BILL NUMBER: AB 725	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Wilk

                        FEBRUARY 21, 2013

   An act to amend Section 1367.003 of the Health and Safety Code,
relating to health care coverage.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 725, as introduced, Wilk. 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 prohibits a health care
service plan from expending for administrative costs, as defined, an
excessive amount of the payments the plan receives for providing
health care services to its subscribers and enrollees.
   The federal Patient Protection and Affordable Care Act prohibits a
health insurance issuer issuing health insurance coverage from
establishing lifetime limits or unreasonable annual limits on the
dollar value of benefits for any participant or beneficiary, as
specified. The act also requires a health insurance issuer issuing
health insurance coverage to comply with minimum medical loss ratios
and to provide an annual rebate to each insured if the medical loss
ratio of the amount of the revenue expended by the issuer on costs to
the total amount of premium revenue is less than a certain
percentage, as specified.
   Existing law requires health care service plans and health
insurers to comply with the requirements imposed under those federal
provisions, as specified. Existing law authorizes the Director of the
Department of Managed Health Care and the Insurance Commissioner to
promulgate regulations and emergency regulations to implement
requirements relating to medical loss ratios, as specified.
   This bill would make technical, nonsubstantive changes to those
provisions.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 1367.003 of the Health and Safety Code is
amended to read:
   1367.003.  (a) Every health care service plan that issues, sells,
renews, or offers health care service plan contracts for health care
coverage in this state, including a grandfathered health plan, but
not including specialized health care service plan contracts, shall
provide an annual rebate to each enrollee under such coverage, on a
pro rata basis, if the ratio of the amount of premium revenue
expended by the health care service plan on the costs for
reimbursement for clinical services provided to enrollees under such
coverage and for activities that improve health care quality to the
total amount of premium revenue, excluding federal and state taxes
and licensing or regulatory fees and after accounting for payments or
receipts for risk adjustment, risk corridors, and reinsurance, is
less than the following:
   (1) With respect to a health care service plan offering coverage
in the large group market, 85 percent.
   (2) With respect to a health care service plan offering coverage
in the small group market or in the individual market, 80 percent.
   (b) Every health care service plan that issues, sells, renews, or
offers health care service plan contracts for health care coverage in
this state, including a grandfathered health plan, shall comply with
the following minimum medical loss ratios:
   (1) With respect to a health care service plan offering coverage
in the large group market, 85 percent.
   (2) With respect to a health care service plan offering coverage
in the small group market or in the individual market, 80 percent.
   (c) (1) The total amount of an annual rebate required under this
section shall be calculated in an amount equal to the product of the
following:
   (A) The amount by which the percentage described in paragraph (1)
or (2) of subdivision (a) exceeds the ratio described in paragraph
(1) or (2) of subdivision (a).
   (B) The total amount of premium revenue, excluding federal and
state taxes and licensing or regulatory fees and after accounting for
payments or receipts for risk adjustment, risk corridors, and
reinsurance.
   (2) A health care service plan shall provide any rebate owing to
an enrollee no later than August 1 of the calendar year following the
year for which the ratio described in subdivision (a) was
calculated.
   (d) (1) 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 medical loss ratio as described
under Section 2718 of the federal Public Health Service Act (42
U.S.C. Sec. 300gg-18), and any federal rules or regulations issued
under that section.
   (2) The director may also adopt emergency 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) when it is necessary to implement the
applicable provisions of this section and to address specific
conflicts between state and federal law that prevent implementation
of federal law and guidance pursuant to Section 2718 of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-18). The initial
adoption of the emergency regulations shall be deemed to be an
emergency and necessary for the immediate preservation of the public
peace, health, safety, or general welfare.
   (e) The department shall consult with the Department of Insurance
in adopting necessary regulations, and in taking any other action for
the purpose of implementing this section.
   (f) This section shall be implemented to the extent required by
federal law and shall comply with, and not exceed, the scope of
Section 2791 of the federal Public Health Service Act (42 U.S.C. Sec.
300gg-91) and the requirements of Section 2718 of the federal Public
Health Service Act (42 U.S.C. Sec. 300gg-18) and any rules or
regulations issued under those sections.
   (g)  Nothing in this   This  section
shall  not  be construed to apply to provisions of this
chapter pertaining to financial statements, assets, liabilities, and
other accounting items to which subdivision (s) of Section 1345
applies.
   (h)  Nothing in this   This  section
shall  not  be construed to apply to a health care service
plan contract or insurance policy issued, sold, renewed, or offered
for health care services or coverage provided in the Medi-Cal program
(Chapter 7 (commencing with Section 14000) of Part 3 of Division 9
of the Welfare and Institutions Code), the Healthy Families Program
(Part 6.2 (commencing with Section 12693) of Division 2 of the
Insurance Code), the Access for Infants and Mothers Program (Part 6.3
(commencing with Section 12695) of Division 2 of the Insurance
Code), the California Major Risk Medical Insurance Program (Part 6.5
(commencing with Section 12700) of Division 2 of the Insurance Code),
or the Federal Temporary High Risk Insurance Pool (Part 6.6
(commencing with Section 12739.5) of Division 2 of the Insurance
Code), to the extent consistent with the federal Patient Protection
and Affordable Care Act (Public Law 111-148).