(a) A hospital service corporation shall enter into service agreements with hospitals approved or licensed by the state only.
(b) Each service agreement must require the participant hospital to furnish to subscribers of the service corporation the hospital services that are, under the subscriber's contract, to be furnished by participant hospitals; and this obligation to furnish the service, as provided for in the subscriber's contract, shall be a direct obligation of the participant hospitals to the subscribers as well as to the service corporation.
(c) Each service agreement must further effectively in substance provide that
(1) the participant hospitals shall be compensated for services rendered to a subscriber in accordance with terms contained in the agreement or attached to and made a part of the agreement and that the hospital may not request or receive from the service corporation compensation for the services that is not in accord with the terms;
(2) compensation for services may be prorated and settled under the circumstances and in the manner referred to in AS 21.87.300;
(3) if the participant hospital withdraws from the agreement, the withdrawal may not be effective as to a subscriber's contract in force on the date of the withdrawal until the termination of the subscriber's contract or the next anniversary of the subscriber's contract, whichever date is the earlier.
(d) The service corporation shall terminate the service agreement of a particular participant hospital, in addition to other bases of termination provided for in the agreement, if it is determined that the hospital has knowingly charged or attempted to charge the service corporation for a service not actually rendered, or has knowingly violated a material provision of the service agreement.
(e) The proposed form of a service agreement and of the standard riders and endorsements to it shall be filed with the director and are subject to the approval of the director under AS 21.87.180.