BILL NUMBER: ABX1 1 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY DECEMBER 13, 2007
AMENDED IN ASSEMBLY NOVEMBER 8, 2007
INTRODUCED BY Assembly Member Nunez
(Principal coauthor: Senator Perata)
SEPTEMBER 11, 2007
An act to amend Sections 2069, 2836.1, and 3516
Section 2069 of, and to add Sections
2838, 4040.1, 4071.2, 4071.3, and 4071.4 to ,
and to add and repeal Section 2838 of , the Business and
Professions Code, to add Section 49452.9 to the Education Code, to
add Sections 12803.1, 12803.2, 12803.25,
22830.5, and 22830.6 to, and to add Chapter 15 (commencing with
Section 8899.50) to Division 1 of Title 2 of, the
Government Code, to amend Sections 1363 and 1378
1357.54, 1363, 1365, 128745, and 128748 of, to add
Sections 1262.9, 1342.9, 1347, 1356.2, 1367.16, 1367.205,
1367.38, 1368.025, 1378.1, 1395.2, 104376,
128745.1, and 130545 to, to add Chapter 1.6
(commencing with Section 155) to Part 1 of Division 1 of, to
add Article 3.11 (commencing with Section 1357.20) and Article
4.1 (commencing with Section 1366.10) 11.6
(commencing with Section 1399.820) to Chapter 2.2 of Division 2
of, to add Article 1 (commencing with Section 104250) to Chapter 4
of Part 1 of Division 103 of, to add Article 3 (commencing with
Section 104705) to Chapter 2 of Part 3 of Division 103 of, and to add
Chapter 4 (commencing with Section 128850) to Part 5 of Division 107
of, the Health and Safety Code, to amend Sections 10607, 12693.43,
12693.70, 12693.73, and 12693.76 of, to add Sections 10113.10,
10113.11, 10123.56, 10293.5 10176.15,
10273.6 , 12693.56, 12693.57, 12693.58, 12693.59,
12693.766, 12694.5, 12886, and 12887 to, to add
Chapter 1.6 (commencing with Section 10199.10) and Chapter
8.1 (commencing with Section 10760) and Chapter 9.6 (commencing
with Section 10919) to Part 2 of Division 2 of, and to add Part
6.45 (commencing with Section 12699.201) and Part 6.7
(commencing with Section 12739.50) to Division 2 of, the
Insurance Code, to add Sections 96.8 and 96.81
Section 96.8 to the Labor Code, to add Section 1120
to, and to add Division 1.2 (commencing with Section 4800) to, the
Unemployment Insurance Code, and to amend Sections
14005.30, 14005.31, 14005.32, and 14008.85 of, to amend and repeal
Section Sections 14005.30 and 14011.16 of, to
add Sections 14005.01, 14005.301, 14005.305, 14005.306,
14005.307, 14005.310, 14005.311, 14005.331,
14005.333, 14005.334, 14011.16.1, 14074.5,
14081.6, 14092.5, 14132.105, and 14137.10 to, and to add
Article 5.22 5.215 (commencing with
Section 14167.22) and Article 7 (commencing with Section
14199.10) to , and to add and repeal Article 5.21
(commencing with Section 14167.1) of, Chapter 7 of Part 3 of
Division 9 of, the Welfare and Institutions Code, relating to health
care coverage, and making an appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
AB 1, as amended, Nunez. Health care reform.
(1) Existing law creates the California Health and Human Services
Agency.
This bill would require the agency, in consultation with the Board
of Administration of the Public Employees' Retirement System (PERS),
to assume lead agency responsibility for professional review and
development of best practice standards for high-cost chronic diseases
that state health care programs would be required to implement upon
their adoption. The bill would additionally require the agency, in
consultation with PERS and health care provider groups, to
develop health care provider performance measurement benchmarks, as
specified.
The bill, effective July 1, 2008, would create the California
Health Care Cost and Quality Transparency Commission
Committee in the California Health
and Human Services Agency, with various powers and duties, including
the development and periodic review of a health care cost
and quality transparency plan. The bill would authorize the
commission to impose fees on data sources and data users, as
specified, and to impose penalties on data sources that fail to file
any report required by the commission. The bill would transfer
certain data collection responsibilities from the Office of Statewide
Health Planning and Development to the commission on July 1, 2009.
The bill would require the Office of Statewide Health
Planning and Development to assist the committee in that regard. The
bill would require the Secretary of California Health and
Human Services to track and assess the effects of health care reform
and to report to the Legislature by March 1, 2012, and biennially
thereafter. The bill would also create the California Health
Benefits Service within the California Health and Human
Services Agency State Department of Health Care
Services , with various powers and duties relative to creation
of joint ventures between certain county-organized health plans and
various other entities. The bill would require these joint ventures
to be licensed as health care service plans and would create a
stakeholder committee .
(2) Existing law does not provide a system of health care coverage
for all California residents. Existing law does not require
employers to provide health care coverage for employees and
dependents, other than coverage provided as part of the workers'
compensation system for work-related employee injuries, and does not
require individuals to maintain health care coverage. Existing law
provides for the creation of various programs to provide health care
coverage to persons who have limited incomes and meet various
eligibility requirements. These programs include the Healthy Families
Program, administered by the Managed Risk Medical Insurance Board,
and the Medi-Cal program, administered by the State Department of
Health Care Services and county welfare departments.
This bill would require California residents, subject to certain
exceptions, to enroll in and maintain a
at least minimum policy of
creditable health care coverage , as determined by the
Managed Risk Medical Insurance Board, for themselves and their
dependents, as defined. The bill would require the Managed
Risk Medical Insurance Board board to
determine establish, by regulation, the
minimum policy of health care definition and standards
for minimum creditable coverage , including an
affordability standard and hardship exemptions, by March 1, 2009,
and would require the board to facilitate enrollment in public
or private coverage and to establish an education and awareness
program, on or before by January 1,
2010, relating to the requirement to obtain a
minimum policy of health care creditable
coverage. The bill would make implementation of these
requirements subject to an appropriation of funds therefor in the
annual Budget Act or other statute. The bill would
make enact related changes
provisions , including authorizing a school district, on
and after January 1, 2010, to provide parents and guardians
information explaining these health care coverage requirements.
The bill would, as of January 1, 2009, create the California
Cooperative Health Insurance Purchasing Program (Cal-CHIPP), which
would function as a statewide purchasing pool for health care
coverage and be administered by the Managed Risk Medical Insurance
Board. The bill would require, on and after January 1, 2010,
certain health care service plans and health insurers to submit a
good faith bid to the board to be a participating plan in Cal-CHIPP.
The bill would specify eligibility for Cal-CHIPP and would
require the board to develop and offer a variety of benefit plan
designs, including the Cal-CHIPP Healthy Families plan where
in which enrollment would be restricted to
specified low-income persons. The bill would authorize an employer to
pay all or a part of the premium payment required of its employees
enrolled in Cal-CHIPP. The bill would make it an unfair labor
practice for an employer to refer an employee, or his or her
dependent, to Cal-CHIPP or to arrange for their application to that
program to separate them from group coverage provided through the
employment relationship, and for an employer to change the
share-of-cost ratio or modify coverage in order for an employee or
his or her dependents to enroll in that program. Because an unfair
labor practice may be punishable as a crime, the bill would impose a
state-mandated local program. The bill would create the California
Health Trust Fund as part of Cal-CHIPP in the
State Treasury , and moneys in the fund would be continuously
appropriated to the board for the purposes of Cal-CHIPP. The bill
would require the State Department of Health Care Services to seek
any necessary federal approval to enable the state to receive federal
Medicaid funds for specified persons who could otherwise be made
eligible for Medi-Cal benefits, with the state share of funds to be
provided from the California Health Trust Fund. The bill
would expand eligibility under the Medi-Cal program, commencing July
1, 2010, to certain populations subject to federal financial
participation and would additionally expand eligibility under the
Medi-Cal program to a population 19 years of age or older with a
family income greater than 100% of the federal poverty level but less
than or equal to 250% of the federal poverty level, subject to
establishment of a county share of cost. The bill, on
and after July 1, 2010, would also extend Medi-Cal benefits to
parents and caretaker relatives and various other persons meeting
certain eligibility requirements. The bill would require
certain of these individuals to receive their benefits in the form of
a benchmark package, which would be the subsidized
Cal-CHIPP Healthy Families benefit package
or packages established under Cal-CHIPP . The bill
would provide for the benchmark benefits to be administered by the
Managed Risk Medical Insurance Board, pursuant to an interagency
agreement with the department. The bill would make these provisions
subject to federal financial participation and approval, as
specified.
The bill would require the State Department of Health Care
Services to establish a Healthy Action Incentives and Rewards Program
to be provided as a covered benefit under the Medi-Cal program,
subject to federal financial participation and approval. The bill
would also require the Director of Health Care Services to establish
a local coverage option program for low-income adults that would be
the exclusive Medi-Cal coverage for a 5-year period beginning with
the program's commencement, for county residents who, among other
requirements, have a family income at or below 100% of the federal
poverty level and are not otherwise eligible for the Medi-Cal
program. The bill would specify that the program would become
operational for services rendered on or after July 1, 2010. The bill
would specify that coverage under the program would be provided at a
county's option and only by a county that operates a designated
public hospital, subject to approval by the State Department of
Health Care Services and contingent on establishment of a county
share of cost. The bill would require the State Department of Health
Care Services, by January 1, 2010, to contract with an independent
3rd party to develop an assessment tool to measure the care provided
under the program. The bill would require the department, after 3
years of the program's operation, to evaluate the program using the
assessment tool and would extend the program for an additional 2
years if the program substantially met certain criteria and would
terminate the program if it did not. The bill would enact other
related provisions.
The bill, subject to future appropriation of funds, would expand
the number of children eligible for coverage under the Healthy
Families Program on and after July 1, 2010
2009 . The bill would, on and after July 1, 2010
2009 , delete as an eligibility requirement for
a child under the Healthy Families Program and the Medi-Cal program
that the child satisfy citizen and immigration status requirements
applicable to the program programs
under federal law, thereby creating a state-only element of the
programs. The bill would additionally, on and after July 1,
2010 2009 , disregard all income over 250% but
less than or equal to 300% of the federal poverty level and would
apply Medi-Cal program income deductions to a family income greater
than 300% of the federal poverty level in determining eligibility for
the Healthy Families Program. The bill would authorize the board to
provide, or arrange for the provision of, an electronic personal
health record under the Healthy Families Program, to the extent funds
are appropriated for that purpose, and would provide for the
confidentiality of information obtained pursuant to the program.
The bill would require the department to exercise its federal
option as necessary to simplify Medi-Cal eligibility by exempting all
resources for applicants and recipients, commencing July 1, 2010
, and it would revise the semiannual status reports required
of Medi-Cal beneficiaries on and after July 1, 2010 .
The bill would authorize the department to make statewide
determinations of Medi-Cal eligibility, as specified.
The bill would require the State Department of Health Care
Services to establish a Healthy Action Incentives and Rewards Program
to be provided as a covered benefit under the Medi-Cal program,
subject to federal financial participation and approval. The bill
would also require the Director of Health Care Services to establish
a local coverage option program that would be the exclusive Medi-Cal
coverage for a 5-year period beginning with the program's
commencement, for county residents 21 years of age or older who,
among other requirements, have a family income at or below 100% of
the federal poverty level and are not otherwise eligible for the
Medi-Cal program. The bill would specify that the program would
become operational for services rendered on or after July 1, 2010.
The bill would specify that coverage under the program would be
provided at a county's option and only by a county that operates a
designated public hospital. The bill would require the State
Department of Health Care Services, by January 1, 2010, to contract
with an independent 3rd party to develop an assessment tool to
measure the care provided under the program. The bill would require
the department after 3 years of the program's operation, to evaluate
the program using the assessment tool and would extend the program
for an additional 2 years if the program substantially met certain
criteria and would terminate the program if it did not. The bill
would enact other related provisions.
The bill would provide for enact the
Medi-Cal Physician Services Rate Increase Act, which
would establish, with respect to services rendered to Medi-Cal
beneficiaries on and after July 1, 2010, to the extent funds are
appropriated in the annual Budget Act, increased
reimbursements of up to 100% of the Medicare rate for
physicians and , physician groups, as
defined, and others that are enrolled Medi-Cal providers
eligible to receive payments for Medi-Cal services. The bill would
permit some of these rate increases to be linked to specified
performance measures and would provide that these rate increases
would be implemented only to the extent that state funds are
appropriated for the nonfederal share of these increases. The bill
would require the Director of Health Care Services to seek federal
approval of the rate methodology set forth in the act and would
prohibit the methodology from being implemented if federal approval
is not obtained.
Because each county is required to determine eligibility for the
Medi-Cal program, expansion of program eligibility would impose a
state-mandated local program.
This bill would also enact the Medi-Cal Hospital Rate
Stabilization Act, which would revise the methodology by which safety
net care pool funds are paid to designated public hospitals for
providing uncompensated care to the uninsured. The bill would require
the State Department of Health Care Services to determine an
outpatient base rate and an inpatient base rate, as defined, for
various types of hospitals. The bill would also, commencing July 1,
2010, establish specified reimbursement rate methodologies under the
Medi-Cal program for hospital services, as defined, that are rendered
by designated public hospitals and for managed health care plans, as
specified, and would require managed health care plans to expend
100% of moneys received under the increased rates for payments to
hospitals for providing services to Medi-Cal patients. The bill would
make implementation of certain of these provisions contingent on the
establishment of certain requirements under which counties pay a
share of cost for persons enrolled in the Medi-Cal program, and would
make implementation of all of these provisions contingent on the
imposition of a 4% fee on the net patient revenue of general acute
care hospitals.
(3) 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 and makes a
willful violation of the act a crime. Existing law also provides for
the regulation of health insurers by the Department of Insurance.
This bill would enact various health insurance market reforms, to
be operative on specified dates, including requirements for guarantee
issue of individual health care service plan contracts and health
insurance policies and other requirements relating to
individual coverage , modified small employer coverage,
modified disclosures, and other related changes. The bill
would require the Director of the Department of Managed Health Care
and the Insurance Commissioner to adopt regulations by
, on and after July 1, 2008 2010
, to would require at least 85%
of full-service health care service plan dues, fees, and other
periodic payments and health insurance premiums to be spent on health
care services benefits and not on
administrative costs. The bill would allow a health care service plan
and a health insurer to provide notices by electronic transmission
using specified procedures.
The bill would require a health care service plan providing
prescription drug benefits and maintaining a drug formulary to,
commencing on or before January 1, 2010, make the most current
formularies available electronically to prescribers and pharmacies
and would require health care service plans that provide services to
certain beneficiaries under a Medi-Cal managed care program
comply to be subject solely to the filing,
reporting, monitoring, and survey requirements established by the
State Department of Health Care Services for the Medi-Cal managed
care program for designated subjects. The bill would require the
department and the State Department of Health Care Services to
develop a joint filing and review process for medical quality surveys
.
The bill would also require specified group
health care service plan contracts and group health insurance
policies offered, amended, or renewed on or after January 1, 2009, to
offer at least one benefit design that includes
to include a Healthy Action Incentives and Rewards
Program, as specified. The bill would also authorize an employer to
provide health coverage that includes a Healthy Action Incentives and
Reward program Rewards Program to his
or her employees.
Because a willful violation of the bill's requirements relative to
health care service plans would be a crime, the bill would impose a
state-mandated local program.
(4) Under existing federal law, a cafeteria plan is a written plan
through which employees choose among 2 or more benefits consisting
of cash and qualified benefits. Existing federal law provides that,
except as specified, no amount is included in the gross income of a
participant in a cafeteria plan solely because the participant may
choose among the benefits of the plan.
This plan would, beginning January 1, 2010, require an employer to
adopt and maintain a cafeteria plan to allow employees to pay
premiums for health care coverage to the extent amounts for that
coverage are excludable from the gross income of the employee, as
specified. The bill would require an employer who fails to establish
or maintain a cafeteria plan to pay a penalty of $100 or $500 per
employee, as specified.
(4)
(5) Existing law authorizes the Board of Administration
of the Public Employees' Retirement System to contract with carriers
offering health benefit plans for coverage for eligible employees
and annuitants.
This bill would require the board, on or before January 1,
2009 2010 , to provide or arrange for
the provision of an electronic personal health record for enrollees
receiving health care benefits.
(5)
(6) Existing law establishes the State Department of
Public Health, which licenses and regulates health facilities and
also administers funds for programs relating to smoking cessation.
Under existing law, a noncontracting hospital is required to contact
an enrollee's health care service plan to obtain the enrollee's
medical record information prior to admitting the enrollee for
inpatient poststabilization care, as defined, or prior to
transferring the enrollee, if certain conditions apply. Existing law
prohibits the hospital from billing the enrollee for
poststabilization care if it is required to, and fails to, contact
the enrollee's health care service plan. Under existing law, a
violation of any of these provisions is punishable as a misdemeanor.
This bill would prohibit a noncontracting hospital, as defined,
from billing a covered patient for emergency health care services and
poststabilizing care except for applicable copayments and cost
shares. By changing the definition of an existing crime, this bill
would impose a state-mandated local program.
The bill would also require the department to maintain the
California Diabetes Program to provide information and assistance
pertaining to the prevention and treatment of diabetes. The bill
would also establish the Comprehensive Diabetes Services Program in
the State Department of Health Care Services to provide diabetes
prevention and management services to certain beneficiaries in the
Medi-Cal program, to the extent funding is available for this
purpose. The bill would also require the department, in consultation
with the Department of Managed Health Care, the State Department of
Health Care Services, the Managed Risk Medical Insurance Board, and
the Department of Insurance, to annually identify the 10 largest
providers of health care coverage in the state, to ascertain and
summarize the smoking cessation benefits provided by those coverage
providers, to publish the benefit summary on the department's
Internet Web site, to include the benefit summary as part of its
preventive health education against tobacco use campaign, and to
evaluate any changes in connection with the smoking cessation
benefits provided by the coverage providers, as provided. The bill
would also require the department, to the extent that funds are
available and appropriated for this purpose, to increase the capacity
of effective smoking cessation services available from, and expand
the awareness of, services available through, the California Smokers'
Helpline, as prescribed.
The bill would also create the Community Makeover Grant program
that would be administered by the department and would require it to
award grants to local health departments in cities and counties,
which would serve as the local lead agencies in administering the
program, for the purpose of developing new programs or improving
existing programs that promote active living and healthy eating. The
bill would require the department to issue guidelines and to specify
data reporting requirements for local lead agencies to comply with
various requirements relating to the administration of the program.
The bill would also require the department to develop a sustained
media campaign to educate the public about the importance of obesity
prevention.
(6)
(7) Existing law provides for the Office of Statewide
Health Planning and Development, which has specified powers and
duties. Existing law requires the office to publish specified
reports.
This bill would require the office to publish risk-adjusted
outcome reports for percutaneous coronary interventions, commencing
January 1, 2010, and would require the office to establish a clinical
data collection program to collect data on percutaneous coronary
interventions and establish by regulation the data to be reported by
each hospital.
(7)
(8) Existing law provides for the certification and
regulation of nurses, including nurse practitioners and
nurse-midwives, by the Board of Registered Nursing and for the
licensure and regulation of physician assistants by the Physician
Assistant Committee of the Medical Board of California. Existing law
provides that a medical assistant may administer medication upon the
specific authorization and supervision of a licensed physician and
surgeon or licensed podiatrist or, in specified clinic settings, upon
the specific authorization and supervision of a nurse practitioner,
nurse-midwife, or physician assistant.
This bill would remove the requirement that a medical assistant's
administration of medication upon the specific authorization and
supervision of a nurse practitioner, nurse-midwife, or physician
assistant occur in specified clinic settings, and would make related
changes.
(8)
(9) Existing law, the Nursing Practice Act, provides
for the licensure and regulation of nurse practitioners by the Board
of Registered Nursing which is within the Department of Consumer
Affairs. Under existing law, a physician and surgeon is
prohibited from supervising more than 4 nurse practitioners at one
time.
This bill would instead prohibit a physician and surgeon
from supervising more than 6 nurse practitioners at one time. The
bill would , until July 1, 2011, create the Task
Force on Nurse Practitioner Scope of Practice that would consist of
specified members appointed by the Governor, the Speaker of the
Assembly, and the Senate Committee on Rules. The bill would make the
task force responsible for developing a recommended scope of practice
for nurse practitioners and would require the task force to report
the recommended scope of practice to the Governor and the Legislature
on or before June 30, 2009. The bill would require the Director of
Consumer Affairs, on or before July 1, 2010, to promulgate
regulations that adopt the recommended scope of practice. The bill
would require the aforementioned boards to pay the state
administrative costs of implementing these provisions.
(9) Existing law, the Physician Assistant Practice Act, provides
for the licensure and regulation of physician assistants by the
Physician Assistant Committee of the Medical Board of California and
limits the number of physician assistants supervised by a physician.
This bill would prohibit a physician and surgeon from supervising
more than 6 physician assistants at one time.
(10) Existing law, the Pharmacy Law, defines an electronic
transmission prescription and sets forth the requirements for those
types of prescriptions.
This bill would require electronic prescribing systems to meet
specified standards and requirements and would require a prescriber
or prescriber's authorized agent to offer patients a written receipt
of information transmitted electronically,
including the patient's name and the drug
prescribed, and would require the State Department of Health Care
Services to develop a pilot program to foster the adoption and use of
electronic prescribing by health care providers that contract with
the Medi-Cal program, as specified. The bill would require every
licensed prescriber, or prescriber's authorized agent, or pharmacy
operating in California, on or before January 1, 2010, to have the
ability to transmit and receive prescriptions by electronic data
transmission.
(11) This bill would give the State Department of Health Care
Services, in consultation with the Department of Finance, authority
to take various actions as necessary to implement the bill, including
promoting flexibility of implementation and maximizing federal
financial participation. The bill would require the Director of
Health Care Services to notify the Chair of the Joint Legislative
Budget Committee prior to exercising this flexibility. The bill would
declare the intent of the Legislature to implement the bill to
harmonize and best effectuate the purposes and intent of the bill.
(12) This bill would declare the Legislature's intent that the act'
s provisions be financed by contributions from various sources,
including payments by acute care hospitals and employers, and by
increasing the taxes on cigarettes and other tobacco products. The
bill would also declare the Legislature's intent to increase the
rates paid under the Medi-Cal program for inpatient and outpatient
hospital services.
(13) The bill would make its provisions operative upon the date
that the Director of Finance files a finding with the Secretary of
State that, among other circumstances, sufficient state resources
will exist in the Health Care Trust Fund to implement those
provisions. The bill would also require the director to transmit that
finding to the Chief Clerk of the Assembly, the Secretary of the
Senate, and the chairs of the appropriate committees of the
Legislature at least 90 days prior to implementation of its
provisions.
(13)
(14) The California Constitution requires the state to
reimburse local agencies and school districts for certain costs
mandated by the state. Statutory provisions establish procedures for
making that reimbursement.
This bill would provide that with regard to certain mandates no
reimbursement is required by this act for a specified reason.
With regard to any other mandates, this bill would provide that,
if the Commission on State Mandates determines that the bill contains
costs so mandated by the state, reimbursement for those costs shall
be made pursuant to the statutory provisions noted above.
Vote: majority. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. This act shall be known and may be cited as the
California Health Care Reform and Cost Control Act.
Health Care Reform and Cost Control Act.
SEC. 2. It is the intent of the Legislature to accomplish the goal
of universal health care for all California residents. To accomplish
this goal, the Legislature proposes to take all of the following
steps:
(a) Ensure that all Californians have access to affordable,
comprehensive health care.
(b) Leverage available federal funds to the greatest extent
possible through existing federal programs.
(c) Maintain and strengthen the health insurance system and
improve availability and affordability of private health care
coverage for all purchasers through (1) insurance market reforms; (2)
enhanced access to effective primary and preventive services,
including management of chronic illnesses; (3) promotion of
cost-effective health technologies; and (4) implementation of
meaningful, systemwide cost containment strategies.
(d) Engage in early and systematic evaluation at each step of the
implementation process to identify the impacts on state costs, the
costs of coverage, employment and insurance markets, health delivery
systems, quality of care, and overall progress in moving toward
universal coverage.
SEC. 3. Section 2069 of the Business and Professions Code is
amended to read:
2069. (a) (1) Notwithstanding any other provision of law, a
medical assistant may administer medication only by intradermal,
subcutaneous, or intramuscular injections and perform skin tests and
additional technical supportive services upon the specific
authorization and supervision of a licensed physician and surgeon,
nurse practitioner, nurse-midwife, physician assistant, or licensed
podiatrist.
(2) The licensed physician and surgeon , nurse
practitioner, nurse-midwife, physician assistant, or licensed
podiatrist may, at his or her discretion, provide written
instructions to be followed by a medical assistant in the performance
of tasks or supportive services. These written instructions may
provide that the tasks may be performed when the licensed physician
and surgeon, nurse practitioner, nurse-midwife, physician assistant,
or licensed podiatrist may, at his or her discretion,
in consultation with the nurse practitioner, nurse-midwife, or
physician assistant, provide written instructions to be
followed by a medical assistant in the performance of tasks or
supportive services. These written instructions may provide that the
supervisory function for the medical assistant for these tasks or
supportive services may be delegated to the nurse practitioner,
nurse-midwife, or physician assistant within the standardized
procedures or protocol, and that tasks may be performed when the
licensed physician and surgeon is not onsite, so long as the
following apply:
(A) The nurse practitioner or nurse-midwife is functioning
pursuant to standardized procedures, as defined by Section 2725, or
protocol. The standardized procedures or protocol shall be developed
and approved by the supervising physician and surgeon, the nurse
practitioner or nurse-midwife, and the facility administrator or his
or her designee.
(B) The physician assistant is functioning pursuant to regulated
services defined in Section 3502 and is approved to do so by the
supervising physician or surgeon.
(b) As used in this section and Sections 2070 and 2071, the
following definitions shall apply:
(1) "Medical assistant" means a person who may be unlicensed, who
performs basic administrative, clerical, and technical supportive
services in compliance with this section and Section 2070 for a
licensed physician and surgeon or a licensed podiatrist, or group
thereof, for a medical, nursing, or podiatry corporation, for a
physician assistant, a nurse practitioner, or a nurse-midwife as
provided in subdivision (a), or for a health care service plan, who
is at least 18 years of age, and who has had at least the minimum
amount of hours of appropriate training pursuant to standards
established by the Division of Licensing. The medical assistant shall
be issued a certificate by the training institution or instructor
indicating satisfactory completion of the required training. A copy
of the certificate shall be retained as a record by each employer of
the medical assistant.
(2) "Specific authorization" means a specific written order
prepared by the licensed physician and surgeon, nurse practitioner,
nurse-midwife, physician assistant, or licensed podiatrist
authorizing the procedures to be performed on a patient, which shall
be placed in the patient's medical record, or a standing order
prepared by the licensed physician and surgeon, nurse practitioner,
nurse-midwife, physician assistant, or licensed podiatrist,
authorizing the procedures to be performed, the duration of which
shall be consistent with accepted medical practice. A notation of the
standing order shall be placed on the patient's medical record.
(3) "Supervision" means the supervision of procedures authorized
by this section by the following practitioners, within the scope of
their respective practices, who shall be physically present in the
treatment facility during the performance of those procedures:
(A) A licensed physician and surgeon.
(B) A licensed podiatrist.
(C) A physician assistant, nurse practitioner, or nurse-midwife.
(4) "Technical supportive services" means simple routine medical
tasks and procedures that may be safely performed by a medical
assistant who has limited training and who functions under the
supervision of a licensed physician and surgeon, a licensed
podiatrist, a physician assistant, a nurse practitioner, or a
nurse-midwife.
(c) Nothing in this section shall be construed as authorizing the
licensure of medical assistants. Nothing in this section shall be
construed as authorizing the administration of local anesthetic
agents by a medical assistant. Nothing in this section shall be
construed as authorizing the division to adopt any regulations that
violate the prohibitions on diagnosis or treatment in Section 2052.
(d) Notwithstanding any other provision of law, a medical
assistant may not be employed for inpatient care in a licensed
general acute care hospital as defined in subdivision (a) of Section
1250 of the Health and Safety Code.
(e) Nothing in this section shall be construed as authorizing a
medical assistant to perform any clinical laboratory test or
examination for which he or she is not authorized by Chapter 3
(commencing with Section 1200). Nothing in this section shall be
construed as authorizing a nurse practitioner, nurse-midwife, or
physician assistant to be a laboratory director of a clinical
laboratory, as those terms are defined in paragraph (7) of
subdivision (a) of Section 1206 and subdivision (a) of Section 1209.
SEC. 4. Section 2836.1 of the Business and
Professions Code is amended to read:
2836.1. Neither this chapter nor any other provision of law shall
be construed to prohibit a nurse practitioner from furnishing or
ordering drugs or devices when all of the following apply:
(a) The drugs or devices are furnished or ordered by a nurse
practitioner in accordance with standardized procedures or protocols
developed by the nurse practitioner and the supervising physician and
surgeon when the drugs or devices furnished or ordered are
consistent with the practitioner's educational preparation or for
which clinical competency has been established and maintained.
(b) The nurse practitioner is functioning pursuant to standardized
procedure, as defined by Section 2725, or protocol. The standardized
procedure or protocol shall be developed and approved by the
supervising physician and surgeon, the nurse practitioner, and the
facility administrator or the designee.
(c) (1) The standardized procedure or protocol covering the
furnishing of drugs or devices shall specify which nurse
practitioners may furnish or order drugs or devices, which drugs or
devices may be furnished or ordered, under what circumstances, the
extent of physician and surgeon supervision, the method of periodic
review of the nurse practitioner's competence, including peer review,
and review of the provisions of the standardized procedure.
(2) In addition to the requirements in paragraph (1), for Schedule
II controlled substance protocols, the provision for furnishing
Schedule II controlled substances shall address the diagnosis of the
illness, injury, or condition for which the Schedule II controlled
substance is to be furnished.
(d) The furnishing or ordering of drugs or devices by a nurse
practitioner occurs under physician and surgeon supervision.
Physician and surgeon supervision shall not be construed to require
the physical presence of the physician, but does include (1)
collaboration on the development of the standardized procedure, (2)
approval of the standardized procedure, and (3) availability by
telephonic contact at the time of patient examination by the nurse
practitioner.
(e) For purposes of this section, no physician and surgeon shall
supervise more than six nurse practitioners at one time.
(f) (1) Drugs or devices furnished or ordered by a nurse
practitioner may include Schedule II through Schedule V controlled
substances under the California Uniform Controlled Substances Act
(Division 10 (commencing with Section 11000) of the Health and Safety
Code) and shall be further limited to those drugs agreed upon by the
nurse practitioner and physician and surgeon and specified in the
standardized procedure.
(2) When Schedule II or III controlled substances, as defined in
Sections 11055 and 11056, respectively, of the Health and Safety
Code, are furnished or ordered by a nurse practitioner, the
controlled substances shall be furnished or ordered in accordance
with a patient-specific protocol approved by the treating or
supervising physician. A copy of the section of the nurse
practitioner's standardized procedure relating to controlled
substances shall be provided, upon request, to any licensed
pharmacist who dispenses drugs or devices, when there is uncertainty
about the nurse practitioner furnishing the order.
(g) (1) The board has certified in accordance with Section 2836.3
that the nurse practitioner has satisfactorily completed (1) at least
six month's physician and surgeon-supervised experience in the
furnishing or ordering of drugs or devices and (2) a course in
pharmacology covering the drugs or devices to be furnished or ordered
under this section.
(2) Nurse practitioners who are certified by the board and hold an
active furnishing number, who are authorized through standardized
procedures or protocols to furnish Schedule II controlled substances,
and who are registered with the United States Drug Enforcement
Administration, shall complete, as part of their continuing education
requirements, a course including Schedule II controlled substances
based on the standards developed by the board. The board shall
establish the requirements for satisfactory completion of this
subdivision.
(h) Use of the term "furnishing" in this section, in health
facilities defined in Section 1250 of the Health and Safety Code,
shall include (1) the ordering of a drug or device in accordance with
the standardized procedure and (2) transmitting an order of a
supervising physician and surgeon.
(i) "Drug order" or "order" for purposes of this section means an
order for medication which is dispensed to or for an ultimate user,
issued by a nurse practitioner as an individual practitioner, within
the meaning of Section 1306.02 of Title 21 of the Code of Federal
Regulations. Notwithstanding any other provision of law, (1) a drug
order issued pursuant to this section shall be treated in the same
manner as a prescription of the supervising physician; (2) all
references to "prescription" in this code and the Health and Safety
Code shall include drug orders issued by nurse practitioners; and (3)
the signature of a nurse practitioner on a drug order issued in
accordance with this section shall be deemed to be the signature of a
prescriber for purposes of this code and the Health and Safety Code.
SEC. 5. Section 2838 is added to the Business and Professions
Code, to read:
2838. (a) The Task Force on Nurse Practitioner Scope of Practice
is hereby created and shall consist of the following members:
(1) The Director of Consumer Affairs, who shall serve as an ex
officio member of the task force and shall cast the deciding vote in
any matter voted upon by the task force that results in a tie vote.
(2) Three members of the Medical Board of California, two of whom
shall be appointed to the task force by the Governor, and one of whom
shall be appointed to the task force by the Speaker of the Assembly.
(3) Three members of the Board of Registered Nursing, two of whom
shall be appointed to the task force by the Governor, and one of whom
shall be appointed to the task force by the Senate Committee on
Rules.
(4) Two representatives of an institution of higher education, who
shall be appointed to the task force by the Governor as nonvoting
members.
(b) The duty of the task force shall be to develop a recommended
scope of practice for nurse practitioners.
(c) The task force shall report its recommended scope of practice
for nurse practitioners to the Governor and the Legislature on or
before June 30, 2009.
(d) On or before July 1, 2010, the Director of Consumer Affairs
shall promulgate regulations that adopt the task force's recommended
scope of practice.
(e) The Medical Board of California and the Board of Registered
Nursing shall pay the state administrative costs of implementing this
section.
(f) This section shall become inoperative on July 1, 2011, and, as
of January 1, 2012, is repealed, unless a later enacted statute,
that is enacted before January 1, 2012, deletes or extends the dates
on which it becomes inoperative and is repealed.
SEC. 6. Section 3516 of the Business and
Professions Code, as amended by Section 4 of Chapter 376 of the
Statutes of 2007, is amended to read:
3516. (a) Notwithstanding any other provision of law, a physician
assistant licensed by the committee shall be eligible for employment
or supervision by any physician and surgeon who is not subject to a
disciplinary condition imposed by the board prohibiting that
employment or supervision.
(b) No physician and surgeon shall supervise more than six
physician assistants at any one time, except as provided in Section
3502.5.
(c) The board may restrict a physician and surgeon to supervising
specific types of physician assistants including, but not limited to,
restricting a physician and surgeon from supervising physician
assistants outside of the field of specialty of the physician and
surgeon.
SEC. 7. Section 4040.1 is added to the Business and Professions
Code, to read:
4040.1. (a) Electronic prescribing shall
not interfere with a patient's existing freedom to choose a pharmacy,
and shall not interfere with the prescribing decision at the point
of care.
(b) Notwithstanding subdivision (c) of Section 4040, "electronic
prescribing" or "e-prescribing" means a prescription or
prescription-related information transmitted between the point of
care and the pharmacy using electronic media.
SEC. 8. Section 4071.2 is added to the Business and Professions
Code, to read:
4071.2. (a) On or before January 1, 2010, every licensed
prescriber, prescriber's authorized agent, or pharmacy operating in
California shall have the ability to transmit and receive
prescriptions by electronic data transmission.
(b) The Medical Board of California, the State Board of Optometry,
the Bureau of Naturopathic Medicine, the Dental Board of California,
the Osteopathic Medical Board of California, the Board of Registered
Nursing, and the Physician Assistant Committee shall have authority
with the California State Board of Pharmacy to ensure compliance with
this section, and those boards are specifically charged with the
enforcement of this section with respect to their respective
licensees.
(c) Nothing in this section shall be construed to diminish or
modify any requirements or protections provided for in the
prescription of controlled substances as otherwise established by
this chapter or by the California Uniform Controlled Substances Act
(Division 10 (commencing with Section 11000) of the Health and Safety
Code).
SEC. 9. Section 4071.3 is added to the Business and Professions
Code, to read:
4071.3. Every electronic prescription system shall meet all of
the following requirements:
(a) Comply with nationally recognized or certified standards for
data exchange or be accredited by a recognized accreditation
organization.
(b) Allow real-time verification of an individual's eligibility
for benefits and whether the prescribed medication is a covered
benefit.
(c) Comply with applicable state and federal confidentiality and
data security requirements.
(d) Comply with applicable state record retention and reporting
requirements.
SEC. 10. Section 4071.4 is added to the Business and Professions
Code, to read:
4071.4. A prescriber or prescriber's authorized agent using an
electronic prescription system shall offer patients a written receipt
of the information that has been transmitted electronically to the
pharmacy. The receipt shall include the patient's name, the dosage
and drug prescribed, the name of the pharmacy where the electronic
prescription was sent, and shall indicate that the receipt cannot be
used as a duplicate order for the same medicine.
SEC. 11. Section 49452.9 is added to the Education Code, to read:
49452.9. (a) On and after January 1, 2010, the school district
may provide an information sheet regarding health insurance
requirements to the parent or guardian of all of the following:
(1) A pupil enrolled in kindergarten.
(2) A pupil enrolled in first grade if the pupil was not
previously enrolled in kindergarten.
(3) A pupil enrolled during the course of the year in the case of
children who have recently arrived, and intend to remain, in
California.
(b) The information sheet described in subdivision (a) shall
include all of the following:
(1) An explanation of the health insurance requirements under
Section 8899.50 of the Government Code.
(2) Information on the important relationship between health and
learning.
(3) A toll-free telephone number to request an application for
Healthy Families, Medi-Cal, or other government-subsidized health
insurance programs.
(4) Contact information for county public health departments.
(5) A statement of privacy applicable under state and federal laws
and regulations.
(c) By January 1, 2010, the State Department of Education shall,
in consultation with the State Department of Health Care Services and
the Managed Risk Medical Insurance Board, develop a standardized
template for the information sheet required by this section. To the
extent possible, the information provided pursuant to this section
shall be consolidated with the information listed in subdivision (c)
of Section 49452.8 into one document. The State Department of
Education shall make the template available on its Internet Web site
and shall, upon request, provide written copies of the template to a
school district.
SEC. 12. Chapter 15 (commencing with Section 8899.50) is added to
Division 1 of Title 2 of the Government Code, to read:
CHAPTER 15. MINIMUM HEALTH CARE COVERAGE
8899.50. (a) Every individual in this state shall be required to
maintain a minimum policy of health care coverage, as determined by
the Managed Risk Medical Insurance Board, for himself or herself and
his or her dependents.
(b) An individual is not subject to the requirements of
subdivision (a) if either of the following apply:
(1) The total cost for a minimum policy, including all
out-of-pocket costs, exceeds 6.5 percent of the individual's family
income.
(2) The individual has a significant financial hardship, as
determined by the Managed Risk Medical Insurance Board.
(c) For purposes of this chapter, the term "dependents" means the
spouse, domestic partner, minor child of the individual, or a child
18 years of age and over who is dependent on the individual, as
defined by the Managed Risk Medical Insurance Board.
(d) In establishing the minimum policy of health care coverage,
the board shall consider all of the following:
(1) The affordability of the minimum policy for individuals who
are subject to the requirements of subdivision (a), taking into
account premiums, deductibles, coinsurance, copayments, and total
out-of-pocket costs.
(2) The degree to which the minimum policy protects individuals
subject to the requirement of subdivision (a) from catastrophic
medical costs.
(3) The importance of encouraging periodic health evaluations and
the use of services that have been shown to be effective in detecting
or preventing serious illness.
(e) It is the intent of the Legislature that the Managed Risk
Medical Insurance Board pay the cost of health care coverage on
behalf of an individual who has been without health care coverage for
a period greater than 63 days after the date of leaving employment
where the individual had health care coverage, by enrolling him or
her in minimum health coverage though the California Cooperative
Heath Insurance Purchasing Program established pursuant to Part 6.45
(commencing with Section 12699.201) of Division 2 of the Insurance
Code and then recouping from the individual the cost of that
coverage.
(f) The Managed Risk Medical Insurance Board shall identify and
implement methods and strategies to establish multiple entry points
and opportunities for enrollment in public or private coverage, as
appropriate, for individuals subject to subdivision (a). The board
shall work with state and local agencies, health care providers,
health plans, employers, consumer groups, community organizations,
and other appropriate stakeholders to establish point-of-service
methods to facilitate enrollment of individuals who do not have or
maintain a minimum policy of health care coverage as required under
this section. The board shall identify and implement in
state-administered health care programs, to the greatest extent
practicable and permissible under federal law, best practices for
streamlined eligibility and enrollment.
(g) On or before January 1, 2010, the board shall establish and
maintain an active statewide education and awareness program to
inform all California residents of their obligation under this
section, including informing them of the options available to obtain
affordable coverage through public programs, the state purchasing
pool, and commercial coverage.
(h) The board may enter into, or authorize entities within the
agency to enter into, agreements with other state agencies or
departments, or local agencies or organizations, to develop,
implement, or participate in the educational program established
pursuant to this section.
(i) Implementation of this section shall be contingent upon an
appropriation of funds for the purpose of this section in the annual
Budget Act or another statute.
8899.50. (a) On and after July 1, 2010, every California resident
shall be enrolled in and maintain at least minimum creditable
coverage, as defined by the Managed Risk Medical Insurance Board
pursuant to Section 12739.50 of the Insurance Code, unless otherwise
exempt pursuant to subdivision (d).
(b) On and after July 1, 2010, a subscriber shall obtain and
maintain at least minimum creditable coverage, as defined by the
Managed Risk Medical Insurance Board, for any person who qualifies as
his or her dependent. For purposes of this chapter, the term
"dependent" means the spouse, registered domestic partner, minor
child of the subscriber, or a child 18 years of age and over who is
dependent on the subscriber, as defined by the Managed Risk Medical
Insurance Board.
(c) Notwithstanding subdivisions (a) and (b), compliance with
those subdivisions shall not be required until Sections 12739.50,
12739.51, and 12699.211.01 of the Insurance Code and Sections
14005.301 and 14005.305 of the Welfare and Institutions Code are
implemented and the Managed Risk Medical Insurance Board has defined
by regulation the minimum creditable coverage that will satisfy the
requirements of this section.
(d) An individual shall not be subject to the requirements of
subdivisions (a) and (b) if the Managed Risk Medical Insurance Board,
pursuant to Section 12739.501 of the Insurance Code, determines that
health care coverage meeting the definition of minimum creditable
coverage is not affordable for that individual
or that the purchase of minimum creditable
coverage would constitute an undue hardship, or if the person or
family has an income at or below 250 percent of poverty and the
person's or family's share of the premium for minimum creditable
coverage exceeds 5 percent of his or her family's income.
(e) An individual shall not be subject to the requirements of
subdivisions (a) and (b) if the individual has been in California for
six months or less and is not eligible for guaranteed issue of
health care coverage under Section 1399.829 of the Health and Safety
Code or Section 10928 of the Insurance Code.
(f) On and after July 1, 2010, individuals with incomes between
250 and 400 percent of the federal poverty level shall be required to
comply with subdivisions (a) and (b) only to the extent that a tax
credit is enacted and is available for costs incurred in purchasing
health care coverage to meet the requirements of this section.
(g) "California resident" means an individual who is a resident of
the state pursuant to Section 244 or is physically present in the
state for at least six months, having entered the state with an
employment commitment or to obtain employment, whether or not
employed at the time of application for health care coverage or after
acceptance.
(h) "Subscriber" means an individual with dependents, as
determined by the Managed Risk Medical Insurance Board consistent
with subdivision (b), who is generally eligible to enroll dependents
for health care coverage purposes, including, but not limited to, an
individual whose employment status, or status as head of household,
parent, spouse, or other status, makes the individual eligible to
enroll his or her dependents for health care coverage purposes.
SEC. 13. Section 12803.1 is added to the
Government Code, to read:
12803.1. (a) The California Health Benefits Service is hereby
created within the California Health and Human Services Agency.
(1) The California Health Benefits Service (CHBS) shall be
governed by a nine member board appointed by the Governor, the Senate
Committee on Rules, and the Speaker of the Assembly. The Governor
shall appoint a representative of local initiatives authorized under
the Welfare and Institutions Code, a representative of county
organized health systems, and a representative of health care
purchasers. The Senate Committee on Rules shall appoint a
representative of local initiatives authorized under the Welfare and
Institutions Code, a representative of county organized health
systems, and a representative of health care consumers. The Speaker
of the Assembly shall appoint a representative of local initiatives
authorized under the Welfare and Institutions Code, a representative
of health care providers, and a representative of organized labor.
Terms of appointment shall be four years. The members of the board
shall elect a board chair from among the nine appointed members.
(2) The board shall appoint an executive director for the board,
who shall serve at the pleasure of the board. The executive director
shall receive the salary established by the Department of Personnel
Administration for exempt officials. The executive director shall
administer the affairs of the board as directed by the board and
shall direct the staff of the board. The executive director may
appoint, with the approval of the board, staff necessary to carry out
the provisions of this section.
(b) The Health and Human Services Agency shall convene a working
group with the collaboration of the Department of Managed Health
Care, the State Department of Health Care Services, and the Managed
Risk Medical Insurance Board. This working group shall assist CHBS in
identifying statutory, regulatory, or financial barriers or
incentives that must be addressed before CHBS can facilitate the
establishment and maintenance of one or more joint ventures between
health plans that contract with, or are governed, owned, or operated
by, a county board of supervisors, a county special commission, or
county health authority authorized by Section 14018.7, 14087.31,
14087.35, 14087.36, 14087.38, or 14087.96 of the Welfare and
Institutions Code. The working group shall also assist CHBS in
identifying statutory, regulatory, or financial barriers or
incentives that must be addressed before CHBS can enter into
contracts with providers to provide health care services in counties
in which there is not a prepaid health plan that contracts with, or
is governed, owned, or operated by, a county board of supervisors, a
county special commission, or a county health authority authorized by
Section 14018.7, 14087.31, 14087.35, 14087.36, 14087.38, or 14087.96
of the Welfare and Institutions Code. The working group shall, no
later than April 1, 2008, report its findings to the executive
director, the CHBS governing board, and the committees of
jurisdiction in the Senate and Assembly.
(c) To the extent permitted under existing law, CHBS is authorized
to solicit and assist prepaid health plans that contract with, or
are governed, owned, or operated by, a county board of supervisors, a
county special commission or county health authority authorized by
Section 14018.7, 14087.31, 14087.35, 14087.36, 14087.38, or 14087.96
of the Welfare and Institutions Code in forming joint ventures to
create integrated networks of public health plans that pool risk and
share networks. CHBS may, upon agreement of participating health
plans, administer those joint ventures. Consistent with the
recommendations pursuant to subdivision (b), and existing law, CHBS
is authorized to develop networks to provide health care services in
counties in which there is not a prepaid health plan that contracts
with, or is governed, owned, or operated by, a county board of
supervisors, a county special commission, or a county health
authority authorized by Section 14018.7, 14087.31, 14087.35,
14087.36, 14087.38, or 14087.96 of the Welfare and Institutions Code.
(1) In forming joint ventures, CHBS and participating health plans
shall seek to contract with the 22 designated public hospitals,
county health clinics, and community clinics.
(2) All joint ventures established pursuant to this section shall
seek licensure as a health care service plan consistent with the
Knox-Keene Health Care Service Plan Act of 1975 (Chapter 2.2
(commencing with Section 1340) of Division 2 of the Health and Safety
Code). Prior to commencement of enrollment, the joint venture shall
be licensed pursuant to that act.
(d) By March 1, 2009, and annually thereafter, CHBS shall submit a
report to the committees of jurisdiction in the Senate and Assembly
on implementation of this section and make recommendations on
resources, regulatory, and legislative changes necessary to implement
this section. The report shall also include recommendations on
resources, policy, and legislative changes necessary to build and
implement a system of health coverage throughout California.
SEC. 14. SEC. 13. Section 12803.2 is
added to the Government Code, to read:
12803.2. (a) The California
Health and Human Services Agency, in consultation with the Board of
Administration of the Public Employees' Retirement System, and after
consultation with affected health care provider groups, shall develop
health care provider performance measurement benchmarks and
incorporate these benchmarks into a common pay-for-performance model
to be offered in every state-administered health care program,
including, but not limited to, the Public Employees' Medical and
Hospital Care Act, the Healthy Families Program, the Major Risk
Medical Insurance Program, the Medi-Cal program, and the California
Cooperative Health Insurance Purchasing Program. These benchmarks
shall be developed to advance a common statewide framework for health
care quality measurement and reporting, including, but not limited
to, measures that have been approved by the National Quality Forum
(NQF) such as the Health Plan Employer Data and Information Set
(HEDIS) and the Joint Commission on Accreditation of Health Care
Organizations (JCAHO), and that have been adopted by the Hospitals
Quality Alliance and other national and statewide groups concerned
with quality. The provisions of Section 14167.25 of the Welfare
and Institutions Code shall be implemented in addition to the
requirements of this section in such a manner that they are
appropriately integrated with the pay-for-performance model required
under this section.
(b) The California Health and Human Services Agency, in
consultation with the Board of Administration of the Public Employees'
Retirement System, shall assume lead agency responsibility for
professional review and development of best practice standards in the
care and treatment of patients with high-cost chronic diseases, such
as asthma, diabetes, and heart disease. In developing the best
practice standards, the agency shall consider the use of an annual
health assessment for patients. Upon adoption of the standards, each
state health care program, including, but not limited to, programs
offered under the Public Employees' Medical and Hospital Care Act,
the Medi-Cal program, the Healthy Families Program, the Major Risk
Medical Insurance Program, and the California Cooperative Health
Insurance Purchasing Program, shall implement those standards.
SEC. 14. Section 12803.25 is added to the Government
Code, to read:
12803.25. (a) The Secretary of California Health and Human
Services, in collaboration with other relevant state agencies, shall
track and assess the effects of health care reform as set forth in
the act enacting this section. The secretary shall either complete
the assessment or contract for its preparation. The secretary may
seek other sources of funding, including grants, to fund the
assessment. The assessment shall include, at minimum, the following
components:
(1) An assessment of the sustainability and solvency of the
program established pursuant to Part 6.45 (commencing with Section
12699.201) of Division 2 of the Insurance Code. This assessment shall
include data regarding persons purchasing health care coverage
through that program.
(2) An assessment of the cost and affordability of health care in
California. This assessment shall include the cost of health care
coverage products for individuals and families obtained through
employers, city and county governments, the Medi-Cal program, the
Healthy Families Program, the Public Employees' Medical and Hospital
Care Act, Medicare Advantage plans, and the individual market.
(3) An assessment of the health care coverage market in
California, including a review of the various insurers and health
care service plans, their offerings, their efficiency in providing
health care services, and their financial conditions, including their
medical loss ratios.
(4) An assessment of the effect on employers and employment,
including employer administrative costs, employee turnover rate, and
wages categorized by the type of employer and the size of the
business.
(5) An assessment of the change in access and availability of
health care coverage throughout the state, including tracking the
availability of health care coverage products in rural and other
underserved areas of the state and assessing the adequacy of the
health care delivery infrastructure to meet the need for health care
services. This assessment shall include a more in-depth review of
areas of the state that were determined to be medically underserved
in 2007.
(6) An assessment of the impact on the county health care safety
net system, including a review of the amount of uncompensated care
and emergency room use.
(7) An overall assessment of health care coverage.
