BILL NUMBER: AB 2152 ENROLLED
BILL TEXT
PASSED THE SENATE AUGUST 29, 2012
PASSED THE ASSEMBLY AUGUST 30, 2012
AMENDED IN SENATE AUGUST 24, 2012
AMENDED IN SENATE AUGUST 21, 2012
AMENDED IN SENATE JUNE 21, 2012
AMENDED IN ASSEMBLY APRIL 17, 2012
INTRODUCED BY Assembly Member Eng
(Principal coauthor: Assembly Member Huffman)
FEBRUARY 23, 2012
An act to amend, repeal, and add Section 1373.65 of, and to add
Section 1373.66 to, the Health and Safety Code, and to amend Sections
10123.12, 10192.17, and 10601 of, to amend, repeal, and add Section
10604 of, and to add Section 10133.57 to, the Insurance Code,
relating to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
AB 2152, Eng. 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 and makes a willful
violation of the act a crime. Existing law requires a health care
service plan to submit a block transfer filing to the department at
least 75 days prior to the termination of its contract with a
provider group or a general acute care hospital and to provide 60
days' notice of the contract's termination to enrollees assigned to
the terminated provider. Existing law specifies that a health care
service plan is not required to send this notice to enrollees of a
preferred provider organization unless the terminated provider is a
general acute care hospital.
This bill would, commencing July 1, 2013, make these provisions
inapplicable with respect to a contract between a plan and a provider
that provides benefits to enrollees and subscribers through a
preferred provider arrangement. The bill would instead require the
plan under those contracts to notify the department at least 30 days
prior to terminating a contract with a provider group or general
acute care hospital where the termination would affect 800 or more
covered lives who have obtained services from the provider group or
hospital within the preceding 6 months. Where the termination would
affect 2,000 or more covered lives who have obtained services from
the provider group or hospital within the preceding 6 months, the
bill would require the plan to send a written notice at least 10 days
prior to the termination date to all of those covered lives, as
specified.
Because a willful violation of these requirements would be a
crime, the bill would impose a state-mandated local program.
Existing law provides for the regulation of health insurers by the
Department of Insurance. Under existing law, a health insurer may
contract with providers for alternative rates of payment. Existing
law requires those insurers to file a policy with the department
describing how the insurer facilitates the continuity of care for new
insureds under group policies receiving services for an acute
condition from a noncontracting provider. Existing law also requires
those health insurers to, at the request of an insured, arrange for
the completion of covered services by a terminated provider if the
insured is undergoing treatment for certain conditions, as specified.
This bill would, commencing July 1, 2013, require a health insurer
to notify the department at least 30 days prior to terminating a
contract with a provider group or general acute care hospital to
provide services at alternative rates of payment if the termination
would affect 800 or more covered lives who have obtained services
from the provider group or hospital within the preceding 6 months.
Where that termination would affect 2,000 or more covered lives who
have obtained services from the provider group or hospital within the
preceding 6 months, the bill would, commencing July 1, 2013, require
the insurer to send a written notice to all of those covered lives
at least 10 days prior to the termination date, as specified.
Existing law requires disability insurance policies to include a
disclosure form that contains specified information, including the
principal benefits and coverage of the policy, the exceptions,
reductions, and limitations that apply to the policy, and a
statement, with respect to health insurance policies, describing how
participation in the policy may affect the choice of physician,
hospital, or health care providers, and describing the extent of
financial liability that may be incurred if care is furnished by a
nonparticipating provider.
With respect to health insurance policies, this bill would require
the disclosure form to include additional information, including
conditions and procedures for cancellation, rescission, or
nonrenewal, a description of the limitations on the insured's choice
of provider, and, with respect to insurers that contract for
alternate rates of payment, a statement describing the basic method
of reimbursement made to its participating providers, as specified.
The bill would also require the first page of the disclosure form for
health insurance policies to include other specified information.
The bill would require a health insurer, medical group, or
participating provider that uses or receives financial bonuses or
other incentives to provide a written summary of specified
information to any requesting person. The bill would make these
provisions operative on July 1, 2013.
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.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1373.65 of the Health and Safety Code is
amended to read:
1373.65. (a) At least 75 days prior to the termination date of
its contract with a provider group or a general acute care hospital,
the health care service plan shall submit an enrollee block transfer
filing to the department that includes the written notice the plan
proposes to send to affected enrollees. The plan may not send this
notice to enrollees until the department has reviewed and approved
its content. If the department does not respond within seven days of
the date of its receipt of the filing, the notice shall be deemed
approved.
(b) At least 60 days prior to the termination date of a contract
between a health care service plan and a provider group or a general
acute care hospital, the plan shall send the written notice described
in subdivision (a) by United States mail to enrollees who are
assigned to the terminated provider group or hospital. A plan that is
unable to comply with the timeframe because of exigent circumstances
shall apply to the department for a waiver. The plan is excused from
complying with this requirement only if its waiver application is
granted by the department or the department does not respond within
seven days of the date of its receipt of the waiver application. If
the terminated provider is a hospital and the plan assigns enrollees
to a provider group with exclusive admitting privileges to the
hospital, the plan shall send the written notice to each enrollee who
is a member of the provider group and who resides within a 15-mile
radius of the terminated hospital. If the plan operates as a
preferred provider organization or assigns members to a provider
group with admitting privileges to hospitals in the same geographic
area as the terminated hospital, the plan shall send the written
notice to all enrollees who reside within a 15-mile radius of the
terminated hospital.
