Amended in Senate April 30, 2015

Senate BillNo. 546


Introduced by Senator Leno

February 26, 2015


An act to amendbegin delete Sectionend deletebegin insert Sections 1374.21 andend insert 1385.04 of, and to add Section 1385.045 to, the Health and Safety Code, and to amendbegin delete Sectionend deletebegin insert Sectionsend insert 10181.4begin insert and 10199.1end insert of, and to add Section 10181.45 to, the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

SB 546, 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.begin delete Existingend deletebegin insert The PPACA imposes an exercise tax on a provider of applicable employer-sponsored health care coverage, if the aggregate cost of that coverage provided to an employee exceeds a specified dollar limit.end insert

begin insert Existing stateend insert 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.begin delete Existingend delete

begin insert Existingend insert 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 large group plan contracts and policies, existing law requires a plan or insurer to file rate information with thebegin insert respectiveend insert 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.begin insert Existing law authorizes the respective department to review those filings, to report to the Legislature at least quarterly on all unreasonable rate filings, and to post on its Internet Web site a decision that an unreasonable rate increase is not justified or that a rate filing contains inaccurate information. Existing law requires prior notice, as specified, of changes to premium rates or coverage in order for those changes to be effective.end insert

This bill would recast the rate information requirement to require large group health care service plans and health insurers to file with thebegin delete departmentend deletebegin insert respective department,end insert at least 60 days prior to implementing any ratebegin delete changeend deletebegin insert increase,end insert all required rate information for any product with a ratebegin delete changeend deletebegin insert increaseend insert if any of certain conditions apply.begin insert The bill would require the respective department to review that information and finalize a decision as to whether the rate is reasonable or unreasonable within 60 days after receiving the information. The bill would require the notice of changes to premium rates or coverage to provide additional information regarding whether the rate change is greater than average rate increases approved by the California Health Benefit Exchange or by the Board of Administration of the Public Employee’s Retirement System, or would be subject to the excise tax described above.end insert The bill would require the plan or insurer to file additional aggregate rate information with thebegin insert respectiveend insert department on or before October 1,begin delete 2016. The bill would also require that the plan or insurer disclose the aggregate data for all products sold in the large group market for all rate filings submitted under these provisions on an annual basis.end deletebegin insert 2016, and annually thereafter.end insert The bill would require the respectivebegin delete departmentsend deletebegin insert departmentend insert to conduct a public meeting regarding large group rate changes. The bill would require these meetings to occur annually after thebegin insert respectiveend insert department has reviewed the large group rate information required to be submitted annually by the plan or insurer. The bill would authorize a health care service plan or health insurer that exclusively contracts with no more than 2 medical groups to provide or arrange for professional medical services for enrollees or insureds 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 or health insurers.

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    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 1374.21 of the end insertbegin insertHealth and Safety Codeend insert
2begin insert is amended to read:end insert

3

1374.21.  

(a) begin deleteNo end deletebegin insert(1)end insertbegin insertend insertbegin insertA end insertchange in premium rates or changes in
4coverage stated in a group health care service plan contract shall
5begin insert notend insert become effective unless the plan has delivered in writing a
6notice indicating the change or changes at least 60 days prior to
7the contract renewal effective date.

begin insert

8(2) The notice delivered pursuant to paragraph (1) for large
9group health plans shall also include the following information:

end insert
begin insert

10(A) The amount by which the rate change for the majority of
11months the rate is proposed to be in effect is greater than the
12average rate increase for individual market products approved by
13the California Health Benefit Exchange for the calendar year.

end insert
begin insert

14(B) The amount by which the rate change for the majority of
15months the rate is proposed to be in effect is greater than the
16average rate increase approved by the California Health Benefits
17Exchange for the calendar year.

end insert
begin insert

18(C) Whether the rate change would cause the health plan for
19the large group purchaser to incur the excise tax for any part of
20the period the rate increase is proposed to be in effect.

end insert

21(b) A health care service plan that declines to offer coverage to
22or denies enrollment for a large group applying for coverage shall,
23at the time of the denial of coverage, provide the applicant with
24the specific reason or reasons for the decision in writing, in clear,
25easily understandable language.

