BILL NUMBER: AB 1526 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 25, 2012
AMENDED IN ASSEMBLY MARCH 20, 2012
INTRODUCED BY Assembly Member Monning
JANUARY 19, 2012
An act to amend Sections 12705, 12718, 12725, and 12737
of , and to add Chapter 9 (commencing with Section 12739.45) to
Part 6.5 of Division 2 of , the Insurance Code,
relating to health care coverage, and making an appropriation
therefor.
LEGISLATIVE COUNSEL'S DIGEST
AB 1526, as amended, Monning. California Major Risk Medical
Insurance Program.
Existing law establishes the California Major Risk Medical
Insurance Program (MRMIP) that is administered by the Managed Risk
Medical Insurance Board (MRMIB) to provide major risk medical
coverage to residents who have been rejected for coverage by at least
one private health plan, as specified. Existing law creates the
Major Risk Medical Insurance Fund and continuously appropriates the
fund to MRMIB for the purposes of MRMIP.
This bill would alternatively require, as a condition of
eligibility for MRMIP, that an applicant have documentation from a
licensed physician, physician assistant, nurse practitioner, or, if
designated by MRMIB, other health care professional, verifying the
applicant's preexisting medical condition. By expanding the
eligibility criteria for MRMIP, the bill would make moneys in a
continuously appropriated fund available for a new or expanded
purpose and would thereby make an appropriation.
Existing law specifies the minimum scope of benefits offered by
participating health plans in MRMIP and requires the exclusion of
benefits that exceed $75,000 in a calendar year or $750,000 in a
lifetime, as specified.
This bill would authorize MRMIB to eliminate those
annual or lifetime limits and would require MRMIB to exclude from the
subscriber contribution rate that portion of the standard average
individual rate attributable to the elimination of those limits.
The bill would also create the Major Risk Medical Insurance
Reconciliation Fund in the State Treasury and would require that
remittances received by MRMIP on or after January 1, 2013, from
health plans participating in MRMIP as a result of reconciliation
based on the actual claim costs of subscribers for prior fiscal years
be deposited in the fund. The bill would require that moneys in the
fund be available for any authorized purpose upon appropriation by
the Legislature, but would prohibit using the moneys to pay for the
elimination of annual or lifetime benefit limits authorized by this
bill.
The bill would also provide that regulations adopted and readopted
by MRMIB to implement the changes made to MRMIP enacted by this bill
are deemed to be an emergency and would exempt MRMIB from describing
facts showing the need for immediate action and from review by the
Office of Administrative Law.
Vote: majority. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 12705 of the
Insurance Code is amended to read:
12705. For the purposes of this part, the following terms have
the following meanings:
(a) "Applicant" means an individual who applies for major risk
medical coverage through the program.
(b) "Board" means the Managed Risk Medical Insurance Board.
(c) "Fund" Except as provided in Chapter 9
(commencing with Section 12739.45), "fund" means the Major
Risk Medical Insurance Fund, from which the program may authorize
expenditures to pay for medically necessary services which exceed
subscribers' contributions, and for administration of the program.
(d) "Major risk medical coverage" means the payment for medically
necessary services provided by institutional and professional
providers.
(e) "Participating health plan" means a private insurer (1)
holding a valid outstanding certificate of authority from the
Insurance Commissioner, a nonprofit membership corporation lawfully
operating under the Nonprofit Corporation Law (Division 2 (commencing
with Section 5000) of the Corporations Code), or a health care
service plan as defined under subdivision (f) of Section 1345 of the
Health and Safety Code, which is lawfully engaged in providing,
arranging, paying for, or reimbursing the cost of personal health
care services under insurance policies or contracts, medical and
hospital service agreements, or membership contracts, in
consideration of premiums or other periodic charges payable to it,
and (2) which contracts with the program to administer major risk
medical coverage to program subscribers.
(f) "Plan rates" means the total monthly amount charged by a
participating health plan for a category of risk.
(g) "Program" means the California Major Risk Medical Insurance
Program.
(h) "Subscriber" means an individual who is eligible for and
receives major risk medical coverage through the program, and
includes a member of a federally recognized California Indian tribe.
(i) "Subscriber contribution" means the portion of participating
health plan rates paid by the subscriber, or paid on behalf of the
subscriber by a federally recognized California Indian tribal
government. If a federally recognized California Indian tribal
government makes a contribution on behalf of a member of the tribe,
the tribal government shall ensure that the subscriber is made aware
of all the health plan options available in the county where the
member resides.
SECTION 1. SEC. 2. Section 12718 of
the Insurance Code is amended to read:
12718. (a) Benefits under this part shall be subject to required
subscriber copayments and deductibles as the board may authorize. Any
authorized copayments shall not exceed 25 percent and any authorized
deductible shall not exceed an annual household deductible amount of
five hundred dollars ($500). However, health plans not utilizing a
deductible may be authorized to charge an office visit copayment of
up to twenty-five dollars ($25). If the board contracts with
participating health plans pursuant to Chapter 5 (commencing with
Section 12720), copayments or deductibles shall be authorized in a
manner consistent with the basic method of operation of the
participating health plans. The aggregate amount of deductible and
copayments payable annually under this section shall not exceed two
thousand five hundred dollars ($2,500) for an individual and four
thousand dollars ($4,000) for a family.
(b) Benefits under this part shall have no annual or lifetime
limits.
(b) The board may remove annual and lifetime limits on benefits
under this part. The board shall exclude the cost attributable to the
removal of those limits from the subscriber contribution as
described in subdivision (c) of Section 12737.
