SB 959, as amended, Hernandez. Health care coverage.
Existing
end deletebegin insert(1)end insertbegin insert end insertbegin insertExistingend insert federal law, the federal Patient Protection and Affordable Care Act (PPACA), enacts various health care coverage market reforms that take effect January 1, 2014. Among other things, PPACA requires each state to, by January 1, 2014, establish an American Health Benefit Exchange that facilitates the purchase of qualified health plans by qualified individuals and qualified small employers. PPACA requires a health insurance issuer to consider all enrollees in its individual market plans to be part of a single risk pool and to consider all enrollees in its small group market plans to be part of a single risk pool. PPACA also requires an issuer to establish an index rate for each of those markets based on the total combined claim costs for providing essential health benefits within the single risk pool for that market and authorizes the issuer to vary premium rates from the index rate based only on specified factors. PPACA requires that the index rate be adjusted based on Exchange user fees and expected payments and charges under certain risk adjustment and reinsurance programs.
Existing law establishes the California Health Benefit Exchange within state government for the purpose of facilitating the purchase of qualified health plans through the Exchange by qualified individuals and small employers. 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 also provides for the regulation of health insurers by the Department of Insurance. Existing law requires a health care service plan and a health insurer to consider as a single risk pool the claims experience of all enrollees and insureds in its nongrandfathered small employerbegin delete plans, whether offered as health care service plan contracts or health insurance policies,end deletebegin insert plansend insert
and to also consider as a single risk pool the claims experience of all enrollees and insureds in its nongrandfathered individual marketbegin delete plans, whether offered as health care service plan contracts or health insurance policies.end deletebegin insert plans.end insert Existing law requires a plan or insurer to establish an index rate for those markets, as specified, and authorizes the plan or insurer to vary premium rates from the index rate based only on specified factors. Existing law requires that the index rate be adjusted based on expected payments and charges under the risk adjustment and reinsurance programs specified under PPACA.
This bill would require thatbegin delete both the enrollees of nongrandfathered individual health benefit plans issued by a health care service plan and the insureds of nongrandfathered individual health benefit plans issued by a health insurer that is a corporate affiliate, subsidiary, or parent of the plan be part of a single risk pool and would make parallel changes with respect to the small group market. The
bill would require thatend delete the index rate also be adjusted based on Exchange user fees, as specified under PPACA.
PPACA requires a health insurance issuer offering coverage in the individual or small group market to ensure that the coverage includes the essential health benefits package and defines this package to mean coverage that, among other requirements, provides the platinum, gold, silver, or bronze level of coverage or, in the individual market, provides catastrophic coverage to specified individuals. Existing law requires health care service plans and health insurers participating in the Exchange to fairly and affirmatively offer, market, and sell in the Exchange at least one product in each of these 5 levels of coverage. Existing law requires a health care service plan or health insurer that does not participate in the Exchange to offer at least one standardized product designated by the Exchange in each of the platinum, gold, silver, andbegin delete bronzedend deletebegin insert
bronzeend insert levels of coverage.
This bill would specify that health care service plans and health insurers participating in the small group market of the Exchange are only required to fairly and affirmatively offer, market, and sell in that market the platinum, gold, silver, and bronze levels of coverage. The bill would also specify that the requirement for plans or insurers not participating in the Exchange to offer at least one standardized product designated by the Exchange in each of those levels of coverage only applies to the individual and small group markets.
Existing
end deletebegin insert (2)end insertbegin insert end insertbegin insertExistingend insert law prohibits a health care service plan or a health insurer offering coverage in the individual market from changing the premium rate or coverage without providing specified notice to the subscriber or policyholder at least 60 days prior to the contract or policy renewal date.
The bill would require that the notice be sent on the earlier of 60 days prior to the renewal date or 15 days prior to the start of the annual enrollment period applicable to the contract or policy.
Existing law requires a plan or insurer that declines to offer coverage or denies enrollment for an individual or his or her dependents applying for individual coverage or that offers individual or small group coverage at a rate that is higher than the standard rate to provide the applicant with the reason for the decision in writing.begin insert Existing law also requires the plan or insurer to inform the applicant about specified high risk pools, including the California Major Risk Medical Insurance Program, and specifies that this requirement does not apply when a plan or insurer rejects an applicant for Medicare supplement coverage.end insert
This bill would deletebegin delete those requirements.end deletebegin insert the requirement that the plan or insurer provide the applicant with the reason for the denial or higher than standard rate. The bill would require a plan or insurer to inform specified applicants for a grandfathered health plan who are denied or charged a higher than standard rate, and applicants for Medicare supplement coverage who are denied due to a specified condition, about the California Major Risk Medical Insurance Program and the Exchange, as specified.end insert
Existing
end deletebegin insert(3)end insertbegin insert end insertbegin insertExistingend insert law requires a health care service plan or health insurer in the individual or small group market to file rate information with the Department of Managed Health Care or the Department of Insurance, as applicable, at least 60 days prior to implementing a rate change and requires the filing to be concurrent with the notice sent to subscribers prior to increasing premium rates. Existing law requires that the rate filing include specified information regarding the proposed rate increase and the plan’s overall annual medical trend factor assumptions in each rate filing for all benefits and by aggregate benefit category. Existing law authorizes the plan to provide aggregated additional data that demonstrates year-to-year cost increases in specific benefit categories in major geographic regions of the state to be defined by the department to include no more than 9 regions.
This bill would eliminate the requirement that the rate filing be concurrent with the notice sent to subscribers prior to increasing premium rates. The bill would also require that a rate filing include specified information regarding a plan or insurer’s proposed rate change, rather than rate increase, and would require that the geographic regions correspond with those regions used by the plan to establish premium rates.
The bill would make other related, conforming, and technical changes.
Because
end deletebegin insert(4)end insertbegin insert end insertbegin insertBecauseend insert a willful violation of the bill’s requirements with respect to health care service plans would be a crime, the 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 100503 of the Government Code, as
2amended by Section 4 of Chapter 5 of the First Extraordinary
3Session of the Statutes of 2013, is amended to read:
In addition to meeting the minimum requirements of
2Section 1311 of the federal act, the board shall do all of the
3following:
4(a) Determine the criteria and process for eligibility, enrollment,
5and disenrollment of enrollees and potential enrollees in the
6Exchange and coordinate that process with the state and local
7government entities administering other health care coverage
8programs, including the State Department of Health Care Services,
9the Managed Risk Medical Insurance Board, and California
10counties, in order to ensure consistent eligibility and enrollment
11processes and seamless transitions between coverage.
12(b) Develop processes to coordinate with the county entities
13that administer eligibility for the Medi-Cal
program and the entity
14that determines eligibility for the Healthy Families Program,
15including, but not limited to, processes for case transfer, referral,
16and enrollment in the Exchange of individuals applying for
17assistance to those entities, if allowed or required by federal law.
18(c) Determine the minimum requirements a carrier must meet
19to be considered for participation in the Exchange, and the
20standards and criteria for selecting qualified health plans to be
21offered through the Exchange that are in the best interests of
22qualified individuals and qualified small employers. The board
23shall consistently and uniformly apply these requirements,
24standards, and criteria to all carriers. In the course of selectively
25contracting for health care coverage offered to qualified individuals
26and qualified small employers through the Exchange, the board
27shall seek to contract with carriers so as to provide health care
28coverage choices that offer the
optimal combination of choice,
29value, quality, and service.
30(d) Provide, in each region of the state, a choice of qualified
31health plans at each of the five levels of coverage contained in
32subsections (d) and (e) of Section 1302 of the federal act, subject
33to subdivision (e) of this section, paragraph (2) of subdivision (d)
34of Section 1366.6 of the Health and Safety Code, and paragraph
35(2) of subdivision (d) of Section 10112.3 of the Insurance Code.
36(e) Require, as a condition of participation in the individual
37market of the Exchange, carriers to fairly and affirmatively offer,
38market, and sell in the individual market of the Exchange at least
39one product within each of the five levels of coverage contained
40in subsections (d) and (e) of Section 1302 of the federal act and
P6 1require, as a condition of participation in the SHOP Program,
2carriers to fairly and affirmatively offer,
market, and sell in the
3SHOP Program at least one product within each of the four levels
4of coverage contained in subsection (d) of Section 1302 of the
5federal act. The board may require carriers to offer additional
6products within each of those levels of coverage. This subdivision
7shall not apply to a carrier that solely offers supplemental coverage
8in the Exchange under paragraph (10) of subdivision (a) of Section
9100504.
10(f) (1) Except as otherwise provided in this section and Section
11100504.5, require, as a condition of participation in the Exchange,
12carriers that sell any products outside the Exchange to do both of
13the following:
14(A) Fairly and affirmatively offer, market, and sell all products
15made available to individuals in the Exchange to individuals
16purchasing coverage outside the Exchange.
17(B) Fairly and affirmatively offer, market, and sell all products
18made available to small employers in the Exchange to small
19employers purchasing coverage outside the Exchange.
20(2) For purposes of this subdivision, “product” does not include
21contracts entered into pursuant to Part 6.2 (commencing with
22Section 12693) of Division 2 of the Insurance Code between the
23Managed Risk Medical Insurance Board and carriers for enrolled
24Healthy Families beneficiaries or contracts entered into pursuant
25to Chapter 7 (commencing with Section 14000) of, or Chapter 8
26(commencing with Section 14200) of, Part 3 of Division 9 of the
27Welfare and Institutions Code between the State Department of
28Health Care Services and carriers for enrolled Medi-Cal
29beneficiaries. “Product” also does not include a bridge plan product
30offered pursuant to Section 100504.5.
31(3) Except as required by Section
1301(a)(1)(C)(ii) of the federal
32act, a carrier offering a bridge plan product in the Exchange may
33limit the products it offers in the Exchange solely to a bridge plan
34product contract.
35(g) Determine when an enrollee’s coverage commences and the
36extent and scope of coverage.
37(h) Provide for the processing of applications and the enrollment
38and disenrollment of enrollees.
39(i) Determine and approve cost-sharing provisions for qualified
40health plans.
P7 1(j) Establish uniform billing and payment policies for qualified
2health plans offered in the Exchange to ensure consistent
3enrollment and disenrollment activities for individuals enrolled in
4the Exchange.
5(k) Undertake activities necessary to
market and publicize the
6availability of health care coverage and federal subsidies through
7the Exchange. The board shall also undertake outreach and
8enrollment activities that seek to assist enrollees and potential
9enrollees with enrolling and reenrolling in the Exchange in the
10least burdensome manner, including populations that may
11experience barriers to enrollment, such as the disabled and those
12with limited English language proficiency.
13(l) Select and set performance standards and compensation for
14navigators selected under subdivision (l) of Section 100502.
15(m) Employ necessary staff.
16(1) The board shall hire a chief fiscal officer, a chief operations
17officer, a director for the SHOP Exchange, a director of Health
18Plan Contracting, a chief technology and information officer, a
19general counsel, and other key
executive positions, as determined
20by the board, who shall be exempt from civil service.
21(2) (A) The board shall set the salaries for the exempt positions
22described in paragraph (1) and subdivision (i) of Section 100500
23in amounts that are reasonably necessary to attract and retain
24individuals of superior qualifications. The salaries shall be
25published by the board in the board’s annual budget. The board’s
26annual budget shall be posted on the Internet Web site of the
27Exchange. To determine the compensation for these positions, the
28board shall cause to be conducted, through the use of independent
29outside advisors, salary surveys of both of the following:
30(i) Other state and federal health insurance exchanges that are
31most comparable to the Exchange.
32(ii) Other relevant labor pools.
33(B) The salaries established by the board under subparagraph
34(A) shall not exceed the highest comparable salary for a position
35of that type, as determined by the surveys conducted pursuant to
36subparagraph (A).
37(C) The Department of Human Resources shall review the
38methodology used in the surveys conducted pursuant to
39subparagraph (A).
P8 1(3) The positions described in paragraph (1) and subdivision (i)
2of Section 100500 shall not be subject to otherwise applicable
3provisions of the Government Code or the Public Contract Code
4and, for those purposes, the Exchange shall not be considered a
5state agency or public entity.
6(n) Assess a charge on the qualified health plans offered by
7carriers that is reasonable and necessary to support the
8development, operations,
and prudent cash management of the
9Exchange. This charge shall not affect the requirement under
10Section 1301 of the federal act that carriers charge the same
11premium rate for each qualified health plan whether offered inside
12or outside the Exchange.
13(o) Authorize expenditures, as necessary, from the California
14Health Trust Fund to pay program expenses to administer the
15Exchange.
16(p) Keep an accurate accounting of all activities, receipts, and
17expenditures, and annually submit to the United States Secretary
18of Health and Human Services a report concerning that accounting.
19Commencing January 1, 2016, the board shall conduct an annual
20audit.
21(q) (1) Annually prepare a written report on the implementation
22and performance of the Exchange functions during the preceding
23fiscal year, including, at a
minimum, the manner in which funds
24were expended and the progress toward, and the achievement of,
25the requirements of this title. The report shall also include data
26provided by health care service plans and health insurers offering
27bridge plan products regarding the extent of health care provider
28and health facility overlap in their Medi-Cal networks as compared
29to the health care provider and health facility networks contracting
30with the plan or insurer in their bridge plan contracts. This report
31shall be transmitted to the Legislature and the Governor and shall
32be made available to the public on the Internet Web site of the
33Exchange. A report made to the Legislature pursuant to this
34subdivision shall be submitted pursuant to Section 9795.
35(2) The Exchange shall prepare, or contract for the preparation
36of, an evaluation of the bridge plan program using the first three
37years of experience with the program. The evaluation shall be
38provided to
the health policy and fiscal committees of the
39Legislature in the fourth year following federal approval of the
P9 1bridge plan option. The evaluation shall include, but not be limited
2to, all of the following:
3(A) The number of individuals eligible to participate in the
4bridge plan program each year by category of eligibility.
5(B) The number of eligible individuals who elect a bridge plan
6option each year by category of eligibility.
7(C) The average length of time, by region and statewide, that
8individuals remain in the bridge plan option each year by category
9of eligibility.
10(D) The regions of the state with a bridge plan option, and the
11carriers in each region that offer a bridge plan, by year.
12(E) The premium difference each year, by region, between the
13bridge plan and the first and second lowest cost plan for individuals
14in the Exchange who are not eligible for the bridge plan.
15(F) The effect of the bridge plan on the premium subsidy amount
16for bridge plan eligible individuals each year by each region.
17(G) Based on a survey of individuals enrolled in the bridge plan:
18(i) Whether individuals enrolling in the bridge plan product are
19able to keep their existing health care providers.
20(ii) Whether individuals would want to retain their bridge plan
21product, buy a different Exchange product, or decline to purchase
22health insurance if there was no bridge plan product available. The
23Exchange may include questions designed to elicit the
information
24in this subparagraph as part of an existing survey of individuals
25receiving coverage in the Exchange.
26(3) In addition to the evaluation required by paragraph (2), the
27Exchange shall post the items in subparagraphs (A) to (F),
28inclusive, on its Internet Web site each year.
29(4) In addition to the report described in paragraph (1), the board
30shall be responsive to requests for additional information from the
31Legislature, including providing testimony and commenting on
32proposed state legislation or policy issues. The Legislature finds
33and declares that activities including, but not limited to, responding
34to legislative or executive inquiries, tracking and commenting on
35legislation and regulatory activities, and preparing reports on the
36implementation of this title and the performance of the Exchange,
37are necessary state requirements and are distinct from the
38promotion of
legislative or regulatory modifications referred to in
39subdivision (d) of Section 100520.
P10 1(r) Maintain enrollment and expenditures to ensure that
2expenditures do not exceed the amount of revenue in the fund, and
3if sufficient revenue is not available to pay estimated expenditures,
4institute appropriate measures to ensure fiscal solvency.
5(s) Exercise all powers reasonably necessary to carry out and
6comply with the duties, responsibilities, and requirements of this
7act and the federal act.
8(t) Consult with stakeholders relevant to carrying out the
9activities under this title, including, but not limited to, all of the
10following:
11(1) Health care consumers who are enrolled in health plans.
12(2) Individuals and entities with experience in facilitating
13enrollment in health plans.
14(3) Representatives of small businesses and self-employed
15individuals.
16(4) The State Medi-Cal Director.
17(5) Advocates for enrolling hard-to-reach populations.
18(u) Facilitate the purchase of qualified health plans in the
19Exchange by qualified individuals and qualified small employers
20no later than January 1, 2014.
21(v) Report, or contract with an independent entity to report, to
22the Legislature by December 1, 2018, on whether to adopt the
23option in Section 1312(c)(3) of the federal act to merge the
24individual and small employer markets. In its report, the board
25shall provide information,
based on at least two years of data from
26the Exchange, on the potential impact on rates paid by individuals
27and by small employers in a merged individual and small employer
28market, as compared to the rates paid by individuals and small
29employers if a separate individual and small employer market is
30maintained. A report made pursuant to this subdivision shall be
31submitted pursuant to Section 9795.
32(w) With respect to the SHOP Program, collect premiums and
33administer all other necessary and related tasks, including, but not
34limited to, enrollment and plan payment, in order to make the
35offering of employee plan choice as simple as possible for qualified
36small employers.
37(x) Require carriers participating in the Exchange to immediately
38notify the Exchange, under the terms and conditions established
39by the board when an individual is or will be enrolled in or
40disenrolled from any
qualified health plan offered by the carrier.
P11 1(y) Ensure that the Exchange provides oral interpretation
2services in any language for individuals seeking coverage through
3the Exchange and makes available a toll-free telephone number
4for the hearing and speech impaired. The board shall ensure that
5written information made available by the Exchange is presented
6in a plainly worded, easily understandable format and made
7available in prevalent languages.
8(z) This section shall become inoperative on the October 1 that
9is five years after the date that federal approval of the bridge plan
10option occurs, and, as of the second January 1 thereafter, is
11repealed, unless a later enacted statute that is enacted before that
12date deletes or extends the dates on which it becomes inoperative
13and is repealed.
Section 100503 of the Government Code, as added by
15Section 5 of Chapter 5 of the First Extraordinary Session of the
16Statutes of 2013, is amended to read:
In addition to meeting the minimum requirements of
18Section 1311 of the federal act, the board shall do all of the
19following:
20(a) Determine the criteria and process for eligibility, enrollment,
21and disenrollment of enrollees and potential enrollees in the
22Exchange and coordinate that process with the state and local
23government entities administering other health care coverage
24programs, including the State Department of Health Care Services,
25the Managed Risk Medical Insurance Board, and California
26counties, in order to ensure consistent eligibility and enrollment
27processes and seamless transitions between coverage.
