BILL NUMBER: SB 1163 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY AUGUST 18, 2010
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 Sections 1342, 1342.4, 1367, and 1389.25
of, to add Sections 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 Sections 10113.9 and 12923.5 of, to add Sections
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. An act to amend Sections 1374.21,
1374.22, and 1389.25 of, and to add Article 6.2 (commencing with
Section 1385.01) to Chapter 2.2 of Division 2 of, the Health and
Safety Code, and to amend Sections 10113.9, 10199.1, and 10199.2 of,
and to add Article 4.5 (commencing with Section 10181) to Chapter 1
of Part 2 of Division 2 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 or group market from changing
the premium rate or coverage without providing specified notice
to the policyholder or subscriber at least 30 days prior to the
effective date of the change.
This bill would require a health care service plan that
offers coverage in the group market and a health insurer that
offers health care coverage in the individual or group market to
provide an individual or group applicant
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
60 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 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 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 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,
including accompanying documentation regarding rate changes. The bill
would 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.
Existing law, the federal Patient Protection and Affordable Care
Act, requires the United States Secretary of Health and Human
Services to establish a process for the annual review of unreasonable
increases in premiums for health insurance coverage in which health
insurance issuers submit to the secretary and the relevant state a
justification for an unreasonable premium increase prior to
implementation of the increase. The act requires the secretary to
carry out a program to award grants to states during the 5-year
period beginning with fiscal year 2010 to assist states in carrying
out this process, as specified.
This bill would require a health care service plan or health
insurer to file rate information with the Department of Managed
Health Care or the Department of Insurance, as specified, and would
require that the information be made publicly available, as
specified. The bill would would authorize the departments to review
these filings and conduct a public hearing under specified
circumstances and would require the departments to post certain
findings on their Internet Web sites. The bill would enact other
related provisions.
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 1374.21 of the
Health and Safety Code is amended to read:
1374.21. (a) No change in premium rates or
changes in coverage stated in a group health care service plan
contract shall become effective unless the plan has delivered in
writing a notice indicating the change or changes at least
30 60 days prior to the contract renewal
effective date.
(b) A health care service plan that declines to offer coverage to
or denies enrollment for a group applying for coverage or that offers
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
applicant with the specific reason or reasons for the decision in
writing, in clear, easily understandable language.
SEC. 2. Section 1374.22 of the Health
and Safety Code is amended to read:
1374.22. (a) The written notice described in subdivision (a)
of Section 1374.21 shall be delivered by mail at the last
known address at least 30 60 days prior
to the renewal effective date to the group contract holder.
(b) The written notice shall state in italics either
and in 12-point type the actual dollar amount
or a and the specific percentage of the
premium rate increase. Further, the notice shall describe in plain
understandable English and highlighted in italics any changes in the
plan design or change in benefits with reduction in benefits,
waivers, exclusions, or conditions.
(c) The written notice shall specify in a minimum of
10-point bold typeface the reason or reasons for premium rate
changes, plan design, or plan benefit changes.
SEC. 3. Article 6.2 (commencing with Section
1385.01) is added to Chapter 2.2 of Division 2 of the
Health and Safety Code , to read:
Article 6.2. Review of Rate Increases
1385.01. For purposes of this article, the following definitions
shall apply:
(a) "Large group health care service plan contract" means a group
health care service plan contract other than a contract issued to a
small employer, as defined in Section 1357.
(b) "Small group health care service plan contract" means a group
health care service plan contract issued to a small employer, as
defined in Section 1357.
(c) "PPACA" means Section 2794 of the federal Public Health
Service Act (42 U.S.C. Sec. 300gg-14), as amended by the federal
Patient Protection and Affordable Care Act (P. L. 111-48), and any
subsequent rules or regulations issued under that section.
(d) "Unreasonable rate increase" has the same meaning as that term
is defined in PPACA.
1385.02. This article shall apply to health care service plan
contracts offered in the individual or group market in California.
