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. The PPACA imposes anbegin delete exerciseend deletebegin insert exciseend insert 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.
Existing state 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 large group plan contracts and policies, existing law requires a plan or insurer to file rate information with the respective 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. 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.
This bill would recast the rate information requirement to require large group health care service plans and health insurers to file with the respective department, at least 60 days prior to implementing any rate increase, all required rate information for any product with a rate increase if any of certain conditions apply. 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 Publicbegin delete Employee’send deletebegin insert
Employeesend insertbegin insert’end insert Retirement System, or would be subject to the excise tax described above. The bill would require the plan or insurer to file additional aggregate rate information with the respective department on or before October 1, 2016, and annually thereafter. The bill would require the respective department to conduct a public meeting regarding large group rate changes. The bill would require these meetings to occur annually after the respective department has reviewed the large group rate information required to be submitted annually by the plan orbegin delete insurer.end deletebegin insert insurer, as specified.end insert 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:
Section 1374.21 of the Health and Safety Code
2 is amended to read:
(a) (1) A change in premium rates or changes in
4coverage stated in a group health care service plan contract shall
5not 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.
8(2) The notice delivered pursuant to paragraph (1) for large
9group health plans shall also include the following information:
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.
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 thebegin delete California Health Benefits begin insert Board of Administration of the Public Employees’
17Exchangeend delete
18Retirement Systemend insert for the calendar year.
19(C) Whether the rate change would cause the health plan for
20the large group purchaser to incur the excise tax for any part of
21the period the rate increase is proposed to be in effect.
22(b) A health care service plan that declines to offer coverage to
23or denies enrollment for a large group applying for
coverage shall,
24at the time of the denial of coverage, provide the applicant with
25the specific reason or reasons for the decision in writing, in clear,
26easily understandable language.
Section 1385.04 of the Health and Safety Code is
2amended to read:
(a) For large group health care service plan contracts,
4all health plans shall file with the department all required rate
5information for rate changes aggregated for the entire large group
6market. This information shall be submitted on or before October
71, 2016, and on or before October 1, annually thereafter.
8(b) (1) For large group rate filings, health plans shall submit
9all information that is required by PPACA. A plan shall also submit
10any other information required pursuant to any regulation adopted
11by the department to comply with this article.
12(2) For each health plan that offers coverage in the large group
13market, the department shall conduct a public meeting regarding
14
large group rate changes. Thebegin insert publicend insert meeting shall occur after the
15department has reviewed the information required in subdivision
16begin delete (a), on or before November 1, 2016, and on or before November begin insert (a). The department shall schedule the public
171, annually thereafter.end delete
18meeting between November 1, 2016, and March 1, 2017, and
19annually thereafter between November 1, and March 1, of the
20subsequent year. The department shall schedule the public meeting
21based on the number of covered lives for the health plan in the
22large group market, with the largest health plan first, and the
23smallest health plan last.end insert
24(c) A health care service plan subject to subdivision (a)
shall
25also disclose the following for the aggregate rate filing for the
26large group market submitted under this section in the large group
27health plan market:
28(1) Number and percentage of rate filings reviewed by the
29following:
30(A) Plan year.
31(B) Segment type.
32(C) Product type.
33(D) Number of subscribers.
34(E) Number of covered lives affected.
35(2) Any factors affecting the rate, and the actuarial basis for
36those factors, including:
37(A) Geographic region.
38(B) Age, including age rating factors.
39(C) Occupation.
40(D) Industry.
P5 1(E) Health status, including health status factors considered.
2(F) Employee, employee and dependents, including a description
3of the family composition used.
4(G) Enrollee share of premiums.
5(H) Enrollee cost sharing.
6(I) Covered benefits in addition to basic health care services,
7as defined in subdivision (b) of Section 1345, and other benefits
8mandated under this article.
9(J) Any other factors that affect the rate that are not otherwise
10specified.
11(3) (A) The plan’s overall annual medical trend factor
12assumptions in each rate filing for all benefits and by aggregate
13benefit category, including hospital inpatient, hospital outpatient,
14physician services, prescription drugs and other ancillary services,
15laboratory, and radiology. A health plan that exclusively contracts
16with no more than two medical groups in the state to provide or
17arrange for professional medical services for the enrollees of the
18plan shall instead disclose the amount of its actual trend experience
19for the prior contract year by aggregate benefit category, using
20benefit categories that are, to the maximum extent possible, the
21same or similar to those used by other plans.
