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 an excise 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 wouldbegin delete recast theend deletebegin insert add to the existingend insert rate information requirement tobegin insert furtherend insert require large group health care service plans and health insurers to file with the respectivebegin delete 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.end deletebegin insert
department the weighted average rate increase for all large group benefit designs during the 12-month period ending January 1 of the following calendar year.end insert The bill would require the notice of changes to premium rates or coveragebegin insert for large group health plans and insurance policiesend insert 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 Employees’ 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 or insurer, as specified. 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 the Board of Administration of
17the Public Employees’ Retirement System for the calendar year.
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.
21(A) Whether the rate proposed to be in effect is greater than the
22average rate increase for individual market products negotiated
P4 1by the California Health Benefit Exchange for the most recent
2calendar year for which the rates are final.
3(B) Whether the rate proposed to be in effect is greater than the
4average rate increase negotiated by the Board of Administration
5of the Public Employees’ Retirement System for the most recent
6calendar year for which the rates are final.
7(C) Whether the rate change includes any portion of the excise
8tax paid by the health plan.
9(b) A health care service plan that declines to offer
coverage to
10or denies enrollment for a large group applying for coverage shall,
11at the time of the denial of coverage, provide the applicant with
12the specific reason or reasons for the decision in writing, in clear,
13easily understandable language.
Section 1385.04 of the Health and Safety Code is
15amended to read:
(a) For large group health care service plan contracts,
17all health plans shall file with the department all required rate
18information for rate changes aggregated for the entire large group
19market. This information shall be submitted on or before October
201, 2016, and on or before October 1, annually thereafter.
21(b) (1) For large group rate filings, health plans shall submit
22all information that is required by PPACA. A plan shall also submit
23any other information required pursuant to any regulation adopted
24by the department to comply with this article.
25(2) For each health plan that offers coverage in the large group
26market, the department shall conduct a public meeting regarding
27
large group rate changes. The public meeting shall occur after the
28department has reviewed the information required in subdivision
29(a). The department shall schedule the public meeting between
30November 1, 2016, and March 1, 2017, and annually thereafter
31between November 1, and March 1, of the subsequent year. The
32department shall schedule the public meeting based on the number
33of covered lives for the health plan in the large group market, with
34the largest health plan first, and the smallest health plan last.
35(c) A health care service plan subject to subdivision (a)
shall
36also disclose the following for the aggregate rate filing for the
37large group market submitted under this section in the large group
38health plan market:
39(1) Number and percentage of rate filings reviewed by the
40following:
P5 1(A) Plan year.
2(B) Segment type.
3(C) Product type.
4(D) Number of subscribers.
5(E) Number of covered lives affected.
6(2) Any factors affecting the rate, and the actuarial basis for
7those factors, including:
8(A) Geographic region.
9(B) Age, including age rating factors.
10(C) Occupation.
11(D) Industry.
12(E) Health status, including health status factors considered.
13(F) Employee, employee and dependents, including a description
14of the family composition used.
15(G) Enrollee share of premiums.
16(H) Enrollee cost sharing.
17(I) Covered benefits in addition to basic health care services,
18as defined in subdivision (b) of Section 1345, and other benefits
19mandated under this article.
20(J) Any other factors that affect the rate that are not otherwise
21specified.
22(3) (A) The plan’s overall annual medical trend factor
23assumptions in each rate filing for all benefits and by aggregate
24benefit category, including hospital inpatient, hospital outpatient,
25physician services, prescription drugs and other ancillary services,
26laboratory, and radiology. A health plan that exclusively contracts
27with no more than two medical groups in the state to provide or
28arrange for professional medical services for the enrollees of the
29plan shall instead disclose the amount of its actual trend experience
30for the prior contract year by aggregate benefit category, using
31benefit categories that are, to the maximum extent possible, the
32same or similar to those used by other plans.