28(b) Develop processes to coordinate with the county entities
29that administer eligibility for the Medi-Cal
program and the entity
30that determines eligibility for the Healthy Families Program,
31including, but not limited to, processes for case transfer, referral,
32and enrollment in the Exchange of individuals applying for
33assistance to those entities, if allowed or required by federal law.
34(c) Determine the minimum requirements a carrier must meet
35to be considered for participation in the Exchange, and the
36standards and criteria for selecting qualified health plans to be
37offered through the Exchange that are in the best interests of
38qualified individuals and qualified small employers. The board
39shall consistently and uniformly apply these requirements,
40standards, and criteria to all carriers. In the course of selectively
P12 1contracting for health care coverage offered to qualified individuals
2and qualified small employers through the Exchange, the board
3shall seek to contract with carriers so as to provide health care
4coverage choices that offer the
optimal combination of choice,
5value, quality, and service.
6(d) Provide, in each region of the state, a choice of qualified
7health plans at each of the five levels of coverage contained in
8subsections (d) and (e) of Section 1302 of the federal act, subject
9to subdivision (e) of this section, paragraph (2) of subdivision (d)
10of Section 1366.6 of the Health and Safety Code and paragraph
11(2) of subdivision (d) of Section 10112.3 of the Insurance Code.
12(e) Require, as a condition of participation in the Exchange,
13carriers to fairly and affirmatively offer, market, and sell in the
14Exchange at least one product within each of the five levels of
15coverage contained in subsections (d) and (e) of Section 1302 of
16the federal act and require, as a condition of participation in the
17SHOP Program, carriers to fairly and affirmatively offer, market,
18and sell in the SHOP Program at least one
product within each of
19the four levels of coverage contained in subsection (d) of Section
201302 of the federal act. The board may require carriers to offer
21additional products within each of those levels of coverage. This
22subdivision shall not apply to a carrier that solely offers
23supplemental coverage in the Exchange under paragraph (10) of
24subdivision (a) of Section 100504.
25(f) (1) Require, as a condition of participation in the Exchange,
26carriers that sell any products outside the Exchange to do both of
27the following:
28(A) Fairly and affirmatively offer, market, and sell all products
29made available to individuals in the Exchange to individuals
30purchasing coverage outside the Exchange.
31(B) Fairly and affirmatively offer, market, and sell all products
32made available to small employers in the
Exchange to small
33employers purchasing coverage outside the Exchange.
34(2) For purposes of this subdivision, “product” does not include
35contracts entered into pursuant to Part 6.2 (commencing with
36Section 12693) of Division 2 of the Insurance Code between the
37Managed Risk Medical Insurance Board and carriers for enrolled
38Healthy Families beneficiaries or contracts entered into pursuant
39to Chapter 7 (commencing with Section 14000) of, or Chapter 8
40(commencing with Section 14200) of, Part 3 of Division 9 of the
P13 1Welfare and Institutions Code between the State Department of
2Health Care Services and carriers for enrolled Medi-Cal
3beneficiaries.
4(g) Determine when an enrollee’s coverage commences and the
5extent and scope of coverage.
6(h) Provide for the processing of applications and the enrollment
7and disenrollment of
enrollees.
8(i) Determine and approve cost-sharing provisions for qualified
9health plans.
10(j) Establish uniform billing and payment policies for qualified
11health plans offered in the Exchange to ensure consistent
12enrollment and disenrollment activities for individuals enrolled in
13the Exchange.
14(k) Undertake activities necessary to market and publicize the
15availability of health care coverage and federal subsidies through
16the Exchange. The board shall also undertake outreach and
17enrollment activities that seek to assist enrollees and potential
18enrollees with enrolling and reenrolling in the Exchange in the
19least burdensome manner, including populations that may
20experience barriers to enrollment, such as the disabled and those
21with limited English language proficiency.
22(l) Select and set performance standards and compensation for
23navigators selected under subdivision (l) of Section 100502.
24(m) Employ necessary staff.
25(1) The board shall hire a chief fiscal officer, a chief operations
26officer, a director for the SHOP Exchange, a director of Health
27Plan Contracting, a chief technology and information officer, a
28general counsel, and other key executive positions, as determined
29by the board, who shall be exempt from civil service.
30(2) (A) The board shall set the salaries for the exempt positions
31described in paragraph (1) and subdivision (i) of Section 100500
32in amounts that are reasonably necessary to attract and retain
33individuals of superior qualifications. The salaries shall be
34published by the board in the board’s annual budget. The board’s
35
annual budget shall be posted on the Internet Web site of the
36Exchange. To determine the compensation for these positions, the
37board shall cause to be conducted, through the use of independent
38outside advisors, salary surveys of both of the following:
39(i) Other state and federal health insurance exchanges that are
40most comparable to the Exchange.
P14 1(ii) Other relevant labor pools.
2(B) The salaries established by the board under subparagraph
3(A) shall not exceed the highest comparable salary for a position
4of that type, as determined by the surveys conducted pursuant to
5subparagraph (A).
6(C) The Department of Human Resources shall review the
7methodology used in the surveys conducted pursuant to
8subparagraph (A).
9(3) The positions described in paragraph (1) and subdivision (i)
10of Section 100500 shall not be subject to otherwise applicable
11provisions of the Government Code or the Public Contract Code
12and, for those purposes, the Exchange shall not be considered a
13state agency or public entity.
14(n) Assess a charge on the qualified health plans offered by
15carriers that is reasonable and necessary to support the
16development, operations, and prudent cash management of the
17Exchange. This charge shall not affect the requirement under
18Section 1301 of the federal act that carriers charge the same
19premium rate for each qualified health plan whether offered inside
20or outside the Exchange.
21(o) Authorize expenditures, as necessary, from the California
22Health Trust Fund to pay program expenses to administer the
23Exchange.
24(p) Keep an accurate accounting of all activities, receipts, and
25expenditures, and annually submit to the United States Secretary
26of Health and Human Services a report concerning that accounting.
27Commencing January 1, 2016, the board shall conduct an annual
28audit.
29(q) (1) Annually prepare a written report on the implementation
30and performance of the Exchange functions during the preceding
31fiscal year, including, at a minimum, the manner in which funds
32were expended and the progress toward, and the achievement of,
33the requirements of this title. This report shall be transmitted to
34the Legislature and the Governor and shall be made available to
35the public on the Internet Web site of the Exchange. A report made
36to the Legislature pursuant to this subdivision shall be submitted
37pursuant to Section 9795.
38(2) In addition to the report described in paragraph (1), the board
39shall be responsive to requests for additional information from the
40Legislature, including providing testimony and commenting on
P15 1proposed state legislation or policy issues. The Legislature finds
2and declares that activities including, but not limited to, responding
3to legislative or executive inquiries, tracking and commenting on
4legislation and regulatory activities, and preparing reports on the
5implementation of this title and the performance of the Exchange,
6are necessary state requirements and are distinct from the
7promotion of legislative or regulatory modifications referred to in
8subdivision (d) of Section 100520.
9(r) Maintain enrollment and expenditures to ensure that
10expenditures do not exceed the amount of revenue in the fund, and
11if sufficient revenue is not available to pay estimated expenditures,
12institute appropriate measures to ensure fiscal
solvency.
13(s) Exercise all powers reasonably necessary to carry out and
14comply with the duties, responsibilities, and requirements of this
15act and the federal act.
16(t) Consult with stakeholders relevant to carrying out the
17activities under this title, including, but not limited to, all of the
18following:
19(1) Health care consumers who are enrolled in health plans.
20(2) Individuals and entities with experience in facilitating
21enrollment in health plans.
22(3) Representatives of small businesses and self-employed
23individuals.
24(4) The State Medi-Cal Director.
25(5) Advocates for enrolling hard-to-reach populations.
26(u) Facilitate the purchase of qualified health plans in the
27Exchange by qualified individuals and qualified small employers
28no later than January 1, 2014.
29(v) Report, or contract with an independent entity to report, to
30the Legislature by December 1, 2018, on whether to adopt the
31option in Section 1312(c)(3) of the federal act to merge the
32individual and small employer markets. In its report, the board
33shall provide information, based on at least two years of data from
34the Exchange, on the potential impact on rates paid by individuals
35and by small employers in a merged individual and small employer
36market, as compared to the rates paid by individuals and small
37employers if a separate individual and small employer market is
38maintained. A report made pursuant to this subdivision shall be
39submitted pursuant to
Section 9795.
P16 1(w) With respect to the SHOP Program, collect premiums and
2administer all other necessary and related tasks, including, but not
3limited to, enrollment and plan payment, in order to make the
4offering of employee plan choice as simple as possible for qualified
5small employers.
6(x) Require carriers participating in the Exchange to immediately
7notify the Exchange, under the terms and conditions established
8by the board when an individual is or will be enrolled in or
9disenrolled from any qualified health plan offered by the carrier.
10(y) Ensure that the Exchange provides oral interpretation
11services in any language for individuals seeking coverage through
12the Exchange and makes available a toll-free telephone number
13for the hearing and speech impaired. The board shall ensure that
14written information made
available by the Exchange is presented
15in a plainly worded, easily understandable format and made
16available in prevalent languages.
17(z) This section shall become operative only if Section 4 of the
18act that added this section becomes inoperative pursuant to
19subdivision (z) of that Section 4.
Section 1357.503 of the Health and Safety Code is
21amended to read:
(a) (1) On and after October 1, 2013, a plan shall
23fairly and affirmatively offer, market, and sell all of the plan’s
24small employer health care service plan contracts for plan years
25on or after January 1, 2014, to all small employers in each service
26area in which the plan provides or arranges for the provision of
27health care services.
28(2) On and after October 1, 2013, a plan shall make available
29to each small employer all small employer health care service plan
30contracts that the plan offers and sells to small employers or to
31associations that include small employers in this state for plan
32years on or after January 1, 2014. Health coverage through an
33association that is not related to employment shall be considered
34
individual coverage pursuant to Section 144.102(c) of Title 45 of
35the Code of Federal Regulations.
36(3) A plan that offers qualified health plans through the
37Exchange shall be deemed to be in compliance with paragraphs
38(1) and (2) with respect to small employer health care service plan
39contracts offered through the Exchange in those geographic regions
40in which the plan offers plan contracts through the Exchange.
P17 1(b) A plan shall provide enrollment periods consistent with
2PPACA and described in Section 155.725 of Title 45 of the Code
3of Federal Regulations. Commencing January 1, 2014, a plan shall
4provide special enrollment periods consistent with the special
5enrollment periods described in Section 1399.849, to the extent
6permitted by PPACA, except for the triggering events identified
7in paragraphs (d)(3) and (d)(6) of Section 155.420 of Title 45 of
8the Code of Federal Regulations
with respect to plan contracts
9offered through the Exchange.
10(c) No plan or solicitor shall induce or otherwise encourage a
11small employer to separate or otherwise exclude an eligible
12employee from a health care service plan contract that is provided
13in connection with employee’s employment or membership in a
14guaranteed association.
15(d) Every plan shall file with the director the reasonable
16employee participation requirements and employer contribution
17requirements that will be applied in offering its plan contracts.
18Participation requirements shall be applied uniformly among all
19small employer groups, except that a plan may vary application
20of minimum employee participation requirements by the size of
21the small employer group and whether the employer contributes
22100 percent of the eligible employee’s premium. Employer
23contribution requirements shall not vary by employer size. A
health
24care service plan shall not establish a participation requirement
25that (1) requires a person who meets the definition of a dependent
26in Section 1357.500 to enroll as a dependent if he or she is
27otherwise eligible for coverage and wishes to enroll as an eligible
28employee and (2) allows a plan to reject an otherwise eligible small
29employer because of the number of persons that waive coverage
30due to coverage through another employer. Members of an
31association eligible for health coverage under subdivision (m) of
32Section 1357.500, but not electing any health coverage through
33the association, shall not be counted as eligible employees for
34purposes of determining whether the guaranteed association meets
35a plan’s reasonable participation standards.
36(e) The plan shall not reject an application from a small
37employer for a small employer health care service plan contract
38if all of the following conditions are met:
39(1) The small employer offers health benefits to 100 percent of
40its eligible employees. Employees who waive coverage on the
P18 1grounds that they have other group coverage shall not be counted
2as eligible employees.
3(2) The small employer agrees to make the required premium
4payments.
5(3) The small employer agrees to inform the small employer’s
6employees of the availability of coverage and the provision that
7those not electing coverage must wait until the next open
8enrollment or a special enrollment period to obtain coverage
9through the group if they later decide they would like to have
10coverage.
11(4) The employees and their dependents who are to be covered
12by the plan contract work or reside in the service area in which
13the plan provides or otherwise arranges
for the provision of health
14care services.
15(f) No plan or solicitor shall, directly or indirectly, engage in
16the following activities:
17(1) Encourage or direct small employers to refrain from filing
18an application for coverage with a plan because of the health status,
19claims experience, industry, occupation of the small employer, or
20geographic location provided that it is within the plan’s approved
21service area.
22(2) Encourage or direct small employers to seek coverage from
23another plan because of the health status, claims experience,
24industry, occupation of the small employer, or geographic location
25provided that it is within the plan’s approved service area.
26(3) Employ marketing practices or benefit designs that will have
27the effect of discouraging the
enrollment of individuals with
28significant health needs or discriminate based on an individual’s
29race, color, national origin, present or predicted disability, age,
30sex, gender identity, sexual orientation, expected length of life,
31degree of medical dependency, quality of life, or other health
32conditions.
33(g) A plan shall not, directly or indirectly, enter into any
34contract, agreement, or arrangement with a solicitor that provides
35for or results in the compensation paid to a solicitor for the sale of
36a health care service plan contract to be varied because of the health
37status, claims experience, industry, occupation, or geographic
38location of the small employer. This subdivision does not apply
39to a compensation arrangement that provides compensation to a
40solicitor on the basis of percentage of premium, provided that the
P19 1percentage shall not vary because of the health status, claims
2experience, industry, occupation, or geographic area of the
small
3employer.
4(h) (1) A policy or contract that covers a small employer, as
5defined in Section 1304(b) of PPACA and in Section 1357.500,
6shall not establish rules for eligibility, including continued
7eligibility, of an individual, or dependent of an individual, to enroll
8under the terms of the policy or contract based on any of the
9following health status-related factors:
10(A) Health status.
11(B) Medical condition, including physical and mental illnesses.
12(C) Claims experience.
13(D) Receipt of health care.
14(E) Medical history.
15(F) Genetic information.
16(G) Evidence of insurability, including conditions arising out
17of acts of domestic violence.
18(H) Disability.
19(I) Any other health status-related factor as determined by any
20federal regulations, rules, or guidance issued pursuant to Section
212705 of the federal Public Health Service Act.
22(2) Notwithstanding Section 1389.1, a health care service plan
23shall not require an eligible employee or dependent to fill out a
24health assessment or medical questionnaire prior to enrollment
25under a small employer health care service plan contract. A health
26care service plan shall not acquire or request information that
27relates to a health status-related factor from the applicant or his or
28her dependent or any other source prior to enrollment of the
29
individual.
30(i) (1) A health care service plan shall consider as a single risk
31pool for rating purposes in the small employer market the claims
32experience of all enrollees in all nongrandfathered small employer
33healthbegin delete care service plan contractsend deletebegin insert benefit plansend insert offered by the health
34care service plan in thisbegin delete state and all insureds in all
35nongrandfathered health benefit plans subject to Chapter 8.01
36(commencing with
Section 10753) of Part 2 of Division 2 of the
37Insurance Code offered by a health insurer that is a corporate
38affiliate, subsidiary, or parent of the plan,end delete
39as health care service plan contracts or health insurance policies,end insert
40 including those insureds and enrollees who enroll in coverage
P20 1through the Exchange and insureds and enrolleesbegin delete who enroll in begin insert covered by the health care service planend insert outside of the
2coverageend delete
3Exchange.
4(2) At least each calendar year, and no more frequently than
5each calendar quarter, a health care service plan shall establish an
6index rate for the small employer market in the state based on the
7total
combined claims costs for providing essential health benefits,
8as defined pursuant to Section 1302 of PPACA and Section
91367.005, within the single risk pool required under paragraph
10(1). The index rate shall be adjusted on a marketwide basis based
11on the total expected marketwide payments and charges under the
12risk adjustment and reinsurance programs established for the state
13pursuant to Sections 1343 and 1341 of PPACA and Exchange user
14fees, as described in subdivision (d) of Section 156.80 of Title 45
15of the Code of Federal Regulations. The premium rate for all of
16the nongrandfathered small employer health care service plan
17contracts and nongrandfathered health benefit plans within the
18single risk pool required under paragraph (1) shall use the
19applicablebegin delete index rate, as adjusted for total expected marketwide begin insert
marketwide adjusted index rate,end insert subject only to
20payments and charges under the risk adjustment and reinsurance
21programs established for the state pursuant to Sections 1343 and
221341 of PPACA,end delete
23the adjustments permitted under paragraph (3).
24(3) A health care service plan may vary premium rates for a
25particular nongrandfathered small employer health care service
26plan contract from its index rate based only on the following
27actuarially justified plan-specific factors:
28(A) The actuarial value and cost-sharing design of the plan
29contract.
30(B) The plan contract’s provider network, delivery system
31characteristics, and utilization management practices.
32(C) The benefits provided under the plan contract that are in
33addition to the essential health benefits, as defined pursuant to
34Section 1302 of PPACA. These additional benefits shall be pooled
35with similar benefits
within the single risk pool required under
36paragraph (1) and the claims experience from those benefits shall
37be utilized to determine rate variations for plan contracts that offer
38those benefits in addition to essential health benefits.
P21 1(D) With respect to catastrophic plans, as described in subsection
2(e) of Section 1302 of PPACA, the expected impact of the specific
3eligibility categories for those plans.
4(E) Administrative costs, excluding any user fees required by
5the Exchange.
6(j) A plan shall comply with the requirements of Section 1374.3.
7(k) (1) Except as provided in paragraph (2), if Section 2702 of
8the federal Public Health Service Act (42 U.S.C. Sec. 300gg-1),
9as added by Section 1201 of PPACA, is repealed, this section
shall
10become inoperative 12 months after the repeal date, in which case
11health care service plans subject to this section shall instead be
12governed by Section 1357.03 to the extent permitted by federal
13law, and all references in this article to this section shall instead
14refer to Section 1357.03 except for purposes of paragraph (2).
