Amended in Senate March 30, 2016

Senate BillNo. 1010


Introduced by Senator Hernandez

February 11, 2016


An act to amend Sectionbegin delete 1385.03 of the Health and Safety Code, and to amend Section 10181.3 of the Insurance Code, relating to health care coverage.end deletebegin insert 1385.045 of, to add Section 1367.245 to, and to add Chapter 9 (commencing with Section 127675) to Part 2 of Division 107 of the Health and Safety Code, and to amend Section 10181.45 of, and to add Section 10123.204 to, the Insurance Code, relating to health care.end insert

LEGISLATIVE COUNSEL’S DIGEST

SB 1010, as amended, Hernandez. Healthbegin delete care coverage: rate review.end deletebegin insert care: prescription drug costs.end insert

begin insert

Existing law, the Knox-Keene Health Care Service Plan Act of 1975 (Knox-Keene Act), provides for the licensure and regulation of health care service plans by the Department of Managed Health Care (DMHC) 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 (DOI). Existing law requires health care service plans and health insurers to file specified rate information with DMHC or DOI, as applicable, for health care service plan contracts or health insurance policies in the individual or small group markets and for health care service plan contracts and health insurance policies in the large group market.

end insert
begin insert

This bill would require health care service plans or health insurers that file the above-described rate information to report to DMHC or DOI, on a date no later than the reporting of the rate information, specified cost information regarding covered prescription drugs, including generic drugs, brand name drugs, specialty drugs, and prescription drugs provided in an outpatient setting or sold in a retail setting. The information reported would include, but not be limited to, the 25 most frequently prescribed drugs and the average wholesale price for each drug and the 25 most costly drugs by total plan or insurer spending and the average wholesale price for each drug. DMHC and DOI would be required to compile the reported information into a consumer-friendly report that demonstrates the overall impact of drug costs on health care premiums and publish the reports on their Internet Web sites by January 1 of each year. Except for the report, DMHC and DOI would be required to keep confidential all information provided pursuant to these provisions.

end insert
begin insert

Because a willful violation of the Knox-Keene Act is a crime, this bill would impose a state-mandated local program.

end insert
begin insert

This bill would require a manufacturer of a branded prescription drug to notify state purchasers, health care service plans, health insurers, and the chairs of specified Senate and Assembly committees if it is increasing the wholesale acquisition cost of the drug by more than 10% during any 12-month period or if it intends to introduce to market a prescription drug that has a wholesale acquisition cost of $10,000 or more annually or per course of treatment. The bill would require a manufacturer of a generic prescription drug with a specified price to notify state purchasers, health care service plans, health insurers, and the chairs of specified Senate and Assembly committees if it is increasing the wholesale acquisition cost of the drug by more than 10% during any 12-month period. The bill would require a manufacturer, within 30 days of notification of a price increase, or of the introduction to market of a prescription drug that has a wholesale acquisition cost of $10,000 or more annually or per course of treatment, to report specified information regarding the drug price to each state purchaser, health care service plan, and health insurer, and would require a manufacturer who fails to provide the required information within the 30 days to be subject to a civil penalty of $1,000 per day. The bill would also require the Legislature to conduct an annual public hearing regarding the price increases and information reported, as prescribed.

end insert
begin insert

Existing law requires, for large group health care service plan contracts and health insurance policies, each health care service plan or health insurer to file with DMHC or DOI the weighted average rate increase for all large group benefit designs during the 12-month period ending January 1 of the following calendar year, and to also disclose specified information for the aggregate rate information for the large group market.

end insert
begin insert

This bill would add to that disclosure of information for the aggregate rate information for the large group market, the requirement for health care service plans or health insurers to disclose specified cost information regarding covered prescription drugs, including generic drugs, brand name drugs excluding specialty drugs, and specialty drugs dispensed at a pharmacy, network pharmacy, or mail order pharmacy for outpatient use.

end insert
begin insert

Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

end insert
begin insert

This bill would make legislative findings to that effect.

end insert
begin insert

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.

end insert
begin insert

This bill would provide that no reimbursement is required by this act for a specified reason.