22(B) The amount of the projected trend attributable to the use of
23services,
price inflation, or fees and risk for annual plan contract
24trends by aggregate benefit category, such as hospital inpatient,
25hospital outpatient, physician services, prescription drugs and other
26ancillary services, laboratory, and radiology. A health plan that
27exclusively contracts with no more than two medical groups in the
28state to provide or arrange for professional medical services for
29the enrollees of the plan shall instead disclose the amount of its
30actual trend experience for the prior contract year by aggregate
31benefit category, using benefit categories that are, to the maximum
32extent possible, the same or similar to those used by other plans.
33(C) A comparison of claims cost and rate of changes over time.
34(D) Any changes in enrollee cost sharing over the prior year
35associated with the submitted rate filing.
36(E) Any changes in enrollee benefits over the prior year
37associated with the submitted rate filing.
38(F) Any cost containment and quality improvement efforts since
39the plan’s last rate filing for the same category of health benefit
40plan. To the extent possible, the plan shall describe any significant
P6 1new health care cost containment and quality improvement efforts
2and provide an estimate of potential savings together with an
3estimated cost or savings for the projection period.
4(G) The average rate increase for the large group market
5enrollees covered in the filing with the average rate weighted by
6the number of covered lives.
7(d) The department may require all health care service plans to
8submit all rate filings to the National Association of Insurance
9Commissioners’ System for Electronic Rate and Form
Filing
10(SERFF). Submission of the required rate filings to SERFF shall
11be deemed to be filing with the department for purposes of
12compliance with this section.
Section 1385.045 is added to the Health and Safety
14Code, to read:
(a) (1) For large group health care service plan
16contracts, all health plans shall file with the department at least 60
17days prior to implementing any rate increase all required rate
18information for any product with a rate increase if either of the
19following apply:
20(A) The rate increase is greater thanbegin insert 150 percent ofend insert the average
21rate increase determined under Section 1385.04.
22(B) The rate increase would cause the health plan for the large
23group purchaser to incur the excise tax for any part of the period
24the rate increase is proposed to be in
effect.
25(2) This filing shall be concurrent with the written notice
26described in subdivision (a) of Section 1374.21.
27(b) A plan shall disclose to the department all of the following
28for each large group rate filing described in subdivision (a):
29(1) Company name of plan and contact information.
30(2) Number of plan contract forms covered by the filing.
31(3) Plan contract form numbers covered by the filing.
32(4) Product type, such as a preferred provider organization or
33health maintenance organization.
34(5) Segment type.
35(6) Type of plan involved, such as for profit or not for profit.
36(7) Whether the products are opened or closed.
37(8) Enrollment in each plan contract and rating form.
38(9) Enrollee months in each plan contract form.
39(c) Any factors affecting the rate, and the actuarial basis for the
40factor, including, but not limited to:
P7 1(1) Geographic region.
2(2) Age, including age rating factors.
3(3) Occupation.
4(4) Industry.
5(5) Health status, including health status factors considered.
6(6) Employee, employee and dependents, including a description
7of the family composition used.
8(7) Enrollee share of premiums.
9(8) Enrollee cost sharing.
10(9) Covered benefits in addition to basic health care services,
11as defined in subdivision (b) of Section 1345, and other benefits
12mandated under this article.
13(10) Any other factor that affects the rate that is not otherwise
14specified.
15(d) The plan shall also disclose the following:
16(1) Annual rate.
17(2) Total earned premiums in each plan contract form.
18(3) Total incurred claims in each plan contract form.
19(4) Average rate increase initially requested.
20(5) Review category: initial filing for new product, filing for
21existing product, or resubmission.
22(6) Average rate of increase.
23(7) Effective date of rate increase.
24(8) Number of subscribers or enrollees affected by each plan
25contract form.
26(9) The plan’s overall annual medical trend factor assumptions
27in each rate
filing for all benefits and by aggregate benefit category,
28including hospital inpatient, hospital outpatient, physician services,
29prescription drugs and other ancillary services, laboratory, and
30radiology. A health plan that exclusively contracts with no more
31than two medical groups in the state to provide or arrange for
32 professional medical services for the enrollees of the plan shall
33instead disclose the amount of its actual trend experience for the
34prior contract year by aggregate benefit category, using benefit
35categories that are, to the maximum extent possible, the same or
36similar to those used by other plans.
37(10) The amount of the projected trend attributable to the use
38of services, price inflation, or fees and risk for annual plan contract
39trends by aggregate benefit category, such as hospital inpatient,
40hospital outpatient, physician services, prescription drugs and other
P8 1ancillary services, laboratory, and radiology. A health plan
that
2exclusively contracts with no more than two medical groups in the
3state to provide or arrange for professional medical services for
4the enrollees of the plan shall instead disclose the amount of its
5actual trend experience for the prior contract year by aggregate
6benefit category, using benefit categories that are, to the maximum
7extent possible, the same or similar to those used by other plans.
