BILL NUMBER: AB 786	AMENDED
	BILL TEXT

	AMENDED IN SENATE  SEPTEMBER 4, 2009
	AMENDED IN SENATE  SEPTEMBER 1, 2009
	AMENDED IN SENATE  AUGUST 18, 2009
	AMENDED IN SENATE  JUNE 30, 2009
	AMENDED IN ASSEMBLY  JUNE 2, 2009
	AMENDED IN ASSEMBLY  APRIL 22, 2009

INTRODUCED BY   Assembly Member Jones
   (Principal coauthor: Senator Steinberg)

                        FEBRUARY 26, 2009

   An act to add  Sections 1399.819, 1399.820, and 1399.821
to   Article 12 (commencing with Section 1399.819) to
Chapter 2.2 of Division 2 of  the Health and Safety Code, and to
add  Sections 10903, 10904, and 10905 to  
Chapter 9.7 (commencing with Section 10903) to Part 2 of Division 2
of  the Insurance Code, relating to health care coverage.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 786, as amended, Jones.  Individual 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 establishes the Office of
Patient Advocate within the department to represent the interests of
plan enrollees. 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 individual health care service plan
contracts and individual health insurance policies issued, amended,
or renewed on or after January 1, 2011, to contain a maximum limit
 , not to exceed $15,000 per person per year,  on
out-of-pocket costs for covered benefits provided by in-network
providers  and for covered emergency services  , as
specified. The bill would require, by  December 31, 2011,
  July 1, 2012,  the Department of Managed Health
Care and the Department of Insurance to jointly, by regulation,
develop standard definitions and terminology for benefits and
cost-sharing provisions applicable to individual contracts and
policies, as specified, and to develop a system to categorize those
contracts and policies into coverage choice categories that meet
specified requirements. The bill would require plans and insurers to
submit certain information to the departments by  February 1,
2012,   a specified date  and would require the
Director of the Department of Managed Health Care and the Insurance
Commissioner to categorize the contracts and policies into the
appropriate coverage choice category  on or before June 30,
2012   by a specified date  . The bill would
require the Office of Patient Advocate to develop and maintain on its
Internet Web site a uniform benefits matrix of those contracts and
policies arranged by coverage choice category along with other
specified information. The bill would require health care service
plans, health insurers, solicitors, solicitor firms, brokers, and
agents to make prospective enrollees or insureds aware of the
availability and contents of the benefits matrix when marketing or
selling a contract or policy in the individual market.
   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.   
  SECTION 1.    Article 12 (commencing with Section
1399.819) is added to Chapter 2.2 of Division 2 of the Health and
Safety Code, to read: 

      Article 12.   Individual Coverage: Coverage Choice
Categories


    1399.819.  (a) (1) On or before  December 31,
2011   July 1, 2012  , the department and the
Department of Insurance shall jointly, by regulation, develop
standard definitions and terminology for covered benefits and
cost-sharing provisions, including, but not limited to, copayments,
coinsurance, deductibles, limitations, and exclusions, applicable to
individual health care service plan contracts and individual health
insurance policies as described in paragraphs (2) and (3). Standard
definitions for covered benefits shall not include standardized
benefit limits or standardized benefit levels.
   (2) Health care service plans shall comply with the standard
definitions and terminology developed pursuant to paragraph (1) for
all new individual plan contracts issued  one year after
  on or after one year following the date  the
departments develop those definitions and terminology.
   (3) Individual health care service plan contracts in existence as
of the date the departments develop the standard definitions and
terminology pursuant to paragraph (1) shall have  three
  two  years from that date to comply with those
definitions and terminology. In lieu of compliance with respect to a
specific health care service plan contract, a plan may offer
individuals enrolled in that contract the opportunity to transfer,
without medical underwriting, to an alternative contract that offers
comparable benefits and cost sharing and that complies with the
standard definitions and terminology. This paragraph shall not apply
to a health care service plan that no longer markets or sells
individual health care service plan contracts  o   r to
a closed block of business pursuant to Section 1367.15  . 
   (4) In developing standard definitions and terminology pursuant to
this section, the department and the Department of Insurance shall,
to the greatest extent possible, take into account and incorporate
definitions and terminology in common usage in individual health care
service plan contracts and individual health insurance policies.