15(2) Subdivision (b) shall remain operative with respect to health
16care service plan contracts offered through the Exchange.
Section 1366.6 of the Health and Safety Code, as
18amended by Section 8 of Chapter 5 of the First Extraordinary
19Session of the Statutes of 2013, is amended to read:
(a) For purposes of this section, the following
21definitions shall apply:
22(1) “Exchange” means the California Health Benefit Exchange
23established in Title 22 (commencing with Section 100500) of the
24Government Code.
25(2) “Federal act” means the federal Patient Protection and
26Affordable Care Act (Public Law 111-148), as amended by the
27federal Health Care and Education Reconciliation Act of 2010
28(Public Law 111-152), and any amendments to, or regulations or
29guidance issued under, those acts.
30(3) “Qualified health plan” has the same meaning as that term
31is defined in Section 1301 of the federal act.
32(4) “Small employer” has the same meaning as that term is
33defined in Section 1357.500.
34(b) (1) Health care service plans participating in the individual
35market of the Exchange shall fairly and affirmatively offer, market,
36and sell in the individual market of the Exchange at least one
37product within each of the five levels of coverage contained in
38subsections (d) and (e) of Section 1302 of the federal act. Health
39care service plans participating in the Small Business Health
40Options Program (SHOP Program) of the Exchange, established
P22 1pursuant to subdivision (m) of Section 100504 of the Government
2Code, shall fairly and affirmatively offer, market, and sell in the
3SHOP Program at least one product within each of the four levels
4of coverage contained in subsection (d) of Section 1302 of the
5federal act.
6(2) The board established under Section 100500 of the
7Government Code may require plans to sell additional products
8within each of the levels of coverage identified in paragraph (1).
9(3) This subdivision shall not apply to a plan that solely offers
10supplemental coverage in the Exchange under paragraph (10) of
11subdivision (a) of Section 100504 of the Government Code.
12(4) This subdivision shall not apply to a bridge plan product
13that meets the requirements of Section 100504.5 of the Government
14Code to the extent approved by the appropriate federal agency.
15(c) (1) Health care service plans participating in the Exchange
16that sell any products outside the Exchange shall do both of the
17following:
18(A) Fairly and affirmatively
offer, market, and sell all products
19made available to individuals in the Exchange to individuals
20purchasing coverage outside the Exchange.
21(B) Fairly and affirmatively offer, market, and sell all products
22made available to small employers in the Exchange to small
23employers purchasing coverage outside the Exchange.
24(2) For purposes of this subdivision, “product” does not include
25contracts entered into pursuant to Part 6.2 (commencing with
26Section 12693) of Division 2 of the Insurance Code between the
27Managed Risk Medical Insurance Board and health care service
28plans for enrolled Healthy Families beneficiaries or to contracts
29entered into pursuant to Chapter 7 (commencing with Section
3014000) of, or Chapter 8 (commencing with Section 14200) of, Part
313 of Division 9 of the Welfare and Institutions Code between the
32State Department of Health Care Services and health care service
33plans
for enrolled Medi-Cal beneficiaries, or for contracts with
34bridge plan products that meet the requirements of Section
35100504.5 of the Government Code.
36(d) (1) Commencing January 1, 2014, a health care service plan
37shall, with respect to individual plan contracts that cover hospital,
38medical, or surgical benefits, only sell the five levels of coverage
39contained in subsections (d) and (e) of Section 1302 of the federal
40act, except that a health care service plan that does not participate
P23 1in the Exchange shall, with respect to individual plan contracts
2that cover hospital, medical, or surgical benefits, only sell the four
3levels of coverage contained in subsection (d) of Section 1302 of
4the federal act.
5(2) Commencing January 1, 2014, a health care service plan
6shall, with respect to small employer plan contracts that cover
7hospital, medical, or surgical
expenses, only sell the four levels of
8coverage contained in subsection (d) of Section 1302 of the federal
9act.
10(e) Commencing January 1, 2014, a health care service plan
11that does not participate in the Exchange shall, with respect to
12individual or small employer plan contracts that cover hospital,
13medical, or surgical benefits, offer at least one standardized product
14that has been designated by the Exchange in each of the four levels
15of coverage contained in subsection (d) of Section 1302 of the
16federal act. This subdivision shall only apply if the board of the
17Exchange exercises its authority under subdivision (c) of Section
18100504 of the Government Code. Nothing in this subdivision shall
19require a plan that does not participate in the Exchange to offer
20standardized products in the small employer market if the plan
21only sells products in the individual market. Nothing in this
22subdivision shall require a plan that does not participate in the
23
Exchange to offer standardized products in the individual market
24if the plan only sells products in the small employer market. This
25subdivision shall not be construed to prohibit the plan from offering
26other products provided that it complies with subdivision (d).
27(f) For purposes of this section, a bridge plan product shall mean
28an individual health benefit plan, as defined in subdivision (f) of
29Section 1399.845, that is offered by a health care service plan
30licensed under this chapter that contracts with the Exchange
31pursuant to Title 22 (commencing with Section 100500) of the
32Government Code.
33(g) This section shall become inoperative on the October 1 that
34is five years after the date that federal approval of the bridge plan
35option occurs, and, as of the second January 1 thereafter, is
36repealed, unless a later enacted statute that is enacted before that
37date deletes or extends
the dates on which it becomes inoperative
38and is repealed.
Section 1366.6 of the Health and Safety Code, as added
2by Section 9 of Chapter 5 of the First Extraordinary Session of the
3Statutes of 2013, is amended to read:
(a) For purposes of this section, the following
5definitions shall apply:
6(1) “Exchange” means the California Health Benefit Exchange
7established in Title 22 (commencing with Section 100500) of the
8Government Code.
9(2) “Federal act” means the federal Patient Protection and
10Affordable Care Act (Public Law 111-148), as amended by the
11federal Health Care and Education Reconciliation Act of 2010
12(Public Law 111-152), and any amendments to, or regulations or
13guidance issued under, those acts.
14(3) “Qualified health plan” has the same meaning as that term
15is defined in Section 1301 of the federal act.
16(4) “Small employer” has the same meaning as that term is
17defined in Section 1357.500.
18(b) (1) Health care service plans participating in the individual
19market of the Exchange shall fairly and affirmatively offer, market,
20and sell in the individual market of the Exchange at least one
21product within each of the five levels of coverage contained in
22subsections (d) and (e) of Section 1302 of the federal act. Health
23care service plans participating in the Small Business Health
24Options Program (SHOP Program) of the Exchange, established
25pursuant to subdivision (m) of Section 100504 of the Government
26Code, shall fairly and affirmatively offer, market, and sell in the
27SHOP Program at least one product within each of the four levels
28of coverage contained in subsection (d) of Section 1302 of the
29federal act.
30(2) The board established under Section 100500 of the
31Government Code may require plans to sell additional products
32within each of the levels of coverage identified in paragraph (1).
33(3) This subdivision shall not apply to a plan that solely offers
34supplemental coverage in the Exchange under paragraph (10) of
35subdivision (a) of Section 100504 of the Government Code.
36(c) (1) Health care service plans participating in the Exchange
37that sell any products outside the Exchange shall do both of the
38following:
P25 1(A) Fairly and affirmatively offer, market, and sell all products
2made available to individuals in the Exchange to individuals
3purchasing coverage outside the Exchange.
4(B) Fairly and affirmatively offer, market, and
sell all products
5made available to small employers in the Exchange to small
6employers purchasing coverage outside the Exchange.
7(2) For purposes of this subdivision, “product” does not include
8contracts entered into pursuant to Part 6.2 (commencing with
9Section 12693) of Division 2 of the Insurance Code between the
10Managed Risk Medical Insurance Board and health care service
11plans for enrolled Healthy Families beneficiaries or to contracts
12entered into pursuant to Chapter 7 (commencing with Section
1314000) of, or Chapter 8 (commencing with Section 14200) of, Part
143 of Division 9 of the Welfare and Institutions Code between the
15State Department of Health Care Services and health care service
16plans for enrolled Medi-Cal beneficiaries.
17(d) (1) Commencing January 1, 2014, a health care service plan
18shall, with respect to individual plan contracts that cover
hospital,
19medical, or surgical benefits, only sell the five levels of coverage
20contained in subsections (d) and (e) of Section 1302 of the federal
21act, except that a health care service plan that does not participate
22in the Exchange shall, with respect to individual plan contracts
23that cover hospital, medical, or surgical benefits, only sell the four
24levels of coverage contained in subsection (d) of Section 1302 of
25the federal act.
26(2) Commencing January 1, 2014, a health care service plan
27shall, with respect to small employer plan contracts that cover
28hospital, medical, or surgical expenses, only sell the four levels of
29coverage contained in subsection (d) of Section 1302 of the federal
30act.
31(e) Commencing January 1, 2014, a health care service plan
32that does not participate in the Exchange shall, with respect to
33individual or small employer plan contracts that cover hospital,
34
medical, or surgical benefits, offer at least one standardized product
35that has been designated by the Exchange in each of the four levels
36of coverage contained in subdivision (d) of Section 1302 of the
37federal act. This subdivision shall only apply if the board of the
38Exchange exercises its authority under subdivision (c) of Section
39100504 of the Government Code. Nothing in this subdivision shall
40require a plan that does not participate in the Exchange to offer
P26 1standardized products in the small employer market if the plan
2only sells products in the individual market. Nothing in this
3subdivision shall require a plan that does not participate in the
4Exchange to offer standardized products in the individual market
5if the plan only sells products in the small employer market. This
6subdivision shall not be construed to prohibit the plan from offering
7other products provided that it complies with subdivision (d).
8(f) This section shall become
operative only if Section 8 of the
9act that added this section becomes inoperative pursuant to
10subdivision (g) of that Section 8.
Section 1367.005 of the Health and Safety Code is
12amended to read:
(a) An individual or small group health care service
14plan contract issued, amended, or renewed on or after January 1,
152014, shall, at a minimum, include coverage for essential health
16benefits pursuant to PPACA and as outlined in this section. For
17purposes of this section, “essential health benefits” means all of
18the following:
19(1) Health benefits within the categories identified in Section
201302(b) of PPACA: ambulatory patient services, emergency
21services, hospitalization, maternity and newborn care, mental health
22and substance use disorder services, including behavioral health
23treatment, prescription drugs, rehabilitative and habilitative services
24and devices, laboratory services, preventive and wellness services
25and chronic disease management, and pediatric
services, including
26oral and vision care.
27(2) (A) The health benefits covered by the Kaiser Foundation
28Health Plan Small Group HMO 30 plan (federal health product
29identification number 40513CA035) as this plan was offered during
30the first quarter of 2012, as follows, regardless of whether the
31benefits are specifically referenced in the evidence of coverage or
32plan contract for that plan:
33(i) Medically necessary basic health care services, as defined
34in subdivision (b) of Section 1345 and in Section 1300.67 of Title
3528 of the California Code of Regulations.
36(ii) The health benefits mandated to be covered by the plan
37pursuant to statutes enacted before December 31, 2011, as
38described in the following sections: Sections 1367.002, 1367.06,
39and 1367.35 (preventive services for children); Section
1367.25
40(prescription drug coverage for contraceptives); Section 1367.45
P27 1(AIDS vaccine); Section 1367.46 (HIV testing); Section 1367.51
2(diabetes); Section 1367.54 (alpha feto protein testing); Section
31367.6 (breast cancer screening); Section 1367.61 (prosthetics for
4laryngectomy); Section 1367.62 (maternity hospital stay); Section
51367.63 (reconstructive surgery); Section 1367.635 (mastectomies);
6Section 1367.64 (prostate cancer); Section 1367.65
7(mammography); Section 1367.66 (cervical cancer); Section
81367.665 (cancer screening tests); Section 1367.67 (osteoporosis);
9Section 1367.68 (surgical procedures for jaw bones); Section
101367.71 (anesthesia for dental); Section 1367.9 (conditions
11attributable to diethylstilbestrol); Section 1368.2 (hospice care);
12Section 1370.6 (cancer clinical trials); Section 1371.5 (emergency
13response ambulance or ambulance transport services); subdivision
14(b) of Section 1373 (sterilization operations or procedures); Section
151373.4 (inpatient hospital and ambulatory maternity);
Section
161374.56 (phenylketonuria); Section 1374.17 (organ transplants for
17HIV); Section 1374.72 (mental health parity); and Section 1374.73
18(autism/behavioral health treatment).
19(iii) Any other benefits mandated to be covered by the plan
20pursuant to statutes enacted before December 31, 2011, as
21described in those statutes.
22(iv) The health benefits covered by the plan that are not
23otherwise required to be covered under this chapter, to the extent
24required pursuant to Sections 1367.18, 1367.21, 1367.215, 1367.22,
251367.24, and 1367.25, and Section 1300.67.24 of Title 28 of the
26California Code of Regulations.
27(v) Any other health benefits covered by the plan that are not
28otherwise required to be covered under this chapter.
29(B) Where there are any conflicts
or omissions in the plan
30identified in subparagraph (A) as compared with the requirements
31for health benefits under this chapter that were enacted prior to
32December 31, 2011, the requirements of this chapter shall be
33controlling, except as otherwise specified in this section.
34(C) Notwithstanding subparagraph (B) or any other provision
35of this section, the home health services benefits covered under
36the plan identified in subparagraph (A) shall be deemed to not be
37in conflict with this chapter.
38(D) For purposes of this section, the Paul Wellstone and Pete
39Domenici Mental Health Parity and Addiction Equity Act of 2008
40(Public Law 110-343) shall apply to a contract subject to this
P28 1section. Coverage of mental health and substance use disorder
2services pursuant to this paragraph, along with any scope and
3duration limits imposed on the benefits, shall be in compliance
4with the Paul
Wellstone and Pete Domenici Mental Health Parity
5and Addiction Equity Act of 2008 (Public Law 110-343), and all
6rules, regulations, or guidance issued pursuant to Section 2726 of
7the federal Public Health Service Act (42 U.S.C. Sec. 300gg-26).
8(3) With respect to habilitative services, in addition to any
9habilitative services identified in paragraph (2), coverage shall
10also be provided as required by federal rules, regulations, and
11guidance issued pursuant to Section 1302(b) of PPACA.
12Habilitative services shall be covered under the same terms and
13conditions applied to rehabilitative services under the plan contract.
14(4) With respect to pediatric vision care, the same health benefits
15for pediatric vision care covered under the Federal Employees
16Dental and Vision Insurance Program vision plan with the largest
17national enrollment as of the first quarter of 2012. The pediatric
18vision
care benefits covered pursuant to this paragraph shall be in
19addition to, and shall not replace, any vision services covered under
20the plan identified in paragraph (2).
21(5) With respect to pediatric oral care, the same health benefits
22for pediatric oral care covered under the dental plan available to
23subscribers of the Healthy Families Program in 2011-12, including
24the provision of medically necessary orthodontic care provided
25pursuant to the federal Children’s Health Insurance Program
26Reauthorization Act of 2009. The pediatric oral care benefits
27covered pursuant to this paragraph shall be in addition to, and shall
28not replace, any dental or orthodontic services covered under the
29plan identified in paragraph (2).
30(b) Treatment limitations imposed on health benefits described
31in this section shall be no greater than the treatment limitations
32imposed by the corresponding plans
identified in subdivision (a),
33subject to the requirements set forth in paragraph (2) of subdivision
34(a).
35(c) Except as provided in subdivision (d), nothing in this section
36shall be construed to permit a health care service plan to make
37substitutions for the benefits required to be covered under this
38section, regardless of whether those substitutions are actuarially
39equivalent.
P29 1(d) To the extent permitted under Section 1302 of PPACA and
2any rules, regulations, or guidance issued pursuant to that section,
3and to the extent that substitution would not create an obligation
4for the state to defray costs for any individual, a plan may substitute
5its prescription drug formulary for the formulary provided under
6the plan identified in subdivision (a) as long as the coverage for
7prescription drugs complies with the sections referenced in clauses
8(ii) and (iv) of subparagraph (A) of
paragraph (2) of subdivision
9(a) that apply to prescription drugs.
10(e) No health care service plan, or its agent, solicitor, or
11representative, shall issue, deliver, renew, offer, market, represent,
12or sell any product, contract, or discount arrangement as compliant
13with the essential health benefits requirement in federal law, unless
14it meets all of the requirements of this section.
15(f) This section shall apply regardless of whether the plan
16contract is offered inside or outside the California Health Benefit
17Exchange created by Section 100500 of the Government Code.
18(g) Nothing in this section shall be construed to exempt a plan
19or a plan contract from meeting other applicable requirements of
20law.
21(h) This section shall not be construed to prohibit a
plan contract
22from covering additional benefits, including, but not limited to,
23spiritual care services that are tax deductible under Section 213 of
24the Internal Revenue Code.
25(i) Subdivision (a) shall not apply to any of the following:
26(1) A specialized health care service plan contract.
27(2) A Medicare supplement plan.
28(3) A plan contract that qualifies as a grandfathered health plan
29under Section 1251 of PPACA or any rules, regulations, or
30guidance issued pursuant to that section.
31(j) Nothing in this section shall be implemented in a manner
32that conflicts with a requirement of PPACA.
33(k) This section shall be implemented
only to the extent essential
34health benefits are required pursuant to PPACA.
35(l) An essential health benefit is required to be provided under
36this section only to the extent that federal law does not require the
37state to defray the costs of the benefit.
38(m) Nothing in this section shall obligate the state to incur costs
39for the coverage of benefits that are not essential health benefits
40as defined in this section.
P30 1(n) A plan is not required to cover, under this section, changes
2to health benefits that are the result of statutes enacted on or after
3December 31, 2011.
4(o) (1) The department may adopt emergency regulations
5implementing this section. The department may, on a one-time
6basis, readopt any emergency regulation authorized
by this section
7that is the same as, or substantially equivalent to, an emergency
8regulation previously adopted under this section.
9(2) The initial adoption of emergency regulations implementing
10this section and the readoption of emergency regulations authorized
11by this subdivision shall be deemed an emergency and necessary
12for the immediate preservation of the public peace, health, safety,
13or general welfare. The initial emergency regulations and the
14readoption of emergency regulations authorized by this section
15shall be submitted to the Office of Administrative Law for filing
16with the Secretary of State and each shall remain in effect for no
17more than 180 days, by which time final regulations may be
18adopted.
19(3) The director shall consult with the Insurance Commissioner
20to ensure consistency and uniformity in the development of
21regulations under this subdivision.
22(4) This subdivision shall become inoperative on March 1, 2016.
