Amended in Senate May 8, 2013

Amended in Senate April 22, 2013

Senate Bill No. 189

Introduced by Senator Monning

(Coauthor: Senator De León)

(Coauthor: Assembly Member Ammiano)

February 7, 2013

An act to add and repeal Section 1367.007 of the Health and Safety Code, and to add and repeal Section 10112.7 of the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

SB 189, as amended, Monning. Health care coverage: wellness programs.

Existing 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 allows the premium rate charged by a health insurance issuer offering small group or individual coverage to vary only by family composition, rating area, age, and tobacco use, as specified, and prohibits discrimination against individuals based on health status, as specified. PPACA prohibits a health insurance issuer from requiring any individual to pay a premium or contribution that is greater than the premium or contribution paid by a similarly situated individual on the basis of any health status-related factor and prohibits construing this provision to prevent a group health insurance issuer from establishing premium discounts or rebates or modifying copayments or deductibles in return for adherence to wellness programs, as specified.

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 allows small employer health care service plan contracts and health insurance policies for plan years on or after January 1, 2014, to vary rates only based on age, geographic region, and family size, as specified.

This bill, until January 1, 2020, would prohibit a health care service plan or health insurer from offering a wellness program in connection with a group health care service plan contract or group health insurance policy, or offering an incentive or reward under a group health care service plan contract or group health insurance policy, based on adherence to a wellness program, unless specified requirements are satisfied. The bill would specify that it does not apply to wellness programs established prior to its enactment provided that those programs comply with all other applicable laws, as specified.

Because a willful violation of the bill’s requirements relative to health care service plans would be a crime, 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 no reimbursement is required by this act for a specified reason.

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 1367.007 is added to the Health and
Safety Code, to read:

1367.007.  

(a) A health care service plan shall not offer a
wellness program in connection with a group health care service
plan contract, or offer an incentive or reward under a group health
care service plan contract based on adherence to a wellness
program, unless all of the following requirements are satisfied:

(1) The program is reasonably designed to promote health or
prevent disease. A program complies with the preceding sentence
if the program has a reasonable chance of improving the health
of, or preventing disease in, participating individuals, is not overly
burdensome, is not a subterfuge for discrimination based on a
health status factor, does not lead to cost shifting begin insert from employer
to employee end insert , and is not highly suspect in the method chosen to
promote health or prevent disease.

begin delete

(2) The incentive or reward is not in the form of a discount on,
or rebate of, a premium, deductible, copayment, or coinsurance.
Incentives may include rewards for participation that are not linked
to premiums, deductibles, copayments, or coinsurance.

end delete begin insert

(2) (A) A financial incentive or reward linked to a premium,
deductible, copayment, coinsurance, or other cost sharing paid
by enrollees is permitted only for participation-based programs.
A financial penalty is not permitted.

end insert begin insert

(B) The total amount of incentives linked to the share of a
premium, deductible, copayment, coinsurance, or other cost
sharing paid by the enrollee shall not exceed three hundred fifty
dollars ($350) annually. This amount shall be adjusted annually
in a manner consistent with Section 1302(c)(4) of the federal
Patient Protection and Affordable Care Act (42 U.S.C.
18022(c)(4)).

end insert begin insert

(3) The program may use incentives or rewards for participation
that reduce the employee share of premium as long as the employee
share of premium does not exceed 50 percent of the premium
charged to the group. The employee share of premium shall not
vary based on a health outcome or other health status factor.

end insert begin insert

(4) The program may use incentives or rewards that reduce
costs to enrollees, including reductions in premiums, deductibles,
copayments, coinsurance, or other cost sharing, as long as the
amount does not exceed 20 percent of the original cost without
the incentive or reward.

end insert begin delete

(3)

end delete

begin insert (5) end insert  Participation in the program is voluntary.

begin delete

(4)

end delete

begin insert (6) end insert  Receipt of an incentive or reward for participation in the
program is not conditioned on an individual satisfying a standard
that is related to a health status factor. begin delete The following wellness end delete
begin insert Wellness end insert programs begin insert , including, but not limited to, the following, end insert
shall be deemed to satisfy this paragraph:

(A) A program that reimburses all or part of the cost for
membership in a fitness center.

(B) A diagnostic testing program that provides a reward for
participation and does not base any part of the reward on outcomes.

