Amended in Assembly August 18, 2014

Amended in Assembly June 30, 2014

Amended in Senate April 10, 2014

Senate BillNo. 1182


Introduced by Senator Leno

February 20, 2014


An act to amend Sections 1374.8, 1385.03, and 1385.04 of the Health and Safety Code, and to amend Sections 791.27 and 10181.4 of the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

SB 1182, as amended, Leno. Health care coverage: rate review.

Existing law, the federal Patient Protection and Affordable Care Act (PPACA), requires the United States Secretary of Health and Human Services to establish a process for the annual review of unreasonable increases in premiums for health insurance coverage in which health insurance issuers submit to the secretary and the relevant state a justification for an unreasonable premium increase prior to implementation of the increase. 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 or health insurer in the individual, small group, or large group markets to file rate information with the Department of Managed Health Care or the Department of Insurance. For individual and small group contracts and policies, existing law requires a plan or insurer to file rate information at least 60 days prior to implementing a rate change and requires a plan or insurer to disclose with each filing specified information by aggregate benefit category. Existing law allows a health care service plan that exclusively contracts with no more than 2 medical groups to provide or arrange for professional medical services for enrollees of the plan to meet this requirement by disclosing its actual trend experience for the prior year using benefit categories that are the same or similar to those used by other plans.

This bill would specify the benefit categories to be used for that purpose and would make other related changes.

For large group plan contracts and policies, existing law requires a plan or insurer to file rate information with the department at least 60 days prior to implementing an unreasonable rate increase, as defined in PPACA. Existing law requires the plan or insurer to also disclose specified aggregate data with that rate filing.

This bill wouldbegin delete instead require the plan or insurer to file rate information with the department at least 60 days prior to implementing a rate increase that exceeds 5% of the prior year’s rate. The bill would also require that the plan or insurer disclose specified data for each rate filing that exceeds 5% of the prior year’s rate for that group, including, but not limited to, company name and contact information, annual rate, and average rate change initially requested.end deletebegin insert revise the aggregate information required to be provided with the rate filing described above, including, among other things, total earned premiums, total incurred claims, and average rate of increase for the rate year. The bill would require a plan or insurer to disclose the methodologies used to develop base rates and other specified information, including, among other things, all of the base rates used for groups in the large group market and all of the factors used to adjust the base rates. The bill would also require a plan or insurer to provide additional aggregate information regarding rate changes for the large group market, including, among other things, the average monthly rate implemented during the prior year and the average rate change initially requested, as specified.end insert The bill would require a plan orbegin delete insurerend deletebegin insert insurer, under certain circumstances,end insert to annually disclose additional aggregate data forbegin delete all products sold inend delete the large group market and to provide deidentified claims data at no charge to a large group purchaser that requests the information and meets specified conditions.

Existing law prohibits, with exceptions, a health care service plan or health insurer from releasing any information to an employer that would directly or indirectly indicate to the employer that an employee is receiving or has received services from a health care provider covered by the plan unless authorized to do so by the employee.

This bill would exempt from the prohibition the release of relevant information for the purposes set forth in the provisions regarding the review of ratebegin delete increasesend deletebegin insert changesend insert.

Because a willful violation of the bill’s requirements by a health care service plan 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:

P3    1

SECTION 1.  

Section 1374.8 of the Health and Safety Code is
2amended to read:

3

1374.8.  

(a) A health care service plan shall not release any
4information to an employer that would directly or indirectly
5indicate to the employer that an employee is receiving or has
6received services from a health care provider covered by the plan
7unless authorized to do so by the employee. An insurer that has,
8pursuant to an agreement, assumed the responsibility to pay
9compensation pursuant to Article 3 (commencing with Section
103750) of Chapter 4 of Part 1 of Division 4 of the Labor Code, shall
11not be considered an employer for the purposes of this section.

12(b) Nothing in this section prohibits a health care service plan
13from releasing relevant information described in this section for
14the purposes set forth in Chapter 12 (commencing with Section
151871) of Part 2 of Division 1 of the Insurance Code.

16(c) Nothing in this section prohibits a health care service plan
17from releasing relevant information described in this section for
18the purposes set forth in subdivisionbegin delete (f)end deletebegin insert (h)end insert of Section 1385.04.

19

SEC. 2.  

Section 1385.03 of the Health and Safety Code is
20amended to read:

P4    1

1385.03.  

(a) All health care service plans shall file with the
2department all required rate information for individual and small
3group health care service plan contracts at least 60 days prior to
4implementing any rate change.

5(b) A plan shall disclose to the department all of the following
6for each individual and small group rate filing:

7(1) Company name and contact information.

8(2) Number of plan contract forms covered by the filing.

9(3) Plan contract form numbers covered by the filing.

10(4) Product type, such as a preferred provider organization or
11health maintenance organization.

12(5) Segment type.

13(6) Type of plan involved, such as for profit or not for profit.

14(7) Whether the products are opened or closed.