   (b) The regulations developed by the department and the Department
of Insurance pursuant to this section may identify and require the
submission of information reasonably needed to develop the standard
definitions and terminology required by this section.
   (c) (1) All individual health care service plan contracts issued,
amended, or renewed on or after January 1, 2011, shall contain a
maximum limit, not to exceed  fifteen thousand dollars
($15,000)   five thousand dollars ($5,000)  per
person per year, on out-of-pocket costs, including, but not limited
to, copayments, coinsurance, and deductibles, for covered benefits
provided by in-network contracted providers  and for covered
emergency services. The out-of-pocket maximum for a family shall not
exceed twice the amount of the out-of-pocket maximum for an
individual  . For purposes of this subdivision, out-of-pocket
costs do not include premium payments or prepaid periodic charges
paid by the subscriber or enrollee.
   (2) Notwithstanding paragraph (1), a health care service plan
contract issued, amended, or renewed on or after January 1, 2011, may
include a separate out-of-pocket limit for cost sharing related to
 prescription drugs   covered prescription drugs
consistent with Section 1342.7  . The contract shall clearly
disclose this separate out-of-pocket limit.
   (3) The maximum permissible out-of-pocket cost limit described in
paragraph (1) shall be indexed to, and shall  increase
  be adjusted  annually with, the medical cost
component of the consumer price index. The director shall annually
update and publish, by September 1, the maximum out-of-pocket limit
to be used for the next calendar year based on changes in the medical
cost component of the consumer price index. 
   (d) Any product that meets the requirements of this chapter,
including subdivision (c) of this section, and that is submitted for
review pursuant to Section 1399.820 shall be eligible for
categorization under Section 1399.820 and shall have definitions and
terminology consistent with this section.  
   (e) The regulations developed pursuant to this section shall take
into account any applicable federal requirements.  
   (d) 
    (f)  This section shall not apply to Medicare supplement
contracts or to coverage offered by specialized health care service
plans, other than specialized  mental  
behavioral  health plans, or to  coverage offered by 
government-sponsored programs. 
   SEC. 2.  Section 1399.820 is added to the Health and Safety Code,
to read: 
   1399.820.  (a) (1) On or before  December 31, 2011
  July 1, 2012  , the department and the Department
of Insurance shall jointly, by regulation, and in consultation with
health care service plans, health insurers, and consumer
representatives, develop a system to categorize  into coverage
choice categories  all health care service plan contracts and
health insurance policies to be offered and sold to individuals on
and after  September 1, 2012, into coverage choice categories
  one year following the date that the regulatio 
 ns are adopted,  in order to facilitate transparency and
consumer comparison shopping. These coverage choice categories shall
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. The
coverage choice categories shall be based on the actuarial value of
each product  and shall be identified based on the benefits
covered and the consumer cost sharing elements.   or
another reasonable alternative, as jointly determined by the
department and the Department of Insurance, in consultation with
stakeholders, and shall be identified based on the benefits covered,
the consumer cost sharing elements, and other information consistent
with Section   1399.821. 
   (2) The coverage choice categories shall be developed to ensure
ease of consumer comparison and understanding of the benefit design
choices in the individual market. The categories shall be developed
to be user-friendly for consumers, with the lowest number of
categories necessary to include the full range of individual products
into meaningful categories, but, in any event, there shall be no
more than a total of 10 categories across all products offered and
sold to individuals, including health care service plan contracts and
health insurance policies. There shall be no fewer than two
categories in common between products in the two departments.
   (3) The department and the Department of Insurance shall develop
consumer-oriented descriptions for each coverage choice category in
order to provide for ease of consumer use and product choice.
   (4) The regulations developed pursuant to this section shall take
into account any applicable federal requirements.
   (b) The regulations developed by the department and the Department
of Insurance pursuant to this section shall identify and require the
submission of information reasonably needed to categorize each
health care service plan contract and health insurance policy subject
to this section, including, but not limited to, the copayments,
coinsurance, deductibles, limitations, exclusions, and premium rates
applicable to, and the actuarial value of, each contract or policy.
The regulations shall require health insurers and health care service
plans to use a standard method of calculation, as established by
those regulations, for the purpose of submitting the actuarial values
of their products to the departments. 
   (c) A health care service plan shall submit the information
required by the department to implement this section no later than
February 1, 2012, for all new individual contracts to be offered or
sold on or after September 1, 2012.  
   (c) With respect to each health care service plan contract subject
to categorization under subdivision (a), a health care service plan
shall submit the information required by the department to implement
this section no later than seven months prior to offering that
contract. 
   (d) The director shall categorize each individual health care
service plan contract to be offered by a plan into the appropriate
coverage choice category on or before  June 30, 2012
  four months prior to the offer of new individual c
 ontracts after the adoption of the regulations required in
subdivision (a)  .
   (e) This section shall not apply to Medicare supplement plans or
to coverage offered by specialized health care service plans or
government-sponsored programs. 
   SEC. 3.  Section 1399.821 is added to the Health and Safety Code,
to read: 
   1399.821.  (a) The Office of Patient Advocate shall develop and
maintain on its Internet Web site a description of each coverage
choice category developed by the department and the Department of
Insurance pursuant to Section 1399.820 of this code and Section 10904
of the Insurance Code and a uniform benefits matrix of all available
individual health care service plan contracts and individual health
insurance policies arranged by coverage choice category. This uniform
benefit matrix shall include, but not be limited to, all of the
following information:
   (1) Benefit information submitted by health care service plans
pursuant to Section 1399.820 and by health insurers pursuant to
Section 10904 of the Insurance Code, including, but not limited to,
the following category descriptions:
   (A) Standard rates by age, family size, and geographic region.
   (B) Deductibles.
   (C) Copayments or coinsurance, as applicable.
   (D) Annual out-of-pocket maximums.
   (E) Professional services.
   (F) Outpatient services.
   (G) Preventive services.
   (H) Hospitalization services.
   (I) Emergency health services.
   (J) Ambulance services.
   (K) Prescription drug coverage.
   (L) Durable medical equipment.
   (M) Mental health and substance abuse services.
   (N) Home health services.
   (O) Other.
   (2) 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.
   (3) For each health care service plan contract or health insurance
policy included in the matrix, a link to provider network
information on the Internet Web site of the corresponding health care
service plan or health insurer.
   (b) The Office of Patient Advocate may also utilize the
information provided by health care service plans and health insurers
pursuant to Section 1399.819 of this code and Section 10903 of the
Insurance Code to develop additional information and tools to
facilitate consumer comparison shopping of individual health care
service plan contracts and individual health insurance policies.
   (c) When marketing or selling a health care service plan contract
in the individual market, a health care service plan, a solicitor, or
a solicitor firm shall make the prospective enrollee aware of the
availability and contents of the benefit matrix described in this
section. This subdivision shall not apply until the Office of Patient
Advocate has developed the benefit matrix required by this section.