(c) The health care service plan shall send enrollees of a
preferred provider organization the written notice required by
subdivision (b) only if the terminated provider is a general acute
care hospital.
(d) If an individual provider terminates his or her contract or
employment with a provider group that contracts with a health care
service plan, the plan may require that the provider group send the
notice required by subdivision (b).
(e) If, after sending the notice required by subdivision (b), a
health care service plan reaches an agreement with a terminated
provider to renew or enter into a new contract or to not terminate
their contract, the plan shall offer each affected enrollee the
option to return to that provider. If an affected enrollee does not
exercise this option, the plan shall reassign the enrollee to another
provider.
(f) A health care service plan and a provider shall include in all
written, printed, or electronic communications sent to an enrollee
that concern the contract termination or block transfer, the
following statement in not less than 8-point type: "If you have been
receiving care from a health care provider, you may have a right to
keep your provider for a designated time period. Please contact your
HMO's customer service department, and if you have further questions,
you are encouraged to contact the Department of Managed Health Care,
which protects HMO consumers, by telephone at its toll-free number,
1-888-HMO-2219, or at a TDD number for the hearing impaired at
1-877-688-9891, or online at www.hmohelp.ca.gov."
(g) For purposes of this section, "provider group" means a medical
group, independent practice association, or any other similar
organization.
(h) This section shall become inoperative on July 1, 2013, and, as
of January 1, 2014, is repealed, unless a later enacted statute,
that is enacted on or before January 1, 2014, deletes or extends the
dates on which it becomes inoperative and is repealed.
SEC. 2. Section 1373.65 is added to the Health and Safety Code, to
read:
1373.65. (a) At least 75 days prior to the termination date of
its contract with a provider group or a general acute care hospital,
the health care service plan shall submit an enrollee block transfer
filing to the department that includes the written notice the plan
proposes to send to affected enrollees. The plan may not send this
notice to enrollees until the department has reviewed and approved
its content. If the department does not respond within seven days of
the date of its receipt of the filing, the notice shall be deemed
approved.
(b) At least 60 days prior to the termination date of a contract
between a health care service plan and a provider group or a general
acute care hospital, the plan shall send the written notice described
in subdivision (a) by United States mail to enrollees who are
assigned to the terminated provider group or hospital. A plan that is
unable to comply with the timeframe because of exigent circumstances
shall apply to the department for a waiver. The plan is excused from
complying with this requirement only if its waiver application is
granted by the department or the department does not respond within
seven days of the date of its receipt of the waiver application. If
the terminated provider is a hospital and the plan assigns enrollees
to a provider group with exclusive admitting privileges to the
hospital, the plan shall send the written notice to each enrollee who
is a member of the provider group and who resides within a 15-mile
radius of the terminated hospital. If the plan assigns members to a
provider group with admitting privileges to hospitals in the same
geographic area as the terminated hospital, the plan shall send the
written notice to all enrollees who reside within a 15-mile radius of
the terminated hospital.
(c) If an individual provider terminates his or her contract or
employment with a provider group that contracts with a health care
service plan, the plan may require that the provider group send the
notice required by subdivision (b).
(d) If, after sending the notice required by subdivision (b), a
health care service plan reaches an agreement with a terminated
provider to renew or enter into a new contract or to not terminate
their contract, the plan shall offer each affected enrollee the
option to return to that provider. If an affected enrollee does not
exercise this option, the plan shall reassign the enrollee to another
provider.
(e) A health care service plan and a provider shall include in all
written, printed, or electronic communications sent to an enrollee
that concern the contract termination or block transfer the following
statement in not less than 8-point type: "If you have been receiving
care from a health care provider, you may have a right to keep your
provider for a designated time period. Please contact your HMO's
customer service department, and if you have further questions, you
are encouraged to contact the Department of Managed Health Care,
which protects HMO consumers, by telephone at its toll-free number,
1-888-HMO-2219, or at a TDD number for the hearing impaired at
1-877-688-9891, or online at www.hmohelp.ca.gov."
(f) For purposes of this section, "provider group" means a medical
group, independent practice association, or any other similar
organization.
(g) This section shall not apply with respect to a contract
between a plan and a provider that provides benefits to enrollees and
subscribers through a preferred provider arrangement.
(h) This section shall become operative on July 1, 2013.
SEC. 3. Section 1373.66 is added to the Health and Safety Code, to
read:
1373.66. (a) This section shall apply only with respect to a
contract between a health care service plan and a provider that
provides benefits to enrollees and subscribers through a preferred
provider arrangement.
(b) At least 30 days prior to the termination date of a contract
between a health care service plan and a provider group or a general
acute care hospital, the health care service plan shall submit a
written notice notifying the department of the termination if the
termination would affect 800 or more covered lives who have obtained
services from the provider group or general acute care hospital
within the preceding six months and shall include with that notice
the written notice the plan proposes to send to affected enrollees
pursuant to subdivision (c).