end insert
begin delete

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care (DMHC) 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 (DOI). Existing law requires health care service plans and health insurers to file specified rate information with DMHC or DOI, as applicable, at least 60 days prior to implementing a rate change for individual or small group health care service plan contracts or health insurance policies. Existing law requires a plan or insurer to disclose as part of the filing, among other things, specified information by aggregate benefit category, such as physician services, ancillary services, and prescription drugs.

end delete
begin delete

This bill would add as aggregate benefit categories “other medical professional services” and “other medical devices and therapies.” 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.

end delete
begin delete

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.

end delete
begin delete

This bill would provide that no reimbursement is required by this act for a specified reason.

end delete

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

P4    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 1367.245 is added to the end insertbegin insertHealth and
2Safety Code
end insert
begin insert, end insertimmediately preceding Section 1367.25begin insert, to read:end insert

begin insert
3

begin insert1367.245.end insert  

(a) (1) A health care service plan that reports rate
4information pursuant to Section 1385.03 or 1385.045 shall report
5the information described in paragraph (2) to the department on
6a date no later than it reports the rate information.

7
(2) For all covered prescription drugs, including generic drugs,
8brand name drugs, specialty drugs, and prescription drugs
9provided in an outpatient setting or sold in a retail setting, all of
10the following shall be reported:

11
(A) The 25 most frequently prescribed drugs and the average
12wholesale price for each drug.

13
(B) The 25 most costly drugs by total plan spending and the
14average wholesale price for each drug.

15
(C) The 25 drugs with the highest year-over-year increase and
16the average wholesale price for each drug.

17
(b) The department shall compile the information reported
18pursuant to subdivision (a) into a consumer-friendly report that
19demonstrates the overall impact of drug costs on health care
20premiums. The data in the report shall be aggregated and shall
21not reveal information specific to individual health care service
22plans.

23
(c) For the purposes of this section, a “specialty drug” is one
24that exceeds the threshold for a specialty drug under the Medicare
25Part D program (Medicare Prescription Drug, Improvement, and
26Modernization Act of 2003 (Public Law 108-173)).

27
(d) By January 1 of each year, the department shall publish on
28its Internet Web site the report required pursuant to subdivision
29(b).

P5    1
(e) After the report required in subdivision (b) is released, the
2department shall include the report as part of the public meeting
3required pursuant to subdivision (b) of Section 1385.045.

4
(f) Except for the report required pursuant to subdivision (b),
5the department shall keep confidential all of the information
6provided to the department pursuant to this section, and that
7information shall be exempt from disclosure under the California
8Public Records Act (Chapter 3.5 (commencing with Section 6250)
9of Division 7 of Title 1 of the Government Code).

end insert
10begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 1385.045 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
11amended to read:end insert

12

1385.045.  

(a) For large group health care service plan
13contracts, each health plan shall file with the department the
14weighted average rate increase for all large group benefit designs
15during the 12-month period ending January 1 of the following
16calendar year. The average shall be weighted by the number of
17enrollees in each large group benefit design in the plan’s large
18group market and adjusted to the most commonly sold large group
19benefit design by enrollment during the 12-month period. For the
20purposes of this section, the large group benefit design includes,
21but is not limited to, benefits such as basic health care services
22and prescription drugs. The large group benefit design shall not
23include cost sharing, including, but not limited to, deductibles,
24copays, and coinsurance.

25(b) (1) A plan shall also submit any other information required
26pursuant to any regulation adopted by the department to comply
27with this article.

28(2) The department shall conduct an annual public meeting
29regarding large group rates within three months of posting the
30aggregate information described in this section in order to permit
31a public discussion of the reasons for the changes in the rates,
32benefits, and cost sharing in the large group market. The meeting
33shall be held in either the Los Angeles area or the San Francisco
34Bay area.

35(c) A health care service plan subject to subdivision (a) shall
36also disclose the following for the aggregate rate information for
37the large group market submitted under this section:

38(1) For rates effective during the 12-month period ending
39January 1 of the following year, number and percentage of rate
40changes reviewed by the following:

P6    1(A) Plan year.

2(B) Segment type, including whether the rate is community
3rated, in whole or in part.

4(C) Product type.

5(D) Number of enrollees.

