Amended in Senate April 9, 2013

Amended in Senate April 1, 2013

Senate BillNo. 639


Introduced by Senator Hernandez

February 22, 2013


An act to amend Section 1367 of, and to add Sections 1367.006, 1367.007,begin delete andend delete 1367.008begin insert, and 1367.009end insert to, the Health and Safety Code, and to add Sections 10112.28, 10112.29, 10112.295,begin insert 10112.297, end insertand 10112.7 to the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

SB 639, as amended, Hernandez. Health care coverage.

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 establishes annual limits on deductibles for employer-sponsored plans and defines bronze, silver, gold, and platinum levels of coverage for the nongrandfathered individual and small group markets.

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.

This bill would prohibit the deductible under a small employer health care service plan contract or health insurance policy offered, sold, or renewed on or after January 1, 2014, from exceeding $2,000 in the case of a plan contract or policy covering a single individual, or $4,000 in all other cases.

The bill would require, for nongrandfathered products in the individual or small group markets, a health care service plan contract or health insurance policy, except a specialized health insurance policy, that is issued, amended, or renewed on or after January 1, 2014, to provide for a limit on annual out-of-pocket expenses for all covered benefits that meet the definition of essential health benefits, as defined, and would require the contract or policy, for nongrandfathered products in the large group market, to provide that limit for all covered benefits, including out-of-network emergency care.

The bill would define bronze, silver, gold, and platinum levels of coverage for the nongrandfathered individual and small group markets consistent with the definitions in PPACA. The bill would prohibit a carrier that is not participating in the Exchange from offering a catastrophic plan, as defined, in the individual market.

PPACA requires a health insurance issuer offering group or individual coverage that provides or covers benefits with respect to services in the emergency department of a hospital to cover emergency services without the need for prior authorization, regardless of whether the provider is a participating provider, and subject to the same cost sharing required if the services were provided by a participating provider, as specified.

This bill would impose that requirement with respect to health insurance policies issued, amended, or renewed on or after January 1, 2014, as specified.

begin insert

Because a willful violation of these requirements with respect to health care service plans would be a crime, the bill would impose a state-mandated local program.

end 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.

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:

P2    1

SECTION 1.  

Section 1367 of the Health and Safety Code is
2amended to read:

3

1367.  

A health care service plan and, if applicable, a specialized
4health care service plan shall meet the following requirements:

P3    1(a)  Facilities located in this state including, but not limited to,
2clinics, hospitals, and skilled nursing facilities to be utilized by
3the plan shall be licensed by the State Department of Public Health,
4where licensure is required by law. Facilities not located in this
5state shall conform to all licensing and other requirements of the
6jurisdiction in which they are located.

7(b)  Personnel employed by or under contract to the plan shall
8be licensed or certified by their respective board or agency, where
9licensure or certification is required by law.

10(c)  Equipment required to be licensed or registered by law shall
11be so licensed or registered, and the operating personnel for that
12equipment shall be licensed or certified as required by law.

13(d)  The plan shall furnish services in a manner providing
14continuity of care and ready referral of patients to other providers
15at times as may be appropriate consistent with good professional
16practice.

17(e)  (1)  All services shall be readily available at reasonable
18times to each enrollee consistent with good professional practice.
19To the extent feasible, the plan shall make all services readily
20accessible to all enrollees consistent with Section 1367.03.

21(2)  To the extent that telehealth services are appropriately
22provided through telehealth, as defined in subdivision (a) of Section
232290.5 of the Business and Professions Code, these services shall
24be considered in determining compliance with Section 1300.67.2
25of Title 28 of the California Code of Regulations.

26(3)  The plan shall make all services accessible and appropriate
27consistent with Section 1367.04.

28(f)  The plan shall employ and utilize allied health manpower
29for the furnishing of services to the extent permitted by law and
30consistent with good medical practice.

