BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
AB 1962 (Skinner) - Dental plans: medical loss ratios: reports.
Amended: August 4, 2014 Policy Vote: Health 7-1
Urgency: No Mandate: Yes
Hearing Date: August 4, 2014
Consultant: Brendan McCarthy
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 1962 would require insurers and health plans
that sell dental plans to file an annual report on the plan's
medical loss ratio.
Fiscal Impact:
One-time costs of about $400,000 to develop guidance and
regulations and renew initial reports. Ongoing costs of
$170,000 per year to review and analyze reports by the
Department of Insurance (Insurance Fund).
One-time costs of $500,000 in 2014-15 and $290,000 in
2015-16 for the development of policies, implementation of
information technology upgrades and review of plan filings.
Ongoing costs of $250,000 per year for enforcement by the
Department of Managed Health Care (Managed Care Fund).
Background: Under current law, the Department of Insurance
regulates health insurers and the Department of Managed Health
Care regulates health plans (collectively, these are referred to
as "carriers").
In general, a medical loss ratio is the amount of premium
revenue expended by a plan on clinical services divided by the
total amount of premium revenue, less certain fees and taxes.
The federal Affordable Care Act requires health plans and health
insurers to meet medical loss ratio requirements. For health
plans and health insurers in the large group market, the medical
loss ratio must be at least 85 percent and in the small group or
individual market the medical loss ratio must be at least 80
percent. If the medical loss ratio falls below prescribed
levels, carriers are required to provide rebates to enrollees.
Carriers are required to file annual reports on their medical
AB 1962 (Skinner)
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loss ratios.
Proposed Law: AB 1962 would require insurers and health plans
that sell dental plans to file an annual report on the plan's
medical loss ratio.
Specific provisions of the bill would:
Require health plans and health insurers that sell dental
plans to file a medical loss ratio report to their
respective regulator by September 30th of each year;
Require carriers to use the specifications of the federal
medical loss ratio reports;
Authorize the regulators to conduct investigations, if
necessary, to verify information in the reports;
Require all information provided to the regulators to be
made available to the public;
Exempt plans under certain state public health care
programs such as Medi-Cal;
State legislative intent that data reported under the bill
be used by the Legislature in adopting a medical loss ratio
requirement for dental plans by January 1, 2018;
Authorize the regulators to issue guidance to carriers
without complying with the requirements of the
Administrative Procedure Act, but also make that guidance
valid only until regulations are adopted.
Related Legislation: AB 18 (Pan, 2013) would have required
health plans and insurers offering pediatric dental coverage
through Covered California to maintain a medical loss ratio of
75 percent. That bill was held in the Assembly Appropriations
Committee.
Staff Comments: The bill does not explicitly require carriers to
meet a minimum medical loss ratio. However, the bill does state
legislative intent to enact a medical loss ratio for dental
plans by January 1, 2018.
The only costs that may be incurred by a local agency under the
bill relate to crimes and infractions. Under the California
Constitution, such costs are not reimbursable by the state.
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