33(B) The amount of the projected trend attributable to the use of
34services,
price inflation, or fees and risk for annual plan contract
35trends by aggregate benefit category, such as hospital inpatient,
36hospital outpatient, physician services, prescription drugs and other
37ancillary services, laboratory, and radiology. A health plan that
38exclusively contracts with no more than two medical groups in the
39state to provide or arrange for professional medical services for
40the enrollees of the plan shall instead disclose the amount of its
P6 1actual trend experience for the prior contract year by aggregate
2benefit category, using benefit categories that are, to the maximum
3extent possible, the same or similar to those used by other plans.
4(C) A comparison of claims cost and rate of changes over time.
5(D) Any changes in enrollee cost sharing over the prior year
6associated with the submitted rate filing.
7(E) Any changes in enrollee benefits over the prior year
8associated with the submitted rate filing.
9(F) Any cost containment and quality improvement efforts since
10the plan’s last rate filing for the same category of health benefit
11plan. To the extent possible, the plan shall describe any significant
12new health care cost containment and quality improvement efforts
13and provide an estimate of potential savings together with an
14estimated cost or savings for the projection period.
15(G) The average rate increase for the large group market
16enrollees covered in the filing with the average rate weighted by
17the number of covered lives.
18(d) The department may require all health care service plans to
19submit all rate filings to the National Association of Insurance
20Commissioners’ System for Electronic Rate and Form
Filing
21(SERFF). Submission of the required rate filings to SERFF shall
22be deemed to be filing with the department for purposes of
23compliance with this section.
Section 1385.045 is added to the Health and Safety
25Code, to read:
(a) (1) For large group health care service plan
27contracts, all health plans shall file with the department at least 60
28days prior to implementing any rate increase all required rate
29information for any product with a rate increase if either of the
30following apply:
31(A) The rate increase is greater than 150 percent of the average
32rate increase determined under Section 1385.04.
33(B) The rate increase would cause the health plan for the large
34group purchaser to incur the excise tax for any part of the period
35the rate increase is proposed to be in
effect.
36(2) This filing shall be concurrent with the written notice
37described in subdivision (a) of Section 1374.21.
38(b) A plan shall disclose to the department all of the following
39for each large group rate filing described in subdivision (a):
40(1) Company name of plan and contact information.
P7 1(2) Number of plan contract forms covered by the filing.
2(3) Plan contract form numbers covered by the filing.
3(4) Product type, such as a preferred provider organization or
4health maintenance organization.
5(5) Segment type.
6(6) Type of plan involved, such as for profit or not for profit.
7(7) Whether the products are opened or closed.
8(8) Enrollment in each plan contract and rating form.
9(9) Enrollee months in each plan contract form.
10(c) Any factors affecting the rate, and the actuarial basis for the
11factor, including, but not limited to:
12(1) Geographic region.
13(2) Age, including age rating factors.
14(3) Occupation.
15(4) Industry.
16(5) Health status, including health status factors considered.
17(6) Employee, employee and dependents, including a description
18of the family composition used.
19(7) Enrollee share of premiums.
20(8) Enrollee cost sharing.
21(9) Covered benefits in addition to basic health care services,
22as defined in subdivision (b) of Section 1345, and other benefits
23mandated under this article.
24(10) Any other factor that affects the rate that is not otherwise
25specified.
26(d) The plan shall also disclose the following:
27(1) Annual rate.
28(2) Total earned premiums in each plan contract form.
29(3) Total incurred claims in each plan contract form.
30(4) Average rate increase initially requested.
31(5) Review category: initial filing for new product, filing for
32existing product, or resubmission.
33(6) Average rate of increase.
34(7) Effective date of rate increase.
35(8) Number of subscribers or enrollees affected by each plan
36contract form.
37(9) The plan’s overall annual medical trend factor assumptions
38in each rate
filing for all benefits and by aggregate benefit category,
39including hospital inpatient, hospital outpatient, physician services,
40prescription drugs and other ancillary services, laboratory, and
P8 1radiology. A health plan that exclusively contracts with no more
2than two medical groups in the state to provide or arrange for
3professional medical services for the enrollees of the plan shall
4instead disclose the amount of its actual trend experience for the
5prior contract year by aggregate benefit category, using benefit
6categories that are, to the maximum extent possible, the same or
7similar to those used by other plans.
