Amended in Assembly April 9, 2014

Amended in Senate February 14, 2013

Senate Bill No. 20

Introduced by Senator Hernandez

December 3, 2012

An act to amend begin delete Section 1341.45 of the Health and Safety Code, relating to health. end delete begin insert Section 100503 of the Government Code, to amend Sections 1348.95 and 1399.849 of the Health and Safety Code, and to amend Sections 10127.19 and 10965.3 of the Insurance Code, relating to health care coverage end insert begin insert . end insert

LEGISLATIVE COUNSEL’S DIGEST

SB 20, as amended, Hernandez. begin delete Health care: workforce training. end delete begin insert Health care coverage. end insert

begin insert

Existing federal law, the federal Patient Protection and Affordable Care Act (PPACA), enacts various health care coverage market reforms that take effect January 1, 2014. Among other things, PPACA requires each health insurance issuer that offers health insurance coverage in the individual or group market in a state to accept every employer and individual in the state that applies for that coverage and to renew that coverage at the option of the plan sponsor or the individual. PPACA also requires each state to, by January 1, 2014, establish an American Health Benefit Exchange that facilitates the purchase of qualified health plans by qualified individuals and qualified small employers, as specified.

end insert begin insert

Existing law establishes the California Health Benefit Exchange within state government, specifies the powers and duties of the board governing the Exchange, and requires the board to facilitate the purchase of qualified health plans through the Exchange by qualified individuals and small employers. Existing law requires the board to undertake activities necessary to market and publicize the availability of health care coverage and federal subsidies through the Exchange and to undertake outreach and enrollment activities that seek to assist with enrolling in the Exchange in the least burdensome manner. Existing law also requires the board of the Exchange to annually prepare a written report on the implementation and performance of the Exchange functions during the preceding fiscal year, as specified, and requires that this report be submitted to the Legislature and the Governor and be made available to the public on the Internet Web site of the Exchange.

end insert begin insert

This bill would require the annual report to also include an assessment of how the Exchange is performing compared to its operational and service principles for its Internet Web site and customer service center, a summary of the Exchange’s outreach strategy for the enrollment of consumers with limited English language proficiency and insufficient access to the Internet, and the total number of covered lives under qualified health plans purchased through the Exchange, as well as specified additional data regarding those lives.

end insert begin insert

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, on and after October 1, 2013, to offer, market, and sell all of the plan’s insurer’s health benefit plans that are sold in the individual market for policy years on or after January 1, 2014, to all individuals and dependents in each service area in which the plan or insurer provides or arranges for the provision of health care services, as specified, but requires plans and insurers to limit enrollment in individual health benefit plans to specified open enrollment and special enrollment periods. Existing law requires a plan or insurer to provide an initial open enrollment period from October 1, 2013, to March 31, 2014, inclusive, and annual enrollment periods for plan years on or after January 1, 2015, from October 15 to December 7, inclusive, of the preceding calendar year.

end insert begin insert

This bill would authorize the Exchange to modify the initial open enrollment period and the first annual enrollment period to the extent permitted by PPACA, and would require individual health benefit plans to comply with those modifications whether offered inside or outside the Exchange.

end insert begin insert

Existing law requires a health care service plan or health insurer to annually report, by March 31, the number of enrollees by product type as of December 31 of the prior year that receive coverage under a plan contract or health insurance policy that covers individuals, small groups, large groups, or administrative services only business lines. Existing law requires that plans and insurers include the enrollment data in specific products types as determined by the department.

end insert begin insert

This bill would instead specify those product types and would also require plans and insurers to report their enrollment in nongrandfathered coverage by coverage tier, if applicable, and by whether the coverage was purchased through the Exchange or outside the Exchange. The bill would also require a plan offering individual plan contracts or a health insurer offering individual health insurance policies to, by May 1, 2014, or within 30 days after the end of the initial open enrollment period described above, report to the department the plan’s or insurer’s enrollment as of March 31, 2014, or the end of the initial open enrollment period, whichever date is later, by product type, coverage tier, age and gender, and whether coverage was purchased inside or outside the Exchange, as specified. The bill would require the departments to report this data to the fiscal and appropriate policy committees of the Legislature by June 1, 2014, or within 60 days of the end of the initial open enrollment period, whichever date is later.

end insert begin 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.

end insert begin insert

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.

end insert begin insert

This bill would provide that no reimbursement is required by this act for a specified reason.

end insert begin delete

Existing law provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and imposes certain requirements on health care service plans. Existing law imposes, for certain violations of these provisions, various fines and administrative penalties, which are deposited in the Managed Care Administrative Fines and Penalties Fund. Existing law requires the first $1,000,000 in the fund to be transferred each year to the Medically Underserved Account for Physicians in the Health Professions Education Fund for purposes of the Steven M. Thompson Physician Corps Loan Repayment Program. Existing law requires all remaining funds to be transferred each year to the Major Risk Medical Insurance Fund for purposes of the Major Risk Medical Insurance Program.

end delete begin delete

This bill, beginning on the date that the Major Risk Medical Insurance Program becomes inoperative, would instead require all the funds in the Managed Care Administrative Fines and Penalties Fund to be transferred each year to the Medically Underserved Account for Physicians in the Health Professions Education Fund for purposes of the Steven M. Thompson Physician Corps Loan Repayment Program. The bill would require the Director of Finance to notify the Joint Legislative Budget Committee in that regard.

end delete

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program:  begin delete no end delete begin insert yes end insert .

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 100503 of the end insert begin insert Government Code end insert begin insert , as
amended by Section 4 of Chapter 5 of the First Extraordinary
Session of the Statutes of 2013, is amended to read: end insert

100503.  

In addition to meeting the minimum requirements of
Section 1311 of the federal act, the board shall do all of the
following:

(a) Determine the criteria and process for eligibility, enrollment,
and disenrollment of enrollees and potential enrollees in the
Exchange and coordinate that process with the state and local
government entities administering other health care coverage
programs, including the State Department of Health Care Services,
the Managed Risk Medical Insurance Board, and California
counties, in order to ensure consistent eligibility and enrollment
processes and seamless transitions between coverage.

(b) Develop processes to coordinate with the county entities
that administer eligibility for the Medi-Cal program and the entity
that determines eligibility for the Healthy Families Program,
including, but not limited to, processes for case transfer, referral,
and enrollment in the Exchange of individuals applying for
assistance to those entities, if allowed or required by federal law.

(c) Determine the minimum requirements a carrier must meet
to be considered for participation in the Exchange, and the
standards and criteria for selecting qualified health plans to be
offered through the Exchange that are in the best interests of
qualified individuals and qualified small employers. The board
shall consistently and uniformly apply these requirements,
standards, and criteria to all carriers. In the course of selectively
contracting for health care coverage offered to qualified individuals
and qualified small employers through the Exchange, the board
shall seek to contract with carriers so as to provide health care
coverage choices that offer the optimal combination of choice,
value, quality, and service.

(d) Provide, in each region of the state, a choice of qualified
health plans at each of the five levels of coverage contained in
subsections (d) and (e) of Section 1302 of the federal act.

(e) Require, as a condition of participation in the Exchange,
carriers to fairly and affirmatively offer, market, and sell in the
Exchange at least one product within each of the five levels of
coverage contained in subsections (d) and (e) of Section 1302 of
the federal act. The board may require carriers to offer additional
products within each of those five levels of coverage. This
subdivision shall not apply to a carrier that solely offers
supplemental coverage in the Exchange under paragraph (10) of
subdivision (a) of Section 100504.

(f) (1) Except as otherwise provided in this section and Section
100504.5, require, as a condition of participation in the Exchange,
carriers that sell any products outside the Exchange to do both of
the following:

(A) Fairly and affirmatively offer, market, and sell all products
made available to individuals in the Exchange to individuals
purchasing coverage outside the Exchange.

(B) Fairly and affirmatively offer, market, and sell all products
made available to small employers in the Exchange to small
employers purchasing coverage outside the Exchange.