(c) Where the termination of a contract between a health care
service plan and a provider group or a general acute care hospital
would affect 2,000 or more covered lives who have obtained services
from the provider group or general acute care hospital within the
preceding six months, unless the department establishes a higher
threshold by regulation, the health care service plan shall send the
written notice described in subdivision (b) by United States mail to
all of those affected covered lives at least 10 days prior to the
contract termination date. A health care service plan that is unable
to comply with the timeframe because of exigent circumstances shall
apply to the department for a waiver. The health care service plan is
excused from complying with this requirement only if its waiver
application is granted by the department or the department does not
respond within seven days of the date of its receipt of the waiver
application.
(d) If an individual provider terminates his or her contract or
employment with a provider group that contracts with a health care
service plan and that termination would affect 2,000 or more covered
lives who have obtained services from the provider within the
preceding six months, unless the department establishes a higher
threshold by regulation, the plan may require that the provider group
send the notice required by subdivision (c).
(e) If, after sending the notice required by subdivision (c), a
health care service plan reaches an agreement with a terminated
provider group or general acute care hospital to renew or enter into
a new contract or to not terminate their contract, the plan shall
send a written notice notifying the affected covered lives that the
provider group or hospital remains in their plan network.
(f) A health care service plan or a provider group shall include
in the written notice sent pursuant to subdivision (c) or (d) the
following information in not less than 12-point type:
(1) The name of the terminated provider group or general acute
care hospital, or in the case of a notice sent pursuant to
subdivision (d), the name of the terminated individual provider.
(2) The date of the pending contract termination.
(3) A brief explanation of the termination of the contract between
the plan and the terminated provider group or general acute care
hospital, or, in the case of a notice sent pursuant to subdivision
(d), a brief explanation of the termination of the contract between
the individual provider and the provider group.
(4) A description explaining how to access a list of contracted
providers in the enrollee's plan network.
(5) A statement that the enrollee may contact the plan's customer
service department to request completion of care for an ongoing
course of treatment from a terminated provider and a telephone number
for further explanation.
(6) A statement informing the enrollee that he or she may be
required to pay a larger portion of costs if the enrollee continues
to use the terminated provider.
(7) The following statement:
"If you have been receiving care from a health care provider, you
may have a right to keep your provider for a designated time period.
Please contact your plan's customer service department, and if you
have further questions, you are encouraged to contact the Department
of Managed Health Care, which protects HMO consumers, by telephone at
its toll-free number, 1-888-HMO-2219, or at a TDD number for the
hearing impaired at 1-877-688-9891, or online at www.hmohelp.ca.gov."
(g) For purposes of this section, "provider group" means a group
of 20 or more physicians and surgeons who are employees, partners, or
shareholders of the group and who practice substantially full time
as part of the group.
(h) The director may adopt regulations in accordance with the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code)
that are necessary to implement the provisions of this section. The
director shall coordinate with the Department of Insurance in the
implementation and enforcement of this section and Section 10133.57
of the Insurance Code.
(i) This section shall become operative on July 1, 2013.
SEC. 4. Section 10192.17 of the Insurance Code is amended to read:
10192.17. (a) Medicare supplement policies and certificates shall
include a renewal, continuation, or conversion provision. The
language or specifications of the provision shall be consistent with
the type of contract issued. The provision shall be appropriately
captioned and shall appear on the first page of the policy, and shall
include any reservation by the issuer of the right to change
premiums and any automatic renewal premium increases based on the
policyholder's age.
(b) Except for riders or endorsements by which the issuer
effectuates a request made in writing by the insured, exercises a
specifically reserved right under a Medicare supplement policy, or is
required to reduce or eliminate benefits to avoid duplication of
Medicare benefits, all riders or endorsements added to a Medicare
supplement policy after the date of issue or upon reinstatement or
renewal that reduce or eliminate benefits or coverage in the policy
shall require a signed acceptance by the insured. After the date of
policy or certificate issue, any rider or endorsement that increases
benefits or coverage with a concomitant increase in premium during
the policy term shall be agreed to in writing signed by the insured,
unless the benefits are required by the minimum standards for
Medicare supplement policies, or if the increased benefits or
coverage is required by law. If a separate additional premium is
charged for benefits provided in connection with riders or
endorsements, the premium charge shall be set forth in the policy.
(c) Medicare supplement policies or certificates shall not provide
for the payment of benefits based on standards described as "usual
and customary," "reasonable and customary," or words of similar
import.
(d) If a Medicare supplement policy or certificate contains any
limitations with respect to preexisting conditions, those limitations
shall appear as a separate paragraph of the policy and be labeled as
"Preexisting Condition Limitations."
(e) (1) Medicare supplement policies and certificates shall have a
notice prominently printed on the first page of the policy or
certificate, and of the outline of coverage, or attached thereto, in
no less than 10-point uppercase type, stating in substance that the
policyholder or certificate holder shall have the right to return the
policy or certificate, via regular mail, within 30 days of receiving
it, and to have the full premium refunded if, after examination of
the policy or certificate, the insured person is not satisfied for
any reason. The return shall void the contract from the beginning,
and the parties shall be in the same position as if no contract had
been issued.
(2) For purposes of this section, a timely manner shall be no
later than 30 days after the issuer receives the returned contract.
(3) If the issuer fails to refund all prepaid or periodic charges
paid in a timely manner, then the applicant shall receive interest on
the paid charges at the legal rate of interest on judgments as
provided in Section 685.010 of the Code of Civil Procedure. The
interest shall be paid from the date the issuer received the returned
contract.