8(11) A comparison of claims cost and rate of changes over time.
9(12) Any changes in enrollee cost sharing over the prior year
10associated with the submitted rate filing.
11(13) Any changes in enrollee benefits over the prior year
12associated with the submitted rate filing.
13(14) The certification described in subdivision (b) of Section
141385.06.
15(15) Any changes in administrative costs.
16(16) Any other information required for rate review under
17PPACA.
18(17) Any cost containment and quality improvement efforts
19since the plan’s last rate filing for the same category of health care
20service plan. To the extent possible, the plan shall describe any
21significant new health care cost containment and quality
22improvement efforts and provide an estimate of potential savings
23together with an estimated cost or savings for the projection period.
24(e) Within 60 days after receiving complete information from
25the plan consistent with this section, the department shall complete
26its review and finalize a decision as to whether the rate is
27reasonable or unreasonable.
28(f) The department may require all health care service plans to
29submit all rate filings to the National Association of Insurance
30Commissioners’ System for Electronic Rate and Form Filing
31(SERFF). Submission of the required rate filings to SERFF shall
32be deemed to be filing with the department for purposes of
33compliance with this section.
34(g) A plan shall submit any other information required under
35PPACA. A plan shall also submit any other information required
36pursuant to any regulation adopted by the department to comply
37with this article.
Section 10181.4 of the Insurance Code is amended to
39read:
(a) For large group health insurance policies, all
2health insurers shall file with the department all required rate
3 information for rate changes aggregated for the entire large group
4market. This information shall be submitted on or before October
51, 2016, and on or before October 1, annually thereafter.
6(b) (1) For large group rate filings, health insurers shall submit
7all information that is required by PPACA. A health insurer shall
8also submit any other information required pursuant to any
9regulation adopted by the department to comply with this article.
10(2) For each health insurer that offers coverage in the large
11group market, the department shall conduct a public meeting
12
regarding large group rate changes. Thebegin insert publicend insert meeting shall occur
13after the department has reviewed the information required in
14subdivisionbegin delete (a), on or before November 1, 2016, and on or before begin insert (a). The department shall
15November 1, annually thereafter.end delete
16schedule the public meeting between November 1, 2016, and March
171, 2017, and annually thereafter between November 1, and March
181, of the subsequent year. The department shall schedule the public
19meeting based on the number of covered lives for the health insurer
20in the large group market, with the largest health insurer first,
21and the smallest health insurer last.end insert
22(c) A health insurer subject to
subdivision (a) shall also disclose
23the following for the aggregate rate filing for the large group market
24submitted under this section in the large group health insurance
25market:
26(1) Number and percentage of rate filings reviewed by the
27following:
28(A) Plan year.
29(B) Segment type.
30(C) Product type.
31(D) Number of insureds.
32(E) Number of covered lives affected.
33(2) Any factors affecting the rate, and the actuarial basis for
34those factors, including:
35(A) Geographic region.
36(B) Age, including age rating factor.
37(C) Occupation.
38(D) Industry.
39(E) Health status, including health status factors considered.
P10 1(F) Employee, employee and dependents, including a description
2of the family composition used.
3(G) Insured share of premiums.
4(H) Insured cost sharing.
5(I) Covered benefits in addition to basic health care services,
6as defined in subdivision (b) of Section 1345 of the Health and
7Safety Code, and other benefits mandated under this article.
8(J) Any other factors that affect the rate that are not otherwise
9specified.
10(3) (A) The health insurer’s overall annual medical trend factor
11assumptions in each rate filing for all benefits and by aggregate
12benefit category, including hospital inpatient, hospital outpatient,
13physician services, prescription drugs and other ancillary services,
14laboratory, and radiology. A health insurer that exclusively
15contracts with no more than two medical groups in the state to
16provide or arrange for professional medical services for the insureds
17of the health insurer shall instead disclose the amount of its actual
18trend experience for the prior contract year by aggregate benefit
19category, using benefit categories that are, to the maximum extent
20possible, the same or similar to those used by other health insurers.
21(B) The amount of
the projected trend attributable to the use of
22services, price inflation, or fees and risk for annual health insurer
23contract trends by aggregate benefit category, such as hospital
24inpatient, hospital outpatient, physician services, prescription drugs
25and other ancillary services, laboratory, and radiology. A health
26insurer that exclusively contracts with no more than two medical
27groups in the state to provide or arrange for professional medical
28services for the insureds of the health insurer shall instead disclose
29the amount of its actual trend experience for the prior contract year
30by aggregate benefit category, using benefit categories that are, to
31the maximum extent possible, the same or similar to those used
32by other health insurers.