(2) For purposes of this subdivision, “product” does not include
contracts entered into pursuant to Part 6.2 (commencing with
Section 12693) of Division 2 of the Insurance Code between the
Managed Risk Medical Insurance Board and carriers for enrolled
Healthy Families beneficiaries or contracts entered into pursuant
to Chapter 7 (commencing with Section 14000) of, or Chapter 8
(commencing with Section 14200) of, Part 3 of Division 9 of the
Welfare and Institutions Code between the State Department of
Health Care Services and carriers for enrolled Medi-Cal
beneficiaries. “Product” also does not include a bridge plan product
offered pursuant to Section 100504.5.

(3) Except as required by Section 1301(a)(1)(C)(ii) of the federal
act, a carrier offering a bridge plan product in the Exchange may
limit the products it offers in the Exchange solely to a bridge plan
product contract.

(g) Determine when an enrollee’s coverage commences and the
extent and scope of coverage.

(h) Provide for the processing of applications and the enrollment
and disenrollment of enrollees.

(i) Determine and approve cost-sharing provisions for qualified
health plans.

(j) Establish uniform billing and payment policies for qualified
health plans offered in the Exchange to ensure consistent
enrollment and disenrollment activities for individuals enrolled in
the Exchange.

(k) Undertake activities necessary to market and publicize the
availability of health care coverage and federal subsidies through
the Exchange. The board shall also undertake outreach and
enrollment activities that seek to assist enrollees and potential
enrollees with enrolling and reenrolling in the Exchange in the
least burdensome manner, including populations that may
experience barriers to enrollment, such as the disabled and those
with limited English language proficiency.

(l) Select and set performance standards and compensation for
navigators selected under subdivision (l) of Section 100502.

(m) Employ necessary staff.

(1) The board shall hire a chief fiscal officer, a chief operations
officer, a director for the SHOP Exchange, a director of Health
Plan Contracting, a chief technology and information officer, a
general counsel, and other key executive positions, as determined
by the board, who shall be exempt from civil service.

(2) (A) The board shall set the salaries for the exempt positions
described in paragraph (1) and subdivision (i) of Section 100500
in amounts that are reasonably necessary to attract and retain
individuals of superior qualifications. The salaries shall be
published by the board in the board’s annual budget. The board’s
annual budget shall be posted on the Internet Web site of the
Exchange. To determine the compensation for these positions, the
board shall cause to be conducted, through the use of independent
outside advisors, salary surveys of both of the following:

(i) Other state and federal health insurance exchanges that are
most comparable to the Exchange.

(ii) Other relevant labor pools.

(B) The salaries established by the board under subparagraph
(A) shall not exceed the highest comparable salary for a position
of that type, as determined by the surveys conducted pursuant to
subparagraph (A).

(C) The Department of Human Resources shall review the
methodology used in the surveys conducted pursuant to
subparagraph (A).

(3) The positions described in paragraph (1) and subdivision (i)
of Section 100500 shall not be subject to otherwise applicable
provisions of the Government Code or the Public Contract Code
and, for those purposes, the Exchange shall not be considered a
state agency or public entity.

(n) Assess a charge on the qualified health plans offered by
carriers that is reasonable and necessary to support the
development, operations, and prudent cash management of the
Exchange. This charge shall not affect the requirement under
Section 1301 of the federal act that carriers charge the same
premium rate for each qualified health plan whether offered inside
or outside the Exchange.

(o) Authorize expenditures, as necessary, from the California
Health Trust Fund to pay program expenses to administer the
Exchange.

(p) Keep an accurate accounting of all activities, receipts, and
expenditures, and annually submit to the United States Secretary
of Health and Human Services a report concerning that accounting.
Commencing January 1, 2016, the board shall conduct an annual
audit.

(q) (1)  begin delete Annually end delete begin insert (A) end insert begin insert   end insert begin insert Notwithstanding Section 10231.5, annually end insert
prepare a written report on the implementation and performance
of the Exchange functions during the preceding fiscal year,
including, at a minimum, begin delete the end delete begin insert all of the following: end insert

begin insert (i) end insert begin insert   end insert begin insert The end insert manner in which funds were expended and the progress
toward, and the achievement of, the requirements of this title. begin delete The
report shall also include data end delete

begin insert (ii) end insert begin insert   end insert begin insert Data end insert provided by health care service plans and health
insurers offering bridge plan products regarding the extent of health
care provider and health facility overlap in their Medi-Cal networks
as compared to the health care provider and health facility networks
contracting with the plan or insurer in their bridge plan contracts.
begin delete This end delete

begin insert

(iii) An assessment of how the Exchange is performing compared
to its operational and service principles for its Internet Web site
and customer service center. If the Exchange determines that it is
not meeting those operational and service principles, the report
shall also include a plan describing how the Exchange intends to
meet those principles.

end insert begin insert

(iv) A summary of the Exchange’s outreach strategy for the
enrollment of consumers with limited English language proficiency.

end insert begin insert

(v) A summary of the Exchange’s outreach strategy for the
enrollment of consumers lacking sufficient access to the Internet.

end insert begin insert

(vi) The total number of lives covered under qualified health
plans purchased through the Exchange as of the end of the
immediately preceding fiscal year.

end insert begin insert

(vii) The percentage of lives reported under clause (vi) receiving
a premium tax credit under Section 36B of the federal Internal
Revenue Code of 1986.

end insert begin insert

(viii) The percentage of lives reported under clause (vi) enrolled
in each of the levels of coverage identified in Sections 1367.008
and 1367.009 of the Health and Safety Code and Sections
10112.295 and 10112.297 of the Insurance Code.

end insert begin insert

(ix) The age, race, and ethnicity of the lives reported under
clause (vi).

end insert

begin insert (B) end insert begin insert   end insert begin insert The end insert report begin insert required by this paragraph end insert shall be transmitted
to the Legislature and the Governor and shall be made available
to the public on the Internet Web site of the Exchange. A report
made to the Legislature pursuant to this begin delete subdivision end delete begin insert paragraph end insert
shall be submitted pursuant to Section 9795.

(2) The Exchange shall prepare, or contract for the preparation
of, an evaluation of the bridge plan program using the first three
years of experience with the program. The evaluation shall be
provided to the health policy and fiscal committees of the
Legislature in the fourth year following federal approval of the
bridge plan option. The evaluation shall include, but not be limited
to, all of the following:

(A) The number of individuals eligible to participate in the
bridge plan program each year by category of eligibility.

(B) The number of eligible individuals who elect a bridge plan
option each year by category of eligibility.

(C) The average length of time, by region and statewide, that
individuals remain in the bridge plan option each year by category
of eligibility.

(D) The regions of the state with a bridge plan option, and the
carriers in each region that offer a bridge plan, by year.

(E) The premium difference each year, by region, between the
bridge plan and the first and second lowest cost plan for individuals
in the Exchange who are not eligible for the bridge plan.

(F) The effect of the bridge plan on the premium subsidy amount
for bridge plan eligible individuals each year by each region.

(G) Based on a survey of individuals enrolled in the bridge plan:

(i) Whether individuals enrolling in the bridge plan product are
able to keep their existing health care providers.

(ii) Whether individuals would want to retain their bridge plan
product, buy a different Exchange product, or decline to purchase
health insurance if there was no bridge plan product available. The
Exchange may include questions designed to elicit the information
in this subparagraph as part of an existing survey of individuals
receiving coverage in the Exchange.

(3) In addition to the evaluation required by paragraph (2), the
Exchange shall post the items in subparagraphs (A) to (F),
inclusive, on its Internet Web site each year.

(4) In addition to the report described in paragraph (1), the board
shall be responsive to requests for additional information from the
Legislature, including providing testimony and commenting on
proposed state legislation or policy issues. The Legislature finds
and declares that activities including, but not limited to, responding
to legislative or executive inquiries, tracking and commenting on
legislation and regulatory activities, and preparing reports on the
implementation of this title and the performance of the Exchange,
are necessary state requirements and are distinct from the
promotion of legislative or regulatory modifications referred to in
subdivision (d) of Section 100520.

