Senate Bill No. 388

Introduced by Senator Mitchell

February 25, 2015

An act to amend Section 1363 of the Health and Safety Code, and to amend Section 10603 of the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

SB 388, as introduced, Mitchell. Solicitation and enrollment.

Existing law, the federal Patient Protection and Affordable Care Act (PPACA), requires a group health plan and a health insurance issuer offering group or individual health insurance coverage to provide a written summary of benefits and coverage (SBC) and requires that the SBC be provided in a culturally and linguistically appropriate manner, as specified.

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 provides for the regulation of health insurers by the Department of Insurance.

Existing law requires a plan or insurer to provide certain disclosures of the benefits, services, and terms of a contract or policy. Existing law requires that contracts and policies subject to PPACA satisfy certain of those disclosure requirements by providing the SBC required under PPACA. Existing law requires the departments to adopt regulations establishing standards and requirements to provide enrollees and insureds with access to language assistance, including requirements for the translation of vital documents, as specified.

This bill would provide that the SBC constitutes a vital document and would require a plan or insurer to comply with requirements applicable to those documents. Because a willful violation of those 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:

SECTION 1.  

Section 1363 of the Health and Safety Code is
amended to read:

1363.  

(a) The director shall require the use by each plan of
disclosure forms or materials containing information regarding
the benefits, services, and terms of the plan contract as the director
may require, so as to afford the public, subscribers, and enrollees
with a full and fair disclosure of the provisions of the plan in
readily understood language and in a clearly organized manner.
The director may require that the materials be presented in a
reasonably uniform manner so as to facilitate comparisons between
plan contracts of the same or other types of plans. Nothing
contained in this chapter shall preclude the director from permitting
the disclosure form to be included with the evidence of coverage
or plan contract.

The disclosure form shall provide for at least the following
information, in concise and specific terms, relative to the plan,
together with additional information as may be required by the
director, in connection with the plan or plan contract:

(1) The principal benefits and coverage of the plan, including
coverage for acute care and subacute care.

(2) The exceptions, reductions, and limitations that apply to the
plan.

(3) The full premium cost of the plan.

(4) Any copayment, coinsurance, or deductible requirements
that may be incurred by the member or the member’s family in
obtaining coverage under the plan.

(5) The terms under which the plan may be renewed by the plan
member, including any reservation by the plan of any right to
change premiums.

(6) A statement that the disclosure form is a summary only, and
that the plan contract itself should be consulted to determine
governing contractual provisions. The first page of the disclosure
form shall contain a notice that conforms with all of the following
conditions:

(A) (i) States that the evidence of coverage discloses the terms
and conditions of coverage.

(ii) States, with respect to individual plan contracts, small group
plan contracts, and any other group plan contracts for which health
care services are not negotiated, that the applicant has a right to
view the evidence of coverage prior to enrollment, and, if the
evidence of coverage is not combined with the disclosure form,
the notice shall specify where the evidence of coverage can be
obtained prior to enrollment.

(B) Includes a statement that the disclosure and the evidence of
coverage should be read completely and carefully and that
individuals with special health care needs should read carefully
those sections that apply to them.

(C) Includes the plan’s telephone number or numbers that may
be used by an applicant to receive additional information about
the benefits of the plan or a statement where the telephone number
or numbers are located in the disclosure form.

(D) For individual contracts, and small group plan contracts as
defined in Article 3.1 (commencing with Section 1357), the
disclosure form shall state where the health plan benefits and
coverage matrix is located.

(E) Is printed in type no smaller than that used for the remainder
of the disclosure form and is displayed prominently on the page.

(7) A statement as to when benefits shall cease in the event of
nonpayment of the prepaid or periodic charge and the effect of
nonpayment upon an enrollee who is hospitalized or undergoing
treatment for an ongoing condition.

(8) To the extent that the plan permits a free choice of provider
to its subscribers and enrollees, the statement shall disclose the
nature and extent of choice permitted and the financial liability
that is, or may be, incurred by the subscriber, enrollee, or a third
party by reason of the exercise of that choice.

(9) A summary of the provisions required by subdivision (g) of
Section 1373, if applicable.

(10) If the plan utilizes arbitration to settle disputes, a statement
of that fact.

(11) A summary of, and a notice of the availability of, the
process the plan uses to authorize, modify, or deny health care
services under the benefits provided by the plan, pursuant to
Sections 1363.5 and 1367.01.

(12) A description of any limitations on the patient’s choice of
primary care physician, specialty care physician, or nonphysician
health care practitioner, based on service area and limitations on
the patient’s choice of acute care hospital care, subacute or
transitional inpatient care, or skilled nursing facility.

(13) General authorization requirements for referral by a primary
care physician to a specialty care physician or a nonphysician
health care practitioner.

(14) Conditions and procedures for disenrollment.

(15) A description as to how an enrollee may request continuity
of care as required by Section 1373.96 and request a second opinion
pursuant to Section 1383.15.

(16) Information concerning the right of an enrollee to request
an independent review in accordance with Article 5.55
(commencing with Section 1374.30).

(17) A notice as required by Section 1364.5.

(b) (1) As of July 1, 1999, the director shall require each plan
offering a contract to an individual or small group to provide with
the disclosure form for individual and small group plan contracts
a uniform health plan benefits and coverage matrix containing the
plan’s major provisions in order to facilitate comparisons between
plan contracts. The uniform matrix shall include the following
category descriptions together with the corresponding copayments
and limitations in the following sequence:

(A) Deductibles.

(B) Lifetime maximums.

(C) Professional services.

(D) Outpatient services.

(E) Hospitalization services.

(F) Emergency health coverage.

(G) Ambulance services.

(H) Prescription drug coverage.

(I) Durable medical equipment.

(J) Mental health services.