33(C) A comparison of claims cost and rate of changes over time.
34(D) Any changes in insured cost sharing over the prior year
35associated with the
submitted rate filing.
36(E) Any changes in insured benefits over the prior year
37associated with the submitted rate filing.
38(F) Any cost containment and quality improvement efforts since
39the health insurer’s last rate filing for the same category of health
40insurance policy. To the extent possible, the health insurer shall
P11 1describe any significant new health care cost containment and
2quality improvement efforts and provide an estimate of potential
3savings together with an estimated cost or savings for the projection
4period.
5(G) The average rate increase for the large group market insureds
6covered in the filing with the average rate weighted by the number
7of covered lives.
8(d) The department may require all health insurers to submit all
9rate filings to the
National Association of Insurance
10Commissioners’ System for Electronic Rate and Form Filing
11(SERFF). Submission of the required rate filings to SERFF shall
12be deemed to be filing with the department for purposes of
13compliance with this section.
Section 10181.45 is added to the Insurance Code, to
15read:
(a) (1) For large group health insurance policies,
17all health insurers shall file with the department at least 60 days
18prior to implementing any rate increase all required rate
19information for any product with a rate increase if either of the
20following apply:
21(A) The rate increase is greater thanbegin insert 150 percent ofend insert the average
22rate increase determined under Section 10181.4.
23(B) The rate increase would cause the health insurer for the
24large group purchaser to incur the excise tax for any part of the
25period the rate increase is proposed to be in effect.
26(2) This filing shall be concurrent with the written notice
27described in subdivision (a) of Section 10199.1.
28(b) A health insurer shall disclose to the department all of the
29following for each large group rate filing described in subdivision
30(a):
31(1) Company name of the health insurer and contact information.
32(2) Number of health insurance policies covered by the filing.
33(3) Health insurance policy form numbers covered by the filing.
34(4) Product type, such as a preferred provider organization or
35health maintenance organization.
36(5) Segment type.
37(6) Type of health insurer involved, such as for profit or not for
38profit.
39(7) Whether the products are opened or closed.
40(8) Enrollment in each health insurance policy and rating form.
P12 1(9) Insured months in each health insurance policy form.
2(c) Any factors affecting the rate, and the actuarial basis for the
3factor, including, but not limited to:
4(1) Geographic region.
5(2) Age, including age rating factors.
6(3) Occupation.
7(4) Industry.
8(5) Health status, including health status factors considered.
9(6) Employee, employee and dependents, including a description
10of the family composition used.
11(7) Insured share of premiums.
12(8) Insured cost sharing.
13(9) Covered benefits in addition to basic health care services,
14as defined in subdivision (b) of Section 1345, and other benefits
15mandated under this article.
16(10) Any other factor that affects the rate that is not otherwise
17specified.
18(d) The health insurer shall also disclose the following:
19(1) Annual rate.
20(2) Total earned premiums in each health insurance policy form.
21(3) Total incurred claims in each health insurance policy form.
22(4) Average rate increase initially requested.
23(5) Review category: initial filing for new product, filing for
24existing product, or resubmission.
25(6) Average rate of increase.
26(7) Effective date of rate increase.
27(8) Number of insureds affected by each health insurance policy
28form.
29(9) The
health insurer’s overall annual medical trend factor
30assumptions in each rate filing for all benefits and by aggregate
31benefit category, including hospital inpatient, hospital outpatient,
32physician services, prescription drugs and other ancillary services,
33laboratory, and radiology. A health insurer that exclusively
34contracts with no more than two medical groups in the state to
35provide or arrange for professional medical services for the insureds
36of the health insurer shall instead disclose the amount of its actual
37trend experience for the prior contract year by aggregate benefit
38category, using benefit categories that are, to the maximum extent
39possible, the same or similar to those used by other health insurers.
P13 1(10) The amount of the projected trend attributable to the use
2of services, price inflation, or fees and risk for annual health
3insurance policy trends by aggregate benefit category, such as
4hospital inpatient, hospital outpatient,
physician services,
5prescription drugs and other ancillary services, laboratory, and
6radiology. A health insurer that exclusively contracts with no more
7than two medical groups in the state to provide or arrange for
8professional medical services for the insureds of the health insurer
9shall instead disclose the amount of its actual trend experience for
10the prior contract year by aggregate benefit category, using benefit
11categories that are, to the maximum extent possible, the same or
12similar to those used by other health insurers.