6(E) The number of products sold that have materially different
7benefits, cost sharing, or other elements of benefit design.

8(2) For rates effective during the 12-month period ending
9January 1 of the following year, any factors affecting the base rate,
10and the actuarial basis for those factors, including all of the
11following:

12(A) Geographic region.

13(B) Age, including age rating factors.

14(C) Occupation.

15(D) Industry.

16(E) Health status factors, including, but not limited to,
17experience and utilization.

18(F) Employee, and employee and dependents, including a
19description of the family composition used.

20(G) Enrollees’ share of premiums.

21(H) Enrollees’ cost sharing.

22(I) Covered benefits in addition to basic health care services,
23as defined in Section 1345, and other benefits mandated under this
24article.

25(J) Which market segment, if any, is fully experience rated and
26which market segment, if any, is in part experience rated and in
27part community rated.

28(K) Any other factor that affects the rate that is not otherwise
29specified.

30(3) (A) The plan’s overall annual medical trend factor
31assumptions for all benefits and by aggregate benefit category,
32including hospital inpatient, hospital outpatient, physician services,
33prescription drugs and other ancillary services, laboratory, and
34radiology for the applicable 12-month period ending January 1 of
35the following year. A health plan that exclusively contracts with
36no more than two medical groups in the state to provide or arrange
37for professional medical services for the enrollees of the plan shall
38instead disclose the amount of its actual trend experience for the
39prior contract year by aggregate benefit category, using benefit
P7    1categories, to the maximum extent possible, that are the same as,
2or similar to, those used by other plans.

3(B) The amount of the projected trend separately attributable
4to the use of services, price inflation, and fees and risk for annual
5plan contract trends by aggregate benefit category, including
6hospital inpatient, hospital outpatient, physician services,
7prescription drugs and other ancillary services, laboratory, and
8radiology. A health plan that exclusively contracts with no more
9than two medical groups in the state to provide or arrange for
10professional medical services for the enrollees of the plan shall
11instead disclose the amount of its actual trend experience for the
12prior contract year by aggregate benefit category, using benefit
13categories that are, to the maximum extent possible, the same or
14similar to those used by other plans.

15(C) A comparison of the aggregate per enrollee per month costs
16and rate of changes over the last five years for each of the
17following:

18(i) Premiums.

19(ii) Claims costs, if any.

20(iii) Administrative expenses.

21(iv) Taxes and fees.

22(D) Any changes in enrollee cost sharing over the prior year
23associated with the submitted rate information, including both of
24the following:

25(i) Actual copays, coinsurance, deductibles, annual out of pocket
26maximums, and any other cost sharing by the benefit categories
27determined by the department.

28(ii) Any aggregate changes in enrollee cost sharing over the
29prior years as measured by the weighted average actuarial value,
30weighted by the number of enrollees.

31(E) Any changes in enrollee benefits over the prior year,
32including a description of benefits added or eliminated, as well as
33any aggregate changes, as measured as a percentage of the
34aggregate claims costs, listed by the categories determined by the
35department.

36(F) Any cost containment and quality improvement efforts since
37the plan’s prior year’s information pursuant to this section for the
38same category of health benefit plan. To the extent possible, the
39plan shall describe any significant new health care cost containment
40and quality improvement efforts and provide an estimate of
P8    1potential savings together with an estimated cost or savings for
2the projection period.

3(G) The number of products covered by the information that
4incurred the excise tax paid by the health plan.

begin insert

5
(4) (A) For covered prescription drugs, including generic drugs,
6brand name drugs excluding specialty drugs, and specialty drugs
7dispensed at a plan pharmacy, network pharmacy, or mail order
8pharmacy for outpatient use all of the following shall be disclosed:

end insert
begin insert

9
(i) The percentage of the premium attributable to prescription
10drug costs for the prior year for each category of prescription
11drugs.

end insert
begin insert

12
(ii) The year-over-year increase in the percentage of the
13premium attributable to each category of prescription drugs.

end insert
begin insert

14
(iii) The year-over-year increase in per member, per month
15costs for drug prices compared to other components of the health
16care premium.

end insert
begin insert

17
(iv) The specialty tier formulary list.

end insert
begin insert

18
(B) The plan shall include the percentage of the premium
19attributable to prescription drugs administered in a doctor’s office
20that are part of the medical benefit as separate from the pharmacy
21benefit, if available.

end insert

22(d) The information required pursuant to this section shall be
23submitted to the department on or before October 1, 2016, and on
24or before October 1 annually thereafter. Information submitted
25pursuant to this section is subject to Section 1385.07.