(f) (1) Issuers of health insurance policies, certificates, or
contracts that provide hospital or medical expense coverage on an
expense incurred or indemnity basis, other than incidentally, to
persons eligible for Medicare shall provide to those applicants a
Guide to Health Insurance for People with Medicare in the form
developed jointly by the National Association of Insurance
Commissioners and the Centers for Medicare and Medicaid Services and
in a type size no smaller than 12-point type. Delivery of the guide
shall be made whether or not the policies or certificates are
advertised, solicited, or issued for delivery as Medicare supplement
policies or certificates as defined in this article. Except in the
case of direct response issuers, delivery of the guide shall be made
to the applicant at the time of application, and acknowledgment of
receipt of the guide shall be obtained by the issuer. Direct response
issuers shall deliver the guide to the applicant upon request, but
not later than at the time the policy is delivered.
(2) For the purposes of this section, "form" means the language,
format, type size, type proportional spacing, bold character, and
line spacing.
(g) As soon as practicable, but no later than 30 days prior to the
annual effective date of any Medicare benefit changes, an issuer
shall notify its policyholders and certificate holders of
modifications it has made to Medicare supplement policies or
certificates in a format acceptable to the commissioner. The notice
shall include both of the following:
(1) A description of revisions to the Medicare Program and a
description of each modification made to the coverage provided under
the Medicare supplement policy or certificate.
(2) Inform each policyholder or certificate holder as to when any
premium adjustment is to be made due to changes in Medicare.
(h) The notice of benefit modifications and any premium
adjustments shall be in outline form and in clear and simple terms so
as to facilitate comprehension.
(i) The notices shall not contain or be accompanied by any
solicitation.
(j) (1) Issuers shall provide an outline of coverage to all
applicants at the time application is presented to the prospective
applicant and, except for direct response policies, shall obtain an
acknowledgment of receipt of the outline from the applicant. If an
outline of coverage is provided at the time of application and the
Medicare supplement policy or certificate is issued on a basis which
would require revision of the outline, a substitute outline of
coverage properly describing the policy or certificate shall
accompany the policy or certificate when it is delivered and contain
the following statement, in no less than 12-point type, immediately
above the company name:
"NOTICE: Read this outline of coverage carefully. It is not
identical to the outline of coverage provided upon application and
the coverage originally applied for has not been issued."
(2) The outline of coverage provided to applicants pursuant to
this section consists of four parts: a cover page, premium
information, disclosure pages, and charts displaying the features of
each benefit plan offered by the issuer. The outline of coverage
shall be in the language and format prescribed below in no less than
12-point type. All Medicare supplement plans authorized by federal
law shall be shown on the cover page, and the plans that are offered
by the issuer shall be prominently identified. Premium information
for plans that are offered shall be shown on the cover page or
immediately following the cover page and shall be prominently
displayed. The premium and mode shall be stated for all plans that
are offered to the prospective applicant. All possible premiums for
the prospective applicant shall be illustrated.
(3) The commissioner may adopt regulations to implement this
article, including, but not limited to, regulations that specify the
required information to be contained in the outline of coverage
provided to applicants pursuant to this section, including the format
of tables, charts, and other information.
(k) (1) Any disability insurance policy or certificate, a basic,
catastrophic or major medical expense policy, or single premium
nonrenewal policy or certificate issued to persons eligible for
Medicare, other than a Medicare supplement policy, a policy issued
pursuant to a contract under Section 1876 of the federal Social
Security Act (42 U.S.C. Sec. 1395 et seq.), a disability income
policy, or any other policy identified in subdivision (b) of Section
10192.3, advertised, solicited, or issued for delivery in this state
to persons eligible for Medicare, shall notify insureds under the
policy that the policy is not a Medicare supplement policy or
certificate. The notice shall either be printed or attached to the
first page of the outline of coverage delivered to insureds under the
policy, or if no outline of coverage is delivered, to the first page
of the policy or certificate delivered to insureds. The notice shall
be in no less than 12-point type and shall contain the following
language:
"THIS POLICY OR CERTIFICATE] IS NOT A MEDICARE SUPPLEMENT POLICY
OR CONTRACT]. If you are eligible for Medicare, review the Guide to
Health Insurance for People with Medicare available from the company."
(2) Applications provided to persons eligible for Medicare for the
disability insurance policies or certificates described in paragraph
(1) shall disclose the extent to which the policy duplicates
Medicare in a manner required by the commissioner. The disclosure
statement shall be provided as a part of, or together with, the
application for the policy or certificate.
(l) (1) Insurers issuing Medicare supplement policies or
certificates for delivery in California shall provide an outline of
coverage to all applicants at the time of presentation for
examination or sale as provided in Section 10605, and in no case
later than at the time the application is made. Except for direct
response policies, insurers shall obtain a written acknowledgment of
receipt of the outline from the applicant.
Any advertisement that is not a presentation for examination or
sale as defined in paragraph (5) of subdivision (a) of Section 10601
shall contain a notice in no less than 10-point uppercase type that
an outline of coverage is available upon request. The insurer or
agent that receives any request for an outline of coverage shall
provide an outline of coverage to the person making the request
within 14 days of receipt of the request.
