BILL ANALYSIS Ó
AB 1962
Page 1
ASSEMBLY THIRD READING
AB 1962 (Skinner)
As Amended May 23, 2014
Majority vote
HEALTH 15-3 APPROPRIATIONS 13-2
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|Ayes:|Pan, Maienschein, |Ayes:|Gatto, Bigelow, |
| |Ammiano, Holden, Bonilla, | |Bocanegra, Bradford, Ian |
| |Bonta, Chesbro, Gomez, | |Calderon, Campos, Eggman, |
| |Gonzalez, Roger | |Gomez, Holden, Pan, |
| |Hernández, Nazarian, | |Quirk, |
| |Nestande, Ridley-Thomas, | |Ridley-Thomas, Weber |
| |Wieckowski, Eggman | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Mansoor, Patterson, |Nays:|Linder, Wagner |
| |Wagner | | |
| | | | |
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SUMMARY : Requires dental plans to file annual reports on
medical loss ratios (MLRs). Specifically, this bill :
1)Requires health plans and insurers that issue, sell, renew, or
offer specialized dental plans or policies to file an annual
report with state regulators - the California Department of
Insurance (CDI) or the Department of Managed Health Care
(DMHC), as appropriate - that is organized by group and
product type and contains the same information required to be
reported by health plans and insurers under the federal
Patient Protection and Affordable Care Act (ACA).
2)Requires state regulators, if they decide to conduct a
financial examination, as provided under current law, to
verify the dental plan's representations in the MLR annual
report, to notify the dental plan 30 days in advance.
Requires dental plans to submit all requested records, books,
and papers to state regulators within 30 days of notification.
3)Requires state regulators to make available to the public all
of the data provided to them under this bill.
AB 1962
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4)Requires state regulators to submit an annual report to the
Legislature that includes an analysis of the filings.
5)Exempts from the reporting requirements in this bill the
Medi-Cal program, the Healthy Families Program, the Access for
Infants and Mothers Program, the California Major Risk Medical
Insurance Program, and the Federal Temporary High Risk
Insurance Pool, to the extent consistent with federal law.
6)State intent that the data reported under this bill be
considered by the Legislature in adopting an MLR standard for
dental plans by January 1, 2018.
EXISTING LAW requires health plans and insurers to provide an
annual rebate to each enrollee, on a pro rata basis, if the
amount of the premium revenue expended for clinical services and
quality improvement activities, or MLR, is less than 85% for
health plans and insurers offering large group health coverage
or less than 80% for health plans and insurers offering
individual and small group health coverage.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)One-time costs, likely under $200,000 to DMHC (Managed Care
Fund) and under $100,000 to CDI to modify information
technology systems and develop reporting requirements.
2)Ongoing minor costs, under $50,000 annually to DMHC and CDI
(Managed Care Fund/ Insurance Fund) to examine reports, review
compliance, and report to the Legislature.
COMMENTS : The ACA includes numerous provisions that change the
way commercial health insurance is offered and regulated in an
effort to provide better value to consumers and increase
transparency, including MLR standards. MLR limits the portion
of premium that health insurers may spend on administration,
marketing and profits. Under the ACA, health insurers must
publicly report the MLR in each state where they offer coverage
and if they fail to meet the minimum MLR standards must pay
rebates to consumers. Dental plans and other plans providing
"excepted benefits" are exempted from these requirements. The
MLR is a basic financial indicator, traditionally referring to
the percentage of insurance premium revenues health insurers
spent on enrollee medical claims. The MLR definition in the ACA
AB 1962
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differs from the traditional MLR definition, most notably
because it allows insurers to include in their expenses spending
on activities to improve health care quality and to deduct from
their revenues certain tax payments and fees.
According to DMHC, dental health plans under their jurisdiction
reported average dental loss ratios (DLRs) of just over 60% in
2012. However, the range varies substantially by health plan
from a low of 31% to a high of 81% and is not broken down by
market, individual, small or large group. DMHC points out that
the reported DLRs are not based on standardized measurement or
calculation as is required for MLR and that a relatively low DLR
does not necessarily mean that the dental plan is in strong
financial condition or that the plan is earning huge profits.
This bill requires dental plans to report information required
in the standardized form required for plans under the ACA.
Analysis Prepared by : Ben Russell / HEALTH / (916) 319-2097
FN: 0003798