BILL NUMBER: SB 1163	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 19, 2010
	AMENDED IN SENATE  APRIL 5, 2010

INTRODUCED BY   Senator Leno
    (   Coauthor:   Senator   Pavley
  ) 

                        FEBRUARY 18, 2010

    An act to amend Sections 1389.25 and 1389.4 of, and to
add Sections 1389.26 and 1389.45 to,   An act to amend
Section 1389.25 of, to add Sections 1389.45 and 1389.46 to, and to
add and repeal Section 1389.26 of,  the Health and Safety Code,
and to amend  Sections 10113.9 and 10113.95 of, and to add
Sections 10113.91 and 10113.96 to,   Section 10113.9 of,
to add Sections 10113.96 and 10113.97 to, and to add and repeal
Section 10113.91 of,  the Insurance Code, relating to health
care coverage.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1163, as amended, Leno. Health care coverage: denials: premium
rates.
   Existing law, the Knox-Keene Health Care Service Plan Act of 1975,
provides for the licensure and regulation of health care service
plans by the Department of Managed Health Care and makes a willful
violation of the act a crime. Existing law also provides for the
regulation of health insurers by the Department of Insurance.
   Existing law requires a health care service plan that offers
health care coverage in the individual market to provide an
individual to whom it denies coverage or enrollment or offers
coverage at a rate higher than the standard rate with the specific
reason or reasons for that decision in writing. Existing law also
prohibits a health care service plan or a health insurer offering
coverage in the individual market from changing the premium rate or
coverage without providing specified notice at least 30 days prior to
the effective date of the change.
   This bill would require a  health care service plan and a
 health insurer that offers health care coverage in the
individual  or group  market to provide an individual 
or group  to whom it denies coverage or enrollment or offers
coverage at a rate higher than the standard rate with the specific
reason or reasons for that decision in writing. With respect to both
health insurers and health care service plans issuing individual 
or group  policies or contracts, the bill would require that
the reasons for a denial or a higher than standard rate be stated in
clear, easily understandable language. The bill would require notice
of a change to the premium rate of coverage to be provided at least
180 days prior to the effective date of the change.
   The bill would also require a health care service plan or health
insurer that  offers health care coverage in the large group
market to provide a group to which it denies coverage or enrollment
or to which it offers coverage at a higher than standard rate, with
the specific reason or reasons for that decision in writing in clear,
easily understandable language   declines to offer
coverage to, or denies enrollment of, any individual or large group
to report quarterly, until January 1, 2014, to the Department of
Managed Health Care or the Department of Insurance, the Managed Risk
Me   dical Insurance Board, and the public, on the number of
applicants that are denied coverage and various related matters. The
bill would require the departments to post certain information in
that regard on the Internet  .
    Existing law requires a health care service plan and a health
insurer to annually file with the Department of Managed Health Care
or the Department of Insurance a general description of the criteria,
policies, procedures, or guidelines the plan or insurer uses for
rating and underwriting decisions related to individual contracts and
policies.
