BILL NUMBER: SB 1163	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  JUNE 23, 2010
	AMENDED IN SENATE  APRIL 28, 2010
	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  Section   Sections 1342,
1342.4, 1367, and  1389.25 of, to add Sections  1389.45
and 1389.46   1389.90, 1389.91, 1389.92, 1389.93, and
1389.94  to, and to add and repeal Section 1389.26 of, the
Health and Safety Code, and to amend  Section 10113.9
  Sections 10113.9 and 12923.5  of, to add Sections
 10113.96 and 10113.97   12969.1, 12969.2,
12969.3, 12969.4, and 12969.5  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 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 Medical 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. The bill would require that reports to the public maintain
patient privacy.
    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  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   specified information for rate filings in
 the individual, small group, and large group markets  ,
including information on product types, rate increases, and changes
in benefits  . The bill would require the departments to 
review each rate filing and  post summary information in that
regard on the Internet  and to provide  
access to the full information on request   , including
  accompanying documentation   regarding rate
changes  . The bill would  also require plans and
insurers to annually disclose certain information relating to rate
increases for each product.   require the departments to
provide data to the United States Secretary of Health and Human
Services on health insurance rate trends in premium ratings and
information summarizing the nature of consumer inquiries and
complaints relating to health care coverage rates, as specified. The
bill would also require the departments to apply for grant funding
from the federal government for the purposes of rate review and would
authorize the departments to impose fees on health care service
plans and health insurers for rate review. 
   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 1342 of the   Health
and Safety Code   is amended to read: 
   1342.  It is the intent and purpose of the Legislature to promote
the delivery and the quality of health and medical care to the people
of the State of California who enroll in, or subscribe for the
services rendered by, a health care service plan or specialized
health care service plan by accomplishing all of the following:
   (a) Ensuring the continued role of the professional as the
determiner of the patient's health needs which fosters the
traditional relationship of trust and confidence between the patient
and the professional.
   (b) Ensuring that subscribers and enrollees are educated and
informed of the benefits and services available in order to enable a
rational consumer choice in the marketplace.
   (c) Prosecuting malefactors who make fraudulent solicitations or
who use deceptive methods, misrepresentations, or practices which are
inimical to the general purpose of enabling a rational choice for
the consumer public.
   (d) Helping to ensure the best possible health care for the public
at the lowest possible cost by transferring the financial risk of
health care from patients to providers.
   (e) Promoting effective representation of the interests of
subscribers and enrollees.
   (f) Ensuring the financial stability thereof by means of proper
regulatory procedures.
   (g) Ensuring that subscribers and enrollees receive available and
accessible health and medical services rendered in a manner providing
continuity of care.
   (h) Ensuring that subscribers and enrollees have their grievances
expeditiously and thoroughly reviewed by the department. 
   (i)  Ensuring that the rates charged to subscribers and enrollees
are consistent with state and federal law. 
   SEC. 2.   Section 1342.4 of the   Health and
Safety Code   is amended to read: 
   1342.4.  (a) The Department of Managed Health Care and the
Department of Insurance shall maintain a joint senior level working
group to ensure clarity for health care consumers about who enforces
their patient rights and consistency in the regulations of these
departments.
   (b) The joint working group shall undertake a review and
examination of the Health and Safety Code, the Insurance Code, and
the Welfare and Institutions Code as they apply to the Department of
Managed Health Care and the Department of Insurance to ensure
consistency in consumer protection.
   (c) The joint working group shall review and examine all of the
following  processes  in each department:
   (1) Grievance and consumer complaint processes, including, but not
limited to, outreach, standard complaints, including coverage and
medical necessity complaints, independent medical review, and
information developed for consumer use.
   (2) The processes used to ensure enforcement of the law,
including, but not limited to, the medical survey and audit process
in the Health and Safety Code and market conduct exams in the
Insurance Code.
   (3) The processes for regulating the timely payment of claims.

   (4) Rates in the individual and group markets consistent with
federal law. 
   (d) The joint working group shall report its findings to the
Insurance Commissioner and the Director of the Department of Managed
Health Care for review and approval. The commissioner and the
director shall submit the approved final report under signature to
the Legislature by January 1 of every year for five years.
