BILL NUMBER: AB 1150	CHAPTERED
	BILL TEXT

	CHAPTER  188
	FILED WITH SECRETARY OF STATE  JULY 22, 2008
	APPROVED BY GOVERNOR  JULY 22, 2008
	PASSED THE SENATE  JULY 3, 2008
	PASSED THE ASSEMBLY  JANUARY 29, 2008
	AMENDED IN ASSEMBLY  JANUARY 16, 2008
	AMENDED IN ASSEMBLY  JANUARY 7, 2008

INTRODUCED BY   Assembly Member Lieu

                        FEBRUARY 23, 2007

   An act to add Section 1389.6 to the Health and Safety Code, and to
add Section 10385 to the Insurance Code, relating to health care.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1150, Lieu. Health care coverage: underwriting practices.
   The Knox-Keene Health Care Service Plan Act of 1975, the willful
violation of which is a crime, provides for the licensure and
regulation of health care service plans by the Department of Managed
Health Care. Existing law also provides for the regulation of health
insurers by the Insurance Commissioner. Under existing law, persons
retained by a health care service plan or a disability insurer to
review claims for health care services may not be compensated based
either on a percentage of the amount by which a claim for payment is
reduced or on the number of claims or the cost of services for which
the person has denied authorization or payment.
   This bill would prohibit the compensation of a person or entity
employed by, or contracted with, a health care service plan or
disability insurer from being based on, or related to, the number of
health care service plan or health insurance contracts, policies, or
certificates that the person has caused or recommended to be
rescinded, canceled, or limited, or the resulting cost savings to the
plan or insurer. The bill would also prohibit a plan or insurer from
setting performance goals or quotas, or providing compensation to
any person or entity employed by or contracted with the plan or
insurer, based on the number of persons whose health coverage is
rescinded or any financial savings to the plan or insurer associated
with rescission of coverage. Because this bill would create a new
prohibition applicable to health care service plans, the willful
violation of which would be a crime, it would impose a state-mandated
local program.
   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 no reimbursement is required by this
act for a specified reason.


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

  SECTION 1.  Section 1389.6 is added to the Health and Safety Code,
to read:
   1389.6.  Compensation of a person or entity employed by, or
contracted with, a health care service plan shall not be based on, or
related in any way to, the number of contracts that the person or
entity has caused or recommended to be rescinded, canceled, or
limited, or the resulting cost savings to the health plan. A health
care service plan shall not set performance goals or quotas, or
provide compensation to any person or entity employed by, or
contracted with, the health care service plan, based on the number of
persons whose coverage is rescinded or any financial savings to the
health care service plan associated with rescission of coverage.
  SEC. 2.  Section 10385 is added to the Insurance Code, to read:
   10385.  Compensation of a person or entity employed by, or
contracted with, a disability insurer shall not be based on, or
related in any way to, the number of policies or certificates for
health insurance that the person or entity has caused or recommended
to be rescinded, canceled, or limited, or the resulting cost savings
to the insurer. A disability insurer shall not set performance goals
or quotas, or provide compensation to any person or entity employed
by, or contracted with, the insurer, based on the number of persons
whose health insurance coverage is rescinded or any financial savings
to the insurer associated with rescission of coverage.
  SEC. 3.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because 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.