23(p) For purposes of this section, the following definitions shall
24apply:
25(1) “Habilitative services” means medically necessary health
26care services and health care devices that assist an individual in
27partially or fully acquiring or improving skills and functioning and
28that are necessary to address a health condition, to the maximum
29extent practical. These services address the skills and abilities
30needed for functioning in interaction with an individual’s
31environment. Examples of health care services that are not
32habilitative services include, but are not limited to, respite care,
33day care, recreational care, residential treatment, social services,
34custodial care, or education services of any kind, including, but
35not limited to, vocational training.
Habilitative services shall be
36covered under the same terms and conditions applied to
37rehabilitative services under the plan contract.
38(2) (A) “Health benefits,” unless otherwise required to be
39defined pursuant to federal rules, regulations, or guidance issued
40pursuant to Section 1302(b) of PPACA, means health care items
P31 1or services for the diagnosis, cure, mitigation, treatment, or
2prevention of illness, injury, disease, or a health condition,
3including a behavioral health condition.
4(B) “Health benefits” does not mean any cost-sharing
5requirements such as copayments, coinsurance, or deductibles.
6(3) “PPACA” means the federal Patient Protection and
7Affordable Care Act (Public Law 111-148), as amended by the
8federal Health Care and Education Reconciliation Act of 2010
9(Public Law 111-152), and
any rules, regulations, or guidance
10issued thereunder.
11(4) “Small group health care service plan contract” means a
12group health care service plan contract issued to a small employer,
13as defined in Section 1357.500.
Section 1367.006 of the Health and Safety Code is
15amended to read:
(a) This section shall apply to nongrandfathered
17individual and group health care service plan contracts that provide
18coverage for essential health benefits, as defined in Section
191367.005, and that are issued, amended, or renewed on or after
20January 1, 2015.
21(b) (1) For nongrandfathered health care service plan contracts
22in the individual or small group markets, a health care service plan
23contract, except a specialized health care service plan contract,
24that is issued, amended, or renewed on or after January 1, 2015,
25shall provide for a limit on annual out-of-pocket expenses for all
26covered benefits that meet the definition of essential health benefits
27in Section 1367.005, including out-of-network emergency care
28consistent with Section
1371.4.
29(2) For nongrandfathered health care service plan contracts in
30the large group market, a health care service plan contract, except
31a specialized health care service plan contract, that is issued,
32amended, or renewed on or after January 1, 2015, shall provide
33for a limit on annual out-of-pocket expenses for covered benefits,
34including out-of-network emergency care consistent with Section
351371.4. This limit shall only apply to essential health benefits, as
36defined in Section 1367.005, that are covered under the plan to
37the extent that this provision does not conflict with federal law or
38guidance on out-of-pocket maximums for nongrandfathered health
39care service plan contracts in the large group market.
P32 1(c) (1) The limit described in subdivision (b) shall not exceed
2the limit described in Section 1302(c) of PPACA, and any
3subsequent rules, regulations,
or guidance issued under that section.
4(2) The limit described in subdivision (b) shall result in a total
5maximum out-of-pocket limit for all covered essential health
6benefits equal to the dollar amounts in effect under Section
7223(c)(2)(A)(ii) of the Internal Revenue Code of 1986 with the
8dollar amounts adjusted as specified in Section 1302(c)(1)(B) of
9PPACA.
10(d) Nothing in this section shall be construed to affect the
11reduction in cost sharing for eligible enrollees described in Section
121402 of PPACA, and any subsequent rules, regulations, or guidance
13issued under that section.
14(e) If an essential health benefit is offered or provided by a
15specialized health care service plan, the total annual out-of-pocket
16maximum for all covered essential benefits shall not exceed the
17limit in subdivision (b). This section shall
not apply to a specialized
18health care service plan that does not offer an essential health
19benefit as defined in Section 1367.005.
20(f) The maximum out-of-pocket limit shall apply to any
21copayment, coinsurance, deductible, and any other form of cost
22sharing for all covered benefits that meet the definition of essential
23health benefits in Section 1367.005.
24(g) For nongrandfathered health plan contracts in the group
25market, “plan year” has the meaning set forth in Section 144.103
26of Title 45 of the Code of Federal Regulations. For
27nongrandfathered health plan contracts sold in the individual
28market, “plan year” means the calendar year.
29(h) “PPACA” means the federal Patient Protection and
30Affordable Care Act (Public Law 111-148), as amended by the
31federal Health Care and Education Reconciliation Act of 2010
32(Public Law
111-152), and any rules, regulations, or guidance
33issued thereunder.
Section 1374.21 of the Health and Safety Code is
35amended to read:
(a) No change in premium rates or changes in
37coverage stated in a group health care service plan contract shall
38become effective unless the plan has delivered in writing a notice
39indicating the change or changes at least 60 days prior to the
40contract renewal effective date.
P33 1(b) A health care service plan that declines to offer coverage to
2or denies enrollment for a large group applying for coverage shall,
3at the time of the denial of coverage, provide the applicant with
4the specific reason or reasons for the decision in writing, in clear,
5easily understandable language.
Section 1385.03 of the Health and Safety Code is
7amended to read:
(a) All health care service plans shall file with the
9department all required rate information for individual and small
10group health care service plan contracts at least 60 days prior to
11implementing any rate change.
12(b) A plan shall disclose to the department all of the following
13for each individual and small group rate filing:
14(1) Company name and contact information.
15(2) Number of plan contract forms covered by the filing.
16(3) Plan contract form numbers covered by the filing.
17(4) Product type, such as a
preferred provider organization or
18health maintenance organization.
19(5) Segment type.
20(6) Type of plan involved, such as for profit or not for profit.
21(7) Whether the products are opened or closed.
22(8) Enrollment in each plan contract and rating form.
23(9) Enrollee months in each plan contract form.
24(10) Annual rate.
25(11) Total earned premiums in each plan contract form.
26(12) Total incurred claims in each plan contract form.
27(13) Average rate change initially requested.
28(14) Review category: initial filing for new product, filing for
29existing product, or resubmission.
30(15) Average rate of change.
31(16) Effective date of rate change.
32(17) Number of subscribers or enrollees affected by each plan
33contract form.
34(18) The plan’s overall annual medical trend factor assumptions
35in each rate filing for all benefits and by aggregate benefit category,
36including hospital inpatient, hospital outpatient, physician services,
37prescription drugs and other ancillary services, laboratory, and
38radiology. A plan may provide aggregated additional data that
39demonstrates or reasonably estimates year-to-year cost changes
40
in specific benefit categories in the geographic regions listed in
P34 1Sections 1357.512 and 1399.855. A health plan that exclusively
2contracts with no more than two medical groups in the state to
3provide or arrange for professional medical services for the
4enrollees of the plan shall instead disclose the amount of its actual
5trend experience for the prior contract year by aggregate benefit
6category, using benefit categories that are, to the maximum extent
7possible, the same or similar to those used by other plans.
8(19) The amount of the projected trend attributable to the use
9of services, price inflation, or fees and risk for annual plan contract
10trends by aggregate benefit category, such as hospital inpatient,
11hospital outpatient, physician services, prescription drugs and other
12ancillary services, laboratory, and radiology. A health plan that
13exclusively contracts with no more than two medical groups in the
14state to provide or arrange for
professional medical services for
15the enrollees of the plan shall instead disclose the amount of its
16actual trend experience for the prior contract year by aggregate
17benefit category, using benefit categories that are, to the maximum
18extent possible, the same or similar to those used by other plans.
19(20) A comparison of claims cost and rate of changes over time.
20(21) Any changes in enrollee cost sharing over the prior year
21associated with the submitted rate filing.
22(22) Any changes in enrollee benefits over the prior year
23associated with the submitted rate filing.
24(23) The certification described in subdivision (b) of Section
251385.06.
26(24) Any changes in administrative costs.
27(25) Any other information required for rate review under
28PPACA.
29(c) A health care service plan subject to subdivision (a) shall
30also disclose the following aggregate data for all rate filings
31submitted under this section in the individual and small group
32health plan markets:
33(1) Number and percentage of rate filings reviewed by the
34following:
35(A) Plan year.
36(B) Segment type.
37(C) Product type.
38(D) Number of subscribers.
39(E) Number of covered lives affected.
40(2) The plan’s average rate change by the following categories:
P35 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(d) The department may require all health care service plans to
11submit all rate filings to the National Association of Insurance
12Commissioners’
System for Electronic Rate and Form Filing
13(SERFF). Submission of the required rate filings to SERFF shall
14be deemed to be filing with the department for purposes of
15compliance with this section.
16(e) A plan shall submit any other information required under
17PPACA. A plan shall also submit any other information required
18pursuant to any regulation adopted by the department to comply
19with this article.
Section 1385.06 of the Health and Safety Code is
21amended to read:
(a) A filing submitted under this article shall be
23actuarially sound.
24(b) (1) The plan shall contract with an independent actuary or
25actuaries consistent with this section.
26(2) A filing submitted under this article shall include a
27certification by an independent actuary or actuarial firm that the
28rate change is reasonable or unreasonable and, if unreasonable,
29that the justification for the change is based on accurate and sound
30actuarial assumptions and methodologies. Unless PPACA requires
31a certification of actuarial soundness for each large group contract,
32a filing submitted under Section 1385.04 shall include a
33certification by an independent actuary, as described in this
section,
34that the aggregate or average rate increase is based on accurate
35and sound actuarial assumptions and methodologies.
36(3) The actuary or actuarial firm acting under paragraph (2)
37shall not be an affiliate or a subsidiary of, nor in any way owned
38or controlled by, a health care service plan or a trade association
39of health care service plans. A board member, director, officer, or
40employee of the actuary or actuarial firm shall not serve as a board
P36 1member, director, or employee of a health care service plan. A
2board member, director, or officer of a health care service plan or
3a trade association of health care service plans shall not serve as
4a board member, director, officer, or employee of the actuary or
5actuarial firm.
6(c) Nothing in this article shall be construed to permit the
7director to establish the rates charged subscribers and enrollees
8for covered health care
services.
Section 1385.07 of the Health and Safety Code is
10amended to read:
(a) Notwithstanding Chapter 3.5 (commencing with
12Section 6250) of Division 7 of Title 1 of the Government Code,
13all information submitted under this article shall be made publicly
14available by the department except as provided in subdivision (b).
15(b) The contracted rates between a health care service plan and
16a provider shall be deemed confidential information that shall not
17be made public by the department and are exempt from disclosure
18under the California Public Records Act (Chapter 3.5 (commencing
19with Section 6250) of Division 7 of Title 1 of the Government
20Code). The contracted rates between a health care service plan and
21a large group shall be deemed confidential information that shall
22not be made public by the department and are exempt from
23disclosure
under the California Public Records Act (Chapter 3.5
24(commencing with Section 6250) of Division 7 of Title 1 of the
25Government Code).
26(c) All information submitted to the department under this article
27shall be submitted electronically in order to facilitate review by
28the department and the public.
29(d) In addition, the department and the health care service plan
30shall, at a minimum, make the following information readily
31available to the public on their Internet Web sites, in plain language
32and in a manner and format specified by the department, except
33as provided in subdivision (b). The information shall be made
34public for 60 days prior to the implementation of the rate change.
35The information shall include:
36(1) Justifications for any unreasonable rate changes, including
37all information and supporting documentation
as to why the rate
38change is justified.
39(2) A plan’s overall annual medical trend factor assumptions in
40each rate filing for all benefits.
P37 1(3) A health plan’s actual costs, by aggregate benefit category
2to include hospital inpatient, hospital outpatient, physician services,
3prescription drugs and other ancillary services, laboratory, and
4radiology.
5(4) The amount of the projected trend attributable to the use of
6services, price inflation, or fees and risk for annual plan contract
7trends by aggregate benefit category, such as hospital inpatient,
8hospital outpatient, physician services, prescription drugs and other
9ancillary services, laboratory, and radiology. A health plan that
10exclusively contracts with no more than two medical groups in the
11state to provide or arrange for professional medical services for
12the
enrollees of the plan shall instead disclose the amount of its
13actual trend experience for the prior contract year by aggregate
14benefit category, using benefit categories that are, to the maximum
15extent possible, the same or similar to those used by other plans.
Section 1385.11 of the Health and Safety Code is
17amended to read:
(a) Whenever it appears to the department that any
19person has engaged, or is about to engage, in any act or practice
20constituting a violation of this article, including the filing of
21inaccurate or unjustified rates or inaccurate or unjustified rate
22information, the department may review the rate filing to ensure
23compliance with the law.
24(b) The department may review other filings.
25(c) The department shall accept and post to its Internet Web site
26any public comment on a rate change submitted to the department
27during the 60-day period described in subdivision (d) of Section
281385.07.
29(d) The department shall report to the Legislature at
least
30quarterly on all unreasonable rate filings.
31(e) The department shall post on its Internet Web site any
32modifications submitted by the plan to the proposed rate change,
33including any documentation submitted by the plan supporting
34those modifications.
35(f) If the director makes a decision that an unreasonable rate
36change is not justified or that a rate filing contains inaccurate
37information, the department shall post that decision on its Internet
38Web site.
P38 1(g) Nothing in this article shall be construed to impair or impede
2the department’s authority to administer or enforce any other
3provision of this chapter.
Section 1389.25 of the Health and Safety Code is
5amended to read:
(a) (1) This section shall apply only to a full service
7health care service plan offering health coverage in the individual
8market in California and shall not apply to a specialized health
9care service plan, a health care service plan contract in the
10Medi-Cal program (Chapter 7 (commencing with Section 14000)
11of Part 3 of Division 9 of the Welfare and Institutions Code), a
12health care service plan conversion contract offered pursuant to
13Section 1373.6, a health care service plan contract in the Healthy
14Families Program (Part 6.2 (commencing with Section 12693) of
15Division 2 of the Insurance Code), or a health care service plan
16contract offered to a federally eligible defined individual under
17Article 4.6 (commencing with Section 1366.35).
18(2) A local initiative, as defined in subdivision (v) of Section
1953810 of Title 22 of the California Code of Regulations, that is
20awarded a contract by the State Department of Health Care Services
21pursuant to subdivision (b) of Section 53800 of Title 22 of the
22California Code of Regulations, shall not be subject to this section
23unless the plan offers coverage in the individual market to persons
24not covered by Medi-Cal or the Healthy Families Program.
25(b) (1) No change in the premium rate or coverage for an
26individual plan contract shall become effective unless the plan has
27delivered a written notice of the change at least 15 days prior to
28the start of the annual enrollment period applicable to the contract
29or 60 days prior to the effective date of the contract renewal,
30whichever occurs earlier in the calendar year.
31(2) The written notice required
pursuant to paragraph (1) shall
32be delivered to the individual contractholder at his or her last
33address known to the plan. The notice shall state in italics and in
3412-point type the actual dollar amount of the premium rate increase
35and the specific percentage by which the current premium will be
36increased. The notice shall describe in plain, understandable
37English any changes in the plan design or any changes in benefits,
38including a reduction in benefits or changes to waivers, exclusions,
39or conditions, and highlight this information by printing it in italics.
40The notice shall specify in a minimum of 10-point bold typeface,
P39 1the reason for a premium rate change or a change to the plan design
2or benefits.
3(c) If a plan rejects a dependent of a subscriber applying to be
4added to the subscriber’s individual grandfathered health plan,
5rejects an applicant for a
Medicare supplement plan contract due
6to the applicant having end-stage renal disease, or offers an
7individual grandfathered health plan to an applicant at a rate that
8is higher than the standard rate, the plan shall inform the applicant
9about the California Major Risk Medical Insurance Program
10(MRMIP) (Part 6.5 (commencing with Section 12700) of Division
112 of the Insurance Code) and about the new coverage options, and
12the potential for subsidized coverage, through Covered California.
13The plan shall direct persons seeking more information to MRMIP,
14Covered California, plan or policy representatives, insurance
15agents, or an entity paid by Covered California to assist with health
16coverage enrollment, such as a navigator or an assister.
17(c)
end delete
18begin insert(d)end insert A notice provided pursuant to this section is a private and
19confidential communication and, at the time of application, the
20plan shall give the individual applicant the opportunity to designate
21the address for receipt of the written notice in order to protect the
22confidentiality of any personal or privileged information.
23(e) For purposes of this section, the following definitions shall
24apply:
25(1) “Covered California” means the California Health Benefit
26Exchange established pursuant to Section 100500 of the
27Government Code.
28(2) “Grandfathered health plan” has the same meaning as that
29term is defined in Section 1251 of PPACA.
30(3) “PPACA” means the federal
Patient Protection and
31Affordable Care Act (Public Law 111-148), as amended by the
32federal Health Care and Education Reconciliation Act of 2010
33(Public Law 111-152), and any rules, regulations, or guidance
34issued pursuant to that law.
Section 1399.849 of the Health and Safety Code is
36amended to read:
(a) (1) On and after October 1, 2013, a plan shall
38fairly and affirmatively offer, market, and sell all of the plan’s
39health benefit plans that are sold in the individual market for policy
40years on or after January 1, 2014, to all individuals and dependents
P40 1in each service area in which the plan provides or arranges for the
2provision of health care services. A plan shall limit enrollment in
3individual health benefit plans to open enrollment periods and
4special enrollment periods as provided in subdivisions (c) and (d).
5(2) A plan shall allow the subscriber of an individual health
6benefit plan to add a dependent to the subscriber’s plan at the
7option of the subscriber, consistent with the open enrollment,
8annual enrollment, and special
enrollment period requirements in
9this section.
10(b) An individual health benefit plan issued, amended, or
11renewed on or after January 1, 2014, shall not impose any
12preexisting condition provision upon any individual.
13(c) (1) A plan shall provide an initial open enrollment period
14from October 1, 2013, to March 31, 2014, inclusive, and annual
15enrollment periods for plan years on or after January 1, 2015, from
16October 15 to December 7, inclusive, of the preceding calendar
17year.
18(2) Pursuant to Section 147.104(b)(2) of Title 45 of the Code
19of Federal Regulations, for individuals enrolled in noncalendar
20year individual health plan contracts, a plan shall provide a limited
21open enrollment period beginning on the date that is 30 calendar
22days prior to the date the policy year ends in 2014.
23(d) (1) Subject to paragraph (2), commencing January 1, 2014,
24a plan shall allow an individual to enroll in or change individual
25health benefit plans as a result of the following triggering events:
26(A) He or she or his or her dependent loses minimum essential
27coverage. For purposes of this paragraph, the following definitions
28shall apply:
29(i) “Minimum essential coverage” has the same meaning as that
30term is defined in subsection (f) of Section 5000A of the Internal
31Revenue Code (26 U.S.C. Sec. 5000A).