(2) If an outline of coverage is provided at or before the time of
application and the Medicare supplement policy or certificate is
issued on a basis that would require revision of the outline, a
substitute outline of coverage properly describing the policy or
certificate shall accompany the policy or certificate when it is
delivered and contain the following statement, in no less than
12-point type, immediately above the name:
"NOTICE: Read this outline of coverage carefully. It is not
identical to the outline of coverage provided upon application and
the coverage originally applied for has not been issued."
(3) The outline of coverage shall be in the language and format
prescribed in this subdivision in no less than 12-point type, and
shall include the following items in the order prescribed below.
Titles, as set forth below in paragraphs (B) to (H), inclusive, shall
be capitalized, centered, and printed in boldface type.
(A) (i) The following shall only apply to policies sold for
effective dates prior to June 1, 2010:
(I) The outline of coverage shall include the items, and in the
same order, specified in the chart set forth in Section 17 of the
Model Regulation to implement the NAIC Medicare Supplement Insurance
Minimum Standards Model Act, as adopted by the National Association
of Insurance Commissioners in 2004.
(II) The cover page shall contain the 14-plan (A-L) charts. The
plans offered by the insurer shall be clearly identified. Innovative
benefits shall be explained in a manner approved by the commissioner.
The text shall read:
"Medicare supplement insurance can be sold in only 12 standard
plans. This chart shows the benefits included in each plan. Every
insurance company must offer Plan A. Some plans may not be available.
The BASIC BENEFITS included in ALL plans are:
Hospitalization: Medicare Part A coinsurance plus coverage for 365
additional days after Medicare benefits end.
Medical expenses: Medicare Part B coinsurance (usually 20 percent
of the Medicare-approved amount).
Blood: First three pints of blood each year.
Mammogram: One annual screening to the extent not covered by
Medicare.
Cervical cancer test: One annual screening."
Reference to the mammogram and cervical cancer screening test
shall not be included so long as California is required to disallow
them for Medicare beneficiaries by the Centers for Medicare and
Medicaid Services or other agent of the federal government under 42
U.S.C. Sec. 1395ss.]
(ii) The following shall only apply to policies sold for effective
dates on or after June 1, 2010:
(I) The outline of coverage shall include the items, and in the
same order specified in the chart set forth in Section 17 of the
Model Regulation to implement the NAIC Medicare Supplement Insurance
Minimum Standards Model Act, as adopted by the National Association
of Insurance Commissioners in 2008.
(II) The cover page shall contain all Medicare supplement benefit
plan charts A to D, inclusive, F, high deductible F, G, and K to N,
inclusive. The plans offered by the insurer shall be clearly
identified. Innovative benefits shall be explained in a manner
approved by the commissioner. The text shall read:
"Medicare supplement insurance can be sold in only standard plans.
This chart shows the benefits included in each plan. Every insurance
company must offer Plan A. Some plans may not be available. Plans E,
H, I and J are no longer available for sale. This sentence shall not
appear after June 1, 2011.]
The BASIC BENEFITS included in ALL plans are:
Hospitalization: Medicare Part A coinsurance plus coverage for 365
additional days after Medicare benefits end.
Medical expenses: Medicare Part B coinsurance (usually 20 percent
of the Medicare-approved amount) or copayments for hospital
outpatient services. Plans K, L, and N require insureds to pay a
portion of Part B coinsurance copayments.
Blood: First three pints of blood each year.
Hospice: Part A coinsurance.
Mammogram: One annual screening to the extent not covered by
Medicare.
Cervical cancer test: One annual screening."
Reference to the mammogram and cervical cancer screening test
shall not be included so long as California is required to disallow
them for Medicare beneficiaries by the Centers for Medicare and
Medicaid Services or other agent of the federal government under 42
U.S.C. Sec. 1395ss.]
(B) PREMIUM
INFORMATION. Premium information for plans that are offered by the
insurer shall be shown on, or immediately following, the cover page
and shall be clearly and prominently displayed. The premium and mode
shall be stated for all offered plans. All possible premiums for the
prospective applicant shall be illustrated in writing. If the premium
is based on the increasing age of the insured, information
specifying when and how premiums will change shall be clearly
illustrated in writing. The text shall state: "We the insurer's name]
can only raise your premium if we raise the premium for all policies
like yours in California."
(C) The text shall state: "Use this outline to compare benefits
and premiums among policies."
(D) READ YOUR POLICY VERY CAREFULLY. The text shall state: "This
is only an outline describing your policy's most important features.
The policy is your insurance contract. You must read the policy
itself to understand all of the rights and duties of both you and
your insurance company."
(E) THIRTY-DAY RIGHT TO RETURN THIS POLICY. The text shall state:
"If you find that you are not satisfied with your policy, you may
return it to insert the insurer's address]. If you send the policy
back to us within 30 days after you receive it, we will treat the
policy as if it has never been issued and return all of your
payments."
(F) POLICY REPLACEMENT. The text shall read: "If you are replacing
another health insurance policy, do NOT cancel it until you have
actually received your new policy and are sure you want to keep it."