P4    1

begin deleteSECTION 1.end delete
2begin insertSEC. 2.end insert  

Section 1385.04 of the Health and Safety Code is
3amended to read:

4

1385.04.  

(a) For large group health care service plan contracts,
5all health plans shall file with the department all required rate
6information for rate changes aggregated for the entire large group
7market. This information shall be submitted on or before October
81, 2016, and on or before October 1, annually thereafter.

9(b) (1) For large group rate filings, health plans shall submit
10all information that is required by PPACA. A plan shall also submit
11any other information required pursuant to any regulation adopted
12by the department to comply with this article.

13(2) For each health plan that offers coverage in the large group
14market, the department shall conduct a public meeting regarding
15large group rate changes. The meeting shall occur after the
16department has reviewed the information required inbegin insert subdivisionend insert
17 (a), on or before November 1, 2016, and on or before November
181, annually thereafter.

19(c) A health care service plan subject to subdivision (a) shall
20also disclose the following for the aggregate rate filing for the
21large group market submitted under this section in the large group
22health plan market:

23(1) Number and percentage of rate filings reviewed by the
24following:

25(A) Plan year.

26(B) Segment type.

27(C) Product type.

28(D) Number of subscribers.

29(E) Number of covered lives affected.

30(2) Any factors affecting the rate, and the actuarial basis for
31those factors, including:

32(A) Geographic region.

33(B) Age, including age rating factors.

34(C) Occupation.

35(D) Industry.

36(E) Health status, including health status factors considered.

37(F) Employee, employee and dependents, including a description
38of the family composition used.

39(G) Enrollee share of premiums.

40(H) Enrollee cost sharing.

P5    1(I) Covered benefits in addition to basic health care services,
2as defined in subdivision (b) of Section 1345, and other benefits
3mandated under this article.

4(J) Any other factors that affect the rate that are not otherwise
5specified.

6(3) (A) The plan’s overall annual medical trend factor
7assumptions in each rate filing for all benefits and by aggregate
8benefit category, including hospital inpatient, hospital outpatient,
9physician services, prescription drugs and other ancillary services,
10laboratory, and radiology. A health plan that exclusively contracts
11with no more than two medical groups in the state to provide or
12arrange for professional medical services for the enrollees of the
13plan shall instead disclose the amount of its actual trend experience
14 for the prior contract year by aggregate benefit category, using
15benefit categories that are, to the maximum extent possible, the
16same or similar to those used by other plans.

17(B) The amount of the projected trend attributable to the use of
18services, price inflation, or fees and risk for annual plan contract
19trends by aggregate benefit category, such as hospital inpatient,
20hospital outpatient, physician services, prescription drugs and other
21ancillary services, laboratory, and radiology. A health plan that
22exclusively contracts with no more than two medical groups in the
23state to provide or arrange for professional medical services for
24the enrollees of the plan shall instead disclose the amount of its
25actual trend experience for the prior contract year by aggregate
26benefit category, using benefit categories that are, to the maximum
27extent possible, the same or similar to those used by other plans.

28(C) A comparison of claims cost and rate of changes over time.

29(D) Any changes in enrollee cost sharing over the prior year
30associated with the submitted rate filing.

31(E) Any changes in enrollee benefits over the prior year
32associated with the submitted rate filing.

33(F) Any cost containment and quality improvement efforts since
34the plan’s last rate filing for the same category of health benefit
35plan. To the extent possible, the plan shall describe any significant
36new health care cost containment and quality improvement efforts
37and provide an estimate of potential savings together with an
38estimated cost or savings for the projection period.

begin insert

P6    1(G) The average rate increase for the large group market
2enrollees covered in the filing with the average rate weighted by
3the number of covered lives.

end insert

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

10

begin deleteSEC. 2.end delete
11begin insertSEC. 3.end insert  

Section 1385.045 is added to the Health and Safety
12Code
, to read:

13

1385.045.  