(8) An assessment of the capacity of the various health care
professions and facilities to provide care to Californians.
(b) An advisory body of individuals with knowledge and expertise
in health care policy and financing shall provide input on the
assessment described in subdivision (a). The Governor shall appoint
five members to the advisory body, the Senate Committee on Rules
shall appoint two members, and the Speaker of the Assembly shall
appoint two members.
(c) To the extent possible, the assessment described in
subdivision (a) shall maximize the use of current surveys and
databases.
(d) To the extent feasible, in order to track the effect of health
care reform on ongoing trends in the health care field, the
assessment described in subdivision (a) shall include data from years
prior to the enactment of the program established pursuant to Part
6.45 (commencing with Section 12699.201) of Division 2 of the
Insurance Code.
(e) All state agencies shall cooperate with the secretary in
implementing the provisions of this section.
(f) The Secretary of California Health and Human Services shall
submit the assessment described in subdivision (a) to the appropriate
policy and fiscal committees of the Legislature on or before March
1, 2012. The secretary shall update the assessment biennially.
SEC. 15. Section 22830.5 is added to the Government Code, to read:
22830.5. (a) On or before January 1, 2009
2010 , the board shall provide or arrange for the provision of
an electronic personal health record for enrollees receiving health
care benefits. The record shall be provided for the purpose of
providing enrollees with information to assist them in understanding
their coverage benefits and managing their health care.
(b) At a minimum, the personal health record shall provide access
to real-time, patient-specific information regarding eligibility for
covered benefits and cost sharing requirements. Such access can be
provided through the use of an Internet-based system.
(c) In addition to the data required pursuant to subdivision (b),
the board may determine that the personal health record shall also
incorporate additional data, such as laboratory results, prescription
history, claims history, and personal health information authorized
or provided by the enrollee. Inclusion of this additional data shall
be at the option of the enrollee.
(d) Systems or software that pertain to the personal health record
shall adhere to accepted national standards for interoperability,
privacy, and data exchange, or shall be certified by a nationally
recognized certification body.
(e) The personal health record shall comply with applicable state
and federal confidentiality and data security requirements.
SEC. 16. Section 22830.6 is added to the Government Code, to read:
22830.6. On or before January 1, 2009
2010 , the board shall provide or arrange for the provision of
a Healthy Action Incentives and Rewards Program, as described in
subdivision (c) of Section 1367.38 of the Health and Safety Code, to
all enrollees.
SEC. 17. Chapter 1.6 (commencing with Section 155) is
added to Part 1 of Division 1 of the Health and Safety Code, to read:
CHAPTER 1.6. CALIFORNIA HEALTH BENEFITS SERVICE
155. (a) The California Health Benefits Service Program is hereby
created within the State Department of Health Care Services for the
purposes of expanding cost-effective health coverage options to
purchasers governed by the Health Care Security and Cost Reduction
Act. The program shall do all of the following:
(1) Identify statutory, regulatory, or financial barriers or
incentives that should be addressed to facilitate the establishment
and maintenance of one or more joint ventures between health plans
that contract with, or are governed, owned, or operated by, a county
board of supervisors, a county special commission, a county organized
health system or a county health authority authorized by Section
14018.7, 14087.31, 14087.35, 14087.36, 14087.38, 14087.96 or Article
2.8 (commencing with Section 14087.5) of Chapter 7 of Division 9 of
Part 3 of the Welfare and Institutions Code, as well as the County
Medical Services Program.
(2) Identify statutory, regulatory, or financial barriers or
incentives that should be addressed before joint ventures among these
health plans may be formed, or existing health plans or the County
Medical Services Program may expand to serve other geographic areas,
for the purposes of providing public health care services in counties
where there is not a local initiative or county organized health
plan that contracts with the State Department of Health Care
Services, or the County Medical Services Program, participating in
these joint ventures.
(3) Report these initial findings to the committees of
jurisdiction in the Senate and Assembly on or before January 15,
2009.
(4) Provide technical assistance to local health care delivery
entities, including local initiatives, county organized health
systems, and the County Medical Services Program, to support joint
ventures and efforts by these entities to expand to serve other
geographic areas and specified populations, or to contract with
providers to provide health care services in counties where there is
not a local initiative or county organized health plan that contracts
with the State Department of Health Care Services that opts to
participate in such joint ventures, or participation from the County
Medical Services Program.
(5) Consistent with the report and recommendations provided
pursuant to this section and consistent with existing law, the
department is authorized to enter into contracts with joint ventures
authorized pursuant to this section to provide medical services to
specified populations, as determined by the program.
(b) Health plans that contract with or are governed, owned, or
operated by, a county board of supervisors, a county special
commission, a county organized health system, or county health
authority authorized by Section 14018.7, 14087.31, 14087.35,
14087.36, 14087.38, or 14087.96 or Article 2.8 (commencing with
Section 14087.5) of Chapter 7 of Division 9 of Part 3 of the Welfare
and Institutions Code, and the County Medical Services Program, are
authorized to form joint ventures to create integrated networks of
public health plans that pool risk and share networks.
(1) In forming joint ventures, participating health plans shall
seek to contract with designated public hospitals, county health
clinics, community health centers, and other traditional safety net
providers.
(2) All joint ventures and health care networks established
pursuant to this section shall seek licensure as a health care
service plan consistent with the Knox-Keene Health Care Service Plan
Act of 1975 (Chapter 2.2 (commencing with Section 1340) of Division 2
of the Health and Safety Code). Prior to commencement of enrollment,
the joint venture or health care network shall be licensed pursuant
to that act.
(c) There is hereby created the California Health Benefits Service
Program Stakeholder Committee. The committee shall be comprised of
10 members appointed by the Director of Health Care Services, the
Senate Committee on Rules, and the Speaker of the Assembly. The
director shall appoint six members including two representatives of
local initiatives authorized under the Welfare and Institutions Code,
a representative of county organized health systems, a
representative of the County Medical Services Program, a
representative of health care providers, and a representative of
employers. The Senate Committee on Rules shall appoint two members
including a labor representative and a representative of health care
consumers. The Speaker of the Assembly shall appoint two members,
including a representative of local initiatives authorized under the
Welfare and Institutions Code, and a representative of organized
labor. The committee shall meet at least quarterly to provide input
to the program and assist the program in carrying out its
responsibilities as outlined in this section.
(d) On or before November 1, 2009, and annually thereafter, the
department, with input from the committee, shall update the
committees of jurisdiction in the Senate and Assembly on
implementation of this section and make recommendations, as
applicable, on changes necessary to implement this section. The
update shall also include progress on fulfilling the intent of the
Health Care Security and Cost Reduction Act and recommendations on
resources, policy, and legislative changes necessary to build and
implement a system of public health coverage throughout California.
The update shall describe the projects proposed or established
pursuant to this section, including, but not limited to, the
participating providers, the groups covered, the physicians and
hospitals in the network, and the counties served.
(e) The program shall consult with relevant departments, including
the Department of Managed Health Care, in the implementation of this
section.
(f) Nothing in this section shall be construed to prohibit any
other licensed health care service plan not mentioned in subdivisions
(b) and (c) from entering in joint ventures or contracts with the
State Department of Health Care Services to provide services in
counties in which there is not a Medi-Cal managed care health plan
that contracts with the department.
SEC. 17. SEC. 18. Section 1262.9 is
added to the Health and Safety Code, to read:
1262.9. (a) If a patient has coverage for emergency health care
services and poststabilizing care, a noncontracting hospital shall
not bill the patient for emergency health care services and
poststabilizing care, except for applicable copayments and cost
shares.
(b) The noncontracting hospital and the health care service plan
or health insurer shall each retain their right to pursue all
currently available legal remedies they may have against each other,
including the right to determine the final payment due.
(c) For the purposes of this section:
(1) "Noncontracting hospital" means a general acute care hospital
as defined in subdivision (a) of Section 1250 that has a special
permit to operate an emergency medical service and does not have a
contract with a health care service plan or a health insurer for the
provision of emergency health care services and poststabilizing care
to the patient, who is one of that health care service plan's or
health insurer's enrollees, members, or insureds.
(2) "Emergency health care services and poststabilizing care"
means emergency services and out-of-area urgent services provided in
an emergency department and a hospital through discharge in
compliance with Sections 1262.8 and 1317 and, in the case of health
care service plans, the services required to be covered pursuant to
paragraph (6) of subdivision (b) of Section 1345, subdivision (i) of
Section 1367, Sections 1371.4, and 1371.5, of this code, and Sections
1300.67(g) and 1300.71.4 of Title 28 of the California Code of
Regulations.
SEC. 18. SEC. 19. Section 1342.9 is
added to the Health and Safety Code, to read:
1342.9. (a) Notwithstanding any other provision of this chapter,
a health care service plan that provides services to a beneficiary of
the Medi-Cal program pursuant to Article 2.7 (commencing with
Section 14087.3), Article 2.8 (commencing with Section 14087.5), or
Article 2.91 (commencing with Section 14089) of Chapter 7 of, or
Article 1 (commencing with Section 14200) or Article 7 (commencing
with Section 14490) of Chapter 8 of, Part 3 of Division 9 of the
Welfare and Institutions Code shall, regarding coverage for
participants in a Medi-Cal managed care program, be subject solely to
the filing, reporting, monitoring, and survey requirements
established by the State Department of Health Care Services for the
Medi-Cal managed care program as those requirements pertain to the
following subjects: advertising and marketing; member materials,
including member handbooks, evidences of coverage, and disclosure
forms; and product design, including its scope and limitations. A
health care service plan that satisfies any of the foregoing filing,
reporting, monitoring, or survey requirements shall be deemed in
compliance with corresponding
provisions, if any, of this chapter.
(b) The department and the State Department of Health Care
Services shall develop a joint filing and review process for medical
quality surveys required pursuant to Section 1380 and pursuant to
Chapter 8 (commencing with Section 14200) of Part 3 of Division 9 of
the Welfare and Institutions Code.
SEC. 19. SEC. 20. Section 1347 is
added to the Health and Safety Code, to read:
1347. The director shall provide regulatory and program
flexibilities as may be necessary to facilitate new, modified, or
combined licenses of local initiatives, county organized health
systems, or the California Health Benefits Service, created pursuant
to Section 12803.1 of the Government Code, seeking licensure for
regional or statewide networks for the purposes of contracting with
the Managed Risk Medical Insurance Board as a participating plan in
the California Cooperative Health Insurance Purchasing Program by
January 1, 2010, or for the purposes of providing coverage in the
individual and group coverage markets. In providing those
flexibilities, the director shall ensure that the health plans
established pursuant to this section meet essential financial,
capacity, and consumer protection requirements of this chapter.
1347. The director may provide regulatory and program
flexibilities to facilitate new, modified, or combined licenses of
local initiatives and county organized health systems, created
through the California Health Benefits Service Program pursuant to
Chapter 1.6 (commencing with Section 155) of Part 1 of Division 1,
that seek licensure for regional or statewide networks for the
purposes of contracting with the Managed Risk Medical Insurance Board
as a participating plan in the California Cooperative Health
Insurance Purchasing Program, or for the purposes of providing
coverage in the individual and group coverage markets. In providing
those flexibilities, the director shall ensure that the health plans
established pursuant to this section meet essential financial,
capacity, and consumer protection requirements of this chapter.
SEC. 20.5. Section 1356.2 is added to the Health and
Safety Code, to read:
1356.2. (a) It is the intent of the Legislature to establish
mechanisms by which the state may defray the costs of an enrollee's
public program participation. The state's efforts may include, but
shall not be limited to, creating mechanisms to take advantage of
other opportunities for coverage available to that enrollee, to
access nonstate resources available to fund care for that enrollee,
or other mechanisms to minimize state costs.
(b) (1) The State Department of Health Care Services, in
consultation with the Department of Insurance and the Department of
Managed Health Care, shall evaluate and consider the options to
effectuate the intent of this section and determine the process and
procedures to implement subdivision (a). The departments shall assess
the fiscal ramifications and administrative feasibility of potential
options, and determine the requirements that best effectuate and
implement this section. The department shall report its findings to
the Joint Legislative Budget Committee by July 1, 2009.
(2) Ninety days following the department's notification to the
Joint Legislative Budget Committee pursuant to paragraph (1), the
departments shall implement the policies, procedures, and
requirements described in its report.
(c) To the extent necessary to achieve the purposes of subdivision
(a), the State Department of Health Care Services may implement
Section 1396e of Title 42 of the United States Code. To the extent
necessary to achieve the purposes of this section, this option shall
be exercised in conjunction with the benchmark authority provided in
Section 1396u-7 of Title 42 of the United States Code.
(d) To the extent necessary to achieve the purposes of subdivision
(a), the Department of Insurance and the Department of Managed
Health Care shall establish appropriate licensing requirements for
health insurers and health care service plans to permit the state to
access funds and contributions available to enrollees to reduce the
cost of subsidized coverage.
(e) For the purposes of implementing this section, the State
Department of Health Care Services, the Department of Insurance, and
the Department of Managed Health Care shall promulgate regulations in
accordance with the requirements of Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code.
(f) For the purposes of this section, "subsidized coverage" means
coverage provided under either of the following:
(1) Part 6.45 (commencing with Section 12699.201) of Division 2 of
the Insurance Code through a Cal-CHIPP Healthy Families plan.
(2) Section 14005.333 of the Welfare and Institutions Code.
(g) This section shall be implemented no later than one year from
the date that the act enacting this section becomes operative.
SEC. 20. SEC. 21. Article 3.11
(commencing with Section 1357.20) is added to Chapter 2.2 of Division
2 of the Health and Safety Code, to read:
Article 3.11. Insurance Market Reform
1357.20. On and after January 1, 2010, the department, in
consultation with the Department of Insurance, shall require each
health care service plan with one million or more enrollees in
California, based on the plan's enrollment in the prior year, to
submit a good faith bid to the Managed Risk Medical Insurance Board
in order to be a participating plan through the California
Cooperative Health Insurance Purchasing Program (Cal-CHIPP) pursuant
to Part 6.45 (commencing with Section 12699.201) of Division 2 of the
Insurance Code.
1357.23. 1357.20. Effective July 1,
2010, all requirements in Article 3.1 (commencing with Section 1357)
applicable to offering, marketing, and selling health care service
plan contracts to small employers as defined in that article,
including, but not limited to, the obligation to fairly and
affirmatively offer, market, and sell all of the plan's contracts to
all employers, guaranteed renewal of all health care service plan
contracts, use of the risk adjustment factor, and the restriction of
risk categories to age, geographic region, and family composition as
described in that article, shall be applicable to all health care
service plan contracts offered to all employers with 100 or fewer
eligible employees, except as follows:
(a) For small employers with 2 to 50, inclusive, eligible
employees, all requirements in that article shall apply.
(b) For employers with 51 to 100, inclusive, eligible employees,
all requirements in that article shall apply, except that the health
care service plan may develop health care coverage benefit plan
designs to fairly and affirmatively market only to employer groups of
51 to 100, inclusive, eligible employees and apply a risk
adjustment factor of no more than 115 percent and no less than 85
percent of the standard employee risk rate .
1357.24. It is the intent of the Legislature to establish a
mechanism by which the state may defray the costs of an enrollee's
public program participation by taking advantage of other
opportunities for coverage available to that enrollee.
1357.25. The requirements of this article shall not apply to a
specialized health care service plan or a Medicare supplement
contract.
1357.26. This article shall become operative on July 1, 2008.
SEC. 21.5. Section 1357.54 of the Health and Safety
Code is amended to read:
1357.54. All individual health benefit plans, except for
short-term limited duration insurance, shall be renewable with
respect to all eligible individuals or dependents at the option of
the individual except as follows:
(a) For nonpayment of the required premiums or contributions by
the individual in accordance with the terms of the health insurance
coverage or the timeliness of the payments.
(b) For fraud or intentional misrepresentation of material fact
under the terms of the coverage by the individual.
(c) Movement of the individual contractholder outside the service
area, but only if the coverage is terminated uniformly without regard
to any health status-related factor of covered individuals.
(d) If the plan ceases to provide or arrange for the provision of
health care services for new individual health benefit plans in this
state; provided, however, that the following conditions are
satisfied:
(1) Notice of the decision to cease new or existing individual
health benefit plans in the state is provided to the director and to
the individual at least 180 days prior to discontinuation of that
coverage.
(2) Individual health benefit plans shall not be canceled for 180
days after the date of the notice required under paragraph (1) and
for that business of a plan that remains in force, any plan that
ceases to offer for sale new individual health benefit plans shall
continue to be governed by this section with respect to business
conducted under this section.
(3) A plan that ceases to write new individual health benefit
plans in this state after the effective date of this section shall be
prohibited from offering for sale individual health benefit plans in
this state for a period of five years from the date of notice to the
director.
(e) If the plan withdraws an individual health benefit plan from
the market; provided, that the plan notifies all affected individuals
and the director at least 90 days prior to the discontinuation of
these plans, and that the plan makes available to the individual all
health benefit plans that it makes available to new individual
business without regard to any health status-related factor of
enrolled individuals or individuals who may become eligible for the
coverage.
This section shall become inoperative on the date that Section
1399.829 becomes operative.
SEC. 21. SEC. 22. Section 1363 of
the Health and Safety Code is amended to read:
1363. (a) The director shall require the use by each plan of
disclosure forms or materials containing information regarding the
benefits, services, and terms of the plan contract as the director
may require, so as to afford the public, subscribers, and enrollees
with a full and fair disclosure of the provisions of the plan in
readily understood language and in a clearly organized manner. The
director may require that the materials be presented in a reasonably
uniform manner so as to facilitate comparisons between plan contracts
of the same or other types of plans. Nothing contained in this
chapter shall preclude the director from permitting the disclosure
form to be included with the evidence of coverage or plan contract.
The disclosure form shall provide for at least the following
information, in concise and specific terms, relative to the plan,
together with additional information as may be required by the
director, in connection with the plan or plan contract:
(1) The principal benefits and coverage of the plan, including
coverage for acute care and subacute care.
(2) The exceptions, reductions, and limitations that apply to the
plan.
(3) The full premium cost of the plan.
(4) Any copayment, coinsurance, or deductible requirements that
may be incurred by the member or the member's family in obtaining
coverage under the plan.
(5) The terms under which the plan may be renewed by the plan
member, including any reservation by the plan of any right to change
premiums.
(6) A statement that the disclosure form is a summary only, and
that the plan contract itself should be consulted to determine
governing contractual provisions. The first page of the disclosure
form shall contain a notice that conforms with all of the following
conditions:
(A) (i) States that the evidence of coverage discloses the terms
and conditions of coverage.
(ii) States, with respect to individual plan contracts, small
group plan contracts, and any other group plan contracts for which
health care services are not negotiated, that the applicant has a
right to view the evidence of coverage prior to enrollment, and, if
the evidence of coverage is not combined with the disclosure form,
the notice shall specify where the evidence of coverage can be
obtained prior to enrollment.
(B) Includes a statement that the disclosure and the evidence of
coverage should be read completely and carefully and that individuals
with special health care needs should read carefully those sections
that apply to them.
(C) Includes the plan's telephone number or numbers that may be
used by an applicant to receive additional information about the
benefits of the plan or a statement where the telephone number or
numbers are located in the disclosure form.
(D) For individual contracts, and small group plan contracts as
defined in Article 3.1 (commencing with Section 1357), the disclosure
form shall state where the health plan benefits and coverage matrix
is located.
(E) Is printed in type no smaller than that used for the remainder
of the disclosure form and is displayed prominently on the page.
(7) A statement as to when benefits shall cease in the event of
nonpayment of the prepaid or periodic charge and the effect of
nonpayment upon an enrollee who is hospitalized or undergoing
treatment for an ongoing condition.
(8) To the extent that the plan permits a free choice of provider
to its subscribers and enrollees, the statement shall disclose the
nature and extent of choice permitted and the financial liability
that is, or may be, incurred by the subscriber, enrollee, or a third
party by reason of the exercise of that choice.
(9) A summary of the provisions required by subdivision (g) of
Section 1373, if applicable.
(10) If the plan utilizes arbitration to settle disputes, a
statement of that fact.
(11) A summary of, and a notice of the availability of, the
process the plan uses to authorize, modify, or deny health care
services under the benefits provided by the plan, pursuant to
Sections 1363.5 and 1367.01.
(12) A description of any limitations on the patient's choice of
primary care physician, specialty care physician, or nonphysician
health care practitioner, based on service area and limitations on
the patient's choice of acute care hospital care, subacute or
transitional inpatient care, or skilled nursing facility.
(13) General authorization requirements for referral by a primary
care physician to a specialty care physician or a nonphysician health
care practitioner.
(14) Conditions and procedures for disenrollment.
(15) A description as to how an enrollee may request continuity of
care as required by Section 1373.96 and request a second opinion
pursuant to Section 1383.15.
(16) Information concerning the right of an enrollee to request an
independent review in accordance with Article 5.55 (commencing with
Section 1374.30).
(17) A notice as required by Section 1364.5.
(b) (1) As of July 1, 1999, the director shall require each plan
offering a contract to an individual or small group to provide with
the disclosure form for individual and small group plan contracts a
uniform health plan benefits and coverage matrix containing the plan'
s major provisions in order to facilitate comparisons between plan
contracts. The uniform matrix shall include the following category
descriptions together with the corresponding copayments and
limitations in the following sequence:
(A) Deductibles.
(B) Lifetime maximums.
(C) Professional services.
(D) Outpatient services.
(E) Hospitalization services.
(F) Emergency health coverage.
(G) Ambulance services.
(H) Prescription drug coverage.
(I) Durable medical equipment.
(J) Mental health services.
(K) Chemical dependency services.
(L) Home health services.
(M) Other.
(2) The following statement shall be placed at the top of the
matrix in all capital letters in at least 10-point boldface type:
THIS MATRIX IS INTENDED TO BE USED TO HELP YOU COMPARE COVERAGE
BENEFITS AND IS A SUMMARY ONLY. THE EVIDENCE OF COVERAGE AND PLAN
CONTRACT SHOULD BE CONSULTED FOR A DETAILED DESCRIPTION OF COVERAGE
BENEFITS AND LIMITATIONS.
(c) Nothing in this section shall prevent a plan from using
appropriate footnotes or disclaimers to reasonably and fairly
describe coverage arrangements in order to clarify any part of the
matrix that may be unclear.
(d) All plans, solicitors, and representatives of a plan shall,
when presenting any plan contract for examination or sale to an
individual prospective plan member, provide the individual with a
properly completed disclosure form, as prescribed by the director
pursuant to this section for each plan so examined or sold.
(e) In the case of group contracts, the completed disclosure form
and evidence of coverage shall be presented to the contractholder
upon delivery of the completed health care service plan agreement.
(f) Group contractholders shall disseminate copies of the
completed disclosure form to all persons eligible to be a subscriber
under the group contract at the time those persons are offered the
plan. If the individual group members are offered a choice of plans,
separate disclosure forms shall be supplied for each plan available.
Each group contractholder shall also disseminate or cause to be
disseminated copies of the evidence of coverage to all applicants,
upon request, prior to enrollment and to all subscribers enrolled
under the group contract.
(g) In the case of conflicts between the group contract and the
evidence of coverage, the provisions of the evidence of coverage
shall be binding upon the plan notwithstanding any provisions in the
group contract that may be less favorable to subscribers or
enrollees.
(h) In addition to the other disclosures required by this section,
every health care service plan and any agent or employee of the plan
shall, when presenting a plan for examination or sale to any
individual purchaser or the representative of a group consisting of
100 or fewer individuals, disclose in writing the ratio of premium
costs to health services paid for plan contracts with individuals and
with groups of the same or similar size for the plan's preceding
fiscal year. A plan may report that information by geographic area,
provided the plan identifies the geographic area and reports
information applicable to that geographic area.
(i) Subdivision (b) shall not apply to any coverage provided by a
plan for the Medi-Cal program or the Medicare Program pursuant to
Title XVIII and Title XIX of the Social Security Act.
SEC. 22. Article 4.1 (commencing with Section
1366.10) is added to Chapter 2.2 of Division 2 of the Health and
Safety Code, to read:
Article 4.1. California Individual Coverage Guarantee Issue
1366.10. It is the intent of the Legislature to do both of the
following:
(a) Guarantee the availability and renewability of health coverage
through the private health insurance market to individuals.
(b) Require that health care service plans and health insurers
issuing coverage in the individual market compete on the basis of
price, quality, and service, and not on risk selection.
1366.104. (a) On or before September 1, 2008, the director and
the Insurance Commissioner shall jointly adopt regulations governing
five classes of individual health benefit plans that health care
service plans and health insurers shall make available.
(b) Within 90 days of the adoption of the regulations required by
subdivision (a), the director and the Insurance Commissioner shall
jointly approve five classes of individual health benefit plans for
each health care service plan and health insurer participating in the
individual market, with each class having an increased level of
benefits beginning with the lowest class. Within each class, the
director and the Insurance Commissioner shall jointly approve one
baseline HMO and one baseline PPO, each of which is the lowest cost
product to be issued by health care service plans and health insurers
in the individual market. The classes of benefits jointly approved
by the director and the Insurance Commissioner shall reflect a
reasonable continuum between the class with the lowest level of
benefits and the class with the highest level of benefits, shall
permit reasonable benefit variation that will allow for a diverse
market within each class, and shall be enforced consistently between
health care service plans and health insurers in the same marketplace
regardless of licensure.
(c) In approving the five classes of plans filed by health care
service plans and health insurers, the director and the Insurance
Commissioner shall do both of the following:
(1) Jointly determine that the plans provide reasonable benefit
variation, allowing a diverse market.
(2) Jointly require either (A) that benefits within each class are
standard and uniform across all plans and insurers, or (B) that
benefits offered in each class are actuarially equivalent across all
plans and insurers.
1366.105. On and after July 1, 2010, health care service plans
and health insurers participating in the individual market shall
guarantee issue the five classes of approved health benefit plans and
shall, at the same time, discontinue offering and selling health
benefit plans other than those within the five approved classes of
benefit plans in the individual market.
1366.106. Individuals may purchase a health benefit plan from one
of the five classes of approved plans on a guaranteed issue basis.
After selecting and purchasing a health benefit plan within a class
of benefits, an individual may change plans only as set forth in this
section. For individuals enrolled as a family, the subscriber may
change classes for himself or herself, or for all dependents:
(a) Annually in the month of the subscriber's birth, an individual
may select a different individual plan from another health care
service plan or insurer, within the same class of benefits or the
next higher class of benefits.
(b) Annually in the month of the subscriber's birth, an individual
may move up one class of benefits offered by the same health care
service plan or health insurer.
(c) At any time a subscriber may move to a lower class of
benefits.
(d) At significant life events, the enrollee may move up to a
higher class of benefits as follows:
(1) Upon marriage or entering into a domestic partnership.
(2) Upon divorce.
(3) Upon the death of a spouse or domestic partner, on whose
health coverage an individual was a dependent.
(4) Upon the birth or adoption of a child.
(e) A dependent child may terminate coverage under a parent's plan
and select coverage for his or her own account following his or her
18th birthday.
(f) If a subscriber becomes eligible for group benefits, Medicare,
or other benefits, and selects those benefits in lieu of his or her
individual coverage, the dependent spouse or domestic partner may
become the subscriber. If there is no dependent spouse or domestic
partner enrolled in the plan, the oldest child may become the
subscriber.
1366.107. At the time an individual applies for health coverage
from a health care service plan or health insurer participating in
the individual market, an individual shall provide information as
required by a standardized health status questionnaire to assist
plans and insurers in identifying persons in need of disease
management. Health care service plans and health insurers may not use
information provided on the questionnaire to decline coverage or to
limit an individual's choice of health care benefit plan.
1366.108. Health benefit plans shall become effective within 31
days of receipt of the individual's application, standardized health
status questionnaire, and premium payment.
1366.109. Health care service plans and health insurers may
reject an application for health care benefits if the individual does
not reside or work in a plan's or insurer's approved service area.
1366.110. The director or the Insurance Commissioner, as
applicable, may require a health care service plan or health insurer
to discontinue the offering of health care benefits, or acceptance of
applications from individuals, upon a determination by the director
or commissioner that the plan or insurer does not have sufficient
financial viability, or organizational and administrative capacity,
to ensure the delivery of health care benefits to its enrollees or
insureds.
1366.111. All health care benefits offered to individuals shall
be renewable with respect to all individuals and dependents at the
option of the subscriber, except:
(a) For nonpayment of the required premiums by the subscriber.
(b) When the plan or insurer withdraws from the individual health
care market, subject to rules and requirements jointly approved by
the director and the Insurance Commissioner.
1366.112.
No health care service plan or health insurer shall, directly or
indirectly, enter into any contract, agreement, or arrangement with a
solicitor that provides for or results in the compensation paid to a
solicitor for the sale of a health care service plan contract or
health insurance policy to be varied because of the health status,
claims experience, occupation, or geographic location of the
individual, provided the geographic location is within the plan's or
insurer's approved service area.
1366.113. This article shall not apply to individual health plan
contracts for coverage of Medicare services pursuant to contracts
with the United States government, Medi-Cal contracts with the State
Department of Health Care Services, Healthy Families Program
contracts with the Managed Risk Medical Insurance Board, high-risk
pool contracts with the Major Risk Medical Insurance Program,
Medicare supplement policies, long-term care policies, specialized
health plan contracts, or contracts issued to individuals who secure
coverage from Cal-CHIPP.
1366.114. (a) A health care service plan or health insurer may
rate its entire portfolio of health benefit plans in accordance with
expected costs or other market considerations, but the rate for each
plan or insurer shall be set in relation to the balance of the
portfolio as certified by an actuary. Each benefit plan shall be
priced as determined by each health care service plan or health
insurer to reflect the difference in benefit variation, or the
effectiveness of a provider network, but may not adjust the rate for
a specific plan for risk selection. A health care service plan's or
health insurer's rates shall use the same rating factors for age,
family size, and geographic location for each individual health care
benefit plan it issues. Rates for health care benefits may vary from
applicant to applicant only by any of the following:
(1) Age of the subscriber, as determined by the director and the
Insurance Commissioner.
(2) Family size in categories determined by the director and the
Insurance Commissioner.
(3) Geographic rate regions as determined by the director and the
Insurance Commissioner.
(4) Health improvement discounts. A health care service plan or
health insurer may reduce copayments or offer premium discounts for
nonsmokers, individuals demonstrating weight loss through a
measurable health improvement program, or individuals actively
participating in a disease management program, provided those
discounts are approved by the director and the Insurance
Commissioner.
(b) The director and Insurance Commissioner shall take into
consideration the age, family size, and geographic region rating
categories applicable to small group coverage contracts pursuant to
Section 1357 of this code and Section 10700 of the Insurance Code in
implementing this section.
1366.115. The first term of each health benefit plan contract or
policy issued shall be from the effective date through the last day
of the month immediately preceding the subscriber's next birthday.
Contracts or policies may be renewed by the subscriber as set forth
in this article.
1366.116. This article, other than Section 1366.104, shall not
become operative until the date that the provisions of Section
8899.50 of the Government Code are implemented.
SEC. 22.5. Section 1365 of the Health and Safety Code
is amended to read:
1365. (a) An enrollment or a subscription may not be canceled or
not renewed except for the following:
(1) Failure to pay the charge for such coverage if the subscriber
has been duly notified and billed for the charge and at least 15 days
has elapsed since the date of notification.
(2) Fraud or deception in the use of the services or facilities of
the plan or knowingly permitting such fraud or deception by another.
(3) Such other good cause as is agreed upon in the contract
between the plan and a group or the subscriber.
(b) An enrollee or subscriber who alleges that an enrollment or
subscription has been canceled or not renewed because of the enrollee'
s or subscriber's health status or requirements for health care
services may request a review by the director. If the director
determines that a proper complaint exists under the provisions of
this section, the director shall notify the plan. Within 15 days
after receipt of such notice, the plan shall either request a hearing
or reinstate the enrollee or subscriber. If, after hearing, the
director determines that the cancellation or failure to renew is
contrary to subdivision (a), the director shall order the plan to
reinstate the enrollee or subscriber. A reinstatement pursuant to
this subdivision shall be retroactive to the time of cancellation or
failure to renew and the plan shall be liable for the expenses
incurred by the subscriber or enrollee for covered health care
services from the date of cancellation or nonrenewal to and including
the date of reinstatement.
(c) This section shall not abrogate any preexisting contracts
entered into prior to the effective date of this chapter between a
subscriber or enrollee and a health care service plan or a
specialized health care service plan including, but not limited to,
the financial liability of such that
plan, except that each plan shall, if directed to do so by the
director, exercise its authority, if any, under any such preexisting
contracts to conform them to the provisions of subdivision (a).
(d) On and after the date that Section 1399.829 becomes operative,
this section shall not apply to individual health plan contracts.
SEC. 22.7. Section 1367.16 is added to the Health and
Safety Code, to read:
1367.16. For purposes of subdivision (c) of Section 1367.15,
"comparable benefits" means any health plan contract in the same
coverage choice category, as determined by the department and the
Department of Insurance pursuant to Section 1399.832, that a closed
block of business would have been in, had that block of business not
been closed. If the coverage benefits provided in the closed block of
business do not meet or exceed the minimum health care coverage
requirements of Section 1399.824, they shall be deemed comparable to
the lowest coverage choice category.
SEC. 23. Section 1367.205 is added to the Health and Safety Code,
to read:
1367.205. Commencing on or before January 1, 2010, a health care
service plan that provides prescription drug benefits and maintains
one or more drug formularies shall make the most current formularies
available electronically to prescribers and pharmacies.
SEC. 24. Section 1367.38 is added to the Health and Safety Code,
to read:
1367.38. (a) A full-service health care service plan, except for
a Medicare supplement plan, that offers, delivers, amends, or renews
a contract on or after January 1, 2009, that covers hospital,
medical, or surgical expenses on a group basis shall offer at least
one benefit design that includes a Healthy Action Incentives and
Rewards Program as described in subdivision (c). Any plan subject to
this section shall communicate the availability of the Healthy Action
Incentives and Rewards Program coverage to all group subscribers and
to all prospective group subscribers with whom they are negotiating.
(b) In addition to benefit designs offered pursuant to subdivision
(a), every health care service plan contract offered, delivered,
amended, or renewed on or after January 1, 2009, that offers coverage
on a group basis shall offer a Healthy Action Incentives and Rewards
Program, as described in subdivision (c), as a supplement to every
contract that covers hospital, medical, or surgical expenses and that
does not include a Healthy Action Incentives and Rewards Program as
part of the overall benefit design.
(c) For purposes of this section, benefits for a Healthy Action
Incentives and Rewards Program shall provide for all of the
following:
(1) Health risk appraisals to be used to assess an individual's
overall health status and to identify risk factors, including, but
not limited to, smoking and smokeless tobacco use, alcohol abuse,
drug use, and nutrition and physical activity practices.
(2) A followup appointment with a licensed health care
professional acting within his or her scope of practice to review the
results of the health risk appraisal and discuss any recommended
actions.
(3) Incentives or rewards for enrollees to become more engaged in
their health care and to make appropriate choices that support good
health, including obtaining health risk appraisals, screening
services, immunizations, or participating in healthy lifestyle
programs and practices. These programs and practices may include, but
need not be limited to, smoking cessation, physical activity, or
nutrition. Incentives may include, but need not be limited to, health
premium reductions, differential copayment or coinsurance amounts,
and cash payments. Rewards may include, but need not be limited to,
nonprescription pharmacy products or services not otherwise covered
under an enrollee's health plan contract, exercise classes, gym
memberships, and weight management programs. If a health care service
plan elects to offer an incentive in the form of a reduction in the
premium amount, the premium reduction shall be standardized and
uniform for all groups and subscribers and shall be offered only
after the successful completion of the specified program or practice
by the enrollee or subscriber.
(d) In order to demonstrate compliance with this section, a health
care service plan may file an amendment to its application for
licensure pursuant to subdivision (a) of Section 1352.
(e) This section is in addition to, and does not replace, any
other section in this chapter concerning requirements for plans to
provide health care screening services, childhood immunizations,
adult immunizations, and preventive care services.
(f) (1) Notwithstanding any other provision of law, the provision
of healthy incentives and rewards pursuant to this section by a
health care provider, or his or her agent, that meets the requirement
of this section, shall not be considered or construed as an unlawful
practice, act, kickback, bribe, rebate, remuneration, offer, coupon,
product, payment, or any other form of compensation by a provider or
his or her agent, directly or indirectly, overtly or covertly, in
exchange for another to obtain, participate, or otherwise undergo or
receive health care services.
(2) Notwithstanding any other provision of law, incentives
authorized pursuant to this section are not subject to the penalties,
discipline, limitations, or sanctions imposed under law to preclude
or prohibit, as an unlawful practice, bribe, kickback, or other act,
the offering or delivery of a rebate, remuneration, offer, coupon,
product, rebate, payment, or any other form of compensation by the
provider, or his or her agent, directly or indirectly, overtly or
covertly, in exchange for another to obtain, participate, or
otherwise undergo or receive health care services.
(3) Notwithstanding any other provision of law, the provision of
healthy incentives and rewards pursuant to this section by a health
care provider, or his or her agent, that meets the requirements of
this section shall not be considered or construed as an inducement to
enroll.
(g) This section shall only be implemented if and to the extent
allowed under federal law. If any portion of this section is held to
be invalid, as determined by a final judgment of a court of competent
jurisdiction, this section shall become inoperative.
1367.38. (a) On and after January 1, 2009, every health care
service plan, except for a Medicare supplement plan, that covers
hospital, medical, or surgical expenses on a group basis shall offer
to include a Healthy Action Incentives and Rewards Program, as
described in subdivision (b), to be implemented in connection with a
health care service plan, under such terms and conditions as may be
agreed upon between the subscriber group and the health care service
plan. Every plan shall communicate the availability of that program
to all prospective subscriber groups with whom it is negotiating and
to existing subscriber groups upon renewal.
(b) For purposes of this section, benefits under a Healthy Action
Incentives and Rewards Program shall provide for all of the
following, where appropriate:
(1) Health risk appraisals to be used to assess an individual's
overall health status and to identify risk factors, including, but
not limited to, smoking and smokeless tobacco use, alcohol abuse,
drug use, and nutrition and physical activity practices.
(2) Enrollee access to an appropriate health care provider, as
medically necessary, to review and address the results of the health
risk appraisal. In addition, where appropriate, the Healthy Action
Incentives and Rewards Program may include followup through a
Web-based tool or a nurse hotline either in combination with a
referral to a provider or separately.
(3) Incentives or rewards for enrollees to become more engaged in
their health care and to make appropriate choices that support good
health, including obtaining health risk appraisals, screening
services, immunizations, or participating in healthy lifestyle
programs and practices. These programs and practices may include, but
need not be limited to, smoking cessation, physical activity, or
nutrition. Incentives may include, but need not be limited to, health
premium reductions, differential copayment or coinsurance amounts,
and cash payments. Rewards may include, but need not be limited to,
nonprescription pharmacy products or services not otherwise covered
under an enrollee's health plan contract, exercise classes, gym
memberships, and weight management programs. If a health care service
plan elects to offer an incentive in the form of a reduction in the
premium amount, the premium reduction shall be standardized and
uniform for all groups and subscribers and shall be offered only
after the successful completion of the specified program or practice
by the enrollee or subscriber.
(c) (1) A health care service plan subject to this section shall
offer and price all Healthy Action Incentives and Rewards Programs
approved by the director consistently across all groups, potential
groups, and individuals and offer and price the programs without
regard to the health status, prior claims experience, or risk profile
of the members of a group. A health plan shall not condition the
offer, delivery, or renewal of a contract that covers hospital,
medical, or surgical expenses on the group's purchase, acceptance, or
enrollment in a Healthy Action Incentives and Rewards Program.
Rewards and incentives established in the program may not be
designed, provided, or withheld based on the actual health service
utilization or health care claims experience of the group, members of
the group, or the individual.
(2) In order to demonstrate compliance with this section, a health
care service plan shall file the program description and design as
an amendment to its application for licensure pursuant to subdivision
(a) of Section 1352. The director shall disapprove, suspend, or
withdraw any product or program developed pursuant to this section if
the director determines that the product or product design has the
effect of allowing health care service plans to market, sell, or
price health coverage for healthier lower risk profile groups in a
preferential manner that is inconsistent with the requirement to
offer, market, and sell products pursuant to Article 3.1 (commencing
with Section 1357) and Article 11.6 (commencing with Section
1399.820).
(d) This section shall supplement, and not supplant, any other
section in this chapter concerning requirements for plans to provide
health care services, childhood immunizations, adult immunizations,
and preventive care services.
(e) This section shall only be implemented if and to the extent
allowed under federal law. If any portion of this section is held to
be invalid, as determined by a final judgment of a court of competent
jurisdiction, this section shall become inoperative.
SEC. 25. Section 1368.025 is added to the Health and Safety Code,
to read:
1368.025. In addition to the duties listed in paragraph (3) of
subdivision (c) of Section 1368.02, the duties of the Office of
Patient Advocate shall include providing access to the public to
reports and data obtained by the lead agency
Office of Statewide Health Planning and Development in a format
and through mechanisms, including, but not limited to, the Internet,
that allow the public to use the information to assist them in
making informed selections of health plans, hospitals, medical
groups, nursing homes, and other providers about whom the office has
collected information.
SEC. 26. Section 1378 of the Health and Safety
Code is amended to read:
1378. No plan shall expend for administrative costs in any fiscal
year an excessive amount of the aggregate dues, fees and other
periodic payments received by the plan for providing health care
services to its subscribers or enrollees. The term "administrative
costs," as used herein, includes costs incurred in connection with
the solicitation of subscribers or enrollees for the plan. The
director shall adopt regulations no later than July 1, 2008,
requiring that at least 85 percent of aggregate dues, fees, and other
periodic payments received by a full-service plan be spent on health
care services. The regulations shall also define "health care
services." This section shall not apply to Medicare supplement
contracts.
This section shall not preclude a plan from expending additional
sums of money for administrative costs provided such money is not
derived from revenue obtained from subscribers or enrollees of the
plan.
SEC. 26. Section 1378.1 is added to the Health and
Safety Code, to read:
1378.1. (a) Except as provided in subdivision (f), a full-service
health care service plan shall, on and after July 1, 2010, expend in
the form of health care benefits no less than 85 percent of the
aggregate dues, fees, premiums, or other periodic payments received
by the plan. For purposes of this section, the plan may deduct from
the aggregate dues, fees, premiums, or other periodic payments
received by the plan the amount of income taxes or other taxes that
the plan expensed. For purposes of this section, "health care
benefits" shall mean health care services that are either provided by
or reimbursed by the plan or its contracted providers as plan
benefits.
(b) (1) In addition to the health care benefits defined in
subdivision (a), health care benefits shall include:
(A) The costs of programs or activities, including training and
the provision of informational materials that are determined as part
of the regulations under subdivision (d) to improve the provision of
quality care, improve health care outcomes, or encourage the use of
evidence-based medicine.
(B) Disease management expenses using cost-effective
evidence-based guidelines.
(C) Plan medical advice by telephone.
(D) Payments to providers as risk pool payments of
pay-for-performance initiatives.
(2) Health care benefits shall not include administrative costs
listed in Section 1300.78 of Title 28 of the California Code of
Regulations in effect on January 1, 2007.
(c) To assess compliance with this section, a plan licensed to
operate in California may average its total costs across all health
care service plan contracts issued, amended, or renewed in
California, and all health insurance policies issued, amended, or
renewed by its affiliated disability insurers with valid California
certificates of authority, except for those policies listed in
subdivision (f) of Section 10113.10 of the Insurance Code.
(d) The department and the Department of Insurance shall jointly
adopt and amend regulations to implement this section and Section
10113.10 of the Insurance Code to establish uniform reporting by
plans and insurers of the information necessary to determine
compliance with this section. These regulations may include
additional elements in the definition of health care benefits not
identified in paragraph (1) of subdivision (b) in order to
consistently operationalize the requirements of this section among
health plans and health insurers, but such regulatory additions shall
be consistent with the legislative intent that health plans expend
at least 85 percent of aggregate payments as provided in subdivision
(a) on health care benefits.
(e) The department may exclude from the determination of
compliance with the requirement of subdivision (a) any new health
care service plan contracts for up to the first two years that these
contracts are offered for sale in California, provided that the
director determines that the new contracts are substantially
different from the existing contracts being issued, amended, or
renewed by the health plan seeking the exclusion.
(f) This section shall not apply to Medicare supplement plans or
to coverage offered by specialized health care service plans,
including, but not limited to, ambulance, dental, vision, behavioral
health, chiropractic, and naturopathic.
SEC. 27. Section 1395.2 is added to the Health and Safety Code, to
read:
1395.2. (a) A health care service plan may provide notice by
electronic transmission and shall be deemed to have fully complied
with the specific statutory or regulatory requirements to provide
notice by United States mail to an applicant, enrollee, or
subscriber, if it complies with all of the following requirements:
(1) Obtains written authorization from the
applicant, enrollee, or subscriber to provide notices by electronic
transmission and to cease providing notices by United States mail.
The authorization shall be renewed by the enrollee or
subscriber on an annual basis. If the health care service plan
obtains an application for coverage by electronic transmission, it
may obtain authorization by electronic transmission from the
applicant, enrollee, or subscriber to provide notices by electronic
transmission. "Authorization" means the agreement by
the applicant, enrollee, or subscriber through interactive voice
response, the internet or other similar medium, or in writing, to
receive notices by electronic transmission.
(2) Uses an authorization form process
, approved by the department, in which the applicant, enrollee,
or subscriber confirms understanding of the type of notice
that will be provided by understanding of and
agreement with the specific notices or materials that will be
provided by electronic transmission.
(3) Complies with the specific statutory or regulatory
requirements as to the content of the notices it sends by electronic
transmission.
(4) Provides for the privacy of the notice as required by state
and federal laws and regulations.
(5) Allows the applicant, enrollee, or subscriber at any time to
terminate the authorization to provide notices by electronic
transmission and receive the notices through the United States mail
, if specific statutory or regulatory requirements require
notice by mail .
(6) Sends the electronic transmission of a notice to the last
known electronic address of the applicant, enrollee, or subscriber.
If the electronic transmission fails to reach its intended recipient
twice, the health care service plan shall resume sending all notices
to the last known United States mail address of the applicant,
enrollee, or subscriber.
(7) Maintains an Internet Web site where the applicant, enrollee,
or subscriber may access the notices sent by electronic transmission.
(8) Informs the applicant, enrollee, or subscriber how to
terminate the authorization to provide notices sent by electronic
transmission.
(b) A health care service plan shall not use the electronic mail
address of an applicant, enrollee, or subscriber that it obtained for
the purposes of providing notice pursuant to subdivision (a) for any
purpose other than sending a notice as described in
subdivision (a) communicating with the enrollee,
applicant, or subscriber about his or her policy, plan, or benefits
.
(c) No person other than the applicant, enrollee, or subscriber to
whom the medical information in the notice pertains or a
representative lawfully authorized to act on behalf of the applicant,
enrollee, or subscriber, may authorize the transmission of medical
information by electronic transmission. "Medical information" for
these purposes shall have the meaning set forth in subdivision (g) of
Section 56.05 of the Civil Code. The transmission of any
medical information, as that term is used in subdivision (g) of
Section 56.05 of the Civil Code, shall comply with the
Confidentiality of Medical Information Act (Part 2.6 (commencing with
Section 56) of Division 1 of the Civil Code).
(d) A notice transmitted electronically pursuant to this section
is a private and confidential communication, and it shall constitute
a violation of this chapter for a person, other than the applicant,
enrollee, or subscriber to whom the notice is addressed, to read or
otherwise gain access to the notice without the express, specific
permission of the notice's addressee. This subdivision shall not
apply to a provider health care provider,
health care service plan, or contractor of a health care
provider or health care service plan, of an applicant,
enrollee, or subscriber if the provider
health care provider, health care service plan, or contractor of a
health care provider or health care service plan is authorized
to have access to the medical information pursuant to the
Confidentiality of Medical Information Act (Part 2.6 (commencing with
Section 56) of Division 1 of the Civil Code).
(e) A health care service plan shall not impose additional fees or
a differential if an applicant, enrollee, or subscriber elects not
to receive notices by electronic transmission.
(f) "Notice" for purposes of this section includes
Notices that may be made by electronic
transmission include an explanation of benefits; responses to
inquiries from an applicant, enrollee, or subscriber; underwriting
decisions; distribution of plan contracts, including evidence of
coverage and disclosure forms pursuant to Sections 1300.63.1 and
1300.63.2 of Title 28 of the California Code of Regulations; a list
of contracting providers pursuant to Section 1367.26; and changes in
rates or coverage pursuant to Sections 1374.21, 1374.22, and 1374.23.
A plan may not transmit through electronic means any notice
that ma y affect the eligibility for, or continued
enrollment in, coverage.
SEC. 28. Article 11.6 (commencing with Section
1399.820) is added to Chapter 2.2 of Division 2 of the Health and
Safety Code, to read:
Article 11.6. Individual Market Reform and Guarantee Issue
1399.820. It is the intent of the Legislature to do both of the
following:
(a) Guarantee the availability and renewability of health coverage
to individuals through the private health insurance market.
(b) Require that health care service plans and health insurers
issuing coverage in the individual market compete on the basis of
price, quality, and service, and not on risk selection.
1399.821. For purposes of this article, the following terms shall
have the following meanings:
(a) "Anniversary date" means the calendar date one year from, and
each subsequent year thereafter, the date an individual enrolls in a
health plan contract.
(b) "Coverage choice category" means the category of health plan
contracts and health insurance policies established by the department
and the Department of Insurance pursuant to Section 1399.832.
(c) "Dependent" means the spouse, registered domestic partner, or
child of an individual, subject to applicable terms of the health
plan contract covering the individual.
(d) "Health insurance policy" means an individual disability
insurance policy offered, sold, amended, or renewed to individuals
and their dependents and that provides coverage for hospital,
medical, or surgical benefits. The term shall not include any of the
following kinds of insurance:
(1) Accidental death and accidental death and dismemberment.
(2) Disability insurance, including hospital indemnity,
accident-only, and specified disease insurance that pays benefits on
a fixed benefit, cash-payment-only basis.
(3) Credit disability, as defined in Section 779.2 of the
Insurance Code.
(4) Coverage issued as a supplement to liability insurance.
(5) Disability income, as defined in subdivision (i) of Section
799.01 of the Insurance Code.
(6) Insurance under which benefits are payable with or without
regard to fault and that is statutorily required to be contained in
any liability insurance policy or equivalent self-insurance.
(7) Insurance arising out of a workers' compensation or similar
law.
(8) Long-term care coverage.
(9) Dental coverage.
(10) Vision coverage.
(11) Medicare supplement, CHAMPUS-supplement or
Tricare-supplement, behavioral health-only, pharmacy-only, hospital
indemnity, hospital-only, accident-only, or specified disease
insurance that does not pay benefits on a fixed benefit,
cash-payment-only basis.
(e) "Health insurer" means a disability insurer that offers and
sells health insurance.
(f) "Health plan" means a health care service plan, as defined in
subdivision (f) of Section 1345, that is lawfully engaged in
providing, arranging, paying for, or reimbursing the cost of health
care services and is offering or selling health care service plan
contracts in the individual market. A health plan shall not include a
specialized health care service plan.
(g) "Health plan contract" means an individual health care service
plan contract offered, sold, amended, or renewed to individuals and
their dependents. The term shall not include long-term care
insurance, dental, or vision coverage. In addition, the term shall
not include a specialized health care service plan contract, as
defined in subdivision (o) of Section 1345.
(h) "Purchasing pool" means the program established under Part
6.45 (commencing with Section 12699.201) of Division 2 of the
Insurance Code.