   This bill would require a plan or  health  insurer to
annually disclose to the Department of Managed Health Care or the
Department of Insurance  the standards, processes, and
criteria used by the plan or insurer to deny issuance of a large
group contract or policy. The bill would also require a plan or
insurer issuing coverage in the individual or large group market to
annually disclose to the Department of Managed Health Care or the
Department of Insurance the number and proportion of individual or
group applicants denied coverage during the preceding year, and the
reasons therefor, the number and proportion of enrollees, insureds,
or groups that paid a premium rate that was higher than the standard
rate, and the reasons therefor, and the standards, processes, and
criteria used by the plan or insurer for adjusting premiums
applicable to individual or large group contracts or policies based
on health status or any other risk factor, as specified. For large
groups, the bill would also require reporting of the number and
proportion of those groups that paid a premium rate lower than the
standard rate, and the reasons therefor. The bill would require the
departments to disclose this information, and the information
obtained from plans and insurers from the annual filing described
above, to the public, the Managed Risk Medical Insurance Board, and
the relevant policy and budget committees of the Legislature, as
specified written policies, procedures, or underwriting guidelines
under which the plan or insurer makes its decision to determine the
standard rate and to issue a contract or policy at a rate higher or
lower than the standard rate. The bill would also require, among
other things, disclosure of the various rates for each product in the
individual and small group markets, and the number and proportion of
contractholders   written policies, procedures, or
underwriting guidelines under which the plan or insurer makes its
decision to determine the standard rate and to issue a contract or
policy at a rate higher or lower than the standard rate. The bill
would also require, among other things, disclosure of the various
rates for each product in the individual and small group markets, and
the number and proportion of contract holders and policyholders in
each rate category for the individual, small group, and large group
markets. The bill would require the departments   to post
summary information in that regard on the Internet and to provide
access to the full information on request. The bill would also
require plans and insurers to annually disclose certain information
relating to rate increases for each product  .
   Because a willful violation of the bill's requirements relative to
health care service plans would be a crime, the bill would impose a
state-mandated local program.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


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

  SECTION 1.  Section 1389.25 of the Health and Safety Code is
amended to read:
   1389.25.  (a) (1) This section shall apply only to a full service
health care service plan offering health coverage in the individual
 or group  market in California and shall not apply to a
specialized health care service plan, a health care service plan
contract in the Medi-Cal program (Chapter 7 (commencing with Section
14000) of Part 3 of Division 9 of the Welfare and Institutions Code),
a health care service plan conversion contract offered pursuant to
Section 1373.6, a health care service plan contract in the Healthy
Families Program (Part 6.2 (commencing with Section 12693) of
Division 2 of the Insurance Code), or a health care service plan
contract offered to a federally eligible defined individual under
Article 4.6 (commencing with Section 1366.35).
   (2) A local initiative, as defined in subdivision (v) of Section
53810 of Title 22 of the California Code of Regulations, that is
awarded a contract by the State Department of Health Care Services
pursuant to subdivision (b) of Section 53800 of Title 22 of the
California Code of Regulations, shall not be subject to this section
unless the plan offers coverage  in the individual market
 to persons not covered by Medi-Cal or the Healthy Families
Program.
   (b) (1) A health care service plan that declines to offer coverage
or denies enrollment for an individual or his or her dependents 
or a group  applying for  individual  coverage
or that offers  individual  coverage at a rate that
is higher than the standard rate, shall, at the time of the denial
or offer of coverage, provide the  individual
applicant with the specific reason or reasons for the decision in
writing, in clear, easily understandable language.
   (2)  No change in the premium rate or coverage for  an
individual   a  plan contract shall become
effective unless the plan has delivered a written notice of the
change at least 180 days prior to the effective date of the contract
renewal or the date on which the rate or coverage changes. A notice
of an increase in the premium rate shall include the reasons for the
rate increase.
   (3) The written notice required pursuant to paragraph (2) shall be
delivered to the  individual  contractholder at his
or her last address known to the plan, at least 180 days prior to
the effective date of the change. The notice shall state in italics
either the actual dollar amount of the premium rate increase or the
specific percentage by which the current premium will be increased.
The notice shall describe in plain, understandable English any
changes in the plan design or any changes in benefits, including a
reduction in benefits or changes to waivers, exclusions, or
conditions, and highlight this information by printing it in italics.
The notice shall specify in a minimum of 10-point bold typeface, the
reason for a premium rate change or a change to the plan design or
benefits.
   (4) If a plan rejects an  individual  applicant or the
dependents of an  individual  applicant for coverage or
offers individual coverage at a rate that is higher than the standard
rate, the plan shall inform the applicant about the state's
high-risk health insurance pool, the California Major Risk Medical
Insurance Program (Part 6.5 (commencing with Section 12700) of
Division 2 of the Insurance Code). The information provided to the
applicant by the plan shall specifically include the program's
toll-free telephone number and its Internet Web site address. The
requirement to notify applicants of the availability of the
California Major Risk Medical Insurance Program shall not apply when
a health plan rejects an applicant for Medicare supplement coverage.