(r) Maintain enrollment and expenditures to ensure that
expenditures do not exceed the amount of revenue in the fund, and
if sufficient revenue is not available to pay estimated expenditures,
institute appropriate measures to ensure fiscal solvency.

(s) Exercise all powers reasonably necessary to carry out and
comply with the duties, responsibilities, and requirements of this
act and the federal act.

(t) Consult with stakeholders relevant to carrying out the
activities under this title, including, but not limited to, all of the
following:

(1) Health care consumers who are enrolled in health plans.

(2) Individuals and entities with experience in facilitating
enrollment in health plans.

(3) Representatives of small businesses and self-employed
individuals.

(4) The State Medi-Cal Director.

(5) Advocates for enrolling hard-to-reach populations.

(u) Facilitate the purchase of qualified health plans in the
Exchange by qualified individuals and qualified small employers
no later than January 1, 2014.

(v) Report, or contract with an independent entity to report, to
the Legislature by December 1, 2018, on whether to adopt the
option in Section 1312(c)(3) of the federal act to merge the
individual and small employer markets. In its report, the board
shall provide information, based on at least two years of data from
the Exchange, on the potential impact on rates paid by individuals
and by small employers in a merged individual and small employer
market, as compared to the rates paid by individuals and small
employers if a separate individual and small employer market is
maintained. A report made pursuant to this subdivision shall be
submitted pursuant to Section 9795.

(w) With respect to the SHOP Program, collect premiums and
administer all other necessary and related tasks, including, but not
limited to, enrollment and plan payment, in order to make the
offering of employee plan choice as simple as possible for qualified
small employers.

(x) Require carriers participating in the Exchange to immediately
notify the Exchange, under the terms and conditions established
by the board when an individual is or will be enrolled in or
disenrolled from any qualified health plan offered by the carrier.

(y) Ensure that the Exchange provides oral interpretation
services in any language for individuals seeking coverage through
the Exchange and makes available a toll-free telephone number
for the hearing and speech impaired. The board shall ensure that
written information made available by the Exchange is presented
in a plainly worded, easily understandable format and made
available in prevalent languages.

(z) This section shall become inoperative on the October 1 that
is five years after the date that federal approval of the bridge plan
option occurs, and, as of the second January 1 thereafter, is
repealed, unless a later enacted statute that is enacted before that
date deletes or extends the dates on which it becomes inoperative
and is repealed.

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 100503 of the end insert begin insert Government Code end insert begin insert , as added by
Section 5 of Chapter 5 of the First Extraordinary Session of the
Statutes of 2013, is amended to read: end insert

100503.  

In addition to meeting the minimum requirements of
Section 1311 of the federal act, the board shall do all of the
following:

(a) Determine the criteria and process for eligibility, enrollment,
and disenrollment of enrollees and potential enrollees in the
Exchange and coordinate that process with the state and local
government entities administering other health care coverage
programs, including the State Department of Health Care Services,
the Managed Risk Medical Insurance Board, and California
counties, in order to ensure consistent eligibility and enrollment
processes and seamless transitions between coverage.

(b) Develop processes to coordinate with the county entities
that administer eligibility for the Medi-Cal program and the entity
that determines eligibility for the Healthy Families Program,
including, but not limited to, processes for case transfer, referral,
and enrollment in the Exchange of individuals applying for
assistance to those entities, if allowed or required by federal law.

(c) Determine the minimum requirements a carrier must meet
to be considered for participation in the Exchange, and the
standards and criteria for selecting qualified health plans to be
offered through the Exchange that are in the best interests of
qualified individuals and qualified small employers. The board
shall consistently and uniformly apply these requirements,
standards, and criteria to all carriers. In the course of selectively
contracting for health care coverage offered to qualified individuals
and qualified small employers through the Exchange, the board
shall seek to contract with carriers so as to provide health care
coverage choices that offer the optimal combination of choice,
value, quality, and service.

(d) Provide, in each region of the state, a choice of qualified
health plans at each of the five levels of coverage contained in
subsections (d) and (e) of Section 1302 of the federal act.

(e) Require, as a condition of participation in the Exchange,
carriers to fairly and affirmatively offer, market, and sell in the
Exchange at least one product within each of the five levels of
coverage contained in subsections (d) and (e) of Section 1302 of
the federal act. The board may require carriers to offer additional
products within each of those five levels of coverage. This
subdivision shall not apply to a carrier that solely offers
supplemental coverage in the Exchange under paragraph (10) of
subdivision (a) of Section 100504.

(f) (1) Require, as a condition of participation in the Exchange,
carriers that sell any products outside the Exchange to do both of
the following:

(A) Fairly and affirmatively offer, market, and sell all products
made available to individuals in the Exchange to individuals
purchasing coverage outside the Exchange.

(B) Fairly and affirmatively offer, market, and sell all products
made available to small employers in the Exchange to small
employers purchasing coverage outside the Exchange.

(2) For purposes of this subdivision, “product” does not include
contracts entered into pursuant to Part 6.2 (commencing with
Section 12693) of Division 2 of the Insurance Code between the
Managed Risk Medical Insurance Board and carriers for enrolled
Healthy Families beneficiaries or contracts entered into pursuant
to Chapter 7 (commencing with Section 14000) of, or Chapter 8
(commencing with Section 14200) of, Part 3 of Division 9 of the
Welfare and Institutions Code between the State Department of
Health Care Services and carriers for enrolled Medi-Cal
beneficiaries.

(g) Determine when an enrollee’s coverage commences and the
extent and scope of coverage.

(h) Provide for the processing of applications and the enrollment
and disenrollment of enrollees.

(i) Determine and approve cost-sharing provisions for qualified
health plans.

(j) Establish uniform billing and payment policies for qualified
health plans offered in the Exchange to ensure consistent
enrollment and disenrollment activities for individuals enrolled in
the Exchange.

(k) Undertake activities necessary to market and publicize the
availability of health care coverage and federal subsidies through
the Exchange. The board shall also undertake outreach and
enrollment activities that seek to assist enrollees and potential
enrollees with enrolling and reenrolling in the Exchange in the
least burdensome manner, including populations that may
experience barriers to enrollment, such as the disabled and those
with limited English language proficiency.

(l) Select and set performance standards and compensation for
navigators selected under subdivision (l) of Section 100502.

(m) Employ necessary staff.

(1) The board shall hire a chief fiscal officer, a chief operations
officer, a director for the SHOP Exchange, a director of Health
Plan Contracting, a chief technology and information officer, a
general counsel, and other key executive positions, as determined
by the board, who shall be exempt from civil service.

(2) (A) The board shall set the salaries for the exempt positions
described in paragraph (1) and subdivision (i) of Section 100500
in amounts that are reasonably necessary to attract and retain
individuals of superior qualifications. The salaries shall be
published by the board in the board’s annual budget. The board’s
annual budget shall be posted on the Internet Web site of the
Exchange. To determine the compensation for these positions, the
board shall cause to be conducted, through the use of independent
outside advisors, salary surveys of both of the following:

(i) Other state and federal health insurance exchanges that are
most comparable to the Exchange.

(ii) Other relevant labor pools.

(B) The salaries established by the board under subparagraph
(A) shall not exceed the highest comparable salary for a position
of that type, as determined by the surveys conducted pursuant to
subparagraph (A).

(C) The Department of Human Resources shall review the
methodology used in the surveys conducted pursuant to
subparagraph (A).

(3) The positions described in paragraph (1) and subdivision (i)
of Section 100500 shall not be subject to otherwise applicable
provisions of the Government Code or the Public Contract Code
and, for those purposes, the Exchange shall not be considered a
state agency or public entity.

(n) Assess a charge on the qualified health plans offered by
carriers that is reasonable and necessary to support the
development, operations, and prudent cash management of the
Exchange. This charge shall not affect the requirement under
Section 1301 of the federal act that carriers charge the same
premium rate for each qualified health plan whether offered inside
or outside the Exchange.

(o) Authorize expenditures, as necessary, from the California
Health Trust Fund to pay program expenses to administer the
Exchange.

(p) Keep an accurate accounting of all activities, receipts, and
expenditures, and annually submit to the United States Secretary
of Health and Human Services a report concerning that accounting.
Commencing January 1, 2016, the board shall conduct an annual
audit.

(q) (1)  begin delete Annually end delete begin insert (A) end insert begin insert   end insert begin insert Notwithstanding Section 10231.5, annually end insert
prepare a written report on the implementation and performance
of the Exchange functions during the preceding fiscal year,
including, at a minimum, begin delete the end delete begin insert all of the following: end insert

begin insert (i) end insert begin insert   end insert begin insert The end insert manner in which funds were expended and the progress
toward, and the achievement of, the requirements of this title. begin delete This end delete

begin insert

(ii) An assessment of how the Exchange is performing compared
to its operational and service principles for its Internet Web site
and customer service center. If the Exchange determines that it is
not meeting those operational and service principles, the report
shall also include a plan describing how the Exchange intends to
meet those principles.

end insert begin insert

(iii) A summary of the Exchange’s outreach strategy for the
enrollment of consumers with limited English language proficiency.

end insert begin insert

(iv) A summary of the Exchange’s outreach strategy for the
enrollment of consumers lacking sufficient access to the Internet.

end insert begin insert

(v) The total number of lives covered under qualified health
plans purchased through the Exchange as of the end of the
immediately preceding fiscal year.

end insert begin insert

(vi) The percentage of lives reported under clause (v) receiving
a premium tax credit under Section 36B of the federal Internal
Revenue Code of 1986.

end insert begin insert

(vii) The percentage of lives reported under clause (v) enrolled
in each of the levels of coverage identified in Sections 1367.008
and 1367.009 of the Health and Safety Code and Sections
10112.295 and 10112.297 of the Insurance Code.

end insert begin insert

(viii) The age, race, and ethnicity of the lives reported under
clause (v).

end insert

begin insert (B) end insert begin insert   end insert begin insert The end insert report begin insert required by this paragraph end insert shall be transmitted
to the Legislature and the Governor and shall be made available
to the public on the Internet Web site of the Exchange. A report
made to the Legislature pursuant to this begin delete subdivision end delete begin insert paragraph end insert
shall be submitted pursuant to Section 9795.

(2) In addition to the report described in paragraph (1), the board
shall be responsive to requests for additional information from the
Legislature, including providing testimony and commenting on
proposed state legislation or policy issues. The Legislature finds
and declares that activities including, but not limited to, responding
to legislative or executive inquiries, tracking and commenting on
legislation and regulatory activities, and preparing reports on the
implementation of this title and the performance of the Exchange,
are necessary state requirements and are distinct from the
promotion of legislative or regulatory modifications referred to in
subdivision (d) of Section 100520.

(r) Maintain enrollment and expenditures to ensure that
expenditures do not exceed the amount of revenue in the fund, and
if sufficient revenue is not available to pay estimated expenditures,
institute appropriate measures to ensure fiscal solvency.

(s) Exercise all powers reasonably necessary to carry out and
comply with the duties, responsibilities, and requirements of this
act and the federal act.

(t) Consult with stakeholders relevant to carrying out the
activities under this title, including, but not limited to, all of the
following:

(1) Health care consumers who are enrolled in health plans.

(2) Individuals and entities with experience in facilitating
enrollment in health plans.

(3) Representatives of small businesses and self-employed
individuals.

(4) The State Medi-Cal Director.

(5) Advocates for enrolling hard-to-reach populations.

(u) Facilitate the purchase of qualified health plans in the
Exchange by qualified individuals and qualified small employers
no later than January 1, 2014.

(v) Report, or contract with an independent entity to report, to
the Legislature by December 1, 2018, on whether to adopt the
option in Section 1312(c)(3) of the federal act to merge the
individual and small employer markets. In its report, the board
shall provide information, based on at least two years of data from
the Exchange, on the potential impact on rates paid by individuals
and by small employers in a merged individual and small employer
market, as compared to the rates paid by individuals and small
employers if a separate individual and small employer market is
maintained. A report made pursuant to this subdivision shall be
submitted pursuant to Section 9795.

(w) With respect to the SHOP Program, collect premiums and
administer all other necessary and related tasks, including, but not
limited to, enrollment and plan payment, in order to make the
offering of employee plan choice as simple as possible for qualified
small employers.

(x) Require carriers participating in the Exchange to immediately
notify the Exchange, under the terms and conditions established
by the board when an individual is or will be enrolled in or
disenrolled from any qualified health plan offered by the carrier.

(y) Ensure that the Exchange provides oral interpretation
services in any language for individuals seeking coverage through
the Exchange and makes available a toll-free telephone number
for the hearing and speech impaired. The board shall ensure that
written information made available by the Exchange is presented
in a plainly worded, easily understandable format and made
available in prevalent languages.

(z) This section shall become operative only if Section 4 of the
act that added this section becomes inoperative pursuant to
subdivision (z) of that Section 4.

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 1348.95 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

1348.95.  

begin insert (a) end insert begin insert   end insert begin insert (1) end insert begin insert   end insert Commencing March 1, 2013, and at least
annually thereafter, every health care service plan begin delete , not including
a health care service plan offering specialized health care service
plan contracts end delete , shall begin delete provide end delete begin insert report end insert to the department, in a form
and manner determined by the department in consultation with the
Department of Insurance, the begin delete number of enrollees, by product type,
as of December 31 of the prior year, that receive health care
coverage under a health care service plan contract that covers end delete
begin insert plan’s enrollment under its plan contracts, excluding specialized
health care service plan contracts, that cover end insert individuals, small
groups, large groups, or administrative services only business lines
begin insert as of December 31 of the immediately preceding year end insert . begin delete Health care
service plans shall include the enrollment data in specific product
types as determined by the department, including, but not limited
to, HMO, point-of-service, PPO, grandfathered, and Medi-Cal
managed care. The end delete begin insert This report shall, at a minimum, include the
following information: end insert

begin insert

(A) The plan’s enrollment in nongrandfathered coverage by
product type (HMO, point-of-service, PPO, EPO, Medi-Cal
managed care, or other), coverage tier (catastrophic, bronze-HSA,
bronze, silver-HSA, silver, gold, or platinum), if applicable, and
whether the coverage was purchased through the Exchange or
outside the Exchange.

end insert begin insert

(B) The plan’s enrollment in grandfathered coverage by product
type (HMO, point-of-service, PPO, EPO, Medi-Cal managed care,
or other).

end insert

begin insert (2) end insert begin insert   end insert begin insert The end insert department shall publicly report the data provided by
each health care service plan pursuant to this begin delete section end delete begin insert subdivision end insert ,
including, but not limited to, posting the data on the department’s
Internet Web site. begin delete The end delete

begin insert

(b) (1) In addition to the report required under subdivision (a),
by May 1, 2014, or within 30 days after the end of the initial open
enrollment period described in subdivision (c) of Section 1399.849,
whichever date is later, a health care service plan offering
individual health care service plan contracts shall report to the
department, in a form and manner determined by the department
in consultation with the Department of Insurance, the plan’s
enrollment under its individual health care service plan contracts,
excluding specialized health care service plan contracts, as of
March 31, 2014, or the date on which the initial open enrollment
period described in subdivision (c) of Section 1399.849 ends,
whichever date is later. The report shall, at a minimum, include
the following information:

end insert begin insert

(A) The plan’s enrollment in nongrandfathered coverage by
product type (HMO, point-of-service, PPO, EPO, Medi-Cal
managed care, or other), coverage tier (catastrophic, bronze-HSA,
bronze, silver-HSA, silver, gold, or platinum), age and gender,
and whether the coverage was purchased through the Exchange
or outside the Exchange.

end insert begin insert

(B) The plan’s enrollment in grandfathered coverage by product
type (HMO, point-of-service, PPO, EPO, Medi-Cal managed care,
or other) and by age and gender.

end insert begin insert

(2) (A) By June 1, 2014, or within 60 days after the end of the
initial open enrollment period described in subdivision (c) of
Section 1399.849, whichever date is later, the department shall
report to the fiscal and appropriate policy committees of the
Legislature, and post publicly on the department’s Internet Web
site, the enrollment data submitted by each health care service
plan pursuant to this subdivision.

