BILL NUMBER: AB 2667	CHAPTERED  09/29/06

	CHAPTER  758
	FILED WITH SECRETARY OF STATE  SEPTEMBER 29, 2006
	APPROVED BY GOVERNOR  SEPTEMBER 29, 2006
	PASSED THE SENATE  AUGUST 31, 2006
	PASSED THE ASSEMBLY  AUGUST 31, 2006
	AMENDED IN SENATE  AUGUST 28, 2006
	AMENDED IN SENATE  AUGUST 23, 2006
	AMENDED IN SENATE  AUGUST 7, 2006
	AMENDED IN SENATE  JUNE 26, 2006
	AMENDED IN SENATE  JUNE 8, 2006
	AMENDED IN ASSEMBLY  MAY 8, 2006
	AMENDED IN ASSEMBLY  APRIL 26, 2006

INTRODUCED BY   Assembly Member Baca

                        FEBRUARY 24, 2006

   An act to add Section 22854 to the Government Code, to amend
Section 1351 of, and to add Section 1351.3 to, the Health and Safety
Code, to add Section 717.2 to the Insurance Code, and to add Article
2.99 (commencing with Section 14095) to Chapter 7 of Part 3 of
Division 9 of the Welfare and Institutions Code, relating to health.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2667, Baca  Health care providers and insurers: considerations.

   The Public Employees' Medical and Hospital Care Act requires the
Board of Administration of the Public Employees' Retirement System to
approve health benefit plans for certain public employees and
annuitants, and authorizes the board to contract with carriers
offering health benefit plans.
   This bill would authorize the board to consider specified factors
with respect to any entity that seeks to contract with the system for
the provision of health benefits.
   Existing law, the Knox-Keene Health Care Service Plan Act of 1975,
provides for the licensure and regulation of health care service
plans by the Department of Managed Health Care. Existing law requires
each application for licensure as a health care service plan or
specialized health care service plan under these provisions to be
accompanied by specified information.
   This bill would require that each application, in addition, be
accompanied by information relating to the applicant's history of
providing, or arranging to provide for, certain health care services
or benefits and the applicant's history of noncompliance with
specified laws, regulations, and requirements.
   This bill would require the department to consider any relevant
information concerning misconduct with respect to any application for
an initial license for any entity that seeks to contract with the
system for the provision of health benefits.
   Existing law provides for the licensure and regulation of health
insurers by the Department of Insurance. Existing law prohibits any
class of insurance business in the state without first being admitted
of that class by procuring a certificate of authority from the
insurance Commissioner. The commissioner is required to issue a
certificate of authority upon consideration of specified
qualifications of the applicant.
   This bill would require the commissioner to consider specified
factors with respect to any application for a certificate of
authority, or amended certificate of authority to transact health
insurance.
   Existing law provides for the Medi-Cal program, administered by
the State Department of Health Services, pursuant to which medical
benefits are provided to public assistance recipients and certain
other low-income persons. The Medi-Cal program is, in part, governed
and funded by federal Medicaid provisions. Existing law contains
provisions governing the enrollment or reenrollment or contracting
with entities for the provision of health care benefits under the
Medi-Cal program of Medi-Cal providers. Medi-Cal services may also be
obtained under specified types of contractual arrangements.
   This bill would authorize the department to consider specified
factors with regards to contracting with any entity for the provision
of health care services under the Medi-Cal program.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 22854 is added to the Government Code, to read:

