BILL ANALYSIS Ó AB 1180 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1180 (Pan) As Amended September 3, 2013 2/3 vote. Urgency ----------------------------------------------------------------- |ASSEMBLY: |69-1 |(May 24, 2013) |SENATE: |39-0 |(September 9, | | | | | | |2013) | ----------------------------------------------------------------- Original Committee Reference: HEALTH SUMMARY : Makes inoperative because of the federal Patient Protection and Affordable Care Act (ACA) several provisions in existing law that implement the health insurance laws of the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) and additional provisions that provide former employees rights to convert their group health insurance coverage to individual market coverage without medical underwriting. Establishes notification requirements informing individuals affected by this bill of health insurance available in 2014. The Senate amendments : 1)Give the California Department of Insurance (CDI) and the Department of Managed Health Care (DMHC) the authority to adopt additional model notices not subject to the Administrative Procedures Act (APA) related to health insurance carrier notifications to consumers. Permit CDI and DMHC to modify the wording of model notices specifically for the purposes of clarity, readability, and accuracy, and make these vital documents, subject to the applicable requirements of existing law. 2)Establish that the Managed Risk Medical Insurance Board (MRMIB) is not obligated to provide any payment to any health care service plan under an existing pilot project for health care expenses incurred on or after January 1, 2014, or the standard monthly administrative fee, as defined as it existed on January 1, 2007, for any month after December 2013. Requires notifications to be sent out to enrolled individuals if a health care service plan terminates coverage. 3)Establish new premium caps for individuals in grandfathered AB 1180 Page 2 HIPAA and conversion coverage as follows: a) For coverage provided in 2014, the rate charged in 2013 for that coverage multiplied by 1.09. b) For coverage provided in 2015 and each subsequent year, the rate charged in the prior year multiplied by a factor of one plus the percentage change in the statewide average premium for the second lowest cost silver plan offered on the Exchange. Requires the Exchange to determine the percentage change in the statewide average premium for the second lowest cost silver plan, as specified. 4)Include Insurance Code provisions to avoid conflicts between this bill and AB 1391 (Insurance Committee) of the current legislative session. 5)Make other technical corrections to this bill. EXISTING LAW : 1)Establishes DMHC to regulate health plans under the Knox-Keene Health Care Services Plan Act of 1975 in the Health and Safety Code; CDI to regulate health insurers under the Insurance Code; and, the Exchange to compare and make available through selective contracting with health plans and health insurance for individual and small business purchasers as authorized under the ACA. 2)Defines a grandfathered health plan as having the same meaning as that term is defined in the ACA. Federal law defines a grandfathered health plan as any group health plan or health insurance coverage to which Section 1251 of the ACA applies (in general, coverage that existed as of March 23, 2010, which permits new enrollment only for new employees or dependents). AS PASSED BY THE ASSEMBLY , this bill required carriers to issue notices to individuals affected by this bill, informing them of changes in insurance laws beginning January 1, 2014, required uniform model notices to be adopted by CDI and DMHC no later than September 1, 2013, and exempted both CDI and DMHC from the APA for purposes of adopting the model notices. FISCAL EFFECT : According to the Senate Appropriations Committee, one-time costs of about $240,000 for the DMHC to review health plan filings, develop model notices for health AB 1180 Page 3 plans, and develop regulations (Managed Care Fund). One-time costs of $22,000 to develop the required notice to consumers and ongoing costs of about $10,000 per year for enforcement by the Department of Insurance (Insurance Fund). Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097 FN: 0002320