BILL NUMBER: SB 900 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JUNE 23, 2010
AMENDED IN SENATE MAY 20, 2010
AMENDED IN SENATE MAY 5, 2010
AMENDED IN SENATE APRIL 8, 2010
INTRODUCED BY Senators Alquist and Steinberg
(Coauthor: Senator Pavley)
JANUARY 26, 2010
An act to add Division 114 (commencing with Section 135000) to the
Health and Safety Code, relating to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
SB 900, as amended, Alquist. California Health Benefits Exchange.
Existing law, the federal Patient Protection and Affordable Care
Act, requires each state to, by January 1, 2014, establish an
American Health Benefit Exchange that makes available qualified
health plans to qualified individuals and qualified employers, as
specified, and meets certain other requirements. Existing law
provides for the licensure and regulation of health care service
plans by the Department of Managed Health Care and the regulation of
health insurers by the Department of Insurance. Existing law creates
the California Health and Human Services Agency, which consists of
various departments.
This bill would establish the California Health Benefits Exchange
(the Exchange) within the California Health and Human Services Agency
and would require the Exchange to, among other things, implement
specified functions imposed by the federal Patient Protection and
Affordable Care Act in a consumer-friendly manner, enter into
contracts with health care service plans and health insurers seeking
to offer coverage in the Exchange, and provide a choice of
products in each region of the state between 5 levels of
coverage, as specified. Under the bill, carriers participating
in the Exchange would be required to offer, market, and sell all
products made available to individuals and small employers in the
Exchange to individuals and small employers purchasing coverage
outside the Exchange. The bill would authorize the Exchange to
take other various actions and would require the
Exchange to be governed by a board composed of 8 members
the Secretary of California Health and Human Services
and 4 other members appointed by the Governor and the
Legislature in a specified manner. The bill would create the
California Health Benefits Exchange Fund in the State Treasury and
would authorize the board to use moneys in the fund, upon
appropriation by the Legislature, for purposes of these provisions.
The bill would also require the California Health and Human Services
Agency to apply for and receive federal funds for purposes of
establishing the Exchange and would make those funds available to the
agency and the board for those purposes upon appropriation by the
Legislature.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Division 114 (commencing with Section 135000) is added
to the Health and Safety Code, to read:
DIVISION 114. CALIFORNIA HEALTH BENEFITS EXCHANGE
135000. There is hereby established in the California Health and
Human Services Agency, the California Health Benefits Exchange.
135001. For purposes of this division, the following definitions
shall apply:
(a) "Board" means the board described in subdivision (f)
(j) of Section 135004
135005 .
(b) "Carrier" means either a private health insurer holding a
valid outstanding certificate of authority from the Insurance
Commissioner or a health care service plan, as defined under
subdivision (f) of Section 1345, licensed by the Department of
Managed Health Care, including, but not limited to, a local
initiative plan, a county-organized health system, or a joint venture
of local initiative plans and county-organized health systems.
(c) "Exchange" means the California Health Benefits Exchange
established by Section 135000.
(d) "Fund" means the California Health Benefits Fund established
pursuant to Section 135010 135011 .
(e) "Health plan" and "qualified health plan" have the same
meanings as those terms are defined in Section 1301 of the Act.
(f) "The Act" means the federal Patient Protection and Affordable
Care Act (Public Law 111-148) , as amended by the federal Health
Care and Education Reconciliation Act of 2010 (Public Law 111-152)
.
135002. (a) The purpose of this division is
to implement the provisions of the Act requiring the establishment
of an American Health Benefit Exchange in this state by creating an
exchange in state government.
(b) The purpose and mission of the Exchange is to make quality and
affordable health care coverage available to eligible Californians
and to meet the requirements of the Act.
135003. It is the intent of the Legislature that the Exchange
provide do all of the following:
(a) Provide a consumer friendly
process that facilitates the seamless enrollment of individuals in
health care coverage.