(i) "Rating period" means the period for which premium rates
established by a plan are in effect and shall be no less than 12
months beginning on the effective date of the subscriber's health
plan contract.
(j) "Risk adjustment factor" means the percentage adjustment to be
applied to the standard risk rate for a particular individual, based
upon any expected deviations from standard claims due to the health
status of the individual.
(k) "Risk category" means the following characteristics of an
individual: age, geographic region, and family composition of the
individual, plus the health plan contract selected by the individual.
(1) No more than the following age categories may be used in
determining premium rates:
Under 1.
1-18.
19-24.
25-29.
30-34.
35-39.
40-44.
45-49.
50-54.
55-59.
60-64.
65 and over.
However, for the 65 and over age category, separate premium rates
may be specified depending upon whether coverage under the health
plan contract will be primary or secondary to benefits provided by
the federal Medicare Program pursuant to Title XVIII of the federal
Social Security Act.
(2) Health plans shall determine rates using no more than the
following family size categories:
(A) Single.
(B) More than one child 18 years of age or under and no adults.
(C) Married couple or registered domestic partners.
(D) One adult and child.
(E) One adult and children.
(F) Married couple and child or children, or registered domestic
partners and child or children.
(3) (A) In determining rates for individuals, a health plan that
operates statewide shall use no more than nine geographic regions in
the state, have no region smaller than an area in which the first
three digits of all its ZIP Codes are in common within a county, and
divide no county into more than two regions. Health plans shall be
deemed to be operating statewide if their coverage area includes 90
percent or more of the state's population. Geographic regions
established pursuant to this section shall, as a group, cover the
entire state, and the area encompassed in a geographic region shall
be separate and distinct from areas encompassed in other geographic
regions. Geographic regions may be noncontiguous.
(B) (i) In determining rates for individuals, a plan that does not
operate statewide shall use no more than the number of geographic
regions in the state that is determined by the following formula: the
population, as determined in the last federal census, of all
counties that are included in their entirety in a plan's service area
divided by the total population of the state, as determined in the
last federal census, multiplied by nine. The resulting number shall
be rounded to the nearest whole integer. No region may be smaller
than an area in which the first three digits of all its ZIP Codes are
in common within a county and no county may be divided into more
than two regions. The area encompassed in a geographic region shall
be separate and distinct from areas encompassed in other geographic
regions. Geographic regions may be noncontiguous. No health plan
shall have less than one geographic area.
(ii) If the formula in clause (i) results in a health plan that
operates in more than one county having only one geographic region,
then the formula in clause (i) shall not apply and the health plan
may have two geographic regions, provided that no county is divided
into more than one region.
Nothing in this section shall be construed to require a health
plan to establish a new service area or to offer health coverage on a
statewide basis, outside of the health plan's existing service area.
(4) A health plan may rate its entire portfolio of health plan
contracts in accordance with expected costs or other market
considerations, but the rate for each health plan contract shall be
set in relation to the balance of the portfolio, as certified by an
actuary.
(5) Each health plan contract shall be priced as determined by
each health plan to reflect the difference in benefit variation, or
the effectiveness of a provider network, and each health plan may
adjust the rate for a specific plan contract for risk selection only
to the extent permitted by subdivision (d) of Section 1399.840.
(l) "Standard risk rate" means the rate applicable to an
individual in a particular risk category.
(m) "Subscriber" means the individual who is enrolled in a health
plan contract, is the basis for eligibility for enrollment in the
contract, and is responsible for payment to the health plan.
1399.823. On and after March 31, 2009, a health plan shall not
offer to an individual a health plan contract that provides less than
minimum creditable coverage as defined by the Managed Risk Medical
Insurance Board pursuant to Section 12739.50 of the Insurance Code.
1399.826. (a) Notwithstanding Chapter 15 (commencing with Section
8899.50) of Division 1 of Title 2 of the Government Code and Section
1399.823, a health plan may renew an individual health care benefit
plan for anyone enrolled on March 1, 2009, indefinitely without
increasing benefits to meet the required minimum creditable coverage
established by the Managed Risk Medical Insurance Board pursuant to
Section 12739.50 of the Insurance Code. Those individual health care
benefit plans, however, may not be offered to new enrollment, unless
they are amended to meet the minimum creditable coverage established
by the Managed Risk Medical Insurance Board pursuant to Section
12739.50 of the Insurance Code. In offering those plans for renewal,
rates determined by health plans shall meet the requirements of
Sections 1399.821 and 1399.840. An individual who maintains coverage
in a health plan contract pursuant to this section shall be deemed to
be in compliance with Section 8899.50 of the Government Code.
(b) A health plan shall not cease to renew coverage in an
individual health plan contract described in subdivision (a) except
as permitted pursuant to Section 1367.15.
(c) On and after March 1, 2009, the director shall not approve for
offer and sale in this state any individual health plan contract
that was not approved prior to that date and that does not meet or
exceed the requirements for minimum creditable coverage established
by the Managed Risk Medical Insurance Board pursuant to Section
12739.50 of the Insurance Code.
(d) Effective July 1, 2010, all individual health plan contracts
approved, offered, and sold prior to March 1, 2009, which do not
comply with minimum creditable coverage standards adopted by the
Managed Risk Medical Insurance Board pursuant to Section 12739.50 of
the Insurance Code, exclusively because the contract includes a
lifetime benefit maximum inconsistent with minimum creditable
coverage requirements, shall be modified to comply with the minimum
creditable coverage standard.
(e) This section shall become operative on January 1, 2009.
1399.827. A health plan shall, in addition to complying with this
chapter and the rules of the director, comply with this article.
1399.828. This article shall not apply to health plan contracts
for coverage of Medicare services pursuant to contracts with the
United States government, Medicare supplement, Medi-Cal contracts
with the State Department of Health Care Services, Healthy Families
Program contracts with the Managed Risk Medical Insurance Board,
long-term care coverage, specialized health care service plan
contracts, as defined in subdivision (o) of Section 1345, or the
purchasing pool established under Part 6.45 (commencing with Section
12699.201) of Division 2 of the Insurance Code.
1399.829. (a) Except for the health plan contracts described in
subdivision (a) of Section 1399.826, a health plan shall fairly and
affirmatively offer, market, and sell all of the plan's contracts
that are sold to individuals to all individuals in each service area
in which the health plan provides or arranges for the provision of
health care services.
(b) A health plan may not reject an application from an
individual, or his or her dependents, for a health plan contract, or
refuse to renew an individual health plan contract, if all of the
following requirements are met:
(1) The individual agrees to make the required premium payments.
(2) The individual and his or her dependents who are to be covered
by the health plan contract work or reside in the service area in
which the health plan provides or otherwise arranges for the
provision of health care services.
(3) The individual provides the information requested on the
application to determine the appropriate rate.
(c) Notwithstanding subdivision (b), if an individual, or his or
her dependents, applies for a health plan contract in a coverage
choice category for which he or she is not eligible pursuant to
Section 1399.837, the health plan may reject that application
provided that the plan also offers the individual and his or her
dependents coverage in the appropriate coverage choice category.
(d) Notwithstanding subdivision (b), a health plan is not required
to renew an individual health plan contract if any of the conditions
listed in subdivision (a) of Section 1399.839 are met.
(e) Notwithstanding any other provision of this chapter or of a
health plan contract, every health plan shall comply with the
requirements of Chapter 7 (commencing with Section 3750) of Part 1 of
Division 9 of the Family Code and Section 14124.94 of the Welfare
and Institutions Code.
(f) A health plan may request an individual to provide information
on his or her health status or health history, or that of his or her
dependents, in the application for enrollment to the extent required
to apply the risk adjustment factor permitted pursuant to
subdivision (d) of Section 1399.840. The health plan shall use the
standardized form and process developed by the department pursuant to
Section 1399.840. After the health plan contract's effective date of
coverage, a health plan may request that the subscriber provide
information voluntarily on his or her health history or health
status, or that of his or her dependents, for purposes of providing
care management services, including disease management services.
(g) Notwithstanding subdivision (b), a health plan may reject an
application for any person who has been a resident of California for
six months or less unless one of the following applies: (1) the
person is a federally eligible defined individual as defined in
Section 1399.801 or Section 10785 of the Insurance Code; or (2) the
individual can demonstrate a minimum of two years of prior creditable
coverage at least equivalent to the minimum creditable coverage
developed by the Managed Risk Medical Insurance Board pursuant to
Section 12739.50 of the Insurance Code.
(h) Notwithstanding subdivision (b), a health plan may reject an
application for coverage from any person who has been granted a
temporary or permanent hardship exemption from the requirement to
maintain minimum creditable coverage by the Managed Risk Medical
Insurance Board pursuant to Section 12739.501 of the Insurance Code
during the time period of the exemption, as determined by the board.
(i) Notwithstanding Section 1399.846, this section shall not
become operative until Section 12739.51 of the Insurance Code is
implemented.
1399.831. (a) A health plan shall not impose any preexisting
condition exclusions, waivered conditions, or postenrollment waiting
or affiliation periods on any health plan contract issued, amended,
or renewed pursuant to this article, except as provided under
subdivision (b) of this section.
(b) After the requirement to guarantee issue of coverage under
Section 1399.826 has been in effect for nine months, a health plan
may impose a preexisting condition exclusion of up to 12 months for
any person who fails to comply for more than 62 days with the
requirement to maintain coverage under Section 8899.50 of the
Government Code, providing, however, that the exclusion may not
exceed the length of time that the person failed to comply with the
requirements of that section. "Preexisting condition exclusion" means
a contract provision that excludes coverage for charges or expenses
incurred during a specified period following the individual's
effective date of coverage, as to a condition for which medical
advice, diagnosis, care, or treatment was recommended or received
during a specified period immediately preceding the effective date of
coverage. For purposes of this section, preexisting condition
provisions contained in plan contracts may relate only to conditions
for which medical advice, diagnosis, care, or treatment, including
use of prescription drugs, was recommended or received from a
licensed health practitioner during the 12 months immediately
preceding the effective date of coverage.
1399.832. (a) On or before April 1, 2009, the department and the
Department of Insurance shall jointly, by regulation, develop a
system to categorize all health plan contracts and health insurance
polices offered and sold to individuals pursuant to this article and
Chapter 9.6 (commencing with Section 10920) of Part 2 of Division 2
of the Insurance Code into five coverage choice categories. These
coverage choice categories shall do all of the following:
(1) Reflect a reasonable continuum between the coverage choice
category with the lowest level of health care benefits and the
coverage choice category with the highest level of health care
benefits.
(2) Permit reasonable benefit variation that will allow for a
diverse market within each coverage choice category.
(3) Be enforced consistently between health plans and health
insurers in the same marketplace regardless of licensure.
(4) Within each coverage choice category, include one standard
health maintenance organization (HMO) and one standard preferred
provider organization (PPO), each of which is the health plan
contract with the lowest benefit level in that category and for that
type of contract.
(b) All health plans shall submit filings required pursuant to
Section 1399.842 no later than October 1, 2009, for all individual
health plan contracts to be offered or sold on or after July 1, 2010,
to comply with this article, and thereafter any additional health
plan contracts shall be filed pursuant to Section 1399.842. The
director shall categorize each health plan contract offered by a
health plan into the appropriate coverage choice category on or
before March 31, 2010.
(c) To facilitate consumer comparison shopping, all health plans
that offer coverage on an individual basis shall offer at least one
health plan contract in each coverage choice category, including
offering at least one of the standard contracts developed pursuant to
paragraph (4) of subdivision (a), but a health plan may offer
multiple products in each category.
(d) If a health plan offers a specific type of health plan
contract in one coverage choice category, it must offer that specific
type of health plan contract in each coverage choice category. A
"type of health plan contract" includes a preferred provider
organization, an exclusive provider organization model plan, a point
of service model plan, and a health maintenance organization model
plan.
(e) Health plans shall have flexibility in establishing provider
networks, provided that access to care standards pursuant to this
chapter are met, and provided that the provider network offered for
one health plan contract in one coverage choice category is offered
for at least one health plan contract in each coverage choice
category.
(f) A health plan shall establish prices for its products that
reflect a reasonable continuum between the products offered in the
coverage choice category with the lowest level of benefits and the
products offered in the coverage choice category with the highest
level of benefits. A health plan shall not establish a standard risk
rate for a product in a coverage choice category at a lower rate than
a product offered in a lower coverage choice category.
(g) The coverage choice category with the lowest level of benefits
shall include the benefits which meet the requirement of minimum
creditable coverage as determined by the Managed Risk Medical
Insurance Board pursuant to Section 12739.50 of the Insurance Code.
1399.833. A health plan shall offer coverage for a Healthy Action
Incentives and Rewards Program that complies with the requirements
of Section 1367.38 in at least one health plan contract in every
coverage choice category.
1399.834. The Office of the Patient Advocate shall develop and
maintain on its Internet Web site a uniform benefits matrix of all
available individual health plan contracts and individual health
insurance policies arranged by coverage choice category. This uniform
benefit matrix shall include all of the following:
(a) Benefit information submitted by health plans pursuant to
Section 1399.843 and by health insurers pursuant to
Section 10940 of the Insurance Code,
including, but not limited to, the following category descriptions:
(1) Deductibles.
(2) Copayments or coinsurance, as applicable.
(3) Annual out-of-pocket maximums.
(4) Professional services.
(5) Outpatient services.
(6) Preventive services.
(7) Hospitalization services.
(8) Emergency health services.
(9) Ambulance services.
(10) Prescription drug coverage.
(11) Durable medical equipment.
(12) Mental health and substance abuse services.
(13) Home health services.
(14) Other.
(b) The telephone number or numbers that may be used by an
applicant to contact either the department or the Department of
Insurance, as appropriate, for additional assistance.
1399.835. When an individual submits a premium payment, based on
the quoted premium charges, and that payment is delivered or
postmarked, whichever occurs earlier, within the first 15 days of the
month, coverage under the health plan contract shall become
effective no later than the first day of the following month. When
that payment is either delivered or postmarked after the 15th day of
a month, coverage shall become effective no later than the first day
of the second month following delivery or postmark of the payment.
1399.836. Except as provided in Section 1399.829, a health plan
is not required to offer an individual health plan contract and may
reject an application for an individual health plan contract in the
case of any of the following:
(a) The individual and dependents who are to be covered by the
health plan contract do not work or reside in a health plan's
approved service area.
(b) (1) Within a specific service area or portion of a service
area, if a health plan reasonably anticipates and demonstrates to the
satisfaction of the director that it will not have sufficient health
care delivery resources to assure that health care services will be
available and accessible to the eligible individual and dependents of
the individual because of its obligations to existing enrollees.
(2) A health plan that cannot offer a health plan contract to
individuals because it is lacking in sufficient health care delivery
resources within a service area or a portion of a service area may
not offer a health plan contract in the area in which the health plan
is not offering coverage to individuals until the health plan
notifies the director that it has the ability to deliver services to
new enrollees, and certifies to the director that from the date of
the notice it will enroll all individuals and groups requesting
coverage in that area from the health plan.
(c) The plan is licensed in California and meets all of the
following criteria: (1) does not offer coverage to individuals in the
commercial market; (2) requires that its members qualify through the
Medicare Program or Medi-Cal program or their successors; and (3) 75
percent or more of the organization's total enrollment premiums are
paid by the Medi-Cal program or Medicare Program, or by a combination
of Medi-Cal and Medicare payments. In no event shall this exemption
be based upon enrollment in Medicare supplement contracts, as
described in Article 3.5 (commencing with Section 1358).
(d) Any person who has been a resident of California for six
months or less unless one of the following applies: (1) the person is
a federally eligible defined individual as defined in Section
1399.801 or Section 10928 of the Insurance Code, or (2) the person
can demonstrate a minimum of two years of prior creditable coverage
at least equivalent to the minimum creditable coverage developed by
the Managed Risk Medical Insurance Board pursuant to Section 12739.50
of the Insurance Code and providing the person applies for coverage
in California within 62 days of termination or cancellation of the
prior creditable coverage.
(e) Any person who has been granted a temporary or permanent
hardship exemption from the requirement to maintain minimum
creditable coverage by the Managed Risk Medical Insurance Board
pursuant to Section 12739.501 of the Insurance Code during the time
period of the exemption as determined by the board.
1399.837. (a) If an individual disenrolls from a health plan
contract or health insurance policy or if the individual's health
plan contract or health insurance policy is canceled pursuant to
Section 1399.839 or Section 10936 of the Insurance Code prior to the
anniversary date of the health plan contract or health insurance
policy, subsequent enrollment in an individual health plan contract
or an individual health insurance policy shall be limited to the same
coverage choice category the individual was enrolled in prior to
disenrollment or cancellation.
(b) (1) An individual may change to a health plan contract in a
different coverage choice category only on the anniversary date of
the subscriber or upon a qualifying event.
(2) In no case, however, may an individual move up more than one
coverage choice category on the anniversary date of the subscriber
unless there is also a qualifying event.
(c) An individual health plan contract described in subdivision
(a) of Section 1399.826 that does not meet or exceed the requirements
for minimum creditable coverage established by the Managed Risk
Medical Insurance Board shall be deemed to be the lowest coverage
choice category for purposes of this section.
(d) On and after January 1, 2011, an individual who fails to
comply with the provisions of Chapter 15 (commencing with Section
8899.50) of Division 1 of Title 2 of the Government Code for more
than 62 days may only enroll in a health plan contract or health
insurance policy in the lowest coverage choice category. Upon the
individual's anniversary date, the individual may move to a higher
coverage choice category pursuant to subdivision (b).
(e) For purposes of this section, a qualifying event occurs upon
any of the following:
(1) Upon the death of the subscriber, on whose qualifying coverage
an individual was a dependent.
(2) Upon marriage of the subscriber or entrance by the subscriber
into a domestic partnership pursuant to Section 298.5 of the Family
Code.
(3) Upon divorce or legal separation of an individual from the
subscriber.
(4) Upon loss of dependent status by a dependent enrolled in group
health care coverage through a health care service plan or a health
insurer.
(5) Upon the birth or adoption of a child.
(6) Upon the loss of minimum creditable coverage as defined by the
Managed Risk Medical Insurance Board pursuant to Section 12739.50 of
the Insurance Code.
1399.838. The director may require a health plan to discontinue
the offering of contracts or acceptance of applications from any
individual upon a determination by the director that the health plan
does not have sufficient financial viability, or organizational and
administrative capacity to ensure the delivery of health care
services to its enrollees.
1399.839. (a) All health plan contracts offered pursuant to this
article shall be renewable with respect to all individuals and
dependents at the option of the subscriber and shall not be canceled
except for the following reasons:
(1) Failure to pay any charges for coverage provided pursuant to
the contract if the subscriber has been duly notified and billed for
those charges and at least 15 days has elapsed since the date of
notification.
(2) Fraud or intentional misrepresentation of material fact under
the terms of the health plan contract by the individual.
(3) Fraud or deception in the use of the services or facilities of
the plan or knowingly permitting that fraud or deception by another.
(4) Movement of the subscriber outside the health plan's service
area.
(5) If the health plan ceases to provide or arrange for the
provision of health care services for new or existing individual
health plan contracts in this state, provided, however, that the
following conditions are satisfied:
(A) Notice of the decision to cease new or existing individual
health plan contracts in the state is provided to the director and to
the individual at least 180 days prior to discontinuation of that
coverage.
(B) Individual health plan contracts shall not be canceled for 180
days after the date of the notice required under subparagraph (A)
and for that business of a health plan that remains in force, any
health plan that ceases to offer for sale new individual health plan
contracts shall continue to be governed by this article with respect
to business conducted under this article.
(C) A health plan that ceases to write new individual health plan
contracts in this state after the effective date of this section
shall be prohibited from offering for sale individual health plan
contracts in this state for a period of five years from the date of
notice to the director. The director may permit a health plan to
offer and sell individual health plan contracts in this state before
the five-year time period has expired if the director determines that
it is in the best interest of the state and necessary to preserve
the integrity of the health care market.
(6) If the health plan withdraws an individual health plan
contract from the market, provided that the health plan notifies all
affected individuals and the director at least 90 days prior to the
discontinuation of these health plan contracts, and that the health
plan makes available to the individual all health plan contracts with
comparable benefits that it makes available to new individual
business.
(b) On or after July 1, 2010, a health plan shall not rescind the
health plan contract of any individual.
(c) Nothing in this article shall limit any other remedies
available at law to a health plan.
1399.840. Premiums for health plan contracts offered, renewed, or
delivered by health plans on or after the effective date of this
article shall be subject to the following requirements:
(a) The premium for new or existing business shall be the standard
risk rate for an individual in a particular risk category.
(b) The premium rates shall be in effect for no less than 12
months from the date of the health plan contract.
(c) When determining the premium rate for more than one covered
individual, the health plan shall determine the rate based on the
standard risk rate for the subscriber. If more than one individual is
a subscriber, the premium rate shall be based on the age of the
youngest spouse or registered domestic partner.
(d) (1) Notwithstanding subdivision (a), for the first two years
following the implementation of this section, a health plan may apply
a risk adjustment factor to the standard risk rate that may not be
more than 120 percent or less than 80 percent of the applicable
standard risk rate. In determining the risk adjustment factor, a
health plan shall use the standardized form and uniform process
developed by the director pursuant to subdivision (f).
(2) After the first two years following the implementation of this
section, the adjustments applicable under paragraph (1) shall not be
more than 110 percent or less than 90 percent of the standard risk
rate.
(3) Upon the renewal of any contract, the risk adjustment factor
applied to the individual's rate may not be more than 5 percentage
points different than the factor applied to that rate prior to
renewal. The same limitation shall be applied to individuals with
respect to the risk adjustment factor applicable for the purchase of
a new product where the individual's prior health plan has
discontinued that product.
(4) After the first four years following the implementation of
this section, a health plan shall base rates on the standard risk
rate with no risk adjustment factor.
(e) The director and the Insurance Commissioner shall jointly
establish a maximum limit on the ratio between the standard risk
rates for contracts for individuals in the 60 to 64 years of age,
inclusive, category and contracts for individuals in the 30 to 34
years of age, inclusive, category.
(f) On or before March 1, 2009, the director shall, in
consultation with the Insurance Commissioner and the Managed Risk
Medical Insurance Board and using a qualified independent actuary,
develop a standardized form and uniform evaluation process to be used
by all health care service plans and all disability insurers
exclusively for the purpose of determining any risk adjustment rating
factor to be applied to an individual's premium rate based on actual
or expected health care use. Health plans shall base the risk
adjustment factors as authorized in this section solely on the
results of the standardized form and uniform evaluation process
developed by the director.
1399.841. (a) In connection with the offering for sale of any
health plan contract to an individual, each health plan shall make a
reasonable disclosure, as part of its solicitation and sales
materials, of all of the following:
(1) The provisions concerning the health plan's right to change
premium rates on an annual basis and the factors other than provision
of services experience that affect changes in premium rates.
(2) Provisions relating to the guaranteed issue and renewal of
health plan contracts.
(3) Provisions relating to the individual's right to obtain any
health plan contract the individual is eligible to enroll in pursuant
to Sections 1399.829 and 1399.837.
(4) The availability, upon request, of a listing of all the health
plan's contracts, including the rates for each health plan contract.
(b) Every solicitor or solicitor firm contracting with one or more
health plans to solicit enrollments or subscriptions from
individuals shall, when providing information on health plan
contracts to an individual but making no specific recommendations on
particular health plan contracts, do both of the following:
(1) Advise the individual of the health plan's obligation to sell
to any individual any health plan contract it offers to individuals
and provide him or her, upon request, with the actual rates that
would be charged to that individual for a given health plan contract.
(2) Notify the individual that the solicitor or solicitor firm
will procure rate and benefit information for the individual on any
health plan contract offered by a health plan whose contract the
solicitor sells.
(c) Prior to filing an application for a particular individual
health plan contract, the health plan shall obtain a signed statement
from the individual acknowledging that the individual has received
the disclosures required by this section.
1399.842. (a) At least 20 business days prior to offering a
health plan contract subject to this article, all health plans shall
file a notice of material modification with the director in
accordance with the provisions of Section 1352. The notice of
material modification shall include a statement certifying that the
health plan is in compliance with Sections 1399.821 and 1399.840. The
certified statement shall set forth the standard risk rate for each
risk category that will be used in setting the rates at which the
contract will be offered. Any action by the director, as permitted
under Section 1352, to disapprove, suspend, or postpone the health
plan's use of a health plan contract shall be in writing, specifying
the reasons that the health plan contract does not comply with the
requirements of this article.
(b) Prior to making any changes in the standard risk rates filed
with the director pursuant to subdivision (a), the health plan shall
file as an amendment a statement setting forth the changes and
certifying that the health plan is in compliance with Sections
1399.821 and 1399.840. If the standard risk rate is being changed, a
health plan may commence offering health plan contracts utilizing the
changed standard risk rate upon filing the certified statement
unless the director disapproves the amendment by written notice.
(c) Periodic changes to the standard risk rate that a health plan
proposes to implement over the course of up to 12 consecutive months
may be filed in conjunction with the certified statement filed under
subdivision (a) or (b).
(d) Each health plan shall maintain at its principal place of
business all of the information required to be filed with the
director pursuant to this article.
(e) This section shall become operative on July 1, 2009.
1399.843. (a) A health plan shall include all of the following in
the material modification notice filed pursuant to subdivision (a)
of Section 1399.842:
(1) A summary explanation of the following for each health plan
contract offered to individuals:
(A) Eligibility requirements.
(B) The full premium cost of each health plan contract in each
risk category, as defined in subdivision (k) of Section 1399.821.
(C) When and under what circumstances benefits cease.
(D) Other coverage that may be available if benefits under the
described health plan contract cease.
(E) The circumstances under which choice in the selection of
physicians and providers is permitted.
(F) Deductibles.
(G) Annual out-of-pocket maximums.
(2) A summary explanation of coverage for the following, together
with the corresponding copayments, coinsurance, and applicable
limitations for each health plan contract offered to individuals:
(A) Professional services.
(B) Outpatient services.
(C) Preventive services.
(D) Hospitalization services.
(E) Emergency health coverage.
(F) Ambulance services.
(G) Prescription drug coverage.
(H) Durable medical equipment.
(I) Mental health and substance abuse services.
(J) Home health services.
(3) The telephone number or numbers that may be used by an
applicant to access a health plan customer service representative to
request additional information about the health plan contract.
(b) The department shall share the information provided by health
plans pursuant to this article with the Office of the Patient
Advocate for purposes of the development, creation, and maintenance
of the comparative benefits matrix.
1399.844. (a) The Director of the Department of Managed Health
Care shall, in consultation with the Insurance Commissioner, an
outside actuarial firm, and health plans and insurers participating
in the individual market, no later than July 1, 2010, develop and
implement mechanisms to assist health plans and health insurers in
managing the risk of providing health coverage in the individual
market on a guarantee issue basis to the extent that these mechanisms
can improve access to individual coverage.
(b) The mechanisms required under subdivision (a) shall include
methods for collecting information regarding the enrollment, prices,
rate variance, and any other information that may be required to
monitor the condition of the individual market, the risk exposure of
individual health plans and insurers, and to implement subdivisions
(c) and (d).
(c) (1) The mechanisms developed pursuant to subdivision (a) shall
include a method by which an assessment is made of the health status
risk mix of a plan's guarantee issue products. To the extent any
plan's risk mix is disproportionately high compared to the overall
risk mix of all enrollees in guarantee issue products in the
individual market, the mechanisms developed pursuant to subdivision
(a) shall include provisions designed to make adjustments among plans
and insurers based on the relative health risk of individuals
enrolled in different health plans and health insurers. Methods to
compensate for the relative health risk assumed by health plans and
insurers shall include the ability to spread the costs to all health
plan contracts and health insurance policies in the individual
market.
(2) The director and the commissioner shall jointly adopt
regulations identifying health plans and insurers that are required
to participate in the mechanisms established pursuant to this
subdivision.
(d) (1) The director and the commissioner shall also develop as
part of the mechanisms under subdivision (a) a method for the
provision of reinsurance for health plans or insurers offering
guarantee issue products in the individual market if the age adjusted
marketwide incidence of high cost cases or high risk categories
significantly exceed a normative group's incidence rate. This
reinsurance mechanism shall be based on a uniform standard set of
service payment levels based on a methodology to be determined by the
director and the commissioner.
(2) This subdivision shall be implemented on July 1, 2010, or the
operative date of this section, whichever is later, and shall
continue to be implemented until one year after the implementation of
paragraph (4) of subdivision (d) of Section 1399.840.
(3) Notwithstanding paragraph (2), implementation of this
subdivision is contingent on the appropriation of funds for its
purposes.
(e) The director and the commissioner may contract with a
qualified actuarial firm or other entities to accomplish the
requirements of this section.
(f) In developing the mechanisms required by this section, the
director and the commissioner shall take into account the impact on
the individual market from exemptions from the mandate established by
the Managed Risk Medical Insurance Board pursuant to Section
12739.50 of the Insurance Code, as reported to the director by the
board. Nine months following the implementation of guaranteed issue
pursuant to Section 1399.829 and Section 10928 of the Insurance Code,
if the director and the commissioner make a finding that the
exemptions established have adversely affected the relative risk
profile of persons enrolled in individual coverage such that there is
a 7.5 percent to 10 percent higher risk profile difference relative
to the risk profile of a comparable population, as determined by the
director and the commissioner, the director and the commissioner
shall establish a reinsurance program for individual market health
plans and insurers to compensate for the adverse risk selection. The
costs for reinsurance pursuant to this section shall be funded
equally by state funds and a broad-based assessment on all health
plans and health insurers. Implementation of this subdivision is
contingent on the appropriation of funds for its purposes.
1399.845. (a) The director may issue regulations that are
necessary to carry out the purposes of this article.
(b) Nothing in this article shall be construed as providing the
director with rate regulation authority.
1399.846. Sections 1399.826 and 1399.832 shall become operative
on January 1, 2009, and Section 1399.842 shall become operative on
July 1, 2009. The remaining sections in this article shall become
operative on July 1, 2010.
SEC. 28. SEC. 29. Article 1
(commencing with Section 104250) is added to Chapter 4 of Part 1 of
Division 103 of the Health and Safety Code, to read:
Article 1. California Diabetes Program
104250. The State Department of Public Health shall maintain the
California Diabetes Program, including, but not limited to, the
following:
(a) Provide information on diabetes prevention and management to
the public, including health care providers.
(b) Provide technical assistance to the Medi-Cal program,
including participating providers and Medi-Cal managed care plans,
regarding the proper scope of benefits to be provided to eligible
individuals under Section 14132.23 14137.10
of the Welfare and Institutions Code. The assistance may
include, but shall not be limited to, all of the following:
(1) Provide information on evidence-based screening guidelines,
tools, and protocols, including the distribution of these guidelines,
tools, and protocols.
(2) Develop, with assistance from the State Department of Health
Care Services, the Comprehensive Diabetes Services Program
operational screening guidelines and protocols, utilizing the most
current American Diabetes Association screening criteria for diabetes
testing in adults.
(3) Provide the Comprehensive Diabetes Services Program
operational screening guidelines, tools, and protocols, including the
distribution of those guidelines, tools, and protocols.
(4) Provide screening service criteria for diabetes and
prediabetes in accordance with the guidelines developed for the
Comprehensive Diabetes Services Program.
(5) Provide information regarding culturally and linguistically
appropriate lifestyle coaching and self-management training for
eligible adults with prediabetes and diabetes, in accordance with
evidence-based interventions to avoid unhealthy blood sugar levels
that contribute to the progression of diabetes and its complications.
(c) Provide technical assistance to the State Department of Health
Care Services, including assistance on data collection and
evaluation of the Medi-Cal program's Comprehensive Diabetes Services
Program, established pursuant to Section 14132.23
14137.10 of the Welfare and Institutions Code.
(d) This section shall be implemented only to the extent funds are
appropriated for purposes of this section in the annual Budget Act
or in another statute.
SEC. 29. SEC. 30. Section 104376 is
added to the Health and Safety Code, to read:
104376. (a) (1) The department, in consultation with the
Department of Managed Health Care, the State Department of Health
Care Services, the Managed Risk Medical Insurance Board, and the
Department of Insurance, shall annually identify, on the basis of the
number of persons insured, the 10 largest providers of health care
coverage, including both public and private entities, and ascertain
the smoking cessation benefits provided by each of these coverage
providers.
(2) The department shall summarize the smoking cessation benefit
information gathered under this subdivision and make the benefit
summary available on the Internet, including the department's Web
site.
(b) The department shall, where appropriate, include the smoking
cessation benefit information as part of its educational efforts to
prevent tobacco use that it renders to the public and to health care
providers.
(c) The department shall conduct an evaluation, commencing one
year following the publication of the smoking cessation benefit
information on the department's Web site as provided in this section,
to assess all of the following:
(1) Any changes in the awareness of the beneficiaries of the 10
largest providers of health care coverage as to the availability of
smoking cessation benefits.
(2) Any changes in the awareness of health care providers as to
the availability of smoking cessation benefits.
(3) The extent to which smoking cessation benefits are utilized by
beneficiaries of the 10 largest providers of health care coverage,
and any changes in the utilization rate of these benefits as
determined by a comparison with any available preexisting
information.
(4) Smoking-related indicators available through the Health Plan
Employer Data and Information Set.
(5) Any changes to the smoking cessation benefit coverage of the
10 largest providers of health care coverage.
(6) The impact on smoking rates based on the expansion of
counseling services and the direct provision of tobacco cessation
pharmacotherapy by the California Smokers' Helpline.
(d) To the extent funds are appropriated for these purposes, the
department shall increase its efforts to do all of the following:
(1) Reduce smoking by increasing the capacity of effective
cessation services available from the California Smokers' Helpline,
including tobacco cessation pharmacotherapy.
(2) Expand public awareness about the services that are available
through the California Smokers' Helpline.
(3) Expand public awareness and use of existing cessation benefits
that are available to California smokers through their public and
private providers of health care coverage.
SEC. 30. SEC. 31. Article 3
(commencing with Section 104705) is added to Chapter 2 of Part 3 of
Division 103 of the Health and Safety Code, to read:
Article 3. Community Makeover Grants
104705. (a) The Community Makeover Grant program is hereby
created and shall be administered by the department. The department
shall award grants to local health departments to serve as local lead
agencies in accordance with this article.
(b) For purposes of determining the amount of each grant awarded
under this article, local health departments shall be allocated, at a
minimum, base funding in proportion to total available funding.
(c) Except as provided in subdivision (b), local health
departments shall receive an allocation based on each county's or
city's proportion of the statewide population, to be expended for
purposes that include, but need not be limited to:
(1) Creating a community infrastructure that promotes active
living and healthy eating.
(2) Coordinating with, at minimum, city, county, and school
partners to facilitate community level, multisector collaboration for
the development and implementation of strategies to facilitate
active living and healthy eating.
(3) Conducting competitive grant application processes to support
local grants. These local grants may be used to develop new programs
and improve existing programs to promote physical activity for
children, improve access to healthy foods, and better utilize
community recreation facilities.
(4) Preparing program interventions and materials that will be
available in accessible, and culturally and linguistically
appropriate, formats.
(d) The department shall issue guidelines for local lead agencies
on how to prepare a local plan for a comprehensive community
intervention program that includes changes to promote active living
and healthy eating, and to prevent obesity and other related chronic
diseases.
(e) The department shall specify data reporting requirements for
local lead agencies and their subcontractors.
(f) (1) The department shall conduct a fiscal and program review
on a regular basis.
(2) If the department determines that any local lead agency is not
in compliance with any provision of this article, the local lead
agency shall submit to the department, within 60 days, a plan for
complying with this article.
(3) The department may withhold funds allocated under this section
from local lead agencies that are not in compliance with this
article.
(g) For purposes of this article, "department" means the State
Department of Public Health.
104710. (a) The department may provide a variety of training,
consultation, and technical assistance to support local programs.
(b) Notwithstanding any other provision of law, the department may
use a request for proposal process or may directly award contracts
to provide the assistance described in subdivision (a) to another
state, federal, or auxiliary organization.
(c) Any organization awarded a contract under this section shall
demonstrate the ability to provide statewide assistance to accelerate
progress, and to ensure the long-term impact of local obesity
prevention programs.
104715. (a) The department shall track and evaluate obesity
related measures, including, but not limited to, active living,
healthy eating, and community environment indicators. These tracking
and evaluation activities shall utilize scientifically appropriate
methods, and may include, but need not be limited to, the following:
(1) Track statewide health indicators.
(2) Evaluate funded projects, determining baseline measures and
progress toward goals, as well as capturing successes and emerging
models.
(3) Compare the effectiveness of individual programs to inform
funding decisions and program modifications.
(4) Incorporate other aspects into the evaluation that have been
identified by the department in consultation with state and local
advisory groups, local health departments, and other interested
parties.
(5) Forecast health and economic cost consequences associated with
obesity.
(6) Funds permitting, utilize a sample size that is adequate to
produce county-, ethnic-, and disability-specific estimates.
(b) The purpose of the evaluation shall be to direct the most
efficient allocation of resources appropriated under this article to
accomplish the maximum reduction of obesity rates. The comprehensive
evaluation shall be designed to measure the extent to which programs
funded pursuant to this article promote the goals identified in the
California Obesity Prevention Plan.
104720. The department shall develop a campaign to educate the
public about the importance of obesity prevention that frames active
living and healthy eating as "California living." The
campaign-centered efforts shall be closely linked with
community-level program change efforts and shall be available in
accessible and culturally and linguistically appropriate formats.
104721. The department shall provide assistance and other support
for schools to promote the availability and consumption of fresh
fruits and vegetables and foods with whole grains.
104725. The department shall provide technical assistance to help
employers integrate wellness policies and programs into employee
benefit plans and worksites.
104726. Notwithstanding any other provision of law, this article
shall be implemented only to the extent funds are appropriated for
purposes of this article in the annual Budget Act or in another
statute.
SEC. 31. Section 128745.1 is added to the
Health and Safety Code, to read:
128745.1. (a) In addition to any other established and pending
reports, commencing January 1, 2010, and every year thereafter, the
office shall publish risk-adjusted outcome reports for percutaneous
coronary interventions, including, but not limited to, the use of
angioplasty or stents. In each year, the reports shall compare
risk-adjusted outcomes by hospital, and in at least every other year,
by hospital and physician. Upon the recommendation of the technical
advisory committee based on statistical and technical considerations,
information on individual hospitals and surgeons may be excluded
from the reports.
(b) The office shall establish a clinical data collection program
to collect data on percutaneous coronary interventions, including,
but not limited to, the use of angioplasty or stents, performed in
hospitals. The office shall establish by regulation the data to be
reported by each hospital at which percutaneous coronary
interventions are performed. In establishing the data to be reported,
the office shall consult with the clinical panel established
pursuant to Section 128748.
SEC. 32. Section 128745 of the Health and Safety Code
is amended to read:
128745. (a) Commencing July 1993, and annually thereafter, the
office shall publish risk-adjusted outcome reports in accordance with
the following schedule:
Procedures and
Publication Period Conditions
Date Covered Covered
July 1993 1988-90 3
July 1994 1989-91 6
July 1995 1990-92 9
Reports for subsequent years shall include conditions and
procedures and cover periods as appropriate.
(b) The procedures and conditions required to be reported under
this chapter shall be divided among medical, surgical ,
and obstetric conditions or procedures and shall be selected by the
office, based on the recommendations of the commission and the advice
of the technical advisory committee set forth in subdivision (j) of
Section 128725. The office shall publish the risk-adjusted outcome
reports for surgical procedures by individual hospital and individual
surgeon unless the office in consultation with the technical
advisory committee and medical specialists in the relevant area of
practice determines that it is not appropriate to report by
individual surgeon. The office, in consultation with the technical
advisory committee and medical specialists in the relevant area of
practice, may decide to report nonsurgical procedures and conditions
by individual physician when it is appropriate. The selections shall
be in accordance with all of the following criteria:
(1) The patient discharge abstract contains sufficient data to
undertake a valid risk adjustment. The risk adjustment report shall
ensure that public hospitals and other hospitals serving primarily
low-income patients are not unfairly discriminated against.
(2) The relative importance of the procedure and condition in
terms of the cost of cases and the number of cases and the
seriousness of the health consequences of the procedure or condition.
(3) Ability to measure outcome and the likelihood that care
influences outcome.
(4) Reliability of the diagnostic and procedure data.
(c) (1) In addition to any other established and pending reports,
on or before July 1, 2002, the office shall publish a risk-adjusted
outcome report for coronary artery bypass graft surgery by hospital
for all hospitals opting to participate in the report. This report
shall be updated on or before July 1, 2003.
(2) In addition to any other established and pending reports,
commencing July 1, 2004, and every year thereafter, the office shall
publish risk-adjusted outcome reports for coronary artery bypass
graft surgery for all coronary artery bypass graft surgeries
performed in the state. In each year, the reports shall compare
risk-adjusted outcomes by hospital, and in every other year, by
hospital and cardiac surgeon. Upon the recommendation of the
technical advisory committee based on statistical and technical
considerations, information on individual hospitals and surgeons may
be excluded from the reports.
(3) Unless otherwise recommended by the clinical panel established
by Section 128748, the office shall collect the same data used for
the most recent risk-adjusted model developed for the California
Coronary Artery Bypass Graft Mortality Reporting Program. Upon
recommendation of the clinical panel, the office may add any clinical
data elements included in the Society of Thoracic Surgeons' data
base. Prior to any additions from the Society of Thoracic Surgeons'
data base, the following factors shall be considered:
(A) Utilization of sampling to the maximum extent possible.
(B) Exchange of data elements as opposed to addition of data
elements.
(4) Upon recommendation of the clinical panel, the office may add,
delete or revise clinical data elements, but shall add no more than
a net of six elements not included in the Society of Thoracic
Surgeons' data base, to the data set over any five-year period. Prior
to any additions or deletions, all of the following factors shall be
considered:
(A) Utilization of sampling to the maximum extent possible.
(B) Feasibility of collecting data elements.
(C) Costs and benefits of collection and submission of data.
(D) Exchange of data elements as opposed to addition of data
elements.
(5) The office shall collect the minimum data necessary for
purposes of testing or validating a risk-adjusted model for the
coronary artery bypass graft report.
(d) (1) In addition to any other established and pending reports,
commencing January 1, 2010, and every year thereafter, the office
shall publish risk-adjusted outcome reports for percutaneous coronary
interventions, including, but not limited to, the use of angioplasty
or stents. In each year, the reports shall compare risk-adjusted
outcomes by hospital, and in at least every other year, by hospital
and physician. Upon the recommendation of the technical advisory
committee based on statistical and technical considerations,
information on individual hospitals and surgeons may be excluded from
the reports.
(2) The office shall establish a clinical data collection program
to collect data on percutaneous coronary interventions, including,
but not limited to, the use of angioplasty or stents, performed in
hospitals. Based upon the recommendation of the clinical advisory
panel established pursuant to Section 128748, the office shall
establish by regulation the data to be reported by each hospital at
which percutaneous coronary interventions are performed.
(3) When establishing the clinical data collection program to
collect data on percutaneous coronary interventions, the office shall
consider all of the following factors:
(A) Utilization of sampling to the maximum extent possible.
(B) Feasibility of collecting data elements.
(C) Costs and benefits of collection and submission of data.
(D) Exchange of data elements as opposed to addition of data
elements.
(4) The office shall collect the minimum data necessary for
purposes of testing or validating a risk-adjusted model for the
percutaneous coronary intervention report.
(d)
(e) The annual reports shall compare the risk-adjusted
outcomes experienced by all patients treated for the selected
conditions and procedures in each California hospital during the
period covered by each report, to the outcomes expected. Outcomes
shall be reported in the five following groupings for each hospital:
(1) "Much higher than average outcomes," for hospitals with
risk-adjusted outcomes much higher than the norm.
(2) "Higher than average outcomes," for hospitals with
risk-adjusted outcomes higher than the norm.
(3) "Average outcomes," for hospitals with average risk-adjusted
outcomes.
(4) "Lower than average outcomes," for hospitals with
risk-adjusted outcomes lower than the norm.
(5) "Much lower than average outcomes," for hospitals with
risk-adjusted outcomes much lower than the norm.
(e)
(f) For coronary artery bypass graft surgery reports
and any other outcome reports for which auditing is appropriate, the
office shall conduct periodic auditing of data at hospitals.
(f)
(g) The office shall publish in the annual reports
required under this section the risk-adjusted mortality rate for each
hospital and for those reports that include physician reporting, for
each physician.
(g)
(h) The office shall either include in the annual
reports required under this section, or make separately available at
cost to any person requesting it, risk-adjusted outcomes data
assessing the statistical significance of hospital or physician data
at each of the following three levels: 99 percent confidence level
(0.01 p-value), 95 percent confidence level (0.05 p-value), and 90
percent confidence level (.10 p-value). The office shall include any
other analysis or comparisons of the data in the annual reports
required under this section that the office deems appropriate to
further the purposes of this chapter.
SEC. 32.5. Section 128748 of the Health and Safety Code
is amended to read:
128748. (a) This section shall apply to any risk-adjusted
outcome report that includes reporting of data by an individual
physician.
(b) (1) The office shall obtain data necessary to complete a
risk-adjusted outcome report from hospitals. If necessary data for an
outcome report is available only from the office of a physician and
not the hospital where the patient received treatment, then the
hospital shall make a reasonable effort to obtain the data from the
physician's office and provide the data to the office. In the event
that the office finds any errors, omissions, discrepancies, or other
problems with submitted data, the office shall contact either the
hospital or physician's office that maintains the data to resolve the
problems.
(2) The office shall collect the minimum data necessary for
purposes of testing or validating a risk-adjusted model. Except for
data collected for purposes of testing or validating a risk-adjusted
model, the office shall not collect data for an outcome report nor
issue an outcome report until the clinical panel established pursuant
to this section has approved the risk-adjusted model.
(c) For each risk-adjusted outcome report on a medical, surgical,
or obstetric condition or procedure that includes reporting of data
by an individual physician, the office director shall appoint a
clinical panel, which shall have nine members. Three members shall be
appointed from a list of three or more names submitted by the
physician specialty society that most represents physicians
performing the medical, surgical, and obstetric procedure for which
data is collected. Three members shall be appointed from a list of
three or more names submitted by the California Medical Association.
Three members shall be appointed from lists of names submitted by
consumer organizations. At least one-half of the appointees from the
lists submitted by the physician specialty society and the California
Medical Association, and at least one appointee from the lists
submitted by consumer organizations, shall be experts in collecting
and reporting outcome measurements for physicians or hospitals. The
panel may include physicians from another state. The panel shall
review and approve the development of the risk-adjustment model to be
used in preparation of the outcome report.
(d) For the clinical panel panels
authorized by subdivision (c) for coronary artery bypass graft
surgery and percutaneous coronary intervention , three
members shall be appointed from a list of three or more names
submitted by the California Chapter of the American College of
Cardiology. Three members shall be appointed from list of three or
more names submitted by the California Medical Association. Three
members shall be appointed from lists of names submitted by consumer
organizations. At least one-half of the appointees from the lists
submitted by the California Chapter of the American College of
Cardiology, and the California Medical Association, and at least one
appointee from the lists submitted by consumer organizations, shall
be experts in collecting and reporting outcome measurements for
physicians and surgeons or hospitals. The panel
panels may include physicians from another state. The
panel panels shall review and approve
the development of the risk-adjustment model to be used in
preparation of the outcome report.
(e) Any report that includes reporting by an individual physician
shall include, at a minimum, the risk-adjusted outcome data for each
physician. The office may also include in the report, after
consultation with the clinical panel, any explanatory material,
comparisons, groupings, and other information to facilitate consumer
comprehension of the data.
(f) Members of a clinical panel shall serve without compensation,
but shall be reimbursed for any actual and necessary expenses
incurred in connection with their duties as members of the clinical
panel.
SEC. 32. Chapter 4 (commencing with Section
128850) is added to Part 5 of Division 107 of the Health and Safety
Code, to read:
CHAPTER 4. HEALTH CARE COST AND QUALITY TRANSPARENCY
Article 1. General Provisions
128850. The Legislature hereby finds and declares that:
(a) The steady rise in health costs is eroding health access,
undermining wages and pensions, straining public health and finance
systems, and placing an undue burden on the state's economy. Health
care that costs more is not necessarily health care that improves
life expectancy, reduces death rates, improves health or minimizes
illness and chronic conditions.
(b) Although there are existing voluntary efforts to report on
health care quality at various levels of the health care system in
California, the collection of performance data on a voluntary basis
is inconsistent and incomplete and does not meet the needs of
policymakers, purchasers, consumers, or the health industry for
reliable comparisons of provider cost and quality.
(c) Data that is collected through existing state programs is not
collected or analyzed with the goal of reducing health care costs in
the system, monitoring performance, or ensuring quality patient
outcomes.
(d) The present day overall lack of transparency of health
outcomes and the factors affecting health care costs limits the
ability of consumers, purchasers, and policymakers to seek out and
reward high-quality providers, or to make quality improvements where
they are needed.
(e) The effective use and distribution of health care data and
meaningful analysis of that data will lead to greater transparency in
the health care system resulting in improved health care quality and
outcomes, more cost-effective care and improvements in life
expectancy, reduced death rates, and improved overall public health.
(f) Hospitals, physicians, health care providers, and health
insurers who have access to systemwide performance data can use the
information to improve patient safety, efficiency of health care
delivery, and quality of care, leading to quality improvement and
costs savings throughout the health care system.
(g) Without comprehensive, systemwide data that is adequately
analyzed and reported widely, the Legislature cannot effectively
evaluate the health care system, establish appropriate regulatory
standards, or identify
the most effective use and value for state health care dollars.
Moreover, consumers and purchasers cannot exercise informed choice in
the market or identify the most cost-effective quality providers and
services.
(h) The State of California is uniquely positioned to collect,
analyze, and report all payer data on health care utilization,
quality, and costs in the state in order to facilitate value-based
purchasing of health care and to support and promote continuous
quality improvement among health care plans and providers.
(i) It is therefore the intent of the Legislature to assume a
leadership role in measuring performance and value in the health care
system. By establishing statewide data and common measurement and
analyses of health care costs, quality, and outcomes, and by
establishing a statewide leadership organization with sufficient
revenues to adequately analyze and report meaningful performance
measures related to health care costs and quality, the Legislature
intends to promote competition, identify appropriate health care
utilization, and ensure the highest quality of health care services
for all Californians.
(j) The Legislature further intends to reduce duplication and
inconsistency in the collection, analysis, and dissemination of
health care performance information within state government and among
both public and private entities by establishing one state-level
commission with primary responsibility for coordinating health care
data development, collection, analysis, evaluation, and
dissemination.
(k) The Legislature intends for the commission to ensure the
availability of reliable data to measure and compare performance
within the health care system along each of the domains identified by
the Institute of Medicine: safety, timeliness, effectiveness,
efficiency, equity, and patient-centeredness.
(l) It is further the intent of the Legislature that the data
collected be used for the transparent public reporting of quality and
cost efficiency information regarding all levels of the health care
system, including health care service plans and health insurers,
hospitals and other health facilities, and medical groups and
physicians, so that health care plans and providers can improve their
performance and deliver safer, better health care more affordably;
so that purchasers can know which health care services reduce
morbidity, mortality, and other adverse health outcomes; so that
consumers can choose whether and where to have health care provided;
and so that the Legislature can effectively regulate and monitor the
health care delivery system to ensure quality and value for all
purchasers and consumers.
128851. As used in this chapter, the following terms have the
following meanings:
(a) "Administrative claims data" means data that is submitted
electronically or otherwise to, or collected by, health insurers,
health care service plans, administrators, or other payers of health
care services, and which are submitted to, or collected for, the
purposes of payment to any physician, physician group, laboratory,
pharmacy, hospital of any type, imaging center, or any other facility
or person that is requesting payment for the provision of medical
care.