   SEC. 3.    Section 1367 of the   Health and
Safety Code   is amended to read: 
   1367.  A health care service plan and, if applicable, a
specialized health care service plan shall meet the following
requirements:
   (a) Facilities located in this state including, but not limited
to, clinics, hospitals, and skilled nursing facilities to be utilized
by the plan shall be licensed by the State Department of Health
Services, where licensure is required by law. Facilities not located
in this state shall conform to all licensing and other requirements
of the jurisdiction in which they are located.
   (b) Personnel employed by or under contract to the plan shall be
licensed or certified by their respective board or agency, where
licensure or certification is required by law.
   (c) Equipment required to be licensed or registered by law shall
be so licensed or registered, and the operating personnel for that
equipment shall be licensed or certified as required by law.
   (d) The plan shall furnish services in a manner providing
continuity of care and ready referral of patients to other providers
at times as may be appropriate consistent with good professional
practice.
   (e) (1) All services shall be readily available at reasonable
times to each enrollee consistent with good professional practice. To
the extent feasible, the plan shall make all services readily
accessible to all enrollees consistent with Section 1367.03.
   (2) To the extent that telemedicine services are appropriately
provided through telemedicine, as defined in subdivision (a) of
Section 2290.5 of the Business and Professions Code, these services
shall be considered in determining compliance with Section 1300.67.2
of Title 28 of the California Code of Regulations.
   (3) The plan shall make all services accessible and appropriate
consistent with Section 1367.04.
   (f) The plan shall employ and utilize allied health manpower for
the furnishing of services to the extent permitted by law and
consistent with good medical practice.
   (g) The plan shall have the organizational and administrative
capacity to provide services to subscribers and enrollees. The plan
shall be able to demonstrate to the department that medical decisions
are rendered by qualified medical providers, unhindered by fiscal
and administrative management.
   (h) (1) Contracts with subscribers and enrollees, including group
contracts, and contracts with providers, and other persons furnishing
services, equipment, or facilities to or in connection with the
plan, shall be fair, reasonable, and consistent with the objectives
of this chapter. All contracts with providers shall contain
provisions requiring a fast, fair, and cost-effective dispute
resolution mechanism under which providers may submit disputes to the
plan, and requiring the plan to inform its providers upon
contracting with the plan, or upon change to these provisions, of the
procedures for processing and resolving disputes, including the
location and telephone number where information regarding disputes
may be submitted.
   (2) A health care service plan shall ensure that a dispute
resolution mechanism is accessible to noncontracting providers for
the purpose of resolving billing and claims disputes.
   (3)  On and after January 1, 2002, a health care service plan
shall annually submit a report to the department regarding its
dispute resolution mechanism. The report shall include information on
the number of providers who utilized the dispute resolution
mechanism and a summary of the disposition of those disputes.
   (i) A health care service plan contract shall provide to
subscribers and enrollees all of the basic health care services
included in subdivision (b) of Section 1345, except that the director
may, for good cause, by rule or order exempt a plan contract or any
class of plan contracts from that requirement. The director shall by
rule define the scope of each basic health care service that health
care service plans are required to provide as a minimum for licensure
under this chapter. Nothing in this chapter shall prohibit a health
care service plan from charging subscribers or enrollees a copayment
or a deductible for a basic health care service or from setting
forth, by contract, limitations on maximum coverage of basic health
care services, provided that the copayments, deductibles, or
limitations are reported to, and held unobjectionable by, the
director and set forth to the subscriber or enrollee pursuant to the
disclosure provisions of Section 1363.
   (j) A health care service plan shall not require registration
under the Controlled Substances Act of 1970 (21 U.S.C. Sec. 801 et
seq.) as a condition for participation by an optometrist certified to
use therapeutic pharmaceutical agents pursuant to Section 3041.3 of
the Business and Professions Code. 
   Nothing in this section shall be construed to permit the director
to establish the rates charged subscribers and enrollees for
contractual health care services. 
   The director's enforcement of Article 3.1 (commencing with Section
1357) shall not be deemed to establish the rates charged subscribers
and enrollees for contractual health care services.