31(g)  The plan shall have the organizational and administrative
32capacity to provide services to subscribers and enrollees. The plan
33shall be able to demonstrate to the department that medical
34decisions are rendered by qualified medical providers, unhindered
35by fiscal and administrative management.

36(h)  (1)  Contracts with subscribers and enrollees, including
37group contracts, and contracts with providers, and other persons
38furnishing services, equipment, or facilities to or in connection
39with the plan, shall be fair, reasonable, and consistent with the
40objectives of this chapter. All contracts with providers shall contain
P4    1provisions requiring a fast, fair, and cost-effective dispute
2resolution mechanism under which providers may submit disputes
3to the plan, and requiring the plan to inform its providers upon
4contracting with the plan, or upon change to these provisions, of
5the procedures for processing and resolving disputes, including
6the location and telephone number where information regarding
7disputes may be submitted.

8(2)  A health care service plan shall ensure that a dispute
9resolution mechanism is accessible to noncontracting providers
10for the purpose of resolving billing and claims disputes.

11(3)  On and after January 1, 2002, a health care service plan
12shall annually submit a report to the department regarding its
13dispute resolution mechanism. The report shall include information
14on the number of providers who utilized the dispute resolution
15mechanism and a summary of the disposition of those disputes.

16(i)  A health care service plan contract shall provide to
17subscribers and enrollees all of the basic health care services
18included in subdivision (b) of Section 1345, except that the director
19may, for good cause, by rule or order exempt a plan contract or
20any class of plan contracts from that requirement. The director
21shall by rule define the scope of each basic health care service that
22health care service plans are required to provide as a minimum for
23licensure under this chapter. Nothing in this chapter shall prohibit
24a health care service plan from charging subscribers or enrollees
25a copayment or a deductible for a basic health care service
26consistent with Section 1367.006 or 1367.007, provided that the
27copayments, deductibles, or other cost sharing are reported to the
28director and set forth to the subscriber or enrollee pursuant to the
29disclosure provisions of Section 1363. Nothing in this chapter shall
30prohibit a health care service plan from setting forth, by contract,
31limitations on maximum coverage of basic health care services,
32provided that the limitations are reported to, and held
33unobjectionable by, the director and set forth to the subscriber or
34enrollee pursuant to the disclosure provisions of Section 1363.

35(j)  A health care service plan shall not require registration under
36the Controlled Substances Act of 1970 (21 U.S.C. Sec. 801 et seq.)
37as a condition for participation by an optometrist certified to use
38therapeutic pharmaceutical agents pursuant to Section 3041.3 of
39the Business and Professions Code.

P5    1Nothing in this section shall be construed to permit the director
2to establish the rates charged subscribers and enrollees for
3contractual health care services.

4The director’s enforcement of Article 3.1 (commencing with
5Section 1357) shall not be deemed to establish the rates charged
6subscribers and enrollees for contractual health care services.

7The obligation of the plan to comply with this chapter shall not
8be waived when the plan delegates any services that it is required
9to perform to its medical groups, independent practice associations,
10or other contracting entities.

11

SEC. 2.  

Section 1367.006 is added to the Health and Safety
12Code
, to read:

13

1367.006.  

(a) (1) For nongrandfathered products in the
14individual or small group markets, a health care service plan
15contract, except a specialized health care service plan contract,
16that is issued, amended, or renewed on or after January 1, 2014,
17shall provide for a limit on annual out-of-pocket expenses for all
18covered benefits that meet the definition of essential health benefits
19in paragraph (1) of subdivision (a) of Section 1367.005.