26begin insert

begin insertSEC. 3.end insert  

end insert

begin insertChapter 9 (commencing with Section 127675) is added
27to Part 2 of Division 107 of the end insert
begin insertHealth and Safety Codeend insertbegin insert, to read:end insert

begin insert

28 

29Chapter  begin insert9.end insert Prescription Drug Pricing for State
30Purchasers
31

 

32

begin insert127675.end insert  

(a) This chapter shall apply to any manufacturer of
33a prescription drug that is purchased or reimbursed by any of the
34following:

35
(1) A state purchaser in California, including, but not limited
36to, the Public Employees’ Retirement System, the State Department
37of Health Care Services, the Department of General Services, and
38the Department of Corrections and Rehabilitation, or an entity
39acting on behalf of a state purchaser.

40
(2) A health care service plan licensed pursuant to Section 1353.

P9    1
(3) A health insurer holding a valid outstanding certificate of
2authority from the Insurance Commissioner.

3
(b) (1) A manufacturer of a branded prescription drug shall
4notify each state purchaser, health care service plan, or health
5insurer if it is increasing the wholesale acquisition cost of a
6prescription drug by more than 10 percent during any 12-month
7period or if it intends to introduce to market a prescription drug
8that has a wholesale acquisition cost of ten thousand dollars
9($10,000) or more annually or per course of treatment. The notice
10shall be provided in writing at least 60 days prior to the planned
11effective date of the increase. A copy of the notice shall be provided
12concurrently to the Chairs of the Senate Committee on
13Appropriations, the Senate Committee on Budget and Fiscal
14Review, the Assembly Committee on Appropriations, and the
15Assembly Committee on Budget.

16
(2) A manufacturer of a generic prescription drug with a price
17of one hundred dollars ($100) or more per 30-day supply shall
18notify a state purchaser, health care service plan, or health insurer
19if it is increasing the wholesale acquisition cost of the prescription
20drug by more than 10 percent during a 12-month period. The notice
21shall be provided in writing at least 60 days prior to the planned
22effective date of the increase. A copy of the notice shall be provided
23concurrently to the Chairs of the Senate Committee on
24Appropriations, the Senate Committee on Budget and Fiscal
25Review, the Assembly Committee on Appropriations, and the
26Assembly Committee on Budget.

27
(3) (A) Within 30 days of notification of a price increase, or of
28the introduction to market of a prescription drug that has a
29wholesale acquisition cost of ten thousand dollars ($10,000) or
30more annually or per course of treatment, a manufacturer shall
31report all of the following information to each state purchaser,
32health care service plan, or health insurer:

33
(i) A justification for the proposed increase in the price of the
34drug, including all information and supporting documentation as
35to why the increase is justified.

36
(ii) The total dollar amount of public funding received by the
37manufacturer for the development and marketing, including, but
38not limited to, state and federal tax credits, grants, and all other
39public subsidies.

40
(iii) The expected marketing budget for the drug.

P10   1
(iv) The date the drug was purchased if it was not developed by
2the manufacturer.

3
(v) A schedule of past price increases for the drug.

4
(B) Failure to report the information to state purchasers, health
5care service plans, or health insurers shall result in a civil penalty
6of one thousand dollars ($1,000) per day for every day after the
730-day notification period.

8
(c) The Legislature shall conduct an annual public hearing
9regarding the price increases and information reported pursuant
10to this section. The hearing shall provide for public discussion of
11the reasons for the price increases, emerging trends, decreases in
12drug prices, and the impact on health care affordability and
13premiums.