15(8) Enrollment in each plan contract and rating form.

16(9) Enrollee months in each plan contract form.

17(10) Annual rate.

18(11) Total earned premiums in each plan contract form.

19(12) Total incurred claims in each plan contract form.

20(13) Average rate change initially requested.

21(14) Review category: initial filing for new product, filing for
22existing product, or resubmission.

23(15) Average rate of change.

24(16) Effective date of rate change.

25(17) Number of subscribers or enrollees affected by each plan
26contract form.

27(18) The plan’s overall annual medical trend factor assumptions
28in each rate filing for all benefits and by aggregate benefit category,
29including hospital inpatient, hospital outpatient, physician services,
30prescription drugs and other ancillary services, laboratory, and
31radiology. A plan may provide aggregated additional data that
32demonstrates or reasonably estimates year-to-year cost changes
33in specific benefit categories in the geographic regions listed in
34Sections 1357.512 and 1399.855. A health plan that exclusively
35contracts with no more than two medical groups in the state to
36provide or arrange for professional medical services for the
37enrollees of the plan shall instead disclose the amount of its actual
38trend experience for the prior contract year by aggregate benefit
39category, using service categories that are, to the maximum extent
40possible, the same or similar to the benefit categories used by other
P5    1plans. For this purpose, benefit categories shall be those specified
2inbegin delete subdivision (e)end deletebegin insert subparagraph (A) of paragraph (1) of subdivision
3(g)end insert
of Section 1385.04.

4(19) The amount of the projected trend attributable to the use
5of services, price inflation, or fees and risk for annual plan contract
6trends by aggregate benefit category, such as hospital inpatient,
7hospital outpatient, physician services, prescription drugs and other
8ancillary services, laboratory, and radiology. A health plan that
9exclusively contracts with no more than two medical groups in the
10state to provide or arrange for professional medical services for
11the enrollees of the plan shall instead disclose the amount of its
12actual trend experience for the prior contract year by aggregate
13service category, using service categories that are, to the maximum
14extent possible, the same or similar to those used by other plans.
15For this purpose, benefit categories shall be those specified in
16begin delete subdivision (e)end deletebegin insert subparagraph (A) of paragraph (1) of subdivision
17(g)end insert
of Section 1385.04.

18(20) A comparison of claims cost and rate of changes over time.

19(21) Any changes in enrollee cost-sharing over the prior year
20associated with the submitted rate filing.

21(22) Any changes in enrollee benefits over the prior year
22associated with the submitted rate filing.

23(23) The certification described in subdivision (b) of Section
241385.06.

25(24) Any changes in administrative costs.

26(25) Any other information required for rate review under
27PPACA.

28(c) A health care service plan subject to subdivision (a) shall
29also disclose the following aggregate data for all rate filings
30submitted under this section in the individual and small group
31health plan markets:

32(1) Number and percentage of rate filings reviewed by the
33following:

34(A) Plan year.

35(B) Segment type.

36(C) Product type.

37(D) Number of subscribers.

38(E) Number of covered lives affected.

39(2) The plan’s average rate change by the following categories:

40(A) Plan year.

P6    1(B) Segment type.

2(C) Product type.

3(3) Any cost containment and quality improvement efforts since
4the plan’s last rate filing for the same category of health benefit
5plan. To the extent possible, the plan shall describe any significant
6new health care cost containment and quality improvement efforts
7and provide an estimate of potential savings together with an
8estimated cost or savings for the projection period.

9(d) The department may require all health care service plans to
10submit all rate filings to the National Association of Insurance
11Commissioners’ System for Electronic Rate and Form Filing
12(SERFF). Submission of the required rate filings to SERFF shall
13be deemed to be filing with the department for purposes of
14compliance with this section.

15(e) A plan shall submit any other information required under
16PPACA. A plan shall also submit any other information required
17pursuant to any regulation adopted by the department to comply
18with this article.

19

SEC. 3.  

Section 1385.04 of the Health and Safety Code is
20amended to read:

21

1385.04.  

(a) For large group health care service plan contracts,
22all health plans shall file with the department at least 60 days prior
23to implementing any rate change all required rate information for
24begin insert unreasonableend insert ratebegin delete increases that exceed 5 percent of the prior
25year’s rateend delete
begin insert increasesend insert. This filing shall be concurrent with the
26written notice described in subdivision (a) of Section 1374.21.

27(b) For large group rate filings, health plans shall submit all
28information that is required by PPACA. A plan shall also submit
29any other information required pursuant to any regulation adopted
30by the department to comply with this article.

31(c) A health care service planbegin delete subject to subdivision (a)end delete shall
32disclosebegin delete for each rate filing that exceeds 5 percent of the prior
33year’s rate for that group all of the following:end delete
begin insert the following
34aggregate information for rates in the large group market:end insert

35(1) Company name and contact information.

