BILL NUMBER: SB 746 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 9, 2013
INTRODUCED BY Senator Leno
FEBRUARY 22, 2013
An act to amend Section 1385.04 of the Health and Safety Code,
relating to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
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 disclose
certain information to the department, including the plan's overall
annual medical trend factor assumptions by major service category and
the amount of its actual trend experience for the prior
contract year by aggregate benefit category, 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
markets as specified, and to provide claims or other
data to large group purchasers that demonstrate the ability to comply
with privacy laws, as specified . 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.
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 1. Section 1385.04 of the Health and Safety Code is
amended to read:
1385.04. (a) For large group health care service plan contracts,
all health plans shall file with the department at least 60 days
prior to implementing any rate change all required rate information
for any rate increases that exceed
increase that exceeds the Consumer Price Index as published by
the United States Bureau of Labor Statistics. This filing shall be
concurrent with the written notice described in subdivision (a) of
Section 1374.21.
(b) For large group rate filings, health plans shall submit all
information that is required by PPACA. A plan shall also submit any
other information required pursuant to any regulation adopted by the
department to comply with this article.
(c) A health care service plan subject to subdivision (a) shall
also disclose the following aggregate data for all rate filings
submitted under this section in the large group
health plan market:
(1) Number and percentage of rate filings reviewed by the
following:
(A) Plan year.
(B) Segment type.
(C) Product type.
(D) Number of subscribers.
(E) Number of covered lives affected.
(2) The plan's average rate increase by the following categories:
(A) Plan year.
(B) Segment type.
(C) Product type.
(3) Any cost containment and quality improvement efforts since the
plan's last rate filing for the same category of health benefit
plan. To the extent possible, the plan shall describe any significant
new health care cost containment and quality improvement efforts and
provide an estimate of potential savings together with an estimated
cost or savings for the projection period.
(4)
(d) A health care service plan that exclusively
contracts with no more than two medical groups in the state to
provide or arrange for professional medical services for the
enrollees of the plan shall disclose both all
of the following:
(1) The plan's overall annual medical trend factor assumptions in
the aggregate for large group rates by major service category,
including all of the following:
(A) Hospital inpatient.
(B) Outpatient visits.
(C) Outpatient surgical or other procedures.
(D) Professional medical.
(E) Mental health.
(F) Substance abuse.
(G) Skilled nursing facility, if covered.
(H) Prescription drugs.
(I) Other ancillary services.
(J) Laboratory.
(K) Radiology or imaging.
(2) A plan may provide aggregated additional data that
demonstrates or reasonably estimates year-to-year cost increases in
specific service categories in major geographic regions of the state.
(A)
(3) The amount of its actual trend experience for the
prior contract year by aggregate benefit category, using benefit
categories that are, to the maximum extent possible, the same or
similar to those used for the individual and small group markets.
(4) The amount of the projected aggregate trend in the large group
market attributable to the use of services, price inflation, or fees
and risk for annual plan contract trends by major service category,
including hospital inpatient, hospital outpatient, physician
services, prescription drugs, other ancillary services, laboratory,
and radiology.
(B)
(5) The amount of its actual trend experience in
the aggregate for the prior contract year by aggregate benefit
category, using benefit categories that are, to the maximum extent
possible, the same or similar to those used by it for the
individual and small group markets. in paragraph (1).
(6) The amount of projected trend
attributable to the following categories:
(A) Use of services by service and disease category.
(B) Price changes in physician costs, including compensation.
(C) Price changes in hospital contracts.
(D) Price changes in other provider contracts.
(E) Price changes in supplier contracts.
(F) Cost changes in administrative costs for the health plan.
(G) Cost changes in administrative costs for each contracting
medical group.
(H) Capital investment for care locations, including, but not
limited to, hospitals and medical office buildings.
(I) Other capital investments.
(J) Community benefit expenditures, excluding bad debt and valued
at cost.
(K) All other budgetary expenditures, with additional detail as
may be required by the department.
(7) The amount and proportion of costs attributed to the medical
groups that would not have been attributable as medical losses if
incurred by the health plan rather than the medical group.
(e) If the department determines that a proposed rate is
unreasonable, it shall inform the California Health Benefit Exchange
of its determination. The Exchange shall use this information in the
same manner as other information on unreasonable rates.
(f) (1) A health
care service plan that exclusively contracts with no more than two
medical groups in the state to provide or arrange for professional
medical services for the enrollees of the plan shall provide claims
data at no charge to a large group purchaser if the large group
purchaser requests the information and if the large group
demonstrates that it is able to comply with relevant state and
federal privacy laws.
(2) If claims data is not available, the plan shall provide data
sufficient for the large group purchaser to calculate the cost of
obtaining similar services from other health plans and evaluate
cost-effectiveness by service and disease category. In the absence of
claims data, the data shall include patient-level data on
demographics, prescribing, encounter, inpatient services, outpatient
services, and any other data as may be required of the health plan to
comply with risk adjustment, reinsurance, or risk corridors as
required by the PPACA. In the absence of claims data, the plan shall
provide patient-level utilization data used to experience rate the
large group, including diagnostic and procedure coding and costs
assigned to each service.
(d)
(g) The department may require all health care service
plans to submit all rate filings to the National Association of
Insurance Commissioners' System for Electronic Rate and Form Filing
(SERFF). Submission of the required rate filings to SERFF shall be
deemed to be filing with the department for purposes of compliance
with this section.
SEC. 2. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.