20(2) For nongrandfathered products in the large group market, a
21health care service plan contract, except a specialized health care
22service plan contract, that is issued, amended, or renewed on or
23after January 1, 2014, shall provide for a limit on annual
24out-of-pocket expenses for all covered benefits, including
25out-of-network emergency care consistent with Section 1371.4.
26begin insert For large group products for the first plan year commencing on
27or after January 1, 2014, the requirement that a product provide
28for a limit on annual out-of-pocket expenses shall be satisfied if
29both of the following apply:end insert
begin insert

30(A) The product complies with the requirements of this
31paragraph with respect to basic health care services.

end insertbegin insert

32(B) To the extent the product includes an out-of-pocket maximum
33on coverage that does not consist solely of basic health care
34services, the out-of-pocket maximum does not exceed the limit
35established pursuant to this paragraph.

end insert

36(b) The limit described in subdivision (a) shall apply to any
37copayment, coinsurance, deductible, incentive payment, and any
38other form of cost sharing for all covered benefitsbegin insert, including
39prescription drugs covered pursuant to Section 1367.24end insert
.

P6    1(c) The limit described in subdivision (a) shall not exceed the
2limit described in Section 1302(c) of PPACA, and any subsequent
3rules, regulations, or guidance issued under that section.

4(d) Nothing in this section shall be construed to affect the
5reduction in cost sharing for eligible enrollees described in Section
61402 of PPACA, and any subsequent rules, regulations, or guidance
7issued under that section.

8(e) “PPACA” means the federal Patient Protection and
9Affordable Care Act (Public Law 111-148), as amended by the
10federal Health Care and Education Reconciliation Act of 2010
11(Public Law 111-152), and any rules, regulations, or guidance
12issued thereunder.

13

SEC. 3.  

Section 1367.007 is added to the Health and Safety
14Code
, to read:

15

1367.007.  

(a) (1) For a small employer health care service
16plan contract offered, sold, or renewed on or after January 1, 2014,
17the deductible under the plan shall not exceed:

18(A) Two thousand dollars ($2,000) in the case of a plan contract
19covering a single individual.

20(B) Four thousand dollars ($4,000) in the case of any other plan
21contract.

22(2) The dollar amounts in this section shall be indexed consistent
23with Section 1302(c)(2) of PPACA and any federal rules or
24guidance pursuant to that section.

25(3) The limitation in this subdivision shall be applied in a
26manner that does not affect the actuarial value of any small
27employer health care service plan contract.

28(4) For small group products at the bronze level of coverage,
29as defined in Section 1367.008, the department may permit plans
30to offer a higher deductible in order to meet the actuarial value
31requirement of the bronze level. In making this determination, the
32department shall consider affordability of cost sharing for enrollees
33and shall also consider whether enrollees may be deterred from
34seeking appropriate care because of higher cost sharing.

35(b) Nothing in this section shall be construed to allow a plan
36contract to have a deductible that applies to preventive services as
37defined in Section 1367.002.

38(c) “PPACA” means the federal Patient Protection and
39Affordable Care Act (Public Law 111-148), as amended by the
40federal Health Care and Education Reconciliation Act of 2010
P7    1(Public Law 111-152), and any rules, regulations, or guidance
2issued thereunder.

3

SEC. 4.  

Section 1367.008 is added to the Health and Safety
4Code
, to read:

5

1367.008.  

(a) Levels of coverage for the nongrandfathered
6individualbegin delete and small group marketsend deletebegin insert marketend insert are defined as follows:

7(1) Bronze level: A health care service plan contract in the
8bronze level shall provide a level of coverage that is actuarially
9equivalent to 60 percent of the full actuarial value of the benefits
10provided under the plan contract. No product shall be offered at
11this level of coverage unless it is a standardized product consistent
12with Section 1366.6.

13(2) Silver level: A health care service plan contract in the silver
14level shall provide a level of coverage that is actuarially equivalent
15to 70 percent of the full actuarial value of the benefits provided
16under the plan contract. No product shall be offered at this level
17of coverage unless it is a standardized product consistent with
18Section 1366.6.

19(3) Gold level: A health care service plan contract in the gold
20level shall provide a level of coverage that is actuarially equivalent
21to 80 percent of the full actuarial value of the benefits provided
22under the plan contract. No product shall be offered at this level
23of coverage unless it is a standardized product consistent with
24Section 1366.6.