However, this article shall not apply to a specialized health care
service plan contract; a Medicare supplement contract subject to
Article 3.5 (commencing with Section 1358.1); a health care service
plan contract offered 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 contract offered in
the Healthy Families Program (Part 6.2 (commencing with Section
12693) of Division 2 of the Insurance Code), the Access for Infants
and Mothers Program (Part 6.3 (commencing with Section 12695) of
Division 2 of the Insurance Code), the California Major Risk Medical
Insurance Program (Part 6.5 (commencing with Section 12700) of
Division 2 of the Insurance Code), or the Federal Temporary High Risk
Pool (Part 6.6 (commencing with Section 12739.5) of Division 2 of
the Insurance Code); a health care service plan conversion contract
offered pursuant to Section 1373.6; or a health care service plan
contract offered to a federally eligible defined individual under
Article 4.6 (commencing with Section 1366.35) or Article 10.5
(commencing with Section 1399.801).
1385.04. (a) (1) All health care service plans shall file with
the department all required rate information for individual and small
group health care service plan contracts at least 60 days prior to
implementing any rate change.
(2) For large group health care service plan contracts, all health
plans shall file with the department all required rate information
for unreasonable rate increases prior to implementing any such rate
change.
(b) A plan shall disclose to the department all of the following
for each rate filing:
(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) Segment type.
(6) Type of plan involved, 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) Review category: initial filing for new product, filing for
existing product, or resubmission.
(15) Average rate of increase.
(16) Effective date of rate increase.
(17) Number of subscribers or enrollees affected by each plan
contract form.
(18) The plan's 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. A plan shall provide additional data that
demonstrates year-to-year cost increases in specific benefit
categories. A health plan shall also provide information on aggregate
annual cost increases for specific hospitals and for specific
medical groups within a plan network.
(19) The amount of the projected trend attributable to the use of
services, price inflation, or fees and risk for annual plan contract
trends by aggregate 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 of consumer inquiries and complaints related to
the plan's rates that have been received by the plan during the
preceding two plan years. The plan shall also summarize the nature of
those inquiries and complaints.
(24) The certification described in subdivision (c) of Section
1385.06.
(c) A health care service plan subject to subdivision (a) shall
also disclose the following aggregate data for all rate filings in
the individual, small group, 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 plan's average rate increase by the following categories:
(A) Plan year.
(B) Segment type.
(C) Product type.
(3) Any cost containment and quality improvement efforts since the
plan's last rate filing for the same category of health benefit
plan. The plan shall describe any significant new health care cost
containment and quality improvement efforts and provide an estimate
of potential savings together with an estimated cost or savings for
the projection period.
(d) The department may require all health care service plans to
submit all rate filings to the National Association of Insurance
Commissioners' System for Electronic Rate and Form Filing (SERFF).
Submission of the required rate filings to SERFF shall be deemed to
be filing with the department for purposes of compliance with this
section.
(e) A plan shall submit any other information required by the
department to comply with this article.
1385.06. (a) A filing submitted under this article shall be
consistent with applicable state and federal laws, rules, and
regulations, including, but not limited to, the applicable provisions
of law governing health care service plan contracts, medical loss
ratios, rating rules, health benefit designs, and health benefit
standards.
(b) A filing submitted under this article shall be actuarially
sound.
(c) (1) A filing submitted under this article shall include a
certification by an independent actuary or actuarial firm that the
rate increase is reasonable or unreasonable and, if unreasonable,
that the justification for the increase is based on accurate and
sound actuarial assumptions.
(2) The actuary or actuarial firm acting under paragraph (1) shall
not be an affiliate or a subsidiary of, nor in any way owned or
controlled by, a health care service plan or a trade association of
health care service plans. A board member, director, officer, or
employee of the actuary or actuarial firm shall not serve as a board
member, director, or employee of a health care service plan. A board
member, director, or officer of a health care service plan or a trade
association of health care service plans shall not serve as a board
member, director, officer, or employee of the actuary or actuarial
firm.
(d) Nothing in this section shall be construed to preclude the
department from reviewing a proposed rate increase for actuarial
soundness or consistency with applicable state or federal laws,
rules, or regulations.
1385.07. (a) Notwithstanding Chapter 3.5 (commencing with Section
6250) of Division 7 of Title 1 of the Government Code, all
information submitted under this article shall be made publicly
available except as provided in subdivision (b).
(b) The contracted rates between a health care service plan and an
individual provider, including, but not limited to, a health
professional, medical group, hospital, or hospital system, shall be
deemed confidential information that shall not be divulged by the
department.
(c) All information submitted to the department under this article
shall be submitted electronically in order to facilitate review by
the department and the public.