(b) "Ambulatory surgery center" means a facility where procedures
are performed on an outpatient basis in general operating rooms,
ambulatory surgery rooms, endoscopy units, or cardiac catheterization
laboratories of a hospital or a freestanding ambulatory surgery
clinic.
(c) "Commission" means the California Health Care Cost and Quality
Transparency Commission.
(d) "Data source" means any physician, physician group, health
facility, health care service plan, health insurer, any state agency
providing or paying for health care or collecting health care data or
information, or any other payer for health care services in
California.
(e) "Encounter data" means data relating to treatment or services
rendered by providers to patients which may be reimbursed on a
fee-for-service or capitation basis.
(f) "Group" or "physician group" means an affiliation of
physicians and other health care professionals, whether a
partnership, corporation, or other legal form, with the primary
purpose of providing medical care.
(g) "Healthcare-associated infection" means a localized or
systemic condition that (1) results from adverse reaction to the
presence of an infectious agent or its toxin and (2) was not present
or incubating at the time of admission to the hospital.
(h) "Health care provider" means a physician, physician group, or
health facility.
(i) "Health facility" or "health facilities" means health
facilities required to be licensed pursuant to Chapter 2 (commencing
with Section 1250) of Division 2.
(j) "Office" means the Office of Statewide Health Planning and
Development.
(k) "Risk-adjusted outcomes" means the clinical outcomes of
patients grouped by diagnoses or procedures that have been adjusted
for demographic and clinical factors.
128852. Notwithstanding the provisions of Chapter 1 (commencing
with Section 128675), commencing July 1, 2009, the responsibilities
of the office with respect to determining the data to be collected
and the analysis and reporting of the data collected pursuant to
Chapter 1 (commencing with Section 128675) shall be transferred to
the commission, as determined by the commission and as reported to
the Secretary of Health and Welfare and the Legislature no later than
January 1, 2009. Any limitations on the collection, analysis, and
use of data in that chapter shall be inapplicable to the extent
determined necessary by the commission to implement its
responsibilities under this chapter. All data collected by the office
shall be available to the commission for the purposes of carrying
out its responsibilities under this chapter. During the initial
development of the data plan pursuant to Section 128675, the office
shall make available to the commission any and all data files,
information, and staff resources as may be necessary to assist in and
support the plan's development.
128853. This chapter shall be operative on July 1, 2008.
Article 2. Health Care Cost and Quality Transparency
Commission
128855. There is hereby created in the California Health and
Human Services Agency, the California Health Care Cost and Quality
Transparency Commission composed of 13 members, each of whom shall
have demonstrated knowledge and experience in the measurement and
analysis of health care quality or cost data, in deploying that data
on behalf of consumers and purchasers, or in health care or other
issues relevant to the commission's responsibilities. The
appointments shall be made as follows:
(a) The Governor shall appoint seven members as follows:
(1) One academic with experience in health care data and cost
efficiency research.
(2) One representative of hospitals.
(3) One representative of an integrated multispecialty medical
group.
(4) One representative of physician and surgeons.
(5) One representative of large employers that purchase group
health care coverage for employees and that is not also a supplier or
broker in health care coverage.
(6) One representative of a labor union.
(7) One representative of employers that purchase group health
care coverage for their employees or a representative of a nonprofit
organization that demonstrates experience working with employers to
enhance value and affordability of health care coverage.
(b) The Senate Committee on Rules shall appoint three members as
follows:
(1) One representative of a labor union.
(2) One representative of consumers with a demonstrated record of
advocating health care issues on behalf of consumers.
(3) One representative of health insurers or health care service
plans.
(c) The Assembly Speaker shall appoint three members as follows:
(1) One representative of consumers with a demonstrated record of
advocating health care issues on behalf of consumers.
(2) One representative of small employers that purchase group
health care coverage for employees that is not also a supplier or
broker in health care coverage.
(3) One representative of a nonprofit labor-management purchaser
coalition that has a demonstrated record of working with employers
and employee associations to enhance value and affordability in
health care.
(d) The following members shall serve in an ex officio, nonvoting
capacity:
(1) The Secretary of California Health and Human Services or a
designee.
(2) A designee of the California Public Employees' Retirement
System.
(3) The Director of the Department of Managed Health Care or a
designee.
(4) The executive director of the Managed Risk Medical Insurance
Board or a designee.
(5) The Insurance Commissioner or a designee.
(e) The Governor shall designate a member to serve as chairperson
for a two-year term. No member may serve more than two, two-year
terms as chairperson. All appointments shall be for four-year terms;
provided, however, that the initial term shall be two years for
members initially filling the positions set forth in paragraphs 1, 2,
4, and 6 of subdivision (a), paragraph 2 of subdivision (b), and
paragraph 2 of subdivision (c).
128856. The commission shall meet at least once every two months,
or more often if necessary to fulfill its duties.
128857. The members of the commission shall receive a per diem of
one hundred dollars ($100) for each day actually spent in the
discharge of official duties and shall be reimbursed for any actual
and necessary expenses incurred in connection with their duties as
members of the commission.
128858. The commission shall appoint an executive director, who
shall serve at the pleasure of the commission. The executive director
shall receive the salary established by the Department of Personnel
Administration for exempt officials. The executive director shall
administer the affairs of the commission as directed by the
commission and shall direct the staff of the commission. The
executive director may appoint, with the approval of the commission,
staff necessary to carry out the functions and duties of the
commission.
128859. The commission shall be authorized to do the following:
(a) Enter into contracts.
(b) Sue and be sued.
(c) Employ necessary staff.
(d) Authorize expenditures from the fund or from other moneys
appropriated in the annual Budget Act or other public or private
revenues as necessary to carry out its responsibilities under this
chapter.
(e) Adopt, amend, and rescind such regulations, forms, and orders
as are necessary to carry out its responsibilities under this
chapter.
(f) Require any data source to submit data necessary to implement
the health care cost and quality transparency plan, provided the
health care cost and quality transparency plan is adopted by
regulation, pursuant to Chapter 3.5 (commencing with Section 11340)
of Part 1 of Division 3 of Title 2 of the Government Code.
(g) Determine the data elements to be collected, the reporting
formats for data submitted, and the use and reporting by the
commission of any data submitted.
(h) Audit the accuracy of all data submitted and require entities
submitting financial data for the purposes of this part to submit
proof that financial data submitted has been audited in accordance
with generally accepted auditing principles.
(i) Exercise all powers reasonably necessary to carry out the
powers and responsibilities expressly granted or imposed upon it
under this chapter.
128860. The commission shall have no authority to disclose any
confidential information concerning contracted rates between health
care providers and any data source, but nothing in this section shall
prevent the commission from publicly disclosing information on the
relative or comparative cost to payers or purchasers of health care
or the costs for a specific course of treatment or episode, as
applicable for the reporting.
128861. (a) No later than January 1, 2009, the commission shall
determine the functions currently performed by the office that are
necessary to the commission's activities and report to the Secretary
of Health and Welfare and the Legislature those functions that shall
be transferred to the commission effective July 1, 2009.
(b) All regulations adopted by the office that relate to functions
vested in the commission and that are in effect immediately
preceding July 1, 2009, shall remain in effect and shall be fully
enforceable unless and until readopted, amended, or repealed by the
commission.
(c) The commission may use the unexpended balance of funds
available for use in connection with the performance of the functions
of the office transferred to the commission.
(d) All officers and employees of the office who, on July 1, 2009,
are serving in the state civil service, other than as temporary
employees, and engaged in the performance of a function vested in the
commission shall be transferred to the commission. The status,
positions, and rights of these persons shall not be affected by the
transfer except as to positions exempted from civil service.
(e) The commission shall have possession and control of all
records, papers, offices, equipment, supplies, moneys, funds,
appropriations, land or other property, real or personal, held for
the benefit or use of the office for the performance of functions
transferred to the commission.
128862. The functions and duties of the commission shall include
the following:
(a) Develop, implement, and periodically update a health care
quality and cost containment plan, including data collection,
performance measurement, and reporting methods, that provides for
effective measurement of the safety and quality of an array of health
care services provided to Californians.
(b) Determine the data to be collected, and method of collection,
to implement the data collection and reporting requirements set forth
in this chapter.
(c) Determine the measures necessary to implement the reporting
requirements in the plan developed pursuant to 128864 in a manner
that is cost effective and reasonable for data sources and timely,
relevant, and reliable for consumers and purchasers.
(d) Determine the reports and data to be made available to the
public in order to accomplish the purposes of this chapter, including
conducting studies and reporting the results of the studies.
(e) Seek to establish agreements for voluntary reporting of health
care claims and data from any and all health care payers who are not
subject to mandatory reporting to the commission pursuant to this
chapter, and its subsequent regulations, in order to ensure
availability of the most comprehensive, systemwide data on health
care costs and quality.
(f) Collect, aggregate, and timely distribute performance data on
quality, health outcomes, cost, utilization, and pricing in a manner
accessible for purchasers, consumers, and policymakers.
(g) Fully protect patient privacy, in compliance with state and
federal medical privacy laws, while preserving the ability to analyze
data using date of birth, ethnicity, and sex where the disclosure of
this information will not identify an individual.
(h) Create technical advisory committees and clinical advisory
committees, as necessary, to advise the commission on technical or
clinical issues.
(i) Annually report to the Governor and the Legislature, on or
before March 1, on the status of implementing this chapter, the
resources necessary to fully implement this chapter, and any
recommendations for statutory changes that would advance the purposes
of this chapter.
(j) Provide state leadership and coordination of public and
private health care quality and performance measurements to ensure
efficiency, cost-effectiveness, transparency, and informed choice by
purchasers and consumers.
128863. (a) The commission shall appoint at least one technical
advisory committee, and may appoint additional technical advisory
committees as the commission deems appropriate, and shall include on
each such committee academic and professional experts with expertise
related to the activities of the commission.
(b) The commission shall appoint at least one clinical advisory
committee and may appoint additional advisory committees specific to
issues that require additional or different clinical expertise. Each
clinical advisory committee shall include clinicians and others with
expertise related to the activities of the commission and any issue
under consideration.
(c) The commission shall, as appropriate, refer technical and
clinical issues, including issues related to risk adjustment
methodology, to an advisory committee for recommendation. The
advisory committee shall, within the time period specified by the
commission, issue to the commission a written recommendation
concerning the issue referred to the advisory committee. The
commission shall consider the recommendation of the advisory
committee. If the commission rejects the recommendation, it shall
issue a written finding and rationale for rejecting the
recommendation. If the advisory committee fails to issue a
recommendation within the time period prescribed by the commission,
the commission may appoint another advisory committee or take such
other action it deems necessary to obtain the needed technical or
clinical information required to carry out its responsibilities.
(d) The members of the technical and clinical advisory committees
appointed by the commission shall receive no compensation, but shall
be reimbursed for any actual and necessary expenses incurred in
connection with their duties as members of the advisory committee.
(e) The commission shall provide opportunities for participation
from consumers, purchasers, and providers at all advisory committee
meetings.
128864. The commission shall develop and implement a
conflict-of-interest policy applicable to all employees, contractors,
and advisory committee members that will ensure, at a minimum, that
persons advising the commission disclose any material financial
interest in the outcome of the work performed on behalf of the
commission.
Article 3. Health Care Cost and Quality Transparency Plan
128865. (a) The commission shall, by December 1, 2009, develop
and, by regulation adopt, a health care cost and quality transparency
plan that will, when implemented, result in the transparent public
reporting of safety, quality, and cost efficiency information at all
levels of the health care system. The plan shall:
(1) Include specific strategies to measure and collect data
related to health care safety and quality, utilization, cost to
payers, and health outcomes and shall focus on data elements that
foster quality improvement and peer group comparisons.
(2) Facilitate value-based, cost-effective purchasing of health
care services by public and private purchasers.
(3) Result in useable information that allows health care
purchasers, consumers, and data sources to identify and compare
health plans and insurers as well as individual health facilities,
physicians, and other health care providers, on the extent to which
they provide safe, cost-effective, high-quality health care services.
(4) Be designed to measure each of the performance domains
identified by the Institute of Medicine: safety, timeliness,
effectiveness, efficiency, equity and patient-centeredness.
(5) Use and build on existing data collection standards and
methods to the greatest extent possible to accomplish the goals of
the commission in a cost-effective manner, which may include, but not
be limited to, collecting and disseminating one or more nationally
recognized methodologies for measuring and quantifying provider
quality, cost and service effectiveness, and implementing systemwide
mandatory collection of data elements otherwise being collected in
existing voluntary public and private reporting programs in
California.
(6) Incorporate and utilize administrative claims data to the
extent it is the most cost-efficient method of collecting data in
order to minimize the cost and administrative burden on data sources.
The commission may incorporate and utilize data other than
administrative claims data, provided it is necessary to measure and
analyze a significant health care quality, safety, or cost issue that
cannot be adequately measured with the use of administrative claims
data.
(b) The plan shall include all of the following:
(1) The reports, analyses, and data that will be made available to
data sources, purchasers, and consumers on the performance of health
plans and insurers, medical groups, health facilities, and
physicians, the format in which the reports and data will be made
available, and the planned implementation dates.
(2) The data elements necessary to produce the reports and data to
be made available. The plan shall address the extent to which
standardized electronic reporting of administrative claims data can
provide the information necessary for the purposes of this chapter,
and the most efficient, least burdensome method of collecting other
necessary data, including systemwide encounter data.
(3) The data elements to be collected and how they will be
collected.
(4) A unique patient identifier to permit analysis of health care
utilization patterns that indicate inadequate quality of care, such
as hospital readmissions and repetitive service utilization.
(5) The manner in which patient confidentiality will be maintained
in compliance with state and federal medical and patient privacy
laws.
(6) The administration of data collection, quality assurance, and
reporting functions.
(7) The funding necessary to implement the plan and
recommendations for revenue sources to provide that funding.
(8) A review of existing public and private health performance
data collection and reporting standards and practices, at the state
and federal level, and strategies for incorporating or coordinating
with existing mandatory and voluntary measurement and reporting
activities as the commission determines necessary to accomplish the
goal of this chapter in a cost-effective manner. The review of state
programs shall include, at a minimum, review of data collection
programs administered by the office and the Office of the Patient
Advocate.
(9) The timeline for implementation of the plan and a specific
timeline and process for updating the plan on a regular basis.
128866. The commission may contract with a qualified public or
private agency or academic institution to assist in the review of
existing data collection programs or to conduct other research or
analysis the commission deems necessary to complete and implement the
plan required pursuant to Section 128865 or to meet any of its
obligations under this chapter.
128867. The commission shall review and, where appropriate,
incorporate into the plan required by Section 128865 health care data
collection and reporting required under other state laws, including,
but not limited to, Chapter 1 (commencing with Section 128675),
Article 3.5 (commencing with Section 1288.10) of Chapter 2 of
Division 2, and Sections 1279.1, 1279.3, and 1368.02, and shall
recommend any modification of these
statutes necessary to be consistent with the plan
developed pursuant to Section 128865. Data collection and reporting
required by these provisions shall not be delayed pending the
development and implementation of the plan.
128868. (a) No later than December 1, 2008, and annually
thereafter, the commission shall publicly report the federal Agency
for Healthcare Research and Quality Patient Safety Indicators and
Inpatient Quality Indicators for each acute care hospital licensed in
California using administrative discharge data that hospitals report
pursuant to this part.
(b) No later than July 1, 2010, the commission shall publish an
initial report of health care associated infection rates in general
acute care hospitals. The types of infection to be included and the
methods to be used shall be determined by the commission, in
consultation with the State Department of Public Health and the
committee established pursuant to Section 1288.5. The report shall be
based on data collected for a period of 12 months, and thereafter
shall be updated quarterly.
Article 4. Fees
128870. (a) The commission shall, to the extent possible, recover
the cost of implementing this chapter from fees charged to data
sources and data users. As part of the plan adopted pursuant to
Article 3 (commencing with Section 128865), the commission shall
promulgate a schedule of fees that will, to the extent possible,
recover the cost of implementing centralized data collection,
effective analysis, and reporting activities under this chapter. The
schedule of fees shall be based on the relative need to collect and
analyze information from various data sources, and the relative value
to data sources and users, in order to correct the adverse health
effects that have resulted from the lack of transparency of health
care cost and quality information. The fee schedule shall ensure
appropriate access to data at a reasonable cost for academic
researchers. Notwithstanding this section, the commission shall not
fail to publish reports for the public consistent with the plan and
shall not otherwise charge members of the public for access to the
reports generated and published by the commission.
(b) The commission may seek and accept contributions to support
the work of the commission from any foundation or other public or
private entity that does not have a financial interest in the outcome
of the work of the commission, as defined in the
conflict-of-interest policy adopted pursuant to Section 128864.
128871. There is hereby established in the State Treasury, the
Health Care Cost and Quality Transparency Fund to support the work of
the commission. All fees and contributions collected by the
commission pursuant to Section 128870 shall be deposited in this fund
and, upon appropriation by the Legislature, used to support the work
of the commission.
Article 5. Penalties
128875. (a) Any data source that fails to file any report as
required by this chapter or by the health care cost and quality
transparency plan adopted pursuant to this chapter, shall be liable
for a civil penalty of one hundred dollars ($100) to one thousand
dollars ($1,000) per day. The commission shall, as part of the plan
developed pursuant to Section 128865, promulgate a schedule of civil
penalties that will be assessed for reporting violations that varies
from one hundred dollars ($100) per day for the least serious
violation, up to one thousand dollars ($1,000) for the most serious
violation.
(b) Civil penalties shall be assessed and recovered in a civil
action brought by the commission in the name of the people of the
State of California. Assessment of a civil penalty may, at the
request of a health care provider, be reviewed on appeal and the
penalty may be reduced or waived by the commission for good cause.
(c) Any money received by the commission pursuant to this section
shall be paid into the General Fund.
SEC. 33. Chapter 4 (commencing with Section 128850) is
added to Part 5 of Division 107 of the Health and Safety Code, to
read:
CHAPTER 4. HEALTH CARE COST AND QUALITY TRANSPARENCY
Article 1. General Provisions
128850. The Legislature hereby finds and declares all of the
following:
(a) The steady rise in health costs is eroding health access,
straining public health and finance systems, and placing an undue
burden on the state's economy.
(b) The effective use and distribution of health care data and
meaningful analysis of that data will lead to greater transparency in
the health care system resulting in improved health care quality and
outcomes, more cost-effective care, improvements in life expectancy,
reduced preventable deaths, and improved overall public health.
(c) Hospitals, physicians, health care providers, and health
insurers who have access to system-wide performance data can be
called upon to use the information to improve patient safety,
efficiency of health care delivery, and quality of care, leading to
quality improvement and costs savings throughout the health care
system.
(d) The State of California is uniquely positioned to collect,
analyze, and report data on health care utilization, quality, and
costs in the state in order to facilitate value-based purchasing of
health care and to support and promote continuous quality improvement
among health plans and providers.
(e) Establishing statewide data and common measurement and
analysis of health care costs, quality, and outcomes will identify
appropriate health care utilization and ensure the highest quality of
health care services for all Californians.
(f) Comprehensive statewide data and common measurement will allow
analysis on the provision of care so that efforts can be undertaken
to improve health outcomes for all Californians, including those
groups with demonstrated health disparities.
(g) It is therefore the intent of the Legislature that the State
of California assume a leadership role in measuring performance and
value in the health care system. By establishing the primary
statewide data and common measurement and analyses of health care
costs, quality, and outcomes, and by providing sufficient revenues to
adequately analyze and report meaningful performance measures
related to health care costs, safety, and quality, the Legislature
intends to promote competition, identify appropriate health care
utilization, and ensure the highest quality of health care services
for all Californians.
(h) The Legislature further intends to reduce duplication and
inconsistency in the collection, analysis, and dissemination of
health care performance information within state government and among
both public and private entities by coordinating health care data
development, collection, analysis, evaluation, and dissemination.
(i) It is further the intent of the Legislature that the data
collected be used for the transparent public reporting of quality and
cost efficiency information regarding all levels of the health care
system, including health care service plans and health insurers,
hospitals and other health facilities, and medical groups,
physicians, and other licensed health professionals in independent
practice, so that health care plans and providers can improve their
performance and deliver safer, better health care more affordably; so
that purchasers can know which health care services reduce
morbidity, mortality, and other adverse health outcomes; so that
consumers can choose whether and where to have health care provided;
and so that policymakers can effectively monitor the health care
delivery system to ensure quality and value for all purchasers and
consumers.
(j) The Legislature further intends that all existing duties,
powers, and authority relating to health care cost, quality, and
safety data collection and reporting under current state law continue
in full effect.
128851. As used in this chapter, the following terms mean:
(a) "Administrative claims data" means data that are submitted
electronically or otherwise to, or collected by, health insurers,
health care service plans, administrators, or other payers of health
care services and that are submitted to, or collected for, the
purposes of payment to any licensed physician, medical provider
group, laboratory, pharmacy, hospital, imaging center, or any other
facility or person who is requesting payment for the provision of
medical care.
(b) "Committee" means the Health Care Cost and Quality
Transparency Committee.
(c) "Licensed health professional in independent practice" means
those licensed health professionals who can order or direct health
services or expenditures for patients are who are eligible to bill
Medi-Cal for services. This includes, but is not limited to, nurse
practitioners, physician assistants, dentists, chiropractors, and
pharmacists.
(d) "Data source" may include any of the following: a licensed
physician, other licensed health professional in independent
practice, medical provider group, health facility, health care
service plan licensed by the Department of Managed Health Care,
insurer certificated by theInsurance Commissioner to sell health
insurance, any state agency providing or paying for health care or
collecting health care data or information, or any other payer for
health care services in California.
(e) "Encounter data" means data relating to treatment or services
rendered by providers to patients and which may be reimbursed on a
fee-for-service or capitation basis.
(f) "Group" or "medical provider group" means an affiliation of
physicians and other health care professionals, whether a
partnership, corporation, or other legal form, with the primary
purpose of providing medical care.
(g) "Health facility" or "health facilities" means health
facilities required to be licensed pursuant to Chapter 2 (commencing
with Section 1250) of Division 2.
(h) "Office" means the Office of Statewide Health Planning and
Development.
(i) "Risk-adjusted outcomes" means the clinical outcomes of
patients grouped by diagnoses or procedures that have been adjusted
for demographic and clinical factors.
(j) "Secretary" is the Secretary of California Health and Human
Services.
128852. Any limitations on the addition of data elements pursuant
to Chapter 1 (commencing with section 128675) shall be inapplicable
to the extent determined necessary to implement the responsibilities
under this chapter. All data collected by the office shall be
available to the committee and secretary for the purposes of carrying
out their responsibilities under this chapter. The office shall make
available to the committee any and all data files, information, and
staff resources as may be necessary to assist in and support the
responsibilities of the committee.
Article 2. Health Care Cost and Quality Transparency Committee
12855. There is hereby created in the California Health and Human
Services Agency the California Health Care Cost and Quality
Transparency Committee composed of sixteen members. The appointments
shall be made as follows:
(a) The Governor shall appoint ten members as follows:
(1) One researcher with experience in health care data and cost
efficiency research.
(2) One representative of private hospitals.
(3) One representative of public hospitals.
(4) One representative of an integrated multi-specialty medical
group.
(5) One representative of health insurers or health care service
plans.
(6) One representative of licensed health professionals in
independent practice.
(7) One representative of large employers that purchase group
health care coverage for employees and that is not also a supplier or
broker of health care coverage.
(8) One representative of a labor union.
(9) One representative of employers that purchase group health
care coverage for their employees or a representative of a nonprofit
organization that demonstrates experience working with employers to
enhance value and affordability of health care coverage.
(10) One representative of pharmacists.
(b) The Senate Committee on Rules shall appoint three members as
follows:
(1) One representative of a labor union.
(2) One representative of consumers with a demonstrated record of
advocating health care issues on behalf of consumers.
(3) One representative of physicians and surgeons who is a
practicing patient-care physician licensed in the state of
California.
(c) The Assembly Speaker shall appoint three members as follows:
(1) One representative of consumers with a demonstrated record of
advocating health care issues on behalf of consumers.
(2) One representative of small employers that purchase group
health care coverage for employees and that is not also a supplier or
broker in health care coverage.
(3) One representative of a nonprofit labor-management purchaser
coalition that has a demonstrated record of working with employers
and employee associations to enhance value and affordability in
health care.
(d)The following members shall serve in an ex officio, nonvoting
capacity:
(1) The Executive Officer of the California Public Employees
Retirement System or a designee.
(2) The Director of the Department of Managed Health Care or a
designee.
(3) The Insurance Commissioner or a designee.
(4) The Director of the Department of Public Health or a designee.
(5) The Director of the State Department of Health Care Services
or a designee.
(e) The Governor shall designate a member to serve as chairperson
for a two-year term. No member may serve more than two, two-year
terms as chairperson. All appointments shall be for four-year terms;
provided, however, that the initial term shall be two years for
members initially filling the positions set forth in paragraphs 1,
2,4, and 6 of subdivision (a), paragraph 2 of subdivision (b), and
paragraph 2 of subdivision (c).
128856. The committee shall meet at least once every two months,
or more often if necessary to fulfill its duties.
128857. The members of the committee shall be reimbursed for any
actual and necessary expenses incurred in connection with their
duties as members of the committee.
128858. The secretary shall provide or contract for
administrative support for the committee.
128859. The committee shall do all of the following:
(a) Develop and recommend to the secretary the Health Care Cost
and Quality Transparency Plan, as provided in Article 3 (commencing
with Section 128865).
(b) Monitor the implementation of the Health Care Cost and Quality
Transparency Plan.
(c) Issue an annual public report, on or before March 1, on the
status of implementing this chapter, the resources necessary to fully
implement this chapter, and any recommendations for changes to the
statutes, regulations, or the transparency plans that would advance
the purposes of this chapter.
128860. (a) The committee shall appoint at least one technical
committee, and may appoint additional technical committees as the
committee deems appropriate, and shall include on each such committee
academic and professional experts with expertise related to the
activities of the committee.
(b) (1) The committee shall appoint at least one clinical panel
and may appoint additional panels specific to issues that require
additional or different clinical expertise. Each clinical panel shall
contain a majority of clinicians with expertise related to the
activities of the committee and any issue under consideration and
shall also include experts in collecting and reporting data. Each
clinical panel shall also include two members of the committee, one
of whom shall be a representative of hospitals or health
professionals and the other of whom shall be a representative of
consumers, purchasers or labor unions.
(2) For the initial plan, the committee shall appoint at least one
clinical panel that shall do all of the following:
(i) Issue a written report of recommendations to implement the
goals set forth by the committee, including how to measure quality
improvement, necessary data elements, and appropriate risk-adjustment
methodology. The report shall be submitted to the committee within
the time period specified by the committee. The committee shall
either adopt the recommendations of the clinical panel or by a
two-thirds vote of the committee reject the recommendations. If the
committee rejects the recommendations, it shall issue a written
finding and rationale for rejecting the recommendations. If the
committee rejects the recommendations, it shall refer the issue back
to the clinical panel and request additional or modified
recommendations in specific areas in which the committee found the
recommendations deficient.
(ii) Make recommendations to the committee concerning the specific
data to be collected and the methods of collection to implement this
chapter, assure that the results are statistically valid and
accurate, and state any limitations on the conclusions that can be
drawn from the data.
(iii) Make recommendations concerning the measures necessary to
implement the reporting requirements in a manner that is
cost-effective and reasonable for data sources and is reliable,
timely, and relevant to consumers, purchasers, and health providers.
(c) The members of the technical committees and clinical advisory
panels shall be reimbursed for any actual and necessary expenses
incurred in connection with their duties as members of the technical
committee or clinical advisory panel.
(d) The committee shall provide opportunities for participation
from consumers and patients as well as purchasers and providers at
all committee meetings.
128861. The committee, technical committee, and clinical panel
members, and any contractors, shall be subject to the
conflict-of-interest policy of the California Health and Human
Services Agency.
Article 3. Health Care Cost and Quality Transparency Plan
128865. (a) (1) The committee shall, within one year after its
first meeting, develop and recommend to the secretary an initial
Health Care Cost and Quality Transparency Plan.
(2) The committee shall periodically review and recommend updates
to the Health Care Cost and Quality Transparency Plan. The committee
shall conduct a full review every three years, and any
recommendations resulting from the review shall be subject to Section
128866.
(3) The initial plan and updates to the plan shall result in
public reporting of safety, quality and cost efficiency information
on the health care system. The purpose of the plan shall be to
improve health care cost efficiency, improve health system
performance, and promote quality patient outcomes.
(4) In developing the initial plan and updates to the plan, the
committee shall review existing data gathering and reporting,
including existing voluntary efforts.
(5) In developing the initial plan and updates to the plan, the
committee shall obtain the recommendation of the relevant clinical
panel or panels, if any, on the measures to be reported.
(b) The plan shall include, but not be limited to, strategies to:
(1) Measure, and collect data related to, health care safety and
quality, utilization, health outcomes, and cost of health care
services from health plans and insurers, medical groups, health
facilities, licensed physicians and other licensed health
professionals in independent practice.
(2) Measure each of the performance domains, including, but not
limited to, safety, timeliness, effectiveness, efficiency, quality,
equity, and other domains as appropriate.
(3) Develop a valid and reliable methodology for collecting and
reporting cost and quality information to ensure the integrity of the
data and reflect the intensity, cost, and scope of services provided
and that the data is collected from the most appropriate data
source.
(4) Measure and collect data related to disparities in health
outcomes among various populations and communities, including racial
and ethnic groups.
(5) Use and build on existing data collection standards, methods,
and definitions to the greatest extent possible to accomplish the
goals of this chapter in an efficient and effective manner, including
those data collected by the state and federal governments.
(6) Incorporate and utilize administrative claims data to the
extent that it is the most efficient method of collecting valid and
reliable data.
(7) Improve coordination, alignment, and timeliness of data
collection, state and federal reporting practices and standards, and
existing mandatory and voluntary measurement and reporting activities
by existing public and private entities, taking into account the
reporting burden on providers.
(8) Provide public reports, analyses, and data on the health care
quality, safety, and performance measures of health plans and
insurers, medical groups, health facilities, licensed physicians, and
other licensed health professionals in independent practice, that
are accurate, statistically valid, and descriptive of how the data
were derived.
(9) Maintain patient confidentiality consistent with state and
federal medical and patient privacy laws.
(10) Coordinate and streamline existing related data collection
and reporting activities within state government.
(11) Participate in the monitoring of implementation of the plan,
including a timeline and prioritization of the planned data
collection, analyses and reports.
(12) Participate in the monitoring of data collection, continuous
quality improvement, and reporting functions.
(13) Assess compliance with data collection requirements needed to
implement this chapter.
(14) Recommend a fee schedule sufficient to fund the
implementation of this chapter.
(c) The secretary may contract with a qualified public or private
agency or academic institution to assist in the review of existing
data collection programs or to conduct other research or analysis
deemed necessary for the committee or secretary to complete and
implement the Health Care Cost and Quality Transparency Plan or to
meet the obligations of this chapter.
128866. (a) Within 60 days of receipt of the Health Care Cost and
Quality Transparency Plan recommended by the committee, the
secretary shall do one of the following:
(1) Advise the committee that the recommended plan is accepted and
implementing regulations shall be drafted and submitted to the
Office of Administrative Law pursuant to the Administrative
Procedures Act, Chapter 3.5 (commencing with section 11340) of Part 1
of Division 3 of Title 2 of the Government Code.
(2) Refer the plan back to the committee and request additional or
modified recommendations in specific areas in which the secretary
finds the plan is deficient. If referred back to the committee, the
secretary shall respond to any modified recommendation in the manner
provided in this section.
(b) Every six years after implementation, commencing with 2014,
the secretary shall report to the Legislature on the work of the
committee and whether the committee should be continued in the manner
described in this article or whether changes should be made to the
law.
Article 4. Implementation of Health Care Cost and
Quality Transparency Plan
128867. (a) After acceptance of the plan pursuant to Section
128866, the secretary shall be responsible for timely implementation
of the approved plan. The secretary shall assure timely
implementation by the office, which shall include, but not be limited
to, the following:
(1) Provide data, information, and reports as may be required by
the committee to assist in its responsibilities under this chapter
(2) Determine the specific data to be collected and the methods of
collection to implement this chapter, consistent with the approved
plan, and assure that the results are statistically valid and
accurate as well as risk-adjusted where appropriate.
(3) Determine the measures necessary to implement the reporting
requirements in a manner that is cost-effective and reasonable for
data sources and is reliable, timely, and relevant for consumers,
purchasers, and providers.
(4) Collect the data consistent with the data reporting
requirements of the approved plan including, but not limited to, data
on quality, health outcomes, cost, and utilization.
(5) Audit, as necessary, the accuracy of any and all data
submitted pursuant to this chapter.
(6) Seek to establish agreements for voluntary reporting of health
care claims and data from any and all health care data sources that
are not subject to mandatory reporting pursuant to this chapter in
order to assure the most comprehensive system-wide data on health
care costs and quality.
(7) Fully protect patient privacy and confidentiality, in
compliance with state and federal privacy laws, while preserving the
ability to analyze the data. Any individual patient information
obtained pursuant to this chapter shall be exempt from the disclosure
requirements of the Public Records Act (Chapter 3.5 (commencing with
Section 6250) of Division 7 of Title 1 of the Government Code.
(9) Adopt the same procedures for health care providers as those
specified in Section 128750 and adopt substantially similar
procedures for other data sources to ensure that all data sources
identified in any outcome report have a reasonable opportunity to
review, comment on, and appeal any outcome report in which the data
source is identified before it is released to the public.
(b) The secretary and office shall consult with the committee in
implementing this chapter, and shall cooperate with the committee in
fulfilling the committee's responsibility to monitor implementation
activities.
(c) All state agencies shall cooperate with the secretary and the
office to implement the Health Care Cost and Quality Transparency
Plan approved by the secretary.
(d) The secretary or the office shall adopt regulations necessary
to carry out the intent of this chapter.
128868. Nothing in this chapter shall be construed to authorize
the disclosure of any confidential information concerning contracted
rates between health care providers and payers or any other data
source, but nothing in this section shall prevent the disclosure of
information on the relative or comparative cost to payers or
purchasers of health care services, consistent with the requirements
of this chapter.
128869. (a) Patient social security numbers and any other data
elements that the office believes could be used to determine the
identity of an individual patient shall be exempt from the disclosure
requirements of the California Public Records Act (Chapter 3.5
(commencing with Section 6250) of Division 7 of Title 1 of the
Government Code).
(b) No person reporting data pursuant to this section shall be
liable for damages in any action based on the use or misuse of
patient-identifiable data that has been mailed or otherwise
transmitted to the office pursuant to the requirements of this
chapter.
(c) No communication of data or information by a data source to
the committee, the secretary or the office shall constitute a waiver
of privileges preserved by Sections 1156, 1156.1, or 1157 of the
Evidence Code or of Section 1370 of the Health and Safety Code.
(d) Information, documents or records from original sources
otherwise subject to discovery or introduction into evidence shall
not be immune from discovery or introduction into evidence merely
because they were also provided to the committee or office pursuant
to this chapter.
128870. The office shall solicit input from interested
stakeholders and convene meetings to receive input on the creation of
a fee schedule to implement the provisions of this section. This
stakeholder process shall occur in a manner that allows for
meaningful review of the information and fiscal projections by the
interested stakeholders. After the stakeholder process has been
convened and used in the development of a proposal, the office shall
provide the secretary with a proposal that will, to the extent
possible, identify a fee schedule and other financial resources for
the implementation of this chapter and allow for the recovery of
costs of implementing centralized data collection, and effective
analysis and reporting activities under this chapter.
(b) The schedule of fees, including specific fees charged to each
data source and user, shall be approved by the Legislature and
Governor in the annual Budget Act. The annual budget of the committee
shall be presented and justified to the Legislature with an annual
work plan including a description of the data sources, data,
elements, use of the data and the number and frequency of reports to
be made available.
(c) The total amount of fees charged by the office to a hospital
to recover the costs of implementing this chapter, and the fees
charged to that hospital pursuant to Section 127280 of the Health and
Safety Code shall not exceed 0.06 percent of the gross operating
cost of the hospital for the provision of health care services for
its last fiscal year that ended on or before June 30 of the preceding
calendar year.
128871. There is hereby established in the State Treasury the
Health Care Cost and Quality Transparency Fund to support the
implementation of this chapter. All fees and contributions collected
by the office pursuant to Section 128870 shall be deposited in this
fund and used to support the implementation of this chapter.
Expenditures shall be subject to appropriation in the annual Budget
Act.
SEC. 33. SEC. 34. Section 130545 is
added to the Health and Safety Code, to read:
130545. (a) The State Department of Health Care Services shall
identify best practices related to e-prescribing modalities and
standards and shall make recommendations for statewide adoption of
e-prescribing on or before January 1, 2009.
(b) The State Department of Health Care Services shall develop a
pilot program to foster the adoption and use of electronic
prescribing by health care providers that contract with Medi-Cal. The
implementation of this Medi-Cal pilot is contingent upon the
availability of FFP or federal grant funds. The department may
provide electronic prescribing technology, including equipment and
software, to participating Medi-Cal prescribers.
SEC. 35. Section 10113.10 is added to the Insurance
Code, to read:
10113.10. (a) Notwithstanding Section 10270.95 and except as
provided in subdivision (f), a health insurer selling health
insurance shall, on and after July 1, 2010, expend in the form of
health care benefits no less than 85 percent of the aggregate dues,
fees, premiums, or other periodic payments received by the insurer.
For purposes of this section, the insurer may deduct from the
aggregate dues, fees, premiums, or other periodic payments received
by the insurer the amount of income taxes or other taxes that the
insurer expensed. For purposes of this section, "health care benefits"
shall mean health care services that are either provided or
reimbursed by the insurer or its contracted providers as benefits to
its policyholders and insurers.
(b) (1) In addition to the health care benefits defined in
subdivision (a), health care benefits shall include:
(A) The costs of programs or activities, including training and
the provision of informational materials that are determined as part
of the regulation under subdivision (d) to improve the provision of
quality care, improve health care outcomes, or encourage the use of
evidence-based medicine.
(B) Disease management expenses using cost-effective
evidence-based guidelines.
(C) Plan medical advice by telephone.
(D) Payments to providers as risk pool payments of
pay-for-performance initiatives.
(2) Health care benefits shall not include administrative costs
listed in Section 1300.78 of Title 28 of the California Code of
Regulations in effect on January 1, 2007.
(c) To assess compliance with this section, an insurer with a
valid certificate of authority may average its total costs across all
health insurance policies issued, amended, or renewed in California,
and all health care service plan contracts issued, amended, or
renewed by its affiliated health care service plans which are
licensed to operate in California, except for those contracts listed
in subdivision (f) of Section 1378.1 of the Health and Safety Code.
(d) The department and the Department of Managed Health Care shall
jointly adopt and amend regulations to implement this section and
Section 1378.1 of the Health and Safety Code to establish uniform
reporting by health care service plans and insurers of the
information necessary to determine compliance with this section.
These regulations may include additional elements in the definition
of health care benefits not identified in paragraph (1) of
subdivision (b) in order to consistently operationalize the
requirements of this section among health insurers and health plans,
but such regulatory additions shall be consistent with the
legislative intent that health insurers expend at least 85 percent of
aggregate payments as provided in subdivision (a) on health care
benefits.
(e) The department may exclude from the determination of
compliance with the requirement of subdivision (a) any new health
insurance policies for up to the first two years that these policies
are offered for sale in California, provided that the commissioner
determines that the new policies are substantially different from the
existing policies being issued, amended, or renewed by the insurer
seeking the exclusion.
(f) This section shall not apply to Medicare supplement policies,
short-term limited duration health insurance policies, vision-only,
dental-only, behavioral health-only, pharmacy-only policies,
CHAMPUS-supplement or TRICARE-supplement insurance policies, or to
hospital indemnity, hospital-only, accident-only, or specified
disease insurance policies that do not pay benefits on a fixed
benefit, cash payment only basis.
SEC. 34. SEC. 36. Section 10113.11
is added to the Insurance Code, to read:
10113.11. (a) A health insurer may provide notice by electronic
transmission and shall be deemed to have fully complied with the
specific statutory or regulatory requirements to provide notice by
United States mail to an applicant or insured if it complies with all
of the following requirements:
(1) Obtains written authorization from the
applicant or insured to provide notices by electronic transmission
and to cease providing notices by United States mail. The
authorization shall be renewed by the insured on an annual basis. If
the health insurer obtains an application for coverage by electronic
transmission, it may obtain authorization by electronic transmission
from the applicant or insured to provide notices by electronic
transmission. "Authorization" means the agreement by
the applicant, enrollee, or subscriber through interactive voice
response, the Internet or other similar medium, or in writing, to
receive notices by electronic transmission.
(2) Uses an authorization form process
, approved by the department, in which the applicant or insured
confirms understanding of the type of notice that will be
provided by electronic transmission. understanding of
and agreement with the specific notices or materials that will be
provided by electronic transmission.
(3) Complies with the specific statutory or regulatory
requirements as to the content of the notices it sends by electronic
transmission.
(4) Provides for the privacy of the notice as required by state
and federal laws and regulations.
(5) Allows the applicant or insured at any time to terminate the
authorization to provide notices by electronic transmission and
receive the notices through the United States mail , if specific
statutory or regulatory requirements require notice by mail .
(6) Sends the electronic transmission of a notice to the last
known electronic address of the applicant or insured. If the
electronic transmission of the notice fails to reach its intended
recipient twice, the health insurer shall resume sending all notices
to the last known United States mail address of the applicant or
insured.
(7) Maintains an Internet Web site where the applicant or insured
may access the notices sent by electronic transmission.
(8) Informs the applicant, enrollee, or subscriber how to
terminate the authorization to provide notices sent by electronic
transmission.
(b) A health insurer shall not use the electronic mail address of
an applicant or insured that it obtained for the purposes of
providing notice pursuant to subdivision (a) for any purpose other
than sending a notice as described in subdivision (a)
communicating with the enrollee, applicant, or
subscriber about his or her policy, plan, or benefits .
(c) No person other than the applicant or insured to whom the
medical information in the notice pertains or a representative
lawfully authorized to act on behalf of the applicant or insured, may
authorize the transmission of medical information by electronic
transmission. "Medical information" for these purposes shall have the
meaning set forth in subdivision (g) of Section 56.05 of the Civil
Code. The transmission of any medical information, as that term
is used in subdivision (g) of Section 56.05 of the Civil Code, shall
comply with the Confidentiality of Medical Information Act (Part 2.6
(commencing with Section 56) of Division 1 of the Civil Code).
(d) A notice transmitted electronically pursuant to this section
is a private and confidential communication, and it shall be unlawful
for a person, other than the applicant or insured to whom the notice
is addressed, to read or otherwise gain access to the notice without
the express, specific permission of the notice's addressee. This
subdivision shall not apply to a provider
health care provider, health insurer, or contractor of a health care
provider or health insurer of an applicant or insured if the
provider health care provider, health care
insurer, or contractor of a health care provider or health insurer
is authorized to have access to the medical information
pursuant to the Confidentiality of Medical Information Act (Part 2.6
(commencing with Section 56) of Division 1 of the Civil Code).
(e) A health insurer may not impose additional fees or a
differential if an applicant or insured elects not to receive notices
by electronic transmissions.
(f) "Notice" for purposes of this section includes
Notices that may be made by electronic transmission
include explanation of benefits; distribution of the insurer's
policies and certificates of coverage; a list of contracting
providers; responses to inquiries from insureds; changes in rates
pursuant to Sections 10113.7 and 10901.3; and notices related to
underwriting decisions pursuant to Section 791.10. A health
insurer may not transmit through electronic means any notice that may
affect the eligibility for, or continued enrollment in, coverage.
SEC. 35. SEC. 37. Section 10123.56
is added to the Insurance Code, to read:
10123.56. (a) Every policy of group health insurance that is
offered, delivered, amended, or renewed on or after January 1, 2009,
that covers hospital, medical, or surgical expenses shall offer
coverage that includes a Healthy Action Incentives and Rewards
Program as described in subdivision (c). Every insurer shall
communicate the availability of this coverage to all group
policyholders and to all prospective group policyholders with whom
they are negotiating.
(b) Every policy of insurance that is offered, delivered, amended,
or renewed on or after January 1, 2009, that covers hospital,
medical, or surgical expenses on an individual basis shall offer
individuals at least one coverage choice that includes a Healthy
Action Incentives and Rewards Program that meets the requirements
described in subdivision (c).
(c) For purposes of this section, benefits for a Healthy Action
Incentives and Rewards Program shall provide for all of the
following:
(1) Health risk appraisals that collect information from
individuals to assess overall health status and to identify risk
factors, including, but not limited to, smoking and smokeless tobacco
use, alcohol abuse, drug use, and nutrition and physical activity
practices.
(2) A followup appointment with a licensed health care
professional acting within his or her scope of practice to review the
results of the health risk appraisal and discuss any recommended
actions.
(3) Incentives or rewards for policyholders to became more engaged
in their health care and to make appropriate choices that support
good health, including obtaining health risk appraisals, screening
services, immunizations, or participating in healthy lifestyle
programs or practices. These programs or practices may include, but
need not be limited to, smoking cessation, physical activity, or
nutrition. Incentives may include, but need not be limited to, health
premium reductions, differential copayment or coinsurance amounts,
and cash payments. Rewards may include, but need not be limited to,
nonmedical pharmacy products or services not otherwise covered under
a policyholder's health insurance contract, gym memberships, and
weight management programs. If an insurer elects to offer an
incentive in the form of a reduction in the premium amount, the
premium reduction shall be standardized and uniform for all groups
and policyholders and shall be offered only after the successful
completion of the specified program or practice by the insured or
policyholder.
(d) This section is in addition to, and does not replace, any
other section in this code concerning requirements for insurers to
provide health care screening services, childhood immunizations,
adult immunizations, and preventive care services.
(e) (1) Notwithstanding any other provision of law, the provision
of healthy incentives and rewards pursuant to this section by a
health care provider, or his or her agent, that meets the
requirements of this section, Section 1367.38 of the Health and
Safety Code, or Section 14132.105 of the Welfare and Institutions
Code shall not be considered or construed as an unlawful practice,
act, kickback, bribe, rebate, remuneration, offer, coupon, product,
payment, or any other form of compensation by a provider or his or
her agent, directly or indirectly, overtly or covertly, in exchange
for another to obtain, participate, or otherwise undergo or receive
health care services.
(2) Notwithstanding any other provision of law, incentives
authorized pursuant to this section are not subject to the penalties,
discipline, limitations, or sanctions imposed under law to preclude
or prohibit, as an unlawful practice, bribe, kickback or other act,
the offering or delivery of a rebate, remuneration, offer, coupon,
product, rebate, payment, or any other form of compensation by the
provider, or his or her agent, directly or indirectly, overtly or
covertly, in exchange for another to obtain, participate, or
otherwise undergo or receive health care services.
(3) Notwithstanding any other provision of law, the provision of
healthy incentives and rewards pursuant to this section by a health
care provider, or his or her agent, that meets the requirements of
this section shall not be considered or construed as an inducement to
enroll.
(f) This section shall only be implemented if and to the extent
allowed under federal law. If any portion of this section is held to
be invalid, as determined by a final judgment of a court of competent
jurisdiction, this section shall become inoperative.
10123.56. (a) On and after January 1, 2009, every policy of
health insurance, except for a Medicare supplement policy, that
covers hospital, medical, or surgical expenses on a group basis shall
offer to include a Healthy Action Incentives and Rewards Program, as
described in subdivision (b), to be implemented in connection with a
health insurance policy, under such terms and conditions as may be
agreed upon between the group policyholder and the health insurer.
Every insurer shall communicate the availability of that program to
all prospective group policyholders with whom it is negotiating and
to existing group policyholders upon renewal.
(b) For purposes of this section, benefits under a Healthy Action
Incentives and Rewards Program shall provide for all of the following
where appropriate:
(1) Health risk appraisals to be used to assess an individual's
overall health status and to identify risk factors, including, but
not limited to, smoking and smokeless tobacco use, alcohol abuse,
drug use, and nutrition and physical activity practices.
(2) Enrollee access to an appropriate health care provider, as
medically necessary, to review and address the results of the health
risk appraisal. In addition, where appropriate, the Healthy Action
Incentives and Rewards Program may include follow-up through a
Web-based tool or a nurse hotline either in combination with a
referral to a provider or separately.
(3) Incentives or rewards for policyholders to become more engaged
in their health care and to make appropriate choices that support
good health, including obtaining health risk appraisals, screening
services, immunizations, or participating in healthy lifestyle
programs and practices. These programs and practices may include, but
need not be limited to, smoking cessation, physical activity, or
nutrition. Incentives may include, but need not be limited to, health
premium reductions, differential copayment or coinsurance amounts,
and cash payments. Rewards may include, but need not be limited to,
nonprescription pharmacy products or services not otherwise covered
under a policyholder's health insurance policy, exercise classes, gym
memberships, and weight management programs. If an insurer elects to
offer an incentive in the form of a reduction in the premium amount,
the premium reduction shall be standardized and uniform for all
groups and policyholders and shall be offered only after the
successful completion of the specified program or practice by the
insured or policyholder.
(c) (1) An insurer subject to this section shall offer and price
all Healthy Action Incentives and Rewards Programs approved by the
commissioner consistently across all groups, potential groups, and
individuals and offer and price the programs without regard to the
health status, prior claims experience, or risk profile of the
members of a group. An insurer shall not condition the offer,
delivery, or renewal of a policy that covers hospital, medical or
surgical expenses on the group's purchase, acceptance or enrollment
in a Healthy Action Incentives and Rewards Program. Rewards and
incentives established in the program may not be designed, provided,
or withheld based on the actual health service utilization or health
care claims experience of the group, members
of the group, or the individual.
(2) In order to demonstrate compliance with this section, a health
insurer shall file the program description and design with the
commissioner. The commissioner shall disapprove, suspend, or withdraw
any product or program developed pursuant to this section if the
commissioner determines that the product or product design has the
effect of allowing insurers to market, sell, or price health coverage
for healthier lower risk profile groups in a preferential manner
that is inconsistent with the requirement to offer, market and sell
products pursuant to Chapter 8 (commencing with Section 10700) and
Chapter 9.6 (commencing with Section 10919).
(d) This section shall supplement, and not supplant, any other
section in this chapter concerning requirements for insurers to
provide health care services, childhood immunizations, adult
immunizations, and preventive care services.
(e) This section shall only be implemented if and to the extent
allowed under federal law. If any portion of this section is held to
be invalid, as determined by a final judgment of a court of competent
jurisdiction, this section shall become inoperative.
SEC. 36. Chapter 1.6 (commencing with Section
10199.10) is added to Part 2 of Division 2 of the Insurance Code, to
read:
CHAPTER 1.6. CALIFORNIA INDIVIDUAL COVERAGE GUARANTEE ISSUE
10199.10. It is the intent of the Legislature to do both of the
following:
(a) Guarantee the availability and renewability of health coverage
through the private health insurance market to individuals.
(b) Require that health care service plans and health insurers
issuing coverage in the individual market compete on the basis of
price, quality, and service, and not on risk selection.
10199.104. (a) On or before September 1, 2008, the commissioner
and the Director of the Department of Managed Health Care shall
jointly adopt regulations governing five classes of individual health
benefit plans that health care service plans and health insurers
shall make available.