32(ii) “Loss of minimum essential coverage” includes, but is not
33limited to, loss of that coverage due to the circumstances described
34in Section 54.9801-6(a)(3)(i) to (iii), inclusive, of Title 26 of the
35Code of Federal Regulations and the
circumstances described in
36Section 1163 of Title 29 of the United States Code. “Loss of
37minimum essential coverage” also includes loss of that coverage
38for a reason that is not due to the fault of the individual.
39(iii) “Loss of minimum essential coverage” does not include
40loss of that coverage due to the individual’s failure to pay
P41 1premiums on a timely basis or situations allowing for a rescission,
2subject to clause (ii) and Sections 1389.7 and 1389.21.
3(B) He or she gains a dependent or becomes a dependent.
4(C) He or she is mandated to be covered as a dependent pursuant
5to a valid state or federal court order.
6(D) He or she has been released from incarceration.
7(E) His or her health
coverage issuer substantially violated a
8material provision of the health coverage contract.
9(F) He or she gains access to new health benefit plans as a result
10of a permanent move.
11(G) He or she was receiving services from a contracting provider
12under another health benefit plan, as defined in Section 1399.845
13of this code or Section 10965 of the Insurance Code, for one of
14the conditions described in subdivision (c) of Section 1373.96 and
15that provider is no longer participating in the health benefit plan.
16(H) He or she demonstrates to the Exchange, with respect to
17health benefit plans offered through the Exchange, or to the
18department, with respect to health benefit plans offered outside
19the Exchange, that he or she did not enroll in a health benefit plan
20during the immediately preceding enrollment period available
to
21the individual because he or she was misinformed that he or she
22was covered under minimum essential coverage.
23(I) He or she is a member of the reserve forces of the United
24States military returning from active duty or a member of the
25California National Guard returning from active duty service under
26Title 32 of the United States Code.
27(J) With respect to individual health benefit plans offered
28through the Exchange, in addition to the triggering events listed
29in this paragraph, any other events listed in Section 155.420(d) of
30Title 45 of the Code of Federal Regulations.
31(2) With respect to individual health benefit plans offered
32outside the Exchange, an individual shall have 60 days from the
33date of a triggering event identified in paragraph (1) to apply for
34coverage from a health care service plan subject to this
section.
35With respect to individual health benefit plans offered through the
36Exchange, an individual shall have 60 days from the date of a
37triggering event identified in paragraph (1) to select a plan offered
38through the Exchange, unless a longer period is provided in Part
39155 (commencing with Section 155.10) of Subchapter B of Subtitle
40A of Title 45 of the Code of Federal Regulations.
P42 1(e) With respect to individual health benefit plans offered
2through the Exchange, the effective date of coverage required
3pursuant to this section shall be consistent with the dates specified
4in Section 155.410 or 155.420 of Title 45 of the Code of Federal
5Regulations, as applicable. A dependent who is a registered
6domestic partner pursuant to Section 297 of the Family Code shall
7have the same effective date of coverage as a spouse.
8(f) With respect to individual health benefit plans offered outside
9
the Exchange, the following provisions shall apply:
10(1) After an individual submits a completed application form
11for a plan contract, the health care service plan shall, within 30
12days, notify the individual of the individual’s actual premium
13charges for that plan established in accordance with Section
141399.855. The individual shall have 30 days in which to exercise
15the right to buy coverage at the quoted premium charges.
16(2) With respect to an individual health benefit plan for which
17an individual applies during the initial open enrollment period
18described in subdivision (c), when the subscriber submits a
19premium payment, based on the quoted premium charges, and that
20payment is delivered or postmarked, whichever occurs earlier, by
21December 15, 2013, coverage under the individual health benefit
22plan shall become effective no later than January 1, 2014. When
23that payment is
delivered or postmarked within the first 15 days
24of any subsequent month, coverage shall become effective no later
25than the first day of the following month. When that payment is
26delivered or postmarked between December 16, 2013, and
27December 31, 2013, inclusive, or after the 15th day of any
28subsequent month, coverage shall become effective no later than
29the first day of the second month following delivery or postmark
30of the payment.
31(3) With respect to an individual health benefit plan for which
32an individual applies during the annual open enrollment period
33described in subdivision (c), when the individual submits a
34premium payment, based on the quoted premium charges, and that
35payment is delivered or postmarked, whichever occurs later, by
36December 15, coverage shall become effective as of the following
37January 1. When that payment is delivered or postmarked within
38the first 15 days of any subsequent month, coverage shall become
39effective no
later than the first day of the following month. When
40that payment is delivered or postmarked between December 16
P43 1and December 31, inclusive, or after the 15th day of any subsequent
2month, coverage shall become effective no later than the first day
3of the second month following delivery or postmark of the
4payment.
5(4) With respect to an individual health benefit plan for which
6an individual applies during a special enrollment period described
7in subdivision (d), the following provisions shall apply:
8(A) When the individual submits a premium payment, based
9on the quoted premium charges, and that payment is delivered or
10postmarked, whichever occurs earlier, within the first 15 days of
11the month, coverage under the plan shall become effective no later
12than the first day of the following month. When the premium
13payment is neither delivered nor postmarked until after the 15th
14day of
the month, coverage shall become effective no later than
15the first day of the second month following delivery or postmark
16of the payment.
17(B) Notwithstanding subparagraph (A), in the case of a birth,
18adoption, or placement for adoption, the coverage shall be effective
19on the date of birth, adoption, or placement for adoption.
20(C) Notwithstanding subparagraph (A), in the case of marriage
21or becoming a registered domestic partner or in the case where a
22qualified individual loses minimum essential coverage, the
23coverage effective date shall be the first day of the month following
24the date the plan receives the request for special enrollment.
25(g) (1) A health care service plan shall not establish rules for
26eligibility, including continued eligibility, of any individual to
27enroll under the terms of
an individual health benefit plan based
28on any of the following factors:
29(A) Health status.
30(B) Medical condition, including physical and mental illnesses.
31(C) Claims experience.
32(D) Receipt of health care.
33(E) Medical history.
34(F) Genetic information.
35(G) Evidence of insurability, including conditions arising out
36of acts of domestic violence.
37(H) Disability.
38(I) Any other health status-related factor as determined by any
39federal
regulations, rules, or guidance issued pursuant to Section
402705 of the federal Public Health Service Act.
P44 1(2) Notwithstanding Section 1389.1, a health care service plan
2shall not require an individual applicant or his or her dependent
3to fill out a health assessment or medical questionnaire prior to
4enrollment under an individual health benefit plan. A health care
5service plan shall not acquire or request information that relates
6to a health status-related factor from the applicant or his or her
7dependent or any other source prior to enrollment of the individual.
8(h) (1) A health care service plan shall consider as a single risk
9pool for rating purposes in the individual market the claims
10experience ofbegin insert all insureds andend insert all enrollees in all
nongrandfathered
11individual health benefit plans offered by that health care service
12plan in thisbegin delete state and all insureds in all nongrandfathered
individual
13health benefit plans, as defined in Section 10965 of the Insurance
14Code, offered in this state by a health insurer that is a corporate
15affiliate, subsidiary, or parent of the plan,end delete
16as health care service plan contracts or individual health insurance
17policies,end insert including those insureds and enrollees who enroll in
18individual coverage through the Exchange and insureds and
19enrollees who enroll in individual coverage outside of the
20Exchange. Student health insurance coverage, as that coverage is
21defined in Section 147.145(a) of Title 45 of the Code of Federal
22Regulations, shall not be included in a health care service plan’s
23single risk pool for individual coverage.
24(2) Each calendar year, a health care service plan shall establish
25an index rate for the individual market in the state based on the
26total
combined claims costs for providing essential health benefits,
27as defined pursuant to Section 1302 of PPACA, within the single
28risk pool required under paragraph (1). The index rate shall be
29adjusted on a marketwide basis based on the total expected
30marketwide payments and charges under the risk adjustment and
31reinsurance programs established for the state pursuant to Sections
321343 and 1341 of PPACA and Exchange user fees, as described
33in subdivision (d) of Section 156.80 of Title 45 of the Code of
34Federal Regulations. The premium rate for all of the health benefit
35plans in the individual market within the single risk pool required
36under paragraph (1) shall use the applicablebegin delete index rate, as adjusted
37for total expected marketwide payments and charges under the
38risk adjustment and reinsurance programs
established for the state
39pursuant to Sections 1343 and 1341 of PPACA,end delete
P45 1adjusted index rate,end insert subject only to the adjustments permitted
2under paragraph (3).
3(3) A health care service plan may vary premium rates for a
4particular health benefit plan from its index rate based only on the
5following actuarially justified plan-specific factors:
6(A) The actuarial value and cost-sharing design of the health
7benefit plan.
8(B) The health benefit plan’s provider network, delivery system
9characteristics, and utilization management practices.
10(C) The benefits provided under the health benefit plan that are
11in addition to the essential health
benefits, as defined pursuant to
12Section 1302 of PPACA and Section 1367.005. These additional
13benefits shall be pooled with similar benefits within the single risk
14pool required under paragraph (1) and the claims experience from
15those benefits shall be utilized to determine rate variations for
16plans that offer those benefits in addition to essential health
17benefits.
18(D) With respect to catastrophic plans, as described in subsection
19(e) of Section 1302 of PPACA, the expected impact of the specific
20eligibility categories for those plans.
21(E) Administrative costs, excluding user fees required by the
22Exchange.
23(i) This section shall only apply with respect to individual health
24benefit plans for policy years on or after January 1, 2014.
25(j) This section shall not apply to a grandfathered health plan.
26(k) If Section 5000A of the Internal Revenue Code, as added
27by Section 1501 of PPACA, is repealed or amended to no longer
28apply to the individual market, as defined in Section 2791 of the
29federal Public Health Service Act (42 U.S.C. Sec. 300gg-91),
30subdivisions (a), (b), and (g) shall become inoperative 12 months
31after that repeal or amendment.
Section 10112.27 of the Insurance Code is amended
33to read:
(a) An individual or small group health insurance
35policy issued, amended, or renewed on or after January 1, 2014,
36shall, at a minimum, include coverage for essential health benefits
37pursuant to PPACA and as outlined in this section. This section
38shall exclusively govern what benefits a health insurer must cover
39as essential health benefits. For purposes of this section, “essential
40health benefits” means all of the following:
P46 1(1) Health benefits within the categories identified in Section
21302(b) of PPACA: ambulatory patient services, emergency
3services, hospitalization, maternity and newborn care, mental health
4and substance use disorder services, including behavioral health
5treatment, prescription drugs, rehabilitative and habilitative services
6and devices,
laboratory services, preventive and wellness services
7and chronic disease management, and pediatric services, including
8oral and vision care.
9(2) (A) The health benefits covered by the Kaiser Foundation
10Health Plan Small Group HMO 30 plan (federal health product
11identification number 40513CA035) as this plan was offered during
12the first quarter of 2012, as follows, regardless of whether the
13benefits are specifically referenced in the plan contract or evidence
14of coverage for that plan:
15(i) Medically necessary basic health care services, as defined
16in subdivision (b) of Section 1345 of the Health and Safety Code
17and in Section 1300.67 of Title 28 of the California Code of
18Regulations.
19(ii) The health benefits mandated to be covered by the plan
20pursuant to statutes enacted before December 31,
2011, as
21described in the following sections of the Health and Safety Code:
22Sections 1367.002, 1367.06, and 1367.35 (preventive services for
23children); Section 1367.25 (prescription drug coverage for
24contraceptives); Section 1367.45 (AIDS vaccine); Section 1367.46
25(HIV testing); Section 1367.51 (diabetes); Section 1367.54 (alpha
26feto protein testing); Section 1367.6 (breast cancer screening);
27Section 1367.61 (prosthetics for laryngectomy); Section 1367.62
28(maternity hospital stay); Section 1367.63 (reconstructive surgery);
29Section 1367.635 (mastectomies); Section 1367.64 (prostate
30cancer); Section 1367.65 (mammography); Section 1367.66
31(cervical cancer); Section 1367.665 (cancer screening tests);
32Section 1367.67 (osteoporosis); Section 1367.68 (surgical
33procedures for jaw bones); Section 1367.71 (anesthesia for dental);
34Section 1367.9 (conditions attributable to diethylstilbestrol);
35Section 1368.2 (hospice care); Section 1370.6 (cancer clinical
36trials); Section 1371.5 (emergency response ambulance or
37
ambulance transport services); subdivision (b) of Section 1373
38(sterilization operations or procedures); Section 1373.4 (inpatient
39hospital and ambulatory maternity); Section 1374.56
40(phenylketonuria); Section 1374.17 (organ transplants for HIV);
P47 1Section 1374.72 (mental health parity); and Section 1374.73
2(autism/behavioral health treatment).
3(iii) Any other benefits mandated to be covered by the plan
4pursuant to statutes enacted before December 31, 2011, as
5described in those statutes.
6(iv) The health benefits covered by the plan that are not
7otherwise required to be covered under Chapter 2.2 (commencing
8with Section 1340) of Division 2 of the Health and Safety Code,
9to the extent otherwise required pursuant to Sections 1367.18,
101367.21, 1367.215, 1367.22, 1367.24, and 1367.25 of the Health
11and Safety Code, and Section 1300.67.24 of Title 28 of the
12California Code of
Regulations.
13(v) Any other health benefits covered by the plan that are not
14otherwise required to be covered under Chapter 2.2 (commencing
15with Section 1340) of Division 2 of the Health and Safety Code.
16(B) Where there are any conflicts or omissions in the plan
17identified in subparagraph (A) as compared with the requirements
18for health benefits under Chapter 2.2 (commencing with Section
191340) of Division 2 of the Health and Safety Code that were
20enacted prior to December 31, 2011, the requirements of Chapter
212.2 (commencing with Section 1340) of Division 2 of the Health
22and Safety Code shall be controlling, except as otherwise specified
23in this section.
24(C) Notwithstanding subparagraph (B) or any other provision
25of this section, the home health services benefits covered under
26the plan identified in subparagraph (A)
shall be deemed to not be
27in conflict with Chapter 2.2 (commencing with Section 1340) of
28Division 2 of the Health and Safety Code.
29(D) For purposes of this section, the Paul Wellstone and Pete
30Domenici Mental Health Parity and Addiction Equity Act of 2008
31(Public Law 110-343) shall apply to a policy subject to this section.
32Coverage of mental health and substance use disorder services
33pursuant to this paragraph, along with any scope and duration
34limits imposed on the benefits, shall be in compliance with the
35Paul Wellstone and Pete Domenici Mental Health Parity and
36Addiction Equity Act of 2008 (Public Law 110-343), and all rules,
37regulations, and guidance issued pursuant to Section 2726 of the
38federal Public Health Service Act (42 U.S.C. Sec. 300gg-26).
39(3) With respect to habilitative services, in addition to any
40habilitative services identified in paragraph (2), coverage shall
P48 1
also be provided as required by federal rules, regulations, or
2guidance issued pursuant to Section 1302(b) of PPACA.
3Habilitative services shall be covered under the same terms and
4conditions applied to rehabilitative services under the policy.
5(4) With respect to pediatric vision care, the same health benefits
6for pediatric vision care covered under the Federal Employees
7Dental and Vision Insurance Program vision plan with the largest
8national enrollment as of the first quarter of 2012. The pediatric
9vision care services covered pursuant to this paragraph shall be in
10addition to, and shall not replace, any vision services covered under
11the plan identified in paragraph (2).
12(5) With respect to pediatric oral care, the same health benefits
13for pediatric oral care covered under the dental plan available to
14subscribers of the Healthy Families Program in 2011-12, including
15the
provision of medically necessary orthodontic care provided
16pursuant to the federal Children’s Health Insurance Program
17Reauthorization Act of 2009. The pediatric oral care benefits
18covered pursuant to this paragraph shall be in addition to, and shall
19not replace, any dental or orthodontic services covered under the
20plan identified in paragraph (2).
21(b) Treatment limitations imposed on health benefits described
22in this section shall be no greater than the treatment limitations
23imposed by the corresponding plans identified in subdivision (a),
24subject to the requirements set forth in paragraph (2) of subdivision
25(a).
26(c) Except as provided in subdivision (d), nothing in this section
27shall be construed to permit a health insurer to make substitutions
28for the benefits required to be covered under this section, regardless
29of whether those substitutions are actuarially equivalent.
30(d) To the extent permitted under Section 1302 of PPACA and
31any rules, regulations, or guidance issued pursuant to that section,
32and to the extent that substitution would not create an obligation
33for the state to defray costs for any individual, an insurer may
34substitute its prescription drug formulary for the formulary
35provided under the plan identified in subdivision (a) as long as the
36coverage for prescription drugs complies with the sections
37referenced in clauses (ii) and (iv) of subparagraph (A) of paragraph
38(2) of subdivision (a) that apply to prescription drugs.
39(e) No health insurer, or its agent, producer, or representative,
40shall issue, deliver, renew, offer, market, represent, or sell any
P49 1product, policy, or discount arrangement as compliant with the
2essential health benefits requirement in federal law, unless it meets
3all of the requirements of this section. This
subdivision shall be
4enforced in the same manner as Section 790.03, including through
5the means specified in Sections 790.035 and 790.05.
6(f) This section shall apply regardless of whether the policy is
7offered inside or outside the California Health Benefit Exchange
8created by Section 100500 of the Government Code.
9(g) Nothing in this section shall be construed to exempt a health
10insurer or a health insurance policy from meeting other applicable
11requirements of law.
12(h) This section shall not be construed to prohibit a policy from
13covering additional benefits, including, but not limited to, spiritual
14care services that are tax deductible under Section 213 of the
15Internal Revenue Code.
16(i) Subdivision (a) shall not apply to any of the following:
17(1) A policy that provides excepted benefits as described in
18Sections 2722 and 2791 of the federal Public Health Service Act
19(42 U.S.C. Sec. 300gg-21; 42 U.S.C. Sec. 300gg-91).
20(2) A policy that qualifies as a grandfathered health plan under
21Section 1251 of PPACA or any binding rules, regulation, or
22guidance issued pursuant to that section.
23(j) Nothing in this section shall be implemented in a manner
24that conflicts with a requirement of PPACA.
25(k) This section shall be implemented only to the extent essential
26health benefits are required pursuant to PPACA.
27(l) An essential health benefit is required to be provided under
28this section only to the extent that federal law does not require the
29
state to defray the costs of the benefit.