(d) In addition, the health care service plan shall file the
following information in a manner and format specified by the
department. The information shall be in plain language and shall be
made readily available to the public on the Internet Web site of the
department and the plan, except as provided in subdivision (b). The
information shall be made public for 60 days prior to the
implementation of the rate increase. This period may be extended by
the department if needed to complete its review consistent with this
article. The information shall include:
(1) Justifications for any unreasonable rate increases, including
all information and supporting documentation as to why the rate
increase is justified.
(2) A plan's overall annual medical trend factor assumptions in
each rate filing for all benefits.
(3) A health plan's actual costs, disaggregated by aggregate
benefit category to include hospital inpatient, hospital outpatient,
physician services, prescription drugs and other ancillary services,
laboratory, and radiology.
(4) The amount of the projected trend attributable to the use of
services, price inflation, or fees and risk for annual plan contract
trends by aggregate benefit category, such as hospital inpatient,
hospital outpatient, physician services, prescription drugs and other
ancillary services, laboratory, and radiology.
1385.08. (a) On or before July 1, 2011, the director may issue
guidance to health care service plans regarding compliance with this
article. This guidance shall not be subject to the Administrative
Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1
of Division 3 of Title 2 of the Government Code).
(b) The department may adopt regulations to implement this article
in accordance with Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code.
(c) The department shall consult with the Department of Insurance
in issuing guidance under subdivision (a), in adopting regulations
under subdivision (b), in posting information on its Internet Web
site under this article, and in taking any other action for the
purpose of implementing this article.
1385.11. (a) Whenever it appears to the department that any
person has engaged, or is about to engage, in any act or practice
constituting a violation of this article, including the filing of
inaccurate or unjustified rates or inaccurate or unjustified rate
information, the department may review the rate filing to ensure
compliance with the law.
(b) The department shall, at a minimum, review for consistency
with Section 1385.06 any unreasonable rate increase.
(c) The department shall also review a proposed rate increase if
the plan proposing the increase is found by the department to have a
pattern of filing inaccurate, unjustified, or unreasonable rate
increases.
(d) The department may review other filings.
(e) The department shall consider any public comment on a rate
increase submitted to the department during the 60-day period
described in subdivision (d) of Section 1385.07.
(f) The department shall report to the Legislature at least
quarterly on all rate filings that are unreasonable, not actuarially
sound, or otherwise not consistent with applicable state or federal
laws or regulations, including, but not limited to, those governing
health care service plan contracts, medical loss ratio, rating rules,
benefit designs, and benefit standards.
(g) After conducting a review under this section, the department
shall post on its Internet Web site any changes to the proposed rate
increase, including any documentation supporting those changes.
(h) If the department finds that an unreasonable rate increase is
not justified or that a rate filing contains inaccurate information,
the department shall post its finding on its Internet Web site.
(i) Nothing in this article shall be construed to impair or impede
the department's authority to administer or enforce any other
provision of this chapter.
1385.13. The department shall do all of the following in a manner
consistent with applicable federal laws, rules, and regulations:
(a) Provide data to the United States Secretary of Health and
Human Services on health care service plan rate trends in premium
rating areas.
(b) Provide to the United States Secretary of Health and Human
Services the number of, and a summary of the nature of, inquiries and
complaints related to health care service plan rates that have been
received for the past two plan years.
(c) Commencing with the creation of the Exchange, provide to the
Exchange such information as may be necessary to allow compliance
with federal law, rules, regulations, and guidance. The director
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. 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
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
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 at the time of the denial or offer of coverage
in clear, easily understandable language .
(2) No change in the premium rate or coverage for an individual
plan contract shall become effective unless the plan has delivered a
written notice of the change at least 30 60
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 30 60
days prior to the effective date of the change. The notice
shall state in italics either and in 12-point
type the actual dollar amount of the premium rate increase
or and 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 applicant or the dependents of an
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 (MRMIP) (Part 6.5 (commencing
with Section 12700) of Division 2 of the Insurance Code), and the
federal temporary high risk pool established pursuant to Part 6.6
(commencing with Section 12739.5) of Division 2 of the Insurance
Code. The information provided to the applicant by the plan shall be
in accordance with standards developed by the department, in
consultation with the Managed Risk Medical Insurance Board, and shall
specifically include the toll-free telephone number and Internet Web
site address for MRMIP and the federal temporary high risk pool. The
requirement to notify applicants of the availability of MRMIP and
the federal temporary high risk pool 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. 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 to or
denies enrollment for an individual or his or her dependents 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 applicant with the specific
reason or reasons for the decision in writing, in clear, easily
understandable language.