(b) Provide an easily understandable marketplace for purchasing
health care coverage where consumers can identify their appropriate
and affordable health care coverage choice and, if eligible, claim
their federal tax and cost-sharing subsidy.
(c) Organize the health care coverage and cost choices within the
Exchange to facilitate competition based on price and quality.
135004. The Exchange shall do all of the following:
(a) Meet the requirements imposed by Section 1311 of the
135004. The Exchange shall meet the requirements
imposed by the Act, and perform all of the following functions
in a consumer-friendly manner:
(1)
(a) Provide for the operation of a toll-free telephone
hotline to respond to requests for assistance.
(2)
(b) Maintain an Internet Web site through which
enrollees and prospective enrollees of qualified health plans may
obtain standardized comparative information on those plans.
(3)
(c) Assign a rating to each qualified health plan
offered through the Exchange in accordance with the criteria
developed under paragraph (3) of subdivision (c) of Section 1311 of
the Act.
(4)
(d) Utilize a standardized format for presenting health
benefits plan options in the Exchange, including the use of the
uniform outline of coverage established under Section 2715 of the
federal Public Health Service Act.
(5)
(e) Consistent with the system established under
Section 1413 of the Act, inform individuals of eligibility
requirements for the Medi-Cal program, the Healthy Families Program,
or any applicable state or local public health care coverage program
and, if, through screening of an application by the Exchange, the
Exchange determines that an individual is eligible for any of those
programs, enroll the individual in that program.
(6)
(f) Establish and make available by electronic means a
calculator to determine the actual cost of coverage after the
application of any premium tax credit under Section 36B of the
Internal Revenue Code of 1986 and any cost-sharing reduction under
Section 1402 of the Act.
(7)
(g) Grant a certification, subject to Section 1411 of
the Act and any implementing regulations, attesting that, for
purposes of the individual responsibility penalty under Section 5000A
of the Internal Revenue Code of 1986, an individual is exempt from
the individual responsibility requirement or from the penalty imposed
by that section because of either of the following:
(A)
(1) There is no affordable qualified health plan
available through the Exchange, or the individual's employer,
covering the individual.
(B)
(2) The individual meets the requirements for any other
exemption from the individual responsibility requirement or penalty.
135005. In addition to meeting the requirements
of the Act, the Exchange shall do all of the following:
(a) Develop and maintain an electronic clearinghouse of all
products offered to individuals and small employers by carriers both
inside and outside of the Exchange to assist individuals and small
employers in understanding and comparing the available products and
in making their coverage purchasing decision. In developing the
electronic clearinghouse, the board may require carriers
participating in the Exchange to make available and regularly update
an electronic directory of contracting health care providers so
individuals seeking coverage through the Exchange can search by
health care provider name to determine which health plans in the
Exchange include that health care provider in their network, and
whether that health care provider is accepting new patients for that
particular health plan.
(b) Negotiate and enter into contracts, including selective
carrier contracts, with carriers seeking to offer coverage in the
Exchange.
(c) Establish quality incentives and rewards consistent with
subdivisions (g) and (h) of Section 1311 of the Act, including, but
not limited to, incentives that encourage the use of delivery systems
(c) Determine the participation
requirements, standards, and selection criteria for carriers and
products offered through the Exchange, which may include, but are not
limited to, standards that encourage the use of delivery systems
that deliver cost-effective, high-quality care.
(d) Provide a choice of health plans
products in each region of the state, including a choice in
each region of the state between the five levels of coverage
contained in subdivisions (d) and (e) of Section 1302 of the Act.
(e) Require, as a condition of participation in the Exchange,
carriers to do both of the following:
(1) Fairly and affirmatively offer, market, and sell all products
made available to individuals in the Exchange to individuals
purchasing coverage outside the Exchange.
(2) Fairly and affirmatively offer, market, and sell all products
made available to small employers in the Exchange to small employers
purchasing coverage outside the Exchange.
(f) Administer a separate Small Business Health Options Program
(SHOP) that is designed to assist small employers in facilitating the
enrollment of their employees in products offered in the small group
market through the Exchange.
