Amended in Senate March 6, 2013

California Legislature—2013–14 First Extraordinary Session

Senate Bill No. 3

Introduced by Senator Hernandez

February 5, 2013

An act begin insert to amend Sections 100501 and 100503 of, and to add Sections 100504.5, 100504.6, and 100504.7 to, the Government Code, to amend Section 1366.6 of, and to add Section 1399.864 to, the Health and Safety Code, and to amend Section 10112.3 of, and to add Section 10961 to, the Insurance Code, end insert relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

SB 3, as amended, Hernandez. Health care coverage: bridge plan.

Existing law, the federal Patient Protection and Affordable Care Act, requires each state to, by January 1, 2014, establish an American Health Benefit Exchange that makes available qualified health plans to qualified individuals and small employers.

Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income persons receive health care benefits. 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. Existing law also provides for the regulation of health insurers by the Department of Insurance.

Under existing law, carriers that sell any products outside the California Health Benefit Exchange (Exchange) are required to fairly and affirmatively offer, market, and sell all products made available to individuals or small employers in the Exchange to individuals or small employers, respectively, purchasing coverage outside the Exchange.

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This bill would declare the intent of the Legislature to enact legislation that would create a bridge option to allow low-cost health coverage to be provided to individuals within the California Health Benefit Exchange.

end delete begin insert

Existing law also requires carriers that participate in the Exchange to fairly and affirmatively offer, market, and sell in the Exchange at least one product within 5 levels of specified coverage.

end insert begin insert

This bill would exempt a bridge plan product, as defined, from that latter requirement.

end insert begin insert

This bill would, among other things, also require the Exchange to enter into contracts with and certify as a qualified health plan bridge plan products that meet specified requirements, including being a Medi-Cal managed care plan. The bill would also require the Exchange, subject to federal approval, to enroll individuals in a bridge plan. The bill would authorize the Exchange to adopt regulations to implement those provisions, and until January 1, 2016, exempt the adoption, amendment, or repeal of those regulations from the Administrative Procedure Act.

end insert begin insert

The bill would authorize a health care service plan or insurance carrier offering a bridge plan product in the Exchange to limit the products it offers in the Exchange to the bridge plan product. The bill would define “bridge plan product” as an individual health benefit plan offered by a licensed health care service plan or health insurer that contracts with the Exchange, as specified.

end insert

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

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

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert (a) end insert begin insert   end insert begin insert It is the intent of the Legislature that the
Exchange provide a more affordable coverage option for
low-income individuals, improve continuity of care for individuals
moving from Medi-Cal to the Exchange, and reduce the need for
individuals previously enrolled in the Medi-Cal program to change
health plans due to changes in their household income. end insert

begin insert

(b) In addition to other plan choices, it is the intent of the
Legislature that the Exchange offer quality, affordable health plan
choices that, to the extent possible, will be the lowest cost silver
plan offered in the individual’s geographic region through
Medi-Cal managed care plans that bridge Medicaid coverage and
private commercial health insurance for eligible lower income
individuals.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 100501 of the end insert begin insert Government Code end insert begin insert is amended
to read: end insert

100501.  

For purposes of this title, the following definitions
shall apply:

(a) “Board” means the board described in subdivision (a) of
Section 100500.

begin insert

(b) “Bridge plan product” means an individual health benefit
plan as defined in subdivision (e) of Section 1399.845 of the Health
and Safety Code that is offered by a health care service plan
licensed under the Knox-Keene Health Care Service Plan Act of
1975 (Chapter 2.2 (commencing with Section 1340) of Division 2
of the Health and Safety Code) or as defined in subdivision (a) of
Section 10198.6 of the Insurance Code that is offered by a health
insurer licensed under the Insurance Code that contracts with the
Exchange pursuant to this title.

end insert begin delete

(b)

end delete

begin insert (c) end insert  “Carrier” means either a private health insurer holding a
valid outstanding certificate of authority from the Insurance
Commissioner or a health care service plan, as defined under
subdivision (f) of Section 1345 of the Health and Safety Code,
licensed by the Department of Managed Health Care.

