BILL NUMBER: AB 2244 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 27, 2010
AMENDED IN ASSEMBLY APRIL 5, 2010
INTRODUCED BY Assembly Member Feuer
FEBRUARY 18, 2010
An act to add Article 11.7 (commencing with Section 1399.825) to
Chapter 2.2 of Division 2 of the Health and Safety Code, and to add
Chapter 9.7 (commencing with Section 10950) to Part 2 of Division 2
of the Insurance Code, relating to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
AB 2244, as amended, Feuer. Health care coverage.
Existing law provides for the licensing and regulation of health
care service plans by the Department of Managed Health Care. Existing
law provides for the regulation of health insurers by the Department
of Insurance. Existing law authorizes a health care service plan or
health insurer to exclude an applicant from coverage for a specified
time for preexisting conditions. A willful violation of provisions
governing health care service plans is a crime.
This bill would require all health care service plans and
insurance carriers that offer health care coverage to children or
individuals to offer that coverage, by specified dates, to any child
or individual seeking coverage. The bill would also prohibit, by
specified dates, the exclusion or limitation of coverage due to any
preexisting condition. The bill would further establish and require
the implementation of standard risk rates with respect to plan
contracts or health benefit plans that provide coverage to children,
as specified. The bill would authorize the Department of Managed
Health Care and the Department of Insurance to adopt emergency
regulations for purposes of implementation.
By imposing new requirements on health care service plans, the
willful violation of which would be a crime, this 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. Article 11.7 (commencing with Section 1399.825) is
added to Chapter 2.2 of Division 2 of the Health and Safety Code, to
read:
Article 11.7. Individual Access to Health Care
1399.825. As used in this article:
(a) (1) "Child" means any individual under 19 years of age.
(2) "Responsible party for a child" means an adult having custody
of a child with the right to make medical decisions for, and with the
responsibility for the financial needs of, the child.
(b) "Individual" means any individual over 19 years of age.
(c) "In force business" means an existing health benefit plan
contract issued by the plan to an individual.
(e)
(d) "New business" means a health care service plan
contract issued to an individual that is not the plan's in force
business.
(f)
(e) "Preexisting condition provision" 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.
(g)
(f) "Rating period" means the period for which premium
rates established by a plan are in effect and shall be no less than
12 months.
(h)
(g) "Risk adjusted individual risk rate" means the rate
determined for an eligible individual or child in a particular risk
category after applying the risk adjustment factor.
(i)
(h) "Risk adjustment factor" means the percentage
adjustment to be applied equally to each standard risk rate for a
particular child, based upon any expected deviations from standard
cost of services. This factor may not be more than 120 percent or
less than 80 percent until January 1, 2012. Effective January 1,
2012, this factor may not be more than 110 percent or less than 90
percent. Effective January 1, 2014, the standard risk rate shall
apply to all policies sold to individuals or for children.
(j)
(i) "Risk category" means the following characteristics
of an eligible child: age, geographic region, and family composition
of the individual, plus the health benefit plan selected by the
individual.
(1) Until January 1, 2014, no more than the following age
categories may be used in determining premium rates:
(A) Under age 5.
(B) Age 5-15.
(C) Age 15-19.
(2) The rate shall not vary by more than 2 to 1 for children.
(3) Individual health care service plans shall base rates for
individuals and children using no more than the following family size
categories:
(A) Single.
(B) Married couple.
(C) One adult and child or children.
(D) Married couple and child or children.
(4) In determining rates for individuals and children, a plan that
operates statewide shall use the geographic regions specified in
Section 1357.
(k)
(j) Nothing in this section shall be construed to
require a plan to establish a new service area or to offer health
coverage on a statewide basis, outside of the plan's existing service
area.
1399.826. (a) (1) Effective January 1, 2011, every health care
service plan offering plan contracts for children shall offer
coverage to the responsible party for any child that seeks coverage.
(2) Effective January 1, 2014, every health care service plan
offering plan contracts to individuals shall offer coverage to any
individual who seeks coverage.
(b) (1) Effective January 1, 2011, notwithstanding any other
provision of state law or regulation, every health care service plan
offering contracts for children shall not exclude or limit coverage
due to any preexisting condition.
(2) Effective January 1, 2014, notwithstanding any other provision
of state law or regulation, every health care service plan offering
contracts for children individuals
shall not exclude or limit coverage due to any preexisting condition.
(c) This article shall not apply to coverage to which an employer
makes any contribution.
(d) Every health care service plan offering plan contracts to
individuals shall in addition to complying with the provisions of
this chapter and the rules adopted thereunder comply with the
provisions of this article.
1399.827. 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, long-term care coverage, or specialized health plan
contracts.
1399.828. (a) Upon the effective date of this article, a health
care service plan shall fairly and affirmatively offer, market, and
sell all of the plan's health care service plan contracts that are
offered and sold to the responsible party for a child. Effective
January 1, 2014, a health care service plan shall fairly and
affirmatively offer, market, and sell all of the plan's health care
service plan contracts that are sold to individuals.
(b) Effective January 1, 2011, a health care service plan shall
not reject an application from the responsible party for a child for
a health care service plan contract. Effective January 1, 2014, a
health care service plan shall not reject an application from an
individual for a health care service plan contract.
(c) No health care service plan or solicitor shall, directly or
indirectly, engage in the following activities:
(1) Encourage or direct an individual or responsible party for a
child to refrain from filing an application for coverage with a plan
because of the health status, claims experience, industry, occupation
of the individual or child, or geographic location provided that it
is within the plan's approved service area.
(2) Encourage or direct individuals or children to seek coverage
from another plan because of the health status, claims experience,
industry, occupation of the individual or child, or geographic
location, provided that it is within the plan's approved service
area.