(G) DISCLOSURES. The text shall read: "This policy may not fully
cover all of your medical costs." "Neither this company nor any of
its agents are connected with Medicare." "This outline of coverage
does not give all the details of Medicare coverage. Contact your
local social security office or consult 'The Medicare Handbook' for
more details." "For additional information concerning policy
benefits, contact the Health Insurance Counseling and Advocacy
Program (HICAP) or your agent. Call the HICAP toll-free telephone
number, 1-800-434-0222, for a referral to your local HICAP office.
HICAP is a service provided free of charge by the State of
California."
For policies effective on dates on or after June 1, 2010, the
following language shall be required until June 1, 2011, "This
outline shows benefits and premiums of policies sold for effective
dates on or after June 1, 2010. Policies sold for effective dates
prior to June 1, 2010, have different benefits and premiums. Plans E,
H, I, and J are no longer available for sale."
(H) For policies that are not guaranteed issue] COMPLETE ANSWERS
ARE IMPORTANT. The text shall read: "When you fill out the
application for a new policy, be sure to answer truthfully and
completely all questions about your medical and health history. The
company may have the right to cancel your policy and refuse to pay
any claims if you leave out or falsify important medical information.
Review the application carefully before you sign it. Be certain
that all information has been properly recorded."
(I) One chart for each benefit plan offered by the insurer showing
the services, Medicare payments, payments under the policy and
payments expected from the insured, using the same uniform format and
language. No more than four plans may be shown on one page. Include
an explanation of any innovative benefits in a manner approved by the
commissioner.
(m) An issuer shall comply with all notice requirements of the
Medicare Prescription Drug, Improvement, and Modernization Act of
2003 (Public Law 108-173).
SEC. 5. Section 10123.12 of the Insurance Code is amended to read:
10123.12. (a) Every health insurer, including those insurers that
contract for alternative rates of payment pursuant to Section 10133,
and every self-insured employee welfare benefit plan that will
affect the choice of physician, hospital, or other health care
providers, shall include within its disclosure form and within its
evidence or certificate of coverage a statement clearly describing
how participation in the policy or plan may affect the choice of
physician, hospital, or other health care providers, and describing
the nature and extent of the financial liability that is, or that may
be, incurred by the insured, enrollee, or covered dependents if care
is furnished by a provider that does not have a contract with the
insurer or plan to provide service at alternative rates of payment
pursuant to Section 10133. The form shall clearly inform prospective
insureds or plan enrollees that participation in the policy or plan
will affect the person's choice in this regard by placing the
following statement in a conspicuous place on all material required
to be given to prospective insureds or plan enrollees including
promotional and descriptive material, disclosure forms, and
certificates and evidences of coverage:
PLEASE READ THE FOLLOWING INFORMATION SO YOU WILL KNOW FROM
WHOM OR WHAT GROUP OF PROVIDERS HEALTH CARE MAY BE OBTAINED
It is not the intent of this section to require that the names of
individual health care providers be enumerated to prospective
insureds or enrollees.
If a health insurer providing coverage for hospital, medical, or
surgical expenses provides a list of facilities to patients or
contracting providers, the insurer shall include within the provider
listing a notification that insureds or enrollees may contact the
insurer in order to obtain a list of the facilities with which the
health insurer is contracting for subacute care and/or transitional
inpatient care.
(b) Every health insurer that contracts for alternative rates of
payment pursuant to Section 10133, shall include within its
disclosure form a statement clearly describing the basic method of
reimbursement, including the scope and general methods of payment,
made to its contracting providers of health care services, and
whether financial bonuses or any other incentives are used. The
disclosure form shall indicate that if an insured wishes to know more
about these issues, the insured may request additional information
from the insurer, the insured's provider, or the provider's medical
group regarding the information required pursuant to subdivision (c).
(c) If a health insurer, medical group, or participating health
care provider uses or receives financial bonuses or any other
incentives, the insurer, medical group, or health care provider shall
provide a written summary to any person who requests it that
includes both of the following:
(1) A general description of the bonus and any other incentive
arrangements used in its compensation agreements. Nothing in this
paragraph shall be construed to require disclosure of trade secrets
or commercial or financial information that is privileged or
confidential, such as payment rates, as determined by the
commissioner, pursuant to state law.
(2) A description regarding whether, and in what manner, the
bonuses and any other incentives are related to a provider's use of
referral services.
(d) The statements and written information provided pursuant to
subdivisions (b) and (c) shall be communicated in clear and simple
language that enables consumers to evaluate and compare health
insurance policies.
(e) Subdivisions (b), (c), and (d) shall become operative on July
1, 2013.
SEC. 6. Section 10133.57 is added to the Insurance Code, to read:
10133.57. (a) At least 30 days prior to the termination date of a
contract between a health insurer and a provider group or a general
acute care hospital to provide services at alternative rates of
payment pursuant to Section 10133, the health insurer shall submit a
written notice notifying the department of the termination if the
termination would affect 800 or more covered lives who have obtained
services from the provider group or general acute care hospital
within the preceding six months and shall include with that notice
the written notice the insurer proposes to send to affected insureds
pursuant to subdivision (b).