(b)
(2) No change in the premium rate or coverage for an
individual health insurance policy shall become effective unless the
insurer has delivered a written notice of the change at least
30 60 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.
(c)
(3) The written notice required pursuant to
subdivision (b) paragraph (2) shall be delivered
to the individual policyholder at his or her last address known to
the insurer, at least 30 60 days prior
to the effective date of the change. The notice shall state in
italics either and in 12-point type the
actual dollar amount of the premium increase or
and 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.
(d)
(4) If an insurer rejects an applicant or the
dependents of an 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 (MRMIP)
(Part 6.5 (commencing with Section 12700)), and the federal temporary
high risk pool established pursuant to Part 6.6 (commencing with
Section 12739.5). The information provided to the applicant by the
insurer shall be in accordance with standards developed by the
department, in consultation with the Managed Risk Medical Insurance
Board, and shall specifically include the toll-free telephone number
and Internet Web site address for MRMIP and the federal temporary
high risk pool. The requirement to notify applicants of the
availability of MRMIP and the federal temporary high risk pool 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. Article 4.5 (commencing with Section
10181) is added to Chapter 1 of Part 2 of Division 2 of the
Insurance Code , to read:
Article 4.5. Review of Rate Increases
10181. For purposes of this article, the following definitions
shall apply:
(a) "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.
(b) "Small group health insurance policy" means a group health
insurance policy issued to a small employer, as defined in Section
10700.
(c) "PPACA" means Section 2794 of the federal Public Health
Service Act (42 U.S.C. Sec. 300gg-14), as amended by the federal
Patient Protection and Affordable Care Act (P. L. 111-48), and any
subsequent rules or regulations issued pursuant to that law.
(d) "Unreasonable rate increase" has the same meaning as that term
is defined in PPACA.
10181.2. This article shall apply to health
insurance policies offered in the individual or group market in
California. However, this article shall not apply to a specialized
health insurance policy; a Medicare supplement policy subject to
Article 6 (commencing with Section 10192.05); a health insurance
policy offered 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 insurance policy offered in the Healthy
Families Program (Part 6.2 (commencing with Section 12693)), the
Access for Infants and Mothers Program (Part 6.3 (commencing with
Section 12695)), the California Major Risk Medical Insurance Program
(Part 6.5 (commencing with Section 12700)), or the Federal Temporary
High Risk Pool (Part 6.6 (commencing with Section 12739.5)); a health
insurance conversion policy offered pursuant to Section 12682.1; or
a health insurance policy offered to a federally eligible defined
individual under Chapter 9.5 (commencing with Section 10900).
10181.4. (a) (1) All health insurers shall file with the
department all required rate information for individual and small
group health insurance policies at least 60 days prior to
implementing any rate change.
(2) For large group health insurance policies, all health insurers
shall file with the department all required rate information for
unreasonable rate increases prior to implementing any such rate
change.
(b) An insurer shall disclose to the department all of the
following for each rate filing:
(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) Segment type.
(6) Type of insurer involved, such as for profit or not for
profit.
(7) Whether the products are opened or closed.
(8) Enrollment in each policy and rating form.
(9) Insured 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) Review category: initial filing for new product, filing for
existing product, or resubmission.
(15) Average rate of increase.
(16) Effective date of rate increase.
(17) Number of policyholders or insureds affected by each policy
form.
(18) The insurer's 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. An insurer shall provide additional data
that demonstrates year-to-year cost increases in specific benefit
categories. An insurer shall also provide information on aggregate
annual cost increases for specific hospitals and for specific medical
groups within a network.
(19) The amount of the projected trend attributable to the use of
services, price inflation, or fees and risk for annual policy trends
by aggregate 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 insured cost-sharing 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 of consumer inquiries and complaints related to
the insurer's rates that have been received by the insurer during the
preceding two plan years. The insurer shall also summarize the
nature of those inquiries and complaints.
(24) The certification described in subdivision (c) of Section
10181.6.
(c) An insurer subject to subdivision (a) shall also disclose the
following aggregate data for all rate filings in the individual,
small group, and large group health insurance markets:
(1) Number and percentage of rate filings reviewed by the
following:
(A) Plan year.
(B) Segment type.
(C) Product type.