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(c)

end delete

begin insert (d) end insert  “Exchange” means the California Health Benefit Exchange
established by Section 100500.

begin delete

(d)

end delete

begin insert (e) end insert  “Federal act” means 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 amendments to, or regulations or
guidance issued under, those acts.

begin delete

(e)

end delete

begin insert (f) end insert  “Fund” means the California Health Trust Fund established
by Section 100520.

begin delete

(f)

end delete

begin insert (g) end insert  “Health plan” and “qualified health plan” have the same
meanings as those terms are defined in Section 1301 of the federal
act.

begin insert

(h) “Healthy Families coverage” means coverage under the
Healthy Families Program pursuant to Part 6.2 (commencing with
Section 12693) of Division 2 of the Insurance Code.

end insert begin insert

(i) “Medi-Cal coverage” means coverage under the Medi-Cal
program pursuant to Chapter 7 (commencing with Section 14000)
of Part 3 of Division 9 of the Welfare and Institutions Code.

end insert begin insert

(j) “Modified adjusted gross income” shall have the same
meaning as the term is used in paragraph (B) of subdivision (d)
of Section 1401 (26 U.S.C. Sec. 36B) of the federal act.

end insert begin insert

(k) “Members of the modified adjusted gross income household”
shall mean any individual who would be included in the calculation
for modified adjusted gross income pursuant to subdivision (a) of
Section 1401 (26 U.S.C. Sec. 36B(d)) of the federal act and as
otherwise determined by the Exchange as permitted by the federal
act and this title.

end insert begin delete

(g)

end delete

begin insert (l) end insert  “SHOP Program” means the Small Business Health Options
Program established by subdivision (m) of Section 100502.

begin delete

(h)

end delete

begin insert (m) end insert  “Supplemental coverage” means coverage through a
specialized health care service plan contract, as defined in
subdivision (o) of Section 1345 of the Health and Safety Code, or
a specialized health insurance policy, as defined in Section 106 of
the Insurance Code.

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 100503 of the end insert begin insert Government Code end insert begin insert 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
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)  begin delete Require, end delete begin insert Except as otherwise provided in this section
and Section 100504.5, require, end insert 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. begin insert “Product” also does not include a bridge plan
product offered pursuant to Section 100504.5. end insert

begin insert

(3) 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.

end insert

(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) 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.

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 100504.5 is added to the end insert begin insert Government Code end insert begin insert ,
to read: end insert

begin insert

begin insert 100504.5. end insert   

(a) To the extent approved by the appropriate
federal agency, for the purpose of implementing the option in
paragraph (7) of subdivision (a) of Section 100504, the Exchange
shall contract with, and certify as a qualified health plan, a bridge
plan product that meets the following requirements:

(1) Is certified by the Exchange as a qualified bridge plan
product. For purposes of this section, in order to be a qualified
bridge plan product, the plan shall do all of the following:

(A) Be a health care service plan or health insurer that contracts
with the State Department of Health Care Services to provide
Medi-Cal managed care plan services.

(B) Meet minimum requirements to contract with the Exchange
as a qualified health plan pursuant to Section 1301 of the PPACA
and Sections 100502, 100503, and 100507 of this code.

(C) Enroll in the bridge plan product only individuals who meet
the requirements of paragraph (2).

(D) Comply with the medical loss ratio requirements of Section
1399.864 of the Health and Safety Code or Section 10961 of the
Insurance Code.

(2) (A) Any of the following individuals may have the option
of enrolling in a bridge plan product if one is available:

(i) Individuals who are determined to be eligible for the
Exchange that can demonstrate that their Medi-Cal coverage or
their Healthy Families coverage was terminated as defined in
regulations adopted by the Exchange pursuant to Section 100504.7.

(ii) Other members of the modified adjusted gross income
household in which there are Medi-Cal or Healthy Families
enrollees.

(iii) Individuals eligible pursuant to Section 100504.6.

(B) (i) Individuals who are eligible to enroll in a bridge plan
product under clause (i) of subparagraph (A) shall only be eligible
to enroll in a bridge plan product offered by the health care service
plan or health insurer through which the individual was enrolled
prior to eligibility for a bridge plan product as either a Medi-Cal
beneficiary or as a Healthy Families enrollee.

