BILL NUMBER: AB 1962 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Skinner
(Coauthors: Assembly Members Bocanegra, Bonilla, Bonta, Holden,
Nestande, Pan, Waldron, and Weber)
(Coauthors: Senators Berryhill and Mitchell)
FEBRUARY 19, 2014
An act to amend Section 1367.003 of, and to add Section 1367.004
to, the Health and Safety Code, and to amend Section 10112.25 of, and
to add Section 10112.26 to, the Insurance Code, relating to health
care coverage.
LEGISLATIVE COUNSEL'S DIGEST
AB 1962, as introduced, Skinner. Dental plans: medical loss
ratios: rebates.
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 or health insurer to comply with specified minimum
medical loss ratios and requires a plan or insurer to provide an
annual rebate to enrollees and insureds if the ratio of the amount of
premium revenue expended by the plan or insurer on specified costs
to the total amount of premium revenue is less than a certain
percentage. Existing law specifies that these requirements do not
apply to specialized health care service plan contracts or
specialized health insurance policies.
This bill would require specialized dental health care service
plan contracts and specialized dental health insurance policies to
comply with parallel requirements. The bill would authorize the
departments to adopt regulations implementing these provisions and
would require that those regulations parallel the regulations adopted
with respect to full-service plan contracts and policies. Because a
willful violation of the bill's requirements by a health care service
plan would be a crime, the bill would impose a state-mandated local
program.
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.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
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 ,
except as provided in Section 1367.004 , 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 section shall 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 section shall 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).
SEC. 2. Section 1367.004 is added to the Health and Safety Code,
to read:
1367.004. (a) A health care service plan that issues, sells,
renews, or offers a specialized health care service plan contract
covering dental services shall provide an annual rebate to each
enrollee under that 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 that coverage and for activities that improve dental
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) A health care service plan that issues, sells, renews, or
offers specialized health care service plan contracts covering dental
services in this state 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
in this section. The regulations shall parallel the regulations
adopted under subdivision (d) of Section 1367.003.
(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) as necessary to implement this section. 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. The emergency
regulations shall be parallel to any emergency regulations adopted
pursuant to subdivision (d) of Section 1367.003.
(3) 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.
(e) Nothing in this section shall 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.
(f) Nothing in this section shall 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
Pool (Part 6.6 (commencing with Section 12739.5) of Division 2 of
the Insurance Code).
SEC. 3. Section 10112.25 of the Insurance Code is amended to read:
10112.25. (a) Every health insurer that issues, sells, renews, or
offers health insurance policies for health care coverage in this
state, including a grandfathered health plan, but not including
specialized health insurance policies, except as provided in
Section 10112.26, shall provide an annual rebate to each
insured under such coverage, on a pro rata basis, if the ratio of the
amount of premium revenue expended by the health insurer on the
costs for reimbursement for clinical services provided to insureds
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 insurer offering coverage in the
large group market, 85 percent.
(2) With respect to a health insurer offering coverage in the
small group market or in the individual market, 80 percent.
(b) Every health insurer that issues, sells, renews, or offers
health insurance policies 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 insurer offering coverage in the
large group market, 85 percent.
(2) With respect to a health insurer 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 insurer shall provide any rebate owing to an insured
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 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 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 commissioner 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 Managed
Health Care 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 section shall 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)),
the Access for Infants and Mothers Program (Part 6.3 (commencing with
Section 12695)), the California Major Risk Medical Insurance Program
(Part 6.5 (commencing with Section 12700)), or the Federal Temporary
High Risk Insurance Pool (Part 6.6 (commencing with Section
12739.5)), to the extent consistent with the federal Patient
Protection and Affordable Care Act (Public Law 111-148).
SEC. 4. Section 10112.26 is added to the Insurance Code, to read:
10112.26. (a) A health insurer that issues, sells, renews, or
offers a specialized health insurance policy covering dental services
shall provide an annual rebate to each insured under that coverage,
on a pro rata basis, if the ratio of the amount of premium revenue
expended by the insurer on the costs for reimbursement for clinical
services provided to insureds under that coverage and for activities
that improve dental 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 insurer offering coverage in the
large group market, 85 percent.
(2) With respect to a health insurer offering coverage in the
small group market or in the individual market, 80 percent.
(b) A health insurer that issues, sells, renews, or offers
specialized health insurance policies covering dental services in
this state shall comply with the following minimum medical loss
ratios:
(1) With respect to a health insurer offering coverage in the
large group market, 85 percent.
(2) With respect to a health insurer 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 insurer shall provide any rebate owing to an insured
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 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 medical loss ratio as
described in this section. The regulations shall parallel the
regulations adopted under subdivision (d) of Section 10112.25.
(2) The commissioner 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) as necessary to implement this section. 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. The emergency
regulations shall be parallel to any emergency regulations adopted
pursuant to subdivision (d) of Section 10112.25.
(3) The department shall consult with the Department of Managed
Health Care in adopting necessary regulations, and in taking any
other action for the purpose of implementing this section.
(e) Nothing in this section shall 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
Pool (Part 6.6 (commencing with Section 12739.5) of Division 2 of
the Insurance Code).
SEC. 5. 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.