25(4) Platinum level: A health care service plan contract in the
26platinum level shall provide a level of coverage that is actuarially
27equivalent to 90 percent of the full actuarial value of the benefits
28provided under the plan contract. No product shall be offered at
29this level of coverage unless it is a standardized product consistent
30with Section 1366.6.

31(b) Actuarial value for nongrandfathered individualbegin delete and
32nongrandfathered small employerend delete
health care service plan contracts
33shall be determined in accordance with the following:

34(1) Actuarial value shall not vary by more than plus or minus
352 percent.

36(2) Actuarial value shall be determined on the basis of essential
37health benefits as defined in Section 1367.005 and as provided to
38a standard, nonelderly population. For this purpose, a standard
39population shall not include those receiving coverage through the
40Medi-Cal or Medicare programs.

P8    1(3) The department may use the actuarial value methodology
2developed consistent with Section 1302(d) of PPACA.

3(4) The department, in consultation with the Department of
4Insurance and the Exchange, shall consider whether to exercise
5state-level flexibility with respect to the actuarial value calculator
6in order to take into account the unique characteristics of the
7California health care coverage market, including the prevalence
8of health care service plans, total cost of care paid for by the plan,
9price of care, patterns of service utilization, and relevant
10demographic factors.

begin delete

11(5) For small group products, employer contributions toward
12health reimbursement accounts and health savings accounts shall
13count toward the actuarial value of the product in the manner
14specified in federal rules and guidance.

end delete

15(c) For all products in the nongrandfathered individualbegin delete and small
16group markets, any deductible shall apply to all servicesend delete
begin insert market end insert
17begin insertcommencing January 1, 2015, any deductible shall apply to the
18same services for any product in the same level of coverage
19whether regulated by the department or the Department of
20Insuranceend insert
.

21(d) (1) A catastrophic plan is a health care service plan contract
22that provides no benefits for any plan year until the enrollee has
23incurred cost-sharing expenses in an amount equal to the annual
24limit on out-of-pocket costs as specified in Section 1367.006 except
25that it shall provide coverage for at least three primary care visits.
26A carrier that is not participating in the Exchange shall not offer,
27market, or sell a catastrophic plan in the individual market. No
28product shall be offered at this level of coverage unless it is a
29standardized product consistent with Section 1366.6.

30(2) A catastrophic plan may be offered only in the individual
31market and only if consistent with subdivision (c) and this
32paragraph. Catastrophic plans may be offered only if either of the
33following apply:

34(A) The individual purchasing the plan has not yet attained 30
35years of age.

36(B) The individual has a certificate of exemption from Section
375000(A) of the Internal Revenue Code because the individual is
38not offered affordable coverage or because the individual faces
39hardship.

begin insert

P9    1(e) Nothing in this section shall prohibit a plan from offering
2supplemental benefits for services that are not included in essential
3health benefits as defined in Section 1367.005, including adult
4dental, adult vision, acupuncture, or chiropractic, if the plan
5demonstrates to the satisfaction of the director that those benefits
6will not affect the risk adjustment scores or the reinsurance
7amounts for the product or the plan. For a plan to continue to
8offer a supplemental benefit, the plan shall annually provide to
9the department information necessary to determine whether the
10benefit has affected the risk mix in the prior plan year.

end insert
begin delete

11(e)

end delete

12begin insert(f)end insert “PPACA” means the federal Patient Protection and
13Affordable Care Act (Public Law 111-148), as amended by the
14federal Health Care and Education Reconciliation Act of 2010
15(Public Law 111-152), and any rules, regulations, or guidance
16issued thereunder.

begin insert17

begin insertSEC. 5.end insert  

Section 1367.009 is added to the Health and Safety
18Code
, to read:

19

begin insert1367.009.end insert  

(a) Levels of coverage for the nongrandfathered
20small group market are defined as follows:

21(1) Bronze level: A health care service plan contract in the
22bronze level shall provide a level of coverage that is actuarially
23equivalent to 60 percent of the full actuarial value of the benefits
24provided under the plan contract.