(g) Undertake activities necessary to market and publicize the
availability of health care coverage through the Exchange.
(h) Select and set performance standards and compensation for
navigators selected pursuant to subdivision (i) of Section 1311 of
the Act.
(e)
(i) Employ necessary staff, including actuarial staff.
(f) Be governed by a board consisting of eight members with
four-year terms. Of the eight members, four shall be appointed by the
Governor, two shall be appointed by the Senate Committee on Rules,
and two shall be appointed by the Speaker of the Assembly. Each of
the appointed members shall have demonstrated knowledge and
experience in health care and issues relevant to the board's
responsibilities. The board shall hold public meetings on a bimonthly
basis, or more frequently as necessary.
(j) (1) Be governed by a board consisting of five members. Of the
five members, two shall be appointed by the Governor, one shall be
appointed by the Senate Committee on Rules, and one shall be
appointed by the Speaker of the Assembly. The Secretary of California
Health and Human Services or his or her designee shall serve as an
ex officio voting member.
(2) Members of the board shall be appointed for a term of four
years. Vacancies shall be filled by appointment for the unexpired
term.
(3) Each person appointed to the board shall have demonstrated and
acknowledged expertise in at least two of the following areas:
(A) The health care coverage market.
(B) The small group health care coverage market.
(C) Health benefits plan administration.
(D) Health care finance.
(E) Administering a public or private health care delivery system.
(4) Each member of the board shall have the responsibility and
duty to meet the requirements of this division and the Act, to serve
the public interest of the individuals and small businesses seeking
health care coverage through the Exchange, and to ensure the
operational well-being and fiscal solvency of the Exchange.
(5) The chairperson of the board shall hire an executive director
to organize, administer, and manage the operations of the Exchange,
and to serve as secretary and as an ex officio nonvoting member of
the board.
(6) A member of the board shall not be employed by, a consultant
for, a member of the board of directors of, affiliated with an agent
of, or otherwise a representative of, any carrier or other insurer,
agent, or broker, or a health care provider, health care facility, or
health clinic. A board member shall not receive compensation for his
or her service on the board but may receive per diem and
reimbursement for travel and other necessary expenses, as provided in
Section 103 of the Business and Professions Code, while engaged in
the performance of official duties of the board.
(7) The board shall hold public meetings and be subject to the
requirements of the Bagley-Keene Open Meeting Act (Article 9
(commencing with Section 11120) of Chapter 1 of Part 1 of Division 3
of Title 2 of the Government Code), except that the board may hold
closed sessions when considering matters related to litigation,
personnel, contracting, and the development of rates.
(g)
(k) Receive federal funds for purposes of establishing
and administering the Exchange, including funds made available
pursuant to Section 1311 of the Act.
135005. 135006. The Exchange may do
any of the following:
(a) Issue rules and regulations, as necessary. Until January 1,
2014, any rules and regulations issued pursuant to this
subdivision 2014, any necessary rules and regulations
may be adopted as emergency regulations in accordance with 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 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.
(b) Apply for and receive funds from private foundations.
(c) Exercise the federal option set forth in paragraph (2) of
(c) Report, or contract with an
independent entity to report, to the Legislature on whether to adopt
the option in subdivision (b) of Section 1311 of the Act to
provide a single exchange for providing services to both qualified
individuals and qualified small employers if the Exchange
makes all of the following determinations:
(1) Providing coverage through a single exchange will provide a
significant benefit for the health coverage marketplace in the state.
(2) Providing coverage through a single exchange will be cost
effective for both qualified individuals and qualified small
employers.
(3) The Exchange can
make coverage available through a single exchange on a guarantee
issue basis without undue risk of adverse selection.
qualified small employers. The report shall provide data on the
impact of having a single exchange with a merged individual and small
group market on rates paid by individuals and by small employers, as
compared to the impact on those rates of having separate exchanges
for the individual and small group markets. A report submitted under
this subdivision shall be submitted in compliance with Section 9795
of the Government Code. This subdivision shall become inoperative on
January 1, 2016.