(b) Within 90 days of the adoption of the regulations required by
subdivision (a), the commissioner and the Director of the Department
of Managed Health Care shall jointly approve five classes of
individual health benefit plans for each health care service plan and
health insurer participating in the individual market, with each
class having an increased level of benefits beginning with the lowest
class. Within each class, the commissioner and the Director of the
Department of Managed Health Care shall jointly approve one baseline
HMO and one baseline PPO, each of which is the lowest cost product to
be issued by health care service plans and health insurers in the
individual market. The classes of benefits jointly approved by the
commissioner and the Director of the Department of Managed Health
Care shall reflect a reasonable continuum between the class with the
lowest level of benefits and the class with the highest level of
benefits, shall permit reasonable benefit variation that will allow
for a diverse market within each class, and shall be enforced
consistently between health care service plans and health insurers in
the same marketplace regardless of licensure.
(c) In approving the five classes of plans filed by health care
service plans and health insurers, the commissioner and the Director
of the Department of Managed Health Care shall do both of the
following:
(1) Jointly determine that the plans provide reasonable benefit
variation, allowing a diverse market.
(2) Jointly require either (A) that benefits within each class are
standard and uniform across all plans and insurers, or (B) that
benefits offered in each class are actuarially equivalent across all
plans and insurers.
10199.105. On and after July 1, 2010, health care service plans
and health insurers participating in the individual market shall
guarantee issue the five classes of approved health benefit plans and
shall, at the same time, discontinue offering and selling health
benefit plans other than those within the five approved classes of
benefit plans in the individual market.
10199.106. Individuals may purchase a health benefit plan from
one of the five classes of approved plans on a guaranteed issue
basis. After selecting and purchasing a health benefit plan within a
class of benefits, an individual may change plans only as set forth
in this section. For individuals enrolled as a family, the subscriber
may change classes for himself or herself, or for all dependents:
(a) Annually in the month of the subscriber's birth, an individual
may select a different individual plan from another health care
service plan or insurer, within the same class of benefits or the
next higher level of benefits.
(b) Annually in the month of the subscriber's birth, an individual
may move up one class of benefits offered by the same health care
service plan or health insurer.
(c) At any time a subscriber may move to a lower class of
benefits.
(d) At significant life events, the insured may move up to a
higher class of benefits as follows:
(1) Upon marriage or entering into a domestic partnership.
(2) Upon divorce.
(3) Upon the death of a spouse or domestic partner, on whose
health coverage an individual was a dependent.
(4) Upon the birth or adoption of a child.
(e) A dependent child may terminate coverage under a parent's plan
and select coverage for his or her own account following his or her
18th birthday.
(f) If a subscriber becomes eligible for group benefits, Medicare,
or other benefits, and selects those benefits in lieu of his or her
individual coverage, the dependent spouse or domestic partner may
become the subscriber. If there is no dependent spouse or domestic
partner enrolled in the plan, the oldest child may become the
subscriber.
10199.107. At the time an individual applies for health coverage
from a health care service plan or health insurer participating in
the individual market, an individual shall provide information as
required by a standardized health status questionnaire to assist
plans and insurers in identifying persons in need of disease
management. Health care service plans and health insurers may not use
information provided on the questionnaire to decline coverage, or to
limit an individual's choice of health care benefit plan.
10199.108. Health benefit plans shall become effective within 31
days of receipt of the individual's application, standardized health
status questionnaire, and premium payment.
10199.109. Health care service plans and health insurers may
reject an application for health care benefits if the individual does
not reside or work in a plan's or insurer's approved service area.
10199.110. The commissioner or the Director of the Department of
Managed Health Care, as applicable, may require a health care service
plan or health insurer to discontinue the offering of health care
benefits, or acceptance of applications from individuals, upon a
determination by the director or commissioner that the plan or
insurer does not have sufficient financial viability, or
organizational and administrative capacity, to ensure the delivery of
health care benefits to its enrollees or insureds.
10199.111. All health care benefits offered to individuals shall
be renewable with respect to all individuals and dependents at the
option of the subscriber, except:
(a) For nonpayment of the required premiums by the subscriber.
(b) When the plan or insurer withdraws from the individual health
care market, subject to rules and requirements jointly adopted by the
director and the Insurance Commissioner.
10199.112. No health care service plan or health insurer shall,
directly or indirectly, enter into any contract, agreement, or
arrangement with a solicitor that provides for or results in the
compensation paid to a solicitor for the sale of a health care
service plan contract or health insurance policy to be varied because
of the health status, claims experience, occupation, or geographic
location of the individual, provided the geographic location is
within the plan's or insurer's approved service area.
10199.113. This chapter shall not apply to individual health plan
contracts for coverage of Medicare services pursuant to contracts
with the United States government, Medi-Cal contracts with the State
Department of Health Care Services, Healthy Families Program
contracts with the Managed Risk Medical Insurance Board, high-risk
pool contracts with the Major Risk Medical Insurance Program,
Medicare supplement policies, long-term care policies, specialized
health plan contracts, or contracts issued to individuals who secure
coverage from Cal-CHIPP.
10199.114. (a) A health care service plan or health insurer may
rate its entire portfolio of health benefit plans in accordance with
expected costs or other market considerations, but the rate for each
plan or insurer shall be set in relation to the balance of the
portfolio as certified by an actuary. Each benefit plan shall be
priced as determined by each health care service plan or health
insurer to reflect the difference in benefit variation, or the
effectiveness of a provider network, but may not adjust the rate for
a specific plan for risk selection. A health care service plan's or
health insurer's rates shall use the same rating factors for age,
family size, and geographic location for each individual health care
benefit plan it issues. Rates for health care benefits may vary from
applicant to applicant only by any of the following:
(1) Age of the subscriber, as determined by the commissioner and
the Director of the Department of Managed Health Care.
(2) Family size in categories determined by the commissioner and
the Director of the Department of Managed Health Care.
(3) Geographic rate regions as determined by the commissioner and
the Director of the Department of Managed Health Care.
(4) Health improvement discounts. A health care service plan or
health insurer may reduce copayments or offer premium discounts for
nonsmokers, individuals demonstrating weight loss through a
measurable health improvement program, or individuals actively
participating in a disease management program, provided discounts are
approved by the commissioner and the Director of the Department of
Managed Health Care.
(b) The commissioner and the Director of the Department of Managed
Health Care shall take into consideration the age, family size, and
geographic region rating categories applicable to small group
coverage contracts pursuant to Section 1357 of the Health and Safety
Code and Section 10700 of this code in implementing this section.
10199.115. The first term of each health benefit plan contract or
policy issued shall be from the effective date through the last day
of the month immediately preceding the subscriber's next birthday.
Contracts or policies may be renewed by the subscriber as set forth
in this chapter.
10199.116 This chapter, other than Section 10199.104, shall not
become operative until the date that the provisions of Section
8899.50 of the Government Code are implemented.
SEC. 37. Section 10293.5 is added to the
Insurance Code, to read:
10293.5. (a) The commissioner shall adopt regulations no later
than July 1, 2008, requiring that at least 85 percent of health
insurance premium revenue received by a health insurer be spent on
health care services. The regulations shall also define "health care
services."
(b) As used in this section, health insurance shall have the same
meaning as in subdivision (b) of Section 106.
(c) The requirements of this chapter shall not apply to a Medicare
supplement, vision-only, dental-only, or CHAMPUS-supplement
insurance or to hospital indemnity, hospital-only, accident-only, or
specified disease insurance that does not pay benefits on a fixed
benefit, cash payment only basis.
SEC. 38. Section 10176.15 is added to the Insurance
Code, to read:
10176.15. For purposes of subdivision (d) of Section 10176.10,
"comparable benefits" means any health insurance policy in the same
coverage choice category, as determined by the department and the
Department of Managed Health Care pursuant to Section 10930, that a
closed block of business would have been in had that block of
business not been closed. If the coverage benefits provided in the
closed block of business do not meet or exceed the minimum health
care coverage requirements of Section 10923, they shall be deemed
comparable to the lowest coverage choice category.
SEC. 39. Section 10273.6 of the Insurance Code is
amended to read:
10273.6. All individual health benefit plans, except for
short-term limited duration insurance, shall be renewable with
respect to all eligible individuals or dependents at the option of
the individual except as follows:
(a) For nonpayment of the required premiums or contributions by
the individual in accordance with the terms of the health insurance
coverage or the timeliness of the payments.
(b) For fraud or intentional misrepresentation of material fact
under the terms of the coverage by the individual.
(c) Movement of the individual contractholder outside the service
area but only if coverage is terminated uniformly without regard to
any health status-related factor of covered individuals.
(d) If the disability insurer ceases to provide or arrange for the
provision of health care services for new individual health benefit
plans in this state; provided, however, that the following conditions
are satisfied:
(1) Notice of the decision to cease new or existing individual
health benefit plans in this state is provided to the commissioner
and to the individual policy or contractholder at least 180 days
prior to discontinuation of that coverage.
(2) Individual health benefit plans shall not be canceled for 180
days after the date of the notice required under paragraph (1) and
for that business of a disability insurer that remains in force, any
disability insurer that ceases to offer for sale new individual
health benefit plans shall continue to be governed by this section
with respect to business conducted under this section.
(3) A disability insurer that ceases to write new individual
health benefit plans in this state after the effective date of this
section shall be prohibited from offering for sale individual health
benefit plans in this state for a period of five years from the date
of notice to the commissioner.
(e) If the disability insurer withdraws an individual health
benefit plan from the market; provided, that the disability insurer
notifies all affected individuals and the commissioner at least 90
days prior to the discontinuation of these plans, and that the
disability insurer makes available to the individual all health
benefit plans that it makes available to new individual businesses
without regard to a health status-related factor of enrolled
individuals or individuals who may become eligible for the coverage.
This section shall become inoperative on the date that Section
10937 becomes operative.
SEC. 38. SEC. 40. Section 10607 of
the Insurance Code is amended to read:
10607. In addition to the other disclosures required by this
chapter, every insurer and their employees or agents shall, when
presenting a plan for examination or sale to any individual or the
representative of a group consisting of 100 or fewer individuals,
disclose in writing the ratio of incurred claims to earned premiums
(loss-ratio) for the insurer's preceding calendar year for policies
with individuals and with groups of the same or similar size for the
insurer's preceding fiscal year.
SEC. 39. SEC. 41. Chapter 8.1
(commencing with Section 10760) is added to Part 2 of Division 2 of
the Insurance Code, to read:
CHAPTER 8.1. INSURANCE MARKET REFORM
10760. On and after January 1, 2010, the department, in
consultation with the Department of Managed Health Care, shall
require each health insurer with one million or more insureds in
California, based on the insurer's enrollment in the prior year, to
submit a good faith bid to the Managed Risk Medical Insurance Board
in order to be a participating plan through the California
Cooperative Health Insurance Purchasing Program (Cal-CHIPP) pursuant
to Part 6.45 (commencing with Section 12699.201).
10763. 10760. On and after July 1,
2010, all requirements in Chapter 8 (commencing with Section 10700)
applicable to offering, marketing, and selling health benefit plans
to small employers as defined in that chapter, including, but not
limited to, the obligation to fairly and affirmatively offer, market,
and sell all of the carrier's health benefit plan designs to all
employers, guaranteed renewal of all health benefit plan designs, use
of the risk adjustment factor, and the restriction of risk
categories to age, geographic region, and family composition as
described in that chapter, shall be applicable to all health benefit
plan designs offered to all employers with 100 or fewer eligible
employees, except as follows:
(a) For small employers with 2 to 50, inclusive, eligible
employees, all requirements in that chapter shall apply.
(b) For employers with 51 to 100, inclusive, eligible employees,
all requirements in that chapter shall apply, except that the carrier
may develop health care coverage benefit plan designs to fairly and
affirmatively market only to employer groups of 51 to 100 eligible
employees and apply a risk adjustment factor of no more than 115
percent and no less than 85 percent of the standard employee risk
rate .
10764. It is the intent of the Legislature to establish a
mechanism by which the state may defray the costs of an insured's
public program participation by taking advantage of other
opportunities for coverage available to that insured.
10765. (a) As used in this chapter, "health insurance" shall have
the same meaning as in subdivision (b) of Section 106.
(b) The requirements of this chapter shall not apply to a Medicare
supplement, vision-only, dental-only, or CHAMPUS-supplement
insurance or to hospital indemnity, hospital-only, accident-only, or
specified disease insurance that does not pay benefits on a fixed
benefit, cash payment only basis.
10766. This chapter shall become operative on July 1, 2008.
SEC. 40. Section 12693.43 of the Insurance Code
is amended to read:
12693.43. (a) Applicants applying to the purchasing pool shall
agree to pay family contributions, unless the applicant has a family
contribution sponsor. Family contribution amounts consist of the
following two components:
(1) The flat fees described in subdivision (b) or (d).
(2) Any amounts that are charged to the program by participating
health, dental, and vision plans selected by the applicant that
exceed the cost to the program of the highest cost family value
package in a given geographic area.
(b) In each geographic area, the board shall designate one or more
family value packages for which the required total family
contribution is:
(1) Seven dollars ($7) per child with a maximum required
contribution of fourteen dollars ($14) per month per family for
applicants with annual household incomes up to and including 150
percent of the federal poverty level.
(2) Nine dollars ($9) per child with a maximum required
contribution of twenty-seven dollars ($27) per month per family for
applicants with annual household incomes greater than 150 percent and
up to and including 200 percent of the federal poverty level and for
applicants on behalf of children described in clause (ii) of
subparagraph (A) of paragraph (6) of subdivision (a) of Section
12693.70.
(3) On and after July 1, 2005, fifteen dollars ($15) per child
with a maximum required contribution of forty-five dollars ($45) per
month per family for applicants with annual household income to which
subparagraph (B) of paragraph (6) of subdivision (a) of Section
12693.70 is applicable. Notwithstanding any other provision of law,
if an application with an effective date prior to July 1, 2005, was
based on annual household income to which subparagraph (B) of
paragraph (6) of subdivision (a) of Section 12693.70 is applicable,
then this paragraph shall be applicable to the applicant on July 1,
2005, unless subparagraph (B) of paragraph (6) of subdivision (a) of
Section 12693.70 is no longer applicable to the relevant family
income. The program shall provide prior notice to any applicant for
currently enrolled subscribers whose premium will increase on July 1,
2005, pursuant to this paragraph and, prior to the date the premium
increase takes effect, shall provide that applicant with an
opportunity to demonstrate that subparagraph (B) of paragraph (6) of
subdivision (a) of Section 12693.70 is no longer applicable to the
relevant family income.
(4) On and after July 1, 2010, twenty-five dollars ($25) per child
with a maximum required contribution of seventy-five dollars ($75)
per month per family for applicants with annual household incomes
greater than 250 percent and up to and including 300 percent of the
federal poverty level.
(c) Combinations of health, dental, and vision plans that are more
expensive to the program than the highest cost family value package
may be offered to and selected by applicants. However, the cost to
the program of those combinations that exceeds the price to the
program of the highest cost family value package shall be paid by the
applicant as part of the family contribution.
(d) The board shall provide a family contribution discount to
those applicants who select the health plan in a geographic area that
has been designated as the Community Provider Plan. The discount
shall reduce the portion of the family contribution described in
subdivision (b) to the following:
(1) A family contribution of four dollars ($4) per child with a
maximum required contribution of eight dollars ($8) per month per
family for applicants with annual household incomes up to and
including 150 percent of the federal poverty level.
(2) Six dollars ($6) per child with a maximum required
contribution of eighteen dollars ($18) per month per family for
applicants with annual household incomes greater than 150 percent and
up to and including 200 percent of the federal poverty level and for
applicants on behalf of children described in clause (ii) of
subparagraph (A) of paragraph (6) of subdivision (a) of Section
12693.70.
(3) On and after July 1, 2005, twelve dollars ($12) per child with
a maximum required contribution of thirty-six dollars ($36) per
month per family for applicants with annual household income to which
subparagraph (B) of paragraph (6) of subdivision (a) of Section
12693.70 is applicable. Notwithstanding any other provision of law,
if an application with an effective date prior to July 1, 2005, was
based on annual household income to which subparagraph (B) of
paragraph (6) of subdivision (a) of Section 12693.70 is applicable,
then this paragraph shall be applicable to the applicant on July 1,
2005, unless subparagraph (B) of paragraph (6) of subdivision (a) of
Section 12693.70 is no longer applicable to the relevant family
income. The program shall provide prior notice to any applicant for
currently enrolled subscribers whose premium will increase on July 1,
2005, pursuant to this paragraph and, prior to the date the premium
increase takes effect, shall provide that applicant with an
opportunity to demonstrate that subparagraph (B) of paragraph (6) of
subdivision (a) of Section 12693.70 is no longer applicable to the
relevant family income.
(4) On and after July 1, 2010, twenty-two dollars ($22) per child
with a maximum required contribution of sixty-six dollars
($66) per month per family for
applicants with annual household incomes greater than 250 percent and
up to and including 300 percent of the federal poverty level.
(e) Applicants, but not family contribution sponsors, who pay
three months of required family contributions in advance shall
receive the fourth consecutive month of coverage with no family
contribution required.
(f) Applicants, but not family contribution sponsors, who pay the
required family contributions by an approved means of electronic fund
transfer shall receive a 25-percent discount from the required
family contributions.
(g) It is the intent of the Legislature that the family
contribution amounts described in this section comply with the
premium cost sharing limits contained in Section 2103 of Title XXI of
the Social Security Act. If the amounts described in subdivision (a)
are not approved by the federal government, the board may adjust
these amounts to the extent required to achieve approval of the state
plan.
(h) The adoption and one readoption of regulations to implement
paragraph (3) of subdivision (b) and paragraph (3) of subdivision (d)
shall be deemed to be an emergency and necessary for the immediate
preservation of public peace, health, and safety, or general welfare
for purposes of Sections 11346.1 and 11349.6 of the Government Code,
and the board is hereby exempted from the requirement that it
describe specific facts showing the need for immediate action and
from review by the Office of Administrative Law. For purposes of
subdivision (e) of Section 11346.1 of the Government Code, the
120-day period, as applicable to the effective period of an emergency
regulatory action and submission of specified materials to the
Office of Administrative Law, is hereby extended to 180 days.
SEC. 42. Chapter 9.6 (commencing with Section 10919) is
added to Part 2 of Division 2 of the Insurance Code, to read:
CHAPTER 9.6. INDIVIDUAL MARKET REFORM AND GUARANTEE ISSUE
10919. It is the intent of the Legislature to do both of the
following:
(a) Guarantee the availability and renewability of health coverage
through the private health insurance market to individuals.
(b) Require that health care service plans and health insurers
issuing coverage in the individual market compete on the basis of
price, quality, and service, and not on risk selection.
10920. For purposes of this chapter, the following terms shall
have the following meanings:
(a) "Anniversary date" means the calendar date one year from, and
each subsequent year thereafter, the date an individual enrolls in a
health insurance policy.
(b) "Coverage choice category" means the category of health
insurance policies and health plan contracts established by the
department and the Department of Managed Health Care pursuant to
Section 10930.
(c) "Dependent" means the spouse, registered domestic partner, or
child of an individual, subject to applicable terms of the health
insurance policy covering the individual.
(d) "Health insurance policy" means an individual disability
insurance policy offered, sold, amended, or renewed to individuals
and their dependents that provides coverage for hospital, medical, or
surgical benefits. The term shall not include any of the following
kinds of insurance:
(1) Accidental death and accidental death and dismemberment.
(2) Disability insurance, including hospital indemnity,
accident-only, and specified disease insurance that pays benefits on
a fixed benefit, cash-payment-only basis.
(3) Credit disability, as defined in Section 779.2.
(4) Coverage issued as a supplement to liability insurance.
(5) Disability income, as defined in subdivision (i) of Section
799.01.
(6) Insurance under which benefits are payable with or without
regard to fault and that is statutorily required to be contained in
any liability insurance policy or equivalent self-insurance.
(7) Insurance arising out of a workers' compensation or similar
law.
(8) Long-term care coverage.
(9) Dental coverage.
(10) Vision coverage.
(11) Medicare supplement, CHAMPUS-supplement or
Tricare-supplement, behavioral health-only, pharmacy-only, hospital
indemnity, hospital-only, accident-only, or specified disease
insurance that does not pay benefits on a fixed benefit,
cash-payment-only basis.
(e) "Health insurer" means a disability insurer that offers and
sells health insurance.
(f) "Health plan" means a health care service plan, as defined in
subdivision (f) of Section 1345 of the Health and Safety Code, that
is lawfully engaged in providing, arranging, paying for, or
reimbursing the cost of health care services and is offering or
selling health care service plan contracts in the individual market.
A health plan shall not include a specialized health care service
plan.
(g) "Health plan contract" means an individual health care service
plan contract offered, sold, amended, or renewed to individuals and
their dependents and shall not include long-term care insurance,
dental, or vision coverage. In addition, the term shall not include a
specialized health care service plan contract, as defined in
subdivision (o) of Section 1345 of the Health and Safety Code.
(h) "Purchasing pool" means the program established under Part
6.45 (commencing with Section 12699.201).
(i) "Rating period" means the period for which premium rates
established by an insurer are in effect and shall be no less than 12
months beginning on the effective date of the subscriber's health
insurance policy.
(j) "Risk adjustment factor" means the percentage adjustment to be
applied to the standard risk rate for a particular individual, based
upon any expected deviations from standard claims due to the health
status of the individual.
(k) "Risk category" means the following characteristics of an
individual: age, geographic region, and family composition of the
individual, plus the health insurance policy selected by the
individual.
(1) No more than the following age categories may be used in
determining premium rates:
Under 1.
1-18.
19-24.
25-29.
30-34.
35-39.
40-44.
45-49.
50-54.
55-59.
60-64.
65 and over.
However, for the 65 and over age category, separate premium rates
may be specified depending upon whether coverage under the health
insurance policy will be primary or secondary to benefits provided by
the federal Medicare Program pursuant to Title XVIII of the federal
Social Security Act.
(2) Health insurers shall determine rates using no more than the
following family size categories:
(A) Single.
(B) More than one child 18 years of age or under and no adults.
(C) Married couple or registered domestic partners.
(D) One adult and child.
(E) One adult and children.
(F) Married couple and child or children, or registered domestic
partners and child or children.
(3) (A) In determining rates for individuals, a health insurer
that operates statewide shall use no more than nine geographic
regions in the state, have no region smaller than an area in which
the first three digits of all its ZIP Codes are in common within a
county, and divide no county into more than two regions. Health
insurers shall be deemed to be operating statewide if their coverage
area includes 90 percent or more of the state's population.
Geographic regions established pursuant to this section shall, as a
group, cover the entire state, and the area encompassed in a
geographic region shall be separate and distinct from areas
encompassed in other geographic regions. Geographic regions may be
noncontiguous.
(B) (i) In determining rates for individuals, a health insurer
that does not operate statewide shall use no more than the number of
geographic regions in the state that is determined by the following
formula: the population, as determined in the last federal census, of
all counties that are included in their entirety in a health insurer'
s service area divided by the total population of the state, as
determined in the last federal census, multiplied by nine. The
resulting number shall be rounded to the nearest whole integer. No
region may be smaller than an area in which the first three digits of
all its ZIP Codes are in common within a county and no county may be
divided into more than two regions. The area encompassed in a
geographic region shall be separate and distinct from areas
encompassed in other geographic regions. Geographic regions may be
noncontiguous. No health insurer shall have less than one geographic
area.
(ii) If the formula in clause (i) results in a health insurer that
operates in more than one county having only one geographic region,
then the formula in clause (i) shall not apply and the health insurer
may have two geographic regions, provided that no county is divided
into more than one region.
Nothing in this section shall be construed to require a health
insurer to establish a new service area or to offer health insurance
on a statewide basis, outside of the health insurer's existing
service area.
(4) A health insurer may rate its entire portfolio of health
insurance policies in accordance with expected costs or other market
considerations, but the rate for each health insurance policy shall
be set in relation to the balance of the portfolio, as certified by
an actuary.
(5) Each health insurance policy shall be priced as determined by
each health insurer to reflect the difference in benefit variation,
or the effectiveness of a provider network, and each insurer may
adjust the rate for a specific policy for risk selection only to the
extent permitted by subdivision (d) of Section 10937.
(l) "Standard risk rate" means the rate applicable to an
individual in a particular risk category.
(m) "Subscriber" means the individual who is enrolled in a health
insurance policy, is the basis for eligibility for enrollment in the
policy, and is responsible for payment to the health insurer.
10922. On and after March 31, 2009, a health insurer shall not
offer to an individual a health insurance policy that provides less
than minimum creditable coverage, as defined by the Managed Risk
Medical Insurance Board pursuant to Section 12739.50.
10925. (a) Notwithstanding Chapter 15 (commencing with Section
8899.50) of Division 1 of Title 2 of the Government Code and Section
10922, a health insurer may renew an individual health insurance
policy for anyone enrolled on March 1, 2009, indefinitely without
increasing benefits to meet the required minimum creditable coverage
established by the Managed Risk Medical Insurance Board pursuant to
Section 12739.50. Those individual health insurance policies,
however, may not be offered to new enrollment, unless they are
amended to meet the minimum creditable coverage established by the
Managed Risk Medical Insurance Board pursuant to Section 12739.50. In
offering those policies for renewal, rates determined by health
insurers shall meet the requirements of Sections 10920 and 10937. An
individual who maintains coverage in a health insurance policy
pursuant to this section shall be deemed to be in compliance with
Section 8899.50 of the Government Code.
(b) A health insurer shall not cease to renew coverage in an
individual health insurance policy described in subdivision (a)
except as permitted pursuant to Section 10176.10.
(c) On and after March 1, 2009, the director shall not approve for
offer and sale in this state any individual health insurance policy
that was not approved prior to that date and that does not meet or
exceed the minimum creditable coverage requirements established by
the Managed Risk Medical Insurance Board pursuant to Section
12739.50.
(d) Effective July 1, 2010, all individual health insurance
policies approved, offered, and sold prior to March 1, 2009, that do
not comply with minimum creditable coverage standards adopted by the
Managed Risk Medical Insurance Board pursuant to Section 12739.50,
exclusively because the policy includes a lifetime benefit maximum
inconsistent with the standard minimum creditable coverage shall be
modified to comply with the standards for minimum creditable
coverage.
(e) This section shall become operative on January 1, 2009.
10926. A health insurer shall, in addition to complying with the
applicable provisions of this code and the applicable rules of the
commissioner, comply with this chapter.
10927. This chapter shall not apply to health insurance policies
for coverage of Medicare services pursuant to contracts with the
United States government, Medicare supplement, Medi-Cal contracts
with the State Department of Health Care Services, Healthy Families
Program contracts with the Managed Risk Medical Insurance Board,
long-term care coverage, specialized health care service plan
contracts, as defined in subdivision (o) of Section 1345 of the
Health and Safety Code, or the purchasing pool established under Part
6.45 (commencing with Section 12699.201).
10928. (a) Except for the health insurance policies described in
subdivision (a) of Section 10925, a health insurer shall fairly and
affirmatively offer, market, and sell all of the insurer's policies
that are sold to individuals to all individuals in each service area
in which the health insurer provides or arranges for the provision of
health care services.
(b) A health insurer may not reject an application from an
individual, or his or her dependents, for an individual health
insurance policy, or refuse to renew an individual health insurance
policy, if all of the following requirements are met:
(1) The individual agrees to make the required premium payments.
(2) The individual and his or her dependents who are to be covered
by the health insurance policy work or reside in the service area in
which the health insurer provides or otherwise arranges for the
provision of health care services.
(3) The individual provides the information requested on the
application to determine the appropriate rate.
(c) Notwithstanding subdivision (b), if an individual, or his or
her dependents, applies for a health insurance policy in a coverage
choice category for which he or she is not eligible pursuant to
Section 10934, the health insurer may reject that application
provided that the insurer also offers the individual and his or her
dependents coverage in the appropriate coverage choice category.
(d) Notwithstanding subdivision (b), a health insurer is not
required to renew an individual health insurance policy if any of the
conditions listed in subdivision (a) of Section 10936 are met.
(e) Notwithstanding any other provision of this chapter or of a
health insurance policy, every health insurer shall comply with the
requirements of Chapter 7 (commencing with Section 3750) of Part 1 of
Division 9 of the Family Code and Section 14124.94 of the Welfare
and Institutions Code.
(f) A health insurer may request an individual to provide
information on his or her health status or health history, or that of
his or her dependents, in the application for enrollment to the
extent required to apply the risk adjustment factor permitted
pursuant to subdivision (d) of Section 10937. The health insurer
shall use the standardized form and uniform evaluation process
developed for this purpose by the Director of the Department of
Managed Health Care pursuant to Section 1399.840 of the Health and
Safety Code. After the individual health insurance policy's effective
date of coverage, a health insurer may request that the enrollee
provide information voluntarily on his or her health history or
health status, or that of his or her dependents, for purposes of
providing care management services, including disease management
services.
(g) Notwithstanding subdivision (b), a health insurer may reject
an application for any person who has been a resident of California
for six months or less unless one of the following applies: (1) the
person is a federally eligible defined individual pursuant to Section
10785 or Section 1399.801 of the Health and Safety Code; or (2) the
person can demonstrate a minimum of two years of prior creditable
coverage at least equivalent to the minimum creditable coverage
developed by the Managed Risk Medical Insurance Board pursuant to
Section 12739.50 and providing the person applies for coverage in
California within 62 days of termination or cancellation of the prior
creditable coverage.
(h) Notwithstanding subdivision (b), a health insurer may reject
an application for coverage from any person who has been granted a
temporary or permanent hardship exemption from the requirement to
maintain minimum creditable coverage by the Managed Risk Medical
Insurance Board pursuant to Section 12739.501 during the time period
of the exemption, as determined by the board.
(i) Notwithstanding Section 10944, this section shall not become
operative until the authority under Section 12739.51 is implemented.
10929. (a) A health insurer shall not impose any preexisting
condition exclusions, waivered conditions, or postenrollment waiting
or affiliation periods on any health insurance policy issued,
amended, or renewed pursuant to this chapter, except as provided
under subdivision (b) of this section.
(b) After the requirement to guarantee issue of coverage under
Section 10928 has been in effect for nine months, a health insurer
may impose a preexisting condition exclusion of up to 12 months for
any person who fails to comply for more than 62 days with the
requirement to maintain coverage under Section 8899.50 of the
Government Code, providing, however, that the exclusion may not
exceed the length of time that the person failed to comply with the
requirements of that section. "Preexisting condition exclusion" means
a contract provision that excludes coverage for charges or expenses
incurred during a specified period following the individual's
effective date of coverage, as to a condition for which medical
advice, diagnosis, care, or treatment was recommended or received
during a specified period immediately preceding the effective date of
coverage. For purposes of this section, preexisting condition
provisions contained in individual health insurance policies may
relate only to conditions for which medical advice, diagnosis, care,
or treatment, including use of prescription drugs, was recommended or
received from a licensed health practitioner during the 12 months
immediately preceding the effective date of coverage.
10930. (a) On or before April 1, 2009, the department and the
Department of Managed Health Care shall jointly, by regulation,
develop a system to categorize all health insurance polices and
health plan contracts offered and sold to individuals pursuant to
this chapter and Article 11.6 (commencing with Section 1399.820) of
Chapter 2.2 of Division 2 of the Health and Safety Code into five
coverage choice categories. These coverage choice categories shall do
all of the following:
(1) Reflect a reasonable continuum between the coverage choice
category with the lowest level of health care benefits and the
coverage choice category with the highest level of health care
benefits.
(2) Permit reasonable benefit variation that will allow for a
diverse market within each coverage choice category.
(3) Be enforced consistently between health insurers and health
plans in the same marketplace regardless of licensure.
(4) Within each coverage choice category, include one standard
health maintenance organization (HMO) and one standard preferred
provider organization (PPO), each of which is the health insurance
policy with the lowest benefit level in that category and for that
type of contract.
(b) All health insurers shall submit the filings required pursuant
to Section 10939 no later than October 1, 2009, for all individual
health insurance policies to be sold on or after July 1, 2010, to
comply with this chapter, and thereafter any additional health
insurance policies shall be filed pursuant to Section 10939. The
commissioner shall categorize each health insurance policy offered by
a health insurer into the appropriate coverage choice category on or
before March 31, 2010.
(c) To facilitate consumer comparison shopping, all health
insurers that offer coverage on an individual basis shall offer at
least one health insurance policy in each coverage choice category,
including offering at least one of the standard contracts developed
pursuant to paragraph (4) of subdivision (a), but a health insurer
may offer multiple products in each category.
(d) If a health insurer offers a specific type of health insurance
policy in one coverage choice category, it must offer that specific
type of health insurance policy in each coverage choice category. A
"type of health insurance policy" includes a health maintenance
organization model, a preferred provider organization model, an
exclusive provider organization model, a traditional indemnity model,
and a point of service model.
(e) Health insurers shall have flexibility in establishing
provider networks, provided that access to care standards pursuant to
Section 10133.5 are met, and provided that the provider network
offered for one health insurance policy in one coverage choice
category is offered for at least one health insurance policy in each
coverage choice category.
(f) A health insurer shall establish prices for its products that
reflect a reasonable continuum between the products offered in the
coverage choice category with the lowest level of benefits and the
products offered in the coverage choice category with the highest
level of benefits. A health plan shall not establish a standard risk
rate for a product in a coverage choice category at a lower rate than
a product offered in a lower coverage choice category.
(g) The coverage choice category with the lowest level of benefits
shall include the benefits that meet the requirements of minimum
creditable coverage as determined by the Managed Risk Medical
Insurance Board pursuant to Section 12739.50.
10931. A health insurer shall offer coverage for a Healthy Action
Incentives and Rewards Program that complies with the requirements
of Section 10123.56 in at least one health insurance policy in every
coverage choice category.
10932. When an individual submits a premium payment, based on the
quoted premium charges, and that payment is delivered or postmarked,
whichever occurs earlier, within the first 15 days of the month,
coverage under the health insurance policy shall become effective no
later than the first day of the following month. When that payment is
either delivered or postmarked after the 15th day of a month,
coverage shall become effective no later than the first day of the
second month following delivery or postmark of the payment.
10933. Except as provided in Section 10928, a health insurer is
not required to offer an individual health insurance policy and may
reject an application for an individual health insurance policy in
the case of either of the following:
(a) The individual and dependents who are to be covered by the
health insurance policy do not work or reside in a health insurer's
approved service area.
(b) (1)
Within a specific service area or portion of a service area, if a
health insurer reasonably anticipates and demonstrates to the
satisfaction of the commissioner that it will not have sufficient
health care delivery resources to assure that health care services
will be available and accessible to the eligible individual and
dependents of the individual because of its obligations to existing
enrollees.
(2) A health insurer that cannot offer a health insurance policy
to individuals because it is lacking in sufficient health care
delivery resources within a service area or a portion of a service
area may not offer a health insurance policy in the area in which the
health insurer is not offering coverage to individuals until the
health insurer notifies the commissioner that it has the ability to
deliver services to new enrollees, and certifies to the commissioner
that from the date of the notice it will enroll all individuals and
groups requesting coverage in that area from the health insurer.
(c) A person who has been a resident of California for six months
or less unless one of the following applies: (1) the person is a
federally eligible defined individual as defined in Section 10785 or
Section 1399.801 of the Health and Safety Code; or (2) the person can
demonstrate a minimum of two years of prior creditable coverage at
least equivalent to the minimum creditable coverage developed by the
Managed Risk Medical Insurance Board pursuant to Section 12739.50 and
providing the person applies for coverage in California within 62
days of termination or cancellation of the prior creditable coverage.
(d) Any person who has been granted a temporary or permanent
hardship exemption from the requirement to maintain minimum
creditable coverage by the Managed Risk Medical Insurance Board
pursuant to subdivision (e) of Section 12739.50, during the time
period of the exemption, as determined by the board.
10934. (a) If an individual disenrolls from a health insurance
policy or health plan contract or if the individual's health
insurance policy or health plan contract is canceled pursuant to
Section 10936 or Section 1399.839 of the Health and Safety Code prior
to the anniversary date of the health insurance policy or health
plan contract, subsequent enrollment in an individual health
insurance policy or individual health plan contract shall be limited
to the same coverage choice category the individual was enrolled in
prior to disenrollment or cancellation.
(b) (1) An individual may change to a health insurance policy in a
different coverage choice category only on the anniversary date of
the subscriber or upon a qualifying event.
(2) In no case, however, may an individual move up more than one
coverage choice category on the anniversary date of the subscriber
unless there is also a qualifying event.
(c) An individual health insurance policy described in subdivision
(a) of Section 10925 that does not meet or exceed the minimum health
care coverage requirements of Section 12739.50 shall be deemed to be
the lowest coverage choice category for purposes of this section.
(d) On and after January 1, 2011, an individual who fails to
comply with the provisions of Chapter 15 (commencing with Section
8899.50) of Division 1 of Title 2 of the Government Code for more
than 62 days may only enroll in a health insurance policy or health
plan contract in the lowest coverage choice category. Upon the
individual's anniversary date, the individual may move to a higher
coverage choice category pursuant to subdivision (b).
(e) For purposes of this section, a qualifying event occurs upon
any of the following:
(1) Upon the death of the subscriber, on whose qualifying coverage
an individual was a dependent.
(2) Upon marriage of the subscriber or entrance by the subscriber
into a domestic partnership pursuant to Section 298.5 of the Family
Code.
(3) Upon divorce or legal separation of an individual from the
subscriber.
(4) Upon loss of dependent status by a dependent enrolled in group
health care coverage through a health care service plan or a health
insurer.
(5) Upon the birth or adoption of a child.
(6) Upon loss of minimum creditable coverage as defined by the
Managed Risk Medical Insurance Board pursuant to Section 12739.50.
10935. The commissioner may require a health insurer to
discontinue the offering of policies or acceptance of applications
from any individual upon a determination by the commissioner that the
health insurer does not have sufficient financial viability, or
organizational and administrative capacity to ensure the delivery of
health care services to its enrollees.
10936. All health insurance policies offered pursuant to this
chapter shall be renewable with respect to all individuals and
dependents at the option of the subscriber and shall not be canceled
except for the following reasons:
(a) Failure to pay any charges for coverage provided pursuant to
the contract if the subscriber has been duly notified and billed for
those charges and at least 15 days has elapsed since the date of
notification.
(b) Fraud or intentional misrepresentation of material fact under
the terms of the health insurance policy by the individual.
(c) Fraud or deception in the use of the services or facilities of
the health insurer or knowingly permitting that fraud or deception
by another.
(d) Movement of the subscriber outside the health insurer's
service area.
(e) If the health insurer ceases to provide or arrange for the
provision of health care services for new or existing individual
health insurance policies in this state, provided, however, that the
following conditions are satisfied:
(1) Notice of the decision to cease new or existing individual
health insurance policies in the state is provided to the
commissioner and to the individual at least 180 days prior to
discontinuation of that coverage.
(2) Individual health insurance policies shall not be canceled for
180 days after the date of the notice required under paragraph (1)
and for that business of a health insurer that remains in force, any
health insurer that ceases to offer for sale new individual health
insurance policies shall continue to be governed by this chapter with
respect to business conducted under this chapter.
(3) A health insurer that ceases to write new individual health
insurance policies in this state after the effective date of this
section shall be prohibited from offering for sale individual health
insurance policies in this state for a period of five years from the
date of notice to the commissioner. The commissioner may permit a
health insurer to offer and sell individual health insurance policies
in this state before the five-year time period has expired if the
commissioner determines that it is in the best interest of the state
and necessary to preserve the integrity of the health care market.
(f) If the health insurer withdraws an individual health insurance
policy from the market, provided that the health insurer notifies
all affected individuals and the commissioner at least 90 days prior
to the discontinuation of these health insurance policies, and that
the health insurer makes available to the individual all health
insurance policies with comparable benefits that it makes available
to new individual business.
10937. Premiums for health insurance policies offered or
delivered by health insurers on or after the effective date of this
chapter shall be subject to the following requirements:
(a) The premium for new or existing business shall be the standard
risk rate for an individual in a particular risk category.
(b) The premium rates shall be in effect for no less than 12
months from the date of the health insurance policy.
(c) When determining the premium rate for more than one covered
individual, the health insurer shall determine the rate based on the
standard risk rate for the subscriber. If more than one individual is
a subscriber, the premium rate shall be based on the age of the
youngest spouse or registered domestic partner.
(d) (1) Notwithstanding subdivision (a), for the first two years
following the implementation of this section, a health insurer may
apply a risk adjustment factor to the standard risk rate that may not
be more than 120 percent or less than 80 percent of the applicable
standard risk rate. In determining the risk adjustment factor, a
health insurer shall use the standardized form and process developed
by the Director of the Department of Managed Health Care pursuant to
subdivision (f) of Section 1399.840 of the Health and Safety Code.
(2) After the first two years following the implementation of this
section, the adjustments applicable under paragraph (1) shall not be
more than 110 percent or less than 90 percent of the standard risk
rate.
(3) Upon the renewal of any contract, the risk adjustment factor
applied to the individual's rate may not be more than 5 percentage
points different than the factor applied to that rate prior to
renewal. The same limitation shall be applied to individuals with
respect to the risk adjustment factor applicable for the purchase of
a new product where the individual's prior health insurer has
discontinued that product.
(4) After the first four years following the implementation of
this section, a health insurer shall base rates on the standard risk
rate with no risk adjustment factor.
(e) The commissioner and the Director of the Department of Managed
Health Care shall jointly establish a maximum limit on the ratio
between the standard risk rates for contracts for individuals in the
60 to 64 years of age, inclusive, category and contracts for
individuals in the 30 to 34 years of age, inclusive, category.
10938. (a) In connection with the offering for sale of any health
insurance policy to an individual, each health insurer shall make a
reasonable disclosure, as part of its solicitation and sales
materials, of all of the following:
(1) The provisions concerning the health insurer's right to change
premium rates on an annual basis and the factors other than
provision of services experience that affect changes in premium
rates.
(2) Provisions relating to the guaranteed issue and renewal of
individual health insurance policies.
(3) Provisions relating to the individual's right to obtain any
health insurance policy the individual is eligible to enroll in
pursuant to Sections 10928 and 10934.
(4) The availability, upon request, of a listing of all the
individual health insurance policies offered by the health insurer,
including the rates for each health insurance policy.
(b) Every solicitor or solicitor firm contracting with one or more
health insurers to solicit enrollments or subscriptions from
individuals shall, when providing information on health insurance
policies to an individual but making no specific recommendations on
particular health insurance policies, do both of the following:
(1) Advise the individual of the health insurer's obligation to
sell to any individual any health insurance policy it offers to
individuals and provide him or her, upon request, with the actual
rates that would be charged to that individual for a given health
insurance policy.
(2) Notify the individual that the solicitor or solicitor firm
will procure rate and benefit information for the individual on any
health insurance policy offered by a health insurer whose policy the
solicitor sells.
(c) Prior to filing an application for a particular individual
health insurance policy, the health insurer shall obtain a signed
statement from the individual acknowledging that the individual has
received the disclosures required by this section.
10939. (a) At least 20 business days prior to offering a health
insurance policy subject to this chapter, all health insurers shall
file with the commissioner a statement certifying that the health
insurer is in compliance with Sections 10920 and 10937. The certified
statement shall set forth the standard risk rate for each risk
category that will be used in setting the rates at which the contract
will be offered. Any action by the commissioner to disapprove,
suspend, or postpone the health insurer's use of a health insurance
policy shall be in writing, specifying the reasons that the health
insurance policy does not comply with the requirements of this
chapter.
(b) Prior to making any changes in the standard risk rates filed
with the commissioner pursuant to subdivision (a), the health insurer
shall file as an amendment a statement setting forth the changes and
certifying that the health insurer is in compliance with Sections
10920 and 10937. If the standard risk rate is being changed, a health
insurer may commence offering health insurance policies utilizing
the changed standard risk rate upon filing the certified statement
unless the commissioner disapproves the amendment by written notice.
(c) Periodic changes to the standard risk rate that a health
insurer proposes to implement over the course of up to 12 consecutive
months may be filed in conjunction with the certified statement
filed under subdivision (a) or (b).
(d) Each health insurer shall maintain at its principal place of
business all of the information required to be filed with the
commissioner pursuant to this chapter.
(e) This section shall become operative on July 1, 2009.
10940. (a) A health insurer shall include all of the following in
the statement filed pursuant to subdivision (a) of Section 10939:
(1) A summary explanation of the following for each health
insurance policy offered to individuals:
(A) Eligibility requirements.
(B) The full premium cost of each health insurance policy in each
risk category, as defined in subdivision (k) of Section 10920.
(C) When and under what circumstances benefits cease.
(D) Other coverage that may be available if benefits under the
described health insurance policy cease.
(E) The circumstances under which choice in the selection of
physicians and providers is permitted.
(F) Deductibles.
(G) Annual out-of-pocket maximums.
(2) A summary explanation of coverage for the following, together
with the corresponding copayments, coinsurance, and applicable
limitations for each health insurance policy offered to individuals:
(A) Professional services.
(B) Outpatient services.
(C) Preventive services.
(D) Hospitalization services.
(E) Emergency health coverage.
(F) Ambulance services.
(G) Prescription drug coverage.
(H) Durable medical equipment.
(I) Mental health and substance abuse services.
(J) Home health services.
(3) The telephone number or numbers that may be used by an
applicant to access a health insurer customer service representative
to request additional information about the health insurance policy.
(b) If any information provided pursuant to subdivision (a)
changes, the health insurer shall provide to the commissioner, on an
annual basis, an update of that information.
10941. The commissioner shall share the information provided by
health insurers pursuant to this article with the Office of the
Patient Advocate for purposes of the development, creation, and
maintenance of the comparative benefits matrix described in Section
1399.834 of the Health and Safety Code.
10943. (a) The commissioner may issue regulations that are
necessary to carry out the purposes of this chapter.
(b) Nothing in this chapter shall be construed as providing the
commissioner with rate regulation authority.
10944. Sections 10925 and 10930 shall become operative on January
1, 2009, and Section 10939 shall become operative on July 1, 2009.
All remaining sections of this chapter shall become operative on July
1, 2010.
SEC. 43. Section 12693.43 of the Insurance Code is
amended to read:
12693.43. (a) Applicants applying to the purchasing pool shall
agree to pay family contributions, unless the applicant has a family
contribution sponsor. Family contribution amounts consist of the
following two components:
(1) The flat fees described in subdivision (b) or (d).
(2) Any amounts that are charged to the program by participating
health, dental, and vision plans selected by the applicant that
exceed the cost to the program of the highest cost Family
Value Package family value package in a given
geographic area.
(b) In each geographic area, the board shall designate one or more
Family Value Packages family value packages
for which the required total family contribution is:
(1) Seven dollars ($7) per child with a maximum required
contribution of fourteen dollars ($14) per month per family for
applicants with annual household incomes up to and including 150
percent of the federal poverty level.
(2) Nine dollars ($9) per child with a maximum required
contribution of twenty-seven dollars ($27) per month per family for
applicants with annual household incomes greater than 150 percent and
up to and including 200 percent of the federal poverty level and for
applicants on behalf of children described in clause (ii) of
subparagraph (A) of paragraph (6) of subdivision (a) of Section
12693.70.
(3) On and after July 1, 2005, fifteen dollars ($15) per child
with a maximum required contribution of forty-five dollars ($45) per
month per family for applicants with annual household income to which
subparagraph (B) of paragraph (6) of subdivision (a) of Section
12693.70 is applicable. Notwithstanding any other provision of law,
if an application with an effective date prior to July 1, 2005, was
based on annual household income to which subparagraph (B) of
paragraph (6) of subdivision (a) of Section 12693.70 is applicable,
then this subparagraph paragraph shall
be applicable to the applicant on July 1, 2005, unless subparagraph
(B) of paragraph (6) of subdivision (a) of Section 12693.70 is no
longer applicable to the relevant family income. The program shall
provide prior notice to any applicant for currently enrolled
subscribers whose premium will increase on July 1, 2005, pursuant to
this subparagraph paragraph and, prior
to the date the premium increase takes effect, shall provide that
applicant with an opportunity to demonstrate that subparagraph (B) of
paragraph (6) of subdivision (a) of Section 12693.70 is no longer
applicable to the relevant family income. On and after July 1,
2009, this paragraph shall only apply to individuals to which clause
(i), but not clause (ii), of subparagraph (B) of paragraph (6) of
subdivision (a) of Section 12693.70 is applicable.
(4) On and after July 1, 2009, twenty-five dollars ($25) per child
with a maximum required contribution of seventy-five dollars ($75)
per month per family for applicants with annual household income to
which clause (ii) of subparagraph (B) of paragraph (6) of subdivision
(a) of Section 12693.70 is applicable.
(c) Combinations of health, dental, and vision plans that are more
expensive to the program than the highest cost Family Value
Package family value package may be offered to
and selected by applicants. However, the cost to the program of those
combinations that exceeds the price to the program of the highest
cost Family Value Package family value
package shall be paid by the applicant as part of the family
contribution.
(d) The board shall provide a family contribution discount to
those applicants who select the health plan in a geographic area that
has been designated as the Community Provider Plan. The discount
shall reduce the portion of the family contribution described in
subdivision (b) to the following:
(1) A family contribution of four dollars ($4) per child with a
maximum required contribution of eight dollars ($8) per month per
family for applicants with annual household incomes up to and
including 150 percent of the federal poverty level.
(2) Six dollars ($6) per child with a maximum required
contribution of eighteen dollars ($18) per month per family for
applicants with annual household incomes greater than 150 percent and
up to and including 200 percent of the federal poverty level and for
applicants on behalf of children described in clause (ii) of
subparagraph (A) of paragraph (6) of subdivision (a) of Section
12693.70.
(3) On and after July 1, 2005, twelve dollars ($12) per child with
a maximum required contribution of thirty-six dollars ($36) per
month per family for applicants with annual household income to which
subparagraph (B) of paragraph (6) of subdivision (a) of Section
12693.70 is applicable. Notwithstanding any other provision of law,
if an application with an effective date prior to July 1, 2005, was
based on annual household income to which subparagraph (B) of
paragraph (6) of subdivision (a) of Section 12693.70 is applicable,
then this subparagraph paragraph shall
be applicable to the applicant on July 1, 2005, unless subparagraph
(B) of paragraph (6) of subdivision (a) of Section 12693.70 is no
longer applicable to the relevant family income. The program shall
provide prior notice to any applicant for currently enrolled
subscribers whose premium will increase on July 1, 2005, pursuant to
this subparagraph paragraph and, prior
to the date the premium increase takes effect, shall provide that
applicant with an opportunity to demonstrate that subparagraph (B) of
paragraph (6) of subdivision (a) of Section 12693.70 is no longer
applicable to the relevant family income. On and after July 1,
2009, this paragraph shall only apply to individuals to which clause
(i) but not clause (ii) of subparagraph (B) of paragraph (6) of
subdivision (a) of Section 12693.70 is applicable.
(4) On and after July 1, 2009, twenty-two dollars ($22) with a
maximum required contribution of sixty-six dollars ($66) per month
per family for applicants with annual household income to which
clause (ii) of subparagraph (B) of paragraph (6) of subdivision (a)
of Section 12693.70 is applicable.
(e) Applicants, but not family contribution sponsors, who pay
three months of required family contributions in advance shall
receive the fourth consecutive month of coverage with no family
contribution required.
(f) Applicants, but not family contribution sponsors, who pay the
required family contributions by an approved means of electronic fund
transfer shall receive a 25-percent discount from the required
family contributions.
(g) It is the intent of the Legislature that the family
contribution amounts described in this section comply with the
premium cost sharing limits contained in Section 2103 of Title XXI of
the Social Security Act. If the amounts described in subdivision (a)
are not approved by the federal government, the board may adjust
these amounts to the extent required to achieve approval of the state
plan.