   (c) A notice provided pursuant to this section is a private and
confidential communication and at the time of application, the plan
shall give the  individual  applicant the
opportunity to designate the address for receipt of the written
notice in order to protect the confidentiality of any personal or
privileged information.
  SEC. 2.  Section 1389.26 is added to the Health and Safety Code, to
read: 
   1389.26.  (a) (1) This section shall apply only to a full service
health care service plan offering large group health plan contracts
in California and shall not apply to a specialized health care
service plan, a health care service plan contract in the Medi-Cal
program (Chapter 7 (commencing with Section 14000) of Part 3 of
Division 9 of the Welfare and Institutions Code), a health care
service plan conversion contract offered pursuant to Section 1373.6,
a health care service plan contract in the Healthy Families Program
(Part 6.2 (commencing with Section 12693) of Division 2 of the
Insurance Code), or a health care service plan contract offered to a
federally eligible defined individual under Article 4.6 (commencing
with Section 1366.35).
   (2) A local initiative, as defined in subdivision (v) of Section
53810 of Title 22 of the California Code of Regulations, that is
awarded a contract by the State Department of Health Care Services
pursuant to subdivision (b) of Section 53800 of Title 22 of the
California Code of Regulations, shall not be subject to this section
unless the plan offers large group health plan contracts to persons
not covered by Medi-Cal or the Healthy Families Program.
   (b) A health care service plan that declines to offer coverage to
or denies enrollment of a large group or that offers large group
coverage at a rate that is higher than the standard rate, shall, at
the time of the denial or offer of coverage, provide the group
applicant with the specific reason or reasons for the decision in
writing, in clear, easily understandable language.
   (c) A notice provided pursuant to this section is a private and
confidential communication, and at the time of application, the plan
shall give the group applicant the opportunity to designate the
address for receipt of the written notice in order to protect the
confidentiality of any personal or privileged information. 
    1389.26.   (a) A health care service plan subject to
Section 1389.25 that declines to offer coverage to or denies
enrollment of any individual shall quarterly provide to the
department, the Managed Risk Medical Insurance Board, and the public
all of the following:  
   (1) The number and proportion of applicants for individual
coverage that were denied coverage for each product offered by the
plan.  
   (2) The health status and risk factors for each applicant denied
coverage, by product.  
   (3) Demographic information about applicants denied coverage,
including age, gender, language spoken, occupation, and geographic
region of the applicant, by product.  
   (4) The written policies, procedures, or underwriting guidelines
whereby the plan makes its decision to provide or to deny coverage to
applicants.  
   (b) A health care service plan subject to Section 1389.25 that
declines to offer coverage to or denies enrollment of any large group
shall quarterly provide to the department, the Managed Risk Medical
Insurance Board, and the public all of the following:  
   (1) The number and proportion of applicants for large group
coverage that were denied coverage for each product offered by the
plan.  
   (2) The health status and risk factors for each applicant denied
coverage, by product.  
   (3) Demographic information about applicants denied coverage,
including age, gender, language spoken, occupation, and geographic
region of the applicant, by product.  
   (4) The written policies, procedures, or underwriting guidelines
whereby the plan makes its decision to provide or to deny coverage to
applicants.  
   (c) The department shall post on its Internet Web site the
following information for each product offered by a health care
service plan and for all products offered by the plan:  
   (1) The number and proportion of applicants for individual
coverage denied coverage as well as aggregate information about
health status and demographics of those denied coverage.  
   (2) The number and proportion of applicants for large group
coverage denied coverage as well as aggregate information about
health status and demographics of the employees of those large groups
denied coverage.  
   (3)  The written policies, procedures, or underwriting guidelines
whereby the plan makes its decision to provide or to deny coverage to
applicants. 