25(2) Silver level: A health care service plan contract in the silver
26level shall provide a level of coverage that is actuarially equivalent
27to 70 percent of the full actuarial value of the benefits provided
28under the plan contract.

29(3) Gold level: A health care service plan contract in the gold
30level shall provide a level of coverage that is actuarially equivalent
31to 80 percent of the full actuarial value of the benefits provided
32under the plan contract.

33(4) Platinum level: A health care service plan contract in the
34platinum level shall provide a level of coverage that is actuarially
35equivalent to 90 percent of the full actuarial value of the benefits
36provided under the plan contract.

37(b) Actuarial value for nongrandfathered small employer health
38care service plan contracts shall be determined in accordance
39with the following:

P10   1(1) Actuarial value shall not vary by more than plus or minus
22 percent.

3(2) Actuarial value shall be determined on the basis of essential
4health benefits as defined in Section 1367.005 and as provided to
5a standard, nonelderly population. For this purpose, a standard
6population shall not include those receiving coverage through the
7Medi-Cal or Medicare programs.

8(3) The department may use the actuarial value methodology
9developed consistent with Section 1302(d) of PPACA.

10(4) The department, in consultation with the Department of
11Insurance and the Exchange, shall consider whether to exercise
12state-level flexibility with respect to the actuarial value calculator
13in order to take into account the unique characteristics of the
14California health care coverage market, including the prevalence
15of health care service plans, total cost of care paid for by the plan,
16price of care, patterns of service utilization, and relevant
17demographic factors.

18(5) Employer contributions toward health reimbursement
19accounts and health savings accounts shall count toward the
20actuarial value of the product in the manner specified in federal
21rules and guidance.

22(c) For all products in the nongrandfathered small group market
23commencing January 1, 2015, any deductible shall apply to the
24same services for any product in the same level of coverage
25whether regulated by the department or the Department of
26Insurance.

27(e) “PPACA” means the federal Patient Protection and
28Affordable Care Act (Public Law 111-148), as amended by the
29federal Health Care and Education Reconciliation Act of 2010
30(Public Law 111-152), and any rules, regulations, or guidance
31issued thereunder.

end insert
32

begin deleteSEC. 5.end delete
33begin insertSEC. 6.end insert  

Section 10112.28 is added to the Insurance Code, to
34read:

35

10112.28.  

(a) (1) For nongrandfathered products in the
36individual or small group markets, a health insurance policy, except
37a specialized health insurance policy, that is issued, amended, or
38renewed on or after January 1, 2014, shall provide for a limit on
39annual out-of-pocket expenses for all covered benefits that meet
P11   1the definition of essential health benefits in paragraph (1) of
2subdivision (a) of Section 10112.27.

3(2) For nongrandfathered products in the large group market, a
4health insurance policy, except a specialized health insurance
5policy, that is issued, amended, or renewed on or after January 1,
62014, shall provide for a limit on annual out-of-pocket expenses
7for all covered benefits, including out-of-network emergency care.
8begin insert For large group products for the first plan year commencing on
9or after January 1, 2014, the requirement that a product provide
10for a limit on annual out-of-pocket expensesend insert
begin insert shall be satisfied if
11both of the following apply:end insert

begin insert

12(A) The product complies with the requirements of this
13paragraph with respect to basic health care services.

end insert
begin insert

14(B) To the extent the product includes an out-of-pocket maximum
15on coverage that does not consistent solely of basic health care
16services, the out-of-pocket maximum does not exceed the limit
17established pursuant to this subdivision.

end insert

18(b) The limit described in subdivision (a) shall apply to any
19copayment, coinsurance, deductible, incentive payment and any
20other form of cost sharing for all covered benefitsbegin insert, including
21nonformulary prescription drugs that are authorized as medically
22necessaryend insert
.