(d) A health care service plan shall not, 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 to be varied
because of the health status, claims experience, industry,
occupation, or geographic location of the individual or child. This
subdivision does not apply to a compensation arrangement that
provides compensation to a solicitor on the basis of percentage of
premium, provided that the percentage shall not vary because of the
health status, claims experience, industry, occupation, or geographic
area of the individual or child.
(e) Effective January 1, 2011, a health care service plan contract
that covers a child shall not establish rules for eligibility,
including continued eligibility, of an individual, or dependent of an
individual, to enroll under the terms of the plan based on any of
the following health status-related factors:
(1) Health status.
(2) Medical condition, including physical and mental illnesses.
(3) Claims experience.
(4) Receipt of health care.
(5) Medical history.
(6) Genetic information.
(7) Evidence of insurability, including conditions arising out of
acts of domestic violence.
(8) Disability.
(9) Any other health status-related factor determined appropriate
by department.
(f) A health care service plan shall comply with the requirements
of Section 1374.3.
(g) Effective January 1, 2014, this section shall apply to all
individuals and children obtaining coverage with no contribution from
an employer.
1399.829. (a) After an individual or the responsible party for a
child submits a completed application form for a plan contract, the
health care service plan shall, within 30 days, notify the individual
or responsible party for a child of actual premium charges for that
plan contract established in accordance with Section 1399.836. The
individual or responsible party for a child shall have 30 days in
which to exercise the right to buy coverage at the quoted premium
charges.
(b) When an individual or the responsible party for a child
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 plan
contract shall become effective no later than the first day of the
following month. When that payment is neither delivered nor
postmarked until 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.
(c) During the first 60 days after the effective date of the plan
contract, the individual or responsible party for a child shall have
the option of changing coverage to a different plan contract offered
by the same health care service plan. If an individual or the
responsible party for a child notifies the plan of the change within
the first 15 days of a month, coverage under the new plan contract
shall become effective no later than the first day of the following
month. If an individual or the responsible party for a child notifies
the plan of the change after the 15th day of a month, coverage under
the new plan contract shall become effective no later than the first
day of the second month following notification.
1399.830. (a) Effective January 1, 2011, a health care service
plan may not exclude any child who would otherwise be entitled to
health care services on the basis of an actual or expected health
condition of that child. No health care service plan contract may
limit or exclude coverage for a child by type of illness, treatment,
medical condition, or accident.
(b) Effective January 1, 2014, a health care service plan may not
exclude any individual who would otherwise be entitled to health care
services on the basis of an actual or expected health condition of
that individual. No health care service plan contract may limit or
exclude coverage for a child by type of illness, treatment, medical
condition, or accident.
1399.831. All health care service plan contracts offered to an
individual or child shall provide to subscribers and enrollees at
least all of the basic health care services in this act.
1399.832. No health care service plan shall be required to offer
a health care service plan contract or accept applications for the
contract pursuant to this article in the case of any of the
following:
(a) To an individual or child, if the individual or child who is
to be covered by the plan contract does not work or reside within the
plan's approved service areas.
(b) (1) Within a specific service area or portion of a service
area, if the plan reasonably anticipates and demonstrates to the
satisfaction of the director that it will not have sufficient health
care delivery resources to ensure that health care services will be
available and accessible to the individual or child because of its
obligations to existing enrollees.
(2) A health care service plan that cannot offer a health care
service plan contract to individuals or children 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 contract in the
area in which the plan is not offering coverage to individuals to new
employer groups until the plan notifies the director that it has the
ability to deliver services to individuals, and certifies to the
director that from the date of the notice it will enroll all
individuals requesting coverage in that area from the plan
unless the plan has met the requirements of subdivision (d)
.
(3) Nothing in this article shall be construed to limit the
director's authority to develop and implement a plan of
rehabilitation for a health care service plan whose financial
viability or organizational and administrative capacity has become
impaired.
(c) Offer coverage to an individual or child that, within 12
months of application for coverage, disenrolled from a plan contract
offered by the plan.
(d) (1) The director approves the plan's certification that the
number of eligible employees and dependents enrolled under contracts
issued during the current calendar year equals or exceeds either of
the following:
(A) In the case of a plan that administers any self-funded health
coverage arrangements in California, 10 percent of the total
enrollment of the plan in California as of December 31 of the
preceding year.
(B) In the case of a plan that does not administer any self-funded
health coverage arrangements in California, 8 percent of the total
enrollment of the plan in California as of December 31 of the
preceding year. If that certification is approved, the plan shall not
offer any health benefit plan to any small employers during the
remainder of the current year.
(2) If a health care service plan treats an affiliate or
subsidiary as a separate carrier for the purpose of this article
because one health care service plan is qualified under the federal
Health Maintenance Organization Act (42 U.S.C. Sec. 300e et seq.) and
does not offer coverage to small employers, while the affiliate or
subsidiary offers a plan contract that is not qualified under the
federal Health Maintenance Organization Act (42 U.S.C. Sec. 300e et
seq.) and offers plan contracts to small employers, the health care
service plan offering coverage to small employers shall enroll new
eligible employees and dependents, equal to the applicable percentage
of the total enrollment of both the health care service plan
qualified under the federal Health Maintenance Organization Act (42
U.S.C. Sec. 300e et seq.) and its affiliate or subsidiary.
(3) (A) The certified statement filed pursuant to this subdivision
shall state the following:
(i) Whether the plan administers any self-funded health coverage
arrangements in California.
(ii) The plan's total enrollment as of December 31 of the
preceding year.
(iii) The number of eligible employees and dependents enrolled
under contracts issued to small employer groups during the current
calendar year.
(B) The director shall, within 45 days, approve or disapprove the
certified statement. If the certified statement is disapproved, the
plan shall continue to issue coverage as required by Section 1357.03
and be subject to disciplinary action as set forth in Article 7
(commencing with Section 1386).