(K) Chemical dependency services.

(L) Home health services.

(M) Other.

(2) The following statement shall be placed at the top of the
matrix in all capital letters in at least 10-point boldface type:

THIS MATRIX IS INTENDED TO BE USED TO HELP YOU
COMPARE COVERAGE BENEFITS AND IS A SUMMARY
ONLY. THE EVIDENCE OF COVERAGE AND PLAN
CONTRACT SHOULD BE CONSULTED FOR A DETAILED
DESCRIPTION OF COVERAGE BENEFITS AND
LIMITATIONS.

(3) (A) A health care service plan contract subject to Section
2715 of the federal Public Health Service Act (42 U.S.C. Sec.
300gg-15), shall satisfy the requirements of this subdivision by
providing the uniform summary of benefits and coverage required
under Section 2715 of the federal Public Health Service Act (42
U.S.C. Sec. 300gg-15) and any rules or regulations issued
thereunder. A health care service plan that issues the uniform
summary of benefits referenced in this paragraph shall do both of
the following:

(i) Ensure that all applicable benefit disclosure requirements
specified in this chapter and in Title 28 of the California Code of
Regulations are met in other health plan documents provided to
enrollees under the provisions of this chapter.

(ii) Consistent with applicable law, advise applicants and
enrollees, in a prominent place in the plan documents referenced
in subdivision (a), that enrollees are not financially responsible in
payment of emergency care services, in any amount that the health
care service plan is obligated to pay, beyond the enrollee’s
copayments, coinsurance, and deductibles as provided in the
enrollee’s health care service plan contract.

begin insert

(B) The uniform summary of benefits and coverage referenced
in this paragraph shall constitute a vital document for the purposes
of Section 1367.04. Not later than January 1, 2016, the department
shall make available on its Internet Web site written translations
of the template uniform summary of benefits and coverage. In
developing the translations, the department shall consider
subdivision (c) of Section 1367.04.

end insert begin delete

(B)

end delete

begin insert (C) end insert  Subdivision (c) shall not apply to a health care service plan
contract subject to subparagraph (A).

(c) Nothing in this section shall prevent a plan from using
appropriate footnotes or disclaimers to reasonably and fairly
describe coverage arrangements in order to clarify any part of the
matrix that may be unclear.

(d) All plans, solicitors, and representatives of a plan shall, when
presenting any plan contract for examination or sale to an
individual prospective plan member, provide the individual with
a properly completed disclosure form, as prescribed by the director
pursuant to this section for each plan so examined or sold.

(e) In the case of group contracts, the completed disclosure form
and evidence of coverage shall be presented to the contractholder
upon delivery of the completed health care service plan agreement.

(f) Group contractholders shall disseminate copies of the
completed disclosure form to all persons eligible to be a subscriber
under the group contract at the time those persons are offered the
plan. If the individual group members are offered a choice of plans,
separate disclosure forms shall be supplied for each plan available.
Each group contractholder shall also disseminate or cause to be
disseminated copies of the evidence of coverage to all applicants,
upon request, prior to enrollment and to all subscribers enrolled
under the group contract.

(g) In the case of conflicts between the group contract and the
evidence of coverage, the provisions of the evidence of coverage
shall be binding upon the plan notwithstanding any provisions in
the group contract that may be less favorable to subscribers or
enrollees.

(h) In addition to the other disclosures required by this section,
every health care service plan and any agent or employee of the
plan shall, when presenting a plan for examination or sale to any
individual purchaser or the representative of a group consisting of
25 or fewer individuals, disclose in writing the ratio of premium
costs to health services paid for plan contracts with individuals
and with groups of the same or similar size for the plan’s preceding
fiscal year. A plan may report that information by geographic area,
provided the plan identifies the geographic area and reports
information applicable to that geographic area.

(i) Subdivision (b) shall not apply to any coverage provided by
a plan for the Medi-Cal program or the Medicare program pursuant
to Title XVIII and Title XIX of the Social Security Act.

SEC. 2.  

Section 10603 of the Insurance Code, as amended by
Section 8 of Chapter 1 of the 1st Extraordinary Session of the
Statutes of 2013, is amended to read:

10603.  

(a) (1) On or before April 1, 1975, the commissioner
shall promulgate a standard supplemental disclosure form for all
disability insurance policies. Upon the appropriate disclosure form
as prescribed by the commissioner, each insurer shall provide, in
easily understood language and in a uniform, clearly organized
manner, as prescribed and required by the commissioner, the
summary information about each disability insurance policy offered
by the insurer as the commissioner finds is necessary to provide
for full and fair disclosure of the provisions of the policy.

(2) On and after January 1, 2014, a disability insurer offering
health insurance coverage subject to Section 2715 of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-15) shall satisfy
the requirements of this section and the implementing regulations
by providing the uniform summary of benefits and coverage
required under Section 2715 of the federal Public Health Service
Act and any rules or regulations issued thereunder. An insurer that
issues the federal uniform summary of benefits referenced in this
paragraph shall ensure that all applicable disclosures required in
this chapter and its implementing regulations are met in other
documents provided to policyholders and insureds. An insurer
subject to this paragraph shall provide the uniform summary of
benefits and coverage to the commissioner together with the
corresponding health insurance policy pursuant to Section 10290.

begin insert

(3) The uniform summary of benefits and coverage referenced
in this subdivision shall constitute a vital document for the purposes
of Section 10133.8. Not later than January 1, 2016, the
commissioner shall make available on its Internet Web site written
translations of the template uniform summary of benefits and
coverage. In developing the translations, the commissioner shall
consider subdivision (c) of Section 10133.8.

end insert

(b) Nothing in this section shall preclude the disclosure form
from being included with the evidence of coverage or certificate
of coverage or policy.

SEC. 3.  

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.