Amended in Assembly August 6, 2013

Amended in Senate May 28, 2013

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, 1367.008, and 1367.009 to, the Health and Safety Code, and to add Sections 10112.28, 10112.29, 10112.295, 10112.297, and 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 covered benefits, including out-of-network emergencybegin delete care.end deletebegin insert care, to the extent that the limit does not conflict with federal law or guidance, as specified. The bill would, effective January 1, 2015, apply the above-described provisions to a specialized plan or specialized health insurance policy that offers an essential health benefit, as specified.end insert

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.

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.

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:

P3    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:

5(a) Facilities located in this state including, but not limited to,
6clinics, hospitals, and skilled nursing facilities to be utilized by
7the plan shall be licensed by the State Department of Public Health,
8where licensure is required by law. Facilities not located in this
9state shall conform to all licensing and other requirements of the
10jurisdiction in which they are located.

11(b) Personnel employed by or under contract to the plan shall
12be licensed or certified by their respective board or agency, where
13licensure or certification is required by law.

14(c) Equipment required to be licensed or registered by law shall
15be so licensed or registered, and the operating personnel for that
16equipment shall be licensed or certified as required by law.

17(d) The plan shall furnish services in a manner providing
18continuity of care and ready referral of patients to other providers
19at times as may be appropriate consistent with good professional
20practice.

21(e) (1) All services shall be readily available at reasonable times
22to each enrollee consistent with good professional practice. To the
23extent feasible, the plan shall make all services readily accessible
24to all enrollees consistent with Section 1367.03.

25(2) To the extent that telehealth services are appropriately
26provided through telehealth, as defined in subdivision (a) of Section
272290.5 of the Business and Professions Code, these services shall
28be considered in determining compliance with Section 1300.67.2
29of Title 28 of the California Code of Regulations.

30(3) The plan shall make all services accessible and appropriate
31consistent with Section 1367.04.

32(f) The plan shall employ and utilize allied health manpower
33for the furnishing of services to the extent permitted by law and
34consistent with good medical practice.

35(g) The plan shall have the organizational and administrative
36capacity to provide services to subscribers and enrollees. The plan
37shall be able to demonstrate to the department that medical
P4    1decisions are rendered by qualified medical providers, unhindered
2by fiscal and administrative management.

3(h) (1) Contracts with subscribers and enrollees, including
4group contracts, and contracts with providers, and other persons
5furnishing services, equipment, or facilities to or in connection
6with the plan, shall be fair, reasonable, and consistent with the
7objectives of this chapter. All contracts with providers shall contain
8provisions requiring a fast, fair, and cost-effective dispute
9resolution mechanism under which providers may submit disputes
10to the plan, and requiring the plan to inform its providers upon
11contracting with the plan, or upon change to these provisions, of
12the procedures for processing and resolving disputes, including
13the location and telephone number where information regarding
14disputes may be submitted.

15(2) A health care service plan shall ensure that a dispute
16resolution mechanism is accessible to noncontracting providers
17for the purpose of resolving billing and claims disputes.

18(3) On and after January 1, 2002, a health care service plan shall
19annually submit a report to the department regarding its dispute
20resolution mechanism. The report shall include information on the
21number of providers who utilized the dispute resolution mechanism
22and a summary of the disposition of those disputes.

23(i) A health care service plan contract shall provide to
24subscribers and enrollees all of the basic health care services
25included in subdivision (b) of Section 1345, except that the director
26may, for good cause, by rule or order exempt a plan contract or
27any class of plan contracts from that requirement. The director
28shall by rule define the scope of each basic health care service that
29health care service plans are required to provide as a minimum for
30licensure under this chapter. Nothing in this chapter shall prohibit
31a health care service plan from charging subscribers or enrollees
32a copayment or a deductible for a basic health care service
33consistent with Section 1367.006 or 1367.007, provided that the
34copayments, deductibles, or other cost sharing are reported to the
35director and set forth to the subscriber or enrollee pursuant to the
36disclosure provisions of Section 1363. Nothing in this chapter shall
37prohibit a health care service plan from setting forth, by contract,
38limitations on maximum coverage of basic health care services,
39provided that the limitations are reported to, and held
P5    1unobjectionable by, the director and set forth to the subscriber or
2enrollee pursuant to the disclosure provisions of Section 1363.