36(2) Number of planbegin delete contract formsend deletebegin insert contractsend insert covered by the
37filing.

begin delete

38(3) Plan contract form numbers covered by the filing.

end delete
begin delete

39(4)

end delete

P7    1begin insert(3)end insert Product type, such as a preferred provider organization or
2health maintenance organization.

begin delete

3(5)

end delete

4begin insert(4)end insert Segment type.

begin delete

5(6)

end delete

6begin insert(5)end insert Type of plan involved, such as for profit or not for profit.

begin delete

7(7)

end delete

8begin insert(6)end insert Whether the products are opened or closed.

begin delete

9(8) Enrollment in each plan contract and rating form.

end delete
begin delete

10(9) Enrollee months in each plan contract form.

end delete
begin delete

11(10) Annual rate.

end delete
begin delete

12(11)

end delete

13begin insert(7)end insert Total earned premiumsbegin delete in each plan contract formend delete.

begin delete

14(12)

end delete

15begin insert(8)end insert Total incurred claimsbegin delete in each plan contract formend delete.

begin delete

16(13) Average rate change initially requested.

end delete
begin delete

17(14) Review category: initial filing for new product, filing for
18existing product, or resubmission.

end delete
begin delete

19(15) Average rate of change.

end delete
begin delete

20(16) Effective date of rate change.

end delete
begin insert

21(9) Average rate of increase for the rate year.

end insert
begin delete

22(17)

end delete

23begin insert(10)end insert Number of subscribers or enrollees affectedbegin delete by each plan
24contract formend delete
.

begin insert

25(d) A health care service plan shall disclose the methodology
26or methodologies used to develop the base rate or rates and all of
27the following information:

end insert
begin insert

28(1) The base rate for the groups in the large group market. If
29more than one base rate is used by the plan, all of the base rates
30shall be disclosed, as well as the types of groups to which different
31base rates are applied.

end insert
begin insert

32(2) All factors used to adjust the base rate or rates including,
33but not limited to, the following:

end insert
begin insert

34(A) Industry or occupation, if either is applicable.

end insert
begin insert

35(B) Age.

end insert
begin insert

36(C) Health status, medical condition, or claims experience.

end insert
begin insert

37(D) Tobacco use, if applicable.

end insert
begin insert

38(E) Alcohol use, if applicable.

end insert
begin insert

P8    1(F) Any other factor used to adjust the base rate or rates, with
2a description of the factor and an objective and scientifically valid
3explanation, based on up-to-date statistical or actuarial data.

end insert
begin insert

4(3) Any variation in rate or rates based on geographic regions,
5along with a description of the geographic regions used by the
6plan. The description shall specify the applicable counties or, if
7counties are split, the ZIP Codes, in each region.

end insert
begin insert

8(4) Any variation due to benefits covered in addition to basic
9health care services as defined in subdivision (b) of Section 1345,
10as well as a description of the benefits covered, such as
11prescription drugs, durable medical equipment, or infertility
12treatment, using the format specified in paragraph (3) of
13subdivision (b) of Section 1363.

end insert
begin insert

14(5) Variations due to differences in benefit design arising from
15differences in cost sharing, including copays, coinsurance,
16deductibles, annual out-of-pocket limitations, or any other cost
17sharing, using the format specified in paragraph (3) of subdivision
18(b) of Section 1363.

end insert
begin insert

19(6) The actuarial value of products, including the number of
20enrolled lives by the actuarial value tiers specified in paragraph
21(2) of subdivision (e).

end insert
begin insert

22(7) Any other factors affecting the base rate not described here.

end insert
begin insert

23(8) The amount or proportion that each factor contributes to
24the base rate. If the proportions do not add up to 100 percent, an
25explanation of how the remaining portion of the base rate or rates
26are derived.

end insert
begin insert

27(9) If a plan uses modified community rating for any segment
28of the large group, such as new business or groups of a certain
29size, the plan shall describe the modifications to community rating
30and the market segments to which modified community rating
31applies.

end insert
begin insert

32(10) Any change from the prior year in methodology, factors,
33or assumptions used to develop a base rate or rates.

end insert
begin insert

34(e) (1) The plan shall also provide the following aggregate
35information regarding rate changes for the large group market:

end insert
begin insert

36(A) Average rate change during the prior year.

end insert
begin insert

37(B) Average monthly rate implemented during the prior year.

end insert
begin insert

38(C) Average rate change initially requested.

end insert
begin insert

39(D) A comparison of claims cost and rate of changes over time.

end insert
begin insert

P9    1(E) Any changes in enrollee cost sharing over the prior year,
2including the range of changes and the number and proportion of
3enrollees affected.

end insert
begin insert

4(F) Any changes in enrollee benefits over the prior year,
5including the number and proportion of enrollees affected.

end insert
begin insert

6(G) Any changes in administrative costs.

end insert
begin insert

7(2) The information described in paragraph (1) shall be
8categorized by family composition, such as single, single plus one,
9and family, or any other family composition as the plan may use.
10If the plan uses an alternative family composition, it shall provide
11a description of that family composition.