   The obligation of the plan to comply with this section shall not
be waived when the plan delegates any services that it is required to
perform to its medical groups, independent practice associations, or
other contracting entities.
   SECTION 1.   SEC. 4.   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 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 coverage or that offers coverage at a rate that
is higher than the standard rate, shall, at the time of the denial or
offer of coverage, provide the 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 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 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 individual 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 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.   SEC. 5.   Section 1389.26 is
added to the Health and Safety Code, to read:
   1389.26.  (a) (1) 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 
 both  of the following:
   (A) The number and proportion of applicants for individual
coverage that were denied coverage for each product offered by the
plan.
   (B) The health status and risk factors for each applicant denied
coverage, by product. 
   (C) Demographic information about applicants denied coverage,
including age, gender, language spoken, occupation, and geographic
region of the applicant, by product.  
   (D) The written policies, procedures, or underwriting guidelines
whereby the plan makes its decision to provide or to deny coverage to
applicants. 
   (2) Public reporting shall be done in a manner consistent with
maintaining patient privacy. Academic institutions and other
entities, including those eligible for the Consumer Participation
Program, as defined in Section 1348.9, and that have the capacity to
maintain patient privacy, shall be able to obtain patient-specific
data without patient name or identifier. 
   (b) (1) 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:
 
   (A) The number and proportion of applicants for large group
coverage that were denied coverage for each product offered by the
plan.  
   (B) The health status and risk factors for each applicant denied
coverage, by product.  
   (C) Demographic information about applicants denied coverage,
including age, gender, language spoken, occupation, and geographic
region of the applicant, by product.  
   (D) The written policies, procedures, or underwriting guidelines
whereby the plan makes its decision to provide or to deny coverage to
applicants.  
   (2) Public reporting shall be done in a manner consistent with
maintaining patient privacy. Academic institutions and other
entities, including those eligible for the Consumer Participation
Program, as defined in Section 1348.9, and that have the capacity to
maintain patient privacy, shall be able to obtain patient-specific
data without patient name or identifier.  
   (c) 
    (b)  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) 
    (2)  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 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) 
    (c)  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 1389.45 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 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 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.
   (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. 6.    Section 1389.90 is added to the  
Health and Safety Code   , to read:  
   1389.90.  (a) A full service health care service plan that issues,
renews, or amends health care service plan contracts shall be
subject to this section. On or before June 1, 2011, and for each rate
filing thereafter, a plan shall disclose to the department all of
the following for each rate filing in the individual, small employer,
and large group health plan markets:
   (1) Company name and contact information.
   (2) Number of plan contract forms covered by the filing.
   (3) Plan contract form numbers covered by the filing.
   (4) Product type.
   (5) Market segment.
   (6) Type of plan, such as for profit or not for profit.
   (7) Whether the products are opened or closed.
   (8) Enrollment in each plan contract and rating form.
   (9) Enrollee months in each plan contract form.
   (10) Annual rate.
   (11) Total earned premiums in each plan contract form.
   (12) Total incurred claims in each plan contract form.
   (13) Average rate increase initially requested.
   (14) Rate of review category, including approved as originally
submitted, initially rejected, or resubmitted with modifications, and
initially rejected and not resubmitted or initially rejected and
challenged.
   (15) Average rate of increase approved.
   (16) Effective date of rate increase.
   (17) Number of subscribers or enrollees affected by each plan
contract form.
   (18) Overall annual medical trend factor assumptions in each rate
filing for all benefits and disaggregated by benefit category,
including hospital inpatient, hospital outpatient, physician
services, prescription drugs, and other ancillary services,
laboratory, and radiology.
   (19) The amount of the projected trend attributable to the use,
price inflation, or fees and risk for annual plan contract trends by
benefit category, such as hospital inpatient, hospital outpatient,
physician services, prescription drugs and other ancillary services,
laboratory, and radiology.
   (20) A comparison of claims cost and rate of changes over time.
   (21) Any changes in enrollee cost sharing over the prior year
associated with the submitted rate filing.
   (22) Any changes in enrollee benefits over the prior year
associated with the submitted rate filing.
   (23) The number and a summary of the nature of consumer inquiries
and complaints related to health plan rates that have been received
for the past two plan years.