1399.833. The director may require a health care service plan to
discontinue the offering of contracts or acceptance of applications
from any individual or child upon a determination by the director
that the plan does not have sufficient financial viability or
organizational and administrative capacity to ensure the delivery of
health care services to its enrollees. In determining whether the
conditions of this section have been met, the director shall
consider, but not be limited to, the plan's compliance with the
requirements of Section 1367, Article 6 (commencing with Section
1375.1), and the rules adopted under those provisions.
1399.834. All health care service plan contracts offered to a
child or individual shall be renewable at the option of the enrollee
or responsible party for a child except:
(a) For nonpayment of the required premiums by the enrollee or
responsible party for a child.
(b) For fraud or misrepresentation by the individuals or their
representatives.
(c) When the health care service plan ceases to provide or arrange
for the provision of health care services for new individual health
care service plan contracts in this state; provided, however, that
the following conditions are satisfied:
(1) Notice of the decision to cease new or existing individual
health benefits plans in this state is provided to the director and
to the contractholder at least 360 days prior to the discontinuation
of the coverage.
(2) Individual health care service plan contracts subject to this
article shall not be canceled for 360 days after the date of the
notice required under paragraph (1) and for that business of a plan
which remains in force, any plan that ceases to offer for sale new
individual health care service plan contracts shall continue to be
governed by this article with respect to business conducted under
this article.
(3) Except as authorized under subdivision (d) of Section
1399.832 or Section 1399.833, a plan that ceases to write
new individual business in this state after the effective date of
this article shall be prohibited from offering for sale new
individual health care service plan contracts in this state for a
period of five years from the date of notice to the director.
(d) When the health care service plan withdraws a health care
service plan contract from the individual market; provided, the plan
notifies all affected contractholders and the director at least 180
days prior to the discontinuation of those contracts, and the plan
makes available to the individual all plan contracts that it makes
available to new individual business; and provided, that the premium
for the new plan contract complies with the renewal increase
requirements set forth in Section 1399.836.
1399.836. Effective January 1, 2011, premiums for contracts
offered or delivered by health care service plans on or after the
effective date of this article for children shall be subject to the
following requirements:
(a) The premium for new business shall be determined for an
eligible child in a particular risk category after applying a risk
adjustment factor to the plan's standard risk rates. The risk
adjusted risk rate may not be more than 120 percent or less than 80
percent of the plan's applicable standard risk rate until January 1,
2012. Effective January 1, 2012, this factor may not be more than 110
percent or less than 90 percent. The standard risk rates applied to
a child for new business shall be in effect for no less than 12
months.
(b) (1) The premium for in force business shall be determined for
an eligible child in a particular risk category after applying a risk
adjustment factor to the plan's standard individual risk rates. The
risk adjusted individual risk rates may not be more than 120 percent
or less than 80 percent of the plan's applicable standard risk rate
until January 1, 2011. Effective January 1, 2012, this factor may not
be more than 110 percent or less than 90 percent. The factor
effective January 1, 2011, shall apply to in force business at the
earlier of either the time of renewal or January 1, 2012. The risk
adjustment factor applied to a child may not increase by more than 10
percentage points from the risk adjustment factor applied in the
prior rating period. The risk adjustment factor for a child may not
be modified more frequently than once every 12 months.
(2) The standard risk rates shall be in effect for no less than 12
months.
(3) For a contract that a plan has discontinued offering, the risk
adjustment factor applied to the standard risk rates for the first
rating period of the new contract that the responsible party for the
child elects to purchase shall be no greater than the risk adjustment
factor applied in the prior rating period to the discontinued
contract. However, the risk adjusted individual risk rate may not be
more than 120 percent or less than 80 percent of the plan's
applicable standard risk rate until January 1, 2012. Effective
January 1, 2012, this factor may not be more than 110 percent or less
than 90 percent. The factor effective January 1, 2012, shall apply
to in force business at the earlier of either the time of renewal or
January 1, 2012. The risk adjustment factor for a child may not be
modified more frequently than once every 12 months.
1399.837. Health care service plans shall apply standard risk
rates consistently with respect to all children.
1399.838. In connection with the offering for sale of any plan
contract for children, each plan shall make a reasonable disclosure,
as part of its solicitation and sales materials, of the following:
(a) The extent to which premium rates for a specific child are
established or adjusted in part based upon the actual or expected
variation in service costs or actual or expected variation in health
condition of the child.
(b) The provisions concerning the plan's right to change premium
rates and the factors, other than provision of services experience,
that affect changes in premium rates.
(c) Provisions relating to the guaranteed issue and renewal of
contracts.
(d) Provisions relating to the child's right to apply for any
contract written, issued, or administered by the plan at the time of
application for a new health care service plan contract, or at the
time of renewal of a health care service plan contract.
(e) The availability, upon request, of a listing of all the plan's
contracts and benefit plan designs offered for children, including
the rates for each contract.
(f) At the time it offers a contract to the responsible party for
a child, each plan shall provide the responsible party with a
statement of all of its plan contracts offered to children, including
the rates for each plan contract, in the service area in which the
individuals who are to be covered by the plan contract reside. For
purposes of this subdivision, plans that are affiliated plans or that
are eligible to file a consolidated income tax return shall be
treated as one health plan.
(g) Each health care service plan shall do all of the following:
(1) Prepare a brochure that summarizes all of its plan contracts
offered to children and to make this summary available to any
responsible party for a child and to solicitors upon request. The
summary shall include for each contract information on benefits
provided, a generic description of the manner in which services are
provided, such as how access to providers is limited, benefit
limitations, required copayments and deductibles, standard risk
rates, and a phone number that can be called for more detailed
benefit information. Plans are required to keep the information
contained in the brochure accurate and up to date and, upon updating
the brochure, send copies to solicitors and solicitor firms with whom
the plan contracts to solicit enrollments or subscriptions.