14
(d) This chapter shall not restrict the legal ability of a
15pharmaceutical manufacturer to change prices as permitted under
16federal law.

end insert
17begin insert

begin insertSEC. 4.end insert  

end insert

begin insertSection 10123.204 is added to the end insertbegin insertInsurance Codeend insertbegin insert, end insert18
immediately preceding Section 10123.206begin insert, to read:end insert

begin insert
19

begin insert10123.204.end insert  

(a) (1) A health insurer that reports rate
20information pursuant to Section 10181.3 or 10181.45 shall report
21the information described in paragraph (2) to the department on
22a date no later than it reports the rate information.

23
(2) For all covered prescription drugs, including generic drugs,
24brand name drugs, specialty drugs, and prescription drugs
25provided in an outpatient setting or sold in a retail setting, all of
26the following shall be reported:

27
(A) The 25 most frequently prescribed drugs and the average
28wholesale price for each drug.

29
(B) The 25 most costly drugs by total insurer spending and the
30average wholesale price for each drug.

31
(C) The 25 drugs with the highest year-over-year increase and
32the average wholesale price for each drug.

33
(b) The department shall compile the information reported
34pursuant to subdivision (a) into a consumer-friendly report that
35demonstrates the overall impact of drug costs on health care
36premiums. The data in the report shall be aggregated and shall
37not reveal information specific to individual health insurers.

38
(c) For the purposes of this section, a “specialty drug” is one
39that exceeds the threshold for a specialty drug under the Medicare
P11   1Part D program (Medicare Prescription Drug, Improvement, and
2Modernization Act of 2003 (Public Law 108-173)).

3
(d) By January 1 of each year, the department shall publish on
4its Internet Web site the report required pursuant to subdivision
5(b).

6
(e) After the report required in subdivision (b) is released, the
7department shall include the report as part of the public meeting
8required pursuant to subdivision (b) of Section 10181.45.

9
(f) Except for the report required pursuant to subdivision (b),
10the department shall keep confidential all of the information
11provided to the department pursuant to this section, and that
12information shall be exempt from disclosure under the California
13Public Records Act (Chapter 3.5 (commencing with Section 6250)
14of Division 7 of Title 1 of the Government Code).

end insert
15begin insert

begin insertSEC. 5.end insert  

end insert

begin insertSection 10181.45 of the end insertbegin insertInsurance Codeend insertbegin insert is amended
16to read:end insert

17

10181.45.  

(a) For large group health insurance policies, each
18health insurer shall file with the department the weighted average
19rate increase for all large group benefit designs during the 12-month
20period ending January 1 of the following calendar year. The
21average shall be weighted by the number of insureds in each large
22group benefit design in the insurer’s large group market and
23adjusted to the most commonly sold large group benefit design by
24enrollment during the 12-month period. For the purposes of this
25section, the large group benefit design includes, but is not limited
26to, benefits such as basic health care services and prescription
27drugs. The large group benefit design shall not include cost sharing,
28including, but not limited to, deductibles, copays, and coinsurance.

29(b) (1) A health insurer shall also submit any other information
30required pursuant to any regulation adopted by the department to
31comply with this article.

32(2) The department shall conduct an annual public meeting
33regarding large group rates within three months of posting the
34aggregate information described in this section in order to permit
35a public discussion of the reasons for the changes in the rates,
36benefits, and cost sharing in the large group market. The meeting
37shall be held in either the Los Angeles area or the San Francisco
38Bay area.

P12   1(c) A health insurer subject to subdivision (a) shall also disclose
2the following for the aggregate rate information for the large group
3market submitted under this section:

4(1) For rates effective during the 12-month period ending
5January 1 of the following year, number and percentage of rate
6changes reviewed by the following:

7(A) Plan year.

8(B) Segment type, including whether the rate is community
9rated, in whole or in part.

10(C) Product type.

11(D) Number of insureds.

12(E) The number of products sold that have materially different
13benefits, cost sharing, or other elements of benefit design.

14(2) For rates effective during the 12-month period ending
15January 1 of the following year, any factors affecting the base rate,
16and the actuarial basis for those factors, including all of the
17following:

18(A) Geographic region.

19(B) Age, including age rating factors.

20(C) Occupation.

21(D) Industry.

22(E) Health status factors, including, but not limited to,
23experience and utilization.

24(F) Employee, and employee and dependents, including a
25description of the family composition used.

26(G) Insureds’ share of premiums.