8(10) The amount of the projected trend attributable to the use
9of services, price inflation, or fees and risk for annual plan contract
10trends by aggregate benefit category, such as hospital inpatient,
11hospital outpatient, physician services, prescription drugs and other
12ancillary services, laboratory, and radiology. A health plan
that
13exclusively contracts with no more than two medical groups in the
14state to provide or arrange for professional medical services for
15the enrollees of the plan shall instead disclose the amount of its
16actual trend experience for the prior contract year by aggregate
17benefit category, using benefit categories that are, to the maximum
18extent possible, the same or similar to those used by other plans.
19(11) A comparison of claims cost and rate of changes over time.
20(12) Any changes in enrollee cost sharing over the prior year
21associated with the submitted rate filing.
22(13) Any changes in enrollee benefits over the prior year
23associated with the submitted rate filing.
24(14) The certification described in subdivision (b) of Section
251385.06.
26(15) Any changes in administrative costs.
27(16) Any other information required for rate review under
28PPACA.
29(17) Any cost containment and quality improvement efforts
30since the plan’s last rate filing for the same category of health care
31service plan. To the extent possible, the plan shall describe any
32significant new health care cost containment and quality
33improvement efforts and provide an estimate of potential savings
34together with an estimated cost or savings for the projection period.
35(e) Within 60 days after receiving complete information from
36the plan consistent with this section, the department shall complete
37its review and finalize a decision as to whether the rate is
38reasonable or unreasonable.
39(f) The department may require all health care service plans to
40submit all rate filings to the National Association of Insurance
P9 1Commissioners’ System for Electronic Rate and Form Filing
2(SERFF). Submission of the required rate filings to SERFF shall
3be deemed to be filing with the department for purposes of
4compliance with this section.
5(g) A plan shall submit any other information required under
6PPACA. A plan shall also submit any other information required
7pursuant to any regulation adopted by the department to comply
8with this article.
Section 10181.4 of the Insurance Code is amended to
10read:
(a) For large group health insurance policies, all
12health insurers shall file with the department all required rate
13information for rate changes aggregated for the entire large group
14market. This information shall be submitted on or before October
151, 2016, and on or before October 1, annually thereafter.
16(b) (1) For large group rate filings, health insurers shall submit
17all information that is required by PPACA. A health insurer shall
18also submit any other information required pursuant to any
19regulation adopted by the department to comply with this article.
20(2) For each health insurer that offers coverage in the large
21group market, the department shall conduct a public meeting
22
regarding large group rate changes. The public meeting shall occur
23after the department has reviewed the information required in
24subdivision (a). The department shall schedule the public meeting
25between November 1, 2016, and March 1, 2017, and annually
26thereafter between November 1, and March 1, of the subsequent
27year. The department shall schedule the public meeting based on
28the number of covered lives for the health insurer in the large group
29market, with the largest health insurer first, and the smallest health
30insurer last.
31(c) A health insurer subject to
subdivision (a) shall also disclose
32the following for the aggregate rate filing for the large group market
33submitted under this section in the large group health insurance
34market:
35(1) Number and percentage of rate filings reviewed by the
36following:
37(A) Plan year.
38(B) Segment type.
39(C) Product type.
40(D) Number of insureds.
P10 1(E) Number of covered lives affected.
2(2) Any factors affecting the rate, and the actuarial basis for
3those factors, including:
4(A) Geographic region.
5(B) Age, including age rating factor.
6(C) Occupation.
7(D) Industry.
8(E) Health status, including health status factors considered.
9(F) Employee, employee and dependents, including a description
10of the family composition used.
11(G) Insured share of premiums.
12(H) Insured cost sharing.
13(I) Covered benefits in addition to basic health care services,
14as defined in subdivision (b) of Section 1345 of the Health and
15Safety Code, and other benefits mandated under this article.
16(J) Any other factors that affect the rate that are not otherwise
17specified.