   (d) For purposes of this  subdivision  
section , "large group health plan contract" or "large group
coverage" means a group health care service plan contract other than
a contract issued to a small employer, as defined in Section 1357.

   (e) This section shall remain in effect only until January 1,
2014, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2014, deletes or extends
that date.  
  SEC. 3.    Section 1389.4 of the Health and Safety
Code is amended to read:
   1389.4.  (a) A full service health care service plan that issues,
renews, or amends individual health plan contracts shall be subject
to this section.
   (b) A health care service plan subject to this section shall have
written policies, procedures, or underwriting guidelines establishing
the criteria and process whereby the plan makes its decision to
provide or to deny coverage to individuals applying for coverage and
sets the rate for that coverage. These guidelines, policies, or
procedures shall assure that the plan rating and underwriting
criteria comply with Sections 1365.5 and 1389.1 and all other
applicable provisions of state and federal law.
   (c) (1) On or before June 1, 2006, and annually thereafter, every
health care service plan shall file with the department a general
description of the criteria, policies, procedures, or guidelines the
plan uses for rating and underwriting decisions related to individual
health plan contracts, which means automatic declinable health
conditions, health conditions that may lead to a coverage decline,
height and weight standards, health history, health care utilization,
lifestyle, or behavior that might result in a decline for coverage
or severely limit the plan products for which they would be eligible.
A plan may comply with this paragraph by submitting to the
department underwriting materials or resource guides provided to plan
solicitors or solicitor firms, provided that those materials include
the information required to be submitted by this section.
   (2) Commencing January 1, 2011, a plan shall include all of the
following in the annual filing required under paragraph (1):
   (A) The number and proportion of applicants denied individual
coverage during the preceding year, including the age, gender, race
or ethnicity, occupation, and geographic region of the applicants
denied.
   (B) The reasons for the denial of coverage by the demographic
characteristics in subparagraph (A).
   (C) The standards, processes, and criteria used by the plan for
determining and adjusting premiums applicable to individual plan
contracts based on health status or any other risk factor, including
the actuarial basis for determining premiums for individual plan
contracts.
   (D) (i) The number and proportion of individual plan contract
enrollees who paid a premium rate that was higher than the standard
rate and the reasons for the higher rate as well as the number and
proportion of individual plan contract enrollees who paid a premium
rate that was lower than the standard rate and the reasons for the
lower rate.
   (ii) Demographic information on the number and proportion of
individual plan contract enrollees charged a higher rate than the
standard rate, including age, gender, occupation, race or ethnicity,
and geographic location.
   (iii) Demographic information on the number and proportion of
individual plan contract enrollees charged a lower rate than the
standard rate, including age, gender, occupation, race or ethnicity,
and geographic location.
   (d) The department shall disclose the information obtained
pursuant to subdivision (c) to the Managed Risk Medical Insurance
Board and the relevant policy and budget committees of the
Legislature. The department shall also disclose this information to
the public by posting the information on its Internet Web site in a
manner accessible and understandable to consumers. The information
disclosed pursuant to this subdivision shall be company specific.
   (e) In addition to the disclosure required under subdivision (d),
the director shall post on the department's Internet Web site, in a
manner accessible and understandable to consumers, general,
noncompany specific information about rating and underwriting
criteria and practices in the individual market and information about
the Major Risk Medical Insurance Program. The director shall develop
the information for the Internet Web site in consultation with the
Department of Insurance to enhance the consistency of information
provided to consumers. Information about individual health coverage
shall also include the following notification:
   "Please examine your options carefully before declining group
coverage or continuation coverage, such as COBRA, that may be
available to you. You should be aware that companies selling
individual health insurance typically require a review of your
medical history that could result in a higher premium or you could be
denied coverage entirely."
   (f) This section shall not apply to a closed block of business, as
defined in Section 1367.15. 
   SEC. 4.   SEC. 3.   Section 1389.45 is
added to the Health and Safety Code, to read:
   1389.45.  (a) A full service health care service plan that issues,
renews, or amends  large group  health plan
contracts shall be subject to this section.