27(H) Insureds’ cost sharing.

28(I) Covered benefits in addition to basic health care services,
29as defined in Section 1345 of the Health and Safety Code, and
30other benefits mandated under this article.

31(J) Which market segment, if any, is fully experience rated and
32which market segment, if any, is in part experience rated and in
33part community rated.

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

36(3) (A) The insurer’s overall annual medical trend factor
37assumptions for all benefits and by aggregate benefit category,
38including hospital inpatient, hospital outpatient, physician services,
39prescription drugs and other ancillary services, laboratory, and
40radiology for the applicable 12-month period ending January 1 of
P13   1the following year. A health insurer that exclusively contracts with
2no more than two medical groups in the state to provide or arrange
3for professional medical services for the health insurer’s insureds
4shall instead disclose the amount of its actual trend experience for
5the prior contract year by aggregate benefit category, using benefit
6categories, to the maximum extent possible, that are the same or
7similar to those used by other insurers.

8(B) The amount of the projected trend separately attributable
9to the use of services, price inflation, and fees and risk for annual
10policy trends by aggregate benefit category, including hospital
11inpatient, hospital outpatient, physician services, prescription drugs
12and other ancillary services, laboratory, and radiology. A health
13insurer that exclusively contracts with no more than two medical
14groups in the state to provide or arrange for professional medical
15services for the insureds 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 insurers.

19(C) A comparison of the aggregate per insured per month costs
20and rate of changes over the last five years for each of the
21following:

22(i) Premiums.

23(ii) Claims costs, if any.

24(iii) Administrative expenses.

25(iv) Taxes and fees.

26(D) Any changes in insured cost sharing over the prior year
27associated with the submitted rate information, including both of
28the following:

29(i) Actual copays, coinsurance, deductibles, annual out of pocket
30maximums, and any other cost sharing by the benefit categories
31determined by the department.

32(ii) Any aggregate changes in insured cost sharing over the prior
33years as measured by the weighted average actuarial value,
34weighted by the number of insureds.

35(E) Any changes in insured benefits over the prior year,
36including a description of benefits added or eliminated as well as
37any aggregate changes as measured as a percentage of the aggregate
38claims costs, listed by the categories determined by the department.

39(F) Any cost containment and quality improvement efforts made
40since the insurer’s prior year’s information pursuant to this section
P14   1for the same category of health insurer. To the extent possible, the
2insurer shall describe any significant new health care cost
3containment and quality improvement efforts and provide an
4estimate of potential savings together with an estimated cost or
5savings for the projection period.

6(G) The number of products covered by the information that
7incurred the excise tax paid by the health insurer.

begin insert

8
(4) (A) For covered prescription drugs, including generic drugs,
9brand name drugs excluding specialty drugs, and specialty drugs
10dispensed at a pharmacy, network pharmacy, or mail order
11pharmacy for outpatient use all of the following shall be disclosed:

end insert
begin insert

12
(i) The percentage of the premium attributable to prescription
13drug costs for the prior year for each category of prescription
14drugs.

end insert
begin insert

15
(ii) The year-over-year increase in the percentage of the
16premium attributable to each category of prescription drugs.

end insert
begin insert

17
(iii) The year-over-year increase in per member, per month
18costs for drug prices compared to other components of the health
19care premium.

end insert
begin insert

20
(iv) The specialty tier formulary list.

end insert
begin insert

21
(B) The insurer shall include the percentage of the premium
22attributable to prescription drugs administered in a doctor’s office
23that are part of the medical benefit as separate from the pharmacy
24benefit, if available.

end insert

25(d) The information required pursuant to this section shall be
26submitted to the department on or before October 1, 2016, and on
27or before October 1 annually thereafter. Information submitted
28pursuant to this section is subject to Section 10181.7.