   (b) A health care service plan subject to subdivision (a) shall
also disclose the following required aggregate data for rate filings
in the individual, small employer, and large group health plan
markets:
   (1) Number and percentage of rate filings reviewed by the
following:
   (A) Plan year.
   (B) Segment type.
   (C) Product type.
   (D) Number of subscribers.
   (E) Number of covered lives affected.
   (2) The average rate increase by the following:
   (A) Plan year.
   (B) Segment type.
   (C) Product type.
   (c) For purposes of this section, "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.

   SEC. 7.    Section 1389.91 is added to the  
Health and Safety Code   , to read:  
   1389.91.  (a) Each rate filing described in Section 1389.90,
including all supporting material, shall be publicly available on the
department's Internet Web site. All submissions to the department
shall be made electronically in order to facilitate review by the
department and the public. Each rate filing shall include a summary
of rate changes offered in plain language for consumers.
   (b) The department shall post to its public Internet Web site
information about the rate filing and justification in an easy to
understand language for the public.
   (c) A plan shall post all proposed rate increases, including all
accompanying documentation, on its Internet Web site. 
   SEC. 8.    Section 1389.92 is added to the  
Health and Safety Code   , to read:  
   1389.92.  (a) The department shall review each rate filing
described in Section 1389.90 for consistency with applicable state
law and regulations as well as federal law, regulations, rules, or
other guidance.
   (b) The department shall also review each rate filing to determine
that it is actuarially sound.
   (c) The department shall consider public comment on the rate
filing for no less than 60 days and respond pursuant to Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code.
   (d) The department shall conduct a public hearing on the rate
filing on any of the following grounds:
   (1) A consumer or consumer advocacy organization requests a
hearing within 45 days of the rate filing. If the department grants a
hearing, it shall issue written findings in support of that
decision.
   (2) The department determines for any reason to hold a hearing.
   (3) The department finds that the rate filing does not comply with
the provisions of this section.
   (e) After completing a review pursuant to this section, the
department shall post to its Internet Web site any changes to the
rates and the reason for those changes, including any documentation
to support those changes. 
   SEC. 9.    Section 1389.93 is added to the  
Health and Safety Code   , to read:  
   1389.93.  (a) Consistent with federal law, rules, and guidance,
the department shall do all of the following:
   (1) Provide data to the United States Secretary of Health and
Human Services on health plan rate trends in premium rating areas.
   (2) Provide to the United States Secretary of Health and Human
Services the number and summarize the nature of consumer inquiries
and complaints related to health plan rates that have been received
for the past two plan years.
             (b) Commencing with the creation of the Exchange,
provide to the Exchange such information as may be necessary to allow
compliance with federal law, rules, and guidance. The department
shall develop an interagency agreement with the Exchange to
facilitate the reporting of information regarding rate filings that
is consistent with the responsibilities of the Exchange. As used in
this subdivision, the "Exchange" means the American Health Benefit
Exchange established in California pursuant to Section 1311 of the
federal Patient Protection and Affordable Care Act (Public Law
111-148). 
   SEC. 10.    Section 1389.94 is added to the 
 Health and Safety Code   , to read:  
   1389.94.  (a) The department shall apply for grant funding from
the federal government for the purposes of rate review consistent
with the requirements of federal law, rules, and guidance.
   (b) Additional costs and expenses associated with rate reviews
shall be supported by fees consistent with the provisions of Section
1356. 
   SEC. 5.   SEC. 11.   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 coverage or that offers coverage at a rate that is
higher than the standard rate shall, at the time of the denial or
offer of coverage, provide the 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 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 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 individual 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 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.   SEC. 12.   Section 10113.91 is
added to the Insurance Code, to read:
   10113.91.  (a) (1) 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 
 both  of the following:
   (A) The number and proportion of applicants for individual
coverage that were denied coverage for each product offered by the
insurer.
   (B) The health status and risk factors for each applicant denied
coverage, by product. 
   (C) Demographic information about applicants denied coverage,
including age, gender, language spoken, occupation, and geographic
region of the applicant, by product.  
   (D) The written policies, procedures, or underwriting guidelines
whereby the insurer makes its decision to provide or to deny coverage
to applicants. 