   (b) On or before June 1, 2011, and annually thereafter, a plan
shall disclose to the department all of the following: 
   (1) The standards, processes, and criteria used by the plan to
deny issuance of a large group plan contract.  
   (2) The number and proportion of groups denied issuance of a large
group plan contract during the preceding year and the reasons for
those denials.  
   (3) The standards, processes, and criteria used by the plan for
adjusting premiums applicable to large group plan contracts based on
health status or any other risk factor, including the actuarial basis
for the rate.  
   (4) The number and proportion of large groups that paid a premium
rate higher than the standard rate and the reasons for that higher
rate.  
   (5) The number and proportion of large groups that paid a premium
rate lower than the standard rate and the reasons for that lower
rate.  
   (c) The department shall disclose the information obtained
pursuant to subdivision (b) to the Managed Risk Medical Insurance
Board and the relevant policy and budget committees of the
Legislature. The department shall also disclose this information to
the public by posting the information on its Internet Web site in a
manner accessible and understandable to consumers. The information
disclosed pursuant to this section shall be company specific.
 
   (d) For purposes of this subdivision, "large group health plan
contract" means a group health care service plan contract other than
a contract issued to a small employer as defined in Section 1357.
 
   (1) The written policies, procedures, or underwriting guidelines
whereby the plan makes its decision to determine the standard rate
and to issue a plan contract at a rate higher or lower than the
standard rate.  
   (2) For each product in the individual or small group market, the
rates charged, including the standard rate, rates that are higher
than the standard rate, and rates that are lower than the standard
rate.  
   (3) For the individual, small group, and large group markets, the
number and proportion of subscribers in each category charged a
standard rate, a rate that is higher than the standard rate, or a
rate that is lower than the standard rate. For each of these
categories, demographic information shall be provided, including age,
gender, language spoken, and geographic region.  
   (c) The department shall disclose the information provided
pursuant to this section to the public, both in summary fashion on
the department's Internet Web site and in full, on request. 

   (e) 
    (d) This section shall not apply to a closed block of
business, as defined in Section 1367.15.
   SEC. 4.    Section 1389.46 is added to the  
Health and Safety Code   , to read:  
   1389.46.  (a) A full service health care service plan that issues,
renews, or amends health plan contracts shall be subject to this
section.
   (b) On or before June 1, 2011, and no less than annually
thereafter, a plan shall disclose to the department all of the
following with respect to rate increases for each product:
   (1) Any change in rate.
   (2) Any change in cost sharing.
   (3) Any change in covered benefits.
   (c) On or before June 1, 2011, and no less than annually
thereafter, a plan shall also disclose to the department all of the
following with respect to rate increases for each product:
   (1) Actuarial memorandum.
   (2) Assumptions on trends in medical inflation, including
justification.
   (3) Specific worksheets or exhibits documenting increases in
costs.
   (4) Enrollee population characteristics that increase or decrease
costs.
   (5) Utilization increases.
   (6) Provider prices.
   (7) Administrative costs.
   (8) Medical loss ratios.
   (9) Reserves and surplus levels, including tangible net equity and
reserves in excess of tangible net equity.
   (10) Changes in cost sharing. 
  SEC. 5.  Section 10113.9 of the Insurance Code is amended to read:
   10113.9.  (a) This section shall not apply to short-term limited
duration health insurance, vision-only, dental-only, or
CHAMPUS-supplement insurance, or to hospital indemnity,
hospital-only, accident-only, or specified disease insurance that
does not pay benefits on a fixed benefit, cash payment only basis.
   (b) (1) A health insurer that declines to offer coverage or denies
enrollment for an individual or his or her dependents  or a
group  applying for  individual  coverage or
that offers  individual  coverage at a rate that is
higher than the standard rate shall, at the time of the denial or
offer of coverage, provide the  individual 
applicant with the specific reason or reasons for the decision in
writing, in clear, easily understandable language.