end insert
begin insert

12(3) The information described in paragraph (1) shall also be
13categorized by actuarial value tier, using the following actuarial
14value tiers:

end insert
begin insert

15(A) 90 to 100 percent.

end insert
begin insert

16(B) 80 to 89 percent.

end insert
begin insert

17(C) 70 to 79 percent.

end insert
begin insert

18(D) 60 to 69 percent.

end insert
begin insert

19(E) Under 60 percent, if any.

end insert
begin insert

20(f) The plan shall provide the following aggregate information
21regarding trend factors used to develop the change in rate:

end insert
begin delete

22(18)  The

end delete

23begin insert(1)end insertbegin insertend insertbegin insert(A)end insertbegin insertend insertbegin insertTheend insert plan’s overall annual medical trend factor
24assumptionsbegin delete in each rate filingend delete for all benefits and by aggregate
25benefit category, including hospital inpatient, hospital outpatient,
26physician services, prescription drugs and other ancillary services,
27laboratory, and radiology. begin delete A plan may provide aggregated
28additional data that demonstrates or reasonably estimates
29year-to-year cost changes in specific benefit categories in major
30geographic regions of the state if rates vary by region. If rates vary
31by region, the plan shall provide a description of the regions used
32by the plan. Aend delete

33begin insert(B)end insertbegin insertend insertbegin insertAend insert health plan that exclusively contracts with no more than
34two medical groups in the state to provide or arrange for
35professional medical services for the enrollees of the plan shall
36instead disclose the amount of its actual trend experience for the
37prior contract year by aggregate benefit category, using service
38categories that are, to the maximum extent possible, the same or
39similar to the benefit categories used by other plans. For this
P10   1purpose, benefit categories shall be those specified inbegin delete subdivision
2(e)end delete
begin insert subparagraph (A) of paragraph (1) of subdivision (g)end insert.

begin delete

3 (19)

end delete

4begin insert(2)end insertbegin insert(A)end insertbegin insertend insert The amount of the projected trend attributable to the
5use of services, price inflation, or fees and risk for annual plan
6contract trends by aggregate benefit category, such as hospital
7inpatient, hospital outpatient, physician services, prescription drugs
8and other ancillary services, laboratory, and radiology.begin delete Aend delete

9begin insert(B)end insertbegin insertend insertbegin insertAend insert health plan that exclusively contracts with no more than
10two medical groups in the state to provide or arrange for
11professional medical services for the enrollees of the plan shall
12instead disclose the amount of its actual trend experience for the
13prior contract year by aggregate service category, using service
14categories that are, to the maximum extent possible, the same or
15similar to those used by other plans. For this purpose, benefit
16categories shall be those specified inbegin delete subdivision (e)end deletebegin insert subparagraph
17(A) of paragraph (1) of subdivision (g)end insert
.

begin delete

18(20) A comparison of claims cost and rate of changes over time.

19(21) Any changes in enrollee cost-sharing over the prior year
20associated with the submitted rate filing.

21(22) Any changes in enrollee benefits over the prior year
22associated with the submitted rate filing.

23(23) The certification described in subdivision (b) of Section
241385.06.

25(24) Any changes in administrative costs.

26(25) Any other information required for rate review under
27PPACA.

28(d) Except as provided in subdivision (e), a health care service
29plan shall annually disclose the following aggregate data for all
30products sold in the large group market:

31(1) Plan year.

32(2) Segment type.

33(3) Product type.

34(4) Number of subscribers.

35(5) Number of covered lives affected.

36(6) The plan’s average rate change by the following:

37(A) Plan year.

38(B) Segment type.

39(C) Product type.

P11   1(D) Benefit category, including, but not limited to, hospital,
2medical, ancillary, and other benefit categories reported publicly
3for individual and small employer rate filings.

4(E) Trend attributable to cost and trend attributable to utilization
5 by benefit category.

6(e) A

end delete

7begin insert(g)end insertbegin insertend insertbegin insertIn addition to the other information required under this
8section, aend insert
health care service plan that is unable to provide
9information on ratebegin delete increasesend deletebegin insert changeend insert by benefit categories, as
10defined in subdivision (d) of Section 1385.07, including, but not
11limited to, hospital, outpatient medical, and mental health, or
12information on trend attributable to cost and trend attributable to
13utilization by benefit category pursuant to subdivision (d)begin insert of Section
141385.07end insert
, shall annually disclose all of the following aggregate data
15for its large group health care service plan contracts:

16(1) (A) The plan’s overall aggregate data demonstrating or
17reasonably estimating year-to-year costbegin delete increasesend deletebegin insert changeend insert in the
18aggregate for large group rates by major service category. The
19plan shall distinguish between thebegin delete increaseend deletebegin insert changeend insert ascribed to the
20volume of services provided and the increase ascribed to the cost
21of services provided for those assumptions that shall include the
22following categories:

23(i) Hospital inpatient.

24(ii) Outpatient visits.

25(iii) Outpatient surgical or other procedures.

