BILL NUMBER: AB 1962 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 23, 2014
AMENDED IN ASSEMBLY APRIL 22, 2014
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, to the Health and
Safety Code, and to amend Section 10112.25 of, and
to add Section 10112.26 to, to
the Insurance Code, relating to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
AB 1962, as amended, Skinner. Dental plans: medical loss ratios:
rebates. reports.
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.
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 health care services plans that
issue, sell, renew, or offer specialized dental health care
service plan contracts and health insurers that issue, sell,
renew, or offer 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. to, no later than July 31, 2015,
and each year thereafter, file a report, to be known as the MLR
annual report, with the departments that contains the same
information required in the federal Medical Loss Ratio (MLR) Annual
Reporting Form. The bill would require the Department of Managed
Health Care or the Department of Insurance, as applicable and, if a
financial examination is determined to be necessary to verify the
representations in the MLR annual report, to provide the health care
service plan or health insurer with a notification before conducting
the examination, and would require the plan or insurer to
electronically submit to the appropriate department specified
requested records, books, and papers. The bill would require each of
the departments to submit a report to the Legislature by November 1,
2015, and by November 1 of each year thereafter that includes an
analysis of the filings. The bill would declare the intent of the
Legislature that the data reported pursuant to these provisions be
considered by the Legislature in adopting a medical loss
ratio standard for health care service plans and health insurers that
cover dental services that would take effect no later than January
1, 2018. 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 1367.004 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, no later than July 31, 2015, and each
year thereafter, file a report, which shall be known as the MLR
annual report, with the department that is organized by group and
product type and contains the same information required in the
federal Medical Loss Ratio (MLR) Annual Reporting Form (CMS-10418).
(b) The MLR reporting year shall be for the calendar year during
which dental coverage is provided by the plan. All terms used in the
MLR annual report shall have the same meaning as used in the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-18), Part 158
(commencing with 158.101) of Title 45 of the Code of Federal
Regulations, and Section 1367.003.
(c) If the director decides to conduct a financial examination, as
described in Section 1382, because the director finds it necessary
to verify the health care service plan's representations in the MLR
annual report, the department shall provide the health care service
plan with a notification 30 days before the commencement of the
financial examination.
(d) The health care service plan shall have 30 days from the date
of notification to electronically submit to the department all
requested records, books, and papers specified in subdivision (a) of
Section 1381. The director may extend the time for a health care
service plan to comply with this subdivision upon a finding of good
cause.
(e) The department shall make available to the public all of the
data provided to the department pursuant to this section.
(f) (1) The department shall submit a report to the Legislature by
November 1, 2015, and by November 1 of each year thereafter, that
includes an analysis of the filings.
(2) A report to the Legislature pursuant to paragraph (1) shall be
submitted in compliance with Section 9795 of the Government Code.
(g) This section does not apply to a health care service plan
contract 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).
(h) It is the intent of the Legislature that the data reported
pursuant to this section be considered by the Legislature in adopting
a medical loss ratio standard for health care service plans that
cover dental services that would take effect no later than January 1,
2018.
SEC. 2. 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, no later than July 31, 2015, and each year thereafter, file a
report, which shall be known as the MLR annual report, with the
department that is organized by group and product type and contains
the same information required in the federal Medical Loss Ratio (MLR)
Annual Reporting Form (CMS-10418).
(b) The MLR reporting year shall be for the calendar year during
which dental coverage is provided by the plan. All terms used in the
MLR annual report shall have the same meaning as used in the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-18) and Part 158
(commencing with 158.101) of Title 45 of the Code of Federal
Regulations.
(c) If the commissioner decides to conduct an examination, as
described in Section 730, because the commissioner finds it necessary
to verify the health insurer's representations in the MLR annual
report, the department shall provide the health insurer with a
notification 30 days before the commencement of the examination.
(d) The health insurer shall have 30 days from the date of
notification to electronically submit to the department all requested
records, books, and papers specified in subdivision (a) of Section
733. The commissioner may extend the time for a health insurer to
comply with this subdivision upon a finding of good cause.
(e) The department shall make available to the public all of the
data provided to the department pursuant to this section.
(f) (1) The department shall submit a report to the Legislature by
November 1, 2015, and by November 1 of each year thereafter, that
includes an analysis of the filings.
(2) A report to the Legislature pursuant to paragraph (1) shall be
submitted in compliance with Section 9795 of the Government Code.
(g) This section does not apply to an 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) 15 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).
(h) It is the intent of the Legislature that the data reported
pursuant to this section be considered by the Legislature in adopting
a medical loss ratio standard for health insurers that cover dental
services that would take effect no later than January 1, 2018.
SEC. 3. 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.
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
disability insurance for covered benefits in the single specialized
area of dental-only health care that pays benefits on a fixed
benefit, cash payment only basis.
(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. 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.