   (2) No change in the premium rate or coverage for an
individual   a  health insurance policy shall
become effective unless the insurer has delivered a written notice of
the change at least 180 days prior to the effective date of the
policy renewal or the date on which the rate or coverage changes. A
notice of an increase in the premium rate shall include the reasons
for the rate increase.
   (3) The written notice required pursuant to paragraph (2) shall be
delivered to the  individual  policyholder at his
or her last address known to the insurer, at least 180 days prior to
the effective date of the change. The notice shall state in italics
either the actual dollar amount of the premium increase or the
specific percentage by which the current premium will be increased.
The notice shall describe in plain, understandable English any
changes in the policy or any changes in benefits, including a
reduction in benefits or changes to waivers, exclusions, or
conditions, and highlight this information by printing it in italics.
The notice shall specify in a minimum of 10-point bold typeface, the
reason for a premium rate change or a change in coverage or
benefits.
   (4) If an insurer rejects an  individual  applicant or
the dependents of an  individual  applicant for coverage or
offers individual coverage at a rate that is higher than the standard
rate, the insurer shall inform the applicant about the state's
high-risk health insurance pool, the California Major Risk Medical
Insurance Program (Part 6.5 (commencing with Section 12700)). The
information provided to the applicant by the insurer shall
specifically include the program's toll-free telephone number and its
Internet Web site address. The requirement to notify applicants of
the availability of the California Major Risk Medical Insurance
Program shall not apply when a health plan rejects an applicant for
Medicare supplement coverage.
   (c) A notice provided pursuant to this section is a private and
confidential communication and, at the time of application, the
insurer shall give the  individual  applicant the
opportunity to designate the address for receipt of the written
notice in order to protect the confidentiality of any personal or
privileged information.
  SEC. 6.  Section 10113.91 is added to the Insurance Code, to read:

   10113.91.  (a) This section shall apply only to a health insurer
offering large group health insurance policies in California. This
section shall not apply to short-term limited duration health
insurance, vision-only, dental-only, or CHAMPUS-supplement insurance,
or to hospital indemnity, hospital-only, accident-only, or specified
disease insurance that does not pay benefits on a fixed benefit,
cash payment only basis.
   (b) A health insurer that declines to offer coverage to or denies
enrollment of a large group or that offers large group coverage at a
rate that is higher than the standard rate shall, at the time of the
denial or offer of coverage, provide the group applicant with the
specific reason or reasons for the decision in writing, in clear,
easily understandable language.
   (c) A notice provided pursuant to this section is a private and
confidential communication and at the time of application, the
insurer shall give the group applicant the opportunity to designate
the address for receipt of the written notice in order to protect the
confidentiality of any personal or privileged information. 

    10113.91.   (a) A health insurer subject to Section
10113.9 that declines to offer coverage to or denies enrollment of
any individual shall quarterly provide to the commissioner, the
Managed Risk Medical Insurance Board, and the public all of the
following:  
   (1) The number and proportion of applicants for individual
coverage that were denied coverage for each product offered by the
insurer.  
   (2) The health status and risk factors for each applicant denied
coverage, by product.  
   (3) Demographic information about applicants denied coverage,
including age, gender, language spoken, occupation, and geographic
region of the applicant, by product.  
   (4) The written policies, procedures, or underwriting guidelines
whereby the insurer makes its decision to provide or to deny coverage
to applicants.  
   (b) A health insurer subject to Section 10113.9 that declines to
offer coverage to or denies enrollment of any large group shall
quarterly provide to the commissioner, the Managed Risk Medical
Insurance Board, and the public all of the following:  
   (1) The number and proportion of applicants for large group
coverage that were denied coverage for each product offered by the
insurer.  
   (2) The health status and risk factors for each applicant denied
coverage, by product.  
   (3) Demographic information about applicants denied coverage,
including age, gender, language spoken, occupation, and geographic
region of the applicant, by product.  
