BILL NUMBER: AB 2042	ENROLLED
	BILL TEXT

	PASSED THE SENATE  AUGUST 23, 2010
	PASSED THE ASSEMBLY  AUGUST 25, 2010
	AMENDED IN SENATE  AUGUST 12, 2010
	AMENDED IN SENATE  JUNE 29, 2010
	AMENDED IN SENATE  JUNE 10, 2010
	AMENDED IN ASSEMBLY  APRIL 20, 2010
	AMENDED IN ASSEMBLY  APRIL 6, 2010
	AMENDED IN ASSEMBLY  MARCH 22, 2010

INTRODUCED BY   Assembly Member Feuer

                        FEBRUARY 17, 2010

   An act to add Section 1374.255 to the Health and Safety Code, and
to add Section 10199.49 to the Insurance Code, relating to health
care coverage.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 2042, Feuer. Health care coverage: rate changes.
   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. Under
existing law, no change in premium rates or coverage in a health care
service plan contract or a health insurance policy may become
effective without prior written notification of the change to the
contractholder or policyholder. Existing law prohibits a plan or
insurer during the term of a group plan contract or policy from
changing the rate of the premium, copayment, coinsurance, or
deductible during specified time periods.
   This bill would prohibit a health care service plan or health
insurer from altering the rates, as defined, that apply to individual
health care service plan contracts or individual health insurance
policies, or altering any benefits included in individual contracts
or policies, more than once each calendar year, except as specified.
Among those exceptions, the bill would provide that, if a brand name
drug becomes available as a generic drug, the application of a lower
cost-sharing rate for the generic drug would not constitute an
alteration of benefits. The bill's provisions would apply to a new
individual plan contract or policy issued to an enrollee or insured
who transfers from another plan or policy, as specified, and would
prohibit the issuance of new plan contracts or policies more often
than annually.
   Because a willful violation of these requirements by a health care
service plan 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.


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

  SECTION 1.  Section 1374.255 is added to the Health and Safety
Code, to read:
   1374.255.  (a) (1) For purposes of this section, "rate" includes,
but is not limited to, premiums, copayments, coinsurance obligations,
deductibles, out-of-pocket costs, and any other charges for covered
benefits.
   (2) For purposes of this section, "cost sharing" includes, but is
not limited to, copayments, coinsurance obligations, deductibles,
out-of-pocket costs, and charges for covered benefits other than the
premium.
   (b) Notwithstanding any other provision of law, except as required
by changes in state or federal law or as provided in subdivision
(c), a health care service plan shall not do either of the following
more than once each calendar year:
   (1) Alter in any manner the rates that apply to individual plan
contracts.
   (2) Alter in any manner any benefits included in individual plan
contracts.
   (c) (1) If an enrollee changes geographic region or family
composition, the plan may alter the rates to reflect that change but
shall ensure that the change in the rates offered reflects only the
change in geographic region or family composition.
   (2) If coinsurance obligations are based on a percentage of the
cost of services, nothing in this section shall prevent a change in
provider rates during the term of the contract between the enrollee
and the health care service plan even if that change increases the
charge for covered benefits to the enrollee.
   (3) If a generic version of a brand name prescription drug becomes
available, the application of a lower cost-sharing rate for the
generic drug than that of the brand name version shall not constitute
an alteration in benefits. If a generic equivalent of a brand name
prescription drug becomes available, the placement of the brand drug
into another formulary tier or increasing the copayment for that
brand shall not constitute an alteration of benefits or rate
increase. Nothing in this paragraph shall otherwise permit a plan to
change the structure, tiers, or cost sharing for generic and brand
name drugs during the course of the year.
   (4) Notwithstanding paragraph (1) of subdivision (b), a plan may
lower the premium if it does not otherwise alter cost sharing or any
benefits and if the reduction in premium is consistent with other
provisions of state and federal law.
   (d) Upon issuance of a new individual plan contract consistent
with Section 1389.5, the provisions of this section shall apply to
that contract. In no instance shall a new individual plan contract be
issued more often than annually.
   (e) This section shall not apply to health care service plan
contracts issued through a publicly funded state health care coverage
program, including, but not limited to, the Medi-Cal program and the
Healthy Families Program, or to Medicare supplement contracts.
   (f) Nothing in this section shall prevent a plan from providing
coverage for newly approved treatments, therapies, and prescription
drugs related to an existing benefit or service provided under the
contract. Nothing in this section shall be construed to provide any
limitation on medically necessary services.
   (g) This section shall apply only to health care service plan
contracts issued, amended, or renewed on or after January 1, 2011.
   (h) This section shall be implemented to the extent that it does
not conflict with federal laws and regulations.
  SEC. 2.  Section 10199.49 is added to the Insurance Code, to read:
   10199.49.  (a) (1) For purposes of this section, "rate" includes,
but is not limited to, premiums, copayments, coinsurance obligations,
deductibles, out-of-pocket costs, and any other charges for covered
benefits.
   (2) For purposes of this section, "cost sharing" includes, but is
not limited to, copayments, coinsurance obligations, deductibles,
out-of-pocket costs, and charges for covered benefits other than the
premium.
   (b) Notwithstanding any other provision of law, except as required
by changes in state or federal law or as provided in subdivision
(c), a health insurer shall not do either of the following more than
once each calendar year:
   (1) Alter in any manner the rates that apply to individual health
insurance policies.
   (2) Alter in any manner any benefits included in individual health
insurance policies.
   (c) (1) If an insured changes geographic region or family
composition, the health insurance policy may alter the rates to
reflect that change but shall ensure that the change in the rates
offered reflects only the change in geographic region or family
composition.
   (2) If coinsurance obligations are based on a percentage of the
cost of services, nothing in this section shall prevent a change in
provider rates during the term of the policy between the insured and
the health insurer even if that change increases the charge for
covered benefits to the insured.
   (3) If a generic version of a brand name prescription drug becomes
available, the application of a lower cost-sharing rate for the
generic drug than that of the brand name version shall not constitute
an alteration in benefits. If a generic equivalent of a brand name
prescription drug becomes available, the placement of the brand drug
into another formulary tier or increasing the copayment for that
brand shall not constitute an alteration of benefits or rate
increase. Nothing in this paragraph shall otherwise permit an insurer
to change the structure, tiers, or cost sharing for generic and
brand name drugs during the course of the year.
   (4) Notwithstanding paragraph (1) of subdivision (b), a plan may
lower the premium if it does not otherwise alter cost sharing or any
benefits and if the reduction in premium is consistent with other
provisions of state and federal law.
   (d) Upon issuance of a new individual health benefit plan
consistent with Section 10119.1, the provisions of this section shall
apply to that plan. In no instance shall a new individual health
benefit plan be issued more often than annually.
   (e) This section shall not apply to health insurance policies
issued through a publicly funded state health care coverage program,
including, but not limited to, the Medi-Cal program and the Healthy
Families Program, or to Medicare supplement policies.
   (f) Nothing in this section shall prevent an insurer from
providing coverage for newly approved treatments, therapies, and
prescription drugs related to an existing benefit or service provided
under the policy. Nothing in this section shall be construed to
provide any limitation on medically necessary services.
   (g) This section shall apply only to health insurance policies and
health benefit plans issued, amended, or renewed on or after January
1, 2011.
   (h) This section shall be implemented to the extent that it does
not conflict with federal laws or regulations.
  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.