18(3) (A) The health insurer’s overall annual medical trend factor
19assumptions in each rate filing for all benefits and by aggregate
20benefit category, including hospital inpatient, hospital outpatient,
21physician services, prescription drugs and other ancillary services,
22laboratory, and radiology. A health insurer that exclusively
23contracts with no more than two medical groups in the state to
24provide or arrange for professional medical services for the insureds
25of the health insurer shall instead disclose the amount of its actual
26trend experience for the prior contract year by aggregate benefit
27category, using benefit categories that are, to the maximum extent
28possible, the same or similar to those used by other health insurers.
29(B) The amount of
the projected trend attributable to the use of
30services, price inflation, or fees and risk for annual health insurer
31contract trends by aggregate benefit category, such as hospital
32inpatient, hospital outpatient, physician services, prescription drugs
33and other ancillary services, laboratory, and radiology. A health
34insurer that exclusively contracts with no more than two medical
35groups in the state to provide or arrange for professional medical
36services for the insureds of the health insurer shall instead disclose
37the amount of its actual trend experience for the prior contract year
38by aggregate benefit category, using benefit categories that are, to
39the maximum extent possible, the same or similar to those used
40by other health insurers.
P11 1(C) A comparison of claims cost and rate of changes over time.
2(D) Any changes in insured cost sharing over the prior year
3associated with the
submitted rate filing.
4(E) Any changes in insured benefits over the prior year
5associated with the submitted rate filing.
6(F) Any cost containment and quality improvement efforts since
7the health insurer’s last rate filing for the same category of health
8insurance policy. To the extent possible, the health insurer shall
9describe any significant new health care cost containment and
10quality improvement efforts and provide an estimate of potential
11savings together with an estimated cost or savings for the projection
12period.
13(G) The average rate increase for the large group market insureds
14covered in the filing with the average rate weighted by the number
15of covered lives.
16(d) 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.
Section 10181.45 is added to the Insurance Code, to
23read:
(a) (1) For large group health insurance policies,
25all health insurers shall file with the department at least 60 days
26prior to implementing any rate increase all required rate
27information for any product with a rate increase if either of the
28following apply:
29(A) The rate increase is greater than 150 percent of the average
30rate increase determined under Section 10181.4.
31(B) The rate increase would cause the health insurer for the
32large group purchaser to incur the excise tax for any part of the
33period the rate increase is proposed to be in effect.
34(2) This filing shall be concurrent with the written notice
35described in subdivision (a) of Section 10199.1.
36(b) A health insurer shall disclose to the department all of the
37following for each large group rate filing described in subdivision
38(a):
39(1) Company name of the health insurer and contact information.
40(2) Number of health insurance policies covered by the filing.
P12 1(3) Health insurance policy form numbers covered by the filing.
2(4) Product type, such as a preferred provider organization or
3health maintenance organization.
4(5) Segment type.
5(6) Type of health insurer involved, such as for profit or not for
6profit.
7(7) Whether the products are opened or closed.
8(8) Enrollment in each health insurance policy and rating form.
9(9) Insured months in each health insurance policy form.
10(c) Any factors affecting the rate, and the actuarial basis for the
11factor, including, but not limited to:
12(1) Geographic region.
13(2) Age, including age rating factors.
14(3) Occupation.
15(4) Industry.
16(5) Health status, including health status factors considered.
17(6) Employee, employee and dependents, including a description
18of the family composition used.
19(7) Insured share of premiums.
20(8) Insured cost sharing.
21(9) Covered benefits in addition to basic health care services,
22as defined in subdivision (b) of Section 1345, and other benefits
23mandated under this article.
24(10) Any other factor that affects the rate that is not otherwise
25specified.
26(d) The health insurer shall also disclose the following:
27(1) Annual rate.
28(2) Total earned premiums in each health insurance policy form.
29(3) Total incurred claims in each health insurance policy form.
30(4) Average rate increase initially requested.
31(5) Review category: initial filing for new product, filing for
32existing product, or resubmission.
33(6) Average rate of increase.
34(7) Effective date of rate increase.
35(8) Number of insureds affected by each health insurance policy
36form.