3(j) A health care service plan shall not require registration under
4the federal Controlled Substances Act (21 U.S.C. Sec. 801 et seq.)
5as a condition for participation by an optometrist certified to use
6therapeutic pharmaceutical agents pursuant to Section 3041.3 of
7the Business and Professions Code.

8Nothing in this section shall be construed to permit the director
9to establish the rates charged subscribers and enrollees for
10contractual health care services.

11The director’s enforcement of Article 3.1 (commencing with
12Section 1357) shall not be deemed to establish the rates charged
13subscribers and enrollees for contractual health care services.

14The obligation of the plan to comply with this chapter shall not
15be waived when the plan delegates any services that it is required
16to perform to its medical groups, independent practice associations,
17or other contracting entities.

18

SEC. 2.  

Section 1367.006 is added to the Health and Safety
19Code
, to read:

20

1367.006.  

(a) (1) For nongrandfathered products in the
21individual or small group markets, a health care service plan
22contract, except a specialized health care service plan contract,
23that is issued, amended, or renewed on or after January 1, 2014,
24shall provide for a limit on annual out-of-pocket expenses for all
25covered benefits that meet the definition of essential health benefits
26in paragraph (1) of subdivision (a) of Section 1367.005.

27(2) For nongrandfathered products in the large group market, a
28health care service plan contract, except a specialized health care
29service plan contract, that is issued, amended, or renewed on or
30after January 1, 2014, shall provide for a limit on annual
31out-of-pocket expenses for covered benefits, including
32out-of-network emergency care consistent with Section 1371.4.
33begin insert This limit shall apply to essential health benefits covered under
34the plan to the extent that this provision does not conflict with
35federal law or guidance on out-of-pocket maximums for
36nongrandfathered products in the large group market. end insert
For large
37group products for the first plan year commencing on or after
38January 1, 2014, the requirement that a product provide for a limit
39on annual out-of-pocket expenses shall be satisfied if both of the
40following apply:

P6    1(A) The product complies with the requirements of this
2paragraph with respect to basic health care services.

3(B) To the extent the product includes an out-of-pocket
4maximum on coverage other than basic health care services, that
5out-of-pocket maximum also does not exceed the limit established
6pursuant to this paragraph.

7(b) The limit described in subdivision (a) shall apply to any
8copayment, coinsurance, deductible, incentive payment, and any
9other form of cost sharing for all covered benefits, including
10prescription drugs covered pursuant to Section 1367.24.

11(c) The limit described in subdivision (a) shall not exceed the
12limit described in Section 1302(c) of PPACA, and any subsequent
13rules, regulations, or guidance issued under that section.

14(d) Nothing in this section shall be construed to affect the
15reduction in cost sharing for eligible enrollees described in Section
161402 of PPACA, and any subsequent rules, regulations, or guidance
17issued under that section.

begin insert

18(e) Effective January 1, 2015, if an essential health benefit is
19offered by a specialized plan, this section shall apply so that the
20total annual out-of-pocket maximum for all essential benefits does
21not exceed the limit in this section. This section shall not apply to
22a specialized plan that does not offer an essential health benefit
23as defined in Section 1367.005.

end insert
begin delete

24(e)

end delete

25begin insert(f)end insert “PPACA” means the federal Patient Protection and
26Affordable Care Act (Public Law 111-148), as amended by the
27federal Health Care and Education Reconciliation Act of 2010
28(Public Law 111-152), and any rules, regulations, or guidance
29issued thereunder.

30

SEC. 3.  

Section 1367.007 is added to the Health and Safety
31Code
, to read:

32

1367.007.  

(a) (1) For a small employer health care service
33plan contract offered, sold, or renewed on or after January 1, 2014,
34the deductible under the plan shall not exceed:

35(A) Two thousand dollars ($2,000) in the case of a plan contract
36covering a single individual.

37(B) Four thousand dollars ($4,000) in the case of any other plan
38contract.

P7    1(2) The dollar amounts in this section shall be indexed consistent
2with Section 1302(c)(2) of PPACA and any federal rules or
3guidance pursuant to that section.

4(3) The limitation in this subdivision shall be applied in a
5manner that does not affect the actuarial value of any small
6employer health care service plan contract.