(D) Number of policyholders
(E) Number of covered lives affected.
(2) The insurer's average rate increase by the following
categories:
(A) Plan year.
(B) Segment type.
(C) Product type.
(3) Any cost containment and quality improvement efforts since the
insurer's last rate filing for the same category of health benefit
plan. The insurer shall describe any significant new health care cost
containment and quality improvement efforts and provide an estimate
of potential savings together with an estimated cost or savings for
the projection period.
(d) The department may require all health insurers to submit all
rate filings to the National Association of Insurance Commissioners'
System for Electronic Rate and Form Filing (SERFF). Submission of the
required rate filings to SERFF shall be deemed to be filing with the
department for purposes of compliance with this section.
(e) A health insurer shall submit any other information required
by the department to comply with this article.
10181.6. (a) A filing submitted under this article shall be
consistent with applicable state and federal laws, rules, and
regulations, including, but not limited to, the provisions of law
governing health insurance policies, medical loss ratios, rating
rules, health benefit designs, and health benefit standards.
(b) A filing submitted under this article shall be actuarially
sound.
(c) (1) A filing submitted under this article shall include a
certification by an independent actuary or actuarial firm that the
rate increase is reasonable or unreasonable and, if unreasonable,
that the justification for the increase is based on accurate and
sound actuarial assumptions.
(2) The actuary or actuarial firm acting under paragraph (1) shall
not be an affiliate or a subsidiary of, nor in any way owned or
controlled by, a health insurer or a trade association of health
insurers. A board member, director, officer, or employee of the
actuary or actuarial firm shall not serve as a board member,
director, or employee of a health insurer. A board member, director,
or officer of a health insurer or a trade association of health
insurers shall not serve as a board member, director, officer, or
employee of the actuary or actuarial firm.
(d) Nothing in this section shall be construed to preclude the
department from reviewing a proposed rate increase for actuarial
soundness or consistency with applicable state or federal laws,
rules, or regulations.
10181.7. (a) Notwithstanding Chapter 3.5 (commencing with Section
6250) of Division 7 of Title 1 of the Government Code, all
information submitted under this article shall be made publicly
available except as provided in subdivision (b).
(b) The contracted rates between a health insurer and an
individual provider, including, but not limited to, a health
professional, medical group, hospital, or hospital system, shall be
deemed confidential information that shall not be divulged by the
department.
(c) All information submitted to the department under this article
shall be submitted electronically in order to facilitate review by
the department and the public.
(d) In addition, the health insurer shall file the following
information in a manner and format specified by the department. The
information shall be in plain language and shall be made readily
available to the public on the Internet Web site of the department
and the insurer, except as provided in subdivision (b). The
information shall be made public for 60 days prior to the
implementation of the rate increase. This period may be extended by
the department if needed to complete its review consistent with this
article. The information shall include:
(1) Justifications for any unreasonable rate increases, including
all information and supporting documentation as to why the rate
increase is justified.
(2) An insurer's overall annual medical trend factor assumptions
in each rate filing for all benefits.
(3) An insurer's actual costs, disaggregated by aggregate benefit
category to include, hospital inpatient, hospital outpatient,
physician services, prescription drugs and other ancillary services,
laboratory, and radiology.
(4) The amount of the projected trend attributable to the use of
services, price inflation, or fees and risk for annual policy trends
by aggregate benefit category, such as hospital inpatient, hospital
outpatient, physician services, prescription drugs and other
ancillary services, laboratory, and radiology.
10181.9. (a) On or before July 1, 2011, the commissioner may
issue guidance to health insurers regarding compliance with this
article. This guidance shall not be subject to the Administrative
Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1
of Division 3 of Title 2 of the Government Code).
(b) The department may adopt regulations to implement this article
in accordance with Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code.
(c) The department shall consult with the Department of Managed
Health Care in issuing guidance under subdivision (a), in adopting
regulations under subdivision (b), in posting information on its
Internet Web site under this article, and in taking any other action
for the purpose of implementing this article.
10181.11. (a) Whenever it appears to the department that any
person has engaged, or is about to engage, in any act or practice
constituting a violation of this article, including the filing of
inaccurate or unjustified rates or inaccurate or unjustified rate
information, the department may review rate filing to ensure
compliance with the law.
(b) The department shall, at a minimum, review for consistency
with Section 10181.6 any unreasonable rate increase.