(b) Where the termination of a contract between a health insurer
and a provider group or a general acute care hospital to provide
services at alternative rates of payment pursuant to Section 10133
would affect 2,000 or more covered lives who have obtained services
from the provider group or general acute care hospital within the
preceding six months, unless the department establishes a higher
threshold by regulation, the health insurer shall send the written
notice described in subdivision (a) by United States mail to all of
those affected covered lives at least 10 days prior to the contract
termination date. A health insurer that is unable to comply with the
timeframe because of exigent circumstances shall apply to the
department for a waiver. The health insurer is excused from complying
with this requirement only if its waiver application is granted by
the department or the department does not respond within seven days
of the date of its receipt of the waiver application.
(c) If an individual provider terminates his or her contract or
employment with a provider group that contracts with a health insurer
and that termination would affect 2,000 or more covered lives who
have obtained services from the provider within the preceding six
months, unless the department establishes a higher threshold by
regulation, the insurer may require that the provider group send the
notice required by subdivision (b).
(d) If, after sending the notice required by subdivision (b), a
health insurer reaches an agreement with a terminated provider group
or general acute care hospital to renew or enter into a new contract
or to not terminate their contract, the insurer shall send a written
notice notifying the affected covered lives that the provider group
or hospital remains in their provider network.
(e) A health insurer or a provider group shall include in the
written notice sent pursuant to subdivision (b) or (c) the following
information in not less than 12-point type:
(1) The name of the terminated provider group or general acute
care hospital, or in the case of a notice sent pursuant to
subdivision (c), the name of the terminated individual provider.
(2) The date of the pending contract termination.
(3) A brief explanation of the termination of the contract between
the insurer and the terminated provider group or general acute care
hospital, or, in the case of a notice sent pursuant to subdivision
(c), a brief explanation of the termination of the contract between
the individual provider and the provider group.
(4) A description explaining how to access a list of contracted
providers in the insured's provider network.
(5) A statement that the insured may contact the insurer's
customer service department to request completion of care for an
ongoing course of treatment from a terminated provider and a
telephone number for further explanation.
(6) A statement informing the insured that he or she may be
required to pay a larger portion of costs if the insured continues to
use the terminated provider.
(7) The following statement:
"If you have been receiving care from a health care provider, you
may have a right to keep your provider for a designated time period.
Please contact your insurer's customer service department, and if you
have further questions, you are encouraged to contact the Department
of Insurance, which protects insurance consumers, by telephone at
its toll-free number, 800-927-HELP (4357), or at a TDD number for the
hearing impaired at 800-482-4833, or online at www.insurance.ca.gov."
(f) For purposes of this section, "provider group" means a group
of 20 or more physicians and surgeons who are employees, partners, or
shareholders of the group and who practice substantially full time
as part of the group.
(g) The commissioner may adopt regulations in accordance with the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code)
that are necessary to implement the provisions of this section. The
commissioner shall coordinate with the Department of Managed Health
Care in the implementation and enforcement of this section and
Section 1373.66 of the Health and Safety Code.
(h) This section shall become operative on July 1, 2013.
SEC. 7. Section 10601 of the Insurance Code is amended to read:
10601. (a) As used in this chapter:
(1) "Benefits and coverage" means the accident, sickness, or
disability indemnity available under a policy of disability
insurance.
(2) "Exception" means any provision in a policy whereby coverage
for a specified hazard or condition is entirely eliminated.
(3) "Reduction" means any provision in a policy which reduces the
amount of a policy benefit to some amount or period less than would
be otherwise payable for medically authorized expenses or services
had such a reduction not been used.
(4) "Limitation" means any provision other than an exception or a
reduction which restricts coverage under the policy.
(5) "Presenting for examination or sale" means either (A)
publication and dissemination of any brochure, mailer, advertisement,
or form which constitutes a presentation of the provisions of the
policy and which provides a policy enrollment or application form, or
(B) consultations or discussions between prospective beneficiaries
or their contract agents and employees or agents of disability
insurers, when such consultations or discussions include presentation
of formal, organized information about the policy which is intended
to influence or inform the prospective insured or beneficiary, such
as brochures, summaries, charts, slides, or other modes of
information in lieu of or in addition to the policy itself.
(6) "Disability insurance" means every policy of disability
insurance, self-insured employee welfare benefit plan, and nonprofit
hospital service plan issued, delivered, or entered into pursuant to
or described in Chapter 1 (commencing with Section 10110), Chapter 4
(commencing with Section 10270), or Chapter 11A (commencing with
Section 11491) of this part.
(7) "Insurer" means every insurer transacting disability
insurance, every self-insured employee welfare plan, and every
nonprofit hospital service plan specified in paragraph (6).
(8) "Disclosure form" means the standard supplemental disclosure
form required pursuant to Section 10603.
(9) "Small group health insurance policy" means a group health
insurance policy issued to a small employer, as defined in Section
10700.
(b) Paragraph (9) of subdivision (a) shall become operative on
July 1, 2013.
SEC. 8. Section 10604 of the Insurance Code is amended to read:
10604. (a) The disclosure form shall include the following
information, in concise and specific terms, relative to the
disability insurance policy:
(1) The applicable category or categories of coverage provided by
the policy, from among the following:
(A) Basic hospital expense coverage.
(B) Basic medical-surgical expense coverage.
(C) Hospital confinement indemnity coverage.
(D) Major medical expense coverage.
(E) Disability income protection coverage.
(F) Accident only coverage.
(G) Specified disease or specified accident coverage.
(H) Such other categories as the commissioner may prescribe.