26(iv) Professional medical.

27(v) Mental health.

28(vi) Substance abuse.

29(vii) Skilled nursing facility, if covered.

30(viii) Prescription drugs.

31(ix) Other ancillary services.

32(x) Laboratory.

33(xi) Radiology or imaging.

34(B) A plan may providebegin delete aggregatedend delete additionalbegin insert aggregatedend insert data
35thatbegin delete demonstrateend deletebegin insert demonstratesend insert or reasonablybegin delete estimateend deletebegin insert estimatesend insert
36 year-to-year costbegin delete increasesend deletebegin insert changeend insert in each of the specific service
37categories specified in subparagraph (A) for each of the major
38geographic regions of the state if any.

39(2) The amount of projected trend attributable to the following
40categories:

P12   1(A) Use of services by service and disease category.

2(B) Capital investment.

3(C) Community benefit expenditures, excluding bad debt and
4valued at cost.

5(3) The amount and proportion of costs attributed to contracting
6medical groups that would not have been attributable as medical
7losses if incurred by the health plan rather than the medical group.

begin delete

8(f)

end delete

9begin insert(h)end insert (1) A health care service plan shall annually provide claims
10data at no charge to a large group purchaser if the large group
11purchaser requests the information. The health care service plan
12shall provide claims data that a qualified statistician has determined
13begin deleteare end deletebegin insertisend insertbegin insert end insertdeidentified so that the claims databegin delete doend deletebegin insert doesend insert not identify or
14begin delete do notend delete provide a reasonable basis from which to identify an
15individual.

16(2) Information provided to a large group purchaser under this
17subdivision is not subject to Section 1385.07.

18(3) (A) If claims databegin delete areend deletebegin insert isend insert not available, the plan shall provide,
19at no charge to the purchaser, all of the following:

20(i) Deidentified data sufficient for the large group purchaser to
21calculate the cost of obtaining similar services from other health
22plans and evaluate cost-effectiveness by service and disease
23category.

24(ii) Deidentified patient-level data on demographics, prescribing,
25encounters, inpatient services, outpatient services, and any other
26data as may be required of the health plan to comply with risk
27adjustment, reinsurance, or risk corridors pursuant to the federal
28Patient Protection and Affordable Care Act (Public Law 111-148),
29as amended by the federal Health Care and Education
30Reconciliation Act of 2010 (Public Law 111-152), and any rules,
31regulations, or guidance issuedbegin delete thereunderend deletebegin insert pursuant to these actsend insert.

32(iii) Deidentified patient-level data used to experience rate the
33large group, including diagnostic and procedure coding and costs
34assigned to each service.

35(B) The health care service plan shall obtain a formal
36determination from a qualified statistician that the data provided
37pursuant to this paragraphbegin delete haveend deletebegin insert hasend insert been deidentified so that the
38databegin delete doend deletebegin insert doesend insert not identify orbegin delete do notend delete provide a reasonable basis from
39which to identify an individual. The statistician shall certify the
P13   1formal determination in writing and shall, upon request, provide
2the protocol used for deidentification to the department.

3(4) Data provided pursuant to this subdivision shall only be
4provided to a large group purchaser that meets both of the
5following conditions:

6(A) begin deleteIs end deletebegin insertThe large group purchaser is end insertable to demonstrate its
7ability to comply with state and federal privacy laws.

8(B) begin deleteIs a end deletebegin insertThe end insertlarge group purchaserbegin delete thatend delete is either an employer
9with an enrollment of greater than 1,000 covered lives or a
10multiemployer trust.

begin delete

11(g)

end delete

12begin insert(i)end insert The department may require all health care service plans to
13submit all rate filings to the National Association of Insurance
14Commissioners’ System for Electronic Rate and Form Filing
15(SERFF). Submission of the required rate filings to SERFF shall
16be deemed to be filing with the department for purposes of
17compliance with this section.

18

SEC. 4.  

Section 791.27 of the Insurance Code is amended to
19read:

20

791.27.  

(a) A disability insurer that provides coverage for
21hospital, medical, or surgical expenses shall not release any
22information to an employer that would directly or indirectly
23indicate to the employer that an employee is receiving or has
24received services from a health care provider covered by the plan
25unless authorized to do so by the employee. An insurer that has,
26pursuant to an agreement, assumed the responsibility to pay
27compensation pursuant to Article 3 (commencing with Section
283750) of Chapter 4 of Part 1 of Division 4 of the Labor Code, shall
29not be considered an employer for the purposes of this section.

30(b) Nothing in this section prohibits a disability insurer from
31releasing relevant information described in this section for the
32purposes set forth in Chapter 12 (commencing with Section 1871)
33of Part 2 of Division 1.

34(c)  Nothing in this section prohibits a health insurer from
35releasing relevant information described in this section for the
36purposes set forth in subdivisionbegin delete (f)end deletebegin insert (h)end insert of Section 10181.4.

37

SEC. 5.  