(a) (1) For large group health care service plan
14contracts, all health plans shall file with the department at least 60
15days prior to implementing any ratebegin delete changeend deletebegin insert increaseend insert all required
16rate information for any product with a ratebegin delete changeend deletebegin insert increaseend insert ifbegin delete anyend delete
17begin insert eitherend insert of the following apply:

18(A) The ratebegin delete change is equal to orend deletebegin insert increase isend insert greater than the
19average rate increasebegin delete for individual market products approved by
20the California Health Benefits Exchange.end delete
begin insert determined under Section
211385.04.end insert

begin delete

22(B) The rate change is equal to or greater than the average rate
23increase approved by the CalPERS board for the subsequent
24calendar year.

end delete
begin delete

20 25(C)

end delete

26begin insert(B)end insert The ratebegin delete changeend deletebegin insert increaseend insert would cause thebegin insert health plan for
27theend insert
large group purchaser to incur the excisebegin delete tax.end deletebegin insert tax for any part
28of the period the rate increase is proposed to be in effect.end insert

begin delete

29(D) At the request of the large group purchaser.

end delete

30(2) This filing shall be concurrent with the written notice
31described in subdivision (a) of Sectionbegin delete 1374.21, except for a filing
32at the request of the large group purchaser. A filing at the request
33of a large group purchaser may occur at any time after receipt of
34the written notice and prior to the rate taking effect.end delete
begin insert 1374.21.end insert

35(b) A plan shall disclose to the department all of the following
36for each large group rate filing described inbegin insert subdivisionend insert (a):

37(1)begin deleteend deletebegin insertend insert Company name of plan and contact information.

38(2) Number of plan contract forms covered by the filing.

39(3) Plan contract form numbers covered by the filing.

P7    1(4) Product type, such as a preferred provider organization or
2health maintenance organization.

3(5) Segment type.

4(6) Type of plan involved, such as for profit or not for profit.

5(7) Whether the products are opened or closed.

6(8) Enrollment in each plan contract and rating form.

7(9) Enrollee months in each plan contract form.

8(c) Any factors affecting the rate, and the actuarial basis for the
9factor,begin delete includingend deletebegin insert including,end insert but not limited to:

10(1) Geographic region.

11(2) Age, including age rating factors.

12(3) Occupation.

13(4) Industry.

14(5) Health status, including health status factors considered.

15(6) Employee, employee and dependents, including a description
16of the family composition used.

17(7) Enrollee share of premiums.

18(8) Enrollee cost sharing.

19(9) Covered benefits in addition to basic health care services,
20as defined in subdivision (b) of Section 1345, and other benefits
21mandated under this article.

22(10) Any other factor that affects the rate that is not otherwise
23specified.

24(d) The plan shall also disclose the following:

25(1) Annual rate.

26(2) Total earned premiums in each plan contract form.

27(3) Total incurred claims in each plan contract form.

28(4) Average rate increase initially requested.

29(5) Review category: initial filing for new product, filing for
30existing product, or resubmission.

31(6) Average rate of increase.

32(7) Effective date of rate increase.

33(8) Number of subscribers or enrollees affected by each plan
34contract form.

35(9) The plan’s overall annual medical trend factor assumptions
36in each rate filing for all benefits and by aggregate benefit category,
37including hospital inpatient, hospital outpatient, physician services,
38prescription drugs and other ancillary services, laboratory, and
39radiology. A health plan that exclusively contracts with no more
40than two medical groups in the state to provide or arrange for
P8    1professional medical services for the enrollees of the plan shall
2instead disclose the amount of its actual trend experience for the
3prior contract year by aggregate benefit category, using benefit
4categories that are, to the maximum extent possible, the same or
5similar to those used by other plans.