37(9) The
health insurer’s overall annual medical trend factor
38assumptions in each rate filing for all benefits and by aggregate
39benefit category, including hospital inpatient, hospital outpatient,
40physician services, prescription drugs and other ancillary services,
P13 1laboratory, and radiology. A health insurer that exclusively
2contracts with no more than two medical groups in the state to
3provide or arrange for professional medical services for the insureds
4of the health insurer shall instead disclose the amount of its actual
5trend experience for the prior contract year by aggregate benefit
6category, using benefit categories that are, to the maximum extent
7possible, the same or similar to those used by other health insurers.
8(10) The amount of the projected trend attributable to the use
9of services, price inflation, or fees and risk for annual health
10insurance policy trends by aggregate benefit category, such as
11hospital inpatient, hospital outpatient,
physician services,
12prescription drugs and other ancillary services, laboratory, and
13radiology. A health insurer that exclusively contracts with no more
14than two medical groups in the state to provide or arrange for
15professional medical services for the insureds of the health insurer
16shall instead disclose the amount of its actual trend experience for
17the prior contract year by aggregate benefit category, using benefit
18categories that are, to the maximum extent possible, the same or
19similar to those used by other health insurers.
20(11) A comparison of claims cost and rate of changes over time.
21(12) Any changes in insured cost sharing over the prior year
22associated with the submitted rate filing.
23(13) Any changes in insured benefits over the prior year
24associated with the submitted rate filing.
25(14) The certification described in subdivision (b) of Section
2610181.6.
27(15) Any changes in administrative costs.
28(16) Any other information required for rate review under
29PPACA.
30(17) Any cost containment and quality improvement efforts
31since the health insurer’s last rate filing for the same category of
32health insurance policy. To the extent possible, the health insurer
33shall describe any significant new health care cost containment
34and quality improvement efforts and provide an estimate of
35potential savings together with an estimated cost or savings for
36the projection period.
37(e) Within 60 days after receiving complete information from
38the insurer consistent with this section, the
department shall
39complete its review and finalize a decision as to whether the rate
40is reasonable or unreasonable.
P14 1(f) The department may require all health insurers to submit all
2rate 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 health insurer shall submit any other information required
8under PPACA. A health insurer shall also submit any other
9information required pursuant to any regulation adopted by the
10department to comply with this article.
begin insertSection 1385.045 is added to the end insertbegin insertHealth and Safety
12Codeend insertbegin insert, to read:end insert
(a) For large group health care service plan
14contracts, each health plan shall file with the department the
15weighted average rate increase for all large group benefit designs
16during the 12-month period ending January 1 of the following
17calendar year. The average shall be weighted by the number of
18enrollees in each large group benefit design in the plan’s large
19group market and adjusted to the most commonly sold large group
20benefit design by enrollment during the 12-month period. For the
21purposes of this section, the large group benefit design includes,
22but is not limited to, benefits such as basic health care services
23and prescription drugs. The large group benefit design shall not
24include cost sharing, including, but not limited to, deductibles,
25copays, and coinsurance.
26(b) (1) A plan shall also submit any other information required
27pursuant to any regulation adopted by the department to comply
28with this article.
29(2) The department shall conduct an annual public meeting
30regarding large group rates within three months of posting the
31aggregate information described in this section in order to permit
32a public discussion of the reasons for the changes in the rates,
33benefits, and cost sharing in the large group market. The meeting
34shall be held in either the Los Angeles area or the San Francisco
35Bay area.
36(c) A health care service plan subject to subdivision (a) shall
37also disclose the following for the aggregate rate information for
38the large group market submitted under this section:
P15 1(1) For rates
effective during the 12-month period ending
2January 1 of the following year, number and percentage of rate
3changes reviewed by the following:
4(A) Plan year.
5(B) Segment type, including whether the rate is community rated,
6in whole or in part.
7(C) Product type.
8(D) Number of enrollees.
9(E) The number of products sold that have materially different
10benefits, cost sharing, or other elements of benefit design.
11(2) For rates effective during the 12-month period ending
12January 1 of the following year, any factors affecting the base
13rate, and the actuarial basis for those factors, including all of the
14following:
15(A) Geographic region.