30(m) Nothing in this section shall obligate the state to incur costs
31for the coverage of benefits that are not essential health benefits
32as defined in this section.
33(n) An insurer is not required to cover, under this section,
34changes to health benefits that are the result of statutes enacted on
35or after December 31, 2011.
36(o) (1) The commissioner may adopt emergency regulations
37implementing this section. The commissioner may, on a one-time
38basis, readopt any emergency regulation authorized by this section
39that is the same as, or substantially equivalent to, an emergency
40regulation previously adopted under this section.
P50 1(2) The initial adoption of emergency regulations implementing
2this
section and the readoption of emergency regulations authorized
3by this subdivision shall be deemed an emergency and necessary
4for the immediate preservation of the public peace, health, safety,
5or general welfare. The initial emergency regulations and the
6readoption of emergency regulations authorized by this section
7shall be submitted to the Office of Administrative Law for filing
8with the Secretary of State and each shall remain in effect for no
9more than 180 days, by which time final regulations may be
10adopted.
11(3) The commissioner shall consult with the Director of the
12Department of Managed Health Care to ensure consistency and
13uniformity in the development of regulations under this
14subdivision.
15(4) This subdivision shall become inoperative on March 1, 2016.
16(p) Nothing in this section shall impose on health
insurance
17policies the cost sharing or network limitations of the plans
18identified in subdivision (a) except to the extent otherwise required
19to comply with provisions of this code, including this section, and
20as otherwise applicable to all health insurance policies offered to
21individuals and small groups.
22(q) For purposes of this section, the following definitions shall
23apply:
24(1) “Habilitative services” means medically necessary health
25care services and health care devices that assist an individual in
26partially or fully acquiring or improving skills and functioning and
27that are necessary to address a health condition, to the maximum
28extent practical. These services address the skills and abilities
29needed for functioning in interaction with an individual’s
30environment. Examples of health care services that are not
31habilitative services include, but are not limited to, respite
care,
32day care, recreational care, residential treatment, social services,
33custodial care, or education services of any kind, including, but
34not limited to, vocational training. Habilitative services shall be
35covered under the same terms and conditions applied to
36rehabilitative services under the policy.
37(2) (A) “Health benefits,” unless otherwise required to be
38defined pursuant to federal rules, regulations, or guidance issued
39pursuant to Section 1302(b) of PPACA, means health care items
40or services for the diagnosis, cure, mitigation, treatment, or
P51 1prevention of illness, injury, disease, or a health condition,
2including a behavioral health condition.
3(B) “Health benefits” does not mean any cost-sharing
4requirements such as copayments, coinsurance, or deductibles.
5(3) “PPACA” means the federal
Patient Protection and
6Affordable Care Act (Public Law 111-148), as amended by the
7federal Health Care and Education Reconciliation Act of 2010
8(Public Law 111-152), and any rules, regulations, or guidance
9issued thereunder.
10(4) “Small group health insurance policy” means a group health
11insurance policy issued to a small employer, as defined in Section
1210753.
Section 10112.28 of the Insurance Code is amended
14to read:
(a) This section shall apply to nongrandfathered
16individual and group health insurance policies that provide
17coverage for essential health benefits, as defined in Section
1810112.27, and that are issued, amended, or renewed on or after
19January 1, 2015.
20(b) (1) For nongrandfathered health insurance policies in the
21individual or small group markets, a health insurance policy, except
22a specialized health insurance policy, that is issued, amended, or
23renewed on or after January 1, 2015, shall provide for a limit on
24annual out-of-pocket expenses for all covered benefits that meet
25the definition of essential health benefits in Section 10112.27,
26including out-of-network emergency care.
27(2) For nongrandfathered health insurance policies in the large
28group market, a health insurance policy, except a specialized health
29insurance policy, that is issued, amended, or renewed on or after
30January 1, 2015, shall provide for a limit on annual out-of-pocket
31expenses for covered benefits, including out-of-network emergency
32care. This limit shall apply only to essential health benefits, as
33defined in Section 10112.27, that are covered under the policy to
34the extent that this provision does not conflict with federal law or
35guidance on out-of-pocket maximums for nongrandfathered health
36insurance policies in the large group market.
37(c) (1) The limit described in subdivision (b) shall not exceed
38the limit described in Section 1302(c) of PPACA and any
39subsequent rules, regulations, or guidance issued under that section.
P52 1(2) The limit described
in subdivision (b) shall result in a total
2maximum out-of-pocket limit for all covered essential health
3benefits that shall equal the dollar amounts in effect under Section
4223(c)(2)(A)(ii) of the Internal Revenue Code of 1986 with the
5dollar amounts adjusted as specified in Section 1302(c)(1)(B) of
6PPACA.
7(d) Nothing in this section shall be construed to affect the
8reduction in cost sharing for eligible insureds described in Section
91402 of PPACA and any subsequent rules, regulations, or guidance
10issued under that section.
11(e) If an essential health benefit is offered or provided by a
12specialized health insurance policy, the total annual out-of-pocket
13maximum for all covered essential benefits shall not exceed the
14limit in subdivision (b). This section shall not apply to a specialized
15health insurance policy that does not offer an essential health
16benefit as defined in Section
10112.27.
17(f) The maximum out-of-pocket limit shall apply to any
18copayment, coinsurance, deductible, and any other form of cost
19sharing for all covered benefits that meet the definition of essential
20health benefits, as defined in Section 10112.27.
21(g) For nongrandfathered health insurance policies in the group
22market, “policy year” has the meaning set forth in Section 144.103
23of Title 45 of the Code of Federal Regulations. For
24nongrandfathered health insurance policies sold in the individual
25market, “policy year” means the calendar year.
26(h) “PPACA” means the federal Patient Protection and
27Affordable Care Act (Public Law 111-148), as amended by the
28federal Health Care and Education Reconciliation Act of 2010
29(Public Law 111-152), and any rules, regulations, or guidance
30issued
thereunder.
Section 10112.3 of the Insurance Code, as amended
32by Section 11 of Chapter 5 of the First Extraordinary Session of
33the Statutes of 2013, is amended to read:
(a) For purposes of this section, the following
35definitions shall apply:
36(1) “Exchange” means the California Health Benefit Exchange
37established in Title 22 (commencing with Section 100500) of the
38Government Code.
39(2) “Federal act” means the federal Patient Protection and
40Affordable Care Act (Public Law 111-148), as amended by the
P53 1federal Health Care and Education Reconciliation Act of 2010
2(Public Law 111-152), and any amendments to, or regulations or
3guidance issued under, those acts.
4(3) “Qualified health plan” has the same meaning as that term
5is defined in Section 1301 of the federal act.
6(4) “Small employer” has the same meaning as that term is
7defined in Section 10753.
8(b) (1) Health insurers participating in the individual market
9of the Exchange shall fairly and affirmatively offer, market, and
10sell in the individual market of the Exchange at least one product
11within each of the five levels of coverage contained in subsections
12(d) and (e) of Section 1302 of the federal act. Health insurers
13participating in the Small Business Health Options Program (SHOP
14Program) of the Exchange, established pursuant to subdivision
15(m) of Section 100504 of the Government Code, shall fairly and
16affirmatively offer, market, and sell in the SHOP Program at least
17one product within each of the four levels of coverage contained
18in subsection (d) of Section 1302 of the federal act.
19(2) The board
established under Section 100500 of the
20Government Code may require insurers to sell additional products
21within each of the levels of coverage identified in paragraph (1).
22(3) This subdivision shall not apply to an insurer that solely
23offers supplemental coverage in the Exchange under paragraph
24(10) of subdivision (a) of Section 100504 of the Government Code.
25This subdivision shall not apply to a bridge plan product of a
26Medi-Cal managed care plan that contracts with the State
27Department of Health Care Services pursuant to Section 14005.70
28of the Welfare and Institutions Code and that meets the
29requirements of Section 100504.5 of the Government Code, to the
30extent approved by the appropriate federal agency.
31(c) (1) Health insurers participating in the Exchange that sell
32any products outside the Exchange shall do both of the following:
33(A) Fairly and affirmatively offer, market, and sell all products
34made available to individuals in the Exchange to individuals
35purchasing coverage outside the Exchange.
36(B) Fairly and affirmatively offer, market, and sell all products
37made available to small employers in the Exchange to small
38employers purchasing coverage outside the Exchange.
39(2) For purposes of this subdivision, “product” does not include
40contracts entered into pursuant to Part 6.2 (commencing with
P54 1Section 12693) of Division 2 between the Managed Risk Medical
2Insurance Board and health insurers for enrolled Healthy Families
3beneficiaries or to contracts entered into pursuant to Chapter 7
4(commencing with Section 14000) of, or Chapter 8 (commencing
5with Section 14200) of, Part 3 of Division 9 of the Welfare and
6Institutions Code between the State
Department of Health Care
7Services and health insurers for enrolled Medi-Cal beneficiaries
8or for contracts with bridge plan products that meet the
9requirements of Section 100504.5 of the Government Code.
10(d) (1) Commencing January 1, 2014, a health insurer shall,
11with respect to individual policies that cover hospital, medical, or
12surgical benefits, only sell the five levels of coverage contained
13in subsections (d) and (e) of Section 1302 of the federal act, except
14that a health insurer that does not participate in the Exchange shall,
15with respect to individual policies that cover hospital, medical, or
16surgical benefits, only sell the four levels of coverage contained
17in subsection (d) of Section 1302 of the federal act.
18(2) Commencing January 1, 2014, a health insurer shall, with
19respect to small employer policies that cover hospital, medical, or
20surgical
expenses, only sell the four levels of coverage contained
21in subsection (d) of Section 1302 of the federal act.
22(e) Commencing January 1, 2014, a health insurer that does not
23participate in the Exchange shall, with respect to individual or
24small employer policies that cover hospital, medical, or surgical
25expenses, offer at least one standardized product that has been
26designated by the Exchange in each of the four levels of coverage
27contained in subsection (d) of Section 1302 of the federal act. This
28subdivision shall only apply if the board of the Exchange exercises
29its authority under subdivision (c) of Section 100504 of the
30Government Code. Nothing in this subdivision shall require an
31insurer that does not participate in the Exchange to offer
32standardized products in the small employer market if the insurer
33only sells products in the individual market. Nothing in this
34subdivision shall require an insurer that does not participate in the
35
Exchange to offer standardized products in the individual market
36if the insurer only sells products in the small employer market.
37This subdivision shall not be construed to prohibit the insurer from
38offering other products provided that it complies with subdivision
39(d).
P55 1(f) For purposes of this section, a bridge plan product shall mean
2an individual health benefit plan, as defined in subdivision (a) of
3Section 10198.6 that is offered by a health insurer that contracts
4with the Exchange pursuant to Section 100504.5 of the Government
5Code.
6(g) This section shall become inoperative on the October 1 that
7is five years after the date that federal approval of the bridge plan
8option occurs, and, as of the second January 1 thereafter, is
9repealed, unless a later enacted statute that is enacted before that
10date deletes or extends the dates on which it becomes inoperative
11and is
repealed.
Section 10112.3 of the Insurance Code, as added by
13Section 12 of Chapter 5 of the First Extraordinary Session of the
14Statutes of 2013, is amended to read:
(a) For purposes of this section, the following
16definitions shall apply:
17(1) “Exchange” means the California Health Benefit Exchange
18established in Title 22 (commencing with Section 100500) of the
19Government Code.
20(2) “Federal act” means the federal Patient Protection and
21Affordable Care Act (Public Law 111-148), as amended by the
22federal Health Care and Education Reconciliation Act of 2010
23(Public Law 111-152), and any amendments to, or regulations or
24guidance issued under, those acts.
25(3) “Qualified health plan” has the same meaning as that term
26is defined in Section 1301 of the federal act.
27(4) “Small employer” has the same meaning as that term is
28defined in Section 10753.
29(b) (1) Health insurers participating in the individual market
30of the Exchange shall fairly and affirmatively offer, market, and
31sell in the individual market of the Exchange at least one product
32within each of the five levels of coverage contained in subsections
33(d) and (e) of Section 1302 of the federal act. Health insurers
34participating in the Small Business Health Options Program (SHOP
35Program) of the Exchange, established pursuant to subdivision
36(m) of Section 100504 of the Government Code, shall fairly and
37affirmatively offer, market, and sell in the SHOP Program at least
38one product within each of the four levels of coverage contained
39in subsection (d) of Section 1302 of the federal act.
P56 1(2) The board
established under Section 100500 of the
2Government Code may require insurers to sell additional products
3within each of the levels of coverage identified in paragraph (1).
4(3) This subdivision shall not apply to an insurer that solely
5offers supplemental coverage in the Exchange under paragraph
6(10) of subdivision (a) of Section 100504 of the Government Code.
7(c) (1) Health insurers participating in the Exchange that sell
8any products outside the Exchange shall do both of the following:
9(A) Fairly and affirmatively offer, market, and sell all products
10made available to individuals in the Exchange to individuals
11purchasing coverage outside the Exchange.
12(B) Fairly and affirmatively offer, market, and sell all products
13made available
to small employers in the Exchange to small
14employers purchasing coverage outside the Exchange.
15(2) For purposes of this subdivision, “product” does not include
16contracts entered into pursuant to Part 6.2 (commencing with
17Section 12693) of Division 2 between the Managed Risk Medical
18Insurance Board and health insurers for enrolled Healthy Families
19beneficiaries or to contracts entered into pursuant to Chapter 7
20(commencing with Section 14000) of, or Chapter 8 (commencing
21with Section 14200) of, Part 3 of Division 9 of the Welfare and
22Institutions Code between the State Department of Health Care
23Services and health insurers for enrolled Medi-Cal beneficiaries.
24(d) (1) Commencing January 1, 2014, a health insurer shall,
25with respect to individual policies that cover hospital, medical, or
26surgical benefits, only sell the five levels of coverage contained
27in
subsections (d) and (e) of Section 1302 of the federal act, except
28that a health insurer that does not participate in the Exchange shall,
29with respect to individual policies that cover hospital, medical, or
30surgical benefits, only sell the four levels of coverage contained
31in subsection (d) of Section 1302 of the federal act.
32(2) Commencing January 1, 2014, a health insurer shall, with
33respect to small employer policies that cover hospital, medical, or
34surgical expenses, only sell the four levels of coverage contained
35in subsection (d) of Section 1302 of the federal act.
36(e) Commencing January 1, 2014, a health insurer that does not
37participate in the Exchange shall, with respect to individual or
38small employer policies that cover hospital, medical, or surgical
39expenses, offer at least one standardized product that has been
40designated by the Exchange in each of the four levels of
coverage
P57 1contained in subsection (d) of Section 1302 of the federal act. This
2subdivision shall only apply if the board of the Exchange exercises
3its authority under subdivision (c) of Section 100504 of the
4Government Code. Nothing in this subdivision shall require an
5insurer that does not participate in the Exchange to offer
6standardized products in the small employer market if the insurer
7only sells products in the individual market. Nothing in this
8subdivision shall require an insurer that does not participate in the
9Exchange to offer standardized products in the individual market
10if the insurer only sells products in the small employer market.
11This subdivision shall not be construed to prohibit the insurer from
12offering other products provided that it complies with subdivision
13(d).
14(f) This section shall become operative only if Section 11 of the
15act that added this section becomes inoperative pursuant to
16subdivision (g) of that Section
11.
Section 10113.9 of the Insurance Code is amended
18to read:
(a) This section shall not apply to short-term limited
20duration health insurance, vision-only, dental-only, or
21CHAMPUS-supplement insurance, or to hospital indemnity,
22hospital-only, accident-only, or specified disease insurance that
23does not pay benefits on a fixed benefit, cash payment only basis.
24(b) (1) No change in the premium rate or coverage for an
25individual health insurance policy shall become effective unless
26the insurer has delivered a written notice of the change at least 15
27days prior to the start of the annual enrollment period applicable
28to the policy or 60 days prior to the effective date of the policy
29renewal, whichever occurs earlier in the calendar year.
30(2) The written notice required pursuant to paragraph (1) shall
31be delivered to the individual policyholder at his or her last address
32known to the insurer. The notice shall state in italics and in 12-point
33type the actual dollar amount of the premium increase and the
34specific percentage by which the current premium will be
35increased. The notice shall describe in plain, understandable
36English any changes in the policy or any changes in benefits,
37including a reduction in benefits or changes to waivers, exclusions,
38or conditions, and highlight this information by printing it in italics.
39The notice shall specify in a minimum of 10-point bold typeface,
P58 1the reason for a premium rate change or a change in coverage or
2benefits.
3(c) If an insurer rejects a dependent of a policyholder applying
4to be added to the policyholder’s individual grandfathered health
5
plan, rejects an applicant for a Medicare supplement policy due
6to the applicant having end-stage renal disease, or offers an
7individual grandfathered health plan to an applicant at a rate that
8is higher than the standard rate, the insurer shall inform the
9applicant about the California Major Risk Medical Insurance
10Program (MRMIP) (Part 6.5 (commencing with Section 12700)
11of Division 2) and about the new coverage options, and the
12potential for subsidized coverage, through Covered California.
13The insurer shall direct persons seeking more information to
14MRMIP, Covered California, plan or policy representatives,
15insurance agents, or an entity paid by Covered California to assist
16with health coverage enrollment, such as a navigator or an assister.
17(c)
end delete
18begin insert(d)end insert A notice provided pursuant to this section is a private and
19confidential communication and, at the time of application, the
20insurer shall give the applicant the opportunity to designate the
21address for receipt of the written notice in order to protect the
22confidentiality of any personal or privileged information.
23(e) For purposes of this section, the following definitions shall
24apply:
25(1) “Covered California” means the California Health Benefit
26Exchange established pursuant to Section 100500 of the
27Government Code.
28(2) “Grandfathered health plan” has the same meaning as that
29term is defined in Section 1251 of PPACA.
30(3) “PPACA” means the federal Patient
Protection and
31Affordable Care Act (Public Law 111-148), as amended by the
32federal Health Care and Education Reconciliation Act of 2010
33(Public Law 111-152), and any rules, regulations, or guidance
34issued pursuant to that law.
Section 10181.3 of the Insurance Code is amended
36to read:
(a) All health insurers shall file with the department
38all required rate information for individual and small group health
39insurance policies at least 60 days prior to implementing any rate
40change.
P59 1(b) An insurer shall disclose to the department all of the
2following for each individual and small group rate filing:
3(1) Company name and contact information.
4(2) Number of policy forms covered by the filing.
5(3) Policy form numbers covered by the filing.
