Amended in Assembly March 11, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 710

Introduced by Assembly Member Pan

February 21, 2013

An act to amend Section begin delete 1385.01 of the Health and Safety Code, and to amend Section 10181 of the Insurance Code end delete begin insert 100503 of the Government Code end insert , relating to health care coverage begin insert , and making an appropriation therefor end insert .

LEGISLATIVE COUNSEL’S DIGEST

AB 710, as amended, Pan. begin delete Review of rate increases: end delete California Health Benefit begin delete Exchange. end delete begin insert Exchange: multiemployer plans. end insert

begin delete 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. end delete Under the federal Patient Protection and Affordable Care Act (PPACA), each state is required, by January 1, 2014, to establish an American Health Benefit Exchange that makes available qualified health plans to qualified individuals and small employers. Existing state law establishes the California Health Benefit Exchange (Exchange) within state government, specifies the powers and duties of the board governing the Exchange, and requires the board to facilitate the purchase of qualified health plans through the Exchange by qualified individuals and small employers by January 1, 2014. begin delete Existing law provides that, for the purposes of provisions relating to review of rate increases by health care service plan contracts and health insurance policies, specified definitions shall apply. end delete begin insert end insert begin insert Existing law creates the continuously appropriated California Health Trust Fund, which end insert begin insert consists of charges on the qualified health plans offered by carriers to support the end insert begin insert development, operations, and prudent cash management of the Exchange. end insert

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This bill would add the definition of “Exchange” to those provisions.

end delete begin insert

This bill would, to the extent permitted by federal law, require the board to also facilitate the purchase of qualified health plans through the Exchange by multiemployer plans, as defined, no later than July 1, 2014. By expanding the purpose for which moneys in the California Health Trust Fund may be used, this bill would make an appropriation.

end insert

Vote: majority. Appropriation:  begin delete no end delete begin insert yes end insert . Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 100503 of the end insert begin insert Government Code end insert begin insert is
amended to read: end insert

100503.  

In addition to meeting the minimum requirements of
Section 1311 of the federal act, the board shall do all of the
following:

(a) Determine the criteria and process for eligibility, enrollment,
and disenrollment of enrollees and potential enrollees in the
Exchange and coordinate that process with the state and local
government entities administering other health care coverage
programs, including the State Department of Health Care Services,
the Managed Risk Medical Insurance Board, and California
counties, in order to ensure consistent eligibility and enrollment
processes and seamless transitions between coverage.

(b) Develop processes to coordinate with the county entities
that administer eligibility for the Medi-Cal program and the entity
that determines eligibility for the Healthy Families Program,
including, but not limited to, processes for case transfer, referral,
and enrollment in the Exchange of individuals applying for
assistance to those entities, if allowed or required by federal law.

(c) Determine the minimum requirements a carrier must meet
to be considered for participation in the Exchange, and the
standards and criteria for selecting qualified health plans to be
offered through the Exchange that are in the best interests of
qualified individuals and qualified small employers. The board
shall consistently and uniformly apply these requirements,
standards, and criteria to all carriers. In the course of selectively
contracting for health care coverage offered to qualified individuals
and qualified small employers through the Exchange, the board
shall seek to contract with carriers so as to provide health care
coverage choices that offer the optimal combination of choice,
value, quality, and service.

(d) Provide, in each region of the state, a choice of qualified
health plans at each of the five levels of coverage contained in
subdivisions (d) and (e) of Section 1302 of the federal act.

(e) Require, as a condition of participation in the Exchange,
carriers to fairly and affirmatively offer, market, and sell in the
Exchange at least one product within each of the five levels of
coverage contained in subdivisions (d) and (e) of Section 1302 of
the federal act. The board may require carriers to offer additional
products within each of those five levels of coverage. This
subdivision shall not apply to a carrier that solely offers
supplemental coverage in the Exchange under paragraph (10) of
subdivision (a) of Section 100504.

(f) (1) Require, as a condition of participation in the Exchange,
carriers that sell any products outside the Exchange to do both of
the following:

(A) Fairly and affirmatively offer, market, and sell all products
made available to individuals in the Exchange to individuals
purchasing coverage outside the Exchange.

