BILL ANALYSIS �
AB 578
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Date of Hearing: April 17, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 578 (Dickinson) - As Amended: April 8, 2013
Policy Committee: HealthVote:11-6
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill establishes a public disclosure and hearing process
for first time applicants seeking licensure as a health care
service plan (health plan) from the Department of Managed Health
Care (DMHC) or a certificate of authority to transact health
insurance (health insurer) from the Department of Insurance
(CDI).
Specifically, this bill:
1)Requires DMHC (in the case of a health plan) and CDI (in the
case of a health insurer) to publish a notice soliciting
public comments and containing other specified information,
with respect to first time applicants.
2)Requires the appropriate department, prior to approving an
application, to review and consider public comments in
written form and hold at least one public hearing if comments
are received.
FISCAL EFFECT
Unknown, potentially significant costs to DMHC and/or CDI
depending on the number of new applications received.
Publishing a notice will result in negligible costs. Further
costs for each application depend on the volume and complexity
of public comments generated from the published notice. If each
department engages in the public process for a single
application with uncomplicated issues, costs could be minor. It
seems more likely that given the number of filings in recent
years, and the changes in the marketplace from health reform,
costs are likely to be in the several hundreds of thousands of
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dollars.
The bill does not appear to prohibit either department from
consolidating the hearing requirement so that multiple
applications could possibly be considered at a single public
hearing to reduce costs. This would likely be determined based
on the timing of applications received.
COMMENTS
1)Rationale . The California Nurses Association (CNA) is
sponsoring this bill to create transparency in the process by
which applications for health plan licensure are approved.
Other supporters, including Consumer Watchdog and the Center
for Public Interest Law echo CNA's call for transparency. CNA
argues that the public has a vested interest in information
about plan licensure because health reform is causing the
marketplace to grow and many Californians will be covered,
including through publicly subsidized plans.
2)How many new applicants? Since 2009 there have been 19 new
applicants for licensure at DMHC. According to DMHC, there
were a total of four applications received in 2009, three
applications in 2010, one application in 2011, eight
applications in 2012, and three applications so far for 2013.
Seven of the 19 were applications for Medicare Advantage or
Medicare Part D, over which DMHC has limited authority. In
addition, some applicants apply as specialized plans for
limited services, such as dental or vision, as opposed to a
full health care service plan. At least four of the 19
applications were for Medi-Cal.
3)Impact on meeting health reform timeline . The California
Association of Health Plans (CAHP), in opposition to this
bill, suggests than an already lengthy licensing process (six
months to one year for a well prepared applicant) will be even
longer at a time when the state's health exchange is working
to enroll people. CAHP also states that information submitted
to regulators may be sensitive and proprietary and is
protected by law but could be inadvertently disclosed.
Analysis Prepared by : Debra Roth / APPR. / (916) 319-2081
AB 578
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