29begin insert

begin insertSEC. 6.end insert  

end insert
begin insert

The Legislature finds and declares that Sections 1 and
304 of this act, which add Section 1367.245 to the Health and Safety
31Code and Section 10123.204 to the Insurance Code, impose a
32limitation on the public’s right of access to the meetings of public
33bodies or the writings of public officials and agencies within the
34meaning of Section 3 of Article I of the California Constitution.
35Pursuant to that constitutional provision, the Legislature makes
36the following findings to demonstrate the interest protected by this
37limitation and the need for protecting that interest:

end insert
begin insert

38
In order to protect proprietary, confidential information reported
39by prescription drug manufacturers, health care service plans,
40and health insurers, and to protect the integrity of the competitive
P15   1market, it is necessary that this act limit the public’s right of access
2to that information.

end insert
3begin insert

begin insertSEC. 7.end insert  

end insert
begin insert

No reimbursement is required by this act pursuant to
4Section 6 of Article XIII B of the California Constitution because
5the only costs that may be incurred by a local agency or school
6district will be incurred because this act creates a new crime or
7infraction, eliminates a crime or infraction, or changes the penalty
8for a crime or infraction, within the meaning of Section 17556 of
9the Government Code, or changes the definition of a crime within
10the meaning of Section 6 of Article XIII B of the California
11Constitution.

end insert
begin delete
12

SECTION 1.  

Section 1385.03 of the Health and Safety Code
13 is amended to read:

14

1385.03.  

(a) All health care service plans shall file with the
15department all required rate information for individual and small
16group health care service plan contracts at least 60 days prior to
17implementing any rate change.

18(b) A plan shall disclose to the department all of the following
19for each individual and small group rate filing:

20(1) Company name and contact information.

21(2) Number of plan contract forms covered by the filing.

22(3) Plan contract form numbers covered by the filing.

23(4) Product type, such as a preferred provider organization or
24health maintenance organization.

25(5) Segment type.

26(6) Type of plan involved, such as for profit or not for profit.

27(7) Whether the products are opened or closed.

28(8) Enrollment in each plan contract and rating form.

29(9) Enrollee months in each plan contract form.

30(10) Annual rate.

31(11) Total earned premiums in each plan contract form.

32(12) Total incurred claims in each plan contract form.

33(13) Average rate increase initially requested.

34(14) Review category: initial filing for new product, filing for
35existing product, or resubmission.

36(15) Average rate of increase.

37(16) Effective date of rate increase.

38(17) Number of subscribers or enrollees affected by each plan
39contract form.

P16   1(18) The plan’s overall annual medical trend factor assumptions
2in each rate filing for all benefits and by aggregate benefit category,
3including hospital inpatient, hospital outpatient, physician services,
4prescription drugs and other ancillary services, laboratory, and
5radiology. A plan may provide aggregated additional data that
6demonstrates or reasonably estimates year-to-year cost increases
7in specific benefit categories in the geographic regions listed in
8Sections 1357.512 and 1399.855. A health plan that exclusively
9contracts with no more than two medical groups in the state to
10provide or arrange for professional medical services for the
11enrollees of the plan shall instead disclose the amount of its actual
12trend experience for the prior contract year by aggregate benefit
13category, using benefit categories that are, to the maximum extent
14possible, the same or similar to those used by other plans.

15(19) The amount of the projected trend attributable to the use
16of services, price inflation, or fees and risk for annual plan contract
17trends by aggregate benefit category, such as hospital inpatient,
18hospital outpatient, physician services, other medical professional
19services, ancillary services, prescription drugs and other medical
20devices and therapies, laboratory, and radiology. A health plan
21that exclusively contracts with no more than two medical groups
22in the state to provide or arrange for professional medical services
23for the enrollees of the plan shall instead disclose the amount of
24its actual trend experience for the prior contract year by aggregate
25benefit category, using benefit categories that are, to the maximum
26extent possible, the same or similar to those used by other plans.

27(20) A comparison of claims cost and rate of changes over time.

28(21) Any changes in enrollee cost sharing over the prior year
29associated with the submitted rate filing.

30(22) Any changes in enrollee benefits over the prior year
31associated with the submitted rate filing.

32(23) The certification described in subdivision (b) of Section
331385.06.

34(24) Any changes in administrative costs.

35(25) Any other information required for rate review under
36PPACA.

37(c) A health care service plan subject to subdivision (a) shall
38also disclose the following aggregate data for all rate filings
39submitted under this section in the individual and small group
40health plan markets:

P17   1(1) Number and percentage of rate filings reviewed by the
2following:

3(A) