Amended in Senate May 13, 2013

Amended in Senate April 16, 2013

Senate Bill No. 28

Introduced by Senators Hernandez and Steinberg

December 3, 2012

An act to amend Section 100503 of the Government Code, to amend Section 12739.53 of, and to add Section 12712.5 to, the Insurance Code, and to amend Section 14011.6 of the Welfare and Institutions Code, relating to health.

LEGISLATIVE COUNSEL’S DIGEST

SB 28, as amended, Hernandez. California Health Benefit Exchange.

(1) Existing law establishes the California Major Risk Medical Insurance Program (MRMIP), which is administered by the Managed Risk Medical Insurance Board (MRMIB), to provide major risk medical coverage to persons who, among other things, have been rejected for coverage by at least one private health plan. Existing law requires MRMIB to enter into an agreement with the federal Department of Health and Human Services to administer a temporary high risk pool to provide health coverage, until January 1, 2014, to specified individuals who have preexisting conditions, consistent with the federal Patient Protection and Affordable Care Act (PPACA).

Under PPACA, each state is required, by January 1, 2014, to establish an American Health Benefit Exchange that makes available qualified health plans to qualified individuals and small employers. Existing state law establishes the California Health Benefit Exchange (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 by January 1, 2014. Existing law also requires the board to undertake activities necessary to market and publicize the availability of health care coverage and federal subsidizes through the Exchange and to undertake outreach and enrollment activities.

This bill would require MRMIB to provide the Exchange, or its designee, with specified information of subscribers and applicants of MRMIP and the temporary high risk pool in order to assist the Exchange in conducting outreach to those subscribers and applicants.

The bill would require the board governing the Exchange to provide a specified notice informing those subscribers and applicants that they may be eligible for reduced-cost coverage through the Exchange or no-cost coverage through Medi-Cal.

(2) Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions.

Existing law requires, to the extent that federal financial participation is available, that the department implement an option provided for under the federal Social Security Act for a program for accelerated enrollment of children into the Medi-Cal program. Existing law requires the department to designate the single point of entry, as defined, as the qualified entity for determining eligibility under these provisions.

This bill would, commencing October 1, 2013, require the department to designate the Exchange and its agents, and specified county departments as qualified entities for determining eligibility under the above-mentioned provisions. The bill would also require the qualified entity to grant accelerated enrollment if a complete eligibility determination cannot be made based upon the receipt of an application for a child at the time of the initial application begin insert and the child is eligible for accelerated enrollment end insert .

Because the bill would require counties to make additional Medi-Cal eligibility determinations, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

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

SECTION 1.  

Section 100503 of the Government Code is
amended to read:

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
subdivisions (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 subdivisions (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) (1) 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.

(2) Use the information received pursuant to Section 12712.5
of, and paragraph (10) of subdivision (b) of Section 12739.53 of,
the Insurance Code to provide an individual a notice that he or she
may be eligible for reduced-cost coverage through the Exchange
or no-cost coverage through Medi-Cal. The notice shall include
information on obtaining coverage pursuant to those programs.

(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) Annually prepare a written report on the implementation
and performance of the Exchange functions during the preceding
fiscal year, including, at a minimum, the manner in which funds
were expended and the progress toward, and the achievement of,
the requirements of this title. This report 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 subdivision 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 paragraph (3) of subdivision (c) of Section 1312 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.

SEC. 2.  

Section 12712.5 is added to the Insurance Code, to
read:

12712.5.  

In order to assist the California Health Benefit
Exchange, established under Title 22 (commencing with Section
100500) of the Government Code, in conducting outreach to
program subscribers and applicants, the board shall provide the
Exchange, or its designee, with the names, addresses, email
addresses, telephone numbers, other contact information, and
written and spoken languages of program subscribers and
applicants.

SEC. 3.  

Section 12739.53 of the Insurance Code is amended
to read:

12739.53.  

(a) The board shall, consistent with Section 1101
of the federal Patient Protection and Affordable Care Act (P.L.
111-148) and state and federal law and contingent on the agreement
of the federal Department of Health and Human Services and
receipt of sufficient federal funding, enter into an agreement with
the federal Department of Health and Human Services to administer
the federal temporary high risk pool in California.

(b) If the federal Department of Health and Human Services
and the state enter into an agreement to administer the federal
temporary high risk pool, the board shall do all of the following:

(1) Administer the program pursuant to that agreement.

(2) Begin providing coverage in the program on the date
established pursuant to the agreement with the federal Department
of Health and Human Services.

(3) Establish the scope and content of high risk medical
coverage.

(4) Determine reasonable minimum standards for participating
health plans, third-party administrators, and other contractors.

(5) Determine the time, manner, method, and procedures for
withdrawing program approval from a plan, third-party
administrator, or other contractor, or limiting enrollment of
subscribers in a plan.

(6) Research and assess the needs of persons without adequate
health coverage and promote means of ensuring the availability
of adequate health care services.

(7) Administer the program to ensure the following:

(A) That the program subsidy amount does not exceed amounts
transferred to the fund pursuant to this part.

(B) That the aggregate amount spent for high risk medical
coverage and program administration does not exceed the federal
funds available to the state for this purpose and that no state funds
are spent for the purposes of this part.

(8) Maintain enrollment and expenditures to ensure that
expenditures do not exceed amounts available in the fund and that
no state funds are spent for purposes of this part. If sufficient funds
are not available to cover the estimated cost of program
expenditures, the board shall institute appropriate measures to limit
enrollment.

(9) In adopting benefit and eligibility standards, be guided by
the needs and welfare of persons unable to secure adequate health
coverage for themselves and their dependents and by prevailing
practices among private health plans.

(10) (A) As required by the federal Department of Health and
Human Services, implement procedures to provide for the transition
of subscribers into qualified health plans offered through the
California Health Benefit Exchange established pursuant to Title
22 (commencing with Section 100500) of the Government Code.

(B) In order to assist the Exchange in conducting outreach to
program subscribers and applicants, provide the Exchange, or its
designee, with the names, addresses, email addresses, telephone
numbers, other contact information, and written and spoken
languages of program subscribers and applicants.

(11) Post on the board’s Internet Web site the monthly progress
reports submitted to the federal Department of Health and Human
Services. In addition, the board shall provide notice of any
anticipated waiting lists or disenrollments due to insufficient
funding to the public, by making that notice available as part of
its board meetings, and concurrently to the Legislature.

(12) Develop and implement a plan for marketing and outreach.

(c) There shall not be any liability in a private capacity on the
part of the board or any member of the board, or any officer or
employee of the board for or on account of any act performed or
obligation entered into in an official capacity, when done in good
faith, without intent to defraud, and in connection with the
administration, management, or conduct of this part or affairs
related to this part.

SEC. 4.  

Section 14011.6 of the Welfare and Institutions Code
is amended to read:

14011.6.  

(a) To the extent federal financial participation is
available, the department shall exercise the option provided in
Section 1920a of the federal Social Security Act (42 U.S.C. Sec.
1396r-1a) to implement a program for accelerated enrollment of
children.

(b) The department shall designate the single point of entry, as
defined in subdivision (c), as the qualified entity for determining
eligibility under this section.

(c) For purposes of this section, “single point of entry” means
the centralized processing entity that accepts and screens
applications for benefits under the Medi-Cal program for the
purpose of forwarding them to the appropriate counties.

(d) Commencing October 1, 2013, the department shall designate
the California Health Benefit Exchange, established under Title
22 (commencing with Section 100500) of the Government Code,
and its agents and county human services departments as qualified
entities for determining eligibility for accelerated enrollment under
this section.

(e) The department shall implement this section only if, and to
the extent that, federal financial participation is available.

(f) The department shall seek federal approval of any state plan
amendments necessary to implement this section. When federal
approval of the state plan amendment or amendments is received,
the department shall commence implementation of this section on
the first day of the second month following the month in which
federal approval of the state plan amendment or amendments is
received, or on July 1, 2002, whichever is later.

(g) Notwithstanding Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code,
the department shall, without taking any regulatory action,
implement this section by means of all-county letters. Thereafter,
the department shall adopt regulations in accordance with the
requirements of Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code.

(h) Upon the receipt of an application for a child who has
coverage pursuant to the accelerated enrollment program, a county
shall determine whether the child is eligible for Medi-Cal benefits.
If the county determines that the child does not meet the eligibility
requirements for participation in the Medi-Cal program, the county
shall report this finding to the Medical Eligibility Data System so
that accelerated enrollment coverage benefits are discontinued.
The information to be reported shall consist of the minimum data
elements necessary to discontinue that coverage for the child. This
subdivision shall become operative on July 1, 2002, or the date
that the program for accelerated enrollment coverage for children
takes effect, whichever is later.

(i) If a complete eligibility determination cannot be made based
upon the receipt of an application for a child at the time of the
initial application, the qualified entity shall grant accelerated
enrollment pursuant to this section begin insert to the child if he or she is
eligible for accelerated enrollment end insert .

SEC. 5.  

If the Commission on State Mandates determines that
this act contains costs mandated by the state, reimbursement to
local agencies and school districts for those costs shall be made
pursuant to Part 7 (commencing with Section 17500) of Division
4 of Title 2 of the Government Code.