(2) For each contract, prepare a more detailed evidence of
coverage and make it available to responsible parties, solicitors,
and solicitor firms upon request. The evidence of coverage shall
contain all information that a prudent buyer would need to be aware
of in making contract selections.
(3) Provide to responsible parties and solicitors, upon request,
for any given child the standard risk rates. When requesting this
information, responsible parties, solicitors, and solicitor firms
shall provide the plan with the information the plan needs to
determine the individual's risk adjusted risk rate.
(4) Provide copies of the current summary brochure to all
solicitors and solicitor firms contracting with the plan to solicit
enrollments or subscriptions from responsible parties for children.
For purposes of this subdivision, plans that are affiliated plans
or that are eligible to file a consolidated income tax return shall
be treated as one health plan.
(h) Every solicitor or solicitor firm contracting with one or more
plans to solicit enrollments or subscriptions from responsible
parties for children shall do all of the following:
(1) When providing information on contracts to a responsible party
for a child or children but making no specific recommendations on
particular plan contracts:
(A) Advise the responsible party of the plan's obligation to sell
to any responsible party any plan contract it offers for children and
provide them, upon request, with the actual rates that would be
charged for that child for a given contract.
(B) Notify the responsible party that the solicitor or solicitor
firm will procure rate and benefit information for the responsible
party for the child on any plan contract offered by a plan whose
contract the solicitor sells.
(C) Notify the responsible party that upon request the solicitor
or solicitor firm will provide the responsible party with the summary
brochure required under this paragraph for any plan contract offered
by a plan with whom the solicitor or solicitor firm has contracted
to solicit enrollments or subscriptions.
(2) When recommending a particular benefit plan design or designs,
advise the responsible party that, upon request, the agent will
provide the responsible party with the brochure required by paragraph
(1) containing the benefit plan design or designs being recommended
by the agent or broker.
(3) Prior to filing an application for a responsible party for a
child for a particular contract:
(A) For each of the plan contracts offered by the plan whose
contract the solicitor or solicitor firm is offering, provide the
responsible party with the benefit summary required in paragraph (1)
and the standard risk rates for that particular child.
(B) Notify the responsible party that, upon request, the solicitor
or solicitor firm will provide the responsible party with an
evidence of coverage brochure for each contract the plan offers.
(C) Notify the responsible party for a child that, from January 1,
2011, to January 1, 2012, actual rates may be 20 percent higher or
lower than the standard risk rates, and from January 1, 2012, until
December 31, 2014, actual rates may be 10 percent higher or lower
than the standard risk rates, depending on how the plan assesses the
risk of the child.
(D) Notify the responsible party that, upon request, the solicitor
or solicitor firm will submit information to the plan to ascertain
the child's risk adjusted risk rate for any contract the plan offers.
(E) Obtain a signed statement from the responsible party
acknowledging that the responsible party has received the disclosures
required by this section.
1399.839. (a) At least 30 business days prior to renewing or
amending a plan contract subject to this article that will be in
force on the operative date of this article, a plan 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 plan is in compliance with subdivision
(j) (i) of Section 1399.825 and Section
1399.836. The certified statement shall set forth the standard risk
rate for each risk category and the highest and lowest risk
adjustment factors that will be used in setting the rates at which
the contract will be renewed or amended. Any action by the director,
as permitted under Section 1352, to disapprove, suspend, or postpone
the plan's use of a plan contract shall be in writing, specifying the
reasons that the plan contract is not in compliance with the
requirements of this chapter.
(b) At least 30 business days prior to offering a plan contract
subject to this article, all 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 plan is in compliance with subdivision
(j) (i) of Section 1399.825 and Section
1399.836. The certified statement shall set forth the standard risk
rate for each risk category and the highest and lowest risk
adjustment factors that will be used in setting the rates at which
the contract will be offered. Plans that will be offering to a
responsible party for a child contracts approved by the director
prior to the effective date of this article shall file a notice of
material modification in accordance with this subdivision. Any action
by the director, as permitted under Section 1352, to disapprove,
suspend, or postpone the plan's use of a plan contract shall be in
writing, specifying the reasons that the plan contract is not in
compliance with the requirements of this chapter.
(c) Prior to making any changes in the risk categories, risk
adjustment factors, or standard risk rates filed with the director
pursuant to subdivision (a) or (b), the plan shall file, as an
amendment, a statement setting forth the changes and certifying that
the plan is in compliance with subdivision (j)
(i) of Section 1399.825 and Section 1399.836. A plan may
commence offering plan contracts utilizing the changed risk
categories set forth in the certified statement on the 45th day from
the date of the filing, or at an earlier time determined by the
director, unless the director disapproves the amendment by written
notice, stating the reasons therefor. If only the standard risk rate
is being changed, and not the risk categories or risk adjustment
factors, a plan may commence offering plan contracts utilizing the
changed standard risk rate upon the 31st day after filing the
certified statement unless the director disapproves the amendment by
written notice.
(d) Periodic changes to the standard risk rate that a 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), (b), or (c).
(e) Each plan shall maintain at its principal place of business
all of the information required to be filed with the director
pursuant to this section.
(f) Each plan shall make available to the director, on request,
the risk adjustment factor used in determining the rate for any
particular child.
(g) Nothing in this section shall be construed to limit the
director's authority to enforce the rating practices set forth in
this article.