6(10) The amount of the projected trend attributable to the use
7of services, price inflation, or fees and risk for annual plan contract
8trends by aggregate benefit category, such as hospital inpatient,
9hospital outpatient, physician services, prescription drugs and other
10ancillary services, laboratory, and radiology. A health plan that
11exclusively contracts with no more than two medical groups in the
12state to provide or arrange for professional medical services for
13the enrollees of the plan shall instead disclose the amount of its
14actual trend experience for the prior contract year by aggregate
15benefit category, using benefit categories that are, to the maximum
16extent possible, the same or similar to those used by other plans.

17(11) A comparison of claims cost and rate of changes over time.

18(12) Any changes in enrollee cost sharing over the prior year
19associated with the submitted rate filing.

20(13) Any changes in enrollee benefits over the prior year
21associated with the submitted rate filing.

22(14) The certification described in subdivision (b) of Section
231385.06.

24(15) Any changes in administrative costs.

25(16) Any other information required for rate review under
26PPACA.

27(17) Any cost containment and quality improvement efforts
28since the plan’s last rate filing for the same category of health care
29service plan. To the extent possible, the plan shall describe any
30significant new health care cost containment and quality
31improvement efforts and provide an estimate of potential savings
32together with an estimated cost or savings for the projection period.

33(e) begin deleteFor rate filings subject to end deletebegin insertWithin 60 days after receiving
34complete information from the plan consistent with end insert
this section,
35thebegin delete director shall make a decision to modify or deny a rate change
36that is unreasonable, inadequate, or otherwise in violation of this
37article or federal law prior to the implementation of the rate change
38by the plan.end delete
begin insert department shall complete its review and finalize a
39decision as to whether the rate is reasonable or unreasonable.end insert

P9    1(f) The department may require all health care service plans to
2submit all rate filings to the National Association of Insurance
3Commissioners’ System for Electronic Rate and Form Filing
4(SERFF). Submission of the required rate filings to SERFF shall
5be deemed to be filing with the department for purposes of
6compliance with this section.

7(g) A plan shall submit any other information required under
8PPACA. A plan shall also submit any other information required
9pursuant to any regulation adopted by the department to comply
10with this article.

11

begin deleteSEC. 3.end delete
12begin insertSEC. 4.end insert  

Section 10181.4 of the Insurance Code is amended to
13read:

14

10181.4.  

(a) For large group health insurance policies, all
15health insurers shall file with the department all required rate
16information for rate changes aggregated for the entire large group
17market. This information shall be submitted on or before October
181, 2016, and on or before October 1, annually thereafter.

19(b) (1) For large group rate filings, health insurers shall submit
20all information that is required by PPACA. A health insurer shall
21also submit any other information required pursuant to any
22regulation adopted by the department to comply with this article.

23(2) For each health insurer that offers coverage in the large
24group market, the department shall conduct a public meeting
25regarding large group rate changes. The meeting shall occur after
26the department has reviewed the information required in
27begin insert subdivisionend insert (a), on or before November 1, 2016, and on or before
28November 1, annually thereafter.

29(c) A health insurer subject to subdivision (a) shall also disclose
30the following for the aggregate rate filing for the large group market
31submitted under this section in the large group health insurance
32market:

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 insureds.

39(E) Number of covered lives affected.

P10   1(2) Any factors affecting the rate, and the actuarial basis for
2those factors, including:

3(A) Geographic region.

4(B) Age, including age rating factor.

5(C) Occupation.

6(D) Industry.

7(E) Health status, including health status factors considered.

8(F) Employee, employee and dependents, including a description
9of the family composition used.

10(G) Insured share of premiums.

11(H) Insured cost sharing.

12(I) Covered benefits in addition to basic health care services,
13as defined in subdivision (b) of Section 1345 of the Health and
14Safety Code, and other benefits mandated under this article.

15(J) Any other factors that affect the rate that are not otherwise
16specified.