(ii) Individuals who are eligible to enroll in a bridge plan
product under clause (ii) of subparagraph (A) shall only be eligible
to enroll in a bridge plan product offered by the health care service
plan or health insurer through which the member of the household
was enrolled as a Medi-Cal beneficiary or as a Healthy Families
enrollee.

(b) The Exchange shall provide information on all of the
available Exchange-qualified health plans in the area, including,
but not limited to, bridge plan product options for selection by
individuals eligible to enroll in a bridge plan product.

(c) The State Department of Health Care Services shall ensure
that its contracts with a health care service plan or health insurer
to provide Medi-Cal managed care coverage contain a provision
requiring the health care service plan or health insurer to provide
coverage in its bridge plan product to its Medi-Cal managed care
enrollees and other individuals that meet the requirements of
paragraph (2) of subdivision (a) if the Medi-Cal managed care
plan offers a bridge plan product pursuant to this section.

(d) Nothing in this section shall be implemented in a manner
that conflicts with a requirement of the federal act.

end insert

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 100504.6 is added to the end insert begin insert Government Code end insert begin insert ,
to read: end insert

begin insert

begin insert 100504.6. end insert   

(a) To the extent approved by the appropriate
federal agency, the Exchange shall also offer to individuals and
allow an individual to enroll in a bridge plan product that is offered
in the Exchange pursuant to Section 100504.5 if the individual
meets both of the following requirements:

(1) Is eligible for the Exchange.

(2) Has a household income of not more than 200 percent of
the federal poverty line as determined by the Exchange.

(b) Nothing in this section shall be implemented in a manner
that conflicts with a requirement of the federal act.

end insert

begin insert

begin insert SEC. 6. end insert   

end insert

begin insert Section 100504.7 is added to the end insert begin insert Government Code end insert begin insert ,
to read: end insert

begin insert

begin insert 100504.7. end insert   

The Exchange shall have the authority to adopt
regulations to implement the provisions of Sections 100504.5 and
100504.6. Until January 1, 2016, the adoption, amendment, or
repeal of a regulation authorized by this section shall be exempted
from the Administrative Procedure Act (Chapter 3.5 (commencing
with Section 11340) of Part 1 of Division 3 of Title 2).

end insert

begin insert

begin insert SEC. 7. end insert   

end insert

begin insert Section 1366.6 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

1366.6.  

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

(1) “Exchange” means the California Health Benefit Exchange
established in Title 22 (commencing with Section 100500) of the
Government Code.

(2) “Federal act” means 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 amendments to, or regulations or
guidance issued under, those acts.

(3) “Qualified health plan” has the same meaning as that term
is defined in Section 1301 of the federal act.

(4) “Small employer” has the same meaning as that term is
defined in Section 1357.

(b)  begin insert (1) end insert begin insert   end insert Health care service plans participating in the Exchange
shall 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. begin delete The end delete

begin insert (2) end insert begin insert   end insert begin insert The end insert board established under Section 100500 of the
Government Code may require plans to sell additional products
within each of those levels of coverage. begin delete This end delete

begin insert (3) end insert begin insert   end insert begin insert This end insert subdivision shall not apply to a plan that solely offers
supplemental coverage in the Exchange under paragraph (10) of
subdivision (a) of Section 100504 of the Government Code.

begin insert

(4) This subdivision shall not apply to a bridge plan product
that meets the requirements of Section 100504.5 of the Government
Code to the extent approved by the appropriate federal agency.

end insert

(c) (1) Health care service plans participating in the Exchange
that sell any products outside the Exchange shall 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 health care service
plans for enrolled Healthy Families beneficiaries or to 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 health care service
plans for enrolled Medi-Cal begin delete beneficiaries. end delete begin insert beneficiaries, or for
contracts with bridge plan products that meet the requirements of
Section 100504.5 of the Government Code. end insert

(d) Commencing January 1, 2014, a health care service plan
shall, with respect to plan contracts that cover hospital, medical,
or surgical benefits, only sell the five levels of coverage contained
in subdivisions (d) and (e) of Section 1302 of the federal act, except
that a health care service plan that does not participate in the
Exchange shall, with respect to plan contracts that cover hospital,
medical, or surgical benefits, only sell the four levels of coverage
contained in subdivision (d) of Section 1302 of the federal act.