1399.840. The director may issue regulations that are necessary
to carry out the purposes of this article. Prior to the public
comment period required by regulations under the Administrative
Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1
of Division 3 of Title 2 of the Government Code), the director shall
provide the Insurance Commissioner with a copy of the proposed
regulations. The Insurance Commissioner shall have 30 days to notify
the director in writing of any comments on the regulations. The
Insurance Commissioner's comments shall be included in the public
notice issued on the regulations. Any rules and regulations adopted
pursuant to this article may be adopted as emergency regulations in
accordance with the Administrative Procedure Act. Until December 31,
2015, the adoption of these regulations shall be deemed an emergency
and necessary for the immediate preservation of the public peace,
health and safety, or general welfare. Any regulations adopted prior
to December 31, 2015, in order to remain in effect after December 31,
2016, shall be readopted as nonemergency regulations in accordance
with the Administrative Procedures Act prior to December 31, 2016.
SEC. 2. Chapter 9.7 (commencing with Section 10950) is added to
Part 2 of Division 2 of the Insurance Code, to read:
CHAPTER 9.7. INDIVIDUAL ACCESS TO HEALTH INSURANCE
10950. As used in this article:
(a) (1) "Child" means any individual under 19 years of age.
(2) "Responsible party for a child" means an adult having custody
of a child with the right to make medical decisions for, and with the
responsibility for the financial needs of, the child.
(b) "Individual" means any individual over 19 years of age.
(c) "In force business" means an existing health benefit plan
issued by a carrier to an individual.
(e)
(d) "New business" means a health benefit plan issued
to an individual that is not the carrier's in force business.
(f)
(e) "Preexisting condition provision" 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.
(g)
(f) "Rating period" means the period for which premium
rates established by a carrier are in effect and shall be no less
than 12 months.
(h)
(g) "Risk adjusted individual risk rate" means the rate
determined for an eligible individual or child in a particular risk
category after applying the risk adjustment factor.
(i)
(h) "Risk adjustment factor" means the percentage
adjustment to be applied equally to each standard risk rate for a
particular child, based upon any expected deviations from standard
cost of services. This factor may not be more than 120 percent or
less than 80 percent until January 1, 2012. Effective January 1,
2012, this factor may not be more than 110 percent or less than 90
percent. Effective January 1, 2014, the standard risk rate shall
apply to all policies sold to individuals or for children.
(j)
(i) "Risk category" means the following characteristics
of an eligible child: age, geographic region, and family composition
of the individual, plus the health benefit plan selected by the
individual.
(1) Until January 1, 2014, no more than the following age
categories may be used in determining premium rates:
(A) Under age 5.
(B) Age 5-15.
(C) Age 15-19.
(2) The rate shall not vary by more than 2 to 1 for children.
(3) Carriers shall base rates for individuals and children using
no more than the following family size categories:
(A) Single.
(B) Married couple.
(C) One adult and child or children.
(D) Married couple and child or children.
(4) In determining rates for individuals and children, a carrier
that operates statewide shall the geographic regions specified in
Section 10700.
(k)
(j) Nothing in this section shall be construed to
require a carrier to establish a new service area or to offer health
coverage on a statewide basis, outside of the carrier's existing
service area.
10951. (a) (1) Effective January 1, 2011, every carrier offering
health benefit plans for children shall offer coverage to the
responsible party for any child that seeks coverage.
(2) Effective January 1, 2014, every carrier offering health
benefit plans to individuals shall offer coverage to any individual
who seeks coverage.
(b) (1) Effective January 1, 2011, notwithstanding any other
provision of state law or regulation, every carrier offering
contracts for children shall not exclude or limit coverage due to any
preexisting condition.
(2) Effective January 1, 2014, notwithstanding any other provision
of state law or regulation, every carrier offering contracts for
children individuals shall not exclude
or limit coverage due to any preexisting condition.
(c) This article shall not apply to coverage to which an employer
makes any contribution.
(d) Every carrier offering health benefit plans to individuals
shall in addition to complying with the provisions of this chapter
and the rules adopted thereunder comply with the provisions of this
article.
10952. This article shall not apply to health benefit plans 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, long-term care coverage, or specialized health benefit
plans.
10953. (a) Upon the effective date of this article, a carrier
shall fairly and affirmatively offer, market, and sell all of the
carrier's contracts that are offered and sold to the responsible
party for a child. Effective January 1, 2014, a carrier shall fairly
and affirmatively offer, market, and sell all of the carrier's
contracts that are sold to individuals.
(b) Effective January 1, 2011, a carrier shall not reject an
application from the responsible party for a child for a health
benefit plan. Effective January 1, 2014, a carrier shall not reject
an application from an individual for a health benefit plan.
(c) No carrier or solicitor shall, directly or indirectly, engage
in the following activities:
(1) Encourage or direct an individual or responsible party for a
child to refrain from filing an application for coverage with a
carrier because of the health status, claims experience, industry,
occupation of the individual or child, or geographic location
provided that it is within the carrier's approved service area.
(2) Encourage or direct individuals or children to seek coverage
from another carrier because of the health status, claims experience,
industry, occupation of the individual or child, or geographic
location, provided that it is within the carrier's approved service
area.
(d) A carrier shall not, 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 benefit plan to be varied because of the health status,
claims experience, industry, occupation, or geographic location of
the individual or child. This subdivision does not apply to a
compensation arrangement that provides compensation to a solicitor on
the basis of percentage of premium, provided that the percentage
shall not vary because of the health status, claims experience,
industry, occupation, or geographic area of the individual or child.
(e) Effective January 1, 2011, a health care service health
benefit plan that covers a child shall not establish rules for
eligibility, including continued eligibility, of an individual, or
dependent of an individual, to enroll under the terms of the carrier
based on any of the following health status-related factors:
(1) Health status.
(2) Medical condition, including physical and mental illnesses.
(3) Claims experience.
(4) Receipt of health care.
(5) Medical history.
(6) Genetic information.