(h) The adoption and one readoption of regulations to implement
paragraph (3) of subdivision (b) and paragraph (3) of subdivision (d)
shall be deemed to be an emergency and necessary for the immediate
preservation of public peace, health, and safety, or general welfare
for purposes of Sections 11346.1 and 11349.6 of the Government Code,
and the board is hereby exempted from the requirement that it
describe specific facts showing the need for immediate action and
from review by the Office of Administrative Law. For purpose
purposes of subdivision (e) of Section 11346.1
of the Government code Code , the
120-day period, as applicable to the effective period of an emergency
regulatory action and submission of specified materials to the
Office of Administrative law, is hereby extended to 180 days.
SEC. 41. SEC. 44. Section 12693.56
is added to the Insurance Code, to read:
12693.56. (a) The board may provide or arrange for the provision
of an electronic personal health record for enrollees receiving
health care benefits, to the extent funds are appropriated for this
purpose. The record shall be provided for the purpose of providing
enrollees with information to assist them in understanding their
coverage benefits and managing their health care.
(b) At a minimum, the
personal health record shall provide access to real-time,
patient-specific information regarding eligibility for covered
benefits and cost sharing requirements. The access may be provided
through the use of an Internet-based system.
(c) In addition to the data required pursuant to subdivision (b),
the board may determine that the personal health record shall also
incorporate additional data, including, but not limited to,
laboratory results, prescription history, claims history, and
personal health information authorized or provided by the enrollee.
Inclusion of this additional data shall be at the option of the
enrollee.
(d) Systems or software that pertain to the personal health record
shall adhere to accepted national standards for interoperability,
privacy, and data exchange, or shall be certified by a nationally
recognized certification body.
(e) The personal health record shall comply with applicable state
and federal confidentiality and data security requirements.
SEC. 42. SEC. 45. Section 12693.57
is added to the Insurance Code, to read:
12693.57. Every person administering or providing benefits under
the program shall perform his or her duties in such a manner
as to secure for every subscriber the amount of assistance to which
the subscriber is entitled, without attempting to elicit any
information not elicit any information from the
applicant or subscriber that is not required to carry out the
provisions of law applicable to the program.
SEC. 43. SEC. 46. Section 12693.58
is added to the Insurance Code, to read:
12693.58. (a) All types of information, whether written or oral,
concerning an applicant, subscriber, or household member, made or
kept by any public officer or agency in connection with the
administration of any provision of this part shall be confidential,
and shall not be open to examination other than for purposes directly
connected with the administration of the Healthy Families Program or
the Medi-Cal program.
(b) Except as provided in this section and to the extent permitted
by federal law or regulation, all information about applicants,
subscribers, and household members to be safeguarded as provided for
in subdivision (a) includes, but is not limited to, names and
addresses, medical services provided, social and economic conditions
or circumstances, agency evaluation of personal information, and
medical data, including diagnosis and past history of disease or
disability.
(c) Purposes directly connected with the administration of the
Healthy Families Program or the Medi-Cal program encompass all
activities and responsibilities in which the Managed Risk Medical
Insurance Board or State Department of Health Care Services and their
agents, officers, trustees, employees, consultants, and contractors
engage to conduct program operations.
(c) Purposes directly connected with the administration of the
Healthy Families Program encompass all activities and
responsibilities in which the Managed Risk Medical Insurance Board
and its agents, officers, trustees, employees, consultants, and
contractors are engaged to conduct program operations. Purposes
directly connected with the administration of the Medi-Cal program
encompass all activities and responsibilities in which the State
Department of Health Care Services and its agents, officers,
trustees, employees, consultants, and contractors are engaged to
conduct program operations.
(d) Nothing in this section shall be construed to prohibit the
disclosure of information about the applicant, subscriber, or
household member when the applicant, subscriber, or household member
to whom the information pertains or the parent or adult with legal
custody provides express written authorization.
(e) Nothing in this part shall prohibit the disclosure of
protected health information as provided in 45 C.F.R.
164.512 Section 164.512 of Title 45 of the Code of
Federal Regulations .
(f) In the event of a conflict between this section and Section
14100.2 of the Welfare and Institutions Code, the latter section
shall control.
SEC. 44. SEC. 47. Section 12693.59
is added to the Insurance Code, to read:
12693.59. Nothing in this part shall preclude the board from
soliciting voluntary participation by applicants and subscribers in
communicating with the board, or with any other party, concerning
their needs as well as the needs of others who are not adequately
covered by existing private and public health care delivery systems
or concerning means of ensuring the availability of adequate health
care services. The board shall inform applicants and subscribers that
their participation is voluntary and shall inform them of the uses
for which the information is intended.
SEC. 45. SEC. 48. Section 12693.70
of the Insurance Code is amended to read:
12693.70. To be eligible to participate in the program, an
applicant shall meet all of the following requirements:
(a) Be an applicant applying on behalf of an eligible child, which
means a child who is all of the following:
(1) Less than 19 years of age. An application may be made on
behalf of a child not yet born up to three months prior to the
expected date of delivery. Coverage shall begin as soon as
administratively feasible, as determined by the board, after the
board receives notification of the birth. However, no child less than
12 months of age shall be eligible for coverage until 90 days after
the enactment of the Budget Act of 1999.
(2) Not eligible for no-cost full-scope Medi-Cal or Medicare
coverage at the time of application.
(3) In compliance with Sections 12693.71 and 12693.72.
(4) A child who meets citizenship and immigration status
requirements that are applicable to persons participating in the
program established by Title XXI of the Social Security Act, except
as specified in Section 12693.76. This paragraph shall
become inoperative on July 1, 2010.
(5) A resident of the State of California pursuant to Section 244
of the Government Code; or, if not a resident pursuant to Section 244
of the Government Code, is physically present in California and
entered the state with a job commitment or to seek employment,
whether or not employed at the time of application to or after
acceptance in, the program.
(6) (A) In either of the following:
(i) In a family with an annual or monthly household income equal
to or less than 200 percent of the federal poverty level.
(ii) When implemented by the board, subject to subdivision (b) of
Section 12693.765 and pursuant to this section, a child under the age
of two years who was delivered by a mother enrolled in the Access
for Infants and Mothers Program as described in Part 6.3 (commencing
with Section 12695). Commencing July 1, 2007, eligibility under this
subparagraph shall not include infants during any time they are
enrolled in employer-sponsored health insurance or are subject to an
exclusion pursuant to Section 12693.71 or 12693.72, or are enrolled
in the full scope of benefits under the Medi-Cal program at no share
of cost. For purposes of this clause, any infant born to a woman
whose enrollment in the Access for Infants and Mothers Program begins
after June 30, 2004, shall be automatically enrolled in the Healthy
Families Program, except during any time on or after July 1, 2007,
that the infant is enrolled in employer-sponsored health insurance or
is subject to an exclusion pursuant to Section 12693.71 or 12693.72,
or is enrolled in the full scope of benefits under the Medi-Cal
program at no share of cost. Except as otherwise specified in this
section, this enrollment shall cover the first 12 months of the
infant's life. At the end of the 12 months, as a condition of
continued eligibility, the applicant shall provide income
information. The infant shall be disenrolled if the gross annual
household income exceeds the income eligibility standard that was in
effect in the Access for Infants and Mothers Program at the time the
infant's mother became eligible, or following the two-month period
established in Section 12693.981 if the infant is eligible for
Medi-Cal with no share of cost. At the end of the second year,
infants shall again be screened for program eligibility pursuant to
this section, with income eligibility evaluated pursuant to clause
(i), subparagraphs (B) and (C), and paragraph (2) of subdivision (a).
(B) (i) All income over 200 percent of the
federal poverty level but less than or equal to 250 percent of the
federal poverty level shall be disregarded in calculating annual or
monthly household income. On
(ii) On and after July 1,
2010 2009 , all income over 250 percent
of the federal poverty level but less than or equal to 300 percent
of the federal poverty level shall also be disregarded in
calculating annual or monthly household income.
(C) In Prior to July 1, 2010, in a
family with an annual or monthly household income greater than 250
percent of the federal poverty level, any income deduction that is
applicable to a child under Medi-Cal shall be applied in determining
the annual or monthly household income. If the income deductions
reduce the annual or monthly household income to 250 percent or less
of the federal poverty level, subparagraph (B) shall be applied.
(D) On and after July 1, 2010 2009 ,
in a family with an annual or monthly household income greater than
300 percent of the federal poverty level, any income deduction that
is applicable to a child under the Medi-Cal program
Medi-Cal shall be applied in determining the
annual or monthly household income. If the income deductions reduce
the annual or monthly household income to 300 percent or less of the
federal poverty level, subparagraph (B) shall apply
be applied .
(b) The applicant shall agree to remain in the program for six
months, unless other coverage is obtained and proof of the coverage
is provided to the program.
(c) An applicant shall enroll all of the applicant's eligible
children in the program.
(d) In filing documentation to meet program eligibility
requirements, if the applicant's income documentation cannot be
provided, as defined in regulations promulgated by the board, the
applicant's signed statement as to the value or amount of income
shall be deemed to constitute verification.
(e) An applicant shall pay in full any family contributions owed
in arrears for any health, dental, or vision coverage provided by the
program within the prior 12 months.
(f) By January 2008, the board, in consultation with stakeholders,
shall implement processes by which applicants for subscribers may
certify income at the time of annual eligibility review, including
rules concerning which applicants shall be permitted to certify
income and the circumstances in which supplemental information or
documentation may be required. The board may terminate using these
processes not sooner than 90 days after providing notification to the
Chair of the Joint Legislative Budget Committee. This notification
shall articulate the specific reasons for the termination and shall
include all relevant data elements that are applicable to document
the reasons for the termination. Upon the request of the Chair of the
Joint Legislative Budget Committee, the board shall promptly provide
any additional clarifying information regarding implementation of
the processes required by this subdivision.
SEC. 46. SEC. 49 .
Section 12693.73 of the Insurance Code is amended to read:
12693.73. (a) Notwithstanding any other
provision of law, children excluded from coverage under Title XXI of
the Social Security Act are not eligible for coverage under the
program, except as specified in clause (ii) of subparagraph (A) of
paragraph (6) of subdivision (a) of Section 12693.70 and Section
12693.76. On
(b) On and after July 1,
2010 2009 , children who otherwise meet
eligibility requirements for the program but for their immigration
status are eligible for the program.
SEC. 47. SEC. 50. Section 12693.76
of the Insurance Code is amended to read:
12693.76. (a) Notwithstanding any other provision of law, a child
who is a qualified alien as defined in Section 1641 of Title 8 of
the United States Code Annotated shall not be determined ineligible
solely on the basis of his or her date of entry into the United
States.
(b) Notwithstanding any other provision of law, subdivision (a)
may only be implemented to the extent provided in the annual Budget
Act.
(c) Notwithstanding any other provision of law, any uninsured
parent or responsible adult who is a qualified alien, as defined in
Section 1641 of Title 8 of the United States Code, shall not be
determined to be ineligible solely on the basis of his or her date of
entry into the United States.
(d) Notwithstanding any other provision of law, subdivision (c)
may only be implemented to the extent of funding provided in the
annual Budget Act.
(e) Notwithstanding any other provision of law, on and after July
1, 2010 2009 , a child who is otherwise
eligible to participate in the program shall not be determined
ineligible solely on the basis of his or her immigration status.
SEC. 51. Section 12693.766 is added to the Insurance
Code, to read:
12693.766. (a) To establish that the individual meets the
requirements under subdivision (b) of Section 12693.73 and
subdivision (e) of Section 12693.76, the parent or caretaker relative
shall sign under penalty of perjury an attestation that the
individual is not described in any of the categories enumerated on
the attestation for which federal financial participation for
full-scope services is available.
(b) In implementing this section, the board shall consult with
stakeholders, including, but not limited to, consumer advocates and
counties.
(c) Nothing in this section shall be construed to limit a child's
access to Medi-Cal or Healthy Families eligibility under existing
law.
(d) This section shall become operative July 1, 2009.
SEC. 52. Section 12694.5 is added to the Insurance
Code, to read:
12694.5. Upon implementation of Section 14005.311 of the Welfare
and Institutions Code, a county may make determinations of
eligibility for the Healthy Families Program and for the Cal-CHIPP
Healthy Families Plan provided by the program established pursuant to
Part 6.45 (commencing with Section 12699.201).
SEC. 48. SEC. 53. Part 6.45
(commencing with Section 12699.201) is added to Division 2 of the
Insurance Code, to read:
PART 6.45. THE CALIFORNIA COOPERATIVE HEALTH INSURANCE
PURCHASING PROGRAM
CHAPTER 1. GENERAL PROVISIONS
12699.201. For the purposes of this part, the following terms
have the following meanings:
(a) "Benefit plan design" means a specific health coverage product
offered for sale and includes services covered and the levels of
copayments, deductibles, and annual out-of-pocket expenses, and may
include the professional providers who are to provide those services
and the sites where those services are to be provided. A benefit plan
design may also be an integrated system for the financing and
delivery of quality health care services that has significant
incentives for the covered individuals to use the system.
(b) "Board" means the Managed Risk Medical Insurance Board.
(c) "California Cooperative Health Insurance Purchasing Program"
or "Cal-CHIPP" means the statewide purchasing pool established
pursuant to this part and administered by the board.
(d) "Dependent" means the spouse, domestic partner, minor child of
an enrollee, and a child 18 years of age or older of the enrollee
who is dependent on the enrollee, as defined by the board.
(d) "Dependent" means the spouse, child, or registered domestic
partner of an individual, subject to applicable terms of the health
plan contract covering the individual.
(e) "Enrollee" means an individual who is eligible for, and
participates in, Cal-CHIPP.
(f) "Fund" means the California Health Trust Fund established
pursuant to Section 12699.212.
(g) "Cal-CHIPP Healthy Families plan" shall mean health care
coverage provided through a health care service plan or a health
insurer that provides for individuals eligible pursuant to
Section 12699.211.01 of the Insurance Code, or Section
14005.301 or 14005.307 14005.305 of the
Welfare and Institutions Code, coverage that meets the
requirements of federal law and that, at a minimum,
provides the same covered services and benefits required under the
Knox-Keene Health Care Service Plan Act of 1975 (Chapter 2.2
(commencing with Section 1340) of Division 2 of the Health and Safety
Code) plus prescription drug benefits. Prescription drug
benefits shall, at minimum, provide coverage for outpatient generic
prescription drugs and brand name drugs when a prescription drug that
is prescribed has no generic equivalent or when an individual is
unable to achieve the desired therapeutic result with a generic drug.
Prescription drug coverage may be subject to utilization controls.
(h) "Participating dental plan" means either a dental insurer
holding a valid certificate of authority from the commissioner or a
specialized health care service plan, as defined by subdivision (o)
of Section 1345 of the Health and Safety Code, that contracts with
the board to provide or to sell dental coverage to
enrollees.
(i) "Participating health plan" means either a private health
insurer holding a valid outstanding certificate of authority from the
commissioner or a health care service plan as defined under
subdivision (f) of Section 1345 of the Health and Safety Code that
contracts with the board to provide or to sell coverage in Cal-CHIPP
and, pursuant to its contract with the board, provides, arranges,
pays for, or reimburses the costs of health services for Cal-CHIPP
enrollees.
(j) "Participating vision care plan" means either an insurer
holding a valid certificate of authority from the commissioner that
issues vision-only coverage or a specialized health care service
plan, as defined by subdivision (o) of Section 1345 of the Health and
Safety Code, that contracts with the board to provide or to
sell vision coverage to enrollees.
CHAPTER 2. ADMINISTRATION
12699.202. (a) The board shall be responsible for establishing
Cal-CHIPP and administering this part.
(b) The board may do all of the following consistent with the
standards of this part:
(1) Determine eligibility and enrollment ,
enrollment, and disenrollment criteria and processes for
Cal-CHIPP consistent with the eligibility standards in Chapter 3
(commencing with Section 12699.211) and, for Cal-CHIPP Healthy
Families plan enrollees, the enrollment process developed
pursuant to Section 12699.211.04 .
(2) Determine the participation requirements for enrollees.
(3) Determine the participation requirements and the standards and
selection criteria for participating health, dental, and vision care
plans, including reasonable limits on a plan's administrative costs.
(4) Determine when an enrollee's coverage commences and the extent
and scope of coverage.
(5) Determine premium schedules, collect the premiums, and
administer subsidies to eligible enrollees.
(6) Determine rates paid to participating health, dental, and
vision care plans.
(7) Provide, or make available, coverage through participating
health plans in Cal-CHIPP.
(8) Provide, or make available, coverage through participating
dental and vision care plans in Cal-CHIPP.
(9) Provide for the processing of applications and the enrollment
and disenrollment of enrollees.
(10) Determine and approve the benefit designs and cost-sharing
provisions for participating health, dental, and vision care plans.
(11) Enter into contracts.
(12) Sue and be sued.
(13) Employ necessary staff.
(14) Authorize expenditures, as necessary, from the fund to pay
program expenses that exceed enrollee contributions and to administer
Cal-CHIPP.
(15) Issue rules and regulations, as necessary.
(16) Maintain enrollment and expenditures to ensure that
expenditures do not exceed the amount of revenue available in the
fund, and if sufficient revenue is not available to pay the estimated
expenditures, the board shall institute appropriate measures to
ensure fiscal solvency. This paragraph shall not be construed to
allow the board to deny enrollment of a person who otherwise meets
the eligibility requirements of Chapter 3 (commencing with Section
12699.211) in order to ensure the fiscal solvency of the fund.
(17) Establish the criteria and procedures through which employers
direct employees' premium dollars, withheld under the terms of a
cafeteria plan pursuant to Section 4801 of the Unemployment
Insurance Code , to Cal-CHIPP to be credited against the
employees' premium obligations.
(18) Share information obtained pursuant to this part with the
Employment Development Department solely for the purpose of the
administration and enforcement of this part.
(19) Exercise all powers reasonably necessary to carry out the
powers and responsibilities expressly granted or imposed by this
part.
12699.203. The board shall develop and offer a variety of benefit
plan designs, including, but not limited to the following:
(a) A Cal-CHIPP Healthy Families plan for parents and caretaker
relatives pursuant to Section 14005.301 of the Welfare and
Institutions Code and for adults eligible for coverage pursuant to
Section 14005.307 of the Welfare and Institutions Code with incomes
greater than 100 percent of the federal poverty level.
(b) A low-cost plan for Cal-CHIPP enrollees who are adults with a
family income at or below 300 percent of the federal poverty level
who are ineligible for coverage through Section 14005.301 or
14005.307 of the Welfare and Institutions Code or the Medi-Cal
program.
(c) A high-value plan for all Cal-CHIPP enrollees with a family
income above 300 percent of the federal poverty level.
(d) All benefit plan designs shall meet the requirements of the
Knox-Keene Health Care Service Plan Act of 1975 (Chapter 2.2
(commencing with Section 1340) of Division 2 of the Health and Safety
Code) and shall include prescription drug benefits, combined with
enrollee cost-sharing levels that promote prevention and health
maintenance, including appropriate cost sharing for physician office
visits, diagnostic laboratory services, and maintenance medications
to manage chronic diseases, such as asthma, diabetes, and heart
disease.
(e) In determining the enrollee and dependent deductibles,
coinsurance, and copayment requirements, the board shall consider
whether those costs would deter an enrollee or his or her dependents
from obtaining appropriate and timely care, including those enrollees
with a low- or moderate-family income. The board shall also consider
the impact of these costs on an enrollee's ability to afford health
care services.
(f) The board shall consult with the Insurance Commissioner, the
Director of the Department of Managed Health Care, and the Director
of Health Care Services.
12699.203. In developing the benefit plan designs, the board
shall comply with all of the following:
(a) The board shall take into consideration the levels of health
care coverage provided in the state and medical economic factors as
may be deemed appropriate.
(b) The Cal-CHIPP Healthy Families plan shall meet the
requirements of the Knox-Keene Health Care Service Plan Act of 1975
(Chapter 2.2 (commencing with Section 1340) of Division 2 of the
Health and Safety Code), and shall include prescription drug
benefits, combined with enrollee cost-sharing levels that promote
prevention and health maintenance, including appropriate cost-sharing
for physician office visits, diagnostic laboratory services, and
maintenance medications to manage chronic diseases. Prescription drug
benefits shall, at minimum, provide coverage for outpatient generic
prescription drugs and brand name drugs when a prescription drug that
is prescribed has no generic equivalent or when an individual is
unable to achieve the desired therapeutic result with a generic drug.
Prescription drug coverage may be subject to utilization controls.
(c) For individuals ineligible for a Cal-CHIPP Healthy Families
plan, the board shall make available, at a minimum, one product that
offers the same benefits as the minimum health care coverage defined
in Section 12739.50 and one product each from coverage choice
categories 3 and 5, established pursuant to Section 10930 and Section
1399.832 of the Health and Safety Code. Notwithstanding Section
1399.828 of the Health and Safety Code and Section 10927, this
coverage shall be subject to the same rules as set forth in Article
11.6 (commencing with Section 1399.820) of Chapters 2.2 of Division 2
of the Health and Safety Code or as set forth in Chapter 9.6
(commencing with Section 10919) of Part 2.
(d) The board may make available, through the program, dental and
vision coverage for individuals eligible for and enrolled in other
health benefit coverage through the pool under this part, if the
board makes all of the following determinations:
(1) Making that coverage available will provide a significant
benefit for the health coverage marketplace in the state.
(2) Making that coverage available will be cost effective.
(3) The board can make that coverage available on a guarantee
issue basis without undue risk of adverse selection.
(e) In determining
enrollee and dependent cost-sharing for the Cal-CHIPP Healthy
Families plan, the board shall consider whether those costs would
deter an enrollee or his or her dependents from obtaining appropriate
and timely care, including those enrollees with a low or moderate
family income. The board shall also consider the impact of these
costs on an enrollee's ability to afford health care services.
(f) The board shall consult with the Insurance Commissioner, the
Director of the Department of Managed Health Care, and the Director
of Health Care Services. As a condition of eligibility for the
Cal-CHIPP Healthy Families plan, enrollees shall provide all
necessary information and documentation to meet the minimum federal
requirements necessary for federal claiming.
12699.204. (a) The board may adjust premiums at a public meeting
of the board after providing, at minimum, 30
60 days' public notice of the adjustment. In making the
adjustment, the board shall take into account the costs of health
care typically paid for by employers and employees in California.
(b) Notwithstanding subdivision (a), the amount of the premium
paid by an employee with a household income at or below 300 percent
of the federal poverty level shall not exceed 0 to 5 percent of the
household income, depending on the income, after taking into account
the tax savings the employee is able to realize by using the
cafeteria plan made available by his or her employer.
(c)
(b) The following premiums shall apply to coverage
under this part for the population eligible for coverage pursuant to
Section 14005.301 of the Welfare and Institutions Code.
12699.211.01 of the Insurance Code and Sections
14005.301 and 14005.305 of the Welfare and Institutions Code.
(1) For individuals with a family income less than or equal to 150
percent of the federal poverty level, no premiums or out-of-pocket
costs shall be allowed.
(2) For individuals with a family income above 150 percent but
less than or equal to 300 250 percent
of the federal poverty level premiums shall not exceed 5 percent of
the family income net of applicable deductions.
(d) The following premiums shall apply to coverage under this part
for the population eligible for coverage pursuant to Sections
14005.305 and 14005.307 of the Welfare and Institutions Code:
(1) For individuals with a family income less than or equal to 150
percent of the federal poverty level, no premiums or out-of-pocket
costs shall be allowed.
(2) For individuals with a family income above 150 percent but
less than or equal to 250 percent of the federal poverty level,
premiums shall not exceed 5 percent of the family income net of
applicable deductions.
(c) For health care coverage made available pursuant to this part
for enrollees ineligible for a Cal-CHIPP Healthy Families plan, the
applicable premiums shall be commensurate with the full premium cost
of the coverage choice made by the enrollee. However, enrollees
eligible for the state health care tax credit established pursuant to
Section 17052.30 of the Revenue and Taxation Code may reduce their
premiums by the value of the credit. The board shall provide an
additional contribution equal to 20 percent of the premium of a tier
1 product in the pool, at a minimum, to employees with incomes at or
above 250 percent of the federal poverty level whose employers pay
into the fund. The amount of this contribution may be applied to any
product offered by the California Cooperative Health Insurance
Purchasing Program except the Cal-CHIPP Healthy Families plan.
(d) For dental and vision coverage made available pursuant to this
part, the applicable premiums shall be commensurate with the cost of
obtaining the coverage from participating plans, and the
administrative cost associated with providing the coverage.
(e) An employer may pay all, or a portion of, the premium payment
required of its employees enrolled in Cal-CHIPP.
12699.204.1. The board shall limit enrollment in the Cal-CHIPP
Heathy Families plan to individuals who are eligible under Sections
14005.301 and 14005.305 of the Welfare and Institutions Code and to
individuals eligible under Section 14005.307 of the Welfare
and Institutions Code 12699.211.01 with a family
income greater than 100 percent of the federal poverty level.
12699.205. The board, in its contract with a participating health
plan, shall require that the plan utilize efficient practices to
improve and control costs. These practices may include, but are not
limited to, the following:
(a) Preventive care.
(b) Care management for chronic diseases.
(c) Promotion of health information technology.
(d) Standardized billing practices.
(e) Reduction of medical errors.
(f) Incentives for healthy lifestyles.
(g) Patient cost-sharing to encourage the use of preventive and
appropriate care.
(h) Evidence-based use of new technology.
12699.206. (a) The board shall negotiate with Medi-Cal managed
care plans to obtain affordable coverage for eligible enrollees.
(b) The board, in consultation with the State Department of Health
Care Services, shall take all reasonable steps necessary to maximize
federal funding and support federal claiming in the administration
of the purchasing pool created pursuant to this part.
12699.206.1. (a) To provide prescription drug coverage for
Cal-CHIPP enrollees, the board may take any of the following actions:
(1) Contract directly with health care service plans or health
insurers for prescription drug coverage as a component of a health
care service plan contract or a health insurance policy.
(2) Contract with a pharmacy benefits manager (PBM) if the PBM
meets transparency and disclosure requirements established by the
board.
(3)
(2) Procure products directly through the prescription
drug purchasing program established pursuant to Chapter 12
(commencing with Section 14977) of Part 5.5 of Division 3 of Title 2
of the Government Code.
(b) The board may engage in any of the activities described in
subdivision (a), or in any cost-effective combination of those
activities.
(c) If the board enters into a prescription drug purchasing
arrangement pursuant to paragraph (2) or (3) of
subdivision (a), the board may allow any of the following entities to
participate in that arrangement:
(1) Any state, district, county, city, municipal, or other public
agency or governmental entity.
(2) A board or administrator board of
trustees or plan administrator responsible for providing or
delivering health care coverage pursuant to a collective bargaining
agreement, memorandum of understanding, or other similar agreement
with a labor organization. Nothing in this section shall modify,
alter or amend the fiduciary duties of these entities under
applicable federal and state laws.
(d) Notwithstanding this section, any licensed health care service
plan shall be subject to all statutory and regulatory requirements
applicable to coverage for prescription drugs under the Knox-Keene
Health Care Service Plan Act of 1975.
12699.206.2. (a) All information, whether written or oral,
concerning an applicant to Cal-CHIPP, an enrollee in Cal-CHIPP, or a
household member of the applicant or enrollee, created or maintained
by a public officer or agency in connection with the administration
of this part shall be confidential and shall not be open to
examination other than for purposes directly connected with the
administration of this part. "Purposes directly connected with the
administration of this part" includes all activities and
responsibilities in which the board or the State Department of Health
Care Services and their agents, officers, trustees, employees,
consultants, and contractors engage to conduct program operations.
(b) Information subject to the provisions of this section
includes, but is not limited to, names and addresses, medical
services provided to an enrollee, social and economic conditions or
circumstances, agency evaluation of personal information, and medical
data, such as diagnosis and health history.
(c) Nothing in this section shall be construed to prohibit the
disclosure of information about applicants and enrollees, or their
household members, if express written authorization for the
disclosure has been provided by the person to whom the information
pertains or, if that person is a minor, authorization has been
provided by the minor's parent or other adult with legal custody of
the minor.
(d) The use and disclosure of information concerning an applicant
or enrollee in the program who is a beneficiary in the Medi-Cal
program or an applicant to the Medi-Cal program shall be strictly
limited to the circumstances described in Section 14100.2 of the
Welfare and Institutions Code.
(e) Except as provided in subdivision (d), nothing in this part
shall prohibit the disclosure of protected health information as
provided in Section 164.152 of Title 45 of the Code of Federal
Regulations.
12699.207. (a) Notwithstanding any other provision of law, the
board shall not be subject to licensure or regulation by the
Department of Insurance or the Department of Managed Health Care.
(b) Participating health, dental, and vision care plans that
contract with the board shall be regulated by either the Department
of Insurance or the Department of Managed Health Care and shall be
licensed and in good standing with their respective licensing agency.
In their application to Cal-CHIPP and upon request by the board, the
participating health, dental, and vision care plans shall provide
assurance of their licensure and standing with the appropriate
licensing agency.
12699.208. The board shall collect and disseminate, as
appropriate and to the extent possible, information on the quality of
participating health, dental, and vision care plans and each plan's
cost-effectiveness to assist enrollees in selecting a plan.
12699.209. The board, in consultation with the State
Department of Health Care Services, shall take all reasonable steps
necessary to maximize federal funding and support federal claiming in
the administration of the purchasing pool created pursuant to this
part. In addition, the board shall consult and coordinate with the
State Department of Health Care Services in seeking federal financial
support pursuant to Article 7 (commencing with Section 14199.10) of
Chapter 7 of Part 3 of Division 9 of the Welfare and Institutions
Code. To the extent the state obtains federal financial support for
the populations described in Section 14199.10 of the Welfare and
Institutions Code, the coverage shall be subject to the terms,
conditions, and duration of any applicable state plan amendment or
waiver The board shall consult and
coordinate with the State Department of Health Care Services in
seeking federal financial support for Cal-CHIPP Healthy Families
coverage provided pursuant to this part. To the extent that the state
obtains federal financial support for that subsidized coverage, the
coverage shall be subject to the terms, conditions, and duration of
any applicable state plan amendment or waiver . To the extent
required to obtain federal financial support, the board shall apply
citizenship, immigration, and identity documentation standards
required in Title XIX of the federal Social Security Act.
12699.210. The provisions of Section 12693.54 shall apply to a
contract entered into pursuant to this part.
CHAPTER 3. ELIGIBILITY
12699.211. To be eligible to enroll in Cal-CHIPP, an individual
must be a resident of the state pursuant to Section 244 of the
Government Code or physically present in the state, having entered
the state with an employment commitment or to obtain employment,
whether or not employed at the time of application to Cal-CHIPP or
after enrollment in Cal-CHIPP. In addition, to be eligible to enroll
in Cal-CHIPP, an individual must meet any one
of the following requirements:
(a) Be an employee or a dependent of an employee of an employer
who elected to pay into the California Health Trust Fund. To
the extent an employer elects to pay into the California Health
Trust Fund, only employees and dependents in the category of
employees for which the employer has elected to pay shall be eligible
to enroll in Cal-CHIPP.
(b) Be an individual eligible for coverage pursuant to Section
14005.301 , 14005.305, or 14005.307 or
14005.305 of the Welfare and Institutions Code.
(c) Be an individual eligible for a state tax credit for purposes
of purchasing affordable health care coverage.
(c) Be an individual described in Section 12699.211.01.
(d) Be an individual enrolled in coverage pursuant to subdivision
(c) of Section 12739.51.
(e) Be an employee or his or her dependent paying the full cost of
health care coverage through an employee tax savings plan
established pursuant to Section 4801 of the Unemployment Insurance
Code, where the employer designates Cal-CHIPP in the cafeteria plan.
(f) Be eligible for a state tax credit made available pursuant to
Section 17052.30 of the Revenue and Taxation Code.
12699.211.01. Notwithstanding any other provision of
law, an adult otherwise eligible for coverage under Section 14005.307
of the Welfare and Institutions Code is not eligible to enroll in
Cal-CHIPP if he or she is offered health care coverage through his or
her employment. (a) Eligibility
for enrollment in the Cal-CHIPP Healthy Families plan under this
part shall be available to a population composed of individuals who
meet all of the following requirements:
(1) Is a resident of the state pursuant to Section 244 of the
Government Code or is physically present in the state, having entered
the state with an employment commitment or to obtain employment,
whether or not employed at the time of application to the program.
(2) Is a citizen or national of the United States or a qualified
alien without regard to date of entry.
(3) Is 19 years of age or older and is ineligible for Medicare
Parts A and B.
(4) Has family income, less applicable deductions, greater than
100 percent of the federal poverty level but less than or equal to
250 percent of the federal poverty level.
(5) Is ineligible for the Medi-Cal program.
(6) Is eligible to participate in a benchmark package pursuant to
Section 14005.306 of the Welfare and Institutions Code.
(7) Does not have access to employer-sponsored health care
coverage. However, this provision shall not apply to a person with
coverage under Section 14005.301 or 14005.305 of the Welfare and
Institutions Code.
(b) (1) Implementation of this section is contingent on the
establishment of a county share of cost.
(2) The provisions of paragraph (1) shall not apply to a person
with coverage under Section 14005.301 or 14005.305 of the Welfare and
Institutions Code.
12699.211.02. (a) The following program decisions may be appealed
to the board:
(1) A decision that an individual is not qualified to participate
or continue to participate in the program.
(2) A decision that an individual is not eligible for enrollment
or continuing enrollment in the program.
(3) A decision as to the effective date of coverage.
(b) An applicant or subscriber who appeals one of the decisions
listed in subdivision (a) shall be accorded an opportunity for an
administrative hearing. The hearing shall be conducted, insofar as
practicable, pursuant to Chapter 5 (commencing with Section 11500) of
Part 1 of Division 3 of the Government Code.
(c) To the extent required by law, the board shall implement this
section consistent with applicable federal law.
12699.211.03. The board may, through regulations adopted pursuant
to Chapter 3.5 (commencing with Section 11340) of Part 1 of Division
3 of Title 2 of the Government Code, allow individuals who enrolled
in coverage under this chapter and who would be otherwise ineligible
to continue that coverage, to be eligible for extended coverage for a
period of time established by the board, not to exceed 18 months
from the date of ineligibility, if the individual pays the entire
cost for the coverage. Coverage extension policies under this section
may not increase coverage costs for other pool participants. The
board may differentiate or delimit eligibility or conditions for such
continuation coverage, as well as the rating factors used, depending
on the basis of initial eligibility and the coverage options
available to that person.
12699.211.04. The State Department of Health Care Services, in
consultation with the board, shall convene a stakeholders group to
develop an outreach and enrollment process for the purchasing pool
program that is cost effective and coordinated with the Medi-Cal and
Healthy Families programs, in order to ensure seamless access to
coverage through these programs for eligible Californians. The
process and procedures shall be subject to implementation through
future legislative action. The involved stakeholders shall include,
but not be limited to, legislative staff, counties, consumer
organizations, labor organizations, and others as appropriate. In
developing the procedures, items to be considered shall include, but
not be limited to, simplicity and ease of enrollment, current
enrollment practices, quality, accuracy, competence, customer
service, cost-effectiveness, need for automation, problem resolution,
timeliness, and ensuring that federal requirements regarding
screening and enrollment processes and procedures are met.
Implementation of the process shall be contingent on funding being
appropriated for this purpose.
CHAPTER 4. FISCAL
12699.212. (a) The California Health Trust Fund is hereby created
in the State Treasury. Notwithstanding Section 13340 of the
Government Code, the moneys in the fund shall be continuously
appropriated to the board, without regard to fiscal year, for the
purposes of providing health care coverage pursuant to this part. Any
moneys in the fund that are unexpended or unencumbered at the end of
a fiscal year, may be carried forward to the next succeeding fiscal
year.
(b) The board shall establish a prudent reserve in the fund.
(c) Notwithstanding Section 16305.7 of the Government Code, all
interest earned on the moneys that have been deposited into the fund
shall be retained in the fund.
12699.213. The board, subject to the approval of the Department
of Finance, may obtain loans from the General Fund for all necessary
and reasonable expenses related to the administration of the fund.
12699.214. The board shall authorize, for the purposes of this
part, the expenditure from the fund of any state or federal revenue
or other revenue received from any source.
12699.215. The board may solicit and accept gifts, contributions,
and grants from any source, public or private, to administer the
program and shall deposit all revenue from those sources into the
fund.
12699.216. The board, subject to federal approval
pursuant to Section 14199.10 of the Welfare and Institutions Code
, shall pay the nonfederal share of cost from the fund for
employees and dependents individuals
eligible under that federal approval. Revenues in the fund shall
be used, to the extent allowable under federal law, as state
matching funds for receipt of federal funds.
12699.217. This part shall become operative on January 1, 2009.
The board shall provide health coverage pursuant to this part on and
after July 1, 2010.
SEC. 54. Part 6.7 (commencing with Section 12739.50) is
added to Division 2 of the Insurance Code, to read:
PART 6.7. MINIMUM CREDITABLE COVERAGE
12739.50. (a) On or before March 1, 2009, the Managed Risk
Medical Insurance Board shall establish, by regulation, the
definition of minimum creditable coverage for purposes of compliance
with the requirement in Section 8899.50 of the Government Code. On or
before March 1, 2009, the board shall also establish, by regulation,
the definition of minimum creditable coverage for purposes of the
individual health insurance market. The standards set by the board
pursuant to this section shall ensure that minimum creditable
coverage at least includes coverage for physician, hospital, and
preventive services and is at a minimum inclusive of existing
coverage requirements under law.
(b) The board shall consult with the Director of the Department of
Managed Health Care and the Insurance Commissioner in developing the
standards for minimum creditable coverage.
(c) In establishing the standards for minimum creditable coverage,
including the scope of services, enrollee and dependent deductible,
copayment requirements, and coverage of services outside the
deductible, the board shall consider all of the following:
(1) The degree to which minimum creditable coverage protects
individuals subject to the requirement of Section 8899.50 of the
Government Code and health purchasers from catastrophic medical
costs.
(2) The extent to which cost sharing, including any deductible,
coinsurance, or copayment requirements, would deter an enrollee or
his or her dependents from obtaining appropriate and timely care,
including consideration of coverage for prevention services that
would not be subject to any deductible. The board shall consider the
importance of encouraging periodic health evaluations and the use of
services that have been shown to be effective in detecting or
preventing serious illness.
(3) The affordability of the minimum policy for individuals who
are subject to the requirements of Section 8899.50 of the Government
Code, taking into account deductibles, coinsurance, copayments, and
total out-of-pocket costs, and the extent to which the resulting
premium cost would prevent an individual from obtaining coverage at a
reasonable price.
12739.501. (a) A person or family who has an income at or below
250 percent of the federal poverty level shall be exempt from the
requirements established in Section 8899.50 of the Government Code if
the person's or family's share of the premium for 8899.50 minimum
creditable coverage exceeds 5 percent of his or her family's income.
(b) In addition to the exemption pursuant to subdivision (a), the
board shall adopt regulations by January 1, 2010, to establish
affordability and hardship standards for purposes of the requirements
in Section 8899.50 of the Government Code. In developing these
standards, the board shall consider all of the following:
(1) The availability of public coverage, subsidies, and tax
credits for low-income individuals and families.
(2) Total out-of-pocket costs associated with minimum creditable
coverage, including premiums, co-pays, coinsurance, and deductibles.
(3) The percentage or amount of a taxpayer's adjusted gross income
that the individual would be required to contribute toward premiums
for health care.
(4) The percentage of family income that persons insured across
all health care markets currently spend on their health care
premiums, copays, coinsurance, and deductibles.
(5) The percentage of insured persons who meet or exceed their
deductibles.
(6) The impact of the premium amount on the ability of an
individual or family to afford other necessities of life, including,
but not limited to, expenses for housing, utilities, food, clothing,
child care, transportation, education, and taxes. It is the intent of
the Legislature that an individual's contributions toward health
care coverage premiums not interfere with his or her ability to pay
for basic necessities of life.
(7) The effect of the exemption criteria on premium levels for all
health care coverage purchasers.
(8) Specific circumstances and conditions that could make it a
temporary hardship for an individual to be required to purchase
minimum creditable coverage, such as significant increases in basic
living expenses because of unexpected changes in family
circumstances, expenses or living arrangements or hardship that
results from a fire, flood, natural disaster or other unexpected
natural or human-caused event causing substantial household or
personal damage.
(c) The board shall develop a process for considering requests for
exemptions for affordability and hardship and for granting those
exemptions if the board determines that the purchase or continuation
of minimum creditable
coverage would create an undue hardship on an individual or family.
The board shall consider the offering of both temporary and
continuing hardship exemptions and shall establish the timelines and
the process whereby an individual and family must obtain coverage
after the expiration of a temporary exemption and the board shall
establish an individual's rights and responsibilities related to
obtaining that coverage. Individuals who are granted an exemption by
the board shall not be subject to the requirements of Section 8899.50
of the Government Code for the period prescribed by the board.
(d) The board shall track and identify, to the extent feasible,
the number of individuals who are exempted from the mandate to
maintain minimum creditable coverage in Section 8899.50 of the
Government Code as a result of the exemptions developed by the board,
including the specific types and categories of those exemptions, and
report the information to the Legislature and to the Director of the
Department of Managed Health Care to be used in establishing the
reinsurance mechanisms in Section 1399.844 of the Health and Safety
Code.
12739.51. (a) On or before January 1, 2010, the Managed Risk
Medical Insurance Board shall establish and maintain an active
statewide education and awareness program to inform all California
residents of their obligation under Section 8899.50 of the Government
Code, including informing them of the options available to obtain
affordable coverage through public programs, the state purchasing
pool, and commercial coverage.
(b) The board, in consultation with the State Department of Health
Care Services, shall identify and implement methods and strategies
to establish multiple entry points and opportunities for enrollment
in public or private coverage, as appropriate, for individuals
subject to Section 8899.50 of the Government Code. The board shall
work with state and local agencies, health care providers, health
plans, employers, consumer groups, community organizations, and other
appropriate stakeholders to establish point-of-service methods to
facilitate enrollment of individuals who do not have or maintain
minimum creditable coverage as required under Section 8899.50 of the
Government Code. The board shall identify and implement in
state-administered health care programs, to the greatest extent
practicable and permissible under federal law, best practices for
streamlined eligibility and enrollment.
(c)The board shall establish methods by which individuals who have
not obtained health care coverage shall be informed of the method
available to obtain affordable coverage through public programs, the
program established pursuant to Part 6.45 (commencing with Section
12699.201) of Division 2 of the Insurance Code, and commercial
coverage. The board shall also establish methods to ensure that
uninsured individuals obtain the minimum creditable coverage. The
board shall pay the cost of health care coverage on behalf of an
previously uninsured individual who is enrolled in minimum by the
board after being creditable coverage uninsured for at least 62 days,
and the board shall establish methods by which funds advanced for
coverage may be recouped by the state from individuals for whom
coverage is purchased. The board may enter into an agreement with the
Franchise Tax Board to use the Franchise Tax Board's civil authority
and procedures in compliance with notice and other due process
requirements imposed by law to collect funds owed to the state that
were advanced to individuals pursuant to this subdivision.
(d) To the extent possible, activities undertaken pursuant to
subdivision (c) shall be based on existing reporting processes
employed throughout the state to report on the employment and tax
status of individuals and other existing mechanisms. Relevant state
agencies shall cooperate with the board and other responsible
entities in undertaking these activities and implementing this
section.
(e) The board may enter into agreements with other agencies or
departments to perform the activities required under this section.
Prior to entering into any agreements, the board shall report to the
Legislature on the activities to be undertaken pursuant to
subdivision (c). The report shall include the method by which
individuals with and without coverage are identified, the method by
which persons are to be given notice of the availability of coverage
and the timeframe to enroll, the actions that will be taken to enroll
uninsured persons, and the actions that will be taken if persons do
not enroll in minimum creditable coverage. The board shall submit the
required report by March 15, 2010.
(f) The board shall adopt regulations, as appropriate, to
implement this section.
(g) Implementation of this section shall be contingent on the
appropriation of funds for the purposes of this section in the annual
Budget Act or another statute.
SEC. 49. SEC. 55. Section 12886 is
added to the Insurance Code, to read:
12886. It shall constitute an unfair labor practice contrary to
public policy, and enforceable under Section 95 of the Labor Code,
for an employer to refer an individual employee or employee's
dependent to the program established pursuant to Part 6.45
(commencing with Section 12699.201), or to arrange for an individual
employee or employee's dependent to apply to that program, for the
purpose of separating that employee or employee's dependent from
group health coverage provided in connection with the employee's
employment. An employer who pays the premium for the employee in the
program established pursuant to Part 6.45 (commencing with Section
12699.201) shall not, on the basis of that action, be deemed to be in
violation of this section.
SEC. 50. SEC. 56. Section 12887 is
added to the Insurance Code, to read:
12887. It shall constitute an unfair labor practice contrary to
public policy and enforceable under Section 95 of the Labor Code for
an employer to change the employee-employer share-of-cost ratio based
upon the employee's wage base or job classification or to make any
modification of coverage for employees and employees' dependents in
order that the employees or employees' dependents enroll in the
program established pursuant to Part 6.45 (commencing with Section
12699.201).
SEC. 51. SEC. 57. Section 96.8 is
added to the Labor Code, to read:
96.8. (a) Notwithstanding any other provision in this chapter, an
employer may provide health coverage that includes a Healthy Action
Incentives and Rewards Program that meets the requirements of Section
1367.38 of the Health and Safety Code, or Section 10123.56 of the
Insurance Code, to the employer's employees.
(b) A Healthy Action Incentives and Rewards Program offered
pursuant to this section may include, but need not be limited to,
monetary incentives and health coverage premium cost reductions for
employees for nonsmokers and smoking cessation.
SEC. 52. Section 96.81 is added to the Labor
Code, to read:
96.81. (a) (1) Notwithstanding any other provision of law, the
delivery or provision of Healthy Action Incentives and Rewards
Program benefits or coverage by the employer or the employer's agents
to employees for the purposes of and in accordance with the criteria
and requirements established under Section 96.8 shall not be
considered or construed as an unlawful practice, act, kickback,
bribe, rebate, remuneration, offer, payment, or any other form of
compensation made directly or indirectly, overtly or covertly, in
exchange for another to obtain, participate, or otherwise undergo or
receive health care services.
(2) Notwithstanding any other provision of law, the delivery or
provision of Healthy Action Incentives and Rewards Program benefits
or coverage by the employer or the employer's agents to employees for
the purposes of and in accordance with the criteria and requirements
established under Section 96.8 is not subject to the penalties,
discipline, limitations, or sanctions imposed under state law to
preclude or prohibit, as an unlawful practice, bribe, kickback, or
other act, the offering or delivery of a rebate, remuneration, offer,
coupon, product, rebate, payment, or any other form of compensation
made directly or indirectly, overtly or covertly, in exchange for
another to obtain, participate, or otherwise undergo or receive
health care services.
(b) This section shall only be implemented if and to the extent
allowed under federal law. If any portion of this section is held to
be invalid, as determined by a final judgment of a court of competent
jurisdiction, this section shall become inoperative.
SEC. 58. Section 1120 is added to the Unemployment
Insurance Code, to read:
1120. Any employer who fails to establish or maintain a cafeteria
plan as required by Section 4801 shall pay a penalty of one hundred
dollars ($100) per employee for the failure to establish or maintain
a cafeteria plan without good cause, or five hundred dollars ($500)
per employee if the failure to establish or maintain a cafeteria plan
is willful.
SEC. 59. Division 1.2 (commencing with Section 4800) is
added to the Unemployment Insurance Code, to read:
DIVISION 1.2. HEALTH CARE TAX SAVINGS PLAN
4800. This division shall be known and may be cited as the Health
Care Tax Savings Plan.
4801. (a) Each employer of one or more employees in this state
shall, beginning January 1, 2010, adopt and maintain a cafeteria
plan, within the meaning of Section 125 of the Internal Revenue Code,
to allow all employees to pay premiums for health care coverage to
the extent amounts for that coverage are excludable from the gross
income of the employee under Section 106 of the Internal Revenue
Code.
(b) The establishment or maintenance of a cafeteria plan shall
neither be inconsistent with Section 125 of Title 26 of the United
States Code, nor require any employer to take any action that would
violate Section 125 of Title 26 of the United States Code.
(c) For the purposes of this division, the following definitions
apply:
(1) "Employee" means an employee as defined in Article 1.5
(commencing with Section 621) of Chapter 3 of Part 1 of Division 1.
(2) "Employer" means an employer as defined in Article 3
(commencing with Section 675) of Chapter 3 of Part 1 of Division 1,
except as described in subdivision (a) of Section 683 and in
subdivision (a) of Section 685.
(3) "Employing unit" means an "employing unit" as defined in
Section 135.
(4) "Employment" means employment as defined in Article 1
(commencing with Section 601) of Chapter 3 of Part 1 of Division 1.
"Employment" does not include services excluded under Section 632,
subdivision (c) of Section 634.5, and Sections 640, 641, 643, 644,
and 644.5.
(d) The department shall promulgate rules and regulations to
implement the provisions of this division.
SEC. 60. Section 14005.01 is added to the Welfare and
Institutions Code, to read:
14005.01. (a) Notwithstanding any other provision of law, the
department may make statewide determinations and redeterminations of
eligibility and may contract with a county or counties to perform
these functions on its behalf regardless of whether the applicant or
beneficiary is a resident of the county making the determination.
(b) The department may apply subdivision (a) to any group or
subgroup of applicants or recipients, provided that the eligibility
of that group or subgroup is not based on its status as aged, blind,
or disabled.
(c) The department may contract with an agent or agents to make
preliminary eligibility determinations and redeterminations under
this section.
SEC. 53. SEC. 61. Section 14005.30
of the Welfare and Institutions Code is amended to read:
14005.30. (a) (1) To the extent that federal financial
participation is available, Medi-Cal benefits under this chapter
shall be provided to individuals eligible for services under Section
1396u-1 of Title 42 of the United States Code, including any options
under Section 1396u-1(b)(2)(C) made available to and exercised by the
state.
(2) The department shall exercise its option under Section 1396u-1
(b)(2)(C) of Title 42 of the United States Code to adopt less
restrictive income and resource eligibility standards and
methodologies to the extent necessary to allow all recipients of
benefits under Chapter 2 (commencing with Section 11200) to be
eligible for Medi-Cal under paragraph (1).
(3) To the extent federal financial participation is available,
the department shall exercise its option under Section 1396u-1(b)(2)
(C) of Title 42 of the United States Code authorizing the state to
disregard all changes in income or assets of a beneficiary until the
next annual redetermination under Section 14012. The department shall
implement this paragraph only if, and to the extent that the State
Child Health Insurance Program waiver described in Section 12693.755
of the Insurance Code extending Healthy Families Program eligibility
to parents and certain other adults is approved and implemented.
(b) (1) To the extent that federal financial participation is
available, the department shall exercise its option under Section
1396u-1(b)(2)(C) of Title 42 of the United States Code as necessary
to expand eligibility for Medi-Cal under subdivision (a) by
establishing the amount of countable resources individuals or
families are allowed to retain at the same amount medically needy
individuals and families are allowed to retain, except that a family
of one shall be allowed to retain countable resources in the amount
of three thousand dollars ($3,000). This paragraph shall not be
operative during implementation of paragraph (2).
(2) To the extent that federal financial participation is
available, the department shall exercise its option under Section
1396u-1(b)(2)(C) of Title 42 of the United States Code as necessary
to simplify eligibility for Medi-Cal under subdivision (a) by
exempting all resources for applicants and recipients, commencing
July 1, 2010.