17(3) (A) The health insurer’s overall annual medical trend factor
18assumptions in each rate filing for all benefits and by aggregate
19benefit category, including hospital inpatient, hospital outpatient,
20physician services, prescription drugs and other ancillary services,
21laboratory, and radiology. A health insurer that exclusively
22contracts with no more than two medical groups in the state to
23provide or arrange for professional medical services for the insureds
24of the health insurer shall instead disclose the amount of its actual
25trend experience for the prior contract year by aggregate benefit
26category, using benefit categories that are, to the maximum extent
27possible, the same or similar to those used by other health insurers.

28(B) The amount of the projected trend attributable to the use of
29services, price inflation, or fees and risk for annual health insurer
30contract trends by aggregate benefit category, such as hospital
31inpatient, hospital outpatient, physician services, prescription drugs
32and other ancillary services, laboratory, and radiology. A health
33insurer that exclusively contracts with no more than two medical
34groups in the state to provide or arrange for professional medical
35services for the insureds of the health insurer shall instead disclose
36the amount of its actual trend experience for the prior contract year
37by aggregate benefit category, using benefit categories that are, to
38the maximum extent possible, the same or similar to those used
39by other health insurers.

40(C) A comparison of claims cost and rate of changes over time.

P11   1(D) Any changes in insured cost sharing over the prior year
2associated with the submitted rate filing.

3(E) Any changes in insured benefits over the prior year
4associated with the submitted rate filing.

5(F) Any cost containment and quality improvement efforts since
6the health insurer’s last rate filing for the same category of health
7insurance policy. To the extent possible, the health insurer shall
8describe any significant new health care cost containment and
9quality improvement efforts and provide an estimate of potential
10savings together with an estimated cost or savings for the projection
11period.

begin insert

12(G) The average rate increase for the large group market
13insureds covered in the filing with the average rate weighted by
14the number of covered lives.

end insert

15(d) The department may require all health insurers to submit all
16rate filings to the National Association of Insurance
17Commissioners’ System for Electronic Rate and Form Filing
18(SERFF). Submission of the required rate filings to SERFF shall
19be deemed to be filing with the department for purposes of
20compliance with this section.

21

begin deleteSEC. 4.end delete
22begin insertSEC. 5.end insert  

Section 10181.45 is added to the Insurance Code, to
23read:

24

10181.45.  

(a) (1) For large group health insurance policies,
25all health insurers shall file with the department at least 60 days
26prior to implementing any ratebegin delete changeend deletebegin insert increaseend insert all required rate
27information for any product with a ratebegin delete changeend deletebegin insert increaseend insert ifbegin delete anyend delete
28begin insert eitherend insert of the following apply:

29(A) The ratebegin delete change is equal to orend deletebegin insert increase isend insert greater than the
30average rate increasebegin delete for individual market products approved by
31the California Health Benefits Exchange.end delete
begin insert determined under Section
3210181.4.end insert

begin delete

33(B) The rate change is equal to or greater than the average rate
34increase approved by the CalPERS board for the subsequent
35calendar year.

end delete
begin delete

29 36(C)

end delete

37begin insert(B)end insert The ratebegin delete changeend deletebegin insert increaseend insert would cause thebegin insert health insurer
38for theend insert
large group purchaser to incur the excisebegin delete tax.end deletebegin insert tax for any
39part of the period the rate increase is proposed to be in effect.end insert

begin delete

40(D) At the request of the large group purchaser.

end delete

P12   1(2) This filing shall be concurrent with the written notice
2described in subdivision (a) of Sectionbegin delete 10199.1, except for a filing
3at the request of the large group purchaser. A filing at the request
4of a large group purchaser may occur at any time after receipt of
5the written notice and prior to the rate taking effect.end delete
begin insert 10199.1.end insert

6(b) A health insurer shall disclose to the department all of the
7following for each large group rate filing described inbegin insert subdivisionend insert
8 (a):

9(1) Company name of the health insurer and contact information.

10(2) Number of health insurance policies covered by the filing.

11(3) Health insurance policy form numbers covered by the filing.

12(4) Product type, such as a preferred provider organization or
13health maintenance organization.