7(4) For small group products at the bronze level of coverage,
8as defined in Section 1367.008, the department may permit plans
9to offer a higher deductible in order to meet the actuarial value
10requirement of the bronze level. In making this determination, the
11department shall consider affordability of cost sharing for enrollees
12and shall also consider whether enrollees may be deterred from
13seeking appropriate care because of higher cost sharing.

14(b) Nothing in this section shall be construed to allow a plan
15contract to have a deductible that applies to preventive services as
16defined in Section 1367.002.

17(c) “PPACA” means the federal Patient Protection and
18Affordable Care Act (Public Law 111-148), as amended by the
19federal Health Care and Education Reconciliation Act of 2010
20(Public Law 111-152), and any rules, regulations, or guidance
21issued thereunder.

22

SEC. 4.  

Section 1367.008 is added to the Health and Safety
23Code
, to read:

24

1367.008.  

(a) Levels of coverage for the nongrandfathered
25individual market are defined as follows:

26(1) Bronze level: A health care service plan contract in the
27bronze level shall provide a level of coverage that is actuarially
28equivalent to 60 percent of the full actuarial value of the benefits
29provided under the plan contract.begin delete No product shall be offered at
30this level of coverage unless it is a standardized product consistent
31with Section 1366.6.end delete

32(2) Silver level: A health care service plan contract in the silver
33level shall provide a level of coverage that is actuarially equivalent
34to 70 percent of the full actuarial value of the benefits provided
35under the plan contract.begin delete No product shall be offered at this level
36of coverage unless it is a standardized product consistent with
37Section 1366.6.end delete

38(3) Gold level: A health care service plan contract in the gold
39level shall provide a level of coverage that is actuarially equivalent
40to 80 percent of the full actuarial value of the benefits provided
P8    1under the plan contract.begin delete No product shall be offered at this level
2of coverage unless it is a standardized product consistent with
3Section 1366.6.end delete

4(4) Platinum level: A health care service plan contract in the
5platinum level shall provide a level of coverage that is actuarially
6equivalent to 90 percent of the full actuarial value of the benefits
7provided under the plan contract. begin delete No product shall be offered at
8this level of coverage unless it is a standardized product consistent
9with Section 1366.6.end delete

10(b) Actuarial value for nongrandfathered individual health care
11service plan contracts shall be determined in accordance with the
12following:

13(1) Actuarial value shall not vary by more than plus or minus
142 percent.

15(2) Actuarial value shall be determined on the basis of essential
16health benefits as defined in Section 1367.005 and as provided to
17a standard, nonelderly population. For this purpose, a standard
18population shall not include those receiving coverage through the
19Medi-Cal or Medicare programs.

20(3) The department may use the actuarial value methodology
21developed consistent with Section 1302(d) of PPACA.

begin insert

22(4) The actuarial value for pediatric dental benefits, whether
23offered by a full service plan or a specialized plan, shall be
24consistent with federal law and guidance.

end insert
begin delete

25(4)

end delete

26begin insert(5)end insert The department, in consultation with the Department of
27Insurance and the Exchange, shall consider whether to exercise
28state-level flexibility with respect to the actuarial value calculator
29in order to take into account the unique characteristics of the
30California health care coverage market, including the prevalence
31of health care service plans, total cost of care paid for by the plan,
32price of care, patterns of service utilization, and relevant
33demographic factors.

34(c) For all products in the nongrandfathered individual market
35commencing January 1, 2015, any deductible shall apply to the
36same services for any product in the same level of coverage
37whether regulated by the department or the Department of
38Insurance.

39(d) (1) A catastrophic plan is a health care service plan contract
40that provides no benefits for any plan year until the enrollee has
P9    1incurred cost-sharing expenses in an amount equal to the annual
2limit on out-of-pocket costs as specified in Section 1367.006 except
3that it shall provide coverage for at least three primary care visits.
4A carrier that is not participating in the Exchange shall not offer,
5market, or sell a catastrophic plan in the individual market.begin delete No
6product shall be offered at this level of coverage unless it is a
7standardized product consistent with Section 1366.6.end delete

8(2) A catastrophic plan may be offered only in the individual
9market and only if consistent with subdivision (c) and this
10paragraph. Catastrophic plans may be offered only if either of the
11following apply:

12(A) The individual purchasing the plan has not yet attained 30
13years of age.

