BILL NUMBER: SB 746 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 16, 2013
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 disclose that aggregate data on an
annual basis . The bill would also require a health plan that
exclusively contracts with no more than 2 medical groups in the state
to annually disclose certain information with
respect to its large group plan contracts 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
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 each major
service category , 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 increase that exceeds the Consumer Price Index
as published by the United States Bureau of Labor Statistics
unreasonable rate increases . 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 annually the following
aggregate data for all rate filings 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.
(D) Benefit category.
(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.
(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
also disclose annually all of the following
for its large group health care service plan contracts :
(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
each of the specific service categories in
specified in paragraph (1) for each of the major
geographic regions of the state.
(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)
(3) 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
each major service category , including hospital
inpatient, hospital outpatient, physician services, prescription
drugs, other ancillary services, laboratory, and radiology
specified in paragraph (1) .
(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 in paragraph (1).
(6)
(4) 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)
( 5) 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)
(e) (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 , at no charge, all of the following:
(A) 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
(B) 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
(C) Patient-level utilization
data used to experience rate the large group, including diagnostic
and procedure coding and costs assigned to each service.
(g)
(f) 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.