SB 746, as amended, Leno. Health care coverage: premium rates.
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 requires health care service plans, for large group plan contracts, at least 60 days in advance of a rate change, to file with the department all specified rate information for unreasonable rate increases and, with that filing, to disclose specified aggregate data.
This bill would instead require the plans to file all specified rate information for rate increases that exceed the Consumer Price Index as published by the United States Bureau of Labor Statistics. The bill would also require a health plan that exclusively contracts with no more than 2 medical groups in the state to disclosebegin insert
certain information to the department, including the plan’s overall annual medical trend factor assumptions by major service category andend insert the amount of its actual trend experience for the prior contract year by aggregate benefit category,begin delete using benefit categories that are, to the maximum extent possible, the same or similar to those used for the individual and small group markets as well as those used by that plan for the individual and small group marketsend deletebegin insert as specified, and to provide claims or other data to large group purchasers that demonstrate the ability to comply with privacy laws, as specifiedend insert.begin insert The bill would require the department, if it determines that a proposed rate is unreasonable, to inform
the California Health Benefit Exchange of its determination.end insert
Because a willful violation of the bill’s requirements would be a crime, this 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 1385.04 of the Health and Safety Code
2 is amended to read:
(a) For large group health care service plan contracts,
4all health plans shall file with the department at least 60 days prior
5to implementing any rate change all required rate information for
6begin insert any end insert ratebegin delete increases that exceedend deletebegin insert increase that exceedsend insert the Consumer
7Price Index as published by the United States Bureau of Labor
8Statistics. This filing shall be concurrent with the written notice
9described in subdivision (a) of Section 1374.21.
10(b) For large group rate filings, health plans shall submit all
11information that is required by PPACA. A plan shall also submit
12any other information required pursuant to any regulation adopted
13by the department to comply with this article.
14(c) A health care service plan subject to subdivision (a) shall
15also disclose the following aggregate data for all rate filings
16begin delete submitted under this sectionend delete in the large group health plan market:
17(1) Number and percentage of rate filings reviewed by the
18following:
19(A) Plan year.
20(B) Segment type.
21(C) Product type.
22(D) Number of subscribers.
23(E) Number of covered lives affected.
24(2) The plan’s average rate increase by the following categories:
P3 1(A) Plan year.
2(B) Segment type.
3(C) Product type.
4(3) Any cost containment and quality improvement efforts since
5the plan’s last rate filing for the same category of health benefit
6plan. To the extent possible, the plan shall describe any significant
7new health
care cost containment and quality improvement efforts
8and provide an estimate of potential savings together with an
9estimated cost or savings for the projection period.
10(4)
end delete
11begin insert(d)end insert A health care service plan that exclusively contracts with
12no more than two medical groups in the state to provide or arrange
13for professional medical services for the enrollees of the plan shall
14disclosebegin delete bothend deletebegin insert allend insert of the following:
15(1) The plan’s overall annual medical trend factor assumptions
16in the aggregate for large group rates by major service category,
17including all of the following:
18(A) Hospital inpatient.
end insertbegin insert19(B) Outpatient visits.
end insertbegin insert20(C) Outpatient surgical or other procedures.
end insertbegin insert21(D) Professional medical.
end insertbegin insert22(E) Mental health.
end insertbegin insert23(F) Substance abuse.
end insertbegin insert24(G) Skilled nursing facility, if covered.
end insertbegin insert25(H) Prescription drugs.
end insertbegin insert26(I) Other ancillary services.
end insertbegin insert27(J) Laboratory.
end insertbegin insert28(K) Radiology or imaging.
end insertbegin insert
29(2) A plan may provide aggregated additional data that
30demonstrates or reasonably estimates year-to-year cost increases
31in specific service categories in major geographic regions of the
32state.
33 (A)
end delete
34begin insert (3)end insert The amount of its actual trend experience for the prior
35contract year by aggregate benefit category, using benefit categories
36that are, to the
maximum extent possible, the same or similar to
37those used for the individual and small group markets.
38(4) The amount of the projected aggregate trend in the large
39group market attributable to the use of services, price inflation,
40or fees and risk for annual plan contract trends by major service
P4 1category, including hospital inpatient, hospital outpatient,
2physician services, prescription drugs, other ancillary services,
3laboratory, and radiology.
4(B)
end delete
5begin insert(5)end insert The amount of its actual
trend experiencebegin insert in the aggregateend insert
6 for the prior contract year by aggregate benefit category, using
7benefit categories that are, to the maximum extent possible, the
8same or similar to thosebegin delete used by it for the individual and small begin insert in paragraph (1).end insert
9group markets.end delete
10begin insert(6)end insertbegin insert end insertbegin insertThe amount of projected trend attributable to the following
11categories:end insert
12(A) Use of services by service and disease category.
end insertbegin insert13(B) Price changes in physician costs, including compensation.
end insertbegin insert14(C) Price changes in hospital contracts.
end insertbegin insert15(D) Price changes in other provider contracts.
end insertbegin insert16(E) Price changes in supplier contracts.
end insertbegin insert17(F) Cost changes in administrative costs for the health plan.
end insertbegin insert
18(G) Cost changes in administrative costs for each contracting
19medical group.
20(H) Capital investment for care locations, including, but not
21limited to, hospitals and medical office buildings.
22(I) Other capital investments.
end insertbegin insert
23(J) Community benefit expenditures, excluding bad debt and
24valued at cost.
25(K) All other budgetary expenditures, with additional detail as
26may be required by the department.
27(7) The amount and proportion of costs attributed to the medical
28groups that would not have been attributable as medical losses if
29incurred by the health plan rather than the medical group.
30(e) If the department determines that a proposed rate is
31unreasonable, it shall inform the California Health Benefit
32Exchange of its determination. The Exchange shall use this
33information in the same manner as other information on
34unreasonable rates.
35begin insert(f)end insertbegin insert end insertbegin insert(1)end insertbegin insert end insertbegin insertA health care service plan that exclusively contracts with
36no more than two medical groups in the state to provide or arrange
37for professional medical services for the enrollees of the plan shall
38provide claims data at no charge to a large group purchaser if the
39large group purchaser requests the information and if the large
P5 1group demonstrates that it is able to comply with relevant state
2and federal privacy laws.end insert
3(2) If claims data is not available, the plan shall provide data
4sufficient for the large group purchaser to calculate the cost of
5obtaining similar services from other health plans and evaluate
6cost-effectiveness by service and disease category. In the absence
7of claims data, the data shall include patient-level data on
8demographics, prescribing, encounter, inpatient services,
9
outpatient services, and any other data as may be required of the
10health plan to comply with risk adjustment, reinsurance, or risk
11corridors as required by the PPACA. In the absence of claims
12data, the plan shall provide patient-level utilization data used to
13experience rate the large group, including diagnostic and
14procedure coding and costs assigned to each service.
15(d)
end delete
16begin insert(g)end insert The department may require all health care service plans to
17submit all rate filings to the National Association of Insurance
18Commissioners’ System for Electronic Rate and Form Filing
19(SERFF). Submission of the required rate filings to SERFF
shall
20be deemed to be filing with the department for purposes of
21compliance with this section.
No reimbursement is required by this act pursuant to
23Section 6 of Article XIII B of the California Constitution because
24the only costs that may be incurred by a local agency or school
25district will be incurred because this act creates a new crime or
26infraction, eliminates a crime or infraction, or changes the penalty
27for a crime or infraction, within the meaning of Section 17556 of
28the Government Code, or changes the definition of a crime within
29the meaning of Section 6 of Article XIII B of the California
30Constitution.
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