14(B) The individual has a certificate of exemption from Section
155000(A) of the Internal Revenue Code because the individual is
16not offered affordable coverage or because the individual faces
17hardship.

begin insert

18(e) (1) Nongrandfathered products in the individual market
19that are not standardized products as provided under Section
201366.1 shall be subject to review by the department consistent with
21this subdivision prior to product approval. This section shall also
22apply to carriers offering specialized plans that provide coverage
23of an essential health benefit as defined in Section 1367.005.

end insert
begin insert

24(2) The department shall publicly post information on
25 nonstandardized products no less than 60 days prior to the date
26on which the product is approved by the department. For purposes
27of products offered by the Exchange, the department shall post
28nonstandardized products for review 60 days prior to the
29finalization of any contract between the Exchange and the health
30care service plan.

end insert
begin insert

31(3) For each proposed product, the plan shall provide to the
32department all of the following:

end insert
begin insert

33(A) Information as to whether the product was proposed to the
34Exchange and any written information from the Exchange as to
35whether the product was approved, denied, or modified.

end insert
begin insert

36(B) The estimated actuarial value of the proposed product and
37the actuarial value tier of the proposed product.

end insert
begin insert

38(C) The anticipated impact on risk mix of plan enrollees
39purchasing the proposed product, including information on the
P10   1risk mix of enrollees purchasing the same or similar products in
2prior years.

end insert
begin insert

3(D) Any benefit to consumers, including the anticipated impacts
4on premiums.

end insert
begin insert

5(4) The department shall review and take public comment on
6 the nonstandardized products with regard to all of the following:

end insert
begin insert

7(A) Whether the proposed product is likely to affect the risk
8adjustment scores or reinsurance amounts for the product or health
9care service plan.

end insert
begin insert

10(B) Whether the consumer will be provided additional or more
11comprehensive benefits.

end insert
begin insert

12(C) Whether the proposed product has a disproportional impact
13on individuals with high health care needs.

end insert
begin insert

14(D) The anticipated impact on premiums.

end insert
begin insert

15(E) Whether the proposed product is otherwise consistent with
16this chapter.

end insert
begin insert

17(5) If this product is approved or modified, the approved product
18shall be posted.

end insert
begin delete

19(e)

end delete

20begin insert(f)end insert Nothing in this section shall prohibit a plan from offering
21supplemental benefits for services that are not included in essential
22 health benefits as defined in Section 1367.005, including adult
23dental, adult vision, acupuncture, or chiropractic, if the plan
24demonstrates to the satisfaction of the director that those benefits
25will not affect the risk adjustment scores or the reinsurance amounts
26for the product or the plan. For a plan to continue to offer a
27supplemental benefit, the plan shall annually provide to the
28department information necessary to determine whether the benefit
29has affected the risk mix in the prior plan year.

begin delete

30(f)

end delete

31begin insert(g)end insert “PPACA” means the federal Patient Protection and
32Affordable Care Act (Public Law 111-148), as amended by the
33federal Health Care and Education Reconciliation Act of 2010
34(Public Law 111-152), and any rules, regulations, or guidance
35issued thereunder.

36

SEC. 5.  

Section 1367.009 is added to the Health and Safety
37Code
, to read:

38

1367.009.  

(a) Levels of coverage for the nongrandfathered
39small group market are defined as follows:

P11   1(1) Bronze level: A health care service plan contract in the
2bronze level shall provide a level of coverage that is actuarially
3equivalent to 60 percent of the full actuarial value of the benefits
4provided under the plan contract.

5(2) Silver level: A health care service plan contract in the silver
6level shall provide a level of coverage that is actuarially equivalent
7to 70 percent of the full actuarial value of the benefits provided
8under the plan contract.

9(3) Gold level: A health care service plan contract in the gold
10level shall provide a level of coverage that is actuarially equivalent
11to 80 percent of the full actuarial value of the benefits provided
12under the plan contract.

13(4) Platinum level: A health care service plan contract in the
14platinum level shall provide a level of coverage that is actuarially
15equivalent to 90 percent of the full actuarial value of the benefits
16provided under the plan contract.