   (4) The written policies, procedures, or underwriting guidelines
whereby the insurer makes its decision to provide or to deny coverage
to applicants.  
   (c) The commissioner shall post on the department's Internet Web
site the following information for each product offered by a health
insurer and for all products offered by the insurer:  
   (1) The number and proportion of applicants for individual
coverage denied coverage as well as aggregate information about
health status and demographics of those denied coverage.  
   (2) The number and proportion of applicants for large group
coverage denied coverage as well as aggregate information about
health status and demographics of the employees of those denied
coverage.  
   (3)  The written policies, procedures, or underwriting guidelines
whereby the insurer makes its decision to provide or to deny coverage
to applicants. 
            (d) For purposes of this  subdivision 
 section  , "large group policy" or "large group coverage"
means a group health insurance policy other than a policy issued to a
small employer, as defined in Section 10700. 
   (e) This section shall remain in effect only until January 1,
2014, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2014, deletes or extends
that date.  
  SEC. 7.   Section 10113.95 of the Insurance Code
is amended to read:
   10113.95.  (a) A health insurer that issues, renews, or amends
individual health insurance policies shall be subject to this
section.
   (b) An insurer subject to this section shall have written
policies, procedures, or underwriting guidelines establishing the
criteria and process whereby the insurer makes its decision to
provide or to deny coverage to individuals applying for coverage and
sets the rate for that coverage. These guidelines, policies, or
procedures shall assure that the plan rating and underwriting
criteria comply with Sections 10140 and 10291.5 and all other
applicable provisions.
   (c) (1) On or before June 1, 2006, and annually thereafter, every
insurer shall file with the commissioner a general description of the
criteria, policies, procedures, or guidelines that the insurer uses
for rating and underwriting decisions related to individual health
insurance policies, which means automatic declinable health
conditions, health conditions that may lead to a coverage decline,
height and weight standards, health history, health care utilization,
lifestyle, or behavior that might result in a decline for coverage
or severely limit the health insurance products for which they would
be eligible. An insurer may comply with this paragraph by submitting
to the department underwriting materials or resource guides provided
to agents and brokers, provided that those materials include the
information required to be submitted by this section.
   (2) Commencing January 1, 2011, an insurer shall include all of
the following in the annual filing required under paragraph (1):
   (A) The number and proportion of applicants denied individual
coverage during the preceding year, including the age, gender, race
or ethnicity, occupation, and geographic region of the applicants
denied.
   (B) The reasons for the denial of coverage by the demographic
characteristics in subparagraph (A).
   (C) The standards, processes, and criteria used by the insurer for
determining and adjusting premiums applicable to individual policies
based on health status or any other risk factor, including the
actuarial basis for determining premiums for individual policies.
   (D) (i) The number and proportion of insureds under an individual
policy who paid a premium rate that was higher than the standard rate
and the reasons for the higher rate as well as the number and
proportion of individual policyholders who paid a premium rate that
was lower than the standard rate and the reasons for the lower rate.
   (ii) Demographic information on the number and proportion of
individual policyholders charged a higher rate than the standard
rate, including age, gender, occupation, race or ethnicity, and
geographic location.
   (iii) Demographic information on the number and proportion of
individual policyholders charged a lower rate than the standard rate,
including age, gender, occupation, race or ethnicity, and geographic
location.
   (d) The commissioner shall disclose the information obtained
pursuant to subdivision (c) to the Managed Risk Medical Insurance
Board and the relevant policy and budget committees of the
Legislature. The department shall also disclose this information to
the public by posting the information on its Internet Web site in a
manner accessible and understandable to consumers. The information
disclosed pursuant to this subdivision shall be company specific.
   (e) In addition to the disclosure required under subdivision (d),
the commissioner shall post on the department's Internet Web site, in
a manner accessible and understandable to consumers, general,
noncompany specific information about rating and underwriting
criteria and practices in the individual market and information about
the Major Risk Medical Insurance Program. The commissioner shall
develop the information for the Internet Web site in consultation
with the Department of Managed Health Care to enhance the consistency
of information provided to consumers. Information about individual
health insurance shall also include the following notification:
   "Please examine your options carefully before declining group
coverage or continuation coverage, such as COBRA, that may be
available to you. You should be aware that companies selling
individual health insurance typically require a review of your
medical history that could result in a higher premium or you could be
denied coverage entirely."
   (f) This section shall not apply to a closed block of business, as
defined in Section 10176.10. 
   SEC. 8.  SEC. 7.   Section 10113.96 is
added to the Insurance Code, to read:
   10113.96.  (a) A health insurer that issues, renews, or amends
 large group  health insurance policies shall be
subject to this section.
   (b) On or before June 1, 2011, and annually thereafter, an insurer
shall disclose to the commissioner all of the following: 
   (1) The standards, processes, and criteria used by the insurer to
deny issuance of a large group health insurance policy. 

   (2) The number and proportion of groups denied issuance of a large
group health insurance policy during the preceding year and the
reasons for those denials.  
   (3) The standards, processes, and criteria used by the insurer for
adjusting premiums applicable to large group health insurance
policies based on health status or any other risk factor, including
the actuarial basis for the rate.  
   (4) The number and proportion of large groups that paid a premium
rate higher than the standard rate and the reasons for that higher
rate.  
   (5) The number and proportion of large groups that paid a premium
rate lower than the standard rate and the reasons for that lower
rate.  
   (c) The commissioner shall disclose the information obtained
pursuant to subdivision (b) to the Managed Risk Medical Insurance
Board and the relevant policy and budget committees of the
Legislature. The commissioner shall also disclose this information to
the public by posting the information on the department's Internet
Web site in a manner accessible and understandable to consumers. The
information disclosed pursuant to this section shall be company
specific.  
   (d) For purposes of this subdivision, "large group health
insurance policy" means a group health insurance policy other than a
policy issued to a small employer, as defined in Section 10700.
 
   (1) The written policies, procedures, or underwriting guidelines
whereby the insurer makes its decision to determine the standard rate
and to issue a policy at a rate higher or lower than the standard
rate.  
   (2) For each product in the individual or small group market, the
rates charged, including the standard rate, rates that are higher
than the standard rate, and rates that are lower than the standard
rate.  
   (3) For the individual, small group, and large group markets, the
number and proportion of policyholders in each category charged a
standard rate, a rate that is higher than the standard rate, or a
rate that is lower than the standard rate. For each of these
categories, demographic information shall be provided, including age,
gender, language spoken, and geographic region.  
   (c) The commissioner shall disclose the information provided
pursuant to this section to the public, both in summary fashion on
the department's Internet Web site and in full, on request. 

   (e) 
    (d)  This section shall not apply to a closed block of
business, as defined in Section 10176.10.
   SEC. 8.    Section 10113.97 is added to the 
 Insurance Code   , to read:  
   10113.97.  (a) A health insurer that issues, renews, or amends
health insurance policies shall be subject to this section.
   (b) On or before June 1, 2011, and no less than annually
thereafter, an insurer shall disclose to the commissioner all of the
following with respect to rate increases for each product:
   (1) Any change in rate.
   (2) Any change in cost sharing.
   (3) Any change in covered benefits.
   (c) On or before June 1, 2011, and no less than annually
thereafter, an insurer shall also disclose to the commissioner all of
the following with respect to rate increases for each product:
   (1) Actuarial memorandum.
   (2) Assumptions on trends in medical inflation, including
justification.
   (3) Specific worksheets or exhibits documenting increases in
costs.
   (4) Insured population characteristics that increase or decrease
costs.
   (5) Utilization increases.
   (6) Provider prices.
   (7) Administrative costs.
   (8) Medical loss ratios.
   (9) Reserves and surplus levels, including tangible net equity and
reserves in excess of tangible net equity.
   (10) Changes in cost sharing. 
  SEC. 9.  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.