(c) The department shall also review a rate increase if the
insurer proposing the increase is found by the department to have a
pattern of filing inaccurate, unjustified, or unreasonable rate
increases.
(d) The department may review other filings.
(e) The department shall consider any public comment on a rate
increase submitted to the department during the 60-day period
described in subdivision (d) of Section 10181.7.
(f) The department shall report to the Legislature at least
quarterly on all rate filings that are unreasonable, not actuarially
sound, or otherwise not consistent with applicable state or federal
laws or regulations, including, but not limited to, those governing
health insurance policies, medical loss ratio, rating rules, benefit
designs, and benefit standards.
(g) After conducting a review under this section, the department
shall post on its Internet Web site any changes to the proposed rate
increase, including any documentation supporting those changes.
(h) If the department finds that an unreasonable rate increase is
not justified or that a rate filing contains inaccurate information,
the department shall post its finding on its Internet Web site.
(i) Nothing in this article shall be construed to impair or impede
the department's authority to administer or enforce any other
provision of this code.
10181.13. The department shall do all of the following in a
manner consistent with applicable federal laws, rules, and
regulations:
(a) Provide data to the United States Secretary of Health and
Human Services on health insurer rate trends in premium rating areas.
(b) Provide to the United States Secretary of Health and Human
Services the number of, and a summary of the nature of, inquiries and
complaints related to health insurer rates that have been received
for the past two plan years.
(c) Commencing with the creation of the Exchange, provide to the
Exchange such information as may be necessary to allow compliance
with federal law, rules, regulations, and guidance. The director
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. 7. Section 10199.1 of the
Insurance Code is amended to read:
10199.1. (a) No insurer or nonprofit hospital service plan or
administrator acting on its behalf shall terminate a group master
policy or contract providing hospital, medical, or surgical benefits,
increase premiums or charges therefor, reduce or eliminate benefits
thereunder, or restrict eligibility for coverage thereunder without
providing prior notice of that action. No such action shall become
effective unless written notice of the action was delivered by mail
to the last known address of the appropriate insurance producer and
the appropriate administrator, if any, at least 45 days prior to the
effective date of the action and to the last known address of the
group policyholder or group contractholder at least 30
60 days prior to the effective date of the
action. If nonemployee certificate holders or employees of more than
one employer are covered under the policy or contract, written notice
shall also be delivered by mail to the last known address of each
nonemployee certificate holder or affected employer or, if the action
does not affect all employees and dependents of one or more
employers, to the last known address of each affected employee
certificate holder, at least 30 60 days
prior to the effective date of the action.
(b) No holder of a master group policy or a master group nonprofit
hospital service plan contract or administrator acting on its behalf
shall terminate the coverage of, increase premiums or charges for,
or reduce or eliminate benefits available to, or restrict eligibility
for coverage of a covered person, employer unit, or class of
certificate holders covered under the policy or contract for
hospital, medical, or surgical benefits without first providing prior
notice of the action. No such action shall become effective unless
written notice was delivered by mail to the last known address of
each affected nonemployee certificate holder or employer, or if the
action does not affect all employees and dependents of one or more
employers, to the last known address of each affected employee
certificate holder, at least 30 60 days
prior to the effective date of the action.
(c) A health insurer that declines to offer coverage to or denies
enrollment for a group applying for coverage or that offers 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 applicant
with the specific reason or reasons for the decision in writing, in
clear, easily understandable language.
SEC. 8. Section 10199.2 of the
Insurance Code is amended to read:
10199.2. (a) The written notice described in subdivisions
(a) and (b) of Section 10199.1 shall state in italics
either and in 12-point type the actual dollar
amount or a and the specific percentage
of the premium rate increase. Further, the notice shall describe in
plain understandable English and highlighted in italics any changes
in the plan design or change in benefits with reduction in benefits,
waivers, exclusions, or conditions.
(b) The written notice shall specify in a minimum of 10-point
bold typeface the reason or reasons for premium rate changes,
plan design, or plan benefit changes.
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.
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 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.
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.
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. 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 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.
(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) 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 written policies, procedures, or underwriting guidelines
whereby the plan makes its decision to provide or to deny coverage to
applicants.
(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. 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. 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. 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 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.
(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) 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 written policies, procedures, or underwriting guidelines
whereby the insurer makes its decision to provide or to deny coverage
to applicants.
(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. 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. 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.