17(b) Actuarial value for nongrandfathered small employer health
18care service plan contracts shall be determined in accordance with
19the following:

20(1) Actuarial value shall not vary by more than plus or minus
212 percent.

22(2) Actuarial value shall be determined on the basis of essential
23health benefits as defined in Section 1367.005 and as provided to
24a standard, nonelderly population. For this purpose, a standard
25population shall not include those receiving coverage through the
26Medi-Cal or Medicare programs.

27(3) The department may use the actuarial value methodology
28developed consistent with Section 1302(d) of PPACA.

begin insert

29(4) The actuarial value for pediatric dental benefits, whether
30offered by a full service plan or a specialized plan, shall be
31consistent with federal law and guidance.

end insert
begin delete

32(4)

end delete

33begin insert(5)end insert The department, in consultation with the Department of
34Insurance and the Exchange, shall consider whether to exercise
35state-level flexibility with respect to the actuarial value calculator
36in order to take into account the unique characteristics of the
37California health care coverage market, including the prevalence
38of health care service plans, total cost of care paid for by the plan,
39price of care, patterns of service utilization, and relevant
40demographic factors.

begin delete

P12   1(5)

end delete

2begin insert(6)end insert Employer contributions toward health reimbursement
3accounts and health savings accounts shall count toward the
4actuarial value of the product in the manner specified in federal
5rules and guidance.

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

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

16

SEC. 6.  

Section 10112.28 is added to the Insurance Code, to
17read:

18

10112.28.  

(a) (1) For nongrandfathered products in the
19individual or small group markets, a health insurance policy, except
20a specialized health insurance policy, that is issued, amended, or
21renewed on or after January 1, 2014, shall provide for a limit on
22annual out-of-pocket expenses for all covered benefits that meet
23the definition of essential health benefits in paragraph (1) of
24subdivision (a) of Section 10112.27.

25(2) For nongrandfathered products in the large group market, a
26health insurance policy, except a specialized health insurance
27policy, that is issued, amended, or renewed on or after January 1,
282014, shall provide for a limit on annual out-of-pocket expenses
29for covered benefits, including out-of-network emergency care.
30begin insert This limit shall apply to essential health benefits covered under
31the policy to the extent that this provision does not conflict with
32federal law or guidance on out-of-pocket maximums for
33nongrandfathered products in the large group market. end insert
For large
34group products for the first plan year commencing on or after
35January 1, 2014, the requirement that a product provide for a limit
36on annual out-of-pocket expenses shall be satisfied if both of the
37following apply:

38(A) The product complies with the requirements of this
39paragraph with respect to basic health care services.

P13   1(B) To the extent the product includes an out-of-pocket
2maximum on coverage other than basic health care services, that
3out-of-pocket maximum also does not exceed the limit established
4pursuant to this paragraph.

5(b) The limit described in subdivision (a) shall apply to any
6copayment, coinsurance, deductible, incentive payment and any
7other form of cost sharing for all covered benefits, including
8nonformulary prescription drugs that are authorized as medically
9necessary.

10(c) The limit described in subdivision (a) shall not exceed the
11limit described in Section 1302(c) of PPACA and any subsequent
12rules, regulations, or guidance issued under that section.

13(d) Nothing in this section shall be construed to affect the
14reduction in cost sharing for eligible enrollees described in Section
151402 of PPACA and any subsequent rules, regulations, or guidance
16issued under that section.

begin insert

17(e) Effective January 1, 2015, if an essential health benefit is
18offered by a specialized health insurance policy, this section shall
19apply so that the total annual out-of-pocket maximum for all
20essential benefits does not exceed the limit in this section. This
21section shall not apply to a specialized policy that does not offer
22an essential health benefit as defined in Section 1367.005.

end insert
begin delete

23(e)

end delete

24begin insert(f)end insert “PPACA” means the federal Patient Protection and
25Affordable Care Act (Public Law 111-148), as amended by the
26federal Health Care and Education Reconciliation Act of 2010
27(Public Law 111-152), and any rules, regulations, or guidance
28issued thereunder.

29

SEC. 7.  

Section 10112.29 is added to the Insurance Code, to
30read:

31

10112.29.  