end insert begin insert

(B) The requirement for submitting a report to the fiscal and
appropriate policy committees of the Legislature under this
paragraph is inoperative four years after the date on which the
report required under this paragraph is due, pursuant to Section
10231.5 of the Government Code.

end insert

begin insert (c) end insert begin insert   end insert begin insert The end insert department shall consult with the Department of
Insurance to ensure that the data begin insert collected and end insert reported begin insert pursuant
to this section end insert is comparable and consistent begin delete , does not duplicate
existing reporting requirements, end delete and utilizes existing reporting
formats begin insert to the extent feasible end insert .

begin insert

(d) For purposes of this section, the following definitions shall
apply:

end insert begin insert

(1) “Exchange” means the California Health Benefit Exchange
established under Section 100500 of the Government Code.

end insert begin insert

(2) “Grandfathered coverage” means coverage that constitutes
a grandfathered health plan under Section 1251 of the federal
Patient Protection and Affordable Care Act (Public Law 111-148),
as amended by the federal Health Care and Education
Reconciliation Act of 2010 (Public Law 111-152), and any rules,
regulations, or guidance issued pursuant to that law.

end insert begin insert

(3) “Nongrandfathered coverage” means coverage that does
not constitute grandfathered coverage.

end insert

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 1399.849 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

1399.849.  

(a) (1) On and after October 1, 2013, a plan shall
fairly and affirmatively offer, market, and sell all of the plan’s
health benefit plans that are sold in the individual market for policy
years on or after January 1, 2014, to all individuals and dependents
in each service area in which the plan provides or arranges for the
provision of health care services. A plan shall limit enrollment in
individual health benefit plans to open enrollment periods begin insert , annual
enrollment periods, end insert and special enrollment periods as provided in
subdivisions (c) and (d).

(2) A plan shall allow the subscriber of an individual health
benefit plan to add a dependent to the subscriber’s plan at the
option of the subscriber, consistent with the open enrollment,
annual enrollment, and special enrollment period requirements in
this section.

(b) An individual health benefit plan issued, amended, or
renewed on or after January 1, 2014, shall not impose any
preexisting condition provision upon any individual.

(c) (1) A plan shall provide an initial open enrollment period
from October 1, 2013, to March 31, 2014, inclusive, and annual
enrollment periods for begin delete plan end delete begin insert policy end insert years begin insert beginning end insert on or after
January 1, 2015, from October 15 to December 7, inclusive, of the
preceding calendar year begin insert , subject to paragraph (3) end insert .

(2) Pursuant to Section 147.104(b)(2) of Title 45 of the Code
of Federal Regulations, for individuals enrolled in noncalendar
year individual health plan contracts, a plan shall begin insert also end insert provide a
limited open enrollment period beginning on the date that is 30
calendar days prior to the date the policy year ends in 2014.

begin insert

(3) To the extent permitted by PPACA, the Exchange may, by
regulation, modify the initial open enrollment period and the
annual enrollment period for the policy year beginning on January
1, 2015. A health benefit plan offered in the individual market shall
comply with those modifications regardless of whether the plan is
offered inside or outside the Exchange. A regulation adopted
pursuant to this paragraph shall be considered by the Office of
Administrative Law to be necessary for the immediate preservation
of the public peace, health and safety, and general welfare, and
may be adopted as an emergency regulation in accordance with
Chapter 3.5 (commencing with Section 11340) of Part 1 of Division
3 of Title 2 of the Government Code.

end insert

(d) (1) Subject to paragraph (2), commencing January 1, 2014,
a plan shall allow an individual to enroll in or change individual
health benefit plans as a result of the following triggering events:

(A) He or she or his or her dependent loses minimum essential
coverage. For purposes of this paragraph, the following definitions
shall apply:

(i) “Minimum essential coverage” has the same meaning as that
term is defined in subsection (f) of Section 5000A of the Internal
Revenue Code (26 U.S.C. Sec. 5000A).

(ii) “Loss of minimum essential coverage” includes, but is not
limited to, loss of that coverage due to the circumstances described
in Section 54.9801-6(a)(3)(i) to (iii), inclusive, of Title 26 of the
Code of Federal Regulations and the circumstances described in
Section 1163 of Title 29 of the United States Code. “Loss of
minimum essential coverage” also includes loss of that coverage
for a reason that is not due to the fault of the individual.

(iii) “Loss of minimum essential coverage” does not include
loss of that coverage due to the individual’s failure to pay
premiums on a timely basis or situations allowing for a rescission,
subject to clause (ii) and Sections 1389.7 and 1389.21.

(B) He or she gains a dependent or becomes a dependent.

(C) He or she is mandated to be covered as a dependent pursuant
to a valid state or federal court order.

(D) He or she has been released from incarceration.

(E) His or her health coverage issuer substantially violated a
material provision of the health coverage contract.

(F) He or she gains access to new health benefit plans as a result
of a permanent move.

(G) He or she was receiving services from a contracting provider
under another health benefit plan, as defined in Section 1399.845
or Section 10965 of the Insurance Code, for one of the conditions
described in subdivision (c) of Section 1373.96 and that provider
is no longer participating in the health benefit plan.

(H) He or she demonstrates to the Exchange, with respect to
health benefit plans offered through the Exchange, or to the
department, with respect to health benefit plans offered outside
the Exchange, that he or she did not enroll in a health benefit plan
during the immediately preceding enrollment period available to
the individual because he or she was misinformed that he or she
was covered under minimum essential coverage.

(I) He or she is a member of the reserve forces of the United
States military returning from active duty or a member of the
California National Guard returning from active duty service under
Title 32 of the United States Code.

(J) With respect to individual health benefit plans offered
through the Exchange, in addition to the triggering events listed
in this paragraph, any other events listed in Section 155.420(d) of
Title 45 of the Code of Federal Regulations.

(2) With respect to individual health benefit plans offered
outside the Exchange, an individual shall have 60 days from the
date of a triggering event identified in paragraph (1) to apply for
coverage from a health care service plan subject to this section.
With respect to individual health benefit plans offered through the
Exchange, an individual shall have 60 days from the date of a
triggering event identified in paragraph (1) to select a plan offered
through the Exchange, unless a longer period is provided in Part
155 (commencing with Section 155.10) of Subchapter B of Subtitle
A of Title 45 of the Code of Federal Regulations.

(e) With respect to individual health benefit plans offered
through the Exchange, the effective date of coverage required
pursuant to this section shall be consistent with the dates specified
in Section 155.410 or 155.420 of Title 45 of the Code of Federal
Regulations, as applicable. A dependent who is a registered
domestic partner pursuant to Section 297 of the Family Code shall
have the same effective date of coverage as a spouse.

(f) With respect to individual health benefit plans offered outside
the Exchange, the following provisions shall apply:

(1) After an individual submits a completed application form
for a plan contract, the health care service plan shall, within 30
days, notify the individual of the individual’s actual premium
charges for that plan established in accordance with Section
1399.855. The individual shall have 30 days in which to exercise
the right to buy coverage at the quoted premium charges.

(2) With respect to an individual health benefit plan for which
an individual applies during the initial open enrollment period
described in subdivision (c), when the subscriber submits a
premium payment, based on the quoted premium charges, and that
payment is delivered or postmarked, whichever occurs earlier, by
December 15, 2013, coverage under the individual health benefit
plan shall become effective no later than January 1, 2014. When
that payment is delivered or postmarked within the first 15 days
of any subsequent month, coverage shall become effective no later
than the first day of the following month. When that payment is
delivered or postmarked between December 16, 2013, and
December 31, 2013, inclusive, or after the 15th day of any
subsequent month, coverage shall become effective no later than
the first day of the second month following delivery or postmark
of the payment.