13(11) A comparison of claims cost and rate of changes over time.
14(12) Any changes in insured cost sharing over the prior year
15associated with the submitted rate filing.
16(13) Any changes in insured benefits over the prior year
17associated with the submitted rate filing.
18(14) The certification described in subdivision (b) of Section
1910181.6.
20(15) Any changes in administrative costs.
21(16) Any other information required for rate review under
22PPACA.
23(17) Any cost containment and quality improvement efforts
24since the health insurer’s last rate filing for the same category of
25health insurance policy. To the extent possible, the health insurer
26shall describe any significant new health care cost containment
27and quality improvement efforts and provide an estimate of
28potential savings together with an estimated cost or savings for
29the projection period.
30(e) Within 60 days after receiving complete information from
31the insurer consistent with this section, the
department shall
32complete its review and finalize a decision as to whether the rate
33is reasonable or unreasonable.
34(f) The department may require all health insurers to submit all
35rate filings to the National Association of Insurance
36Commissioners’ System for Electronic Rate and Form Filing
37(SERFF). Submission of the required rate filings to SERFF shall
38be deemed to be filing with the department for purposes of
39compliance with this section.
P14 1(g) A health insurer shall submit any other information required
2under PPACA. A health insurer shall also submit any other
3information required pursuant to any regulation adopted by the
4department to comply with this article.
Section 10199.1 of the Insurance Code is amended to
6read:
(a) (1) An insurer or nonprofit hospital service plan
8or administrator acting on its behalf shall not terminate a group
9master policy or contract providing hospital, medical, or surgical
10benefits, increase premiums or charges therefor, reduce or eliminate
11benefits thereunder, or restrict eligibility for coverage thereunder
12without providing prior notice of that action. The action shall not
13become effective unless written notice of the action was delivered
14by mail to the last known address of the appropriate insurance
15producer and the appropriate administrator, if any, at least 45 days
16prior to the effective date of the action and to the last known
17address of the group policyholder or group contractholder at least
1860 days prior to the effective date of the action. If nonemployee
19certificate holders or
employees of more than one employer are
20covered under the policy or contract, written notice shall also be
21delivered by mail to the last known address of each nonemployee
22certificate holder or affected employer or, if the action does not
23affect all employees and dependents of one or more employers, to
24the last known address of each affected employee certificate holder,
25at least 60 days prior to the effective date of the action.
26(2) The notice delivered pursuant to paragraph (1) for large
27group health insurance policies shall also include the following
28information:
29(A) The amount by which the rate change for the majority of
30months the rate is proposed to be in effect is greater than the
31average rate increase for individual market products approved by
32the California Health Benefit Exchange for the calendar year.
33(B) The amount by which the rate change for the majority of
34months the rate is proposed to be in effect is greater than the
35average rate increase approved by thebegin delete California Health Benefit begin insert
Board of Administration of the Public Employees’
36Exchangeend delete
37Retirement Systemend insert for the calendar year.
38(C) Whether the rate change would cause the insurer for the
39large group purchaser to incur the excise tax for any part of the
40period the rate increase is proposed to be in effect.
P15 1(b) A holder of a master group policy or a master group
2nonprofit hospital service plan contract or administrator acting on
3its behalf shall not terminate the coverage of, increase premiums
4or charges for, or reduce or eliminate benefits available to, or
5restrict eligibility for coverage of a covered person, employer unit,
6or class of certificate holders covered under the policy or contract
7for hospital, medical, or surgical benefits without first providing
8prior notice of the action. The action shall not become effective
9unless written notice was delivered by mail to the last
known
10address of each affected nonemployee certificate holder or
11employer, or if the action does not affect all employees and
12dependents of one or more employers, to the last known address
13of each affected employee certificate holder, at least 60 days prior
14to the effective date of the action.
15(c) A health insurer that declines to offer coverage to or denies
16enrollment for a large group applying for coverage shall, at the
17time of the denial of coverage, provide the applicant with the
18specific reason or reasons for the decision in writing, in clear,
19easily understandable language.
No reimbursement is required by this act pursuant to
21Section 6 of Article XIII B of the California Constitution because
22the only costs that may be incurred by a local agency or school
23district will be incurred because this act creates a new crime or
24infraction, eliminates a crime or infraction, or changes the penalty
25for a crime or infraction, within the meaning of Section 17556 of
26the Government Code, or changes the definition of a crime within
27the meaning of Section 6 of Article XIII B of the California
28Constitution.
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