   22854.  (a) The board, in considering a contract with any entity
that seeks to enter into a contract under this article for the
provision of health care benefits or services, may consider all of
the following:
   (1) Whether the applicant is of reputable and responsible
character. The board may consider any available information that the
applicant has demonstrated a pattern and practice of violations of
state or federal laws and regulations.
   (2) Whether the applicant has the ability to provide, or arrange
to provide for, health care benefits or services. The board may
consider any of the following:
   (A) Any prior history of providing, or arranging to provide for,
health care services or benefits in this state, the applicant's
history of substantial compliance with the requirements imposed under
that license, and applicable federal laws, regulations, and
requirements.
   (B) Any prior history in this state or any other state, of
providing, or arranging to provide for, health care services or
benefits authorized to receive Medicare Program reimbursement or
Medicaid Program reimbursement, the applicant's history of
substantial compliance with that state's requirements, and applicable
federal laws, regulations, and requirements.
   (C) Any prior history of providing, or arranging to provide for,
health services as a licensed health professional or an individual or
entity contracting with a health care service plan or insurer, and
the applicant's history of substantial compliance with state
requirements, and applicable federal law, regulations, and
requirements.
   (b) The board may also require the entity described in subdivision
(a) to furnish other information or documents for the purposes of
this section.
  SEC. 2.  Section 1351 of the Health and Safety Code is amended to
read:
   1351.  Each application for licensure as a health care service
plan or specialized health care service plan under this chapter shall
be verified by an authorized representative of the applicant, and
shall be in a form prescribed by the department. This application
shall be accompanied by the fee prescribed by subdivision (a) of
Section 1356 and shall set forth or be accompanied by each and all of
the following:
   (a) The basic organizational documents of the applicant; such as,
the articles of incorporation, articles of association, partnership
agreement, trust agreement, or other applicable documents and all
amendments thereto.
   (b) A copy of the bylaws, rules and regulations, or similar
documents regulating the conduct of the internal affairs of the
applicant.
   (c) A list of the names, addresses, and official positions of the
persons who are to be responsible for the conduct of the affairs of
the applicant, which shall include among others, all members of the
board of directors, board of trustees, executive committee, or other
governing board or committee, the principal officers, each
shareholder with over 5-percent interest in the case of a
corporation, and all partners or members in the case of a partnership
or association, and each person who has loaned funds to the
applicant for the operation of its business.
   (d) A copy of any contract made, or to be made, between the
applicant and any provider of health care services, or persons listed
in subdivision (c), or any other person or organization agreeing to
perform an administrative function or service for the plan. The
director by rule may identify contracts excluded from this
requirement and make provision for the submission of form contracts.
The payment rendered or to be rendered to such provider of health
care services shall be deemed confidential information that shall not
be divulged by the director, except that such payment may be
disclosed and become a public record in any legislative,
administrative, or judicial proceeding or inquiry. The plan shall
also submit the name and address of each physician employed by or
contracting with the plan, together with his or her license number.
   (e) A statement describing the plan, its method of providing for
health care services and its physical facilities. If applicable, this
statement shall include the health care delivery capabilities of the
plan including the number of full-time and part-time primary
physicians, the number of full-time and part-time and specialties of
all nonprimary physicians; the numbers and types of licensed or
state-certified health care support staff, the number of hospital
beds contracted for, and the arrangements and the methods by which
health care services will be provided. For purposes of this
subdivision, primary physicians include general and family
practitioners, internists, pediatricians, obstetricians, and
gynecologists.
   (f) A copy of the forms of evidence of coverage and of the
disclosure forms or material which are to be issued to subscribers or
enrollees of the plan.
   (g) A copy of the form of the individual contract which is to be
issued to individual subscribers and the form of group contract which
is to be issued to any employers, unions, trustees, or other
organizations.
   (h) Financial statements accompanied by a report, certificate, or
opinion of an independent certified public accountant. However,
financial statements from public entities or political subdivisions
of the state need not include a report, certificate, or opinion by an
independent certified public accountant if the financial statement
complies with such requirements as may be established by regulation
of the director.
   (i) A description of the proposed method of marketing the plan and
a copy of any contract made with any person to solicit on behalf of
the plan or a copy of the form of agreement used and a list of the
contracting parties.
   (j) A power of attorney duly executed by any applicant, not
domiciled in this state, appointing the director the true and lawful
attorney in fact of such applicant in this state for the purposes of
service of all lawful process in any legal action or proceeding
against the plan on a cause of action arising in this state.
   (k) A statement describing the service area or areas to be served,
including the service location for each provider rendering
professional services on behalf of the plan and the location of any
other plan facilities where required by the director.
   (l) A description of enrollee-subscriber grievance procedures to
be utilized as required by this chapter, and a copy of the form
specified by subdivision (c) of Section 1368.
   (m) A description of the procedures and programs for internal
review of the quality of health care pursuant to the requirements set
forth in this chapter.
   (n) A description of the mechanism by which enrollees and
subscribers will be afforded an opportunity to express their views on
matters relating to the policy and operation of the plan.
   (o) Evidence of adequate insurance coverage or self-insurance to
respond to claims for damages arising out of the furnishing of health
care services.
   (p) Evidence of adequate insurance coverage or self-insurance to
protect against losses of facilities where required by the director.