(7) Evidence of insurability, including conditions arising out of
acts of domestic violence.
(8) Disability.
(9) Any other health status-related factor determined appropriate
by department.
(f) A carrier shall comply with the requirements of subdivision
(c) of Section 10119.
(g) Effective January 1, 2014, this section shall apply to all
individuals and children obtaining coverage with no contribution from
an employer.
10954. (a) After an individual or the responsible party for a
child submits a completed application form for a health benefit plan,
the carrier shall, within 30 days, notify the individual or
responsible party for a child of actual premium charges for that
health benefit plan established in accordance with Section 10960. The
individual or responsible party for a child shall have 30 days in
which to exercise the right to buy coverage at the quoted premium
charges.
(b) When an individual or the responsible party for a child
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
benefit plan shall become effective no later than the first day of
the following month. When that payment is neither delivered nor
postmarked until 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.
(c) During the first 60 days after the effective date of the
health benefit plan, the individual or responsible party for a child
shall have the option of changing coverage to a different health
benefit plan offered by the same carrier. If an individual or the
responsible party for a child notifies the carrier of the change
within the first 15 days of a month, coverage under the new health
benefit plan shall become effective no later than the first day of
the following month. If an individual or the responsible party for a
child notifies the carrier of the change after the 15th day of a
month, coverage under the new health benefit plan shall become
effective no later than the first day of the second month following
notification.
10955. (a) Effective January 1, 2011, a carrier may not exclude
any child who would otherwise be entitled to health care services on
the basis of an actual or expected health condition of that child. No
health care service health benefit plan may limit or exclude
coverage for a child by type of illness, treatment, medical
condition, or accident.
(b) Effective January 1, 2014, a carrier may not exclude any
individual who would otherwise be entitled to health care services on
the basis of an actual or expected health condition of that
individual. No health care service health benefit plan may limit or
exclude coverage for a child by type of illness, treatment, medical
condition, or accident.
10956. All health benefit plans offered to an individual or child
shall provide to contractholders and insureds at least all of the
basic health care services in this act.
10957. No carrier shall be required to offer a health benefit
plan or accept applications for the contract pursuant to this article
in the case of any of the following:
(a) To an individual or child, if the individual or child who is
to be covered by the health benefit plan does not work or reside
within the carrier's approved service areas.
(b) (1) Within a specific service area or portion of a service
area, if the carrier reasonably anticipates and demonstrates to the
satisfaction of the commissioner that it will not have sufficient
health care delivery resources to ensure that health care services
will be available and accessible to the individual or child because
of its obligations to existing insureds.
(2) A carrier that cannot offer a health benefit plan to
individuals or children 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 contract in the area in which the
carrier is not offering coverage to individuals to new employer
groups until the carrier notifies the commissioner that it has the
ability to deliver services to individuals, and certifies to the
commissioner that from the date of the notice it will enroll all
individuals requesting coverage in that area from the carrier
unless the carrier has met the requirements of subdivision
(d) .
(3) Nothing in this article shall be construed to limit the
commissioner's authority to develop and implement a plan of
rehabilitation for a carrier whose financial viability or
organizational and administrative capacity has become impaired.
(c) Offer coverage to an individual or child that, within 12
months of application for coverage, disenrolled from a health benefit
plan offered by the carrier.
(d) (1) The commissioner approves the carrier's certification that
the number of eligible employees and dependents enrolled under
contracts issued during the current calendar year equals or exceeds
either of the following:
(A) In the case of a carrier that administers any self-funded
health coverage arrangements in California, 10 percent of the total
enrollment of the carrier in California as of December 31 of the
preceding year.
(B) In the case of a carrier that does not administer any
self-funded health coverage arrangements in California, 8 percent of
the total enrollment of the carrier in California as of December 31
of the preceding year. If that certification is approved, the carrier
shall not offer any health benefit plan to any small employers
during the remainder of the current year.
(2) If a carrier treats an affiliate or subsidiary as a separate
carrier for the purpose of this article because one carrier is
qualified under the federal Health Maintenance Organization Act (42
U.S.C. Sec. 300e et seq.) and does not offer coverage to small
employers, while the affiliate or subsidiary offers a plan contract
that is not qualified under the federal Health Maintenance
Organization Act (42 U.S.C. Sec. 300e et seq.) and offers health
benefit plans to small employers, the carrier offering coverage to
small employers shall enroll new eligible employees and dependents,
equal to the applicable percentage of the total enrollment of both
the carrier qualified under the federal Health Maintenance
Organization Act (42 U.S.C. Sec. 300e et seq.) and its affiliate or
subsidiary.
(3) (A) The certified statement filed pursuant to this subdivision
shall state the following:
(i) Whether the carrier administers any self-funded health
coverage arrangements in California.
(ii) The carrier's total enrollment as of December 31 of the
preceding year.
(iii) The number of eligible employees and dependents enrolled
under health benefit plans issued to small employer groups during the
current calendar year.
(B) The commissioner shall, within 45 days, approve or disapprove
the certified statement. If the certified statement is disapproved,
the carrier shall continue to issue coverage and be subject to
disciplinary action.
10958. The commissioner may require a carrier to discontinue the
offering of contracts or acceptance of applications from any
individual or child upon a determination by the commissioner that the
carrier does not have sufficient financial viability or
organizational and administrative capacity to ensure the delivery of
health care services to its insureds. In determining whether the
conditions of this section have been met, the commissioner shall
consider, but not be limited to, the carrier's compliance with the
requirements of this part and the rules adopted under those
provisions.
10959. All health benefit plans offered to a child or individual
shall be renewable at the option of the insured or responsible party
for a child except:
(a) For nonpayment of the required premiums by the insured or
responsible party for a child.
(b) For fraud or misrepresentation by the individuals or their
representatives.