(3) With respect to an individual health benefit plan for which
an individual applies during the annual open enrollment period
described in subdivision (c), when the individual submits a
premium payment, based on the quoted premium charges, and that
payment is delivered or postmarked, whichever occurs later, by
December 15, coverage shall become effective as of the following
January 1. When that payment is delivered or postmarked within
the first 15 days of any subsequent month, coverage shall become
effective no later than the first day of the following month. When
that payment is delivered or postmarked between December 16
and December 31, inclusive, or after the 15th day of any subsequent
month, coverage shall become effective no later than the first day
of the second month following delivery or postmark of the
payment.

(4) With respect to an individual health benefit plan for which
an individual applies during a special enrollment period described
in subdivision (d), the following provisions shall apply:

(A) When the individual submits a premium payment, based
on the quoted premium charges, and that payment is delivered or
postmarked, whichever occurs earlier, within the first 15 days of
the month, coverage under the plan shall become effective no later
than the first day of the following month. When the premium
payment is neither delivered nor postmarked until after the 15th
day of the month, coverage shall become effective no later than
the first day of the second month following delivery or postmark
of the payment.

(B) Notwithstanding subparagraph (A), in the case of a birth,
adoption, or placement for adoption, the coverage shall be effective
on the date of birth, adoption, or placement for adoption.

(C) Notwithstanding subparagraph (A), in the case of marriage
or becoming a registered domestic partner or in the case where a
qualified individual loses minimum essential coverage, the
coverage effective date shall be the first day of the month following
the date the plan receives the request for special enrollment.

(g) (1) A health care service plan shall not establish rules for
eligibility, including continued eligibility, of any individual to
enroll under the terms of an individual health benefit plan based
on any of the following factors:

(A) Health status.

(B) Medical condition, including physical and mental illnesses.

(C) Claims experience.

(D) Receipt of health care.

(E) Medical history.

(F) Genetic information.

(G) Evidence of insurability, including conditions arising out
of acts of domestic violence.

(H) Disability.

(I) Any other health status-related factor as determined by any
federal regulations, rules, or guidance issued pursuant to Section
2705 of the federal Public Health Service Act.

(2) Notwithstanding Section 1389.1, a health care service plan
shall not require an individual applicant or his or her dependent
to fill out a health assessment or medical questionnaire prior to
enrollment under an individual health benefit plan. A health care
service plan shall not acquire or request information that relates
to a health status-related factor from the applicant or his or her
dependent or any other source prior to enrollment of the individual.

(h) (1) A health care service plan shall consider as a single risk
pool for rating purposes in the individual market the claims
experience of all insureds and enrollees in all nongrandfathered
individual health benefit plans offered by that health care service
plan in this state, whether offered as health care service plan
contracts or individual health insurance policies, including those
insureds and enrollees who enroll in individual coverage through
the Exchange and insureds and enrollees who enroll in individual
coverage outside of the Exchange. Student health insurance
coverage, as that coverage is defined in Section 147.145(a) of Title
45 of the Code of Federal Regulations, shall not be included in a
health care service plan’s single risk pool for individual coverage.

(2) Each calendar year, a health care service plan shall establish
an index rate for the individual market in the state based on the
total combined claims costs for providing essential health benefits,
as defined pursuant to Section 1302 of PPACA, within the single
risk pool required under paragraph (1). The index rate shall be
adjusted on a marketwide basis based on the total expected
marketwide payments and charges under the risk adjustment and
reinsurance programs established for the state pursuant to Sections
1343 and 1341 of PPACA. The premium rate for all of the health
care service plan’s health benefit plans in the individual market
shall use the applicable index rate, as adjusted for total expected
marketwide payments and charges under the risk adjustment and
reinsurance programs established for the state pursuant to Sections
1343 and 1341 of PPACA, subject only to the adjustments
permitted under paragraph (3).

(3) A health care service plan may vary premium rates for a
particular health benefit plan from its index rate based only on the
following actuarially justified plan-specific factors:

(A) The actuarial value and cost-sharing design of the health
benefit plan.

(B) The health benefit plan’s provider network, delivery system
characteristics, and utilization management practices.

(C) The benefits provided under the health benefit plan that are
in addition to the essential health benefits, as defined pursuant to
Section 1302 of PPACA and Section 1367.005. These additional
benefits shall be pooled with similar benefits within the single risk
pool required under paragraph (1) and the claims experience from
those benefits shall be utilized to determine rate variations for
plans that offer those benefits in addition to essential health
benefits.

(D) With respect to catastrophic plans, as described in subsection
(e) of Section 1302 of PPACA, the expected impact of the specific
eligibility categories for those plans.

(E) Administrative costs, excluding user fees required by the
Exchange.

(i) This section shall only apply with respect to individual health
benefit plans for policy years on or after January 1, 2014.

(j) This section shall not apply to an individual health benefit
plan that is a grandfathered health plan.

(k) If Section 5000A of the Internal Revenue Code, as added
by Section 1501 of PPACA, is repealed or amended to no longer
apply to the individual market, as defined in Section 2791 of the
federal Public Health Service Act (42 U.S.C. Sec. begin delete 300gg-4), end delete
begin insert 300gg-91), end insert subdivisions (a), (b), and (g) shall become inoperative
12 months after that repeal or amendment.

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 10127.19 of the end insert begin insert Insurance Code end insert begin insert is amended
to read: end insert

10127.19.  

begin insert (a) end insert begin insert   end insert begin insert (1) end insert begin insert   end insert Commencing March 1, 2013, and at least
annually thereafter, every health insurer begin delete , not including a health
insurer offering specialized health insurance policies, end delete shall begin delete provide end delete
begin insert report end insert to the department, in a form and manner determined by the
department in consultation with the Department of Managed Health
Care, the begin delete number of covered lives, by product type, as of December
31 of the prior year, that receive health care coverage under a
health insurance policy that covers end delete begin insert insurer’s enrollment under its
health insurance policies, other than specialized health insurance
policies, that cover end insert individuals, small groups, large groups, or
administrative services only business lines begin insert as of December 31 of
the immediately preceding year end insert . begin delete Health insurers shall include the
unduplicated enrollment data in specific product types as
determined by the department, including, but not limited to, HMO,
point-of-service, PPO, grandfathered, and Medi-Cal managed care.
The end delete begin insert This report shall, at a minimum, include the following
information: end insert

begin insert

(A) The insurer’s enrollment in nongrandfathered coverage by
product type (HMO, point-of-service, PPO, EPO, Medi-Cal
managed care, or other), coverage tier (catastrophic, bronze-HSA,
bronze, silver-HSA, silver, gold, or platinum), if applicable, and
whether the coverage was purchased through the Exchange or
outside the Exchange.

end insert begin insert

(B) The insurer’s enrollment in grandfathered coverage by
product type (HMO, point-of-service, PPO, EPO, Medi-Cal
managed care, or other).

end insert

begin insert (2) end insert begin insert   end insert begin insert The end insert department shall publicly report the data provided by
each health insurer pursuant to this begin delete section end delete begin insert subdivision end insert , including,
but not limited to, posting the data on the department’s Internet
Web site. begin delete The end delete

begin insert

(b) (1) In addition to the report required under subdivision (a),
by May 1, 2014, or within 30 days after the end of the initial open
enrollment period described in subdivision (c) of Section 10965.3,
whichever date is later, a health insurer offering individual health
insurance policies shall report to the department, in a form and
manner determined by the department in consultation with the
Department of Managed Health Care, the insurer’s enrollment
under its individual health insurance policies, excluding specialized
health insurance policies, as of March 31, 2014, or the date on
which the initial open enrollment period described in subdivision
(c) of Section 10965.3 ends, whichever date is later. The report
shall, at a minimum, include the following information:

end insert begin insert

(A) The insurer’s enrollment in nongrandfathered coverage by
product type (HMO, point-of-service, PPO, EPO, Medi-Cal
managed care, or other), coverage tier (catastrophic, bronze-HSA,
bronze, silver-HSA, silver, gold, or platinum), age and gender,
and whether the coverage was purchased through the Exchange
or outside the Exchange.

end insert begin insert

(B) The insurer’s enrollment in grandfathered coverage by
product type (HMO, point-of-service, PPO, EPO, Medi-Cal
managed care, or other) and by age and gender.

