contract or arrangement with a covered plan or public agency and reasonably expects, knew, or should have known it would receive, compensation, direct or indirect, to be received in connection with providing brokerage services or consulting services described in this article, regardless of if those services will be performed, or the compensation received, by the covered service provider, an affiliate, a subcontractor, or a related party. (i) “Direct compensation” means compensation received directly from the covered plan or from the public agency plan sponsor. (j) “Indirect compensation” means compensation received from any source other than the covered plan, the public agency plan sponsor, the covered service provider, or an affiliate. Compensation received from a subcontractor is indirect compensation unless it is received in connection with services performed under the subcontractor’s contract or arrangement. (k) “Material change” means a change to any information required to be disclosed under this article, including a new source of compensation, a new category of compensation, a change in payer or recipient, a change in formula or methodology, or a change in assumptions used to estimate compensation, that a reasonable person would consider important in evaluating potential conflicts of interest. (l) “Noncash compensation” means compensation that is not paid in cash, including travel, lodging, meals, entertainment, gifts, conference sponsorships, lead lists, technology, preferred access, or other items of value. (m) “Public agency” means a county, a city, a city and county, a school district, a community college district, a special district, a joint powers authority, a public authority, a public entity, or any other local governmental entity in this state that is authorized to sponsor, purchase, or administer employee health care benefits. “Public agency” also includes a public joint labor management trust or similar entity that provides or administers health or welfare benefits for public employees or retirees. (n) “Related party” means a covered service provider’s affiliate, subcontractor, or any other person or entity through which compensation is paid or received in connection wi [Text truncated for display. Full text available on Congress.gov.]