(C) A program that provides a reward to individuals for
attending a periodic health education seminar, so long as
begin delete participation is not related to a particular health condition or any end delete
begin insert the reward is not contingent on a health outcome or end insert other health
status factor.

begin delete

(5)

end delete

begin insert (7) end insert  Participation in the program is offered to all similarly situated
individuals.

begin delete

(6)

end delete

begin insert ( end insert begin insert 8) end insert  Reasonable accommodation is provided for individuals with
disabilities who seek to voluntarily participate in the program.

begin delete

(7)

end delete

begin insert ( end insert begin insert 9) end insert  A reasonably available and equivalent alternative is provided
to those individuals who seek to voluntarily participate in the
program but are unable to participate due to occupational
requirements, a medical condition, or other hardship.

begin delete

(8)

end delete

begin insert (10) end insert  All materials related to the program disclose the availability
of the accommodations under paragraphs begin delete (6) end delete begin insert (8) end insert and begin delete (7) end delete begin insert (9) end insert .

begin delete

(9)

end delete

begin insert (11) end insert  The program assesses the cultural competency needs of
the health care service plan’s population in its design.

begin delete

(10)

end delete

begin insert (12) end insert  The program provides language assistance for limited
English-speaking individuals.

begin delete

(11)

end delete

begin insert (13) end insert  The program does not result in any decrease in benefits
coverage.

begin delete

(12) The program does not result in an increase in premium for
the product as demonstrated through rate review consistent with
Article 6.2 (commencing with Section 1385.01).

end delete begin delete

(13) The incentive or reward does not exceed the amounts
determined to be unreasonable by regulation by the director in
consultation with the Insurance Commissioner

end delete begin insert

(14) The plan reports to the department two years after
implementation of the wellness program and every year thereafter,
demonstrating reasonable effectiveness of the program in terms
of improving health of participants and reducing costs, as
determined by the department.

end insert begin delete

(14)

end delete

begin insert (15) end insert  The incentive or reward does not exceed the percentage of
the cost of coverage under the plan contract identified in Section
2705(j)(3)(A) of the federal Public Health Service Act (42 U.S.C.
Sec. 300gg-4(j)(3)(A)) or regulations adopted thereunder.

(b) Nothing in this section shall prohibit a wellness program
that was established prior to January 1, 2014, and applied consistent
with all applicable laws in effect immediately prior to that date,
and that is operating immediately prior to that date, from continuing
to begin delete be carried out for as long as those laws remain in effect end delete begin insert operat end insert begin insert e end insert .

(c) By March 1, 2019, the department shall submit a report to
the appropriate policy committees of the Legislature on the
operation of health care service plan-based wellness programs.

(d) For purposes of this section, “wellness program” means a
program that is designed to promote health or prevent disease.

(e) This section shall remain in effect only until January 1, 2020,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2020, deletes or extends that date.

SEC. 2.  

Section 10112.7 is added to the Insurance Code, to
read:

10112.7.  

(a) A health insurer shall not offer a wellness program
in connection with a group health insurance policy begin insert , end insert or offer an
incentive or reward under a group health insurance policy based
on adherence to a wellness program begin insert , end insert unless all of the following
requirements are satisfied:

(1) The program is reasonably designed to promote health or
prevent disease. A program complies with the preceding sentence
if the program has a reasonable chance of improving the health
of, or preventing disease in, participating individuals, is not overly
burdensome, is not a subterfuge for discrimination based on a
health status factor, does not lead to cost shifting begin insert from employer
to employee end insert , and is not highly suspect in the method chosen to
promote health or prevent disease.

begin delete

(2) The incentive or reward is not in the form of a discount on,
or rebate of, a premium, deductible, copayment, or coinsurance.
Incentives may include rewards for participation that are not linked
to premiums, deductibles, copayments, or coinsurance.

end delete begin insert

(2) (A) A financial incentive or reward linked to a premium,
deductible, copayment, coinsurance, or other cost sharing paid
by insureds is permitted only for participation-based programs.
A financial penalty is not permitted.

