Amended in Senate April 30, 2013

Amended in Senate April 16, 2013

Amended in Senate April 9, 2013

Senate Bill No. 746

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 disclose begin delete that end delete begin insert specified end insert aggregate data begin insert for products in the large group market end insert 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 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.

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
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 shall also disclose annually the
following aggregate data for begin delete all rate filings end delete begin insert products end insert in the large
group health plan market:

(1)  begin delete Number end delete begin insert If a health care service plan submits information
pursuant to subdivision (b), end insert begin insert number end insert 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.

begin insert

(E) Number of covered lives affected.

end insert

(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 specified in paragraph
(1) for each of the major geographic regions of the state.

(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 specified in paragraph (1).

(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.

(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) (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 begin delete if the large group end delete demonstrates that it is able to comply with
relevant state and federal privacy laws.

begin insert

(2) Information provided to a large group purchaser under this
subdivision shall not be subject to the public disclosure
requirements in subdivision (a) of Section 1385.07.

end insert begin delete

(2)

end delete

begin insert ( end insert begin insert 3) end insert  If claims data is not available, the plan shall provide, 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.

(B)  begin delete Patient-level end delete begin insert Deidentified patient-level end insert data on
demographics, prescribing, begin delete encounter end delete begin insert encounters end insert , 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.

(C)  begin delete Patient-level utilization end delete begin insert Deidentified patient-level end insert data used
to experience rate the large group, including diagnostic and
procedure coding and costs assigned to each service.

(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.