BILL NUMBER: AB 1434	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member McCarty

                        FEBRUARY 27, 2015

   An act to add Section 1396.6 to, and to repeal Section 1396.5 of,
the Health and Safety Code, and to amend Section 742 of the Insurance
Code, relating to health insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1434, as introduced, McCarty. Health insurance: prohibition on
health insurance sales: health care service plans.
    Existing law, the Knox-Keene Health Care Service Plan Act of 1975
(Knox-Keene), 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. Any person who transacts
disability insurance without a valid and unrevoked certificate of
authority from the Insurance Commissioner is guilty of a misdemeanor,
except as specified. Existing law provides that a nonprofit hospital
corporation that substantially indemnified subscribers and
enrollees, was operating in 1965 under certain provisions of the
Insurance Code, and that is regulated under Knox-Keene shall enjoy
the privileges under the act that would have been available to it had
it been registered under the Knox-Mills Health Plan Act and had
applied for a license under Knox-Keene in 1976.
   This bill would repeal the latter provision. The bill would
further prohibit an entity licensed under Knox-Keene from offering,
marketing, or selling health insurance, whether issued on a group or
individual basis, to an existing or new customer. By expanding the
scope of an existing crime, the bill would impose a state-mandated
local program.
   Existing law provides that any person or other entity that
provides coverage in this state for medical, surgical, chiropractic,
physical therapy, speech pathology, audiology, professional mental
health, dental, hospital, or optometric services, whether this
coverage is by direct payment, reimbursement, or otherwise, and that
enters into an arrangement or contract with, or underwrites, a
preferred provider organization or specified arrangement is subject
to the jurisdiction of the Department of Insurance. Existing law
provides that a person or entity subject to regulation under
Knox-Keene is not subject to the jurisdiction of the department.
   This bill would delete the provision that a person or entity
subject to regulation under Knox-Keene is not subject to the
jurisdiction of the department.
   Existing law establishes the Medi-Cal program, administered by the
State Department of Health Care Services, under which health care
services are provided to qualified, low-income persons. The Medi-Cal
program is, in part, governed and funded by federal Medicaid program
provisions. Under existing law, one of the methods by which Medi-Cal
services are provided is pursuant to contracts with various types of
managed care plans.
   This bill would require the Department of Finance, in consultation
with the State Department of Health Care Services, as a part of the
annual budget process, to determine if implementation of the bill
results in increased revenues under Section 28 of Article XIII of the
California Constitution, and the amount of the increase, if any. The
bill would declare the intent of the Legislature to appropriate an
equivalent amount, if any, to the State Department of Health Care
Services in the annual budget act for the purpose of increasing
Medi-Cal provider reimbursement rates.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 1396.5 of the Health and Safety Code is
repealed. 
   1396.5.  A nonprofit hospital corporation which substantially
indemnified subscribers and enrollees and was operating in 1965 under
Chapter 11A (commencing with Section 11490) of Part 2 of Division 2
of the Insurance Code and which is regulated under the Knox-Keene
Health Care Service Plan Act shall enjoy the privileges under the act
which would have been available to it had it been registered under
the Knox-Mills Health Plan Act and applied for a license under the
Knox-Keene Health Care Service Plan Act in 1976. 
  SEC. 2.  Section 1396.6 is added to the Health and Safety Code, to
read:
   1396.6.  An entity licensed under this chapter shall not offer,
market, or sell health insurance, as defined in subdivision (b) of
Section 106 of the Insurance Code, including, but not limited to, a
preferred provider organization or arrangement described in Section
10133 of the Insurance Code, whether issued on a group or individual
basis, to an existing or new customer.
  SEC. 3.  Section 742 of the Insurance Code is amended to read:
   742.   (a)     Any
  A  person or other entity that provides coverage
in this state for medical, surgical, chiropractic, physical therapy,
speech pathology, audiology, professional mental health, dental,
hospital, or optometric services, whether this coverage is by direct
payment, reimbursement, or otherwise, and that enters into an
arrangement or contract with, or underwrites, a preferred provider
organization or arrangement subject to Section 10133 is subject to
the jurisdiction of the Department of Insurance. 
   (b) Any person or entity subject to regulation under Chapter 2.2
(commencing with Section 1340) of Division 2 of the Health and Safety
Code shall not be subject to this section. 
  SEC. 4.  As a part of the annual budget process, the Department of
Finance, in consultation with the State Department of Health Care
Services, shall determine if the implementation of this act has
resulted in increased revenues under Section 28 of Article XIII of
the California Constitution, and the amount of the increase, if any.
It is the intent of the Legislature to appropriate an amount equal to
the amount of the increased revenue, if any, to the State Department
of Health Care Services, for the purpose of increasing provider
reimbursement rates under the Medi-Cal program.
  SEC. 5.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.