6(4) Product type, such as indemnity or preferred provider
7
organization.
8(5) Segment type.
9(6) Type of insurer involved, such as for profit or not for profit.
10(7) Whether the products are opened or closed.
11(8) Enrollment in each policy and rating form.
12(9) Insured months in each policy form.
13(10) Annual rate.
14(11) Total earned premiums in each policy form.
15(12) Total incurred claims in each policy form.
16(13) Average rate change initially requested.
17(14) Review category: initial filing for new product, filing for
18existing product, or resubmission.
19(15) Average rate of change.
20(16) Effective date of rate change.
21(17) Number of policyholders or insureds affected by each
22policy form.
23(18) The insurer’s overall annual medical trend factor
24assumptions in each rate filing for all benefits and by aggregate
25benefit category, including hospital inpatient, hospital outpatient,
26physician services, prescription drugs and other ancillary services,
27laboratory, and radiology. An insurer may provide aggregated
28additional data that demonstrates or reasonably estimates
29year-to-year cost changes in specific benefit categories in the
30geographic regions listed
in Sections 10753.14 and 10965.9. For
31purposes of this paragraph, “major geographic region” shall be
32defined by the department and shall include no more than nine
33regions.
34(19) The amount of the projected trend attributable to the use
35of services, price inflation, or fees and risk for annual policy trends
36by aggregate benefit category, such as hospital inpatient, hospital
37outpatient, physician services, prescription drugs and other
38ancillary services, laboratory, and radiology.
39(20) A comparison of claims cost and rate of changes over time.
P60 1(21) Any changes in insured cost sharing over the prior year
2associated with the submitted rate filing.
3(22) Any changes in insured benefits over the prior year
4associated with the submitted rate filing.
5(23) The certification described in subdivision (b) of Section
610181.6.
7(24) Any changes in administrative costs.
8(25) Any other information required for rate review under
9PPACA.
10(c) An insurer subject to subdivision (a) shall also disclose the
11following aggregate data for all rate filings submitted under this
12section in the individual and small group health insurance markets:
13(1) Number and percentage of rate filings reviewed by the
14following:
15(A) Plan year.
16(B) Segment type.
17(C) Product type.
18(D) Number of policyholders.
19(E) Number of covered lives affected.
20(2) The insurer’s average rate change by the following
21categories:
22(A) Plan year.
23(B) Segment type.
24(C) Product type.
25(3) Any cost containment and quality improvement efforts since
26the insurer’s last rate filing for the same category of health benefit
27plan. To the extent possible, the insurer shall describe any
28significant new health care cost containment and quality
29improvement efforts and provide an estimate of potential savings
30together with an estimated cost or savings for the projection
period.
31(d) The department may require all health insurers to submit all
32rate filings to the National Association of Insurance
33Commissioners’ System for Electronic Rate and Form Filing
34(SERFF). Submission of the required rate filings to SERFF shall
35be deemed to be filing with the department for purposes of
36compliance with this section.
37(e) A health insurer shall submit any other information required
38under PPACA. A health insurer shall also submit any other
39information required pursuant to any regulation adopted by the
40department to comply with this article.
Section 10181.6 of the Insurance Code is amended
2to read:
(a) A filing submitted under this article shall be
4actuarially sound.
5(b) (1) The health insurer shall contract with an independent
6actuary or actuaries consistent with this section.
7(2) A filing submitted under this article shall include a
8certification by an independent actuary or actuarial firm that the
9rate change is reasonable or unreasonable and, if unreasonable,
10that the justification for the change is based on accurate and sound
11actuarial assumptions and methodologies. Unless PPACA requires
12a certification of actuarial soundness for each large group health
13insurance policy, a filing submitted under Section 10181.4 shall
14include a certification by an independent actuary,
as described in
15this section, that the aggregate or average rate increase is based
16on accurate and sound actuarial assumptions and methodologies.
17(3) The actuary or actuarial firm acting under paragraph (2)
18shall not be an affiliate or a subsidiary of, nor in any way owned
19or controlled by, a health insurer or a trade association of health
20insurers. A board member, director, officer, or employee of the
21actuary or actuarial firm shall not serve as a board member,
22director, or employee of a health insurer. A board member, director,
23or officer of a health insurer or a trade association of health insurers
24shall not serve as a board member, director, officer, or employee
25of the actuary or actuarial firm.
26(c) Nothing in this article shall be construed to permit the
27commissioner to establish the rates charged insureds and
28policyholders for covered health care
services.
Section 10181.7 of the Insurance Code is amended
30to read:
(a) Notwithstanding Chapter 3.5 (commencing with
32Section 6250) of Division 7 of Title 1 of the Government Code,
33all information submitted under this article shall be made publicly
34available by the department except as provided in subdivision (b).
35(b) Any contracted rates between a health insurer and a provider
36shall be deemed confidential information that shall not be made
37public by the department and are exempt from disclosure under
38the California Public Records Act (Chapter 3.5 (commencing with
39Section 6250) of Division 7 of Title 1 of the Government Code).
40The contracted rates between a health insurer and a large group
P62 1shall be deemed confidential information that shall not be made
2public by the department and are exempt from disclosure under
3the California
Public Records Act (Chapter 3.5 (commencing with
4Section 6250) of Division 7 of Title 1 of the Government Code).
5(c) All information submitted to the department under this article
6shall be submitted electronically in order to facilitate review by
7the department and the public.
8(d) In addition, the department and the health insurer shall, at
9a minimum, make the following information readily available to
10the public on their Internet Web sites, in plain language and in a
11manner and format specified by the department, except as provided
12in subdivision (b). The information shall be made public for 60
13days prior to the implementation of the rate change. The
14information shall include:
15(1) Justifications for any unreasonable rate changes, including
16all information and supporting documentation as to why the rate
17change is
justified.
18(2) An insurer’s overall annual medical trend factor assumptions
19in each rate filing for all benefits.
20(3) An insurer’s actual costs, by aggregate benefit category to
21include, hospital inpatient, hospital outpatient, physician services,
22prescription drugs and other ancillary services, laboratory, and
23radiology.
24(4) The amount of the projected trend attributable to the use of
25services, price inflation, or fees and risk for annual policy trends
26by aggregate benefit category, such as hospital inpatient, hospital
27outpatient, physician services, prescription drugs and other
28ancillary services, laboratory, and radiology.
Section 10181.11 of the Insurance Code is amended
30to read:
(a) Whenever it appears to the department that any
32person has engaged, or is about to engage, in any act or practice
33constituting a violation of this article, including the filing of
34inaccurate or unjustified rates or inaccurate or unjustified rate
35information, the department may review rate filing to ensure
36compliance with the law.
37(b) The department may review other filings.
38(c) The department shall accept and post to its Internet Web site
39any public comment on a rate change submitted to the department
P63 1during the 60-day period described in subdivision (d) of Section
210181.7.
3(d) The department shall report to the Legislature at least
4
quarterly on all unreasonable rate filings.
5(e) The department shall post on its Internet Web site any
6modifications submitted by the insurer to the proposed rate change,
7including any documentation submitted by the insurer supporting
8those modifications.
9(f) If the commissioner makes a decision that an unreasonable
10rate change is not justified or that a rate filing contains inaccurate
11information, the department shall post that decision on its Internet
12Web site.
13(g) Nothing in this article shall be construed to impair or impede
14the department’s authority to administer or enforce any other
15provision of this code.
Section 10199.1 of the Insurance Code is amended
17to read:
(a) No insurer or nonprofit hospital service plan or
19administrator acting on its behalf shall terminate a group master
20policy or contract providing hospital, medical, or surgical benefits,
21increase premiums or charges therefor, reduce or eliminate benefits
22thereunder, or restrict eligibility for coverage thereunder without
23providing prior notice of that action. No such action shall become
24effective unless written notice of the action was delivered by mail
25to the last known address of the appropriate insurance producer
26and the appropriate administrator, if any, at least 45 days prior to
27the effective date of the action and to the last known address of
28the group policyholder or group contractholder at least 60 days
29prior to the effective date of the action. If nonemployee certificate
30holders or employees of more than one employer
are covered under
31the policy or contract, written notice shall also be delivered by
32mail to the last known address of each nonemployee certificate
33holder or affected employer or, if the action does not affect all
34employees and dependents of one or more employers, to the last
35known address of each affected employee certificate holder, at
36least 60 days prior to the effective date of the action.
37(b) No holder of a master group policy or a master group
38nonprofit hospital service plan contract or administrator acting on
39its behalf shall terminate the coverage of, increase premiums or
40charges for, or reduce or eliminate benefits available to, or restrict
P64 1eligibility for coverage of a covered person, employer unit, or class
2of certificate holders covered under the policy or contract for
3hospital, medical, or surgical benefits without first providing prior
4notice of the action. No such action shall become effective unless
5written notice was delivered
by mail to the last known address of
6each affected nonemployee certificate holder or employer, or if
7the action does not affect all employees and dependents of one or
8more employers, to the last known address of each affected
9employee certificate holder, at least 60 days prior to the effective
10date of the action.
11(c) A health insurer that declines to offer coverage to or denies
12enrollment for a large group applying for coverage shall, at the
13time of the denial of coverage, provide the applicant with the
14specific reason or reasons for the decision in writing, in clear,
15easily understandable language.
Section 10753.05 of the Insurance Code is amended
17to read:
(a) No group or individual policy or contract or
19certificate of group insurance or statement of group coverage
20providing benefits to employees of small employers as defined in
21this chapter shall be issued or delivered by a carrier subject to the
22jurisdiction of the commissioner regardless of the situs of the
23contract or master policyholder or of the domicile of the carrier
24nor, except as otherwise provided in Sections 10270.91 and
2510270.92, shall a carrier provide coverage subject to this chapter
26until a copy of the form of the policy, contract, certificate, or
27statement of coverage is filed with and approved by the
28commissioner in accordance with Sections 10290 and 10291, and
29the carrier has complied with the requirements of Section 10753.17.
30(b) (1) On and after October 1, 2013, each carrier shall fairly
31and affirmatively offer, market, and sell all of the carrier’s health
32benefit plans that are sold to, offered through, or sponsored by,
33small employers or associations that include small employers for
34plan years on or after January 1, 2014, to all small employers in
35each geographic region in which the carrier makes coverage
36available or provides benefits.
37(2) A carrier that offers qualified health plans through the
38Exchange shall be deemed to be in compliance with paragraph (1)
39with respect to health benefit plans offered through the Exchange
P65 1in those geographic regions in which the carrier offers plans
2through the Exchange.
3(3) A carrier shall provide enrollment periods consistent with
4PPACA and described in Section 155.725 of Title 45 of the Code
5of Federal Regulations. Commencing
January 1, 2014, a carrier
6shall provide special enrollment periods consistent with the special
7enrollment periods described in Section 10965.3, to the extent
8permitted by PPACA, except for the triggering events identified
9in paragraphs (d)(3) and (d)(6) of Section 155.420 of Title 45 of
10the Code of Federal Regulations with respect to health benefit
11plans offered through the Exchange.
12(4) Nothing in this section shall be construed to require an
13association, or a trust established and maintained by an association
14to receive a master insurance policy issued by an admitted insurer
15and to administer the benefits thereof solely for association
16members, to offer, market, or sell a benefit plan design to those
17who are not members of the association. However, if the
18association markets, offers, or sells a benefit plan design to those
19who are not members of the association it is subject to the
20requirements of this section. This shall apply to an
association that
21otherwise meets the requirements of paragraph (8) formed by
22merger of two or more associations after January 1, 1992, if the
23predecessor organizations had been in active existence on January
241, 1992, and for at least five years prior to that date and met the
25requirements of paragraph (5).
26(5) A carrier which (A) effective January 1, 1992, and at least
2720 years prior to that date, markets, offers, or sells benefit plan
28designs only to all members of one association and (B) does not
29market, offer, or sell any other individual, selected group, or group
30policy or contract providing medical, hospital, and surgical benefits
31shall not be required to market, offer, or sell to those who are not
32members of the association. However, if the carrier markets, offers,
33or sells any benefit plan design or any other individual, selected
34group, or group policy or contract providing medical, hospital, and
35surgical benefits to those who are not
members of the association
36it is subject to the requirements of this section.
37(6) Each carrier that sells health benefit plans to members of
38one association pursuant to paragraph (5) shall submit an annual
39statement to the commissioner which states that the carrier is selling
P66 1health benefit plans pursuant to paragraph (5) and which, for the
2one association, lists all the information required by paragraph (7).
3(7) Each carrier that sells health benefit plans to members of
4any association shall submit an annual statement to the
5commissioner which lists each association to which the carrier
6sells health benefit plans, the industry or profession which is served
7by the association, the association’s membership criteria, a list of
8officers, the state in which the association is organized, and the
9site of its principal office.
10(8) For purposes of paragraphs (4) and (6), an association is a
11nonprofit organization comprised of a group of individuals or
12employers who associate based solely on participation in a
13specified profession or industry, accepting for membership any
14individual or small employer meeting its membership criteria,
15which do not condition membership directly or indirectly on the
16health or claims history of any person, which uses membership
17dues solely for and in consideration of the membership and
18membership benefits, except that the amount of the dues shall not
19depend on whether the member applies for or purchases insurance
20offered by the association, which is organized and maintained in
21good faith for purposes unrelated to insurance, which has been in
22active existence on January 1, 1992, and at least five years prior
23to that date, which has a constitution and bylaws, or other
24analogous governing documents which provide for election of the
25governing board of the association by its members, which has
26
contracted with one or more carriers to offer one or more health
27benefit plans to all individual members and small employer
28members in this state. Health coverage through an association that
29is not related to employment shall be considered individual
30coverage pursuant to Section 144.102(c) of Title 45 of the Code
31of Federal Regulations.
32(c) On and after October 1, 2013, each carrier shall make
33available to each small employer all health benefit plans that the
34carrier offers or sells to small employers or to associations that
35include small employers for plan years on or after January 1, 2014.
36Notwithstanding subdivision (d) of Section 10753, for purposes
37of this subdivision, companies that are affiliated companies or that
38are eligible to file a consolidated income tax return shall be treated
39as one carrier.
40(d) Each carrier shall do all of the following:
P67 1(1) Prepare a brochure that summarizes all of its health benefit
2plans and make this summary available to small employers, agents,
3and brokers upon request. The summary shall include for each
4plan information on benefits provided, a generic description of the
5manner in which services are provided, such as how access to
6providers is limited, benefit limitations, required copayments and
7deductibles, an explanation of how creditable coverage is calculated
8if a waiting period is imposed, and a telephone number that can
9be called for more detailed benefit information. Carriers are
10required to keep the information contained in the brochure accurate
11and up to date, and, upon updating the brochure, send copies to
12agents and brokers representing the carrier. Any entity that provides
13administrative services only with regard to a health benefit plan
14written or issued by another carrier shall not be required to prepare
15a summary brochure which includes that
benefit plan.
16(2) For each health benefit plan, prepare a more detailed
17evidence of coverage and make it available to small employers,
18agents, and brokers upon request. The evidence of coverage shall
19contain all information that a prudent buyer would need to be aware
20of in making selections of benefit plan designs. An entity that
21provides administrative services only with regard to a health benefit
22plan written or issued by another carrier shall not be required to
23prepare an evidence of coverage for that health benefit plan.
24(3) Provide copies of the current summary brochure to all agents
25or brokers who represent the carrier and, upon updating the
26brochure, send copies of the updated brochure to agents and brokers
27representing the carrier for the purpose of selling health benefit
28plans.
29(4) Notwithstanding
subdivision (c) of Section 10753, for
30purposes of this subdivision, companies that are affiliated
31companies or that are eligible to file a consolidated income tax
32return shall be treated as one carrier.
33(e) Every agent or broker representing one or more carriers for
34the purpose of selling health benefit plans to small employers shall
35do all of the following:
36(1) When providing information on a health benefit plan to a
37small employer but making no specific recommendations on
38particular benefit plan designs:
39(A) Advise the small employer of the carrier’s obligation to sell
40to any small employer any of the health benefit plans it offers to
P68 1small employers, consistent with PPACA, and provide them, upon
2request, with the actual rates that would be charged to that
3employer for a given health benefit plan.
4(B) Notify the small employer that the agent or broker will
5procure rate and benefit information for the small employer on
6any health benefit plan offered by a carrier for whom the agent or
7broker sells health benefit plans.
8(C) Notify the small employer that, upon request, the agent or
9broker will provide the small employer with the summary brochure
10required in paragraph (1) of subdivision (d) for any benefit plan
11design offered by a carrier whom the agent or broker represents.
12(D) Notify the small employer of the availability of coverage
13and the availability of tax credits for certain employers consistent
14with PPACA and state law, including any rules, regulations, or
15guidance issued in connection therewith.
16(2) When recommending a particular benefit plan
design or
17designs, advise the small employer that, upon request, the agent
18will provide the small employer with the brochure required by
19paragraph (1) of subdivision (d) containing the benefit plan design
20or designs being recommended by the agent or broker.
21(3) Prior to filing an application for a small employer for a
22particular health benefit plan:
23(A) For each of the health benefit plans offered by the carrier
24whose health benefit plan the agent or broker is presenting, provide
25the small employer with the benefit summary required in paragraph
26(1) of subdivision (d) and the premium for that particular employer.
27(B) Notify the small employer that, upon request, the agent or
28broker will provide the small employer with an evidence of
29coverage brochure for each health benefit plan the carrier offers.
30(C) Obtain a signed statement from the small employer
31acknowledging that the small employer has received the disclosures
32required by this paragraph and Section 10753.16.
33(f) No carrier, agent, or broker shall induce or otherwise
34encourage a small employer to separate or otherwise exclude an
35eligible employee from a health benefit plan which, in the case of
36an eligible employee meeting the definition in paragraph (1) of
37subdivision (f) of Section 10753, is provided in connection with
38the employee’s employment or which, in the case of an eligible
39employee as defined in paragraph (2) of subdivision (f) of Section
4010753, is provided in connection with a guaranteed association.
P69 1(g) No carrier shall reject an application from a small employer
2for a health benefit plan provided:
3(1) The small employer as defined by subparagraph (A) of
4paragraph (1) of subdivision (q) of Section 10753 offers health
5benefits to 100 percent of its eligible employees as defined in
6paragraph (1) of subdivision (f) of Section 10753. Employees who
7waive coverage on the grounds that they have other group coverage
8shall not be counted as eligible employees.
9(2) The small employer agrees to make the required premium
10payments.