23(c) The limit described in subdivision (a) shall not exceed the
24limit described in Section 1302(c) of PPACA and any subsequent
25rules, regulations, or guidance issued under that section.

26(d) Nothing in this section shall be construed to affect the
27reduction in cost sharing for eligible enrollees described in Section
281402 of PPACA and any subsequent rules, regulations, or guidance
29issued under that section.

30(e) “PPACA” means the federal Patient Protection and
31Affordable Care Act (Public Law 111-148), as amended by the
32federal Health Care and Education Reconciliation Act of 2010
33(Public Law 111-152), and any rules, regulations, or guidance
34issued thereunder.

35

begin deleteSEC. 6.end delete
36begin insertSEC. 7.end insert  

Section 10112.29 is added to the Insurance Code, to
37read:

38

10112.29.  

(a) (1) For a small employer health insurance policy
39offered, sold, or renewed on or after January 1, 2014, the deductible
40under the policy shall not exceed:

P12   1(A) Two thousand dollars ($2,000) in the case of a policy
2covering a single individual.

3(B) Four thousand dollars ($4,000) in the case of any other
4policy.

5(2) The dollar amounts in this section shall be indexed consistent
6with Section 1302(c)(2) of PPACA and any federal rules or
7guidance pursuant to that section.

8(3) The limitation in this subdivision shall be applied in a
9manner that does not affect the actuarial value of any small
10employer health insurance policy.

11(4) For small group products at the bronze level of coverage,
12as defined in Section 10112.295, the department may permit
13insurers to offer a higher deductible in order to meet the actuarial
14value requirement of the bronze level. In making this
15determination, the department shall consider affordability of cost
16sharing for insureds and shall also consider whether insureds may
17be deterred from seeking appropriate care because of higher cost
18sharing.

19(b) Nothing in this section shall be construed to allow a policy
20to have a deductible that applies to preventive services as defined
21in PPACA.

22(c) “PPACA” means the federal Patient Protection and
23Affordable Care Act (Public Law 111-148), as amended by the
24federal Health Care and Education Reconciliation Act of 2010
25(Public Law 111-152), and any rules, regulations, or guidance
26issued thereunder.

27

begin deleteSEC. 7.end delete
28begin insertSEC. 8.end insert  

Section 10112.295 is added to the Insurance Code, to
29read:

30

10112.295.  

(a) Levels of coverage for the nongrandfathered
31individualbegin delete and small group marketsend deletebegin insert marketend insert are defined as follows:

32(1) Bronze level: A health insurance policy in the bronze level
33shall provide a level of coverage that is actuarially equivalent to
3460 percent of the full actuarial value of the benefits provided under
35the policy. No product shall be offered at this level of coverage
36unless it is a standardized product consistent with Section 10112.3.

37(2) Silver level: A health insurance policy in the silver level
38shall provide a level of coverage that is actuarially equivalent to
3970 percent of the full actuarial value of the benefits provided under
P13   1the policy. No product shall be offered at this level of coverage
2unless it is a standardized product consistent with Section 10112.3.

3(3) Gold level: A health insurance policy in the gold level shall
4provide a level of coverage that is actuarially equivalent to 80
5percent of the full actuarial value of the benefits provided under
6the policy. No product shall be offered at this level of coverage
7unless it is a standardized product consistent with Section 10112.3.

8(4) Platinum level: A health insurance policy in the platinum
9level shall provide a level of coverage that is actuarially equivalent
10to 90 percent of the full actuarial value of the benefits provided
11under the policy. No product shall be offered at this level of
12coverage unless it is a standardized product consistent with Section
1310112.3.

14(b) Actuarial value for nongrandfathered individualbegin delete and
15nongrandfathered small employerend delete
health insurance policies shall
16be determined in accordance with the following:

17(1) Actuarial value shall not vary by more than plus or minus
182 percent.

19(2) Actuarial value shall be determined on the basis of essential
20health benefits as defined in Section 10112.27 and as provided to
21a standard, nonelderly population. For this purpose, a standard
22population shall not include those receiving coverage through the
23Medi-Cal or Medicare programs.