14(5) Segment type.

15(6) Type of health insurer involved, such as for profit or not for
16profit.

17(7) Whether the products are opened or closed.

18(8) Enrollment in each health insurance policy and rating form.

19(9) Insured months in each health insurance policy form.

20(c) Any factors affecting the rate, and the actuarial basis for the
21factor,begin delete includingend deletebegin insert including,end insert but not limited to:

22(1) Geographic region.

23(2) Age, including age rating factors.

24(3) Occupation.

25(4) Industry.

26(5) Health status, including health status factors considered.

27(6) Employee, employee and dependents, including a description
28of the family composition used.

29(7) Insured share of premiums.

30(8) Insured cost sharing.

31(9) Covered benefits in addition to basic health care services,
32as defined in subdivision (b) of Section 1345, and other benefits
33mandated under this article.

34(10) Any other factor that affects the rate that is not otherwise
35specified.

36(d) The health insurer shall also disclose the following:

37(1) Annual rate.

38(2) Total earned premiums in each health insurance policy form.

39(3) Total incurred claims in each health insurance policy form.

40(4) Average rate increase initially requested.

P13   1(5) Review category: initial filing for new product, filing for
2existing product, or resubmission.

3(6) Average rate of increase.

4(7) Effective date of rate increase.

5(8) Number of insureds affected by each health insurance policy
6form.

7(9) The health insurer’s overall annual medical trend factor
8assumptions in each rate filing for all benefits and by aggregate
9benefit category, including hospital inpatient, hospital outpatient,
10physician services, prescription drugs and other ancillary services,
11laboratory, and radiology. A health insurer that exclusively
12contracts with no more than two medical groups in the state to
13provide or arrange for professional medical services for the insureds
14of the health insurer shall instead disclose the amount of its actual
15trend experience for the prior contract year by aggregate benefit
16category, using benefit categories that are, to the maximum extent
17possible, the same or similar to those used by other health insurers.

18(10) The amount of the projected trend attributable to the use
19of services, price inflation, or fees and risk for annual health
20insurance policy trends by aggregate benefit category, such as
21hospital inpatient, hospital outpatient, physician services,
22prescription drugs and other ancillary services, laboratory, and
23radiology. A health insurer that exclusively contracts with no more
24than two medical groups in the state to provide or arrange for
25professional medical services for the insureds of the health insurer
26shall instead disclose the amount of its actual trend experience for
27the prior contract year by aggregate benefit category, using benefit
28categories that are, to the maximum extent possible, the same or
29similar to those used by other health insurers.

30(11) A comparison of claims cost and rate of changes over time.

31(12) Any changes in insured cost sharing over the prior year
32associated with the submitted rate filing.

33(13) Any changes in insured benefits over the prior year
34associated with the submitted rate filing.

35(14) The certification described in subdivision (b) of Section
3610181.6.

37(15) Any changes in administrative costs.

38(16) Any other information required for rate review under
39PPACA.

P14   1(17) Any cost containment and quality improvement efforts
2since the health insurer’s last rate filing for the same category of
3health insurance policy. To the extent possible, the health insurer
4shall describe any significant new health care cost containment
5and quality improvement efforts and provide an estimate of
6potential savings together with an estimated cost or savings for
7the projection period.

8(e) begin deleteFor rate filings subject to end deletebegin insertWithin 60 days after receiving
9complete information from the insurer consistent with end insert
this section,
10thebegin delete commissionerend deletebegin insert departmentend insert shallbegin delete make a decision to modify or
11deny a rate change that is unreasonable, inadequate, or otherwise
12in violation of this article or federal law prior to the implementation
13of the rate change by the health insurer.end delete
begin insert complete its review and
14finalize a decision as to whether the rate is reasonable or
15unreasonable.end insert

16(f) The department may require all health insurers to submit all
17rate filings to the National Association of Insurance
18Commissioners’ System for Electronic Rate and Form Filing
19(SERFF). Submission of the required rate filings to SERFF shall
20be deemed to be filing with the department for purposes of
21compliance with this section.