(a) (1) For a small employer health insurance policy
32offered, sold, or renewed on or after January 1, 2014, the deductible
33under the policy shall not exceed:

34(A) Two thousand dollars ($2,000) in the case of a policy
35covering a single individual.

36(B) Four thousand dollars ($4,000) in the case of any other
37policy.

38(2) The dollar amounts in this section shall be indexed consistent
39with Section 1302(c)(2) of PPACA and any federal rules or
40guidance pursuant to that section.

P14   1(3) The limitation in this subdivision shall be applied in a
2manner that does not affect the actuarial value of any small
3employer health insurance policy.

4(4) For small group products at the bronze level of coverage,
5as defined in Section 10112.295, the department may permit
6insurers to offer a higher deductible in order to meet the actuarial
7value requirement of the bronze level. In making this
8determination, the department shall consider affordability of cost
9sharing for insureds and shall also consider whether insureds may
10be deterred from seeking appropriate care because of higher cost
11sharing.

12(b) Nothing in this section shall be construed to allow a policy
13to have a deductible that applies to preventive services as defined
14in PPACA.

15(c) “PPACA” means the federal Patient Protection and
16Affordable Care Act (Public Law 111-148), as amended by the
17federal Health Care and Education Reconciliation Act of 2010
18(Public Law 111-152), and any rules, regulations, or guidance
19issued thereunder.

20

SEC. 8.  

Section 10112.295 is added to the Insurance Code, to
21read:

22

10112.295.  

(a) Levels of coverage for the nongrandfathered
23individual market are defined as follows:

24(1) Bronze level: A health insurance policy in the bronze level
25shall provide a level of coverage that is actuarially equivalent to
2660 percent of the full actuarial value of the benefits provided under
27the policy.begin delete No product shall be offered at this level of coverage
28unless it is a standardized product consistent with Section 10112.3.end delete

29(2) Silver level: A health insurance policy in the silver level
30shall provide a level of coverage that is actuarially equivalent to
3170 percent of the full actuarial value of the benefits provided under
32the policy.begin delete No product shall be offered at this level of coverage
33unless it is a standardized product consistent with Section 10112.3.end delete

34(3) Gold level: A health insurance policy in the gold level shall
35provide a level of coverage that is actuarially equivalent to 80
36percent of the full actuarial value of the benefits provided under
37the policy.begin delete No product shall be offered at this level of coverage
38unless it is a standardized product consistent with Section 10112.3.end delete

39(4) Platinum level: A health insurance policy in the platinum
40level shall provide a level of coverage that is actuarially equivalent
P15   1to 90 percent of the full actuarial value of the benefits provided
2under the policy. begin delete No product shall be offered at this level of
3coverage unless it is a standardized product consistent with Section
410112.3.end delete

5(b) Actuarial value for nongrandfathered individual health
6insurance policies shall be determined in accordance with the
7following:

8(1) Actuarial value shall not vary by more than plus or minus
92 percent.

10(2) Actuarial value shall be determined on the basis of essential
11health benefits as defined in Section 10112.27 and as provided to
12a standard, nonelderly population. For this purpose, a standard
13population shall not include those receiving coverage through the
14Medi-Cal or Medicare programs.

15(3) The department may use the actuarial value methodology
16developed consistent with Section 1302(d) of PPACA.

begin insert

17(4) The actuarial value for pediatric dental benefits, whether
18offered by a major medical policy or a specialized health insurance
19policy, shall be consistent with federal law and guidance.

end insert
begin delete

20(4)

end delete

21begin insert(5)end insert The department, in consultation with the Department of
22Managed Health Care and the Exchange, shall consider whether
23to exercise state-level flexibility with respect to the actuarial value
24calculator in order to take into account the unique characteristics
25of the California health care coverage market, including the
26prevalence of health insurance policies, total cost of care paid for
27by the health insurer, price of care, patterns of service utilization,
28and relevant demographic factors.

29(c) For all products in the nongrandfathered individual market
30commencing January 1, 2015, any deductible shall apply to the
31same services for any product in the same level of coverage
32whether regulated by the department or the Department of Managed
33Health Care.