(B) Fairly and affirmatively offer, market, and sell all products
made available to small employers in the Exchange to small
employers purchasing coverage outside the Exchange.

(2) For purposes of this subdivision, “product” does not include
contracts entered into pursuant to Part 6.2 (commencing with
Section 12693) of Division 2 of the Insurance Code between the
Managed Risk Medical Insurance Board and carriers for enrolled
Healthy Families beneficiaries or contracts entered into pursuant
to Chapter 7 (commencing with Section 14000) of, or Chapter 8
(commencing with Section 14200) of, Part 3 of Division 9 of the
Welfare and Institutions Code between the State Department of
Health Care Services and carriers for enrolled Medi-Cal
beneficiaries.

(g) Determine when an enrollee’s coverage commences and the
extent and scope of coverage.

(h) Provide for the processing of applications and the enrollment
and disenrollment of enrollees.

(i) Determine and approve cost-sharing provisions for qualified
health plans.

(j) Establish uniform billing and payment policies for qualified
health plans offered in the Exchange to ensure consistent
enrollment and disenrollment activities for individuals enrolled in
the Exchange.

(k) Undertake activities necessary to market and publicize the
availability of health care coverage and federal subsidies through
the Exchange. The board shall also undertake outreach and
enrollment activities that seek to assist enrollees and potential
enrollees with enrolling and reenrolling in the Exchange in the
least burdensome manner, including populations that may
experience barriers to enrollment, such as the disabled and those
with limited English language proficiency.

(l) Select and set performance standards and compensation for
navigators selected under subdivision (l) of Section 100502.

(m) Employ necessary staff.

(1) The board shall hire a chief fiscal officer, a chief operations
officer, a director for the SHOP Exchange, a director of Health
Plan Contracting, a chief technology and information officer, a
general counsel, and other key executive positions, as determined
by the board, who shall be exempt from civil service.

(2) (A) The board shall set the salaries for the exempt positions
described in paragraph (1) and subdivision (i) of Section 100500
in amounts that are reasonably necessary to attract and retain
individuals of superior qualifications. The salaries shall be
published by the board in the board’s annual budget. The board’s
annual budget shall be posted on the Internet Web site of the
Exchange. To determine the compensation for these positions, the
board shall cause to be conducted, through the use of independent
outside advisors, salary surveys of both of the following:

(i) Other state and federal health insurance exchanges that are
most comparable to the Exchange.

(ii) Other relevant labor pools.

(B) The salaries established by the board under subparagraph
(A) shall not exceed the highest comparable salary for a position
of that type, as determined by the surveys conducted pursuant to
subparagraph (A).

(C) The Department of Human Resources shall review the
methodology used in the surveys conducted pursuant to
subparagraph (A).

(3) The positions described in paragraph (1) and subdivision (i)
of Section 100500 shall not be subject to otherwise applicable
provisions of the Government Code or the Public Contract Code
and, for those purposes, the Exchange shall not be considered a
state agency or public entity.

(n) Assess a charge on the qualified health plans offered by
carriers that is reasonable and necessary to support the
development, operations, and prudent cash management of the
Exchange. This charge shall not affect the requirement under
Section 1301 of the federal act that carriers charge the same
premium rate for each qualified health plan whether offered inside
or outside the Exchange.

(o) Authorize expenditures, as necessary, from the California
Health Trust Fund to pay program expenses to administer the
Exchange.

(p) Keep an accurate accounting of all activities, receipts, and
expenditures, and annually submit to the United States Secretary
of Health and Human Services a report concerning that accounting.
Commencing January 1, 2016, the board shall conduct an annual
audit.

(q) (1) Annually prepare a written report on the implementation
and performance of the Exchange functions during the preceding
fiscal year, including, at a minimum, the manner in which funds
were expended and the progress toward, and the achievement of,
the requirements of this title. This report shall be transmitted to
the Legislature and the Governor and shall be made available to
the public on the Internet Web site of the Exchange. A report made
to the Legislature pursuant to this subdivision shall be submitted
pursuant to Section 9795.