(e) Commencing January 1, 2014, a health care service plan
that does not participate in the Exchange shall, with respect to plan
contracts that cover hospital, medical, or surgical benefits, offer
at least one standardized product that has been designated by the
Exchange in each of the four levels of coverage contained in
subdivision (d) of Section 1302 of the federal act. This subdivision
shall only apply if the board of the Exchange exercises its authority
under subdivision (c) of Section 100504 of the Government Code.
Nothing in this subdivision shall require a plan that does not
participate in the Exchange to offer standardized products in the
small employer market if the plan only sells products in the
individual market. Nothing in this subdivision shall require a plan
that does not participate in the Exchange to offer standardized
products in the individual market if the plan only sells products in
the small employer market. This subdivision shall not be construed
to prohibit the plan from offering other products provided that it
complies with subdivision (d).

begin insert

(f) For purposes of this section, a bridge plan product shall
mean an individual health benefit plan, as defined in subdivision
(e) of Section 1399.845 that is offered by a health care service
plan licensed under this chapter that contracts with the Exchange
pursuant to Title 22 (commencing with Section 100500) of the
Government Code.

end insert

begin insert

begin insert SEC. 8. end insert   

end insert

begin insert Section 1399.864 is added to the end insert begin insert Health and Safety
Code end insert begin insert , to read: end insert

begin insert

begin insert 1399.864. end insert   

(a) For purposes of this article, a bridge plan
product shall mean an individual health benefit plan, as defined
in subdivision (e) of Section 1399.845, that is offered by a health
care service plan licensed under this chapter that contracts with
the Exchange pursuant to Title 22 (commencing with Section
100500) of the Government Code.

(b) Until December 31, 2014, a health care service plan that
contracts with the California Health Benefit Exchange to offer a
qualified bridge plan product pursuant to Section 100504 of the
Government Code shall do all of the following:

(1) As of the effective date of this section, if the health care
service plan has not been approved by the director to offer
individual health benefit plans pursuant to this chapter, the plan
shall file a material modification pursuant to Section 1352 to
expand its license to include individual health benefit plans.

(2) As of the effective date of this section, if the health care
service plan has been approved by the director to offer individual
health benefit plans pursuant to this chapter, the plan shall,
pursuant to Section 1352, file an amendment to expand its license
to include a bridge plan product as an individual health benefit
plan.

(3) During the time the health care service plan’s material
modification or amendment is pending approval by the director,
the health care service plan shall be deemed to comply with
subdivision (b) of Section 100507 of the Government Code.

(4) Maintain a medical loss ratio of 85 percent for the bridge
plan product. A health care service plan shall utilize, to the extent
possible, the same methodology for calculating the medical loss
ratio for the bridge plan product that is used for calculating the
health care service plan medical loss ratio pursuant to Section
1367.003 and shall report its medical loss ratio for the bridge plan
product to the department as provided in Section 1367.003.

(c) A bridge plan product shall not be required to comply with
the following provisions of this article only to the extent approved
by the appropriate federal agency:

(1) Subdivisions (a), (c), and (d) of Section 1399.849.

(2) Section 1399.851.

(3) Section 1399.853.

end insert

begin insert

begin insert SEC. end insert begin insert 9. end insert   

end insert

begin insert Section 10112.3 of the end insert begin insert Insurance Code end insert begin insert is amended to
read: end insert

10112.3.  

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

(1) “Exchange” means the California Health Benefit Exchange
established in Title 22 (commencing with Section 100500) of the
Government Code.

(2) “Federal act” means the federal Patient Protection and
Affordable Care Act (P.L. 111-148), as amended by the federal
Health Care and Education Reconciliation Act of 2010 (P.L.
111-152), and any amendments to, or regulations or guidance
issued under, those acts.

(3) “Qualified health plan” has the same meaning as that term
is defined in Section 1301 of the federal act.

(4) “Small employer” has the same meaning as that term is
defined in Section 10700.