(2) The principal benefits and coverage of the disability
insurance policy.
(3) The exceptions, reductions, and limitations that apply to such
policy.
(4) A summary, including a citation of the relevant contractual
provisions, of the process used to authorize or deny payments for
services under the coverage provided by the policy including coverage
for subacute care, transitional inpatient care, or care provided in
skilled nursing facilities. This paragraph shall only apply to
policies of disability insurance that cover hospital, medical, or
surgical expenses.
(5) The full premium cost of such policy.
(6) Any copayment, coinsurance, or deductible requirements that
may be incurred by the insured or his family in obtaining coverage
under the policy.
(7) The terms under which the policy may be renewed by the
insured, including any reservation by the insurer of any right to
change premiums.
(8) A statement that the disclosure form is a summary only, and
that the policy itself should be consulted to determine governing
contractual provisions.
(b) This section shall become inoperative on July 1, 2013, and, as
of January 1, 2014, is repealed, unless a later enacted statute,
that is enacted on or before January 1, 2014, deletes or extends the
dates on which it becomes inoperative and is repealed.
SEC. 9. Section 10604 is added to the Insurance Code, to read:
10604. (a) The disclosure form shall include at least the
following information, in concise and specific terms, relative to the
disability insurance policy, together with additional information as
the commissioner may require in connection with the policy:
(1) The applicable category or categories of coverage provided by
the policy, from among the following:
(A) Basic hospital expense coverage.
(B) Basic medical-surgical expense coverage.
(C) Hospital confinement indemnity coverage.
(D) Major medical expense coverage.
(E) Disability income protection coverage.
(F) Accident only coverage.
(G) Specified disease or specified accident coverage.
(H) Such other categories as the commissioner may prescribe.
(2) The principal benefits and coverage of the disability
insurance policy, including coverage for acute care and subacute care
if the policy is a health insurance policy, as defined in Section
106.
(3) The exceptions, reductions, and limitations that apply to the
policy.
(4) A summary, including a citation of the relevant contractual
provisions, of the process used to authorize, modify, delay, or deny
payments for services under the coverage provided by the policy
including coverage for subacute care, transitional inpatient care, or
care provided in skilled nursing facilities. This paragraph shall
only apply to health insurance policies, as defined in Section 106.
(5) The full premium cost of the policy.
(6) Any copayment, coinsurance, or deductible requirements that
may be incurred by the insured or his or her family in obtaining
coverage under the policy.
(7) The terms under which the policy may be renewed by the
insured, including any reservation by the insurer of any right to
change premiums.
(8) A statement that the disclosure form is a summary only, and
that the policy itself should be consulted to determine governing
contractual provisions.
(9) For a health insurance policy, as defined in Section 106, all
of the following:
(A) A notice on the first page of the disclosure form that
conforms with all of the following conditions:
(i) (I) States that the form discloses the terms and conditions of
coverage.
(II) States, with respect to individual health insurance policies,
small group health insurance policies, and any group health
insurance policies, that the applicant has a right to view the
disclosure form and policy prior to beginning coverage under the
policy, and, if the policy does not accompany the disclosure form,
the notice shall specify where the policy can be obtained prior to
beginning coverage.
(ii) Includes a statement that the disclosure and the policy
should be read completely and carefully and that individuals with
special health care needs should read carefully those sections that
apply to them.
(iii) Includes the insurer's telephone number or numbers that may
be used by an applicant to receive additional information about the
benefits of the policy, or states where those telephone number or
numbers are located in the disclosure form
(iv) For individual health insurance policies, and small group
health insurance policies, states where a health policy benefits and
coverage matrix is located.
(v) Is printed in type no smaller than that used for the remainder
of the disclosure form and is displayed prominently on the page.
(B) A statement as to when benefits shall cease in the event of
nonpayment of premium and the effect of nonpayment upon an insured
who is hospitalized or undergoing treatment for an ongoing condition.
(C) To the extent that the policy or insurer permits a free choice
of provider to its insureds, the statement shall disclose,
consistent with Section 10123.12, the nature and extent of choice
permitted and the financial liability that is, or may be, incurred by
the insured, covered dependents, or a third party by reason of the
exercise of that choice.
(D) For group health insurance policies, including small group
health insurance policies, a summary of the terms and conditions
under which insureds may remain in the policy in the event the group
ceases to exist, the group policy is terminated, or an individual
insured leaves the group, or the insureds' eligibility status
changes.
(E) If the policy utilizes arbitration to settle disputes, a
statement of that fact. If the policy requires binding arbitration, a
disclosure pursuant to Section 10123.19.
(F) A description of any limitations on the insured's choice of
primary care physician, specialty care physician, or nonphysician
health care practitioner, based on service area and limitations on
the insured's choice of acute care hospital care, subacute or
transitional inpatient care, or skilled nursing facility.
(G) Conditions and procedures for cancellation, rescission, or
nonrenewal.
(H) A description as to how an insured may request continuity of
care as required by Sections 10133.55 and 10133.56, and request a
second opinion pursuant to Section 10123.68.
(I) Information concerning the right of an insured to request an
independent medical review in accordance with Article 3.5 (commencing
with Section 10169) of Chapter 1.
(J) A notice as required by Section 791.04.
(b) This section shall become operative on July 1, 2013.
SEC. 10. 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.