Section 10181.4 of the Insurance Code is amended to
38read:

39

10181.4.  

(a) For large group health insurance policies, all
40health insurers shall file with the department at least 60 days prior
P14   1to implementing any rate change all required rate information for
2begin insert unreasonableend insert ratebegin delete increases that exceed 5 percent of the prior
3year’s rateend delete
begin insert increasesend insert. This filing shall be concurrent with the
4written notice described in Section 10199.1.

5(b) For large group rate filings, health insurers shall submit all
6information that is required by PPACA. A health insurer shall also
7submit any other information required pursuant to any regulation
8adopted by the department to comply with this article.

9(c) A health insurer begin delete subject to subdivision (a)end delete shall disclosebegin delete for
10each rate filing that exceeds 5 percent of the prior year’s rate for
11that group all of the following:end delete
begin insert the following aggregate information
12for rates in the large group market:end insert

13(1) Company name and contact information.

14(2) Number ofbegin delete policy formsend deletebegin insert policiesend insert covered by the filing.

begin delete

15(3) Policy form numbers covered by the filing.

end delete
begin delete

16(4)

end delete

17begin insert(3)end insert Product type, such as indemnity or preferred provider
18organization.

begin delete

19(5)

end delete

20begin insert(4)end insert Segment type.

begin delete

21(6)

end delete

22begin insert(5)end insert Type of insurer involved, such as for profit or not for profit.

begin delete

23(7)

end delete

24begin insert(6)end insert Whether the products are opened or closed.

begin delete

25(8) Enrollment in each policy and rating form.

end delete
begin delete

26(9) Insured months in each policy form.

end delete
begin delete

27(10) Annual rate.

end delete
begin delete

28(11)

end delete

29begin insert(7)end insert Total earned premiumsbegin delete in each policy formend delete.

begin delete

30(12)

end delete

31begin insert(8)end insert Total incurred claimsbegin delete in each policy formend delete.

begin delete

32(13) Average rate change initially requested.

33(14) Review category: initial filing for new product, filing for
34existing product, or resubmission.

35(15) Average rate of change.

36(16) Effective date of rate change.

end delete
begin insert

37(9) Average rate of increase for the rate year.

end insert
begin delete

38(17)

end delete

39begin insert(10)end insert Number of policyholders or insureds affected by each
40policy form.

begin insert

P15   1(d) A health insurer shall disclose the methodology or
2methodologies used to develop the base rate or rates and all of
3the following information:

end insert
begin insert

4(1) The base rate for the groups in the large group market. If
5more than one base rate is used by the insurer, all of the base rates
6shall be disclosed, as well as the types of groups to which different
7base rates are applied.

end insert
begin insert

8(2) All factors used to adjust the base rate or rates including,
9but not limited to, the following:

end insert
begin insert

10(A) Industry or occupation, if either is applicable.

end insert
begin insert

11(B) Age.

end insert
begin insert

12(C) Health status, medical condition, or claims experience.

end insert
begin insert

13(D) Tobacco use, if applicable.

end insert
begin insert

14(E) Alcohol use, if applicable.

end insert
begin insert

15(F) Any other factor used to adjust the base rate or rates, with
16a description of the factor and an objective and scientifically valid
17explanation, based on up-to-date statistical or actuarial data.

end insert
begin insert

18(3) Any variation in rate or rates based on geographic regions,
19along with a description of the geographic regions used by the
20insurer. The description shall specify the applicable counties or,
21if counties are split, the ZIP Codes, in each region.

end insert
begin insert

22(4) Any variation due to benefits covered in addition to basic
23health care services, as well as a description of the benefits
24covered, such as prescription drugs, durable medical equipment,
25or infertility treatment, using the format specified in paragraph
26(2) of subdivision (a) of Section 10603.

end insert
begin insert

27(5) Variations due to differences in benefit design arising from
28differences in cost sharing, including copays, coinsurance,
29deductibles, annual out-of-pocket limitations, or any other cost
30sharing, using the format specified in paragraph (2) of subdivision
31(a) of Section 10603.

end insert
begin insert

32(6) The actuarial value of products, including the number of
33enrolled lives by the actuarial value tiers specified in paragraph
34(3) of subdivision (e).

end insert
begin insert

35(7) Any other factors affecting the base rate not described here.

end insert
begin insert

36(8) The amount or proportion that each factor contributes to
37the base rate. If the proportions do not add up to 100 percent, an
38explanation of how the remaining portion of the base rate or rates
39are derived.

end insert
begin insert

P16   1(9) If an insurer uses modified community rating for any segment
2of the large group, such as new business or groups of a certain
3size, the insurer shall describe the modifications to community
4rating and the market segments to which modified community
5rating applies.

end insert
begin insert

6(10) Any change from the prior year in methodology, factors,
7or assumptions used to develop a base rate or rates.

end insert
begin insert

8(e) (1) The insurer shall also provide the following aggregate
9information regarding rate changes for the large group market:

end insert
begin insert

10(A) Average rate change during the prior year.