   (q) If required by the director by rule pursuant to Section 1376,
a fidelity bond or a surety bond in the amount prescribed.
   (r) Evidence of adequate workmen's compensation insurance coverage
to protect against claims arising out of work-related injuries that
might be brought by the employees and staff of a plan against the
plan.
   (s) All relevant information known to the applicant concerning
whether the plan, its management company, or any other affiliate of
the plan, or any controlling person, officer, director, or other
person occupying a principal management or supervisory position in
the plan, management company, or other affiliate, has any of the
following:
   (1) Any history of noncompliance with applicable state or federal
laws, regulations, or requirements related to providing, or arranging
to provide for, health care services or benefits in this state or
any other state.
   (2) Any history of noncompliance with applicable state or federal
laws, regulations, or requirements related to providing, or arranging
to provide for, health care services or benefits authorized for
reimbursement under the federal Medicare or Medicaid Program.
   (3) Any history of noncompliance with applicable state or federal
laws, regulations, or requirements related to providing, or arranging
for the provision of, health care services as a licensed health
professional or an individual or entity contracting with a health
care service plan or insurer in this state or any other state.
   (t) Such other information as the director may reasonably require.

  SEC. 3.   Section 1351.3 is added to the Health and Safety Code, to
read:
   1351.3.  On and after January 1, 2007, the department, in
considering an application for an initial license for any entity
under this chapter, shall consider any information provided
concerning whether the plan, its management company, or any other
affiliate of the plan, or any controlling person, officer, director,
or other person occupying a principal management or supervisory
position in the plan, management company, or affiliate has any
history of noncompliance, as described in subdivision (s) of Section
1351, and any other relevant information concerning misconduct.
  SEC. 4.   Section 717.2 is added to the Insurance Code, to read:
   717.2.  (a) On and after January 1, 2007, for purposes of Section
717, the commissioner shall consider, with respect to any application
for a certificate of authority or amended certificate of authority
to transact health insurance, as defined in subdivision (b) of
Section 106, in this state, any available evidence regarding any one
or more of the following:
   (1) Any prior history of providing, or arranging to provide for,
health care coverage, services, or benefits in this state and the
applicant's history of substantial compliance with applicable state
and federal laws, regulations, and requirements.
   (2) Any prior history in this state or any other state, of
providing, or arranging to provide for, health care coverage,
services, or benefits for which the applicant is authorized to
receive Medicare Program reimbursement or Medicaid Program
reimbursement, and the applicant's history of substantial compliance
with applicable state and federal laws, regulations, and
requirements.
   (3) Any prior history on the part of the applicant's management of
providing, or arranging to provide for, health services as a
licensed health professional or an individual or entity contracting
with a health care service plan or insurer, and the applicant's
history of substantial compliance with state requirements, and
applicable federal law, regulations, and requirements.
   (b) The commissioner may also require the applicant to provide
information or documents for the purposes of this section. The
commissioner shall consider any other relevant information concerning
misconduct.
  SEC. 5.   Article 2.99 (commencing with Section 14095) is added to
Chapter 7 of Part 3 of Division 9 of the Welfare and Institutions
Code, to read:

      Article 2.99.  Provider Contract Considerations

   14095.   (a) For any entity or program that seeks to contract with
the department to provide, or arrange for the provision of, managed
health care services, disease management, or other health services
contracted for on a basis other than fee-for-service, the department
may consider, but shall not be limited to considering, all of the
following:
   (1) Whether the applicant is of reputable and responsible
character. The department may consider any available information that
the applicant has demonstrated a pattern and practice of violations
of state or federal laws and regulations.
   (2) Whether the applicant has the ability to provide, or arrange
for the provision of, health care benefits or services. The
department may consider evidence that may include all of the
following:
   (A) Any prior history of providing, or arranging for the provision
of, health care services or benefits in this state, the applicant's
history of substantial compliance with the requirements imposed under
that license, and applicable federal laws, regulations, and
requirements.
   (B) Any prior history in this state or any other state, of
providing, or arranging for the provision of, health care services or
benefits authorized to receive Medicare Program reimbursement or
Medicaid Program reimbursement, the applicant's history of
substantial compliance with that state's requirements, and applicable
federal laws, regulations, and requirements.
   (C) Any prior history of providing, or arranging for the provision
of, health services as a licensed health professional or an
individual or entity contracting with a health care service plan or
insurer, and the applicant's history of substantial compliance with
state requirements, and applicable federal law, regulations, and
requirements.
   (b) The department may also require the entity described in
subdivision (a) to furnish other information or documents for the
proper administration and enforcement of the licensing laws.
   (c) For purposes of paragraph (1) of subdivision (a), "applicant"
shall include the applicant's management company, any affiliate of
the applicant, and any controlling person, officer, director, or
other person occupying a principal management or supervisory position
for the applicant, its management company, or an affiliate of the
applicant.
   (d) Nothing in this section shall be construed to restrict or
limit the department in any way from considering any other factor
required by law, or determined by the department to be necessary for
consideration, prior to entering into a contract for the provision of
managed health care services.