end insert begin insert

(B) The total amount of incentives linked to the share of a
premium, deductible, copayment, coinsurance, or other cost
sharing paid by the insured shall not exceed three hundred fifty
dollars ($350) annually. This amount shall be adjusted annually
in a manner consistent with Section 1302(c)(4) of the federal
Patient Protection and Affordable Care Act (42 U.S.C.
18022(c)(4)).

end insert begin insert

(3) The program may use incentives or rewards for participation
that reduce the employee share of premium as long as the employee
share of premium does not exceed 50 percent of the premium
charged to the group. The employee share of premium shall not
vary based on a health outcome or other health status factor.

end insert begin insert

(4) The program may use incentives or rewards that reduce
costs to insureds, including reductions in premiums, deductibles,
copayments, coinsurance, or other cost sharing, as long as the
amount does not exceed 20 percent of the original cost without
the incentive or reward.

end insert begin delete

(3)

end delete

begin insert (5) end insert  Participation in the program is voluntary.

begin delete

(4)

end delete

begin insert (6) end insert  Receipt of an incentive or reward for participation in the
program is not conditioned on an individual satisfying a standard
that is related to a health status factor. begin delete The following wellness end delete
begin insert Wellness end insert programs begin insert , including, but not limited to, the following, end insert
shall be deemed to satisfy this paragraph:

(A) A program that reimburses all or part of the cost for
membership in a fitness center.

(B) A diagnostic testing program that provides a reward for
participation and does not base any part of the reward on outcomes.

(C) A program that provides a reward to individuals for
attending a periodic health education seminar, so long as
begin delete participation is not related to a particular health condition or any end delete
begin insert the reward is not contingent on a health outcome or end insert other health
status factor.

begin delete

(5)

end delete

begin insert (7) end insert  Participation in the program is offered to all similarly situated
individuals.

begin delete

(6)

end delete

begin insert (8) end insert  Reasonable accommodation is provided for individuals with
disabilities who seek to voluntarily participate in the program.

begin delete

(7)

end delete

begin insert (9) end insert  A reasonably available and equivalent alternative is provided
to those individuals who seek to voluntarily participate in the
program but are unable to participate due to occupational
requirements, a medical condition, or other hardship.

begin delete

(8)

end delete

begin insert (10) end insert  All materials related to the program disclose the availability
of the accommodations under paragraphs begin delete (6) end delete begin insert (8) end insert and begin delete (7) end delete begin insert (9) end insert .

begin delete

(9)

end delete

begin insert (11) end insert  The program assesses the cultural competency needs of
the begin delete health care service plan’s end delete begin insert insurer’s covered end insert population in its
design.

begin delete

(10)

end delete

begin insert (1 end insert begin insert 2) end insert  The program provides language assistance for limited
English-speaking individuals.

begin delete

(11)

end delete

begin insert (1 end insert begin insert 3) end insert  The program does not result in any decrease in benefits
coverage.

begin delete

(12) The program does not result in an increase in premium for
the product as demonstrated through rate review consistent with
Article 4.5 (commencing with Section 10181).

(13) The incentive or reward does not exceed the amounts
determined to be unreasonable by regulation by the commissioner
in consultation with the Director of the Department of Managed
Health Care.

end delete begin insert

(14) The insurer reports to the department two years after
implementation of a wellness program and every year thereafter,
demonstrating reasonable effectiveness of the program in terms
of improving health of participants and reducing costs, as
determined by the department.

end insert begin delete

(14)

end delete

begin insert (15) end insert  The incentive or reward does not exceed the percentage of
the cost of coverage under the policy identified in Section
2705(j)(3)(A) of the federal Public Health Service Act (42 U.S.C.
Sec. 300gg-4(j)(3)(A)) or regulations adopted thereunder.

(b) Nothing in this section shall prohibit a wellness program
that was established prior to January 1, 2014, and applied consistent
with all applicable laws in effect immediately prior to that date,
and that is operating immediately prior to that date, from continuing
to begin delete be carried out for as long as those laws remain in effect end delete begin insert operat end insert begin insert e end insert .

(c) By March 1, 2019, the department shall submit a report to
the appropriate policy committees of the Legislature on the
operation of health insurer-based wellness programs.

(d) For purposes of this section, “wellness program” means a
program that is designed to promote health or prevent disease.

(e) This section shall remain in effect only until January 1, 2020,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2020, deletes or extends that date.

SEC. 3.  

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.