end insert
begin insert

11(B) Average monthly rate implemented during the prior year.

end insert
begin insert

12(C) Average rate change initially requested.

end insert
begin insert

13(D) A comparison of claims cost and rate of changes over time.

end insert
begin insert

14(E) Any changes in insured cost sharing over the prior year,
15including the range of changes and the number and proportion of
16insureds affected.

end insert
begin insert

17(F) Any changes in insured benefits over the prior year,
18including the number and proportion of insureds affected.

end insert
begin insert

19(G) Any changes in administrative costs.

end insert
begin insert

20(2) The information described in paragraph (1) shall be
21categorized by family composition, such as single, single plus one,
22and family, or any other family composition as the insurer may
23use. If the insurer uses an alternative family composition, it shall
24provide a description of that family composition.

end insert
begin insert

25(3) The information described in paragraph (1) shall also be
26categorized by actuarial value tier, using the following actuarial
27value tiers:

end insert
begin insert

28(A) 90 to 100 percent.

end insert
begin insert

29(B) 80 to 89 percent.

end insert
begin insert

30(C) 70 to 79 percent.

end insert
begin insert

31(D) 60 to 69 percent.

end insert
begin insert

32(E) Under 60 percent, if any.

end insert
begin insert

33(f) The insurer shall provide the following aggregate information
34regarding trend factors used to develop the change in rate:

end insert
begin delete

35(18)

end delete

36begin insert(1)end insertbegin insert(A)end insertbegin insertend insert The insurer’s overall annual medical trend factor
37assumptions in each rate filing for all benefits and by aggregate
38benefit category, including hospital inpatient, hospital outpatient,
39physician services, prescription drugs and other ancillary services,
40laboratory, and radiology. begin delete An insurer may provide aggregated
P17   1additional data that demonstrates or reasonably estimates
2year-to-year cost changes in specific benefit categories in major
3geographic regions of the state if rates vary by region. If rates vary
4by region, the insurer shall provide a description of the regions
5 used by the insurer.end delete

begin insert

6(B) An insurer that exclusively contracts with no more than two
7medical groups in the state to provide or arrange for professional
8medical services for its insureds shall instead disclose the amount
9of its actual trend experience for the prior contract year by
10aggregate benefit category, using service categories that are, to
11the maximum extent possible, the same or similar to the benefit
12categories used by other plans. For this purpose, benefit categories
13shall be those specified in subparagraph (A) of paragraph (1) of
14subdivision (g).

end insert
begin delete

15(19)

end delete

16begin insert(2)end insertbegin insert(A)end insertbegin insertend insert The amount of the projected trend attributable to the
17use of services, price inflation, or fees and risk for annual policy
18trends by aggregate benefit category, such as hospital inpatient,
19hospital outpatient, physician services, prescription drugs and other
20ancillary services, laboratory, and radiology.

begin insert

21(B) A health insurer that exclusively contracts with no more
22than two medical groups in the state to provide or arrange for
23professional medical services for its insureds shall instead disclose
24the amount of its actual trend experience for the prior contract
25year by aggregate service category, using service categories that
26are, to the maximum extent possible, the same or similar to those
27used by other plans. For this purpose, benefit categories shall be
28those specified in subparagraph (A) of paragraph (1) of subdivision
29(g).

end insert
begin delete

30(20) A comparison of claims cost and rate of changes over time.

31(21) Any changes in insured cost-sharing over the prior year
32associated with the submitted rate filing.

33(22) Any changes in insured benefits over the prior year
34associated with the submitted rate filing.

35(23) The certification described in subdivision (b) of Section
3610181.6.

37(24) Any changes in administrative costs.

38(25) Any other information required for rate review under
39PPACA.

P18   1(d) Except as provided in subdivision (e), a health insurer shall
2annually disclose the following aggregate data for all products
3sold in the large group market:

4(1) Policy year.

5(2) Segment type.

6(3) Product type.

7(4) Number of policyholders.

8(5) Number of covered lives affected.

9(6) The insurer’s average rate change by the following:

10(A) Policy year.

11(B) Segment type.

12(C) Product type.

13(D) Benefit category, including, but not limited to, hospital,
14medical, ancillary, and other benefit categories reported publicly
15for individual and small employer rate filings.

16(E) Trend attributable to cost and trend attributable to utilization
17by benefit category.

18(e) A

end delete

19begin insert(g)end insertbegin insertend insertbegin insertIn addition to the other information required under this
20section, aend insert
health insurer that is unable to provide information on
21ratebegin delete increasesend deletebegin insert changeend insert by benefit categories, as defined in
22subdivision (d) of Sectionbegin delete 10181.7end deletebegin insert 10181.7,end insert including, but not
23limited to, hospital, outpatient medical, and mental health, or
24information on trend attributable to cost and trend attributable to
25utilization by benefit category pursuant to subdivisionbegin delete (d),end deletebegin insert (d) of
26Section 10181.7,end insert
shall annually disclose all of the following
27aggregate data for its large group health insurance policies:

28(1) (A) The insurer’s overall aggregate data demonstrating or
29reasonably estimating year-to-year costbegin delete increasesend deletebegin insert changeend insert in the
30aggregate for large group rates by major service category. The
31insurer shall distinguish between thebegin delete increaseend deletebegin insert changeend insert ascribed to
32the volume of services provided and the increase ascribed to the
33cost of services provided for those assumptions that shall include
34the following categories:

35(i) Hospital inpatient.