16(B) Age, including age rating factors.
17(C) Occupation.
18(D) Industry.
19(E) Health status factors, including, but not limited to,
20experience and utilization.
21(F) Employee, and employee and dependents, including a
22description of the family composition used.
23(G) Enrollees’ share of premiums.
24(H) Enrollees’ cost sharing.
25(I) Covered benefits in addition to basic health care services,
26as defined in Section 1345, and other
benefits mandated under
27this article.
28(J) Which market segment, if any, is fully experience rated and
29which market segment, if any, is in part experience rated and in
30part community rated.
31(K) Any other factor that affects the rate that is not otherwise
32specified.
33(3) (A) The plan’s overall annual medical trend factor
34assumptions for all benefits and by aggregate benefit category,
35including hospital inpatient, hospital outpatient, physician services,
36prescription drugs and other ancillary services, laboratory, and
37radiology for the applicable 12-month period ending January 1
38of the following year. A health plan that exclusively contracts with
39no more than two medical groups in the state to provide or arrange
40for professional medical services for the enrollees of the plan shall
P16 1instead disclose the amount of its
actual trend experience for the
2prior contract year by aggregate benefit category, using benefit
3categories, to the maximum extent possible, that are the same as,
4or similar to, those used by other plans.
5(B) The amount of the projected trend separately attributable
6to the use of services, price inflation, and fees and risk for annual
7plan contract trends by aggregate benefit category, including
8hospital inpatient, hospital outpatient, physician services,
9prescription drugs and other ancillary services, laboratory, and
10radiology. A health plan that exclusively contracts with no more
11than two medical groups in the state to provide or arrange for
12professional medical services for the enrollees of the plan shall
13instead disclose the amount of its actual trend experience for the
14prior contract year by aggregate benefit category, using benefit
15categories that are, to the maximum extent possible, the same or
16similar to those used by other plans.
17(C) A comparison of the aggregate per enrollee per month costs
18and rate of changes over the last five years for each of the
19following:
20(i) Premiums.
21(ii) Claims costs, if any.
22(iii) Administrative expenses.
23(iv) Taxes and fees.
24(D) Any changes in enrollee cost sharing over the prior year
25associated with the submitted rate information, including both of
26the following:
27(i) Actual copays, coinsurance, deductibles, annual out of pocket
28maximums, and any other cost sharing by the benefit categories
29determined by the department.
30(ii) Any aggregate changes in enrollee cost sharing over the
31prior years as measured by the weighted average actuarial value,
32weighted by the number of enrollees.
33(E) Any changes in enrollee benefits over the prior year,
34including a description of benefits added or eliminated, as well as
35any aggregate changes, as measured as a percentage of the
36aggregate claims costs, listed by the categories determined by the
37department.
38(F) Any cost containment and quality improvement efforts since
39the plan’s prior year’s information pursuant to this section for the
40same category of health benefit plan. To the extent possible, the
P17 1plan shall describe any significant new health care cost
2containment and quality improvement efforts and provide an
3estimate of potential savings together with an estimated cost or
4savings for the projection
period.
5(G) The number of products covered by the information that
6incurred the excise tax paid by the health plan.
7(d) The information required pursuant to this section shall be
8submitted to the department on or before October 1, 2016, and on
9or before October 1 annually thereafter. Information submitted
10pursuant to this section is subject to Section 1385.07.
begin insertSection 10181.45 is added to the end insertbegin insertInsurance Codeend insertbegin insert, to
12read:end insert
(a) For large group health insurance policies, each
14health insurer shall file with the department the weighted average
15rate increase for all large group benefit designs during the
1612-month period ending January 1 of the following calendar year.
17The average shall be weighted by the number of insureds in each
18large group benefit design in the insurer’s large group market and
19adjusted to the most commonly sold large group benefit design by
20enrollment during the 12-month period. For the purposes of this
21section, the large group benefit design includes, but is not limited
22to, benefits such as basic health care services and prescription
23drugs. The large group benefit design shall not include cost
24sharing, including, but not limited to, deductibles, copays, and
25coinsurance.
