Amended in Assembly June 25, 2013

Amended in Assembly June 17, 2013

Amended in Senate April 30, 2013

Amended in Senate April 16, 2013

Amended in Senate April 9, 2013

Senate BillNo. 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 specified aggregate data for products and for rate filings, as specified, in the large group market 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 categorybegin delete 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,end delete and to provide claims or other data to large group purchasers thatbegin insert request the data andend insert demonstrate the ability to comply with privacy laws, as specified. The bill would require a health care service plan to use only deidentified data in its disclosures, as specified, to protect the privacy rights of individuals.

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:

P2    1

SECTION 1.  

Section 1385.04 of the Health and Safety Code
2 is amended to read:

3

1385.04.  

(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
6unreasonable rate increases. This filing shall be concurrent with
7the written notice described in subdivision (a) of Section 1374.21.

8(b) For large group rate filings, health plans shall submit all
9information that is required by PPACA. A plan shall also submit
10any other information required pursuant to any regulation adopted
11by the department to comply with this article.

12(c) A health care service plan subject to subdivision (a) shall
13also disclose annually the following aggregate data for all rate
14filings submitted under this section:

15(1) Number and percentage of rate filings reviewed by the
16following:

17(A) Plan year.

18(B) Segment type.

19(C) Product type.

P3    1(D) Number of subscribers.

2(E) Number of covered lives affected.

3(2) The plan’s average rate increase by the following categories:

4(A) Plan year.

5(B) Segment type.

6(C) Product type.

7(D) Benefit category.

8(E) Number of covered lives affected.

9(3) Any cost containment and quality improvement efforts since
10the plan’s last rate filing for the same category of health benefit
11plan. To the extent possible, the plan shall describe any significant
12new health care cost containment and quality improvement efforts
13and provide an estimate of potential savings together with an
14estimated cost or savings for the projection period.

15(d) A health care service plan shallbegin delete alsoend delete disclose annually the
16following aggregate data for all products sold in the large group
17market:

18(1) Plan year.

19(2) Segment type.

20(3) Product type.

21(4) Number of subscribers.

22(5) Number of covered lives affected.

23(6) The plan’s average rate increase by the following:

24(A) Plan year.

25(B) Segment type.

26(C) Product type.

27(D) Benefitbegin delete category.end deletebegin insert category, including, but not limited to,
28hospital, medical, ancillary, and other benefit categories reported
29publicly for individual and small employer rate filingend insert
begin inserts.end insert

begin insert

30(E) Trend attributable to cost and trend attributable to
31utilization by benefit category.

end insert

32(e) A health care service plan that exclusively contracts with
33no more than two medical groups in the state to provide or arrange
34for professional medical services for the enrollees of the plan shall
35begin delete alsoend delete disclose annually all of the followingbegin insert aggregate dataend insert for its
36large group health care service plan contracts:

37(1) The plan’s overall annual medical trend factor assumptions
38in the aggregate for large group rates by major service category.
39The plan shall distinguish between the trend ascribed to the volume
40of services provided and the trend ascribed to the cost of services
P4    1provided, for those assumptions that shall include the following
2categories:

3(A) Hospital inpatient.

4(B) Outpatient visits.

5(C) Outpatient surgical or other procedures.

6(D) Professional medical.

7(E) Mental health.

8(F) Substance abuse.

9(G) Skilled nursing facility, if covered.

10(H) Prescription drugs.

11(I) Other ancillary services.

12(J) Laboratory.

13(K) Radiology or imaging.

14(2) A plan may provide aggregated additional data that
15demonstrate or reasonably estimate year-to-year cost increases in
16each of the specific service categories specified in paragraph (1)
17for each of the major geographic regions of the state.

begin delete

18(3) The amount of the projected aggregate trend in the large
19group market attributable to the use of services, price inflation, or
20fees and risk for annual plan contract trends by each major service
21category specified in paragraph (1).

end delete
begin delete

22(4)

end delete

23begin insert(3)end insert The amount of projected trend attributable to the following
24categories:

25(A) Use of services by service and disease category.

begin delete

26(B) Cost changes in administrative costs for the health plan.

end delete
begin delete

27(C) Cost changes in administrative costs for each of the two
28contracting medical groups with an exclusive contract with the
29plan.

end delete
begin delete

30(D)

end delete

31begin insert(B)end insert Capitalbegin delete investment for care locations, including, but not
32limited to, hospitals and medical office buildings.end delete
begin insert investment.end insert

begin delete

33(E) Other capital investments.

end delete
begin delete

34(F)

end delete

35begin insert(C)end insert Community benefit expenditures, excluding bad debt and
36valued at cost.

begin delete

37(5)

end delete

38begin insert(4)end insert The amount and proportion of costs attributed to the medical
39groups that would not have been attributable as medical losses if
40incurred by the health plan rather than the medical group.

P5    1(f) (1) A health care service plan that exclusively contracts with
2no more than two medical groups in the state to provide or arrange
3for professional medical services for the enrollees of the plan shall
4provide claims data at no charge to a large group purchaser
5begin insert annuallyend insert if the large group purchaser requests the information.
6The health care service plan shall provide claims data that a
7qualified statistician has determined are deidentified so that the
8claims data do not identify or do not provide a reasonable basis
9from which to identify an individual.

10(2) Information provided to a large group purchaser under this
11subdivision shall not be subject to the public disclosure
12requirements in subdivision (a) of Section 1385.07.

13(3) If claims data are not available, the plan shall provide, at no
14charge, all of the following:

15(A) Deidentified data sufficient for the large group purchaser
16to calculate the cost of obtaining similar services from other health
17plans and evaluate cost-effectiveness by service and disease
18 category.

19(B) Deidentified patient-level data on demographics, prescribing,
20encounters, inpatient services, outpatient services, and any other
21data as may be required of the health plan to comply with risk
22adjustment, reinsurance, or risk corridors as required by the
23PPACA.

24(C) Deidentified patient-level data used to experience rate the
25large group, including diagnostic and procedure coding and costs
26assigned to each service.

27(D) The health care service plan shall obtain a formal
28determination from a qualified statistician that the data have been
29deidentified so that the data do not identify or do not provide a
30reasonable basis from which to identify an individual.begin insert The
31statistician shall certify the formal determination in writing and
32shall, upon request, provide the protocol used for deidentification
33to the department.end insert

34(4) Data provided pursuant to subdivision (e) shall only be
35provided to a large group purchaser that meets both of the
36following conditions:

37(A) Is able to demonstrate its ability to comply with state and
38federal privacy laws.

P6    1(B) Is a large group purchaser that is either an
2begin delete employer-sponseredend deletebegin insert employer-sponsoredend insert plan with an enrollment
3of greater than 1,000 covered lives or a multiemployer trust.

4(g) The department may require all health care service plans to
5submit all rate filings to the National Association of Insurance
6Commissioners’ System for Electronic Rate and Form Filing
7(SERFF). Submission of the required rate filings to SERFF shall
8be deemed to be filing with the department for purposes of
9compliance with this section.

10

SEC. 2.  

No reimbursement is required by this act pursuant to
11Section 6 of Article XIII B of the California Constitution because
12the only costs that may be incurred by a local agency or school
13district will be incurred because this act creates a new crime or
14infraction, eliminates a crime or infraction, or changes the penalty
15for a crime or infraction, within the meaning of Section 17556 of
16the Government Code, or changes the definition of a crime within
17the meaning of Section 6 of Article XIII B of the California
18Constitution.



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