BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1962|
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THIRD READING
Bill No: AB 1962
Author: Skinner (D), et al.
Amended: 8/4/14 in Senate
Vote: 21
SENATE HEALTH COMMITTEE : 7-1, 6/11/14
AYES: Hernandez, Beall, De León, DeSaulnier, Evans, Monning,
Wolk
NOES: Nielsen
NO VOTE RECORDED: Morrell
SENATE APPROPRIATIONS COMMITTEE : 5-0, 8/14/14
AYES: De León, Hill, Lara, Padilla, Steinberg
NO VOTE RECORDED: Walters, Gaines
ASSEMBLY FLOOR : 76-0, 5/28/14 - See last page for vote
SUBJECT : Dental plans: medical loss ratios: reports
SOURCE : California Dental Association
DIGEST : This bill requires a health plan or health insurer
that issues, sells, renews, or offers a specialized health plan
contract or specialized health insurance policy covering dental
services to file a medical loss ratio (MLR) annual report with
its regulator that is organized by group and product type that
contains the same information required in the 2013 federal MLR
Annual Reporting Form (MLR Form) required of other health plans
and insurers. States legislative intent that the data reported
pursuant to this bill be considered by the Legislature in
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adopting an MLR standard for health plans or health insurers
that cover dental services that would take effect no later than
January 1, 2018. This bill also authorizes the Department of
Managed Health Care (DMHC) and the Department of Insurance
(CDI), until January 1, 2018, to issue guidance to health care
service plans and health insurers of specialized health
insurance policies subject to this bill, as specified.
ANALYSIS :
Existing law:
1. Establishes DMHC to regulate health care service plans
(health plans), including specialized health plan contracts
and CDI to regulate health insurers, including specialized
health insurance policies. (Specialized plan contracts and
insurance policies are generally for vision or dental
services only.)
2. Requires every health plan and health insurer that issues,
sells, renews, or offers health plan contracts or insurance
policies for health care coverage, including a grandfathered
health plan or insurer, but not including specialized health
plan contracts or insurance policies, to provide an annual
rebate to each enrollee under such coverage if the ratio of
the amount of premium revenue expended by the health plan or
insurer on the costs for reimbursement of clinical services
provided to enrollees or insureds, as specified, to the total
amount of premium revenue less certain taxes and fees is less
than the following:
A. 87% for a health plan or health insurer in the large
group market; or,
B. 80% for a health plan or health insurer in the small
group or individual market.
1. Requires, under federal law and regulation, health plans and
insurers, subject to #2 above, to file an annual MLR Form.
2. Requires DMHC to conduct an examination of the fiscal and
administrative affairs of any health plan, and each person
with whom the plan has made arrangements for administrative,
management, or financial services, as often as deemed
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necessary to protect the interest of subscribers and
enrollees, but not less frequently than once every five
years.
3. Requires the Insurance Commissioner (IC) of CDI, whenever
he/she deems necessary or whenever he/she is requested by
verified petition, signed by 25 persons interested as
shareholders, policyholders, or creditors of any admitted
insurer showing that the insurer is insolvent, or upon
information that any insurer has violated specified
provisions of law, to examine the business and affairs of the
insurer, and requires the IC to examine every domestic
insurer before issuing to it a certificate of authority other
than a renewal.
This bill:
1. Requires a health plan or health insurer that issues, sells,
renews, or offers a specialized health plan contract or
specialized health insurance policy covering dental services
to, no later than September 30, 2015, and each year
thereafter, file an MLR form, with its regulator that is
organized by group and product type and contains the same
information required in the federal MLR Form.
2. Requires the MLR reporting year to be for the calendar year
during which dental coverage is provided by the plan or
insurer. Requires all terms used in the MLR form to have the
same meaning as used in the 2013 federal Public Health
Service Act, and existing California law, as specified.
3. Requires, if the Director of DMHC or IC decides to conduct a
financial examination, as described, because the Director of
DMHC or the IC finds it necessary to verify the health plan's
or health insurer's representations in the MLR form, DMHC or
CDI to provide the health plan or insurer with a notification
30 days before the commencement of the financial examination.
4. Requires the health plan or health insurer to have 30 days
from the date of notification to electronically submit to its
regulator all requested records, books, and papers, as
specified.
5. Authorizes the Director of DMHC or IC to extend the time for
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a health plan or health insurer to comply with this bill upon
a finding of good cause.
6. Requires the regulators to make available to the public all
of the data provided to them pursuant to this bill.
7. Excludes from the requirements of this bill a health plan
contract or insurance policy issued, sold, renewed, or
offered for health care services or coverage provided in the
Medi-Cal program; Healthy Families Program; Access for
Infants and Mothers Program; the California Major Risk
Medical Insurance Program; or, the Federal Temporary High
Risk Insurance Pool, to the extent consistent with the
federal Patient Protection and Affordable Care Act.
8. States legislative intent that the data reported pursuant to
this bill be considered by the Legislature in adopting a MLR
standard for health plans or health insurers that cover
dental services that would take effect no later than
January 1, 2018.
9. Authorizes DMHC and CDI, until January 1, 2018, to issue
guidance to health care service plans and health insurers of
specialized health insurance policies subject to this bill,
as specified.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/15/14)
California Dental Association (source)
California Teachers Association
Health Access California
San Diego Regional Chamber of Commerce
OPPOSITION : (Verified 8/15/14)
Anthem Blue Cross
California Association of Health Underwriters
California Chamber of Commerce
ARGUMENTS IN SUPPORT : This bill's sponsor, California Dental
Association (CDA), writes in support stating this bill allows
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for greater transparency for consumers' dental plan purchasers,
and will lead to an increase in the overall value of the
benefit, which may result in reduced premium costs to patients.
CDA states that without a minimum MLR ratio standard, some
dental plans have MLRs as low as 38% - meaning more than 60% of
each premium dollar stays with the dental plan overhead,
administration and profit, while less than 40% goes toward the
care patients are seeking.
ARGUMENTS IN OPPOSITION : The California Chamber of Commerce
(CalChamber) writes in opposition to this bill stating that
their members are concerned by the use of an MLR to curb
administrative waste because this means that a plan can avoid
reducing its administrative costs by raising their premiums.
CalChamber prefers to allow regulators and legislators more
flexibility to determine how best to address waste.
ASSEMBLY FLOOR : 76-0, 5/28/14
AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Eggman, Fong, Fox, Garcia,
Gatto, Gomez, Gonzalez, Gordon, Gorell, Gray, Grove, Hagman,
Hall, Harkey, Roger Hernández, Holden, Jones, Jones-Sawyer,
Levine, Linder, Logue, Lowenthal, Maienschein, Mansoor,
Medina, Melendez, Mullin, Muratsuchi, Nazarian, Nestande,
Olsen, Pan, Patterson, Perea, John A. Pérez, V. Manuel Pérez,
Quirk, Quirk-Silva, Rendon, Ridley-Thomas, Rodriguez, Salas,
Skinner, Stone, Ting, Wagner, Waldron, Weber, Wieckowski,
Wilk, Williams, Yamada, Atkins
NO VOTE RECORDED: Donnelly, Frazier, Beth Gaines, Vacancy
JL/AL:k 8/17/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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