11(h) No carrier or agent or broker shall, directly or indirectly,
12engage in the following activities:
13(1) Encourage or direct small employers to refrain from filing
14an application for coverage with a carrier because of the health
15status, claims experience, industry, occupation, or geographic
16location within the carrier’s approved service
area of the small
17employer or the small employer’s employees.
18(2) Encourage or direct small employers to seek coverage from
19another carrier because of the health status, claims experience,
20industry, occupation, or geographic location within the carrier’s
21approved service area of the small employer or the small
22employer’s employees.
23(3) Employ marketing practices or benefit designs that will have
24the effect of discouraging the enrollment of individuals with
25significant health needs or discriminate based on the individual’s
26race, color, national origin, present or predicted disability, age,
27sex, gender identity, sexual orientation, expected length of life,
28degree of medical dependency, quality of life, or other health
29conditions.
30This subdivision shall be enforced in the same manner as Section
31790.03, including through Sections 790.035 and
790.05.
32(i) No carrier shall, directly or indirectly, enter into any contract,
33agreement, or arrangement with an agent or broker that provides
34for or results in the compensation paid to an agent or broker for a
35health benefit plan to be varied because of the health status, claims
36experience, industry, occupation, or geographic location of the
37small employer or the small employer’s employees. This
38subdivision shall not apply with respect to a compensation
39arrangement that provides compensation to an agent or broker on
40the basis of percentage of premium, provided that the percentage
P70 1shall not vary because of the health status, claims experience,
2industry, occupation, or geographic area of the small employer.
3(j) (1) A health benefit plan offered to a small employer, as
4defined in Section 1304(b) of PPACA and in Section 10753, shall
5not establish rules for
eligibility, including continued eligibility,
6of an individual, or dependent of an individual, to enroll under the
7terms of the plan based on any of the following health status-related
8factors:
9(A) Health status.
10(B) Medical condition, including physical and mental illnesses.
11(C) Claims experience.
12(D) Receipt of health care.
13(E) Medical history.
14(F) Genetic information.
15(G) Evidence of insurability, including conditions arising out
16of acts of domestic violence.
17(H) Disability.
18(I) Any other health status-related factor as determined by any
19federal regulations, rules, or guidance issued pursuant to Section
202705 of the federal Public Health Service Act.
21(2) Notwithstanding Section 10291.5, a carrier shall not require
22an eligible employee or dependent to fill out a health assessment
23or medical questionnaire prior to enrollment under a health benefit
24plan. A carrier shall not acquire or request information that relates
25to a health status-related factor from the applicant or his or her
26dependent or any other source prior to enrollment of the individual.
27(k) (1) A carrier shall consider as a single risk pool for rating
28purposes in the small employer market the claims experience of
29all insureds in all nongrandfathered small employer health benefit
30plans offered by the carrier
in thisbegin delete state and all enrollees in all
31nongrandfathered small employer health care service plan contracts
32subject to Article 3.16 (commencing with Section 1357.500) of
33Chapter 2.2 of Division 2 of the Health and Safety Code offered
34by a health care service plan licensed under Chapter 2.2
35(commencing with Section 1340) of Division 2 of the Health and
36Safety Code that is a corporate
affiliate, subsidiary, or parent of
37the insurer,end delete
38contracts or health insurance policies,end insert including those insureds
39and enrollees who enroll in coverage through the Exchange and
P71 1insureds and enrolleesbegin delete who enroll in coverageend deletebegin insert covered by the
2carrierend insert outside of the Exchange.
3(2) At least each calendar year, and no more frequently than
4each calendar quarter, a carrier shall establish an index rate for the
5small employer market in the state based on the total combined
6claims costs for providing essential health benefits, as defined
7pursuant to Section 1302 of PPACA and Section 10112.27, within
8the
single risk pool required under paragraph (1). The index rate
9shall be adjusted on a marketwide basis based on the total expected
10marketwide payments and charges under the risk adjustment and
11reinsurance programs established for the state pursuant to Sections
121343 and 1341 of PPACA and Exchange user fees, as described
13in subdivision (d) of Section 156.80 of Title 45 of the Code of
14Federal Regulations. The premium rate for all of the
15nongrandfathered health benefit plans within the single risk pool
16required under paragraph (1) shall use the applicablebegin delete index rate,
17as adjusted for total expected marketwide payments and charges
18under the risk adjustment and reinsurance programs established
19for the state pursuant to Sections 1343 and 1341 of PPACA,end delete
20begin insert
marketwide adjusted index rate,end insert subject only to the adjustments
21permitted under paragraph (3).
22(3) A carrier may vary premium rates for a particular
23nongrandfathered health benefit plan from its index rate based
24only on the following actuarially justified plan-specific factors:
25(A) The actuarial value and cost-sharing design of the health
26benefit plan.
27(B) The health benefit plan’s provider network, delivery system
28characteristics, and utilization management practices.
29(C) The benefits provided under the health benefit plan that are
30in addition to the essential health benefits, as defined pursuant to
31Section 1302 of PPACA. These additional benefits shall be pooled
32with similar benefits within the single risk pool
required under
33paragraph (1) and the claims experience from those benefits shall
34be utilized to determine rate variations for health benefit plans that
35offer those benefits in addition to essential health benefits.
36(D) Administrative costs, excluding any user fees required by
37the Exchange.
38(E) With respect to catastrophic plans, as described in subsection
39(e) of Section 1302 of PPACA, the expected impact of the specific
40eligibility categories for those plans.
P72 1(l) If a carrier enters into a contract, agreement, or other
2arrangement with a third-party administrator or other entity to
3provide administrative, marketing, or other services related to the
4offering of health benefit plans to small employers in this state,
5the third-party administrator shall be subject to this chapter.
6(m) (1) Except as provided in paragraph (2), this section shall
7become inoperative if Section 2702 of the federal Public Health
8Service Act (42 U.S.C. Sec. 300gg-1), as added by Section 1201
9of PPACA, is repealed, in which case, 12 months after the repeal,
10carriers subject to this section shall instead be governed by Section
1110705 to the extent permitted by federal law, and all references in
12this chapter to this section shall instead refer to Section 10705,
13except for purposes of paragraph (2).
14(2) Paragraph (3) of subdivision (b) of this section shall remain
15operative as it relates to health benefit plans offered through the
16Exchange.
Section 10965.3 of the Insurance Code is amended
18to read:
(a) (1) On and after October 1, 2013, a health insurer
20shall fairly and affirmatively offer, market, and sell all of the
21insurer’s health benefit plans that are sold in the individual market
22for policy years on or after January 1, 2014, to all individuals and
23dependents in each service area in which the insurer provides or
24arranges for the provision of health care services. A health insurer
25shall limit enrollment in individual health benefit plans to open
26enrollment periods and special enrollment periods as provided in
27subdivisions (c) and (d).
28(2) A health insurer shall allow the policyholder of an individual
29health benefit plan to add a dependent to the policyholder’s health
30benefit plan at the option of the policyholder, consistent with
the
31open enrollment, annual enrollment, and special enrollment period
32requirements in this section.
33(b) An individual health benefit plan issued, amended, or
34renewed on or after January 1, 2014, shall not impose any
35preexisting condition provision upon any individual.
36(c) (1) A health insurer shall provide an initial open enrollment
37period from October 1, 2013, to March 31, 2014, inclusive, and
38annual enrollment periods for plan years on or after January 1,
392015, from October 15 to December 7, inclusive, of the preceding
40calendar year.
P73 1(2) Pursuant to Section 147.104(b)(2) of Title 45 of the Code
2of Federal Regulations, for individuals enrolled in noncalendar-year
3individual health plan contracts, a plan shall provide a limited open
4enrollment period beginning on the date that is 30 calendar
days
5prior to the date the policy year ends in 2014.
6(d) (1) Subject to paragraph (2), commencing January 1, 2014,
7a health insurer shall allow an individual to enroll in or change
8individual health benefit plans as a result of the following triggering
9events:
10(A) He or she or his or her dependent loses minimum essential
11coverage. For purposes of this paragraph, the following definitions
12shall apply:
13(i) “Minimum essential coverage” has the same meaning as that
14term is defined in subsection (f) of Section 5000A of the Internal
15Revenue Code (26 U.S.C. Sec. 5000A).
16(ii) “Loss of minimum essential coverage” includes, but is not
17limited to, loss of that coverage due to the circumstances described
18in Section 54.9801-6(a)(3)(i) to (iii),
inclusive, of Title 26 of the
19Code of Federal Regulations and the circumstances described in
20Section 1163 of Title 29 of the United States Code. “Loss of
21minimum essential coverage” also includes loss of that coverage
22for a reason that is not due to the fault of the individual.
23(iii) “Loss of minimum essential coverage” does not include
24loss of that coverage due to the individual’s failure to pay
25premiums on a timely basis or situations allowing for a rescission,
26subject to clause (ii) and Sections 10119.2 and 10384.17.
27(B) He or she gains a dependent or becomes a dependent.
28(C) He or she is mandated to be covered as a dependent pursuant
29to a valid state or federal court order.
30(D) He or she has been released from incarceration.
31(E) His or her health coverage issuer substantially violated a
32material provision of the health coverage contract.
33(F) He or she gains access to new health benefit plans as a result
34of a permanent move.
35(G) He or she was receiving services from a contracting provider
36under another health benefit plan, as defined in Section 10965 of
37this code or Section 1399.845 of the Health and Safety Code for
38one of the conditions described in subdivision (a) of Section
3910133.56 and that provider is no longer participating in the health
40benefit plan.
P74 1(H) He or she demonstrates to the Exchange, with respect to
2health benefit plans offered through the Exchange, or to the
3department, with respect to health benefit plans offered outside
4the Exchange, that he or she did not
enroll in a health benefit plan
5during the immediately preceding enrollment period available to
6the individual because he or she was misinformed that he or she
7was covered under minimum essential coverage.
8(I) He or she is a member of the reserve forces of the United
9States military returning from active duty or a member of the
10California National Guard returning from active duty service under
11Title 32 of the United States Code.
12(J) With respect to individual health benefit plans offered
13through the Exchange, in addition to the triggering events listed
14in this paragraph, any other events listed in Section 155.420(d) of
15Title 45 of the Code of Federal Regulations.
16(2) With respect to individual health benefit plans offered
17outside the Exchange, an individual shall have 60 days from the
18date of a triggering event
identified in paragraph (1) to apply for
19coverage from a health care service plan subject to this section.
20With respect to individual health benefit plans offered through the
21Exchange, an individual shall have 60 days from the date of a
22triggering event identified in paragraph (1) to select a plan offered
23through the Exchange, unless a longer period is provided in Part
24155 (commencing with Section 155.10) of Subchapter B of Subtitle
25A of Title 45 of the Code of Federal Regulations.
26(e) With respect to individual health benefit plans offered
27through the Exchange, the effective date of coverage required
28pursuant to this section shall be consistent with the dates specified
29in Section 155.410 or 155.420 of Title 45 of the Code of Federal
30Regulations, as applicable. A dependent who is a registered
31domestic partner pursuant to Section 297 of the Family Code shall
32have the same effective date of coverage as a spouse.
33(f) With respect to an individual health benefit plan offered
34outside the Exchange, the following provisions shall apply:
35(1) After an individual submits a completed application form
36for a plan, the insurer shall, within 30 days, notify the individual
37of the individual’s actual premium charges for that plan established
38in accordance with Section 10965.9. The individual shall have 30
39days in which to exercise the right to buy coverage at the quoted
40premium charges.
P75 1(2) With respect to an individual health benefit plan for which
2an individual applies during the initial open enrollment period
3described in subdivision (c), when the policyholder submits a
4premium payment, based on the quoted premium charges, and that
5payment is delivered or postmarked, whichever occurs earlier, by
6December 15, 2013, coverage under the
individual health benefit
7plan shall become effective no later than January 1, 2014. When
8that payment is delivered or postmarked within the first 15 days
9of any subsequent month, coverage shall become effective no later
10than the first day of the following month. When that payment is
11delivered or postmarked between December 16, 2013, and
12December 31, 2013, inclusive, or after the 15th day of any
13subsequent month, coverage shall become effective no later than
14the first day of the second month following delivery or postmark
15of the payment.
16(3) With respect to an individual health benefit plan for which
17an individual applies during the annual open enrollment period
18described in subdivision (c), when the individual submits a
19premium payment, based on the quoted premium charges, and that
20payment is delivered or postmarked, whichever occurs later, by
21December 15, coverage shall become effective as of the following
22January 1. When that payment is
delivered or postmarked within
23the first 15 days of any subsequent month, coverage shall become
24effective no later than the first day of the following month. When
25that payment is delivered or postmarked between December 16
26and December 31, inclusive, or after the 15th day of any subsequent
27month, coverage shall become effective no later than the first day
28of the second month following delivery or postmark of the
29payment.
30(4) With respect to an individual health benefit plan for which
31an individual applies during a special enrollment period described
32in subdivision (d), the following provisions shall apply:
33(A) When the individual submits a premium payment, based
34on the quoted premium charges, and that payment is delivered or
35postmarked, whichever occurs earlier, within the first 15 days of
36the month, coverage under the plan shall become effective no later
37than the first day of the
following month. When the premium
38payment is neither delivered nor postmarked until after the 15th
39day of the month, coverage shall become effective no later than
P76 1the first day of the second month following delivery or postmark
2of the payment.
3(B) Notwithstanding subparagraph (A), in the case of a birth,
4adoption, or placement for adoption, the coverage shall be effective
5on the date of birth, adoption, or placement for adoption.
6(C) Notwithstanding subparagraph (A), in the case of marriage
7or becoming a registered domestic partner or in the case where a
8qualified individual loses minimum essential coverage, the
9coverage effective date shall be the first day of the month following
10the date the insurer receives the request for special enrollment.
11(g) (1) A health insurer shall not establish rules
for eligibility,
12including continued eligibility, of any individual to enroll under
13the terms of an individual health benefit plan based on any of the
14following factors:
15(A) Health status.
16(B) Medical condition, including physical and mental illnesses.
17(C) Claims experience.
18(D) Receipt of health care.
19(E) Medical history.
20(F) Genetic information.
21(G) Evidence of insurability, including conditions arising out
22of acts of domestic violence.
23(H) Disability.
24(I) Any other health status-related factor as determined by any
25federal regulations, rules, or guidance issued pursuant to Section
262705 of the federal Public Health Service Act.
27(2) Notwithstanding subdivision (c) of Section 10291.5, a health
28insurer shall not require an individual applicant or his or her
29dependent to fill out a health assessment or medical questionnaire
30prior to enrollment under an individual health benefit plan. A health
31insurer shall not acquire or request information that relates to a
32health status-related factor from the applicant or his or her
33dependent or any other source prior to enrollment of the individual.
34(h) (1) A health insurer shall consider as a single risk pool for
35rating purposes in the individual market the claims experience of
36all insuredsbegin insert
and enrolleesend insert in all nongrandfathered individual health
37benefit plans offered by that insurer in thisbegin delete state and all enrollees
38in all nongrandfathered individual health benefit
plans, as defined
39in Section 1399.845 of the Health and Safety Code, offered in this
40state by a health care service plan licensed under Chapter 2.2
P77 1(commencing with Section 1340) of Division 2 of the Health and
2Safety Code that is a corporate affiliate, subsidiary, or parent of
3the insurer,end delete
4contracts or individual health insurance policies,end insert including those
5insureds and enrollees who enroll in individual coverage through
6the Exchange and insureds and enrollees who enroll in individual
7coverage outside the Exchange. Student health insurance coverage,
8as such coverage is defined in Section 147.145(a) of Title 45 of
9the Code of Federal Regulations, shall not be included in a health
10insurer’s single risk pool for individual coverage.
11(2) Each calendar year, a health insurer shall
establish an index
12rate for the individual market in the state based on the total
13combined claims costs for providing essential health benefits, as
14defined pursuant to Section 1302 of PPACA, within the single risk
15pool required under paragraph (1). The index rate shall be adjusted
16on a marketwide basis based on the total expected marketwide
17payments and charges under the risk adjustment and reinsurance
18programs established for the state pursuant to Sections 1343 and
191341 of PPACA and Exchange user fees, as described in
20subdivision (d) of Section 156.80 of Title 45 of the Code of Federal
21Regulations. The premium rate for all of the health benefit plans
22in the individual market within the single risk pool required under
23paragraph (1) shall use the applicablebegin delete index rate, as adjusted for
24total
expected marketwide payments and charges under the risk
25adjustment and reinsurance programs established for the state
26pursuant to Sections 1343 and 1341 of PPACA,end delete
27adjusted index rate,end insert subject only to the adjustments permitted
28under paragraph (3).
29(3) A health insurer may vary premium rates for a particular
30health benefit plan from its index rate based only on the following
31actuarially justified plan-specific factors:
32(A) The actuarial value and cost-sharing design of the health
33benefit plan.
34(B) The health benefit plan’s provider network, delivery system
35characteristics, and utilization management practices.
36(C) The benefits
provided under the health benefit plan that are
37in addition to the essential health benefits, as defined pursuant to
38Section 1302 of PPACA and Section 10112.27. These additional
39benefits shall be pooled with similar benefits within the single risk
40pool required under paragraph (1) and the claims experience from
P78 1those benefits shall be utilized to determine rate variations for
2plans that offer those benefits in addition to essential health
3benefits.
4(D) With respect to catastrophic plans, as described in subsection
5(e) of Section 1302 of PPACA, the expected impact of the specific
6eligibility categories for those plans.
7(E) Administrative costs, excluding any user fees required by
8the Exchange.
9(i) This section shall only apply with respect to individual health
10benefit plans for policy years on or after January 1,
2014.
11(j) This section shall not apply to a grandfathered health plan.
12(k) If Section 5000A of the Internal Revenue Code, as added
13by Section 1501 of PPACA, is repealed or amended to no longer
14apply to the individual market, as defined in Section 2791 of the
15federal Public Health Service Act (42 U.S.C. Sec. 300gg-91),
16subdivisions (a), (b), and (g) shall become inoperative 12 months
17after the date of that repeal or amendment and individual health
18care benefit plans shall thereafter be subject to Sections 10901.2,
1910951, and 10953.
No reimbursement is required by this act pursuant to
21Section 6 of Article XIII B of the California Constitution because
22the only costs that may be incurred by a local agency or school
23district will be incurred because this act creates a new crime or
24infraction, eliminates a crime or infraction, or changes the penalty
25for a crime or infraction, within the meaning of Section 17556 of
26the Government Code, or changes the definition of a crime within
27the meaning of Section 6 of Article XIII B of the California
28Constitution.
O
97