  SEC. 4.    Section 10903 is added to the Insurance
Code, to read:
   10903.   
  SEC. 2.    Chapter 9.7 (commencing with Section 10903) is
added to Part 2 of Division 2 of the Insurance Code, to read: 
      CHAPTER 9.7.   INDIVIDUAL COVERAGE: COVERAGE CHOICE
CATEGORIES


    10903.  (a) (1) On or before  December 31, 2011
  July 1, 2012  , the department and the Department
of Managed Health Care shall jointly, by regulation, develop
standard definitions and terminology for covered benefits and
cost-sharing provisions, including, but not limited to, copayments,
coinsurance, deductibles, limitations, and exclusions, applicable to
individual health care service plan contracts and individual health
insurance policies as described in paragraphs (2) and (3). Standard
definitions for covered benefits shall not include standardized
benefit limits or standardized benefit levels.
   (2) Health insurers shall comply with the standard definitions and
terminology developed pursuant to paragraph (1) for all new
individual health insurance policies issued  one year after
  on or after one year following the date  the
departments develop those standard definitions and terminology.
   (3) Individual health insurance policies in existence as of the
date the departments develop the standard definitions and terminology
pursuant to paragraph (1) shall have  three 
two  years from that date to comply with those definitions and
terminology. In lieu of compliance with respect to a specific health
insurance policy, an insurer may offer individuals enrolled in that
policy the opportunity to transfer, without medical underwriting, to
an alternative policy that offers comparable benefits and cost
sharing and that complies with the standard definitions and
terminology. This paragraph shall not apply to a health insurer that
no longer markets or sells individual health insurance policies 
or to a closed block of business pursuant to Section 10176.10  .

   (4) In developing standard definitions and terminology pursuant to
this section, the department and the Department of Managed Health
Care shall, to the greatest extent possible, take into account and
incorporate definitions and terminology in common usage in individual
health care service plan contracts and individual health insurance
policies. 
   (b) The regulations developed by the department and the Department
of Managed Health Care pursuant to this section may identify and
require the submission of information reasonably needed to develop
the standard definitions and terminology required by this section.
   (c) (1) All individual health insurance policies issued, amended,
or renewed on or after January 1, 2011, shall contain a maximum
limit, not to exceed  fifteen thousand dollars ($15,000)
  five thousand dollars ($5,000)  per person per
year, on out-of-pocket costs, including, but not limited to,
copayments, coinsurance, and deductibles, for covered benefits
provided by in-network providers  and for covered emergency
services. The out-of-pocket maximum for a family shall not exceed
twice the amount of the out-of-pocket maximum for an individual 
. For purposes of this subdivision, out-of-pocket costs do not
include premium payments paid by the policyholder or insured.
   (2) Notwithstanding paragraph (1), a health insurance policy
issued, amended, or renewed on or after January 1, 2011, may include
a separate out-of-pocket limit for cost sharing related to
prescription drugs. The policy shall clearly disclose this separate
out-of-pocket limit.
   (3) The maximum permissible out-of-pocket cost limit described in
paragraph (1) shall be indexed to, and shall  increase
  be adjusted  annually with, the medical cost
component of the consumer price index. The commissioner shall
annually update and publish, by September 1, the maximum
out-of-pocket limit to be used for the next calendar year based on
changes in the medical cost component of the consumer price index.