   (2) Public reporting shall be done in a manner consistent with
maintaining patient privacy. Academic institutions and other
entities, including those eligible for the Consumer Participation
Program, as defined in Section 1348.9 of the Health and Safety Code,
and that have the capacity to maintain patient privacy, shall be able
to obtain patient-specific data without patient name or identifier.

   (b) (1) 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: 

   (A) The number and proportion of applicants for large group
coverage that were denied coverage for each product offered by the
insurer.  
   (B) The health status and risk factors for each applicant denied
coverage, by product.  
   (C) Demographic information about applicants denied coverage,
including age, gender, language spoken, occupation, and geographic
region of the applicant, by product.  
   (D) The written policies, procedures, or underwriting guidelines
whereby the insurer makes its decision to provide or to deny coverage
to applicants.  
   (2) Public reporting shall be done in a manner consistent with
maintaining patient privacy. Academic institutions and other
entities, including those eligible for the Consumer Participation
Program, as defined in Section 1348.9 of the Health and Safety Code,
and that have the capacity to maintain patient privacy, shall be able
to obtain patient-specific data without patient name or identifier.
 
   (c) 
    (b)  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) 
    (2)  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 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) 
    (c)  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 10113.96 is added to the
Insurance Code, to read:
   10113.96.  (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 annually thereafter, an insurer
shall disclose to the commissioner all of the following:
   (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.
   (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. 13.    Section 12923.5 of the  
Insurance Code   is amended to read: 
   12923.5.  (a) The Department of Managed Health Care and the
Department of Insurance shall maintain a joint senior level working
group to ensure clarity for health care consumers about who enforces
their patient rights and consistency in the regulations of these
departments.
   (b) The joint working group shall undertake a review and
examination of the Health and Safety Code, the Insurance Code, and
the Welfare and Institutions Code as they apply to the Department of
Managed Health Care and the Department of Insurance to ensure
consistency in consumer protection.
   (c) The joint working group shall review and examine all of the
following processes in each department:
   (1) Grievance and consumer complaint processes, including, but not
limited to, outreach, standard complaints, including coverage and
medical necessity complaints, independent medical review, and
information developed for consumer use.
   (2) The processes used to ensure enforcement of the law,
including, but not limited to, the medical survey and audit process
in the Health and Safety Code and market conduct exams in the
Insurance Code.
   (3) The processes for regulating the timely payment of claims.

   (4) Review of rates in the individual and group markets consistent
with federal law. 
   (d) The joint working group shall report its findings to the
Insurance Commissioner and the Director of the Department of Managed
Health Care for review and approval. The commissioner and the
director shall submit the approved final report under signature to
the Legislature by January 1 of every year for five years.
   SEC. 14.    Section 12969.1 is added to the 
 Insurance Code   , to read: 
   12969.1.  (a) A health insurer that issues, renews, or amends
health insurance policies shall be subject to this section. On or
before June 1, 2011, and for each rate filing thereafter, an insurer
shall disclose to the commissioner all of the following for each rate
filing in the individual, small employer, and large group policy
markets:
   (1) Company name and contact information.
   (2) Number of policy forms covered by the filing.
   (3) Policy form numbers covered by the filing.
   (4) Product type.
   (5) Market segment.
   (6) Type of insurer.
   (7) Whether the products are opened or closed.
   (8) Enrollment in each policy and rating form.
   (9) Member months in each policy form.
   (10) Annual rate.
   (11) Total earned premiums in each policy form.
   (12) Total incurred claims in each policy form.
   (13) Average rate increase initially requested.
   (14) Rate of review category, including approved as originally
submitted, initially rejected, or resubmitted with modifications, and
initially rejected and not resubmitted or initially rejected and
challenged.
   (15) Average rate of increase approved.
   (16) Effective date of rate increase.
   (17) Number of policyholders or insureds affected by each policy
form.
   (18) Overall annual medical trend factor assumptions in each rate
filing for all benefits and disaggregated by benefit category,
including hospital inpatient, hospital outpatient, physician
services, prescription drugs, and other ancillary services,
laboratory, and radiology.