(d) Enter into other contracts as are necessary or proper to carry
out the duties of the Exchange, including, but not limited to,
contracts for enrollment processing.
(e) Determine the health benefits coverage for small employers
that the Exchange will contract to purchase from participating
carriers.
(f) Appoint committees, as necessary, to provide technical
assistance in the operation of the Exchange.
(g) Undertake activities necessary to administer the Exchange,
including marketing and publicizing the Exchange and establishing
rules, conditions, and procedures for ensuring carrier, employer, and
enrollee compliance with Exchange requirements, consistent with
federal law and regulations.
(h) Consistent with federal procedures established under
subdivision (e) of Section 1312 of the Act, establish procedures to
allow agents or brokers to do both of the following:
(1) Enroll individuals in any qualified health plan in the
individual or small group market as soon as the plan is offered
through the Exchange.
(2) Assist individuals in applying for premium tax credits and
cost-sharing reductions for health plans sold through the Exchange.
(i) Consistent with subdivision (d) of Section 1311 of the Act,
include within the premiums charged to enrollees or employers
purchasing coverage through the Exchange an amount sufficient to pay
the actual, reasonable, and necessary administrative costs of the
Exchange.
135006. 135007. (a) Notwithstanding
any other provision of law, the Exchange shall not be subject to
licensure or regulation by the Department of Insurance or the
Department of Managed Health Care.
(b) Carriers that contract with the Exchange shall be in good
standing with their respective regulatory agencies.
135007. 135008. (a)
If an individual or an employer is dissatisfied with any
action or failure to act that has occurred in connection with
eligibility for, or enrollment in, the Exchange, the individual or
employer shall have the right to appeal to the board and shall be
accorded an opportunity for a fair hearing. Hearings shall be
conducted pursuant to the provisions of Chapter 5 (commencing with
Section 11500) of Part 1 of Division 3 of Title 2 of the Government
Code to the extent those provisions are consistent with appeals
requirements imposed under the Act .
(b) Notwithstanding subdivision (a), the board shall not be
required to provide an appeal concerning a coverage determination if
the subject of the appeal is within the jurisdiction of the
Department of Managed Health Care pursuant to the Knox-Keene Health
Care Service Plan Act of 1975 (Chapter 2.2 (commencing with Section
1340) of Division 2) and its implementing regulations, or within the
jurisdiction of the Department of Insurance pursuant to the Insurance
Code and its implementing regulations.
135008. 135009. Nothing in this
division shall be construed to compel an individual to enroll in a
qualified health plan or to participate in the Exchange.
135009. 135010. The California
Health and Human Services Agency shall apply for and receive federal
funds for purposes of establishing the Exchange, including funds made
available pursuant to Section 1311 of the Act.
135010. 135011. (a) The California
Health Benefits Exchange Fund is hereby created in the State Treasury
as a special fund consisting of revenue necessary for the purposes
of this division. Any moneys in the fund that are unexpended or
unencumbered at the end of a fiscal year may be carried forward to
the next succeeding fiscal year and may be spent without regard
to fiscal year .
(b) The board shall establish a prudent reserve in the fund.
(c) Notwithstanding any other provision of law, moneys deposited
in the fund shall not be loaned to, or borrowed by, any other special
fund or the General Fund, or a county general fund or any other
county fund.
(c)
(d) Except as provided in subdivision (d)
(e) , moneys in the fund shall, upon
appropriation by the Legislature, be used by the board for the
purposes of this division.
(d)
(e) Moneys in the fund received pursuant to Section
135009 135010 shall, upon appropriation
by the Legislature, be used by the California Health and Human
Services Agency or the board for purposes of establishing the
Exchange.
(e)
(f) Notwithstanding Section 16305.7 of the Government
Code, all interest earned on the moneys that have been deposited into
the fund shall be retained in the fund.