22(g) A health insurer shall submit any other information required
23under PPACA. A health insurer shall also submit any other
24information required pursuant to any regulation adopted by the
25department to comply with this article.

26begin insert

begin insertSEC. 6.end insert  

end insert

begin insertSection 10199.1 of the end insertbegin insertInsurance Codeend insertbegin insert is amended to
27read:end insert

28

10199.1.  

(a) begin deleteNo end deletebegin insert(1)end insertbegin insertend insertbegin insertAn end insertinsurer or nonprofit hospital service
29plan or administrator acting on its behalf shallbegin insert notend insert terminate a
30group master policy or contract providing hospital, medical, or
31surgical benefits, increase premiums or charges therefor, reduce
32or eliminate benefits thereunder, or restrict eligibility for coverage
33thereunder without providing prior notice of that action.begin delete No suchend delete
34begin insert Theend insert action shallbegin insert notend insert become effective unless written notice of the
35action was delivered by mail to the last known address of the
36appropriate insurance producer and the appropriate administrator,
37if any, at least 45 days prior to the effective date of the action and
38to the last known address of the group policyholder or group
39contractholder at least 60 days prior to the effective date of the
40action. If nonemployee certificate holders or employees of more
P15   1than one employer are covered under the policy or contract, written
2notice shall also be delivered by mail to the last known address of
3each nonemployee certificate holder or affected employer or, if
4the action does not affect all employees and dependents of one or
5more employers, to the last known address of each affected
6employee certificate holder, at least 60 days prior to the effective
7date of the action.

begin insert

8(2) The notice delivered pursuant to paragraph (1) for large
9group health insurance policies shall also include the following
10information:

end insert
begin insert

11(A) The amount by which the rate change for the majority of
12months the rate is proposed to be in effect is greater than the
13average rate increase for individual market products approved by
14the California Health Benefit Exchange for the calendar year.

end insert
begin insert

15(B) The amount by which the rate change for the majority of
16months the rate is proposed to be in effect is greater than the
17average rate increase approved by the California Health Benefit
18Exchange for the calendar year.

end insert
begin insert

19(C) Whether the rate change would cause the insurer for the
20large group purchaser to incur the excise tax for any part of the
21period the rate increase is proposed to be in effect.

end insert

22(b) begin deleteNo end deletebegin insertA end insertholder of a master group policy or a master group
23nonprofit hospital service plan contract or administrator acting on
24its behalf shallbegin insert notend insert terminate the coverage of, increase premiums
25or charges for, or reduce or eliminate benefits available to, or
26restrict eligibility for coverage of a covered person, employer unit,
27or class of certificate holders covered under the policy or contract
28for hospital, medical, or surgical benefits without first providing
29prior notice of the action.begin delete No suchend deletebegin insert Theend insert action shallbegin insert notend insert become
30effective unless written notice was delivered by mail to the last
31known address of each affected nonemployee certificate holder or
32employer, or if the action does not affect all employees and
33dependents of one or more employers, to the last known address
34of each affected employee certificate holder, at least 60 days prior
35to the effective date of the action.

36(c) A health insurer that declines to offer coverage to or denies
37enrollment for a large group applying for coverage shall, at the
38time of the denial of coverage, provide the applicant with the
39specific reason or reasons for the decision in writing, in clear,
40easily understandable language.

P16   1

begin deleteSEC. 5.end delete
2begin insertSEC. 7.end insert  

No reimbursement is required by this act pursuant to
3Section 6 of Article XIII B of the California Constitution because
4the only costs that may be incurred by a local agency or school
5district will be incurred because this act creates a new crime or
6infraction, eliminates a crime or infraction, or changes the penalty
7for a crime or infraction, within the meaning of Section 17556 of
8the Government Code, or changes the definition of a crime within
9the meaning of Section 6 of Article XIII B of the California
10Constitution.



O

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