(c) When the carrier 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 benefits plans in this state is provided to the commissioner
and to the contractholder at least 360 days prior to the
discontinuation of the coverage.
(2) Individual health benefit plans subject to this article shall
not be canceled for 360 days after the date of the notice required
under paragraph (1) and for that business of a carrier which remains
in force, any carrier that ceases to offer for sale new individual
health benefit plans shall continue to be governed by this article
with respect to business conducted under this article.
(3) Except as authorized under subdivision (d) of Section
10957 or Section 10959, a carrier that ceases to write new
individual business in this state after the effective date of this
article shall be prohibited from offering for sale new individual
health benefit plans in this state for a period of five years from
the date of notice to the commissioner.
(d) When the carrier withdraws a health benefit plan from the
individual market; provided, the carrier notifies all affected
contractholders and the commissioner at least 180 days prior to the
discontinuation of those contracts, and the carrier makes available
to the individual all health benefit plans that it makes available to
new individual business; and provided, that the premium for the new
health benefit plan complies with the renewal increase requirements
set forth in Section 10960.
10960. Effective January 1, 2011, premiums for contracts offered
or delivered by carriers on or after the effective date of this
article for children shall be subject to the following requirements:
(a) The premium for new business shall be determined for an
eligible child in a particular risk category after applying a risk
adjustment factor to the carrier's standard risk rates. The risk
adjusted risk rate may not be more than 120 percent or less than 80
percent of the carrier's applicable standard risk rate until January
1, 2012. Effective January 1, 2012, this factor may not be more than
110 percent or less than 90 percent. The standard risk rates applied
to a child for new business shall be in effect for no less than 12
months.
(b) (1) The premium for in force business shall be determined for
an eligible child in a particular risk category after applying a risk
adjustment factor to the carrier's standard individual risk rates.
The risk adjusted individual risk rates may not be more than 120
percent or less than 80 percent of the carrier's applicable standard
risk rate until January 1, 2011. Effective January 1, 2012, this
factor may not be more than 110 percent or less than 90 percent. The
factor effective January 1, 2011, shall apply to in force business at
the earlier of either the time of renewal or January 1, 2012. The
risk adjustment factor applied to a child may not increase by more
than 10 percentage points from the risk adjustment factor applied in
the prior rating period. The risk adjustment factor for a child may
not be modified more frequently than once every 12 months.
(2) The standard risk rates shall be in effect for no less than 12
months.
(3) For a contract that a carrier has discontinued offering, the
risk adjustment factor applied to the standard risk rates for the
first rating period of the new contract that the responsible party
for the child elects to purchase shall be no greater than the risk
adjustment factor applied in the prior rating period to the
discontinued contract. However, the risk adjusted individual risk
rate may not be more than 120 percent or less than 80 percent of the
carrier's applicable standard risk rate until January 1, 2012.
Effective January 1, 2012, this factor may not be more than 110
percent or less than 90 percent. The factor effective January 1,
2012, shall apply to in force business at the earlier of either the
time of renewal or January 1, 2012. The risk adjustment factor for a
child may not be modified more frequently than once every 12 months.
10961. Carriers shall apply standard risk rates consistently with
respect to all children.
10962. In connection with the offering for sale of any health
benefit plan for children, each carrier shall make a reasonable
disclosure, as part of its solicitation and sales materials, of the
following:
(a) The extent to which premium rates for a specific child are
established or adjusted in part based upon the actual or expected
variation in service costs or actual or expected variation in health
condition of the child.
(b) The provisions concerning the carrier's right to change
premium rates and the factors, other than provision of services
experience, that affect changes in premium rates.
(c) Provisions relating to the guaranteed issue and renewal of
contracts.
(d) Provisions relating to the child's right to apply for any
contract written, issued, or administered by the carrier at the time
of application for a new health benefit plan, or at the time of
renewal of a health benefit plan.
(e) The availability, upon request, of a listing of all the plan's
contracts and benefit plan designs offered for children, including
the rates for each contract.
(f) At the time it offers a contract to the responsible party for
a child, each carrier shall provide the responsible party with a
statement of all of its health benefit plans offered to children,
including the rates for each health benefit plan, in the service area
in which the individuals who are to be covered by the health benefit
plan reside. For purposes of this subdivision, carriers that are
affiliated carriers or that are eligible to file a consolidated
income tax return shall be treated as one carrier.
(g) Each carrier shall do all of the following:
(1) Prepare a brochure that summarizes all of its health benefit
plans offered to children and to make this summary available to any
responsible party for a child and to solicitors upon request. The
summary shall include for each contract information on benefits
provided, a generic description of the manner in which services are
provided, such as how access to providers is limited, benefit
limitations, required copayments and deductibles, standard risk
rates, and a phone number that can be called for more detailed
benefit information. carriers are required to keep the information
contained in the brochure accurate and up to date and, upon updating
the brochure, send copies
to solicitors and solicitor firms with whom the health benefit plans
to solicit enrollments or subscriptions.
(2) For each contract, prepare a more detailed evidence of
coverage and make it available to responsible parties, solicitors,
and solicitor firms upon request. The evidence of coverage shall
contain all information that a prudent buyer would need to be aware
of in making contract selections.
(3) Provide to responsible parties and solicitors, upon request,
for any given child the standard risk rates. When requesting this
information, responsible parties, solicitors, and solicitor firms
shall provide the carrier with the information the carrier needs to
determine the individual's risk adjusted risk rate.
(4) Provide copies of the current summary brochure to all
solicitors and solicitor firms contracting with the carrier to
solicit enrollments or subscriptions from responsible parties for
children.
For purposes of this subdivision, carriers that are affiliated
carriers or that are eligible to file a consolidated income tax
return shall be treated as one carrier.