   (19) The amount of the projected trend attributable to the use,
price inflation, or fees and risk for annual insurance trends by
benefit category, such as hospital inpatient, hospital outpatient,
physician services, prescription drugs and other ancillary services,
laboratory, and radiology.
   (20) A comparison of claims cost and rate of changes over time.
   (21) Any changes in the cost sharing of insureds over the prior
year associated with the submitted rate filing.
   (22) Any changes in insured benefits over the prior year
associated with the submitted rate filing.
   (23) The number and a summary the nature of consumer inquiries and
complaints related to health insurance rates that have been received
for the past two policy years.
   (b) A health insurer subject to subdivision (a) shall also
disclose the following required aggregate data for rate filings in
the individual, small employer, and large group policy markets:
   (1) Number and percentage of rate filings reviewed by the
following:
   (A) Policy year.
   (B) Segment type.
   (C) Product type.
   (D) Number of policyholders.
   (E) Number of covered lives affected.
   (2) The average rate increase by the following:
   (A) Policy year.
   (B) Segment type.
   (C) Product type.
   (c) For purposes of this section, "large group policy" means a
group health insurance policy other than a policy issued to a small
employer, as defined in Section 10700.
   (d) This section shall not apply to specialized health insurance.

   SEC. 15.    Section 12969.2 is added to the 
 Insurance Code  , to read:  
   12969.2.  (a) Each rate filing described in Section 12969.1,
including all supporting material, shall be publicly available on the
department's Internet Web site. All submissions to the commissioner
shall be made electronically in order to facilitate review by the
commissioner and the public. Each rate filing shall include a summary
of rate changes offered in plain language for consumers.
   (b) The commissioner shall post to its public Internet Web site
information about the rate filing and justification in an easy to
understand language for the public.
   (c) Health insurers shall post all proposed rate increases,
including all accompanying documentation on their Internet Web site.

   SEC. 16.    Section 12969.3 is added to the 
 Insurance Code   , to read:  
   12969.3.  (a) The commissioner shall review each rate filing
described in Section 12969.1 for consistency with applicable state
law and regulations as well as federal law, regulations, rules, or
other guidance.
   (b) The commissioner shall also review each rate filing to
determine that it is actuarially sound.
   (c) The commissioner shall consider public comment on the rate
filing for no less than 60 days and respond pursuant to Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code.
   (d) The commissioner shall conduct a public hearing on the rate
filing on any of the following grounds:
   (1) A consumer or consumer advocacy organization requests a
hearing within 45 days of the rate filing. If the commissioner grants
a hearing, it shall issue written findings in support of that
decision.
   (2) The commissioner determines for any reason to hold a hearing.
   (3) The commissioner finds that the rate filing does not comply
with the provisions of this section.
   (e) After completing a review pursuant to this section, the
commissioner shall post to its Internet Web site any changes to the
rates and the reason for those changes, including any documentation
to support those changes. 
   SEC. 17.    Section 12969.4 is added to the 
 Insurance Code   , to read:  
   12969.4.  (a) Consistent with federal law, rules, and guidance,
the commissioner shall do all of the following:
   (1) Provide data to the United States Secretary of Health and
Human Services on health insurance rate trends in premium rating
areas.
   (2) Provide to the United States Secretary of Health and Human
Services the number and summarize the nature of consumer inquiries
and complaints related to health insurance rates that have been
received for the past two plan years.
   (b) Commencing with the creation of the Exchange, provide to the
Exchange such information as may be necessary to allow compliance
with federal law, rules,  and guidance. The commissioner shall
develop an interagency agreement with the Exchange to facilitate the
reporting of information regarding rate filings that is consistent
with the responsibilities of the Exchange. As used in this
subdivision, the "Exchange" means the American Health Benefit
Exchange established in California pursuant to Section 1311 of the
federal Patient Protection and Affordable Care Act (Public Law
111-148). 
   SEC. 18.    Section 12969.5 is added to the 
 Insurance Code   , to read:  
   12969.5.  (a) The commissioner shall apply for grant funding from
the federal government for the purposes of rate review consistent
with the requirements of federal law, rules, and guidance.
   (b) Additional costs and expenses associated with rate reviews
shall be supported by fees established by the commissioner. 
   SEC. 9.   SEC. 19.   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.