BILL NUMBER: AB 1800	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MAY 25, 2012
	AMENDED IN ASSEMBLY  MAY 1, 2012
	AMENDED IN ASSEMBLY  MARCH 20, 2012

INTRODUCED BY   Assembly Member Ma

                        FEBRUARY 21, 2012

   An act to amend  Sections 1342.7 and  
Section  1367 of, and to add Section 1367.005 to, the Health and
Safety Code, and to add Section 10123.197.5 to the Insurance Code,
relating to health care coverage.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 1800, as amended, Ma. Health care coverage.
   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. Existing law provides
that the willful violation of provisions regulating health care
service plans is a crime. Existing law provides for the licensing and
regulation of health insurers by the Insurance Commissioner.
Existing law requires health care service plans and health insurers
to provide certain benefits, but generally does not require plans and
insurers to cover prescription drugs.
    Existing law imposes various requirements on plans and insurers
if they offer coverage for prescription drugs. Existing law, with
respect to health care service plans, authorizes a plan to file
information with the department to seek the approval of, among other
things, a copayment, deductible, or exclusion to a plan's
prescription drug benefit and specifies that an approved exclusion
shall not be subject to review through the independent medical review
process on the grounds of medical necessity.
   Existing federal law, the Patient Protection and Affordable Care
Act, commencing January 1, 2014, imposes an annual limitation on cost
sharing incurred under a health plan that shall not exceed a
specified amount.
   This bill would, commencing January 1, 2014, require a health care
service plan contract and a health insurance policy, except for a
specialized plan or policy, to provide for a limit on annual
out-of-pocket expenses for all covered benefits, except as specified,
and would provide that this limit shall not exceed that federal
limit. The bill would also provide, commencing January 1, 2014, that
these provisions shall not be construed to affect the reduction in
cost sharing for eligible insureds described in federal law 
, and that any deductible for covered benefits shall also apply to
covered prescription drugs  . 
    This bill would, commencing January 1, 2013, with respect to
health care service plans, prohibit the Department of Managed Health
Care from approving an exclusion for a medically necessary
prescription drug for which there is no therapeutic equivalent and
would also require the department to review specified factors in
determining whether to allow an exclusion to a plan's prescription
drug benefits. 
   Existing law provides that the obligation of a plan to comply with
specified standards is not waived when the plan delegates any
services that it is required to perform to its medical groups,
independent practice associations, or other contracting entities.
   This bill would apply those provisions regarding waiver to the
obligation of a plan to comply with the Knox-Keene Health Care
Service Plan Act of 1975, rather than to the obligation of the plan
to comply with specified standards.
   Because this bill would impose new requirements on health care
service plans, the willful violation of which would be a crime, it
would thereby impose a state-mandated local program.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
   