24(3) The department may use the actuarial value methodology
25developed consistent with Section 1302(d) of PPACA.

26(4) The department, in consultation with the Department of
27Managed Health Care and the Exchange, shall consider whether
28to exercise state-level flexibility with respect to the actuarial value
29calculator in order to take into account the unique characteristics
30of the California health care coverage market, including the
31prevalence of healthbegin delete care service plansend deletebegin insert insurance policiesend insert, total
32 cost of care paid for by thebegin delete planend deletebegin insert health insurerend insert, price of care,
33patterns of service utilization, and relevant demographic factors.

begin delete

34(5) For small group products, employer contributions toward
35health reimbursement accounts and health savings accounts shall
36count toward the actuarial value of the product in the manner
37specified in federal rules and guidance.

end delete

38(c) For all products in the nongrandfathered individualbegin delete and small
39group markets, any deductible shall apply to all servicesend delete
begin insert market
40commencing January 1, 2015, any deductible shall apply to the
P14   1same services for any product in the same level of coverage
2whether regulated by the department or the Department of
3Managed Health Careend insert
.

4(d) (1) A catastrophic policy is a health insurance policy that
5provides no benefits for any plan year until the insured has incurred
6cost-sharing expenses in an amount equal to the annual limit on
7out-of-pocket costs as specified in Section 10112.28 except that
8it shall provide coverage for at least three primary care visits. No
9product shall be offered at this level of coverage unless it is a
10standardized product consistent with Section 10112.3. A carrier
11that is not participating in the Exchange shall not offer, market, or
12sell a catastrophic plan in the individual market.

13(2) A catastrophic policy may be offered only in the individual
14market and only if consistent with subdivision (c) and this
15paragraph. Catastrophic policies may be offered only if either of
16the following apply:

17(A) The individual purchasing the policy has not yet attained
1830 years of age.

19(B) The individual has a certificate of exemption from Section
205000(A) of the Internal Revenue Code because the individual is
21not offered affordable coverage or because the individual faces
22hardship.

begin insert

23(e) Nothing in this section shall prohibit an insurer from offering
24supplemental benefits for services that are not included in essential
25health benefits as defined in paragraph (1) of subdivision (a) of
26Section 10112.27, including adult dental, adult vision, acupuncture,
27or chiropractic, if the insurer demonstrates to the satisfaction of
28the commissioner that those benefits will not affect the risk
29adjustment scores or the reinsurance amounts for the product or
30the policy. For an insurer to continue to offer a supplemental
31benefit, the insurer shall annually provide to the department
32information necessary to determine whether the benefit has affected
33the risk mix in the prior policy year.

end insert
begin delete

34(e)

end delete

35begin insert(f)end insert “PPACA” means the federal Patient Protection and
36Affordable Care Act (Public Law 111-148), as amended by the
37federal Health Care and Education Reconciliation Act of 2010
38(Public Law 111-152), and any rules, regulations, or guidance
39issued thereunder.

begin insertP15   1

begin insertSEC. 9.end insert  

Section 10112.297 is added to the Insurance Code, to
2read:

3

begin insert10112.297.end insert  

(a) Levels of coverage for the nongrandfathered
4small group market are defined as follows:

5(1) Bronze level: A health insurance policy in the bronze level
6shall provide a level of coverage that is actuarially equivalent to
760 percent of the full actuarial value of the benefits provided under
8the policy.

9(2) Silver level: A health insurance policy in the silver level
10shall provide a level of coverage that is actuarially equivalent to
1170 percent of the full actuarial value of the benefits provided under
12the policy.

13(3) Gold level: A health insurance policy in the gold level shall
14provide a level of coverage that is actuarially equivalent to 80
15percent of the full actuarial value of the benefits provided under
16the policy.

17(4) Platinum level: A health insurance policy in the platinum
18level shall provide a level of coverage that is actuarially equivalent
19to 90 percent of the full actuarial value of the benefits provided
20under the policy.