34(d) (1) A catastrophic policy is a health insurance policy that
35provides no benefits for any plan year until the insured has incurred
36cost-sharing expenses in an amount equal to the annual limit on
37out-of-pocket costs as specified in Section 10112.28 except that
38it shall provide coverage for at least three primary care visits.begin delete No
39product shall be offered at this level of coverage unless it is a
40standardized product consistent with Section 10112.3.end delete
A carrier
P16   1that is not participating in the Exchange shall not offer, market, or
2sell a catastrophic plan in the individual market.

3(2) A catastrophic policy may be offered only in the individual
4market and only if consistent with subdivision (c) and this
5paragraph. Catastrophic policies may be offered only if either of
6the following apply:

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

9(B) The individual has a certificate of exemption from Section
105000(A) of the Internal Revenue Code because the individual is
11not offered affordable coverage or because the individual faces
12hardship.

begin insert

13(e) (1) Nongrandfathered products in the individual market
14that are not standardized products as provided under Section
1510112.3 shall be subject to review by the department consistent
16with this subdivision prior to product approval. This section shall
17also apply to carriers offering specialized health insurance policies
18that provide coverage of an essential health benefit as defined in
19Section 10112.27.

end insert
begin insert

20(2) The department shall publicly post information on
21nonstandardized products no less than 60 days prior to the date
22on which the product is approved by the department. For purposes
23of products offered by the Exchange, the department shall post
24nonstandardized products for review 60 days prior to the
25finalization of any contract between the Exchange and the health
26insurer or carrier offering a specialized health insurance policy.

end insert
begin insert

27(3) For each proposed product, the insurer shall provide to the
28department all of the following:

end insert
begin insert

29(A) Information as to whether the product was proposed to the
30Exchange and any written information from the Exchange as to
31whether the product was approved, denied, or modified.

end insert
begin insert

32(B) The estimated actuarial value of the proposed product and
33the actuarial value tier of the proposed product.

end insert
begin insert

34(C) The anticipated impact on risk mix of insureds purchasing
35the proposed product, including information on the risk mix of
36insureds purchasing the same or similar products in prior years.

end insert
begin insert

37(D) Any benefit to consumers, including the anticipated impacts
38on premiums.

end insert
begin insert

39(4) The department shall review and take public comment on
40the nonstandardized products with regard to all of the following:

end insert
begin insert

P17   1(A) Whether the proposed product is likely to affect the risk
2adjustment scores or reinsurance amounts for the product or the
3health insurance policy.

end insert
begin insert

4(B) Whether the consumer will be provided additional or more
5comprehensive benefits.

end insert
begin insert

6(C) Whether the proposed product has a disproportional impact
7on individuals with high health care needs.

end insert
begin insert

8(D) The anticipated impact on premiums.

end insert
begin insert

9(E) Whether the proposed product is otherwise consistent with
10this chapter.

end insert
begin insert

11(5) If this product is approved or modified, the approved product
12shall be posted.

end insert
begin delete

13(e)

end delete

14begin insert(f)end insert Nothing in this section shall prohibit an insurerbegin insert under a health
15insurance policyend insert
from offering supplemental benefits for services
16that are not included in essential health benefits as defined in
17paragraph (1) of subdivision (a) of Section 10112.27, including
18adult dental, adult vision, acupuncture, or chiropractic, if the insurer
19demonstrates to the satisfaction of the commissioner that those
20benefits will not affect the risk adjustment scores or the reinsurance
21amounts for the product or the policy. For an insurer to continue
22to offer a supplemental benefit, the insurer shall annually provide
23to the department information necessary to determine whether the
24benefit has affected the risk mix in the prior policy year.

begin delete

25(f)

end delete

26begin insert(g)end insert “PPACA” means the federal Patient Protection and
27Affordable Care Act (Public Law 111-148), as amended by the
28federal Health Care and Education Reconciliation Act of 2010
29(Public Law 111-152), and any rules, regulations, or guidance
30issued thereunder.

31

SEC. 9.  

Section 10112.297 is added to the Insurance Code, to
32read:

33

10112.297.  

(a) Levels of coverage for the nongrandfathered
34small group market are defined as follows:

35(1) Bronze level: A health insurance policy in the bronze level
36shall provide a level of coverage that is actuarially equivalent to
3760 percent of the full actuarial value of the benefits provided under
38the policy.

39(2) Silver level: A health insurance policy in the silver level
40shall provide a level of coverage that is actuarially equivalent to
P18   170 percent of the full actuarial value of the benefits provided under
2the policy.