(c) To the extent federal financial participation is available,
the department shall, commencing March 1, 2000, adopt an income
disregard for applicants equal to the difference between the income
standard under the program adopted pursuant to Section 1931(b) of the
federal Social Security Act (42 U.S.C. Sec. 1396u-1) and the amount
equal to 100 percent of the federal poverty level applicable to the
size of the family. A recipient shall be entitled to the same
disregard, but only to the extent it is more beneficial than, and is
substituted for, the earned income disregard available to recipients.
(d) For purposes of calculating income under this section during
any calendar year, increases in social security benefit payments
under Title II of the federal Social Security Act (42 U.S.C. Sec. 401
and following) arising from cost-of-living adjustments shall be
disregarded commencing in the month that these social security
benefit payments are increased by the cost-of-living adjustment
through the month before the month in which a change in the federal
poverty level requires the department to modify the income disregard
pursuant to subdivision (c) and in which new income limits for the
program established by this section are adopted by the department.
(e) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department shall implement, without taking regulatory action,
subdivisions (a) and (b) of this section by means of an all county
letter or similar instruction. Thereafter, the department shall adopt
regulations in accordance with the requirements of Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code. Beginning six months after the effective date
of this section, the department shall provide a status report to the
Legislature on a semiannual basis until regulations have been
adopted.
SEC. 54. SEC. 62. Section 14005.301
is added to the Welfare and Institutions Code, to read:
14005.301. (a) Notwithstanding Section 14005.30, to the extent
that federal financial participation is available, and as permitted
under Section 6044 of the federal Deficit Reduction Act of 2005 (42
U.S.C. Sec. 1396u-7) the department shall provide benefits under a
Cal-CHIPP Healthy Families plan to a population composed of parents
and other caretaker relatives with a household income at or below 300
percent of the federal poverty level who are not otherwise eligible
for full scope benefits with no share of cost.
(b) The eligibility determination under this section shall not
include an asset test. A redetermination for eligibility under this
section shall be completed annually.
(c) To the extent necessary to implement this section, the
department shall seek federal approval to modify the definition of
"unemployed parent" in Section 14008.85.
(d) The department shall implement this section by means of a
state plan amendment. If this section cannot be implemented by a
state plan amendment, the department shall seek a waiver or a waiver
and a state plan amendment necessary to accomplish the intent of this
section.
(e) This section shall become operative on July 1, 2010.
14005.301. (a) The department shall provide benefits pursuant to
Section 14005.306 to a population composed of parents and other
caretaker relatives who meet all of the following requirements:
(1) Net family income is at or below 250 percent of the federal
poverty level.
(2) The individual is not otherwise eligible for full-scope
benefits under Section 14005.30 but would be eligible for these
benefits if family income were at or below 100 percent of the federal
poverty level.
(3) The individual is a citizen, national, or qualified alien
without regard to date of entry.
(b) The eligibility determination under this section shall not
include an asset test.
(c) The department shall implement this section by means of a
state plan amendment under Section 1902(a)(10)(A)(ii)(I) of the
federal Social Security Act (Title 42 U.S.C. Sec. 1396a(a)(10)(A)(ii)
(I)), or by any other state plan amendment or waiver, or combination
thereof, as is necessary to accomplish the intent of this section.
(d) The department shall seek federal approval to utilize the same
premiums and copayments for the population described in this section
as are applied to the population eligible for the Cal-CHIPP Healthy
Families plan established pursuant to Section 12699.204 of the
Insurance Code.
(e) To the extent necessary to implement this section and Section
14005.305, the department shall seek federal approval to waive the
deprivation requirement or to modify the definition of unemployed
parent provided in Section 14008.85.
(f) This section shall be implemented only if and to the extent
that federal approval to provide benchmark benefits in a manner
consistent with Section 14005.306 has been obtained.
(g) The income test for eligibility determinations under this
section shall be the same test used for the federal poverty level
programs, but shall not include any income disregards available under
those programs.
(h) This section shall become operative on July 1, 2010, or on the
date that the authority under Section 12739.51 is implemented,
whichever is later.
SEC. 55. SEC. 63. Section 14005.305
is added to the Welfare and Institutions Code, to read:
14005.305. (a) The department shall provide benefits to a
population composed of individuals who are either 19 or 20 years of
age and who meet all of the following requirements:
(1) Net family income is at or below 250 percent of the federal
poverty level.
(2) The individual is not otherwise eligible for full-scope
benefits in one of the federal poverty level programs for children,
but would be eligible for those benefits if he or she were under 19
years of age with income at or below 100 percent of the federal
poverty level.
(3) The individual is a citizen, national, or qualified alien
without regard to date of entry.
(b) The eligibility determination under this section shall not
include an asset test. A redetermination for eligibility
under this section shall be completed annually.
(c) The department shall implement this section by means of a
state plan amendment under Section 1902(a)(10)(A)(ii)(I) of the
federal Social Security Act (Title 42 U.S.C. Sec. 1396a(a)(10)(A)(ii)
(I)), or by any other state plan amendment or waiver, or combination
thereof, as is necessary to accomplish the intent of this section.
(d) The department shall seek federal approval to utilize the same
premiums and copayments for the population to whom this section
applies as are applied to the population established pursuant to
Section 14005.307 12699.211.01 of the
Insurance Code .
(e) This section shall be implemented only if, and to the extent
that federal approval has been obtained to provide benchmark benefits
for individuals made eligible under this section with net income
over 100 percent of the federal poverty level in a manner consistent
with Section 14005.306.
(f) The income methodology for eligibility determinations under
this section shall be the methodology used for the federal poverty
level programs, but shall not include any income disregards available
under those programs.
(g) This section shall become operative on July 1, 2010, or
on the date that Section 12739.50 of the Insurance Code is
implemented, whichever is later, but only to the extent federal
financial participation is available.
SEC. 56. SEC. 64. Section 14005.306
is added to the Welfare and Institutions Code, to read:
14005.306. (a) Subject to the limitations provided in
subdivisions (b) and (c), a Medi-Cal beneficiary with a net family
income above 100 percent of the federal poverty level whose
eligibility is based on Section 14005.301 or Section 14005.305 and
who is otherwise eligible for full-scope benefits, shall receive his
or her benefits by means of a benchmark package pursuant to Section
1937 of the federal Social Security Act. This package shall be the
Cal-CHIPP Healthy Families benefit package established for the
program established pursuant to Part 6.45 (commencing with Section
12699.201) of Division 2 of the Insurance Code.
(b) To the extent required by federal law, the categories of
beneficiaries listed in Section 1937(a)(2)(B) of the federal Social
Security Act (Title 42 U.S.C. Sec. 1396u-7(a)(2)(B)), are exempt from
mandatory enrollment in the benchmark package described in
subdivision (a).
(c) The department, with the concurrence of the Managed Risk
Medical Insurance Board, may identify groups of otherwise exempt
individuals that will be allowed a choice, at the beneficiary's
option, to participate in a benchmark package.
(d) The department, with concurrence of the Managed Risk Medical
Insurance Board, may exempt other groups or categories of
beneficiaries from the requirements provided in subdivision (a).
(e) To the extent federal approval is obtained, the appeals
process for issues relating to receipt of benefits through the
benchmark package shall be the process prescribed by the Managed Risk
Medical Insurance Board for the program established pursuant to Part
6.45 (commencing with Section 12699.201) of Division 2 of the
Insurance Code.
(f) This section shall be implemented only if and to the extent
that federal financial participation is available and all necessary
federal approvals have been obtained.
(g) The department shall accomplish the intent of this section by
means of a state plan amendment or by a waiver. If this section is
implemented in whole or in part by means of a state plan amendment,
all applicable federal requirements not otherwise waived, including,
but not limited to, requirements related to cost sharing, shall
apply.
SEC. 57. Section 14005.307 is added to the
Welfare and Institutions Code, to read:
14005.307. (a) The department shall provide benefits under a
Cal-CHIPP Healthy Families plan to a population composed of
individuals who meet all of the following requirements:
(1) Is a resident of the state pursuant to Section 244 of the
Government Code or is physically present in the state, having entered
the state with an employment commitment or to obtain employment,
whether or not employed at the time of application to the program.
(2) Is a citizen or national of the United States or a qualified
alien without regard to date of entry.
(3) Is 19 years of age or
older and is ineligible for Medicare Parts A and B.
(4) Has family income, less applicable deductions, greater than
100 percent of the federal poverty level but less than or equal to
250 percent of the federal poverty level.
(5) Is either ineligible for the Medi-Cal program or eligible to
participate in benchmark package pursuant to Section 14005.306.
(6) Does not have access to employer-sponsored health care
coverage. However, this provision does not apply to a person with
coverage under Section 14005.301 or 14005.305.
(b) Implementation of this section with respect to individuals
with coverage under Section 14005.332 is contingent on establishment
of a county share of cost.
SEC. 58. Section 14005.31 of the Welfare and
Institutions Code is amended to read:
14005.31. (a) (1) Subject to paragraph (2), for any person whose
eligibility for benefits under Section 14005.30 has been determined
with a concurrent determination of eligibility for cash aid under
Chapter 2 (commencing with Section 11200), loss of eligibility or
termination of cash aid under Chapter 2 (commencing with Section
11200) shall not result in a loss of eligibility or termination of
benefits under Section 14005.30 absent the existence of a factor that
would result in loss of eligibility for benefits under Section
14005.30 for a person whose eligibility under Section 14005.30 was
determined without a concurrent determination of eligibility for
benefits under Chapter 2 (commencing with Section 11200).
(2) Notwithstanding paragraph (1), a person whose eligibility
would otherwise be terminated pursuant to that paragraph shall not
have his or her eligibility terminated until the transfer procedures
set forth in Section 14005.32 or the redetermination procedures set
forth in Section 14005.37 and all due process requirements have been
met.
(b) The department, in consultation with the counties and
representatives of consumers, managed care plans, and Medi-Cal
providers, shall prepare a simple, clear, consumer-friendly notice to
be used by the counties, to inform Medi-Cal beneficiaries whose
eligibility for cash aid under Chapter 2 (commencing with Section
11200) has ended, but whose eligibility for benefits under Section
14005.30 continues pursuant to subdivision (a), that their benefits
will continue. To the extent feasible, the notice shall be sent out
at the same time as the notice of discontinuation of cash aid, and
shall include all of the following:
(1) A statement that Medi-Cal benefits will continue even though
cash aid under the CalWORKs program has been terminated.
(2) A statement that continued receipt of Medi-Cal benefits will
not be counted against any time limits in existence for receipt of
cash aid under the CalWORKs program.
(3) A statement that the Medi-Cal beneficiary does not need to
fill out monthly status reports in order to remain eligible for
Medi-Cal, but shall be required to submit a semiannual status report
and annual reaffirmation forms, except that the semiannual status
report shall no longer be required on and after July 1, 2010. The
notice shall remind individuals whose cash aid ended under the
CalWORKs program as a result of not submitting a status report that
he or she should review his or her circumstances to determine if
changes have occurred that should be reported to the Medi-Cal
eligibility worker.
(4) A statement describing the responsibility of the Medi-Cal
beneficiary to report to the county, within 10 days, significant
changes that may affect eligibility.
(5) A telephone number to call for more information.
(6) A statement that the Medi-Cal beneficiary's eligibility worker
will not change, or, if the case has been reassigned, the new worker'
s name, address, and telephone number, and the hours during which the
county's eligibility workers can be contacted.
(c) This section shall be implemented on or before July 1, 2001,
but only to the extent that federal financial participation under
Title XIX of the federal Social Security Act (Title 42 U.S.C. Sec.
1396 and following) is available.
(d) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department shall, without taking any regulatory action, implement
this section by means of all county letters or similar instructions.
Thereafter, the department shall adopt regulations in accordance with
the requirements of Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code. Comprehensive
implementing instructions shall be issued to the counties no later
than March 1, 2001.
SEC. 59. SEC. 65. Section 14005.310
is added to the Welfare and Institutions Code, to read:
14005.310. The department shall seek federal approval to utilize
an interval of one year in determining the cost amounts specified in
Section 12699.204 of the Insurance Code for persons receiving
benchmark benefits pursuant to Sections 14005.301 and 14005.305.
SEC. 60. SEC. 66. Section 14005.311
is added to the Welfare and Institutions Code, to read:
14005.311. (a) The department and the Managed Risk Medical
Insurance Board shall enter into an interagency agreement under which
the board shall have authority and responsibility for administering
benchmark benefits under Sections 14005.301 , 14005.305, and
14005.307 and 14005.305 and for prescribing all
rules and procedures necessary for administering these benefits
subject to the single state agency oversight responsibilities of the
department and consistent with the process developed pursuant to
Section 12699.211.04 of the Insurance Code .
(b) This section shall be implemented only to the extent that
federal financial participation is not jeopardized.
SEC. 61. Section 14005.32 of the Welfare and
Institutions Code is amended to read:
14005.32. (a) (1) If the county has evidence clearly
demonstrating that a beneficiary is not eligible for benefits under
this chapter pursuant to Section 14005.30, but is eligible for
benefits under this chapter pursuant to other provisions of law, the
county shall transfer the individual to the corresponding Medi-Cal
program. Eligibility under Section 14005.30 shall continue until the
transfer is complete.
(2) The department, in consultation with the counties and
representatives of consumers, managed care plans, and Medi-Cal
providers, shall prepare a simple, clear, consumer-friendly notice to
be used by the counties, to inform beneficiaries that their Medi-Cal
benefits have been transferred pursuant to paragraph (1) and to
inform them about the program to which they have been transferred. To
the extent feasible, the notice shall be issued with the notice of
discontinuance from cash aid, and shall include all of the following:
(A) A statement that Medi-Cal benefits will continue under another
program, even though aid under Chapter 2 (commencing with Section
11200) has been terminated.
(B) The name of the program under which benefits will continue,
and an explanation of that program.
(C) A statement that continued receipt of Medi-Cal benefits will
not be counted against any time limits in existence for receipt of
cash aid under the CalWORKs program.
(D) A statement that the Medi-Cal beneficiary does not need to
fill out monthly status reports in order to remain eligible for
Medi-Cal, but shall be required to submit a semiannual status report
and annual reaffirmation forms, except that the semiannual status
report shall no longer be required on and after July 1, 2010. In
addition, if the person or persons to whom the notice is directed has
been found eligible for transitional Medi-Cal as described in
Section 14005.8, 14005.81, or 14005.85, the statement shall explain
the reporting requirements and duration of benefits under those
programs, and shall further explain that, at the end of the duration
of these benefits, a redetermination, as provided for in Section
14005.37 shall be conducted to determine whether benefits are
available under any other provision of law.
(E) A statement describing the beneficiary's responsibility to
report to the county, within 10 days, significant changes that may
affect eligibility or share of cost.
(F) A telephone number to call for more information.
(G) A statement that the beneficiary's eligibility worker will not
change, or, if the case has been reassigned, the new worker's name,
address, and telephone number, and the hours during which the county'
s Medi-Cal eligibility workers can be contacted.
(b) No later than September 1, 2001, the department shall submit a
federal waiver application seeking authority to eliminate the
reporting requirements imposed by transitional Medicaid under Section
1925 of the federal Social Security Act (Title 42 U.S.C. Sec.
1396r-6).
(c) This section shall be implemented on or before July 1, 2001,
but only to the extent that federal financial participation under
Title XIX of the federal Social Security Act (Title 42 U.S.C. Sec.
1396 and following) is available.
(d) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department shall, without taking any regulatory action, implement
this section by means of all county letters or similar instructions.
Thereafter, the department shall adopt regulations in accordance with
the requirements of Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code. Comprehensive
implementing instructions shall be issued to the counties no later
than March 1, 2001.
SEC. 62. SEC. 67. Section 14005.331
is added to the Welfare and Institutions Code, to read:
14005.331. (a) All children under 19 years of age who meet the
state residency requirements of the Medi-Cal program or the Healthy
Families Program shall be eligible for health care coverage in
accordance with subdivision (b) if they either (1) live in a family
with countable household income at or below 300 percent of the
federal poverty level, or (2) meet the income and resource
requirements of Section 14005.7 or the income requirements of Section
14005.30. The children described in this section include all
children for whom federal financial participation under Title XIX of
the federal Social Security Act (42 U.S.C. Sec. 1396 et seq.) or
Title XXI of the federal Social Security Act (42 U.S.C. Sec. 1397 et
seq.) is not available due to their immigration status or date of
entry into the United States, but does not include children who are
ineligible for Title XIX and Title XXI funds based on other grounds.
Nothing in this section shall be construed to limit a child's right
to Medi-Cal eligibility under existing law.
(b) Children described in subdivision (a) in families whose
household income would render them ineligible for no-cost Medi-Cal,
and who are in compliance with Sections 12693.71 and 12693.72 of the
Insurance Code, shall be eligible for the Healthy Families Program
and shall also be eligible for Medi-Cal with a share of cost in
accordance with Section 14005.7. Other children described in this
section shall be eligible for Medi-Cal with no share of cost.
(c) This section shall become operative on July 1, 2010.
14005.331. (a) An individual under the age of 19 years who would
be eligible for full-scope Medi-Cal benefits without a share of cost,
if not for his or her immigration status, shall be eligible for
full-scope Medi-Cal services under this section.
(b) To establish that the individual meets the immigration
requirements under this section, the parent or caretaker relative
shall sign under penalty of perjury an attestation that the
individual is not described in any of the categories enumerated on
the attestation for which federal financial participation for
full-scope services is available.
(c) In implementing this section, the department shall consult
with stakeholders, including, but not limited to, consumer advocates
and counties.
(d) Nothing in this section shall be construed to limit a child's
access to Medi-Cal or Healthy Families eligibility under existing
law.
(e) Implementation of this section is contingent upon an
appropriation for the purposes of this section in the annual Budget
Act or another statute.
(f) This section shall become operative on July 1, 2009.
SEC. 63. SEC. 68. Section 14005.333
is added to the Welfare and Institutions Code, to read:
14005.333. (a) The department shall design and implement a
program to provide the benefits described in subdivision (d) to the
population described in subdivision (c).
(b) The department shall seek to maximize the availability of
federal funding for this section under the terms of any existing
waiver, through amendment of any existing waiver, or by means of a
new waiver, or any combination thereof.
(c) The population eligible to receive benefits under this section
shall consist of all residents 21 years of age or older who meet all
of the following requirements.
(1) Their family income is at or below 100 percent of the federal
poverty level.
(2) They are not otherwise eligible for the Medi-Cal program.
(3) They would be eligible for full-scope Medi-Cal without a share
of cost if they had a categorical linkage.
(4) They are citizens, nationals, or qualified aliens without
regard to date of entry.
(5) They do not have access to employer-sponsored health care
coverage.
(d) (1) Benefits available
under this section shall consist of a benefit package that is
designed by the department and is equivalent to the
subsidized coverage Cal-CHIPP Healthy Families plan
coverage defined in subdivision (g) of Section 12699.201 that is
made available in the purchasing pool established pursuant to
Part 6.45 (commencing with Section 12699.201) of Division 2 of the
Insurance Code , except as provided in subdivision (k) of
Section 14005.334 . To the extent that specific services
are excluded from the subsidized package, these services are not
required to be provided under this section to the population
described under subdivision (c). These excluded services shall
include, but are not limited to, long-term care services, nursing
home care, personal care services, in-home supportive services, and
home- and community-based or other waiver services.
(2) For a five-year period beginning with the first month of
operation of a local coverage option program in a county under
Section 14005.334, the local coverage option program shall be the
exclusive Medi-Cal coverage available for the individuals who reside
in the county and who are eligible Medi-Cal beneficiaries under this
section. This paragraph shall apply only if local coverage option
program services are provided by or through a health care service
plan licensed under the Knox-Keene Health Care Service Plan Act of
1975 (Chapter 2.2 (commencing with Section 1340) of Division 2 of the
Health and Safety Code).
(e) In determining eligibility for benefits under this section,
the department shall use the application requirements and the income
methodology of the federal poverty level programs for pregnant women
and children, including the income deductions and exemptions
applicable under those programs, but shall not include any income
disregards available under those programs.
(f) Nothing in this section is intended to affect or modify the
availability of the eligibility category described in Section 14052
or the application process, documentation requirements, methodology,
or benefits available pursuant to that section.
(f) Notwithstanding Section 14007.2 or any other provision of law,
this section creates no right or entitlement for any individual to
receive any service including any emergency service, unless that
individual has been determined to meet all of the eligibility
requirements in subdivision (c) and the documentation and
verification requirements in subdivision (g).
(g) In order for an otherwise eligible individual to be eligible
for, or to receive, any service, including, but not limited to, any
emergency service under this section, the individual shall be
required to meet all of the minimum federal requirements necessary
for federal claiming by furnishing all necessary information and
providing all necessary documentation.
(h) Except to the extent required by the terms of any applicable
federal waiver, federal Medicaid rights, including the right to
retroactive eligibility, do not apply to persons or services under
this section.
(i) Nothing in this section is intended to affect or modify the
availability of the eligibility category described in Section 14052
or the application process, documentation requirements, methodology,
or benefits available pursuant to that section.
(j) Implementation of this section is contingent on the
establishment of a county share of cost.
(k) This section shall become operative on July 1, 2010, or on the
date that the authority under Section 12739.51 of the Insurance Code
is implemented, whichever is later.
SEC. 64. Section 14005.334 is added to the
Welfare and Institutions Code, to read:
14005.334. (a) The director shall establish a local coverage
option program to provide Medi-Cal coverage for low-income adults.
The program shall meet the requirements of this section.
(b) Coverage shall be provided, at the option of the county, only
by counties that operate designated public hospitals. Each county
shall provide coverage only for those eligible individuals who reside
in the county.
(1) All covered services shall be provided by designated public
hospitals, their affiliated public providers, and community clinics,
except with respect to those medically necessary services that are
not available or accessible through these providers. Each enrollee
shall be assigned a medical home at a public provider affiliated with
a public hospital or at a community clinic. Counties may elect to
contract with additional providers for services to enrollees, if the
county, the department, or the Department of Managed Health Care
determines that the services of a particular provider are necessary
to serve a specific need of enrollees.
(2) Counties may provide coverage directly through a county
operated health care service plan licensed under the Knox-Keene
Health Care Service Plan Act of 1975 (Chapter 2.2 (commencing with
Section 1340) of Division 2 of the Health and Safety Code), or
through a local initiative created pursuant to Section 14087.31,
14087.35, 14087.36 or 14087.38 or a county organized health system
described in Section 14087.51 or 14087.54.
(3) A county may elect to provide coverage through the local
initiative or county organized health system only if the
administrative costs of the local initiative or county organized
health system do not exceed 15 percent, such that at least 85 percent
of aggregate dues, fees, and other periodic payments received by the
local initiative or county organized health system is spent on
health care services.
(4) If a county elects to provide coverage through a local
initiative or county organized health system, the director shall
contract with, and make the payments required under this section to,
the designated local initiative or county organized health system.
(c) A county may offer enrollment in its local coverage option
program to employers and individuals.
(d) In consultation with participating counties, the director
shall complete the following actions:
(1) Establish a uniform benefit package consistent with
subdivision (d) of Section 14005.333.
(2) Design a common identification card to be provided by the
county to each enrollee in a local coverage option program.
(e) Each county, local initiative, or county organized health
system that operates a local coverage option program shall be
entitled to periodic payments per individual who resides in the
county who is an eligible Medi-Cal beneficiary under Section
141005.333 that are actuarially determined to be adequate to meet the
full cost of services, including administrative costs and the cost
incurred in paying for out of network emergency services required in
the benefit package established under subdivision (d) of Section
14005.333 for these individuals.
(f) In consultation with participating counties, the director
shall establish payment rates that shall be accepted by Medi-Cal
participating providers that provide out of network emergency
services to local coverage option program enrollees as payment in
full for those services. The payment rates shall not exceed the
amount the provider would have received had the services been
provided on a fee for service basis to a Medi-Cal beneficiary.
(g) In consultation with the participating counties, by January 1,
2010, the department shall contract with an independent third party
to develop a local coverage option program assessment tool to measure
the extent to which the counties are providing quality, coordinated
care to eligible individuals. The local coverage option program
assessment tool shall be designed to evaluate the following for each
local coverage option program:
(1) Enrolled patient population.
(2) The use of medical services.
(3) Access and barriers to health care.
(4) Processes and quality of care for selected medical conditions,
as appropriate for the population enrolled in the program.
(5) Patient satisfaction.
(h) The following elements shall be evaluated using the local
coverage option program assessment tool developed under subdivision
(g):
(1) Designation of a medical home and assignment of eligible
individuals to a primary care provider within 60 days of enrollment.
For purposes of this paragraph, "medical home" means a single
provider or facility that maintains all of an individual's medical
information. The primary care provider shall be a provider from which
the enrollee can access primary and preventive care, or specialty
care as determined appropriate by a medical professional.
(2) An enrollment process that includes a patient identification
system to demonstrate enrollment into the program.
(3) A screening process for individuals who may qualify for
enrollment into the Healthy Families Program and the Access for
Infants and Mothers Program prior to enrollment into the local
coverage option program.
(4) Use of a medical record system, which may include electronic
medical records.
(5) Demonstrated progress in meeting industry-accepted quality
monitoring processes to assess the health care outcomes of
individuals with chronic conditions who are enrolled in the local
coverage option program, including HEDIS and NCQA standards.
(6) Promotion of the use of preventive services and early
intervention.
(7) The ability to demonstrate how the local coverage option
program will promote the viability of the existing safety net health
care system.
(8) Demonstration of how the program will provide consumer
assistance to individuals applying to, participating in, or accessing
services in the local coverage option program. For purposes of this
paragraph, "consumer assistance" includes specific processes to
address consumer grievances and patient advocacy.
(i) After three years of operation of a local coverage option
program in a county, the department shall conduct a review using the
local coverage option program assessment tool to evaluate each county'
s performance against the benchmarks established under subdivisions
(g) and (h). If the department determines that the local coverage
option program in a particular
county has substantially met the benchmarks, the director
shall extend the period of exclusive coverage in that county for an
additional two years. If the department concludes that a county
failed to substantially meet the benchmarks, the county's local
coverage option program shall cease to be the exclusive coverage
option as provided in paragraph (2) of subdivision (d) of Section
14005.332.01. The county shall have the opportunity for
administrative and judicial review of the department's determination.
(j) After five years of operation of a local coverage option
program in a county, newly enrolled Medi-Cal beneficiaries described
in Section 14005.333 shall have the ability to enroll in either the
local coverage option program or the county organized health system
(COHS) or the two-plan contractor in the county.
(k) To the extent necessary to implement the local coverage option
program, the director may waive, or exempt local coverage option
programs from, the Medi-Cal managed care program requirements of
Chapters 4 and 4.1 of Title 22 of the California Code of Regulations,
and the Director of the Department of Managed Health Care may waive,
or exempt local coverage option programs from, the requirements of
Chapter 2.2 (commencing with Section 1340) of Division 2 of the
Health and Safety Code if the Director of Health Care Services and
the Director of the Department of Managed Health Care find the action
to be in the public interest and not detrimental to the protection
of patients. The director shall comply with the following provisions
in implementing this subdivision:
(1) Waivers or exemptions may be granted to a program as necessary
to implement the limited network of providers authorized under this
section.
(2) Financial responsibility requirements may be waived or
adjusted to recognize the financial viability of the public entity
operating the program.
(3) Section 1342.9 of the Health and Safety Code shall apply to
local coverage option programs.
(l) The local coverage option program shall become operational for
services rendered on and after July 1, 2010.
SEC. 65. Section 14008.85 of the Welfare and
Institutions Code is amended to read:
14008.85. (a) To the extent federal financial participation is
available, a parent who is the principal wage earner shall be
considered an unemployed parent for purposes of establishing
eligibility based upon deprivation of a child where any of the
following applies:
(1) The parent works less than 100 hours per month as determined
pursuant to the rules of the Aid to Families with Dependent Children
program as it existed on July 16, 1996, including the rule allowing a
temporary excess of hours due to intermittent work.
(2) The total net nonexempt earned income for the family is not
more than 100 percent of the federal poverty level as most recently
calculated by the federal government. The department may adopt
additional deductions to be taken from a family's income.
(3) The parent is considered unemployed under the terms of an
existing federal waiver of the 100-hour rule for recipients under the
program established by Section 1931(b) of the federal Social
Security Act (42 U.S.C. Sec. 1396u-1).
(b) The department shall seek any federal approval required to
waive or to increase the income limit in paragraph (2) of subdivision
(a) to the extent necessary to implement Sections 14005.30 and
14005.301.
(c) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department shall implement this section by means of an all county
letter or similar instruction without taking regulatory action.
Thereafter, the department shall adopt regulations in accordance with
the requirements of Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code.
SEC. 66. SEC. 69. Section 14011.16
of the Welfare and Institutions Code is amended to read:
14011.16. (a) Commencing August 1, 2003, the department shall
implement a requirement for beneficiaries to file semiannual status
reports as part of the department's procedures to ensure that
beneficiaries make timely and accurate reports of any change in
circumstance that may affect their eligibility. The department shall
develop a simplified form to be used for this purpose. The department
shall explore the feasibility of using a form that allows a
beneficiary who has not had any changes to so indicate by checking a
box and signing and returning the form.
(b) Beneficiaries who have been granted continuous eligibility
under Section 14005.25 shall not be required to submit semiannual
status reports. To the extent federal financial participation is
available, all children under 19 years of age shall be exempt from
the requirement to submit semiannual status reports.
(c) Beneficiaries whose eligibility is based on a determination of
disability or on their status as aged or blind shall be exempt from
the semiannual status report requirement described in subdivision
(a). The department may exempt other groups from the semiannual
status report requirement as necessary for simplicity of
administration.
(d) When a beneficiary has completed, signed, and filed a
semiannual status report that indicated a change in circumstance,
eligibility shall be redetermined.
(e) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department shall implement this section by means of all county
letters or similar instructions without taking regulatory action.
Thereafter, the department shall adopt regulations in accordance with
the requirements of Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code.
(f) This section shall be implemented only if and to the extent
federal financial participation is available.
(g) This section shall become inoperative on July 1,
2010, and, as of January 1, 2011, is repealed, unless a later enacted
statute that is enacted before January 1, 2011, deletes or extends
the dates on which it becomes inoperative and is repealed.
upon implementation of Section 14011.16.1 and shall remain
inoperative for as long as that section continues to be
implemented.
SEC. 67. SEC. 70. Section 14011.16.1
is added to the Welfare and Institutions Code, to read:
14011.16.1. (a) Commencing July 1, 2010, the department shall
implement a requirement for any beneficiary who is not required to
make premium payments to file a semiannual address verification
report. The department shall develop a simplified form to be used for
this purpose so that a beneficiary who has not had a change of
address can so indicate by checking a box and returning the form.
(b) When a beneficiary who is required to complete and return the
form described in subdivision (a) fails to do so, the county shall
follow up by attempting to contact the individual using the last
known phone number or numbers. If the attempted phone contact fails
to resolve the issue by providing confirmation of the current
address, the county shall search available files to determine if an
alternate or new address has been used by the beneficiary and shall
send a form to that address that is required to be returned. In the
absence of a new or alternate address, a form shall be sent to the
last known address. If the form is not returned, or if it is returned
under circumstances indicating that the individual no longer resides
at the address last provided by the individual and no forwarding
address is provided, eligibility shall be terminated for loss of
contact.
(c) Whenever Medi-Cal eligibility is terminated based on a loss of
contact as described in this section, the entity responsible for
redeterminations of eligibility for the affected beneficiary shall
document the facts causing the eligibility termination in the
beneficiary's file. Following this written certification, a notice of
action specifying that Medi-Cal eligibility was terminated based on
loss of contact shall be sent to the beneficiary.
(d) A beneficiary whose eligibility is based on a determination of
disability or on his or her status as aged or blind shall be exempt
from the requirements of subdivision (a).
(e) Children under 19 years of age and pregnant women shall be
exempt from the requirements of this section.
(f) The department may exempt categories or groups of individuals
from the requirement to file an address verification as necessary for
simplicity of administration.
(g) This section shall be implemented only if and to the extent
that its implementation does not jeopardize federal financial
participation.
SEC. 71. Section 14074.5 is added to the Welfare and
Institutions Code, to read:
14074.5. The department shall seek to maximize the availability
of federal funding for the costs of providing Cal-CHIPP Healthy
Families coverage to non-Medi-Cal beneficiaries through the program
established pursuant to Part 6.45 (commencing with Section 12699.201)
of Division 2 of the Insurance Code.
SEC. 72. Section 14081.6 is added to the Welfare and
Institutions Code, to read:
14081.6. If Article 5.21 (commencing with Section 14167.1) or
Article 5.22 (commencing with Section 14167.31), or both, become
inoperative, hospitals shall be paid for services rendered to
Medi-Cal beneficiaries at the rates that were in effect on June 30,
2010, including the rates paid pursuant to the provisions of this
article.
SEC. 73. Section 14092.5 is added to the Welfare and
Institutions Code, to read:
14092.5. (a) The director shall establish a local coverage option
program to provide Medi-Cal coverage for low-income adults eligible
pursuant to Section 14005.333. The program shall meet the
requirements of this section.
(b) Local coverage option programs shall only be implemented in
counties that operate designated public hospitals where the county
elects to operate a local coverage option program and the department
approves the county's application. Counties operating a local
coverage option shall provide coverage for those eligible individuals
described in Section 14005.333 who reside in the county.
(1) All covered services shall be provided by designated public
hospitals, their affiliated public providers, and community clinics,
except with respect to those medically necessary services that are
not available or accessible through these providers. Local coverage
option programs shall contract with federally qualified health
centers in the county to the extent and as required by federal law.
Each enrollee shall be assigned a medical home at a public provider
affiliated with a public hospital or at a community clinic. Local
coverage option programs shall contract with additional providers,
including safety net providers such as disproportionate share
hospitals, for services to enrollees in order to comply with the
Knox-Keene Health Care Service Plan Act of 1975 (Chapter 2.2
(commencing with Section 1340) of Division 2 of the Health and Safety
Code) or other provisions of law.
(2) Counties may only provide coverage in a local coverage option
through a health care service plan licensed under the Knox-Keene
Health Care Service Plan Act of 1975. The local coverage option may
include any one of the following:
(A) Direct operation through a county-operated licensed health
care service plan.
(B) Operation through a local initiative, created pursuant to
Section 14087.31, 14087.35, or 14087.38 that is licensed as a health
care service plan.
(C) Operation through a county organized health system described
in Section 14087.51 or 14087.54 that is licensed as a health care
service plan.
(3) The department shall issue a request for applications from
applicable counties and shall approve applications based on the
criteria set forth in subdivisions (g) and (h).
(4) The department shall enter into contracts with those counties
that have had their applications approved by the department.
(5) In implementing this section, the department may enter into
contracts for the provision of essential administrative and other
services.
(6) (A) If a county elects to provide coverage through a local
initiative or county organized health system, the director shall
contract with, and make the payments required under this section to,
the designated local initiative or county organized health system in
the county.
(B) An entity receiving payment under subparagraph (A), including
a unit or subunit of county government, shall not transfer any
portion of the payments received to the county or to any other unit
of government; provided, however, that retention of those funds by
the entity receiving payments under subparagraph (A) for use in
either the current or subsequent fiscal year is allowable. Retained
funds may be commingled with county funds for cash management or
related purposes, provided that those funds are appropriately tracked
and only the depositing entity is authorized to expend them.
(c) A county may offer enrollment in its local coverage option
program to employers and individuals.
(d) In consultation with participating counties, the director
shall design a common identification card to be provided by the
county to each enrollee in a local coverage option program.
(e) Each county, local initiative, or county organized health
system that operates a local coverage option program shall be
entitled to periodic payments per individual who resides in the
county who is an eligible Medi-Cal beneficiary under Section
14005.333 and is enrolled in the local coverage option program. Rates
for those payments shall be determined by the department and shall
meet the requirements of Section 14301.1. During the first three
years of operation, the department shall offer the local coverage
option program the option of a contract provision that sets a
specified dollar threshold that, if exceeded, allows the local
coverage option program to share with the state the risk and gains of
providing coverage through a risk corridor agreement that sets
boundaries on profits or losses by the local coverage option program
above and below the specified dollar thresholds as set forth in the
contract between the department and the local coverage option
program. The risk corridor agreement shall provide that if the
profits or losses incurred by the local coverage option program
exceed an initial specified dollar threshold, the local coverage
option program and the state shall share in the profits or losses,
and that if the profits or losses incurred by the local coverage
option program exceed a final specified dollar threshold such profits
or losses shall be allocated entirely to the state. The dollar
thresholds and corridors for profits and losses shall be the same
amount.
(f) All providers that provide out of network emergency services
to local coverage option program enrollees shall accept as payment in
full payments they receive from the local coverage option program
that comply with Section 1396u-2(b)(2)(D) of Title 42 of the United
States Code regarding maximum payments for those services.
(g) In consultation with the participating counties, by January 1,
2010, the department shall contract with an independent third party
to develop a local coverage option program assessment tool to measure
the extent to which the counties are providing quality, coordinated
care to eligible individuals. The local coverage option program
assessment tool shall be designed to evaluate the following for each
local coverage option program:
(1) Enrolled patient population.
(2) The use of medical services.
(3) Access and barriers to health care.
(4) Processes and quality of care for selected medical conditions,
as appropriate for the population enrolled in the program.
(5) Patient satisfaction.
(h) The following elements shall be evaluated using the local
coverage option program assessment tool developed under subdivision
(g):
(1) Designation of a medical home and assignment of eligible
individuals to a primary care provider within 60 days of enrollment.
For purposes of this paragraph, "medical home" means a single
provider or facility that maintains all of an individual's medical
information. The primary care provider shall be a provider from which
the enrollee can access primary and preventive care, or specialty
care as determined appropriate by a medical professional.
(2) An enrollment process that includes a patient identification
system to demonstrate enrollment into the program.
(3) A screening process for individuals who may qualify for
enrollment into the Healthy Families Program and the Access for
Infants and Mothers Program prior to enrollment into the local
coverage option program.
(4) Use of a medical record system, which may include electronic
medical records.
(5) Demonstrated progress in meeting industry-accepted quality
monitoring processes to assess the health care outcomes of
individuals with chronic conditions who are enrolled in the local
coverage option program, including HEDIS and NCQA standards.
(6) Promotion of the use of preventive services and early
intervention.
(7) The ability to demonstrate how the local coverage option
program will promote the viability of the existing safety net health
care system.
(8) Demonstration of how the program will provide consumer
assistance to individuals applying to, participating in, or accessing
services in the local coverage option program. For purposes of this
paragraph, "consumer assistance" includes specific processes to
address consumer grievances and patient advocacy.
(i) After three years of operation of a local coverage option
program in a county, the department shall conduct a review using the
local coverage option program assessment tool to evaluate each county'
s performance against the benchmarks established under subdivisions
(g) and (h). If the department determines that the local coverage
option program in a particular county has substantially met the
benchmarks, the director shall extend the local coverage option
program in that county for an additional two years. If the department
concludes that a county failed to substantially meet the benchmarks,
the county's local coverage option program shall terminate. The
county shall have the opportunity for an administrative hearing
pursuant to Section 100171 of the Health and Safety Code, and for
judicial review of the department's determination.
(j) (1) After four years of operation of a local coverage option
program in a county, if the director extends the local coverage
option program in that county for an additional two years pursuant to
subdivision (i), Medi-Cal beneficiaries enrolled in the local
coverage option program shall have the ability to disenroll from the
local coverage option program and enroll in either the county
organized health system or one of the two-plan contractors in the
county.
(2) After five years of operation of a local coverage option
program in a county, newly enrolled Medi-Cal beneficiaries described
in Section 14005.333 shall have the ability to enroll in either the
local coverage option program or the county organized health system
or one of the two-plan contractors in the county, if available in the
county.
(k) (1) For the first five years of operation of the local
coverage option, the director may exempt local coverage option
programs from the Medi-Cal managed care program requirements of
Chapters 4 and 4.1 of Title 22 of the California Code of Regulations
to implement the limited network of providers authorized under this
section.
(2) Consistent with the authority and requirements of subdivision
(a) of Section 1344 of the Health and Safety Code, the Director of
Managed Health Care may waive or exempt local coverage options
programs from the requirements of Chapter 2.2 (commencing with
Section 1340) of Division 2 of the Health and Safety Code to
implement the limited network of providers authorized under this
section.
(3) In implementing this subdivision, the directors shall find the
action to be in the public interest and not detrimental to the
protection of patients.
(l) The local coverage option program shall become operational for
services rendered on and after July 1, 2010.
(m) The department shall seek any federal waivers or obtain
approval from the Centers for Medicare and Medicaid Services of a
state plan amendment as necessary to allow for federal financial
participation under this section. This section shall only be
implemented if and to the extent that federal financial participation
is available.
(n) Implementation of this section is contingent on establishment
of a county share of cost.
SEC. 68. SEC. 74. Section 14132.105
is added to the Welfare and Institutions Code, to read:
14132.105. (a) (1) The department shall establish a Healthy
Action Incentives and Rewards Program to be provided as a covered
benefit under the Medi-Cal program.
(2) The benefits described in this section shall only be provided
under the terms and conditions determined by the department, and
shall meet all the requirements described in subdivision (b).
(b) For purposes of this section, the Healthy Action Incentives
and Rewards Program shall include, but need not be limited to, all of
the following:
(1) Health risk appraisals that collect information from eligible
beneficiaries to assess overall health status and identify risk
factors, including, but not limited to, smoking and smokeless tobacco
use, alcohol abuse, drug use, nutrition, and physical activity
practices.
(2) A followup appointment with a licensed health care
professional acting within his or her scope of practice to review the
results of the health risk appraisal and discuss any recommended
actions.
(3) Incentives or rewards or both for eligible beneficiaries to
become more engaged in their health care and to make appropriate
choices that support good health, including obtaining health risk
appraisals, screening services, immunizations, or participating in
health lifestyle programs or practices. These programs or practices
may include, but need not be limited to, smoking cessation, physical
activity, or nutrition. Incentives may include, but need not be
limited to, nonmedical pharmacy products or services not otherwise
covered under this chapter, gym memberships, and weight management
programs.
(c) The department shall seek and obtain federal financial
participation and secure all federal approvals, including all
required state plan amendments or waivers, necessary to implement and
fund the services authorized under this section.
(d) This section shall be implemented only if and to the extent
that federal financial participation is available and has been
obtained.
(e) (1) Notwithstanding any other provision of law, the provision
of healthy incentives and rewards pursuant to this section by a
health care provider, or his or her agent, that meets the
requirements of this section, Section 1367.38 of the Health and
Safety Code, or Section 10123.56 of the Insurance Code shall not be
considered or construed as an unlawful practice, act, kickback,
bribe, rebate, remuneration, offer, coupon, product, payment, or any
other form of compensation by a provider or his or her agent,
directly or indirectly, overtly or covertly, in exchange for another
to obtain, participate, or otherwise undergo or receive health care
services.
(2) Notwithstanding any other provision of law, incentives
authorized pursuant to this section are not subject to the penalties,
discipline, limitations, or sanctions imposed under law to preclude
or prohibit, as an unlawful practice, bribe, kickback or other act,
the offering or delivery of a rebate, remuneration, offer, coupon,
product, rebate, payment, or any other form of compensation by the
provider, or his or her agent, directly or indirectly, overtly or
covertly, in exchange for another to obtain, participate, or
otherwise undergo or receive
health care services.
(3) Notwithstanding any other provision of law, the provision of
healthy incentives and rewards pursuant to this section by a health
care provider, or his or her agent, that meets the requirements of
this section shall not be considered or construed as an inducement to
enroll.
(f) This section shall only be implemented if, and to the extent,
allowed under federal law. If any portion of this section is found to
be invalid, as determined by a final judgment of a court of
complaint jurisdiction, this section shall become inoperative.
SEC. 69. SEC. 75. Section 14137.10
is added to the Welfare and Institutions Code, to read:
14137.10. (a) (1) There is hereby established in the department
the Comprehensive Diabetes Services Program to provide comprehensive
diabetes prevention and management services to any individual who
meets the requirements set forth in paragraph (2). For purposes of
this subdivision, "comprehensive diabetes prevention and management
services" shall be defined by the department based on consultation
pursuant to subdivision (b). Services may include, but need not be
limited to, all of the following:
(A) Screening for diabetes and prediabetes in accordance with the
operational screening guidelines and protocols developed for the
Comprehensive Diabetes Services Program utilizing the most current
American Diabetes Association criteria for diabetes in adults.
(B) Providing visits by certified practitioners in accordance with
the operational protocols developed for the Comprehensive Diabetes
Service Program for eligible beneficiaries who have been diagnosed
with prediabetes.
(C) Providing culturally and linguistically appropriate lifestyle
coaching and self-management training for eligible adult
beneficiaries with prediabetes and diabetes, in accordance with
evidence-based interventions, to avoid unhealthy blood sugar levels
that contribute to the progression of diabetes and its complications.
(D) Conducting regular and timely laboratory evaluations, by the
primary care physician of the eligible beneficiary, in conjunction
with a program of blood sugar level self-management education and
training for eligible adult beneficiaries who have been diagnosed
with prediabetes and diabetes.
(2) A beneficiary is eligible for services pursuant to this
section if he or she is all of the following:
(A) Between 18 and 64 years of age.
(B) Not dually enrolled in the Medi-Cal program and the federal
Medicare program.
(C) Diagnosed with prediabetes or diabetes.
(D) Otherwise eligible for full scope of benefits under this
chapter but not enrolled in a Medi-Cal managed care plan.
(b) The department shall seek and obtain federal financial
participation and secure all federal approvals, including all
required state plan amendments or waivers, necessary to implement and
fund the services authorized under this section.
(c) For the purposes of implementation of this section, the
director may enter into contracts for the purposes of providing the
benefits offered under the Comprehensive Diabetes Services Program.
(d) This section shall be implemented only if and to the extent
that federal financial participation is available and has been
obtained.
(e) The Comprehensive Diabetes Services Program shall be developed
and implemented only to the extent that state funds are appropriated
annually for the services provided under this section.
(f) The department shall develop and implement incentives for
Medi-Cal fee-for-service eligible beneficiaries who participate in
the Comprehensive Diabetes Services Program and are compliant with
program requirements for screening and self-management activities.
(g) The department shall develop and implement financial
incentives for Medi-Cal fee-for-service providers who participate in
the Comprehensive Diabetes Services Program and are compliant with
program requirements in the screening and management of eligible
beneficiaries who have been diagnosed with prediabetes and diabetes.
(h) The department shall collect data including, but not be
limited to, laboratory values from screening and diagnostic tests for
the individual beneficiaries participating in the Comprehensive
Diabetes Services Program and monitor the health outcomes of the
participating individual beneficiaries.
(i) The department shall, in consultation with the California
Diabetes Program in the State Department of Public Health, contract
with an independent organization to:
(1) Evaluate and report the health outcomes and cost savings of
the Comprehensive Diabetes Services program.
(2) Estimate the short- and long-term cost savings of expanding
the strategies of the Comprehensive Diabetes Services Program
statewide through the private or commercial insurance markets.
SEC. 76. Article 5.21 (commencing with Section 14167.1)
is added to Chapter 7 of Part 3 of Division 9 of the Welfare and
Institutions Code, to read:
Article 5.21. Medi-Cal Hospital Rate Stabilization Act
14167.1. For purposes of this article, the following definitions
shall apply:
(a) "Acute inpatient day" means a fee-for-service day, as defined
for purposes of the Office of Statewide Health Planning and
Development reporting by hospitals, for which the hospital has been
paid by the Medi-Cal program where the Medi-Cal program is the
primary payer.
(b) "Base period" means the 12-month period ending on the base
period ending date. However, in the case of a hospital that
terminates a contract for the provision of hospital inpatient
services negotiated with the California Medical Assistance Commission
after the date this article is enacted and prior to the base period
ending date, the base period shall be the 12-calendar months prior to
the contract termination date.
(c) "Base period ending date" means the last day of the sixth
month immediately preceding the implementation date.
(d) "Contract hospital" means a hospital that has a written
contract with a managed health care plan to provide hospital services
to the plan's subscribers or enrollees.
(e) "Designated public hospital" means any one of the following
hospitals:
(1) UC Davis Medical Center.
(2) UC Irvine Medical Center.
(3) UC San Diego Medical Center.
(4) UC San Francisco Medical Center.
(5) UC Los Angeles Medical Center, including Santa Monica/UCLA
Medical Center.
(6) LA County Harbor/UCLA Medical Center.
(7) LA County Olive View UCLA Medical Center.
(8) LA County Rancho Los Amigos National Rehabilitation Center.
(9) LA County University of Southern California Medical Center.
(10) Alameda County Medical Center.
(11) Arrowhead Regional Medical Center.
(12) Contra Costa Regional Medical Center.
(13) Kern Medical Center.
(14) Natividad Medical Center.
(15) Riverside County Regional Medical Center.
(16) San Francisco General Hospital.
(17) San Joaquin General Hospital.
(18) San Mateo Medical Center.
(19) Santa Clara Valley Medical Center.
(20) Ventura County Medical Center.
(f) "Hospital community" means the California Hospital Association
and any other hospital industry organization or system that
represents children's hospitals, nondesignated public hospitals,
designated public hospitals, private safety net hospitals, and other
public or private hospitals.
(g) "Hospital inpatient services" means all services covered under
the Medi-Cal program and furnished by hospitals to patients who are
admitted as hospital inpatients and reimbursed on a fee-for-service
basis by the department directly or through its fiscal intermediary.
Hospital inpatient services include outpatient services furnished by
a hospital to a patient who is admitted to that hospital within 24
hours of the provision of the outpatient services that are related to
the condition for which the patient is admitted. Hospital inpatient
services include physician services only if the service is furnished
to a hospital inpatient, the physician is compensated by the hospital
for the service, and the service is billed to the Medi-Cal program
by the hospital under a provider number assigned to the hospital.
Hospital inpatient services do not include inpatient mental health
services for which a county is financially responsible or services
furnished under a managed health care plan.
(h) "Hospital outpatient services" means all services covered
under the Medi-Cal program furnished by hospitals to patients who are
registered as hospital outpatients and reimbursed by the department
on a fee-for-service basis directly or through its fiscal
intermediary. Hospital outpatient services include physician services
only if the service is furnished to a hospital outpatient, the
physician is compensated by the hospital for the service, and the
service is billed to the Medi-Cal program by the hospital under a
provider number assigned to the hospital. Hospital outpatient
services do not include outpatient mental health services for which a
county is financially responsible or services furnished under a
managed health care plan.
(i) "Implementation date" means the first day on which hospitals
provide health care services to Medi-Cal beneficiaries that are
reimbursed under this article.
(j) "Inpatient base rate" means the per diem rate, or per
discharge rate if used by the department, established pursuant to
Section 14167.4.
(k) "Managed health care plan" means a health care delivery system
that manages the provision of health care and receives prepaid
capitated payments from the state in return for providing services to
Medi-Cal beneficiaries. Managed health care plans include, but are
not limited to, county organized health systems and entities
contracting with the department to provide services pursuant to
two-plan models, geographic managed care, and prepaid plans. Entities
providing these services contract with the department pursuant to
Article 2.7 (commencing with Section 14087.3), Article 2.8
(commencing with Section 14087.5), or Article 2.91 (commencing with
Section 14089) of Chapter 7, or Article 1 (commencing with Section
14200) or Article 7 (commencing with Section 14490) of Chapter 8.
(l) "Market basket index" means the percentage increase used by
the Medicare Program for the purpose of determining payment rates for
acute care inpatient hospital services as described in Section 1886
(b)(3)(B)(ii) of the federal Social Security Act.