(h) Every solicitor or solicitor firm contracting with one or more
carriers to solicit enrollments or subscriptions from responsible
parties for children shall do all of the following:
(1) When providing information on contracts to a responsible party
for a child or children but making no specific recommendations on
particular health benefit plans:
(A) Advise the responsible party of the carrier's obligation to
sell to any responsible party any health benefit plan it offers for
children and provide them, upon request, with the actual rates that
would be charged for that child for a given contract.
(B) Notify the responsible party that the solicitor or solicitor
firm will procure rate and benefit information for the responsible
party for the child on any health benefit plan offered by a carrier
whose contract the solicitor sells.
(C) Notify the responsible party that upon request the solicitor
or solicitor firm will provide the responsible party with the summary
brochure required under this paragraph for any health benefit plan
offered by a carrier with whom the solicitor or solicitor firm has
contracted to solicit enrollments or subscriptions.
(2) When recommending a particular benefit plan design or designs,
advise the responsible party that, upon request, the agent will
provide the responsible party with the brochure required by paragraph
(1) containing the benefit plan design or designs being recommended
by the agent or broker.
(3) Prior to filing an application for a responsible party for a
child for a particular contract:
(A) For each of the health benefit plans offered by the carrier
whose contract the solicitor or solicitor firm is offering, provide
the responsible party with the benefit summary required in paragraph
(1) and the standard risk rates for that particular child.
(B) Notify the responsible party that, upon request, the solicitor
or solicitor firm will provide the responsible party with an
evidence of coverage brochure for each contract the carrier offers.
(C) Notify the responsible party for a child that, from January 1,
2011, to January 1, 2012, actual rates may be 20 percent higher or
lower than the standard risk rates, and from January 1, 2012, until
December 31, 2014, actual rates may be 10 percent higher or lower
than the standard risk rates, depending on how the carrier assesses
the risk of the child.
(D) Notify the responsible party that, upon request, the solicitor
or solicitor firm will submit information to the carrier to
ascertain the child's the risk adjusted risk rate for any contract
the carrier offers.
(E) Obtain a signed statement from the responsible party
acknowledging that the responsible party has received the disclosures
required by this section.
10963. (a) At least 30 business days prior to renewing or
amending a health benefit plan subject to this article that will be
in force on the operative date of this article, a carrier shall file
a notice of material modification with the commissioner. The notice
of material modification shall include a statement certifying that
the carrier is in compliance with subdivision (j)
(i) of Section 10950 and Section 10960. The certified
statement shall set forth the standard risk rate for each risk
category and the highest and lowest risk adjustment factors that will
be used in setting the rates at which the contract will be renewed
or amended. Any action by the commissioner to disapprove, suspend or
postpone the carrier's use of a health benefit plan shall be in
writing, specifying the reasons that the health benefit plan is not
in compliance with the requirements of this chapter.
(b) At least 30 business days prior to offering a health benefit
plan subject to this article, all carriers shall file a notice of
material modification with the commissioner. The notice of material
modification shall include a statement certifying that the carrier is
in compliance with subdivision (j) (i)
of Section 10950 and Section 10960. The certified statement shall
set forth the standard risk rate for each risk category and the
highest and lowest risk adjustment factors that will be used in
setting the rates at which the contract will be offered. Carriers
that will be offering to a responsible party for a child contracts
approved by the commissioner prior to the effective date of this
article shall file a notice of material modification in accordance
with this subdivision. Any action by the commissioner to disapprove,
suspend, or postpone the carrier's use of a health benefit plan shall
be in writing, specifying the reasons that the health benefit plan
is not in compliance with the requirements of this chapter.
(c) Prior to making any changes in the risk categories, risk
adjustment factors or standard risk rates filed with the commissioner
pursuant to subdivision (a) or (b), the carrier shall file, as an
amendment, a statement setting forth the changes and certifying that
the carrier is in compliance with subdivision (j)
(i) of Section 10950 and Section 10960. A carrier may
commence offering health benefit plans utilizing the changed risk
categories set forth in the certified statement on the 45th day from
the date of the filing, or at an earlier time determined by the
commissioner, unless the commissioner disapproves the amendment by
written notice, stating the reasons therefor. If only the standard
risk rate is being changed, and not the risk categories or risk
adjustment factors, a carrier may commence offering health benefit
plans utilizing the changed standard risk rate upon the 31st day
after filing the certified statement unless the commissioner
disapproves the amendment by written notice.
(d) Periodic changes to the standard risk rate that a carrier
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), (b), or (c).
(e) Each carrier shall maintain at its principal place of business
all of the information required to be filed with the commissioner
pursuant to this section.
(f) Each carrier shall make available to the commissioner, on
request, the risk adjustment factor used in determining the rate for
any particular child.
(g) Nothing in this section shall be construed to limit the
commissioner's authority to enforce the rating practices set forth in
this article.
10964. The commissioner may issue regulations that are necessary
to carry out the purposes of this article. Prior to the public
comment period required by regulations under the Administrative
Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1
of Division 3 of Title 2 of the Government Code), the commissioner
shall provide the Director of Managed Health Care with a copy of the
proposed regulations. The director shall have 30 days to notify the
commissioner in writing of any comments on the regulations. The
director's comments shall be included in the public notice issued on
the regulations. Any rules and regulations adopted pursuant to this
article may be adopted as emergency regulations in accordance with
the Administrative Procedure Act. Until December 31, 2015, the
adoption of these regulations shall be deemed an emergency and
necessary for the immediate preservation of the public peace, health
and safety, or general welfare. Any regulations adopted prior to
December 31, 2015, in order to remain in effect after December 31,
2016, shall be readopted as nonemergency regulations in accordance
with the Administrative Procedures Act prior to December 31, 2016.
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.
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