26(b) (1) A health insurer shall also submit any other information
27required pursuant to any regulation adopted by the department to
28comply with this article.
29(2) The department shall conduct an annual public meeting
30regarding large group rates within three months of posting the
31aggregate information described in this section in order to permit
32a public discussion of the reasons for the changes in the rates,
33benefits, and cost sharing in the large group market. The meeting
34shall be held in either the Los Angeles area or the San Francisco
35Bay area.
36(c) A health insurer subject to subdivision (a) shall also disclose
37the following for the aggregate rate information for the large group
38market submitted under this section:
P18 1(1) For rates
effective during the 12-month period ending
2January 1 of the following year, number and percentage of rate
3changes reviewed by the following:
4(A) Plan year.
5(B) Segment type, including whether the rate is community rated,
6in whole or in part.
7(C) Product type.
8(D) Number of insureds.
9(E) The number of products sold that have materially different
10benefits, cost sharing, or other elements of benefit design.
11(2) For rates effective during the 12-month period ending
12January 1 of the following year, any factors affecting the base
13rate, and the actuarial basis for those factors, including all of the
14following:
15(A) Geographic region.
16(B) Age, including age rating factors.
17(C) Occupation.
18(D) Industry.
19(E) Health status factors, including, but not limited to,
20experience and utilization.
21(F) Employee, and employee and dependents, including a
22description of the family composition used.
23(G) Insureds’ share of premiums.
24(H) Insureds’ cost sharing.
25(I) Covered benefits in addition to basic health care services,
26as defined in Section 1345 of the
Health and Safety Code, and
27other benefits mandated under this article.
28(J) Which market segment, if any, is fully experience rated and
29which market segment, if any, is in part experience rated and in
30part community rated.
31(K) Any other factor that affects the rate that is not otherwise
32specified.
33(3) (A) The insurer’s overall annual medical trend factor
34assumptions for all benefits and by aggregate benefit category,
35including hospital inpatient, hospital outpatient, physician services,
36prescription drugs and other ancillary services, laboratory, and
37radiology for the applicable 12-month period ending January 1
38of the following year. A health insurer that exclusively contracts
39with no more than two medical groups in the state to provide or
40arrange for professional medical services for the health insurer’s
P19 1insureds
shall instead disclose the amount of its actual trend
2experience for the prior contract year by aggregate benefit
3category, using benefit categories, to the maximum extent possible,
4that are the same or similar to those used by other insurers.
5(B) The amount of the projected trend separately attributable
6to the use of services, price inflation, and fees and risk for annual
7policy trends by aggregate benefit category, including hospital
8inpatient, hospital outpatient, physician services, prescription
9drugs and other ancillary services, laboratory, and radiology. A
10health insurer that exclusively contracts with no more than two
11medical groups in the state to provide or arrange for professional
12medical services for the insureds shall instead disclose the amount
13of its actual trend experience for the prior contract year by
14aggregate benefit category, using benefit categories that are, to
15the maximum extent possible, the same or similar to those
used by
16other insurers.
17(C) A comparison of the aggregate per insured per month costs
18and rate of changes over the last five years for each of the
19following:
20(i) Premiums.
21(ii) Claims costs, if any.
22(iii) Administrative expenses.
23(iv) Taxes and fees.
24(D) Any changes in insured cost sharing over the prior year
25associated with the submitted rate information, including both of
26the following:
27(i) Actual copays, coinsurance, deductibles, annual out of pocket
28maximums, and any other cost sharing by the benefit categories
29determined by the department.
30(ii) Any aggregate changes in insured cost sharing over the
31prior years as measured by the weighted average actuarial value,
32weighted by the number of insureds.
33(E) Any changes in insured benefits over the prior year,
34including a description of benefits added or eliminated as well as
35any aggregate changes as measured as a percentage of the
36aggregate claims costs, listed by the categories determined by the
37department.