(b) Health insurers participating in the Exchange shall 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 established under Section 100500 of the Government Code
may require insurers to sell additional products within each of
those levels of coverage. This subdivision shall not apply to an
insurer that solely offers supplemental coverage in the Exchange
under paragraph (10) of subdivision (a) of Section 100504 of the
Government Code. begin insert This subdivision shall not apply to a bridge
plan product that meets the requirements of Section 100504.5 of
the Government Code, to the extent end insert begin insert approved by the appropriate
federal agency. end insert

(c) (1) Health insurers participating in the Exchange that sell
any products outside the Exchange shall 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 between the Managed Risk Medical
Insurance Board and health insurers for enrolled Healthy Families
beneficiaries or to 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 health insurers for enrolled Medi-Cal beneficiaries
begin insert or for contracts with bridge plan products that meet the
requirements of Section 100504.5 end insert .

(d) Commencing January 1, 2014, a health insurer, with respect
to policies that cover hospital, medical, or surgical benefits, may
only sell the five levels of coverage contained in subdivisions (d)
and (e) of Section 1302 of the federal act, except that a health
insurer that does not participate in the Exchange may, with respect
to policies that cover hospital, medical, or surgical benefits only
sell the four levels of coverage contained in subdivision (d) of
Section 1302 of the federal act.

(e) Commencing January 1, 2014, a health insurer that does not
participate in the Exchange shall, with respect to policies that cover
hospital, medical, or surgical expenses, offer at least one
standardized product that has been designated by the Exchange in
each of the four levels of coverage contained in subdivision (d) of
Section 1302 of the federal act. This subdivision shall only apply
if the board of the Exchange exercises its authority under
subdivision (c) of Section 100504 of the Government Code.
Nothing in this subdivision shall require an insurer that does not
participate in the Exchange to offer standardized products in the
small employer market if the insurer only sells products in the
individual market. Nothing in this subdivision shall require an
insurer that does not participate in the Exchange to offer
standardized products in the individual market if the insurer only
sells products in the small employer market. This subdivision shall
not be construed to prohibit the insurer from offering other products
provided that it complies with subdivision (d).

begin insert

(f) For purposes of this section, a bridge plan product shall
mean an individual health benefit plan, as defined in subdivision
(a) of Section 10198.6 that is offered by a health insurer that
contracts with the Exchange pursuant to Section 100504.5 of the
Government Code.

end insert

begin insert

begin insert SEC. 10. end insert   

end insert

begin insert Section 10961 is added to the end insert begin insert Insurance Code end insert begin insert , to
read: end insert

begin insert

begin insert 10961. end insert   

(a) For purposes of this article, a bridge plan product
shall mean an individual health benefit plan that is offered by a
health insurer licensed under this chapter that contracts with the
Exchange pursuant to Title 22 (commencing with Section 100500)
of the Government Code.

(b) Until December 31, 2014, a health care service plan that
contracts with the California Health Benefit Exchange to offer a
qualified bridge plan product pursuant to Section 100504 of the
Government Code shall do all of the following:

(1) As of the effective date of this section, if the health insurance
policy has not been approved by the commissioner to offer
individual health benefit plans pursuant to this chapter, the plan
shall file a material modification to expand its license to include
individual health benefit plans.

(2) As of the effective date of this section, if the health insurance
policy has been approved by the commissioner to offer individual
health benefit plans pursuant to this chapter, the insurer shall file
an amendment to expand its license to include a bridge plan
product as an individual health benefit plan.

(3) During such time as the health insurer’s material
modification or amendment is pending approval by the
commissioner, the health insurance policy shall be deemed to
comply with subdivision (b) of Section 100507 of the Government
Code.

(4) Maintain a medical loss ratio of 85 percent for the bridge
plan product. A health insurer shall utilize, to the extent possible,
the same methodology for calculating the medical loss ratio for
the bridge plan product that is used for calculating the health
insurer’s medical loss ratio pursuant to Section 10112.25 and
shall report its medical loss ratio for the bridge plan product to
the department as provided in Section 10112.25.

(c) A bridge plan product shall not be required to comply with
the following provisions of this article only to the extent approved
by the appropriate federal agency:

(1) Subdivisions (a), (c), and (d) of Section 10965.3.

(2) Section 10965.5.

(3) Section 10965.7.

end insert

begin delete

SECTION 1.  

It is the intent of the Legislature to enact
legislation to create a bridge option to allow low-cost health
coverage to be provided to individuals within the California Health
Benefit Exchange.

end delete