21(b) Actuarial value for nongrandfathered small employer health
22insurance policies shall be determined in accordance with the
23following:

24(1) Actuarial value shall not vary by more than plus or minus
252 percent.

26(2) Actuarial value shall be determined on the basis of essential
27health benefits as defined in paragraph (1) of subdivision (a) of
28Section 10112.27 and as provided to a standard, nonelderly
29population. For this purpose, a standard population shall not
30include those receiving coverage through the Medi-Cal or
31Medicare programs.

32(3) The department may use the actuarial value methodology
33developed consistent with Section 1302(d) of PPACA.

34(4) The department, in consultation with the Department of
35Managed Health Care and the Exchange, shall consider whether
36to exercise state-level flexibility with respect to the actuarial value
37calculator in order to take into account the unique characteristics
38of the California health care coverage market, including the
39prevalence of health insurance policies, total cost of care paid for
P16   1by the health insurer, price of care, patterns of service utilization,
2and relevant demographic factors.

3(5) Employer contributions toward health reimbursement
4accounts and health savings accounts shall count toward the
5actuarial value of the product in the manner specified in federal
6rules and guidance.

7(c) For all products in the nongrandfathered small group market
8commencing January 1, 2015, any deductible shall apply to the
9same services for any product in the same level of coverage
10whether regulated by the department or the Department of
11Managed Health Care.

12(e) “PPACA” means the federal Patient Protection and
13Affordable Care Act (Public Law 111-148), as amended by the
14federal Health Care and Education Reconciliation Act of 2010
15(Public Law 111-152), and any rules, regulations, or guidance
16issued thereunder.

end insert
17

begin deleteSEC. 8.end delete
18begin insertSEC. 10.end insert  

Section 10112.7 is added to the Insurance Code, to
19read:

20

10112.7.  

(a) A group or individual health insurance policy
21issued, amended, or renewed on or after January 1, 2014, that
22provides or covers any benefits with respect to services in an
23emergency department of a hospital shall cover emergency services
24as follows:

25(1) Without the need for any prior authorization determination.

26(2) Whether the health care provider furnishing the services is
27a participating provider with respect to those services.

28(3) In a manner so that, if the services are provided to an insured:

29(A) By a nonparticipating health care provider with or without
30prior authorization; or

31(B) (i) The services will be provided without imposing any
32requirement under the policy for prior authorization of services or
33any limitation on coverage where the provider of services does
34not have a contractual relationship with the insurer for the
35providing of services that is more restrictive than the requirements
36or limitations that apply to emergency department services received
37from providers who do have such a contractual relationship with
38the insurer; and

39(ii) If the services are provided to an insured out-of-network,
40the cost-sharing requirement, expressed as a copayment amount
P17   1or coinsurance rate, is the same requirement that would apply if
2the services were provided in-network.

3(b) For the purposes of this section, the term “emergency
4services” means, with respect to an emergency medical condition:

5(1) A medical screening examination that is within the capability
6of the emergency department of a hospital, including ancillary
7services routinely available to the emergency department to
8evaluate that emergency medical condition.

9(2) Within the capabilities of the staff and facilities available at
10the hospital, further medical examination and treatment as are
11required under Section 1867(e)(3) of the federal Social Security
12Act (42 U.S.C. 1395dd(e)(3)) to stabilize the patient.

13

begin deleteSEC. 9.end delete
14begin insertSEC. 11.end insert  

No reimbursement is required by this act pursuant
15to Section 6 of Article XIII B of the California Constitution because
16the only costs that may be incurred by a local agency or school
17district will be incurred because this act creates a new crime or
18infraction, eliminates a crime or infraction, or changes the penalty
19for a crime or infraction, within the meaning of Section 17556 of
20the Government Code, or changes the definition of a crime within
21the meaning of Section 6 of Article XIII B of the California
22Constitution.



O

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