(m) "Medi-Cal fee-for-service payments" means all payments made by
the Medi-Cal program to hospitals as reimbursement for hospital
inpatient services furnished with respect to acute inpatient days,
including payments for both routine and ancillary services, and
payments described in subdivision (e) of Section 14167.4, but
excluding payments described in subdivision (f) of Section 14167.4.
(n) "New hospital" means a hospital that did not provide hospital
inpatient services to Medi-Cal beneficiaries under current or prior
ownership and has no history of Medi-Cal reimbursement.
(o) "Nondesignated public hospital" means a public hospital that
is licensed under subdivision (a) of Section 1250 of the Health and
Safety Code and is defined in paragraph (25) of subdivision (a) of
Section 14105.98, excluding designated public hospitals.
(p) "Outpatient base rates" means the Medi-Cal payment rates for
hospital outpatient services in effect on the date immediately
preceding the implementation date.
(q) "Private hospital" means a hospital licensed under subdivision
(a) of Section 1250 of the Health and Safety Code that is a
nonpublic hospital, nonpublic-converted hospital, or converted
hospital as those terms are defined in paragraphs (26) to (28),
inclusive, respectively, of subdivision (a) of Section 14105.98.
(r) "Safety net care pool" means the federal funds available to
ensure continued government support for the provision of health care
services to uninsured populations, as described in subdivision (k) of
Section 14166.1.
14167.2. (a) The department shall determine outpatient base rates
for hospital outpatient services furnished by nondesignated public
hospitals based on the payment methodology in effect on the day
immediately preceding the implementation date until the department
has developed new methods and standards for payment of hospital
outpatient services under subdivision (b). The department shall
increase the outpatient base rates by the percentage the department
determines is necessary to comply with subdivision (c) so that each
outpatient base rate is increased by the same percentage, except as
may be necessary to comply with federal Medicaid law.
(b) The department, in consultation with the hospital community,
and with input from others as deemed necessary and appropriate, shall
develop new methods and standards of payment for hospital outpatient
services. These new methods and standards shall implement
subdivision (c) and take into consideration factors such as acuity
and the cost incurred by hospitals in providing services.
(c) Medi-Cal rates for hospital outpatient services furnished by
nondesignated public hospitals during a fiscal year shall be set to
result in aggregate payments equal to the maximum permitted by
federal Medicaid law.
(d) The department shall establish rates of payment pursuant to
this section prior to the implementation date and prior to the
beginning of each state fiscal year commencing on or after the
implementation date. The department shall monitor payments during the
fiscal year and may make adjustments as may be necessary to comply
with subdivision (c).
14167.3. (a) The department shall determine outpatient base rates
for hospital outpatient services furnished by private hospitals
based on the payment methodology in effect on the day immediately
preceding the implementation date until the department has developed
new methods and standards for payment of hospital outpatient services
under subdivision (b). The department shall increase the outpatient
base rates by the percentage the department determines is necessary
to comply with subdivision (c) so that each outpatient base rate is
increased by the same percentage, except as may be necessary to
comply with federal Medicaid law.
(b) The department, in consultation with the hospital community,
and with input from others as deemed necessary and appropriate, shall
develop new methods and standards of payments for hospital
outpatient services. These new methods and standards shall implement
subdivision (c) and take into consideration factors such as acuity
and the cost incurred by hospitals in providing services.
(c) Medi-Cal rates for hospital outpatient services furnished by
private hospitals during a fiscal year shall be set to result in
aggregate payments equal to the maximum permitted by federal Medicaid
law.
(d) The department shall establish rates of payment pursuant to
this section prior to the implementation date and prior to the
beginning of each state fiscal year commencing on or after the
implementation date. The department shall monitor payments during the
fiscal year and may make adjustments as may be necessary to comply
with subdivision (c).
14167.4. (a) The department shall determine an inpatient base
rate for each private hospital and nondesignated public hospital.
(b) The inpatient base rate shall be an estimate of the hospital's
Medi-Cal fee-for-service payments per acute inpatient day, or per
acute inpatient discharge if used by the department, as of the day
immediately preceding the implementation date.
(c) Each hospital's inpatient base rate shall be determined as
follows:
(1) The department shall determine the hospital's total Medi-Cal
fee-for-service payments for services furnished during the base
period.
(2) The department shall determine the hospital's total Medi-Cal
acute inpatient days, or the number of acute inpatient discharges if
used by the department, for the base period.
(3) The department shall divide the result of paragraph (1) by the
result of paragraph (2).
(4) The department shall adjust the result of paragraph (3) by the
rate of increase in the market basket index from the midpoint of the
base period to the implementation date. The result shall be the
hospital's inpatient base rate.
(d) The department shall make available a paid claims summary for
each hospital that sets forth all of the Medi-Cal fee-for-service
payments made for services furnished during the hospital's base
period and the hospital's fee-for-service Medi-Cal acute inpatient
days for the base period, and any other data the department may
require to determine each hospital's base rate. The Medi-Cal
fee-for-service payments for hospitals reimbursed on a cost basis
shall be the hospital's interim payments. The department shall use
this data to compute the inpatient base rate.
(e) The department shall add to each hospital's Medi-Cal
fee-for-service payments set forth in the paid claims summary
prepared pursuant to subdivision (d) the supplemental payments under
Section 14166.12 or Section 14166.17 made by the department to the
hospital with respect to the state fiscal year ending during the base
period.
(f) In determining each hospital's inpatient base rate, the
department shall exclude payments made pursuant to Sections 14085.5,
14166.11, 14166.16, 14166.21, and 14166.23, payments by a managed
health care plan or one of its contractors, payments resulting from
an intergovernmental transfer, or payments made where the Medi-Cal
program is not the primary payer, such as services covered under
Medicare Part A and Part B where the individual receiving the
services is a Medi-Cal beneficiary.
(g) The department shall make available a preliminary list of each
hospital's inpatient base rate and provide each hospital with the
data used to compute its base rate no later than 90 days before the
implementation date. The department shall make available a final list
of each hospital's inpatient base rate 30 days prior to the
implementation date.
(h) A hospital's base rate shall be corrected if the hospital
demonstrates any of the following:
(1) The department made a mathematical error.
(2) The data used by the department is inaccurate based on the
data in the possession of the department or its fiscal intermediary
at the time the paid claims summary under subdivision (d) was
prepared. Payments made after the date of the preparation of the paid
claims summary under subdivision (d) shall not be a ground for
correction.
(3) The department failed to include payments described in
subdivision (e).
(4) The department included payments described in subdivision (f).
(i) The impatient base rate for a new hospital shall be the median
base rate of hospitals in the peer group to which the new hospital
is assigned by the department. The peer groups are those groupings of
hospitals described in Section 51553 of Title 22 of the California
Code of Regulations.
(j) The department shall review and issue a determination
concerning a hospital's request for a correction under subdivision
(h) within 30 days of receipt of the request. Any correction that is
made shall be applied prospectively, beginning the first day of the
first calendar quarter beginning after the date of the department's
determination. However, if the department receives a hospital's
request for a correction no later than 30 days after the department
publishes the preliminary list under subdivision (g), any correction
shall be effective as of the implementation date.
(k) The department shall develop an informal process for reviewing
and making decisions promptly concerning disputes by hospitals of
the department's action or proposed action under this section or
Section 14167.5, consistent with the provisions of this section and
Section 14167.5. The process shall be exempt from the provisions of
the Administrative Procedure Act.
(l) Notwithstanding any other provision of law, no change to a
hospital's base rate shall be applied to payments for services
rendered prior to the effective date of the change to the base rate.
14167.5. To the extent feasible, the department shall develop a
case mix adjustment factor to apply to inpatient base rates for
private and nondesignated public hospitals. If developed, the
department shall take all of the following steps:
(a) Each private and nondesignated public hospital's inpatient
base rate shall be adjusted to reflect changes in the hospital's
Medi-Cal case mix for fee-for-service Medi-Cal inpatients as compared
to the base period.
(b) Case mix adjustments shall be applied prospectively at the
beginning of each state fiscal year beginning with the first state
fiscal year that begins no less than 12 months after the
implementation date.
(c) The department shall compute a case mix adjustment factor for
each hospital for each state fiscal year. The case mix adjustment
factor shall be the hospital's case mix index for the most recent
calendar year divided by the case mix index for the base period.
(d) The department, in consultation with the hospital community,
and with input from others as deemed necessary and appropriate, shall
develop the methodology for computing the case mix index, including
the data to be used and the sources of the data. In developing the
case mix index methodology, the department shall consider, at
minimum, the following factors:
(1) The development of a methodology that reasonably measures the
relative cost that would be expected to be incurred in treating
different types of cases.
(2) The use of an approach using diagnosis related groups and
relative weights for those groups used by the Medicare Program under
the Medicare inpatient prospective payment system.
(3) The accuracy of applying weights used by the Medicare Program
for the purpose of measuring the Medi-Cal case mix.
(4) The available data.
(5) The comparability of the data available for the base period
and the data available for later years.
(6) The development of accurate measures of relative case mix for
pediatric patients.
(e) No later than 90 days prior to the beginning of the fiscal
period to which a case mix adjustment factor is applied, the
department shall determine each hospital's case mix adjustment
factor, advise each hospital of its case mix adjustment factor and
the case mix index factors used to compute the case mix adjustment
factor, and provide each hospital with the data used to compute the
case mix adjustment factor.
(f) A hospital's case mix adjustment factor shall be corrected if
the hospital demonstrates any of the following:
(1) The department made a mathematical error.
(2) The data used by the department is inaccurate.
(3) More accurate data is available.
(g) The department shall review and issue a determination
concerning a hospital's request for a correction under subdivision
(f) within 30 days of receipt of the request. Any correction that is
made shall be applied prospectively, beginning the first day of the
first calendar quarter beginning after the date of the department's
determination.
(h) (1) The department may make adjustments to a hospital's base
rate to take into account an event or series of events that may
significantly affect a hospital's costs of furnishing hospital
inpatient services that is not reflected in the case mix adjustment,
such as a merger or consolidation of hospitals, a substantial change
in the types of services furnished by a hospital, or a substantial
change in the acuity of the hospital's patients. An event or series
of events shall be deemed to significantly affect a hospital's costs
only if the department determines that the hospital's cost per day
has increased or decreased by 10 percent or more as a result of
the event or series of events.
Events that are generally applicable to multiple hospitals, such as a
market basket increase in the costs of goods or services purchased
by hospitals, shall not be a basis for an adjustment under this
subdivision.
(2) The department shall notify the hospital in writing of any
adjustment it proposes to make under this subdivision. The notice
shall include an explanation of the department's reasons for making
the adjustment, the computation of the adjustment, and the data
relied on by the department in making the adjustment. The hospital
may dispute an adjustment within 30 days after receipt of the notice
described in this paragraph by providing written notice to the person
identified by the department in the notice. The hospital shall
include in the written notice of dispute the reasons the hospital
believes the adjustment should not be made as proposed by the
department, including all data supporting the hospital's position.
The department may not implement any adjustment under this
subdivision until it makes a final determination concerning a notice
of dispute.
(3) Any adjustment under this subdivision shall be made
prospectively beginning the first day of the calendar quarter
beginning no sooner than 60 days after the department issues a notice
to the hospital of the proposed adjustment. However, if the hospital
timely disputes the proposed adjustment, as specified in paragraph
(2), the proposed adjustment shall not be implemented until the first
day of the first calendar quarter beginning after the department
issues its decision concerning the dispute.
14167.6. (a) The department shall determine inpatient base rates
pursuant to Section 14167.4 for hospital inpatient services provided
by nondesignated public hospitals based on the payment methodologies
in effect on the day immediately preceding the implementation date
until the department has developed new methods and standards under
subdivision (b). The department shall increase each hospital's
inpatient base rate by the percentage the department determines is
necessary to comply with subdivision (c), taking into account the
additional payments made pursuant to subdivision (e), so that each
hospital's inpatient base rate is increased by the same percentage,
except as may be necessary to comply with federal Medicaid law. The
department shall pay each nondesignated public hospital for hospital
inpatient services provided prior to the implementation of new
methods and standards of payment developed pursuant to subdivision
(b) based on its inpatient base rate as increased pursuant to this
subdivision.
(b) The department, in consultation with the hospital community,
and with input from others as deemed necessary and appropriate, shall
develop new methods and standards of payments for hospital inpatient
services provided by nondesignated public hospitals. These new
methods and standards shall implement subdivision (c) and take into
consideration factors such as patient acuity, the cost incurred by
hospitals in providing services, and equitable payment for outlier
patients.
(c) Medi-Cal rates for hospital inpatient services furnished by
nondesignated public hospitals during a state fiscal year shall be
set at an amount that results in aggregate payments equal to the
maximum permitted by federal Medicaid law.
(d) The department shall establish rates of payment pursuant to
this section prior to the implementation date and prior to the
beginning of each state fiscal year beginning on or after the
implementation date. The department shall monitor payments during the
fiscal year, and may make adjustments that may be necessary to
comply with subdivision (c).
(e) The department shall develop a reimbursement methodology to
equitably compensate nondesignated public hospitals for the delivery
of Medi-Cal acute inpatient psychiatric services.
14167.7. (a) The department shall determine inpatient base rates
pursuant to Section 14167.4 for hospital inpatient services provided
by private hospitals based on the payment methodologies in effect on
the day immediately preceding the implementation date until the
department has developed new methods and standards under subdivision
(b). The department shall increase each hospital's inpatient base
rate by the percentage the department determines is necessary to
comply with subdivision (c), taking into account the additional
payments made under subdivision (f), so that each hospital's
inpatient base rate is increased by the same percentage, except as
may be necessary to comply with federal Medicaid law. The department
shall pay each private hospital for hospital impatient services
provided prior to the implementation of new methods and standards of
payment developed pursuant to subdivision (b) based on its inpatient
base rate as increased pursuant to this subdivision.
(b) The department, in consultation with the hospital community,
and with input from others as deemed necessary and appropriate, shall
develop new methods and standards of payments for hospital inpatient
services provided by private hospitals. These new methods and
standards shall implement subdivision (c) and take into consideration
factors such as patient acuity, the cost incurred by hospitals in
providing services, and equitable payment for outlier patients.
(c) Medi-Cal rates for hospital inpatient services furnished by
private hospitals during a state fiscal year shall be set to result
in aggregate payments equal to the maximum permitted by federal
Medicaid law.
(d) The department shall establish rates of payment pursuant to
this section prior to the implementation date and prior to the
beginning of each state fiscal year beginning on or after the
implementation date. The department shall monitor payments during the
fiscal year and may make such adjustments as may be necessary to
comply with subdivision (c).
(e) Subject to subdivision (c) of Section 14167.12, the department
shall establish rates of payment to major teaching institutions that
have a formal academic affiliation with a designated public hospital
or a private or public California medical school that take into
consideration the cost of medical education programs.
(f) The department shall develop a reimbursement methodology to
equitably compensate private hospitals for the delivery of Medi-Cal
acute inpatient psychiatric services.
14167.8. (a) The amount of any increased payments made under this
article to private hospitals in excess of the payments that would
have been made under the payment rates in effect on the day
immediately prior to the implementation date, including the amount of
increased payments to hospitals by managed health care plans
pursuant to Section 14167.9, shall not be included in the calculation
of the numerator or denominator of the low-income percent of the
OBRA limit for purposes of the disproportionate share hospital
replacement fund payments pursuant to Section 14166.11.
(b) The department shall continue to make payments to private and
nondesignated public hospitals pursuant to Sections 14085.5,
14105.17, 14105.97, 14166.11, and 14166.16, in addition to other
payments made under this article. The department shall take all of
these payments into account in determining whether an applicable
federal limitation is satisfied only if, and to the extent, required
by federal Medicaid law.
(c) Each private and nondesignated public hospital, as a condition
of receiving reimbursement under this section, shall keep, maintain,
and have readily retrievable, any records specified by the
department to fully support reimbursement amounts to which the
hospital is entitled, and any other records required by the federal
Centers for Medicare and Medicaid Services.
14167.9. (a) The director shall increase reimbursement rates to
managed health care plans by the actuarial equivalent amount
necessary to ensure that managed health care plans increase rates of
payments to hospitals under their contracts by the same percentage
that Medi-Cal fee-for-service rates to hospitals are increased
pursuant to this article, subject to the limitations of federal
Medicaid law, if any.
(b) Subject to subdivision (c), as applicable, the department
shall further increase payments to managed health care plans, in
addition to any increased payments made under subdivision (a), as may
be necessary to ensure that the full amount of the revenue arising
from payments of a fee from all hospitals subject to the fee for
patient days in a fiscal year is expended after making the
expenditures for the payments under Sections 14167.2, 14167.3,
14167.6, 14167.7, and 14167.10.
(c) (1) The amount of increased payments under this section shall
not exceed either of the following limits:
(A) The maximum amount, if any, for which federal financial
participation may be claimed.
(B) The sum of available revenue derived from a fee, as described
in subdivision (l) of Section 14167.12, plus interest, penalties, and
federal financial participation.
(2) The revenue derived from a fee, as described in subdivision
(l) of Section 14167.12, that is made available for purposes of this
section shall be 23.29 percent of the total fees that are assessed on
nondesignated public and private hospitals with respect to any
fiscal year.
(d) A Medi-Cal managed care plan shall equitably expend, in the
form of increased rates to all private hospitals, nondesignated
public hospitals, and designated public hospitals, for providing
services to Medi-Cal patients, 100 percent of any rate increase it
receives under this section. Managed health care plans shall submit
documentation as the department may require to demonstrate compliance
with the provisions of this subdivision.
14167.10. (a) (1) Commencing July 1, 2010, designated public
hospitals shall receive Medi-Cal reimbursement as specified in this
section.
(2) For purposes of this section, "hospital services" means
inpatient services and services rendered in the outpatient department
of the hospital, excluding services rendered by a hospital-based
federally qualified health center for which reimbursement is received
pursuant to Section 14132.100.
(b) Notwithstanding Article 2.6 (commencing with Section 14081),
Sections 14166.35 to 14166.9, inclusive, and any other provision of
law, each of the designated public hospitals shall be paid for those
hospital services provided to Medi-Cal beneficiaries on a
fee-for-service basis during any fiscal year as follows:
(1) Except as provided in paragraph (5), each of the designated
public hospitals shall receive, as payment for inpatient hospital
services provided to Medi-Cal beneficiaries during any fiscal year,
amounts based on the hospital's allowable costs incurred in providing
those services. These costs shall be determined annually by the
department making use of the data provided pursuant to subdivision
(c).
(2) Except as provided in paragraph (5), for the 2010-11 fiscal
year, and each fiscal year thereafter, each of the designated public
hospitals shall receive a reimbursement rate, limited to the payments
funded using state funds as provided in paragraph (3), for the
estimated cost of inpatient and outpatient hospital services rendered
to Medi-Cal beneficiaries based upon claims filed by the hospital in
accordance with the claims process set forth in Division 3
(commencing with Section 50000) of Title 22 of the California Code of
Regulations. Estimated costs shall be derived pursuant to the
process set forth in subdivision (b) of Section 14166.4. Costs not
reimbursed pursuant to this paragraph shall be reimbursed pursuant to
paragraph (7). Inpatient hospital rates may be on a per diem or per
discharge basis as determined by the department.
(3) (A) The nonfederal share of the reimbursement specified in
paragraph (2) shall consist of state funds, which shall be
established for fiscal year 2010-11 through and including fiscal year
2012-13 at the nonfederal share of the full cost incurred by the
particular hospital in the 2009-10 fiscal year, adjusted annually by
the percentage increase in the medical component of the Consumer
Price Index-Urban for the United States, but not to exceed the
nonfederal share of allowable, actual costs. For purposes of this
paragraph, the 2009-10 fiscal year shall be the hospital's initial
base year.
(B) For purposes of this paragraph, the nonfederal share shall be
calculated by subtracting the federal medical assistance percentage
in effect for the particular fiscal year from 100 percent.
(C) (i) For fiscal year 2013-14 and each fiscal year thereafter,
the nonfederal share of the reimbursement specified in paragraph (2)
shall consist of state funds, which shall be established at the
nonfederal share of the full cost incurred by the particular hospital
in the hospital's base year, adjusted annually by the percentage
increase in the medical component of the Consumer Price Index-Urban
for the United States, but not to exceed the nonfederal share of
allowable, actual costs.
(ii) At the beginning of each three-year period beginning with the
three-year period commencing on July 1, 2013, each hospital's costs
incurred, for purposes of clause (i), shall be determined to be the
full cost incurred by the particular hospital in the fiscal year
beginning two years prior to the beginning of the new three-year
period, which fiscal year shall be the hospital's new base year.
(4) For the 2010-11 fiscal year, and each fiscal year thereafter,
each designated public hospital shall receive supplemental federal
reimbursement pursuant to Section 14105.96, in addition to the
reimbursement received by each hospital for outpatient services
pursuant to paragraph (2).
(5) Reimbursement paid to Federally Qualified Health Centers shall
continue pursuant to Section 14132.100 for those hospitals that were
designated by the state as Federally Qualified Health Centers as of
July 1, 2007.
(6) The cost data and the resulting estimated costs submitted
pursuant to this section shall be certified as accurate by the unit
of government that owns or operates the hospital submitting the
estimated costs. Certifications required by this paragraph shall
comply with the requirements of subdivision (e) of Section 14166.8.
(7) (A) To the extent that the amount of the estimated allowable
costs for each designated public hospital determined pursuant to
paragraph (1) exceeds the amounts actually paid pursuant to paragraph
(2), the hospital shall receive a quarterly supplemental payment
equal to the federal reimbursement received as a result of the
amounts claimed by the department to the federal government based on
the total amounts certified pursuant to paragraph (6).
(B) Services provided by clinics and hospital outpatient
departments for which reimbursement is made under a cost-based
methodology pursuant to Section 14105.24 shall continue to be
reimbursed under that methodology.
(C) The supplemental Medi-Cal reimbursement provided by this
paragraph shall be distributed quarterly under a payment methodology
based on inpatient services provided to Medi-Cal patients at the
eligible facility, either on a per-visit basis, per-procedure basis,
or any other federally permissible basis.
(D) Payments made pursuant to this paragraph shall be subject to
reconciliation pursuant to subdivision (f), and pursuant to any other
applicable requirement of state or federal law.
(c) (1) Within five months after the end of each fiscal year, each
designated public hospital shall submit to the department both of
the following reports:
(A) The hospital's Medi-Cal cost report for the fiscal year.
(B) Other cost reporting and statistical data necessary for the
determination of amounts due the hospital, as requested by the
department.
(2) For each fiscal year, the reports shall identify the costs
incurred in providing inpatient hospital services to Medi-Cal
beneficiaries on a fee-for-service basis.
(3) Reports submitted under this subdivision shall include all
allowable costs.
(d) Designated public hospitals shall receive disproportionate
share hospital payments pursuant to Section 14166.6.
(e) In the event of a conflict between the provisions of this
section and any provision of Article 5.2 (commencing with Section
14166), the provisions of this section shall govern. In addition to
direct conflicts, if continuing the implementation or application of
any of the provisions of Article 5.2 (commencing with Section 14166)
leads to results that are inconsistent with the payment methodology
established in this section, after consultation with representatives
of the designated public hospitals, the director shall not implement
or apply any provision of Article 5.2 (commencing with Section 14166)
that the director determines has those results.
(f) No later than April 1 following the end of the fiscal year,
the department shall undertake an interim reconciliation of payments
made pursuant to this section based on the hospitals' Medi-Cal cost
reports and other cost and statistical data submitted by the
hospitals for the fiscal year and shall adjust payments to each
hospital accordingly.
(g) This section shall be implemented only to the extent that
counties with designated public hospitals seeking reimbursement under
this section contribute toward the cost of care through a county
share of cost.
14167.11. (a) Notwithstanding Article 5.2 (commencing with
Section 14166), for the period of time during which this article is
operative, safety net care pool funds, as defined in subdivision (r)
of Section 14167.1, shall be paid to the designated public hospitals,
as defined in subdivision (e) of Section 14167.1, in accordance with
this section, to the extent that those funds are available.
(b) (1) Each designated public hospital, or the governmental
entity with which it is affiliated, that operates nonhospital clinics
or provides other health care services that are not identified as
hospital services, may report and certify, in accordance with Section
14166.8, all or a portion of its uncompensated costs of the services
furnished to the uninsured. Each designated public hospital, or the
governmental entity with which it is affiliated, shall receive from
the safety net care pool for each fiscal year an amount equal to the
federal funds derived from the certification of uncompensated care
costs pursuant to the preceding sentence. The maximum amount payable
pursuant to this paragraph shall be one hundred million dollars
($100,000,000).
(2) If, for any fiscal year, the amount payable from the safety
net care pool is insufficient for purposes of the payments described
in paragraph (1), each designated public hospital, or governmental
entity with which it is affiliated, shall receive a pro rata share of
the amount specified in paragraph (1). The pro rata amount
determined for purposes of this paragraph shall be based on the
percentage that each designated public hospital's certified
uncompensated medical care costs of medical services provided to
uninsured individuals bears to the total amount of the costs
certified by all of the participating designated public hospitals or
governmental entity with which it is affiliated.
(3) Safety net care pool funds above one hundred million dollars
($100,000,000) in any state fiscal year shall be claimed by the
director for the state's expenditures under Section 14005.333 and
under Part 6.45 (commencing with Section 12699. 201) of Division 2 of
the Insurance Code.
(4) If the expenditures specified in paragraph (3) are
insufficient to claim the full amount of safety net care pool funds
available in any state fiscal year, and the designated public
hospitals, or governmental entities with which they are affiliated,
have certified expenditures in the aggregate in excess of the amount
necessary to make the payments required by this subdivision, the
department shall seek Medicaid federal financial participation from
the safety net care pool to the maximum extent possible based on the
remaining certified public expenditures of the designated public
hospitals and governmental entities with which they are affiliated,
and shall distribute the funds to the designated public hospitals, or
governmental entities with which they are affiliated, based on the
amount of each entity's certified expenditures. If the designated
public hospitals' remaining certified public expenditures exceed the
amount of available safety net care pool funds, the amounts remaining
in the safety net care pool, when claimed, shall be distributed on a
pro rata basis.
(5) Subdivision (a) of Section 14166.21 shall remain operative for
the period of time during which this article is operative, but
subdivision (b) of Section 14166.21 shall be inoperative for the
period of time during which this article is operative.
(c) Except as provided in subdivision (b), subdivision (g) of
Section 14166.8 shall be inoperative for the period of time during
which this article is operative. The department shall seek Medicaid
federal financial participation from the safety net care pool based
on qualifying expenditures from the designated public hospitals or
governmental entity with which it is affiliated.
(d) Payments and funding described in this section shall be
subject to the availability of federal funds through a demonstration
project approved by the federal government pursuant to Section 1115
of the federal Social Security Act.
(e) The director may suspend, modify, or adjust any methodology or
computation required by Article 5.2 (commencing with Section 14166)
that is necessary to implement this section.
14167.12. (a) The department shall consult with the hospital
community, and shall receive input from others as deemed necessary
and appropriate, in developing and implementing any and all payment
methodologies developed or implemented for purposes of this article.
The consultation, with input from others as deemed necessary and
appropriate, shall occur sufficiently in advance of the publication
of any proposed regulation pertaining to any such payment methodology
so as to allow the hospital community, and others as deemed
necessary and appropriate, to have meaningful participation and offer
comments as well as to allow the department an opportunity to
consider additional information and engage in follow-up discussions.
(b) The director shall seek federal approval of each payment
methodology set forth in this article. The director, in consultation
with the hospital community, and with input from others as deemed
necessary and appropriate, may alter any methodology specified in
this article to the extent necessary to meet the requirements of
federal law or regulations or to obtain federal approval. If, after
seeking federal approval, federal approval is not obtained, that
methodology shall not be implemented.
(c) Payments made pursuant to this article are contingent on the
receipt of federal reimbursement.
(d) In implementing this article, the department may utilize the
services of the Medi-Cal fiscal intermediary through a change order
to the fiscal intermediary contract to administer this program,
consistent with the requirements of Sections 14104.6, 14104.7,
14104.8, and 14104.9. Contracts
entered into with any Medicare fiscal intermediary shall
not be subject to Part 2 (commencing with Section 10100) of Division
2 of the Public Contract Code.
(e) Except as otherwise provided in this article, Sections
14166.11 to 14166.14, inclusive, Sections 14166.17 to 14166.20,
inclusive, and Sections 14166.22 and 14166.23, shall be inoperative
for the period of time during which this article is operative.
(f) This article shall become inoperative five years after the
implementation date of this article and as of January 1, 2016, is
repealed, unless a later enacted statute that is enacted on or before
January 1, 2016, extends or deletes the dates on which it becomes
inoperative and is repealed.
(g) This article shall be applicable to services rendered to
Medi-Cal beneficiaries on and after July 1, 2010. For services that
are paid under this article, any other provider rate methodology,
including those established by the California Medical Assistance
Commission pursuant to Article 2.6 (commencing with Section 14081),
shall become inoperative for those services on and after that date.
(h) This article shall not apply to any service furnished prior to
the effective date of any federal approvals that may be required to
ensure the availability of federal financial participation for
expenditures made pursuant to this article.
(i) This article shall become inoperative in the event, and on the
effective date, of a final judicial determination by any court of
appellate jurisdiction or a final determination by the federal
Department of Health and Human Services or the Centers for Medicare
and Medicaid Services that any element of this article cannot be
implemented.
(j) The department shall implement this article only to the extent
that state funds are appropriated for the nonfederal share of the
rate increases provided in this article.
(k) If this article becomes inoperative, hospitals shall be paid
the rates that were in effect on June 30, 2010, including the rates
paid pursuant to the provision of Article 2.6 (commencing with
Section 14081).
(l) This article shall be implemented only during those fiscal
years in which a 4 percent fee is imposed on the net patient revenue
of general acute care hospitals.
SEC. 70. SEC. 77. Article
5.22 5.215 (commencing with Section 14167.22) is
added to Chapter 7 of Part 3 of Division 9 of the Welfare and
Institutions Code, to read:
Article 5.22. 5.215. Medi-Cal
Physician Services Rate Increase Act
14167.22. (a) The director shall seek federal approval of the
rate methodology set forth in this article. The director may alter
any methodology specified in this article, to the extent necessary to
meet the requirements of federal law or regulations or to obtain
federal approval. If, after seeking federal approval, federal
approval is not obtained, that methodology shall not be implemented.
(b) Payments made pursuant to this article are contingent on the
receipt of federal reimbursement. Unless otherwise expressly provided
in this article, nothing in this article shall create an obligation
on the part of the department to fund any payment from state funds in
the absence of, or on account of a shortfall in, federal funding.
(c) It is the intent of the Legislature that, to the extent
practicable, the director increase reimbursement rates to managed
health care plans by the actuarial equivalent amount necessary to
ensure that managed health care plans make payments to the classes of
providers whose rates are governed by this article at the same level
as are made pursuant to this article.
(c) The director shall increase reimbursement rates to managed
health care plans by the actuarially equivalent amount necessary to
ensure that managed health care plans increase rates of payment to
the classes of providers whose rates are governed by this article at
the same percentage increase that Medi-Cal fee-for-service rates are
increased to the same classes of providers pursuant to this article,
subject to the limitations of federal law, if any.
14167.23. For purposes of this article, the following definitions
shall apply:
(a) "Physician" means a practitioner meeting the requirements of
Section 51228 of Title 22 of the California Code of Regulations.
(b) "Physician group" means two or more physicians legally
organized as a partnership, professional corporation, foundation,
not-for-profit corporation, or similar association, and that meets
the requirements of Section 51000.16 of Title 22 of the California
Code of Regulations.
14167.24. (a) A physician or physician group, as described in
subdivision (b), shall receive Medi-Cal reimbursement to the extent
provided in this section.
(b) A physician or physician group shall be eligible for
reimbursement if the particular physician or physician group has all
of the following characteristics:
(1) Is an enrolled Medi-Cal provider eligible to receive Medi-Cal
payments and provides services to Medi-Cal beneficiaries.
(2) Is a physician or physician group as defined in Section
14167.23.
(c) An eligible physician's reimbursement pursuant to this section
shall be calculated and paid as follows:
(1) Except as provided under Section 14167.25, commencing on July
1, 2010, reimbursement to an eligible physician or physician group,
as described in subdivisions (a) and (b), shall not be less than ____
percent of the amount that the federal Medicare program would pay
the physician or physician group for the same service, rendered on
the same date. In determining the amounts to be paid pursuant to this
paragraph, the department shall ensure that the equivalent Medicare
rate to be used takes into account all of the factors, supplemental
payments, and other variables that are used to determine the Medicare
rate. The supplemental rate augmentation paid for physician services
in California Children Services, as established in the annual Budget
Act, shall continue.
(2) The department shall establish a rate for services for which
Medicare does not provide a comparable service, or for which the
Medicare payment for the service cannot be separately determined,
which shall be the department's best estimate of a rate that is not
less than ____ percent of what Medicare would pay for that service.
(d) As a condition of receiving reimbursement under this section,
a physician or physician group shall keep, maintain, and have readily
retrievable, any records specified by the department to fully
disclose reimbursement amounts to which the physician or physician
group is entitled, and any other records required by the federal
Centers for Medicare and Medicaid Services.
(e) This section shall apply to services rendered to Medi-Cal
beneficiaries on and after July 1, 2010. With respect to services
that are paid under this section, any other provider rate methodology
that is inconsistent or duplicative of the rates paid pursuant to
this section shall become inoperative for those services to the
extent that the rates are inconsistent or duplicative.
14167.25. (a) (1) Notwithstanding Section 14105 or any other
provision of law, on or after July 1, 2010, the director may
designate a percentage of the rate increase paid to Medi-Cal
fee-for-service providers pursuant to paragraph (1) of subdivision
(c) of Section 14167.24, to be directly linked to performance
measures developed pursuant to subdivisions (c) and (d), including a
demonstrated showing of continued performance improvement.
(2) For purposes of paragraph (1), the percentage of the rate that
is linked to performance measures shall be established by the
director such that physicians and physician groups will be
sufficiently reimbursed for implementing performance measures,
including continued performance improvement.
(b) The performance measures shall be developed by the department
in consultation with stakeholders, including, but not limited to,
representatives of patients, physicians, managed care plans, payers,
and other appropriate stakeholders.
(c) The department, in consultation with the stakeholders
identified in subdivision (b), shall develop a comprehensive list of
performance measures relying, in part, on existing quality and
performance measures endorsed by national organizations, such as the
Ambulatory Quality Alliance, the Hospital Quality Alliance, and the
National Quality Forum (NQF).
(d) At a minimum, all of the following performance measures shall
be used in determining the appropriate percentage rate increases:
(1) Reporting of health care outcomes, including the cost of that
health care.
(2) Improvements in health care efficiency.
(3) Improvements in health care safety.
(4) The efficient exchange of health information data through
technology.
(5) The quality assurance requirements set forth in Section
1300.70 of Title 28 of the California Code of Regulations.
(6) Efforts to promote healthy behaviors among Medi-Cal
beneficiaries pursuant to the Healthy Incentives and Rewards Program
described in Section 14132.105.
(7) The extent to which purchasers, payers, providers, and
consumers are able to monitor the quality and cost of health care
utilizing public reporting information published by the Office of the
Patient Advocate.
(8) The extent to which physicians and physician groups that
provide services to Medi-Cal beneficiaries on a fee-for-service basis
implement activities, such as telemedicine, electronic prescribing
and the electronic exchange of health information among various
payers and providers for the purpose of attaining health care safety
and quality improvements, informed clinical care decisions, the
increased use of interoperable platforms for the exchange of relevant
health care data, and more accurate and timely diagnosis and
treatment.
(9) Compliance with the federal Health Insurance Portability and
Accountability Act (HIPAA) (42 U.S.C. Sec. 300gg).
(e) The department shall consult with stakeholders, including, but
not limited to, representatives of patients, managed care plans, and
payers, to determine the means to measure and document
implementation by each physician and physician group of the
performance measures developed pursuant to subdivisions (c) and (d).
(f) The department may exempt classes of physician and physician
groups and services from this section, if necessary to comply with
the requirements of federal law or regulations.
(g) The department may file one or more state plan amendments to
implement this section.
(h) The department shall seek necessary federal approvals for
implementation of this section. The department shall implement this
section only in a manner that is consistent with federal Medicaid law
and regulations. This section shall be implemented only to the
extent that federal approval is obtained and federal financial
participation is available.
(i) The department shall implement this section only to the extent
that state funds are appropriated for the nonfederal share of the
rate increases provided under this section.
14167.23. For purposes of this article, the following definitions
shall apply:
(a) "Nonphysician medical practitioner" means a physician's
assistant, a certified nurse midwife, or a nurse practitioner,
including a certified family nurse practitioner and a certified
pediatric nurse practitioner, who provides primary care services, as
defined in Section 51170.5 of Title 22 of the California Code of
Regulations, who is an enrolled Medi-Cal provider eligible to receive
Medi-Cal payments, and who provides physician services to Medi-Cal
beneficiaries. Primary care physician services rendered by
nonphysician medical practitioners are covered as physician services
to the extent permitted by applicable licensing statutes and
regulations. The terms "physician's assistant," "nurse midwife," and
"nurse practitioner" are defined for purposes of this article in
Sections 51170.1, 51170.2, and 51170.3 of Title 22 of the California
Code of Regulations, respectively.
(b) "Physician" means a practitioner meeting the requirements of
Section 51228 of Title 22 of the California Code of Regulations who
is an enrolled Medi-Cal provider eligible to receive Medi-Cal
payments and who provides physician services to Medi-Cal
beneficiaries.
(c) "Physician group" means two or more physicians legally
organized as a partnership, professional corporation, foundation,
not-for-profit corporation, or similar association that meets the
requirements of Section 51000.16 of Title 22 of the California Code
of Regulations and that is an enrolled Medi-Cal provider eligible to
receive Medi-Cal payments and provides physician services to Medi-Cal
beneficiaries.
(d) "Physician services" means those services as described in
Section 51305 of Title 22 of the California Code of Regulations.
(e) "Podiatrist" means a person as defined in Section 51075 of
Title 22 of the California Code of Regulations who is an enrolled
Medi-Cal provider eligible to receive Medi-Cal payments and who
provides physician services to Medi-Cal beneficiaries.
(f) "Clinic" means an organized outpatient health facility as
defined in Section 1200 of the Health and Safety Code.
14167.24. (a) A physician, physician group, clinic, podiatrist,
or nonphysician medical practitioner shall receive Medi-Cal
reimbursement to the extent provided in this section.
(b) Physician services, including those rendered by physicians,
physician groups, podiatrists, and nonphysician medical
practitioners, shall be calculated and paid as follows:
(1) Except as provided under Section 14167.25, and only to the
extent that state funds are appropriated in the annual Budget Act,
commencing on July 1, 2010, reimbursement shall be established at a
percentage of the amount that the federal Medicare Program would pay
for the same physician service rendered on the same date; provided,
however, that such increased reimbursement shall not exceed 100
percent of the amount that Medicare would pay. In determining the
amounts to be paid pursuant to this paragraph, the department shall
ensure that the equivalent Medicare rate to be used takes into
account all of the factors, supplemental payments, and other
variables that are used to determine the Medicare rate.
(2) The supplemental rate augmentation paid for physician services
in California Children Services, as established in the annual Budget
Act, shall continue and be paid in addition to the rate established
in this section.
(3) Subject to the funding limitation set forth in paragraph (1),
the department shall establish a rate for physician services for
which Medicare does not provide a comparable physician service, or
for which the Medicare payment for the physician service cannot be
separately determined, which shall be the department's best estimate
of what Medicare would pay for that physician service, to be set at
the percentage established in paragraph (1).
(4) Physician services that are reimbursable under this section
may be provided in any service location, including in clinics, except
for hospitals when the hospital bills for the services, federally
qualified health centers, and rural health centers. Notwithstanding
the provisions of Section 14167.23, physicians, physician groups,
podiatrists, and nonphysician medical practitioners that provide
physician services in clinics shall not be required to be enrolled as
Medi-Cal providers in order for a clinic to receive reimbursement
for those services pursuant to this section.
(5) Claims for payment of services rendered by a nonphysician
medical practitioner, where the rate is established pursuant to this
section, shall comply with the provisions of subdivision (d) of
Section 51503.1 of Title 22 of the California Code of Regulations.
(c) As a condition of receiving reimbursement under this section,
a physician, physician group, clinic, podiatrist, or nonphysician
medical practitioner shall keep, maintain, and have readily
retrievable, any records specified by the department to fully
disclose reimbursement amounts to which the physician, physician
group, clinic, podiatrist, or nonphysician medical practitioner is
entitled, and any other records required by the federal Centers for
Medicare and Medicaid Services.
(d) This section shall apply to all services specified in this
section that are rendered to Medi-Cal beneficiaries on and after July
1, 2010. With respect to all services that are paid under this
section, any other provider rate methodology that is inconsistent or
duplicative of the rates paid pursuant to this section shall become
inoperative for those services to the extent that the rates are
inconsistent or duplicative.
14167.25. (a) (1) Notwithstanding Section 14105 or any other
provision of law, on or after July 1, 2010, the director may
designate up to 25 percent of the rate increase paid to Medi-Cal
fee-for-service providers pursuant to subdivision (b) of Section
14167.24, to be directly linked to performance measures developed
pursuant to subdivisions (c) and (d), including a demonstrated
showing of continued performance improvement.
(2) For purposes of paragraph (1), the percentage of the rate that
is linked to performance measures shall be established by the
director such that physicians, physician groups, clinics,
podiatrists, and nonphysician medical practitioners will be
sufficiently reimbursed for implementing performance measures,
including continued performance improvement.
(b) The performance measures shall be developed by the department
in consultation with stakeholders, including, but not limited to,
representatives of patients, physicians, podiatrists, nonphysician
medical practitioners, managed care plans, payers, and other
appropriate stakeholders.
(c) The department, in consultation with the stakeholders
identified in subdivision (b), shall develop a comprehensive list of
performance measures relying, in part, on existing quality and
performance measures endorsed by national organizations, such as the
Ambulatory Quality Alliance, the Hospital Quality Alliance, and the
National Quality Forum.
(d) In developing the performance measures pursuant to subdivision
(c), the following performance measures may be taken into
consideration in determining the appropriate percentage rate
increases:
(1) Reporting of health care outcomes, including the cost of that
health care.
(2) Improvements in health care efficiency.
(3) Improvements in health care safety.
(4) The efficient exchange of health information data through
technology.
(5) The quality assurance requirements set forth in Section
1300.70 of Title 28 of the California Code of Regulations.
(6) Efforts to promote healthy behaviors among Medi-Cal
beneficiaries pursuant to the Healthy Incentives and Rewards Program
described in Section 14132.105.
(7) The extent to which purchasers, payers, providers, and
consumers are able to monitor the quality and cost of health care
utilizing public reporting information published by the Office of the
Patient Advocate.
(8) The extent to which physicians, physician groups, clinics,
podiatrists, and nonphysician medical practitioners that provide
services to Medi-Cal beneficiaries on a fee-for-service basis
implement activities, such as telemedicine, electronic prescribing
and the electronic exchange of health information among various
payers and providers for the purpose of attaining health care safety
and quality improvements, informed clinical care decisions, the
increased use of interoperable platforms for the exchange of relevant
health care data, and more accurate and timely diagnosis and
treatment.
(9) Compliance with the federal Health Insurance Portability and
Accountability Act (HIPAA) (42 U.S.C. Sec. 300gg).
(e) The department shall consult with stakeholders, including, but
not limited to, representatives of patients, physicians, managed
care plans, payers, and other appropriate stakeholders, to determine
the means to measure and document implementation by each physician,
physician group, clinic, podiatrist, and nonphysician medical
practitioner of the performance measures developed pursuant to
subdivisions (c) and (d).
(f) The department may exempt classes of physicians, physician
groups, clinics, podiatrists, and nonphysician medical practitioners
and specific services from this section, if necessary to comply with
the requirements of federal law or regulations.
(g) The department may file one or more state plan amendments to
implement this section.
(h) The department shall seek necessary federal approvals for
implementation of this section. The department shall implement this
section only in a manner that is consistent with federal Medicaid law
and regulations. This section shall be implemented only to the
extent that federal approval is obtained and federal financial
participation is available.
(i) The department shall implement this section only to the extent
that state funds are appropriated for the nonfederal share of the
rate increases provided under this section.
(j) The provisions of this section shall be implemented in such a
manner that they are appropriately integrated with the
pay-for-performance model described in subdivision (a) of Section
12803.2 of the Government Code.
SEC. 71. Article 7 (commencing with Section
14199.10) is added to Chapter 7 of Part 3 of Division 9 of the
Welfare and Institutions Code, to read:
Article 7. Coordination with the California Health Trust Fund
14199.10. The department shall seek any necessary federal
approval to enable the state to receive federal funds for coverage
provided through the California Cooperative Health Insurance
Purchasing Program (Cal-CHIPP) to persons who would be eligible for
the Medi-Cal program if the state expanded eligibility to a
population composed of parents and other caretaker relatives with a
household income at or below 300 percent of the federal poverty level
who are not otherwise eligible for full scope benefits with no share
of cost. Revenues in the California Health Trust Fund created
pursuant to Section 12699.212 of the Insurance Code shall be used as
state matching funds for receipt of federal funds resulting from the
implementation of this section. All federal funds received pursuant
to that federal approval shall be deposited in the California Health
Trust Fund.
SEC. 72. SEC. 78. The State
Department of Health Care Services, in consultation with the Managed
Risk Medical Insurance Board, shall take all reasonable steps that
are required to obtain the maximum amount of federal funds and to
support federal claiming procedures in the administration of this
act.
SEC. 73. SEC. 79. Notwithstanding
Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3
of Title 2 of the Government Code, during the period January 1, 2008,
to December 31, 2011, inclusive, the State Department of Health Care
Services may implement this act by means of all county letters or
similar instructions without taking regulatory action. After December
31, 2011, the department shall adopt all necessary regulations in
accordance with the requirements of Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code.
SEC. 74. SEC. 80. Notwithstanding
any other provision of law, the Managed Risk Medical Insurance Board
may implement the provisions of this act expanding the Healthy
Families Program only to the extent that funds are appropriated for
those purposes in the annual Budget Act or in another statute.
SEC. 75.
During the period from January 1, 2008, to
December 31, 2011, inclusive, the adoption of regulations pursuant to
this act by the Managed Risk Medical Insurance Board shall be deemed
to be an emergency and necessary for the immediate preservation of
public peace, health, and safety, or the general welfare.
SEC. 76. SEC. 81. (a) In order to
achieve the purposes of this act, the State Department of Health Care
Services, after consultation with the Department of Finance, may
utilize either state plan amendments or waivers, or combination
thereof, as necessary to implement this act, to maximize the
availability of federal financial participation, and to maximize the
number of persons for whom that federal financial participation is
available to cover the cost of health care services.
(b) The flexibility authorized by this act shall include
modification of the requirements, standards, and methodologies for
expansion categories or populations created by this act in order to
maximize the availability of federal financial participation. When
exercising this flexibility, the State Department of Health Care
Services shall not make changes that would do any of the following:
(1) Make otherwise eligible individuals ineligible for health
coverage under the Medi-Cal program and the Healthy Families Program.
(2) Increase cost-sharing amounts beyond levels established in
this act.
(3) Reduce benefits below those provided for in this act.
(4) Otherwise disadvantage applicants or recipients in a way not
contemplated by this act.
(c) The department shall take all reasonable steps necessary to
maximize federal financial participation and to support federal
claiming in the implementation of this act.
(d) It is the intent of the Legislature that the provisions of
this act shall be implemented simultaneously to the extent possible
in order to harmonize and best effectuate the purposes and intent of
this act.
(e) The Director of Health Care Services shall notify the Chair of
the Joint Legislative Budget Committee in any case when it is
necessary to exercise the flexibility provided under this section.
This notification shall be provided 30 days prior to exercising that
flexibility.
SEC. 77. SEC. 82. It is the intent of
the Legislature that provisions of this act shall be financed by
contributions from employers; individuals; federal, state, and local
governments; and health care providers. Specifically financial
support shall include:
(a) Federal financial participation through the federal Medicaid
and S-CHIP programs.
(b) Revenue from counties to support the cost of enrolling
persons otherwise entitled to county-funded care.
persons who would otherwise be entitled to county-funded care if
not for this act.
(c) Fees paid by acute care hospitals at a rate of 4 percent of
patient revenues.
(d) Fees paid by employers not expending an equivalent amount for
health care expenditures at a rate ranging from 2 to 6.5 percent of
total payroll, based on social security wages.
(e) Premium contributions from currently offering employers when
employees, eligible for employer-based coverage, choose to enroll in
public programs.
(f) Premium payments for individuals enrolled in publicly
subsidized coverage and coverage purchased in the individual market.
(g) Additional public funds obtained through increasing the taxes
by two dollars ($2) on the sale of each package of cigarettes and by
an equivalent amount on other tobacco products.
(h) Other state funds made available through savings generated
through reduced demand for existing health care programs.
SEC. 84. (a) Notwithstanding any other provision of
this act, the implementation of the provisions of this act other than
this section, including, but not limited to, the expansion of
eligibility for publicly funded or subsidized health care coverage,
the increase in the Medi-Cal program's provider rates, the
requirements imposed on the offering and sale of health plan
contracts or health insurance policies in the state, and the
requirement that individuals enroll in and maintain health care
coverage, shall be contingent on a finding by the Director of Finance
under subdivision (b) that the financial resources necessary to
implement those provisions are available.
(b) Except as otherwise provided in subdivision (d), this act
shall become operative upon the date that the Director of Finance
files a finding with the Secretary of State that all of the following
circumstances exist:
(1) Based on reasonable financial projections, sufficient state
resources will exist in the Health Care Trust Fund to implement the
act. This determination shall be based on the projected amounts of
revenue that will be available to support the act and the projected
costs required by the act. These projections shall consider the
sufficiency of resources that will be available during the first
three years of operation under the act.
(2) The required federal approvals for program changes under the
act have been obtained or can reasonably be expected to be obtained
by the time those programs are implemented.
(3) Required federal resources will be available to implement the
act based on the anticipated schedule of review and approval of state
plan amendments and waivers applicable to the act.
(c) At least 90 days prior to filing the finding with the
Secretary of State, the Director of Finance shall transmit the
finding described in subdivision (b) to the Chief Clerk of the
Assembly, the Secretary of the Senate, and the chairs of the
appropriate committees of the Legislature.
(d) If any operative date specified in this act is later than the
date of the filing of the finding described in subdivision (b), that
later date shall apply.
(e) Nothing in this section shall be construed to prevent the
appropriation of funds for the support of the activities necessary to
prepare for the implementation of this act prior to the filing of
the finding described in subdivision (b).
SEC. 78. SEC. 84. It is the intent
of the Legislature that the rates paid pursuant to the Medi-Cal
program for inpatient and outpatient hospital services be increased.
SEC. 79. SEC. 85. No reimbursement
is required by this act pursuant to Section 6 of Article XIII B of
the California Constitution for certain costs that may be incurred by
a local agency or school district because, in that regard, this act
creates a new crime or infraction, eliminates a crime or infraction,
or changes the penalty for a crime or infraction, within the meaning
of Section 17556 of the Government Code, or changes the definition of
a crime within the meaning of Section 6 of Article XIII B of the
California Constitution.
However, if the Commission on State Mandates determines that this
act contains other costs mandated by the state, reimbursement to
local agencies and school districts for those costs shall be made
pursuant to Part 7 (commencing with Section 17500) of Division 4 of
Title 2 of the Government Code.