  SECTION 1.    Section 1342.7 of the Health and
Safety Code is amended to read:
   1342.7.  (a) The Legislature finds that in enacting Sections
1367.215, 1367.25, 1367.45, 1367.51, and 1374.72, it did not intend
to limit the department's authority to regulate the provision of
medically necessary prescription drug benefits by a health care
service plan to the extent that the plan provides coverage for those
benefits.
   (b) (1) (A) Nothing in this chapter shall preclude a plan from
filing relevant information with the department pursuant to Section
1352 to seek the approval of a copayment, deductible, limitation, or
exclusion to a plan's prescription drug benefits.
   (B) No exclusion shall be approved for a medically necessary
prescription drug for which there is no therapeutic equivalent. If
the department approves an exclusion to a plan's prescription drug
benefits, the exclusion shall not be subject to review through the
independent medical review process pursuant to Section 1374.30 on the
grounds of medical necessity. In determining whether to allow an
exclusion to a plan's prescription drug benefits, the department
shall review whether the prescription drug is medically necessary,
whether there is a therapeutic equivalent, and whether peer-reviewed
scientific literature indicates that the prescription drug is likely
to provide a benefit to the consumer. The department shall retain its
role in assessing whether issues are related to coverage or medical
necessity pursuant to paragraph (2) of subdivision (d) of Section
1374.30.
   (2) A plan seeking approval of a copayment or deductible may file
an amendment pursuant to Section 1352.1. A plan seeking approval of a
limitation or exclusion shall file a material modification pursuant
to subdivision (b) of Section 1352.
   (c) Nothing in this chapter shall prohibit a plan from charging a
subscriber or enrollee a copayment or deductible for a prescription
drug benefit or from setting forth by contract, a limitation or an
exclusion from, coverage of prescription drug benefits, if the
copayment, deductible, limitation, or exclusion is reported to, and
found unobjectionable by, the director and disclosed to the
subscriber or enrollee pursuant to the provisions of Section 1363.
   (d) The department in developing standards for the approval of a
copayment, deductible, limitation, or exclusion to a plan's
prescription drug benefits, shall consider alternative benefit
designs, including, but not limited to, the following:
   (1) Different out-of-pocket costs for consumers, including
copayments and deductibles.
   (2) Different limitations, including caps on benefits.
   (3) Use of exclusions from coverage of prescription drugs to treat
various conditions, including the effect of the exclusions on the
plan's ability to provide basic health care services, the amount of
subscriber or enrollee premiums, and the amount of out-of-pocket
costs for an enrollee.
   (4) Different packages negotiated between purchasers and plans.
   (5) Different tiered pharmacy benefits, including the use of
generic prescription drugs.
   (6) Current and past practices.
   (e) The department shall develop a regulation outlining the
standards to be used in reviewing a plan's request for approval of
its proposed copayment, deductible, limitation, or exclusion on its
prescription drug benefits.
   (f) Nothing in subdivision (b) or (c) shall permit a plan to limit
prescription drug benefits provided in a manner that is inconsistent
with Sections 1367.215, 1367.25, 1367.45, 1367.51, and 1374.72.
   (g) Nothing in this section shall be construed to require or
authorize a plan that contracts with the State Department of Health
Care Services to provide services to Medi-Cal beneficiaries or with
the Managed Risk Medical Insurance Board to provide services to
enrollees of the Healthy Families Program to provide coverage for
prescription drugs that are not required pursuant to those programs
or contracts, or to limit or exclude any prescription drugs that are
required by those programs or contracts.
   (h) Nothing in this section shall be construed as prohibiting or
otherwise affecting a plan contract that does not cover outpatient
prescription drugs except for coverage for limited classes of
prescription drugs because they are integral to treatments covered as
basic health care services, including, but not limited to,
immunosuppressives, in order to allow for transplants of bodily
organs.
   (i) (1) The department shall periodically review its regulations
developed pursuant to this section.
   (2) On or before July 1, 2004, and annually thereafter, the
department shall report to the Legislature on the ongoing
implementation of this section. 
   SEC. 2.   SECTION 1.   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 Public
Health , 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 consistent with
Section 1367.005, provided that the copayments or deductibles 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 federal Controlled Substances Act of 1970 (21 U.S.C. Sec.
801 et seq.) as a condition for participation by an optometrist
certified to use therapeutic pharmaceutical agents pursuant to
Section 3041.3 of the Business and Professions Code.
   Nothing in this section shall be construed to permit the director
to establish the rates charged subscribers and enrollees for
contractual health care services.
   The director's enforcement of Article 3.1 (commencing with Section
1357) shall not be deemed to establish the rates charged subscribers
and enrollees for contractual health care services.
   The obligation of the plan to comply with this chapter 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. 3.   SEC. 2.   Section 1367.005 is
added to the Health and Safety Code, to read:
   1367.005.  (a)  (1)    A health
care service plan contract, except a specialized health care service
plan contract, that is issued, amended, or renewed on or after
January 1, 2014, shall provide for a limit on annual out-of-pocket
expenses for all covered benefits. 
   (2) 
    (b)  This limit shall apply to any copayment,
coinsurance, deductible, and any other form of cost sharing for any
covered benefits, including prescription drugs, if covered. 
   (3) 
    (c)  This limit shall not exceed the limit described in
Section 1302(c) of the federal Patient Protection and Affordable Care
Act, as amended by the federal Health Care and Education
Reconciliation Act of 2010 (42 U.S.C. Sec. 18022) and any subsequent
rules, regulations, or guidance issued under that section. 
   (4) 
    (d)  Nothing in this section shall be construed to
affect the reduction in cost sharing for eligible insureds described
in Section 1402 of the federal Patient Protection and Affordable Care
Act, as amended by the federal Health Care and Education
Reconciliation Act of 2010 (42 U.S.C. Sec. 18071) and any subsequent
rules, regulations, or guidance issued under that section. 
   (b) Notwithstanding any other provision of law, on and after
January 1, 2014, a health care service plan contract that is issued,
amended, or renewed shall provide that any deductible for covered
benefits shall also apply to covered prescription drugs. There shall
not be separate deductibles for covered prescription drugs and any
other covered benefits. 
   SEC. 4.   SEC. 3.   Section 10123.197.5
is added to the Insurance Code, to read:
   10123.197.5.  (a)  (1)    A
health insurance policy, except a specialized health insurance
policy, that is issued, amended, or renewed on or after January 1,
2014, shall provide for a limit on annual out-of-pocket expenses for
all covered benefits and include the insured's out-of-pocket costs of
covered prescription drugs in that limit. 
   (2) 
    (b)  This limit shall apply to any copayment,
coinsurance, deductible, and any other form of cost sharing for any
covered benefits, including prescription drugs, if covered. 
   (3) 
    (c)  This limit shall not exceed the limit described in
Section 1302(c) of the federal Patient Protection and Affordable Care
Act, as amended by the federal Health Care and Education
Reconciliation Act of 2010 (42 U.S.C. Sec. 18022) and any subsequent
rules, regulations, or guidance issued under that section . 
   (4) 
    (d)  Nothing in this section shall be construed to
affect the reduction in cost sharing for eligible insureds described
in Section 1402 of the federal Patient Protection and Affordable Care
Act, as amended by the federal Health Care and Education
Reconciliation Act of 2010 (42 U.S.C. Sec. 18071) and any subsequent
rules, regulations, or guidance issued under that section. 
   (b) Notwithstanding any other provision of law, a health insurance
policy that is issued, amended, or renewed on and after January 1,
2014, shall provide that any deductible for covered benefits shall
also apply to covered prescription drugs. There shall not be separate
deductibles for covered prescription drugs and any other covered
benefits. 
   SEC. 5.   SEC. 4.   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.