end insert begin insert

(2) (A) By June 1, 2014, or within 60 days after the end of the
initial open enrollment period described in subdivision (c) of
Section 10965.3, whichever date is later, the department shall
report to the fiscal and appropriate policy committees of the
Legislature, and post publicly on the department’s Internet Web
site, the enrollment data submitted by each health insurer pursuant
to this subdivision.

end insert begin insert

(B) The requirement for submitting a report to the fiscal and
appropriate policy committees of the Legislature under this
paragraph is inoperative four years after the date on which the
report required under this paragraph is due, pursuant to Section
10231.5 of the Government Code.

end insert

begin insert (c) end insert begin insert   end insert begin insert The end insert department shall consult with the Department of
Managed Health Care to ensure that the data begin insert collected and end insert reported
begin insert pursuant to this section end insert is comparable and consistent begin delete , does not
duplicate existing reporting requirements, end delete and utilizes existing
reporting formats begin insert to the extent feasible end insert .

begin insert

(d) For purposes of this section, the following definitions shall
apply:

end insert begin insert

(1) “Exchange” means the California Health Benefit Exchange
established under Section 100500 of the Government Code.

end insert begin insert

(2) “Grandfathered coverage” means coverage that constitutes
a grandfathered health plan under Section 1251 of the federal
Patient Protection and Affordable Care Act (Public Law 111-148),
as amended by the federal Health Care and Education
Reconciliation Act of 2010 (Public Law 111-152), and any rules,
regulations, or guidance issued pursuant to that law.

end insert begin insert

(3) “Nongrandfathered coverage” means coverage that does
not constitute grandfathered coverage.

end insert

begin insert

begin insert SEC. 6. end insert   

end insert

begin insert Section 10965.3 of the end insert begin insert Insurance Code end insert begin insert is amended to
read: end insert

10965.3.  

(a) (1) On and after October 1, 2013, a health insurer
shall fairly and affirmatively offer, market, and sell all of the
insurer’s health benefit plans that are sold in the individual market
for policy years on or after January 1, 2014, to all individuals and
dependents in each service area in which the insurer provides or
arranges for the provision of health care services. A health insurer
shall limit enrollment in individual health benefit plans to open
enrollment periods begin insert , annual enrollment periods, end insert and special
enrollment periods as provided in subdivisions (c) and (d).

(2) A health insurer shall allow the policyholder of an individual
health benefit plan to add a dependent to the policyholder’s health
benefit plan at the option of the policyholder, consistent with the
open enrollment, annual enrollment, and special enrollment period
requirements in this section.

(b) An individual health benefit plan issued, amended, or
renewed on or after January 1, 2014, shall not impose any
preexisting condition provision upon any individual.

(c) (1) A health insurer shall provide an initial open enrollment
period from October 1, 2013, to March 31, 2014, inclusive, and
annual enrollment periods for begin delete plan end delete begin insert policy end insert years begin insert beginning end insert on or
after January 1, 2015, from October 15 to December 7, inclusive,
of the preceding calendar year begin insert , subject to paragraph (3) end insert .

(2) Pursuant to Section 147.104(b)(2) of Title 45 of the Code
of Federal Regulations, for individuals enrolled in noncalendar-year
individual health plan contracts, a begin delete plan end delete begin insert health insurer end insert shall begin insert also end insert
provide a limited open enrollment period beginning on the date
that is 30 calendar days prior to the date the policy year ends in
2014.

begin insert

(3) To the extent permitted by PPACA, the Exchange may, by
regulation, modify the initial open enrollment period and the
annual enrollment period for the policy year beginning on January
1, 2015. A health benefit plan offered in the individual market shall
comply with those modifications regardless of whether the plan is
offered inside or outside the Exchange. A regulation adopted
pursuant to this paragraph shall be considered by the Office of
Administrative Law to be necessary for the immediate preservation
of the public peace, health and safety, and general welfare, and
may be adopted as an emergency regulation in accordance with
Chapter 3.5 (commencing with Section 11340) of Part 1 of Division
3 of Title 2 of the Government Code.

end insert

(d) (1) Subject to paragraph (2), commencing January 1, 2014,
a health insurer shall allow an individual to enroll in or change
individual health benefit plans as a result of the following triggering
events:

(A) He or she or his or her dependent loses minimum essential
coverage. For purposes of this paragraph, both of the following
definitions shall apply:

(i) “Minimum essential coverage” has the same meaning as that
term is defined in subsection (f) of Section 5000A of the Internal
Revenue Code (26 U.S.C. Sec. 5000A).

(ii) “Loss of minimum essential coverage” includes, but is not
limited to, loss of that coverage due to the circumstances described
in Section 54.9801-6(a)(3)(i) to (iii), inclusive, of Title 26 of the
Code of Federal Regulations and the circumstances described in
Section 1163 of Title 29 of the United States Code. “Loss of
minimum essential coverage” also includes loss of that coverage
for a reason that is not due to the fault of the individual.

(iii) “Loss of minimum essential coverage” does not include
loss of that coverage due to the individual’s failure to pay
premiums on a timely basis or situations allowing for a rescission,
subject to clause (ii) and Sections 10119.2 and 10384.17.

(B) He or she gains a dependent or becomes a dependent.

(C) He or she is mandated to be covered as a dependent pursuant
to a valid state or federal court order.

(D) He or she has been released from incarceration.

(E) His or her health coverage issuer substantially violated a
material provision of the health coverage contract.

(F) He or she gains access to new health benefit plans as a result
of a permanent move.

(G) He or she was receiving services from a contracting provider
under another health benefit plan, as defined in Section 10965 or
Section 1399.845 of the Health and Safety Code for one of the
conditions described in subdivision (a) of Section 10133.56 and
that provider is no longer participating in the health benefit plan.

(H) He or she demonstrates to the Exchange, with respect to
health benefit plans offered through the Exchange, or to the
department, with respect to health benefit plans offered outside
the Exchange, that he or she did not enroll in a health benefit plan
during the immediately preceding enrollment period available to
the individual because he or she was misinformed that he or she
was covered under minimum essential coverage.

(I) He or she is a member of the reserve forces of the United
States military returning from active duty or a member of the
California National Guard returning from active duty service under
Title 32 of the United States Code.

(J) With respect to individual health benefit plans offered
through the Exchange, in addition to the triggering events listed
in this paragraph, any other events listed in Section 155.420(d) of
Title 45 of the Code of Federal Regulations.

(2) With respect to individual health benefit plans offered
outside the Exchange, an individual shall have 60 days from the
date of a triggering event identified in paragraph (1) to apply for
coverage from a health care service plan subject to this section.
With respect to individual health benefit plans offered through the
Exchange, an individual shall have 60 days from the date of a
triggering event identified in paragraph (1) to select a plan offered
through the Exchange, unless a longer period is provided in Part
155 (commencing with Section 155.10) of Subchapter B of Subtitle
A of Title 45 of the Code of Federal Regulations.

(e) With respect to individual health benefit plans offered
through the Exchange, the effective date of coverage required
pursuant to this section shall be consistent with the dates specified
in Section 155.410 or 155.420 of Title 45 of the Code of Federal
Regulations, as applicable. A dependent who is a registered
domestic partner pursuant to Section 297 of the Family Code shall
have the same effective date of coverage as a spouse.

(f) With respect to an individual health benefit plan offered
outside the Exchange, the following provisions shall apply:

(1) After an individual submits a completed application form
for a plan, the insurer shall, within 30 days, notify the individual
of the individual’s actual premium charges for that plan established
in accordance with Section 10965.9. The individual shall have 30
days in which to exercise the right to buy coverage at the quoted
premium charges.

(2) With respect to an individual health benefit plan for which
an individual applies during the initial open enrollment period
described in subdivision (c), when the policyholder submits a
premium payment, based on the quoted premium charges, and that
payment is delivered or postmarked, whichever occurs earlier, by
December 15, 2013, coverage under the individual health benefit
plan shall become effective no later than January 1, 2014. When
that payment is delivered or postmarked within the first 15 days
of any subsequent month, coverage shall become effective no later
than the first day of the following month. When that payment is
delivered or postmarked between December 16, 2013, and
December 31, 2013, inclusive, or after the 15th day of any
subsequent month, coverage shall become effective no later than
the first day of the second month following delivery or postmark
of the payment.