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.

7(4) Platinum level: A health insurance policy in the platinum
8level shall provide a level of coverage that is actuarially equivalent
9to 90 percent of the full actuarial value of the benefits provided
10under the policy.

11(b) Actuarial value for nongrandfathered small employer health
12insurance policies shall be determined in accordance with the
13following:

14(1) Actuarial value shall not vary by more than plus or minus
152 percent.

16(2) Actuarial value shall be determined on the basis of essential
17health benefits as defined in paragraph (1) of subdivision (a) of
18Section 10112.27 and as provided to a standard, nonelderly
19population. For this purpose, a standard population shall not include
20those receiving coverage through the Medi-Cal or Medicare
21programs.

22(3) The department may use the actuarial value methodology
23developed consistent with Section 1302(d) of PPACA.

begin insert

24(4) The actuarial value for pediatric dental benefits, whether
25offered by a major medical policy or a specialized health insurance
26policy, shall be consistent with federal law and guidance.

end insert
begin delete

27(4)

end delete

28begin insert(5)end insert The department, in consultation with the Department of
29Managed Health Care and the Exchange, shall consider whether
30to exercise state-level flexibility with respect to the actuarial value
31calculator in order to take into account the unique characteristics
32of the California health care coverage market, including the
33prevalence of health insurance policies, total cost of care paid for
34by the health insurer, price of care, patterns of service utilization,
35and relevant demographic factors.

begin delete

36(5)

end delete

37begin insert(6)end insert Employer contributions toward health reimbursement
38accounts and health savings accounts shall count toward the
39actuarial value of the product in the manner specified in federal
40rules and guidance.

P19   1(c) For all products in the nongrandfathered small group market
2commencing January 1, 2015, any deductible shall apply to the
3same services for any product in the same level of coverage
4whether regulated by the department or the Department of Managed
5Health Care.

6(d) “PPACA” means the federal Patient Protection and
7Affordable Care Act (Public Law 111-148), as amended by the
8federal Health Care and Education Reconciliation Act of 2010
9(Public Law 111-152), and any rules, regulations, or guidance
10issued thereunder.

11

SEC. 10.  

Section 10112.7 is added to the Insurance Code, to
12read:

13

10112.7.  

(a) A group or individual health insurance policy
14issued, amended, or renewed on or after January 1, 2014, that
15provides or covers any benefits with respect to services in an
16emergency department of a hospital shall cover emergency services
17as follows:

18(1) Without the need for any prior authorization determination.

19(2) Whether the health care provider furnishing the services is
20a participating provider with respect to those services.

21(3) In a manner so that, if the services are provided to an insured:

22(A) By a nonparticipating health care provider with or without
23prior authorization; or

24(B) (i) The services will be provided without imposing any
25requirement under the policy for prior authorization of services or
26any limitation on coverage where the provider of services does
27not have a contractual relationship with the insurer for the
28providing of services that is more restrictive than the requirements
29or limitations that apply to emergency department services received
30from providers who do have such a contractual relationship with
31the insurer; and

32(ii) If the services are provided to an insured out-of-network,
33the cost-sharing requirement, expressed as a copayment amount
34or coinsurance rate, is the same requirement that would apply if
35the services were provided in-network.

36(b) For the purposes of this section, the term “emergency
37services” means, with respect to an emergency medical condition:

38(1) A medical screening examination that is within the capability
39of the emergency department of a hospital, including ancillary
P20   1services routinely available to the emergency department to
2evaluate that emergency medical condition.

3(2) Within the capabilities of the staff and facilities available at
4the hospital, further medical examination and treatment as are
5required under Section 1867(e)(3) of the federal Social Security
6Act (42 U.S.C. 1395dd(e)(3)) to stabilize the patient.

7

SEC. 11.  

No reimbursement is required by this act pursuant
8to Section 6 of Article XIII B of the California Constitution because
9the only costs that may be incurred by a local agency or school
10district will be incurred because this act creates a new crime or
11infraction, eliminates a crime or infraction, or changes the penalty
12for a crime or infraction, within the meaning of Section 17556 of
13the Government Code, or changes the definition of a crime within
14the meaning of Section 6 of Article XIII B of the California
15Constitution.



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