Amended in Senate August 4, 2014

Amended in Assembly May 23, 2014

Amended in Assembly April 22, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1962

Introduced by Assembly Member Skinner

(Coauthors: Assembly Members begin insert Allen, Bigelow, end insert Bocanegra, Bonilla, Bonta, begin insert Gonzalez, end insert Holden, Nestande, Pan, Waldron, and Weber)

(Coauthors: Senators Berryhill and Mitchell)

February 19, 2014

An act to add Section 1367.004 to the Health and Safety Code, and to add Section 10112.26 to the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

AB 1962, as amended, Skinner. Dental plans: medical loss ratios: 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, no later than begin delete July 31 end delete begin insert September 30 end insert , 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 begin insert 2013 end insert 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. begin delete 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. end delete 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 begin delete health insurers end delete begin insert specialized health insurance policies end insert that cover dental services that would take effect no later than January 1, 2018. begin insert The bill would authorize the Department of Managed Health Care and the Department of Insurance, until January 1, 2018, to issue guidance to health care service plans and health insurers of specialized health insurance policies subject to these provisions regarding compliance with these provisions, as specified. end insert 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 begin delete July 31 end delete begin insert September 30 end insert ,
2015, and each year thereafter, file a report, which shall be known
as the MLR annual report, with the department that is organized
by begin delete group end delete begin insert market end insert and product type and contains the same
information required in the begin insert 2013 end insert 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.

begin delete

(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.

end delete begin delete

(g)

end delete

begin insert (f) end insert  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).

begin delete

(h)

end delete

begin insert (g) end insert  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.

begin insert

(h) Until January 1, 2018, the director may issue guidance to
health care service plans subject to this section regarding
compliance with this section. This guidance shall not be subject
to the Administrative Procedure Act (Chapter 3.5 (commencing
with Section 11340) of Part 1 of Division 3 of Title 2 of the
Government Code). Any guidance issued pursuant to this
subdivision shall be effective only until the director adopts
regulations pursuant to the Administrative Procedure Act. The
department shall consult with the Department of Insurance in
issuing guidance pursuant to this subdivision.

end insert

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 begin delete July 31 end delete begin insert September 30 end insert , 2015, and each year
thereafter, file a report, which shall be known as the MLR annual
report, with the department that is organized by begin delete group end delete begin insert market end insert and
product type and contains the same information required in the
begin insert 2013 end insert 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.

begin delete

(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.

end delete begin delete

(2) A report to the Legislature pursuant to paragraph (1) shall
be submitted in compliance with Section 9795 of the Government
Code.

end delete begin delete

(g)

end delete

begin insert (f) end insert  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) begin delete 15 end delete 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).

begin insert

(g) This section shall not 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.

end insert

(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 begin delete health insurers end delete begin insert specialized health
insurance policies end insert that cover dental services that would take effect
no later than January 1, 2018.

begin insert

(i) Until January 1, 2018, the department may issue guidance
to health insurers of specialized health insurance policies subject
to this section regarding compliance with this section. This
guidance shall not be subject to the Administrative Procedure Act
(Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code). Any guidance issued
pursuant to this subdivision shall be effective only until the
department adopts regulations pursuant to the Administrative
Procedure Act. The department shall consult with the Department
of Managed Health Care in issuing guidance pursuant to this
subdivision.

end insert

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.