SEC. 2. SEC. 3. Section 12725 of the
Insurance Code is amended to read:
12725. (a) Each resident of the state meeting the eligibility
criteria of this section is eligible to apply for major risk medical
coverage through the program. For these purposes, "resident" includes
a member of a federally recognized California Indian tribe.
(b) To be eligible for enrollment in the program, an applicant
shall demonstrate that he or she is unable to secure adequate private
health care coverage by providing either of the following:
(1) Documentation that he or she has been rejected for health care
coverage by at least one private health plan. An applicant shall be
deemed to have been rejected if the only private health coverage that
the applicant could secure would do one of the following:
(A) Impose substantial waivers that the program determines would
leave a subscriber without adequate coverage for medically necessary
services.
(B) Afford limited coverage that the program determines would
leave the subscriber without adequate coverage for medically
necessary services.
(C) Afford coverage only at an excessive price, which the board
determines is significantly above standard average individual
coverage rates.
(2) Documentation satisfactory to the board from a licensed
physician, physician assistant, or nurse practitioner, or, if
designated by the board, other health care professional, verifying
the applicant's preexisting medical condition.
(c) Rejection for policies or certificates of specified disease or
policies or certificates of hospital confinement indemnity, as
described in Section 10198.61, shall not be deemed to be rejection
for the purposes of eligibility for enrollment under paragraph (1) of
subdivision (b).
(d) The board may permit dependents of eligible subscribers to
enroll in major risk medical coverage through the program if the
board determines the enrollment can be carried out in an actuarially
and administratively sound manner.
(e) Notwithstanding the provisions of this section, the board
shall by regulation prescribe a period of time during which a
resident is ineligible to apply for major risk medical coverage
through the program if the resident either voluntarily disenrolls
from, or was terminated for nonpayment of the premium from, a private
health plan after enrolling in that private health plan pursuant to
either Section 10127.15 or Section 1373.62 of the Health and Safety
Code.
(f) For the period commencing September 1, 2003, to December 31,
2007, inclusive, subscribers and their dependents receiving major
risk coverage through the program may receive that coverage for no
more than 36 consecutive months. Ninety days before a subscriber or
dependent's eligibility ceases pursuant to this subdivision, the
board shall provide the subscriber and any dependents with written
notice of the termination date and written information concerning the
right to purchase a standard benefit plan from any health care
service plan or health insurer participating in the individual
insurance market pursuant to Section 10127.15 or Section 1373.62 of
the Health and Safety Code. This subdivision shall become inoperative
on December 31, 2007.
SEC. 3. SEC. 4. Section 12737 of the
Insurance Code is amended to read:
12737. (a) The board shall establish program contribution amounts
for each category of risk for each participating health plan. The
program contribution amounts shall be based on the average amount of
subsidy funds required for the program as a whole. To determine the
average amount of subsidy funds required, the board shall calculate a
loss ratio, including all medical costs, administration fees, and
risk payments, for the program in the prior calendar year. The loss
ratio shall be calculated using 125 percent of the standard average
individual rates for comparable coverage as the denominator, and all
medical costs, administration fees, and risk payments as the
numerator. The average amount of subsidy funds required is calculated
by subtracting 100 percent from the program loss ratio. For purposes
of calculating the program loss ratio, no participating health plan'
s loss ratio shall be less than 100 percent and participating health
plans with fewer than 1,000 program members shall be excluded from
the calculation.
Subscriber contributions shall be established to encourage members
to select those health plans requiring subsidy funds at or below the
program average subsidy. Subscriber contribution amounts shall be
established so that no subscriber receives a subsidy greater than the
program average subsidy, except that:
(1) In all areas of the state, at least one plan shall be
available to program participants at an average subscriber
contribution of 125 percent of the standard average individual rates
for comparable coverage.
(2) No subscriber contribution shall be increased by more than 10
percent above 125 percent of the standard average individual rates
for comparable coverage.
(3) Subscriber contributions for participating health plans
joining the program after January 1, 1997, shall be established at
125 percent of the standard average individual rates for comparable
coverage for the first two benefit years the plan participates in the
program.
(b) The program shall pay program contribution amounts to
participating health plans from the Major Risk Medical Insurance
Fund.
(c) For purposes of subdivision (a), the board shall exclude from
the subscriber contribution that portion of the standard average
individual rate attributable to the elimination of annual and
lifetime benefit limits pursuant to subdivision (b) of Section 12718.
SEC. 5. Chapter 9 (commencing with Section
12739.45) is added to Part 6.5 of Division 2 of the
Insurance Code , to read:
CHAPTER 9. MAJOR RISK MEDICAL INSURANCE RECONCILIATION FUND
12739.45. (a) There is hereby created in the State Treasury the
Major Risk Medical Insurance Reconciliation Fund. As used in this
chapter, "fund" means the Major Risk Medical Insurance Reconciliation
Fund.
(b) Remittances received by the program on or after January 1,
2013, from participating health plans as a result of reconciliation
based on the actual claim costs of subscribers for prior fiscal years
shall be deposited in the fund.
(c) Moneys in the fund shall be available for any authorized
purpose upon appropriation by the Legislature.
(d) Moneys in the fund shall not be used to pay for increased
program costs resulting from the elimination of annual or lifetime
benefit limits pursuant to subdivision (b) of Section 12718.
SEC. 4. SEC. 6. The adoption and
readoption of regulations by the Managed Risk Medical Insurance Board
to implement the changes made by this act to Part 6.5 (commencing
with Section 12700) of Division 2 of the Insurance Code shall be
deemed to be an emergency and necessary to avoid serious harm to the
public peace, health, safety, or general welfare for purposes of
Sections 11346.1 and 11349.6 of the Government Code, and the board is
hereby exempted from the requirement that it describe facts showing
the need for immediate action and from review by the Office of
Administrative Law.