38(F) Any cost containment and quality improvement efforts made
39since the insurer’s prior year’s information pursuant to this section
40for the same category of health insurer. To the extent possible, the
P20 1insurer shall describe any significant new health care cost
2containment and quality improvement efforts and provide an
3estimate of potential savings together with an estimated cost or
4savings for the
projection period.
5(G) The number of products covered by the information that
6incurred the excise tax paid by the health insurer.
7(d) The information required pursuant to this section shall be
8submitted to the department on or before October 1, 2016, and on
9or before October 1 annually thereafter. Information submitted
10pursuant to this section is subject to Section 10181.7.
Section 10199.1 of the Insurance Code is amended to
13read:
(a) (1) An insurer or nonprofit hospital service plan
15or administrator acting on its behalf shall not terminate a group
16master policy or contract providing hospital, medical, or surgical
17benefits, increase premiums or charges therefor, reduce or eliminate
18benefits thereunder, or restrict eligibility for coverage thereunder
19without providing prior notice of that action. The action shall not
20become effective unless written notice of the action was delivered
21by mail to the last known address of the appropriate insurance
22producer and the appropriate administrator, if any, at least 45 days
23prior to the effective date of the action and to the last known
24address of the group policyholder or group contractholder at least
2560 days
prior to the effective date of the action. If nonemployee
26certificate holders or employees of more than one employer are
27covered under the policy or contract, written notice shall also be
28delivered by mail to the last known address of each nonemployee
29certificate holder or affected employer or, if the action does not
30affect all employees and dependents of one or more employers, to
31the last known address of each affected employee certificate holder,
32at least 60 days prior to the effective date of the action.
33(2) The notice delivered pursuant to paragraph (1) for large
34group health insurance policies shall also include the following
35information:
36(A) The amount by which the rate change for the majority of
37months the rate is proposed to be in effect is greater than the
38average rate increase for individual market products approved by
39the California Health Benefit Exchange for the calendar year.
P21 1(B) The amount by which the rate change for the majority of
2months the rate is proposed to be in effect is greater than the
3average rate increase approved by the
Board of Administration of
4the Public Employees’ Retirement System for the calendar year.
5(C) Whether the rate change would cause the insurer for the
6large group purchaser to incur the excise tax for any part of the
7period the rate increase is proposed to be in effect.
8(A) Whether the rate proposed to be in effect is greater than the
9average rate increase for individual market products negotiated
10by the California Health Benefit Exchange for the most recent
11calendar year for which the rates are final.
12(B) Whether the rate proposed to be in effect is greater than the
13average rate increase negotiated
by the Board of Administration
14of the Public Employees’ Retirement System for the most recent
15calendar year for which the rates are final.
16(C) Whether the rate change includes any portion of the excise
17tax paid by the health insurer.
18(b) A holder of a master group policy or a master group
19nonprofit hospital service plan contract or administrator acting on
20its behalf shall not terminate the coverage of, increase premiums
21or charges for, or reduce or eliminate benefits available to, or
22restrict eligibility for coverage of a covered person, employer unit,
23or class of certificate holders covered under the policy or contract
24for hospital, medical, or surgical benefits without first providing
25prior notice of the action. The action shall not become effective
26unless written notice was delivered
by mail to the last known
27address of each affected nonemployee certificate holder or
28employer, or if the action does not affect all employees and
29dependents of one or more employers, to the last known address
30of each affected employee certificate holder, at least 60 days prior
31to the effective date of the action.
32(c) A health insurer that declines to offer coverage to or denies
33enrollment for a large group applying for coverage shall, at the
34time of the denial of coverage, provide the applicant with the
35specific reason or reasons for the decision in writing, in clear,
36easily understandable language.
No reimbursement is required by this act pursuant to
39Section 6 of Article XIII B of the California Constitution because
40the only costs that may be incurred by a local agency or school
P22 1district will be incurred because this act creates a new crime or
2infraction, eliminates a crime or infraction, or changes the penalty
3for a crime or infraction, within the meaning of Section 17556 of
4the Government Code, or changes the definition of a crime within
5the meaning of Section 6 of Article XIII B of the California
6Constitution.
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