   (d) Any product that meets the requirements of this code,
including subdivision (c) of this section, and that is submitted for
review pursuant to Section 10904 shall be eligible for categorization
under Section 10904 and shall have definitions and terminology
consistent with this section.  
   (e) The regulations developed pursuant to this section shall take
into account any applicable federal requirements.  
   (d) 
    (f)  This section shall not apply to Medicare supplement
policies or to specialized health insurance policies, other than
specialized  mental   behavioral  health
policies  , or to coverage offered by government-sponsored
programs  . 
   SEC. 5.  Section 10904 is added to the Insurance Code, to read:

   10904.  (a) (1) On or before  December 31, 2011 
 July 1, 2012  , the department and the Department of
Managed Health Care shall jointly, by regulation, and in consultation
with health care service plans, health insurers, and consumer
representatives, develop a system to categorize  into coverage
choice categories  all health care service plan contracts and
health insurance policies to be offered and sold to individuals on
 and after September 1, 2012, into coverage choice categories
in   and after one year following the date that the
regulations are adopted, in  order to facilitate transparency
and consumer comparison shopping. These coverage choice categories
shall 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. The coverage choice categories shall be based on the
actuarial value of each product  and shall be identified
based on the benefits covered and the consumer cost sharing elements.
  or other reasonable alternative, as jointly
determined by the department and the Department of Managed Health
Care, in consultation with stakeholders, and shall be identified
based on the benefits covered, the consumer cost sharing elements,
and other information consistent   with Section 1399.821 of
the Health and Safety Code. 
   (2) The coverage choice categories shall be developed to ensure
ease of consumer comparison and understanding of the benefit design
choices in the individual market. The categories shall be developed
to be user-friendly for consumers, with the lowest number of
categories necessary to include the full range of individual products
into meaningful categories, but, in any event, there shall be no
more than a total of 10 categories across all products offered and
sold to individuals, including health care service plan contracts and
health insurance policies. There shall be no fewer than two
categories in common between products in the two departments.
   (3) The department and the Department of Managed Health Care shall
develop consumer-oriented descriptions for each coverage choice
category in order to provide for ease of consumer use and product
choice.
   (4) The regulations developed pursuant to this section shall take
into account any applicable federal requirements.
   (b) The regulations developed by the department and the Department
of Managed Health Care pursuant to this section shall identify and
require the submission of information reasonably needed to categorize
each health care service plan contract and health insurance policy
subject to this section, including, but not limited to, the
copayments, coinsurance, deductibles, limitations, exclusions, and
premium rates applicable to, and the actuarial value of, each
contract or policy. The regulations shall require health insurers and
health care service plans to use a standard method of calculation,
as established by those regulations, for the purpose of submitting
the actuarial values of their products to the departments. 
   (c) A health insurer shall submit the information required by the
department to implement this section no later than February 1, 2012,
for all new individual policies to be offered or sold on or after
September 1, 2012.  
   (c) With respect to each health insurance policy subject to
categorization under subdivision (a), a health insurer shall submit
the information required by the department to implement this section
no later than seven months prior to offering that policy. 
   (d) The commissioner shall categorize each individual health
insurance policy to be offered by an insurer into the appropriate
coverage choice category on or before  June 30, 2012
  four months prior to the offer of new individual
policies after the adoption of the regulations required in
subdivision (a)  .
   (e) This section shall not apply to specialized health insurance,
Medicare supplement insurance, short-term limited duration health
insurance, CHAMPUS supplement insurance, TRI-CARE supplement
insurance,  coverage offered by  government-sponsored
programs, or to hospital indemnity, accident-only, or specified
disease insurance. 
   SEC. 6.  Section 10905 is added to the Insurance Code, to read:

   10905.  When marketing or selling a health insurance policy in the
individual market, a health insurer, a broker, or an agent shall
make the prospective insured aware of the availability and contents
of the benefit matrix described in Section 1399.821 of the Health and
Safety Code. This section shall not apply until the Office of
Patient Advocate has developed the benefit matrix required by Section
1399.821 of the Health and Safety Code.
   SEC. 7.   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.