36(ii) Outpatient visits.

37(iii) Outpatient surgical or other procedures.

38(iv) Professional medical.

39(v) Mental health.

40(vi) Substance abuse.

P19   1(vii) Skilled nursing facility, if covered.

2(viii) Prescription drugs.

3(ix) Other ancillary services.

4(x) Laboratory.

5(xi) Radiology or imaging.

6(B) An insurer may providebegin delete aggregatedend delete additionalbegin insert aggregatedend insert
7 data thatbegin delete demonstrateend deletebegin insert demonstratesend insert or reasonablybegin delete estimateend delete
8begin insert estimatesend insert year-to-year costbegin delete increasesend deletebegin insert changeend insert in each of the specific
9service categories specified in subparagraph (A) for each of the
10major geographic regions of the state if any.

11(2) The amount of projected trend attributable to the following
12categories:

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

14(B) Capital investment.

15(C) Community benefit expenditures, excluding bad debt and
16valued at cost.

17(3) The amount and proportion of costs attributed to contracting
18medical groups that would not have been attributable as medical
19losses if incurred by the health insurer rather than the medical
20group.

begin delete

21(f)

end delete

22begin insert(h)end insert (1) A health insurer shall annually provide claims data at
23no charge to a large group purchaser if the large group purchaser
24requests the information. The health insurer shall provide claims
25data that a qualified statistician has determinedbegin delete areend deletebegin insert isend insert deidentified
26so that the claims databegin delete doend deletebegin insert doesend insert not identify orbegin delete do notend delete provide a
27 reasonable basis from which to identify an individual.

28(2) Information provided to a large group purchaser under this
29subdivision is not subject to Section 10181.7.

30(3) (A) If claims databegin delete areend deletebegin insert isend insert not available, the insurer shall
31provide, at no charge to the purchaser, all of the following:

32(i) Deidentified data sufficient for the large group purchaser to
33calculate the cost of obtaining similar services from other health
34begin delete insurersend deletebegin insert insurance policiesend insert and plans and evaluate
35cost-effectiveness by service and disease category.

36(ii) Deidentified patient-level data on demographics, prescribing,
37encounters, inpatient services, outpatient services, and any other
38data as may be required of the health insurer to comply with risk
39adjustment, reinsurance, or risk corridors pursuant to the federal
40Patient Protection and Affordable Care Act (Public Law 111-148),
P20   1as amended by the federal Health Care and Education
2Reconciliation Act of 2010 (Public Law 111-152), and any rules,
3regulations, or guidance issuedbegin delete thereunderend deletebegin insert pursuant to these actsend insert.

4(iii) Deidentified patient-level data used to experience rate the
5large group, including diagnostic and procedure coding and costs
6assigned to each service.

7(B) The health insurer shall obtain a formal determination from
8a qualified statistician that the data provided pursuant to this
9paragraphbegin delete haveend deletebegin insert hasend insert been deidentified so that the databegin delete doend deletebegin insert doesend insert not
10identify orbegin delete do notend delete provide a reasonable basis from which to identify
11an individual. The statistician shall certify the formal determination
12in writing and shall, upon request, provide the protocol used for
13deidentification to the department.

14(4) Data provided pursuant to this subdivision shall only be
15provided to a large group purchaser that meets both of the
16following conditions:

17(A) begin deleteIs end deletebegin insertThe large group purchaser is end insertable to demonstrate its
18ability to comply with state and federal privacy laws.

19(B) begin deleteIs a end deletebegin insertThe end insertlarge group purchaserbegin delete thatend delete is either an employer
20with an enrollment of greater than 1,000 covered lives or a
21multiemployer trust.

begin delete

22(g)

end delete

23begin insert(i)end insert The department may require all health insurers to submit all
24rate filings to the National Association of Insurance
25Commissioners’ System for Electronic Rate and Form Filing
26 (SERFF). Submission of the required rate filings to SERFF shall
27be deemed to be filing with the department for purposes of
28compliance with this section.

29

SEC. 6.  

No reimbursement is required by this act pursuant to
30Section 6 of Article XIII B of the California Constitution because
31the only costs that may be incurred by a local agency or school
32district will be incurred because this act creates a new crime or
33infraction, eliminates a crime or infraction, or changes the penalty
34for a crime or infraction, within the meaning of Section 17556 of
35the Government Code, or changes the definition of a crime within
36the meaning of Section 6 of Article XIII B of the California
37Constitution.



O

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