BILL NUMBER: SB 1522	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 2, 2008

INTRODUCED BY   Senator Steinberg

                        FEBRUARY 22, 2008

   An act to add Section 1399.819 to the Health and Safety Code, and
to add Section 10903 to the Insurance Code, relating to health care
coverage.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1522, as amended, Steinberg. Health care coverage: coverage
choice categories.
   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.
Existing law requires health care service plans and health insurers
that offer contracts or policies to individuals to comply with
specified requirements.
   This bill would require, by a specified date, the Department of
Managed Health Care and the Department of Insurance to jointly, by
regulation, develop a system to categorize all health care service
plan contracts and health insurance policies offered and sold to
individuals into  five   5  coverage choice
categories that meet specified requirements.  The bill would
require individual health care service plan contracts and individual
health insurance policies to contain a maximum limit on out-of-pocket
costs for covered benefits.  The bill would require health care
service plans and health insurers that offer coverage on an
individual basis to offer at least one contract or policy in each
coverage choice category. The bill would also require health care
service plans and health insurers to establish prices for the
products offered to individuals 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.  The bill
  would require the director and the commissioner to
annually report on the contracts and policies offered in each
coverage choice category and on the enrollment in those contracts and
policies. The bill would also require, commencing January 1, 2012,
and every 3 years the   reafter, the director and the
commissioner to jointly determine whether the coverage choice
categories should be revised to meet the needs of consumers. 
The bill would enact other related provisions.
   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.
   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.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


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

  SECTION 1.  Section 1399.819 is added to the Health and Safety
Code, to read:
   1399.819.  (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 care service plan contracts and
health insurance policies offered and sold to individuals pursuant to
this article and Chapter 9.5 (commencing with Section 10900) 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 care service 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 care service
plan contract or health insurance policy with the lowest benefit
level in that category and for that type of contract or policy. 
   (b) All health care service plan contracts offered or sold to
individuals on or after January 1, 2009, shall contain a maximum
limit on out-of-pocket costs, including, but not limited to,
copayments, coinsurance, and deductibles, for covered benefits. 

   (b) 
    (c)  All health care service plans shall submit filings
 required pursuant to Section ___  no later than
October 1, 2009, for all individual health care service plan
contracts to be offered or sold on or after  ___, to comply
with ___   that date  , and thereafter any
additional individual health care plan contracts shall be filed
 pursuant to Section ___   with the department
 . The director shall categorize each individual health care
service plan contract offered by a plan into the appropriate coverage
choice category  on or before ___   within 90
days of the date the contract is filed pursuant to this section. A
health care service plan shall not offer or sell an individual health
care service plan contract until the director has categorized the
contract pursuant to this subdivision  . 
   (c) 
    (d)  To facilitate consumer comparison shopping, all
health care service plans that offer coverage on an individual basis
shall offer at least one health care service 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 plan may offer multiple products in each category.

   (d) 
    (e)  If a health care service plan offers a specific
type of health care service plan contract in one coverage choice
category, it must offer that specific type of health care service
plan contract in each coverage choice category. A "type of health
care service 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) 
    (f)  Health care service 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 care service plan contract in
one coverage choice category is offered for at least one health care
service plan contract in each coverage choice category. 
   (f) 
    (g)  A health care service 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 care service
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. 
   (h) The director shall annually report on the health care service
plan contracts offered by plans in each coverage choice category
pursuant to this section and on the enrollment in those contracts
within each coverage choice category. Commencing January 1, 2012, and
every three years thereafter, the director and the Insurance
Commissioner shall jointly determine whether the coverage choice
categories should be revised to meet the needs of consumers. 
  SEC. 2.  Section 10903 is added to the Insurance Code, to read:
   10903.  (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 policies and
health care service plan contracts offered and sold to individuals
pursuant to this chapter and Article 11.5 (commencing with Section
1399.801) 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 carriers and health care
service plans in the same marketplace regardless of licensure.
   (4) Within each coverage choice category, include one standard
preferred provider organization (PPO), which is the health insurance
policy or health care service plan contract with the lowest benefit
level in that category and for that type of policy or contract. 
   (b) All health insurance policies offered or sold to individuals
on or after January 1, 2009, shall contain a maximum limit on
out-of-pocket costs, including, but not limited to, copayments,
coinsurance, and deductibles, for covered benefits.  
   (b) 
    (c)  All carriers shall submit the filings 
required pursuant to Section ___  no later than October 1,
2009, for all individual health insurance policies to be sold on or
after  ___, to comply with ___   that date 
, and thereafter any additional individual health insurance policies
shall be filed  pursuant to Section ___   with
the commissioner  . The commissioner shall categorize each
individual health insurance policy offered by a carrier into the
appropriate coverage choice category  on or before ___
  within 90 days of the date the policy is filed
pursuant to this section. A carrier shall not offer or sell an
individual health insurance policy until the commissioner has
categorized the policy pursuant to this subdivision  . 
   (c) 
    (d)  To facilitate consumer comparison shopping, all
carriers that offer coverage on an individual basis shall offer at
least one individual health insurance policy in each coverage choice
category, including offering at least one of the standard policies
developed pursuant to paragraph (4) of subdivision (a), but a carrier
may offer multiple products in each category. 
   (d) 
    (e)  If a carrier 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) 
    (f)  Carriers 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 benefit plan in one coverage choice category
is offered for at least one health benefit plan in each coverage
choice category. 
   (f) 
    (g)  A carrier 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 carrier 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. 
   (h) The commissioner shall annually report on the health insurance
policies offered by carriers in each coverage choice category
pursuant to this section and on the enrollment in those policies
within each coverage choice category. Commencing January 1, 2012, and
every three years thereafter, the commissioner and the Director of
Managed Health Care shall jointly determine whether the coverage
choice categories should be revised to meet the needs of consumers.
 
   (i) All health insurance policies offered and sold to individuals
on or after January 1, 2009, shall cover physicians, hospitals, and
preventive services, and shall, at a minimum, meet existing coverage
requirements. 
  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.