(3) With respect to an individual health benefit plan for which
an individual applies during the annual open enrollment period
described in subdivision (c), when the individual submits a
premium payment, based on the quoted premium charges, and that
payment is delivered or postmarked, whichever occurs later, by
December 15, coverage shall become effective as of the following
January 1. When that payment is delivered or postmarked within
the first 15 days of any subsequent month, coverage shall become
effective no later than the first day of the following month. When
that payment is delivered or postmarked between December 16
and December 31, inclusive, or after the 15th day of any subsequent
month, coverage shall become effective no later than the first day
of the second month following delivery or postmark of the
payment.

(4) With respect to an individual health benefit plan for which
an individual applies during a special enrollment period described
in subdivision (d), the following provisions shall apply:

(A) When the individual submits a premium payment, based
on the quoted premium charges, and that payment is delivered or
postmarked, whichever occurs earlier, within the first 15 days of
the month, coverage under the plan shall become effective no later
than the first day of the following month. When the premium
payment is neither delivered nor postmarked until after the 15th
day of the month, coverage shall become effective no later than
the first day of the second month following delivery or postmark
of the payment.

(B) Notwithstanding subparagraph (A), in the case of a birth,
adoption, or placement for adoption, the coverage shall be effective
on the date of birth, adoption, or placement for adoption.

(C) Notwithstanding subparagraph (A), in the case of marriage
or becoming a registered domestic partner or in the case where a
qualified individual loses minimum essential coverage, the
coverage effective date shall be the first day of the month following
the date the insurer receives the request for special enrollment.

(g) (1) A health insurer shall not establish rules for eligibility,
including continued eligibility, of any individual to enroll under
the terms of an individual health benefit plan based on any of the
following factors:

(A) Health status.

(B) Medical condition, including physical and mental illnesses.

(C) Claims experience.

(D) Receipt of health care.

(E) Medical history.

(F) Genetic information.

(G) Evidence of insurability, including conditions arising out
of acts of domestic violence.

(H) Disability.

(I) Any other health status-related factor as determined by any
federal regulations, rules, or guidance issued pursuant to Section
2705 of the federal Public Health Service Act.

(2) Notwithstanding subdivision (c) of Section 10291.5, a health
insurer shall not require an individual applicant or his or her
dependent to fill out a health assessment or medical questionnaire
prior to enrollment under an individual health benefit plan. A health
insurer shall not acquire or request information that relates to a
health status-related factor from the applicant or his or her
dependent or any other source prior to enrollment of the individual.

(h) (1) A health insurer shall consider as a single risk pool for
rating purposes in the individual market the claims experience of
all insureds and enrollees in all nongrandfathered individual health
benefit plans offered by that insurer in this state, whether offered
as health care service plan contracts or individual health insurance
policies, including those insureds who enroll in individual coverage
through the Exchange and insureds who enroll in individual
coverage outside the Exchange. Student health insurance coverage,
as such coverage is defined at Section 147.145(a) of Title 45 of
the Code of Federal Regulations, shall not be included in a health
insurer’s single risk pool for individual coverage.

(2) Each calendar year, a health insurer shall establish an index
rate for the individual market in the state based on the total
combined claims costs for providing essential health benefits, as
defined pursuant to Section 1302 of PPACA, within the single risk
pool required under paragraph (1). The index rate shall be adjusted
on a marketwide basis based on the total expected marketwide
payments and charges under the risk adjustment and reinsurance
programs established for the state pursuant to Sections 1343 and
1341 of PPACA. The premium rate for all of the health insurer’s
health benefit plans in the individual market shall use the applicable
index rate, as adjusted for total expected marketwide payments
and charges under the risk adjustment and reinsurance programs
established for the state pursuant to Sections 1343 and 1341 of
PPACA, subject only to the adjustments permitted under paragraph
(3).

(3) A health insurer may vary premium rates for a particular
health benefit plan from its index rate based only on the following
actuarially justified plan-specific factors:

(A) The actuarial value and cost-sharing design of the health
benefit plan.

(B) The health benefit plan’s provider network, delivery system
characteristics, and utilization management practices.

(C) The benefits provided under the health benefit plan that are
in addition to the essential health benefits, as defined pursuant to
Section 1302 of PPACA and Section 10112.27. These additional
benefits shall be pooled with similar benefits within the single risk
pool required under paragraph (1) and the claims experience from
those benefits shall be utilized to determine rate variations for
plans that offer those benefits in addition to essential health
benefits.

(D) With respect to catastrophic plans, as described in subsection
(e) of Section 1302 of PPACA, the expected impact of the specific
eligibility categories for those plans.

(E) Administrative costs, excluding any user fees required by
the Exchange.

(i) This section shall only apply with respect to individual health
benefit plans for policy years on or after January 1, 2014.

(j) This section shall not apply to an individual health benefit
plan that is a grandfathered health plan.

(k) If Section 5000A of the Internal Revenue Code, as added
by Section 1501 of PPACA, is repealed or amended to no longer
apply to the individual market, as defined in Section 2791 of the
federal Public Health Service Act (42 U.S.C. Sec. begin delete 300gg-4), end delete
begin insert 300gg-91), end insert subdivisions (a), (b), and (g) shall become inoperative
12 months after the date of that repeal or amendment and individual
health care benefit plans shall thereafter be subject to Sections
10901.2, 10951, and 10953.

begin insert

begin insert SEC. 7. end insert   

end insert begin insert

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.

end insert

begin delete

  

SECTION 1.  

Section 1341.45 of the Health and Safety Code
is amended to read:

1341.45.  

(a) There is hereby created in the State Treasury the
Managed Care Administrative Fines and Penalties Fund.

(b) The fines and administrative penalties collected pursuant to
this chapter, on and after the operative date of this section, shall
be deposited into the Managed Care Administrative Fines and
Penalties Fund.

(c) (1) The fines and administrative penalties deposited into
the Managed Care Administrative Fines and Penalties Fund shall
be transferred by the department, beginning September 1, 2009,
and annually thereafter, as follows:

(A) The first one million dollars ($1,000,000) shall be
transferred to the Medically Underserved Account for Physicians
within the Health Professions Education Fund and shall, upon
appropriation by the Legislature, be used for the purposes of the
Steven M. Thompson Physician Corps Loan Repayment Program,
as specified in Article 5 (commencing with Section 128550) of
Chapter 5 of Part 3 of Division 107 and, notwithstanding Section
128555, shall not be used to provide funding for the Physician
Volunteer Program.

(B) Any amount over the first one million dollars ($1,000,000),
including accrued interest, in the fund shall be transferred to the
Major Risk Medical Insurance Fund created pursuant to Section
12739 of the Insurance Code and shall, upon appropriation by the
Legislature, be used for the Major Risk Medical Insurance Program
for the purposes specified in Section 12739.1 of the Insurance
Code.

(C) Transfers under this paragraph shall cease on the date the
Managed Risk Medical Insurance Program becomes inoperative.
The Director of Finance shall notify the Joint Legislative Budget
Committee at the time the program becomes inoperative.

(2) Commencing on the date transfers under paragraph (1) cease,
and annually thereafter, the fines and administrative penalties
deposited into the Managed Care Administrative Fines and
Penalties Fund shall be transferred by the department to the
Medically Underserved Account for Physicians within the Health
Professions Education Fund and shall, upon appropriation by the
Legislature, be used for the purposes of the Steven M. Thompson
Physician Corps Loan Repayment Program, as specified in Article
5 (commencing with Section 128550) of Chapter 5 of Part 3 of
Division 107 and, notwithstanding Section 128555, shall not be
used to provide funding for the Physician Volunteer Program.

(d) Notwithstanding subdivision (b) of Section 1356 and Section
1356.1, the fines and administrative penalties authorized pursuant
to this chapter shall not be used to reduce the assessments imposed
on health care service plans pursuant to Section 1356.

end delete