(2) In addition to the report described in paragraph (1), the board
shall be responsive to requests for additional information from the
Legislature, including providing testimony and commenting on
proposed state legislation or policy issues. The Legislature finds
and declares that activities including, but not limited to, responding
to legislative or executive inquiries, tracking and commenting on
legislation and regulatory activities, and preparing reports on the
implementation of this title and the performance of the Exchange,
are necessary state requirements and are distinct from the
promotion of legislative or regulatory modifications referred to in
subdivision (d) of Section 100520.

(r) Maintain enrollment and expenditures to ensure that
expenditures do not exceed the amount of revenue in the fund, and
if sufficient revenue is not available to pay estimated expenditures,
institute appropriate measures to ensure fiscal solvency.

(s) Exercise all powers reasonably necessary to carry out and
comply with the duties, responsibilities, and requirements of this
begin delete act end delete begin insert title end insert and the federal act.

(t) Consult with stakeholders relevant to carrying out the
activities under this title, including, but not limited to, all of the
following:

(1) Health care consumers who are enrolled in health plans.

(2) Individuals and entities with experience in facilitating
enrollment in health plans.

(3) Representatives of small businesses and self-employed
individuals.

(4) The State Medi-Cal Director.

(5) Advocates for enrolling hard-to-reach populations.

(u) Facilitate the purchase of qualified health plans in the
Exchange by qualified individuals and qualified small employers
no later than January 1, 2014 begin insert , and, to the extent permitted by
federal law, by multiemployer plans, as defined in Section 3(37)
of the federal Employee Retirement Income Security Act of 1974
(29 U.S.C. Sec. 1001 et seq.), no later than July 1, 2014 end insert .

(v) Report, or contract with an independent entity to report, to
the Legislature by December 1, 2018, on whether to adopt the
option in paragraph (3) of subdivision (c) of Section 1312 of the
federal act to merge the individual and small employer markets.
In its report, the board shall provide information, based on at least
two years of data from the Exchange, on the potential impact on
rates paid by individuals and by small employers in a merged
individual and small employer market, as compared to the rates
paid by individuals and small employers if a separate individual
and small employer market is maintained. A report made pursuant
to this subdivision shall be submitted pursuant to Section 9795.

(w) With respect to the SHOP Program, collect premiums and
administer all other necessary and related tasks, including, but not
limited to, enrollment and plan payment, in order to make the
offering of employee plan choice as simple as possible for qualified
small employers.

(x) Require carriers participating in the Exchange to immediately
notify the Exchange, under the terms and conditions established
by the board begin insert , end insert when an individual is or will be enrolled in or
disenrolled from any qualified health plan offered by the carrier.

(y) Ensure that the Exchange provides oral interpretation
services in any language for individuals seeking coverage through
the Exchange and makes available a toll-free telephone number
for the hearing and speech impaired. The board shall ensure that
written information made available by the Exchange is presented
in a plainly worded, easily understandable format and made
available in prevalent languages.

begin delete

SECTION 1.  

Section 1385.01 of the Health and Safety Code
is amended to read:

1385.01.  

For purposes of this article, the following definitions
shall apply:

(a) “Exchange” means the California Health Benefit Exchange
created by Section 100500 of the Government Code.

(b) “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, 1357.500, or
1357.600.

(c) “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, 1357.500, or 1357.600.

(d) “PPACA” means Section 2794 of the federal Public Health
Service Act (42 U.S.C. Sec. 300gg-94), as amended by the federal
Patient Protection and Affordable Care Act (Public Law
(111-148)), and any subsequent rules, regulations, or guidance
issued under that section.

(e) “Unreasonable rate increase” has the same meaning as that
term is defined in PPACA.

SEC. 2.  

Section 10181 of the Insurance Code is amended to
read:

10181.  

For purposes of this article, the following definitions
shall apply:

(a) “Exchange” means the California Health Benefit Exchange
created by Section 100500 of the Government Code.

(b) “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, 10753, or 10755.

(c) “Small group health insurance policy” means a group health
insurance policy issued to a small employer, as defined in Section
10700, 10753, or 10755.

(d) “PPACA” means Section 2794 of the federal Public Health
Service Act (42 U.S.C. Sec. 300gg-94), as amended by the federal
Patient Protection and Affordable Care Act (Public Law 111-148),
and any subsequent rules, regulations, or guidance issued pursuant
to that law.

(e) “Unreasonable rate increase” has the same meaning as that
term is defined in PPACA.

end delete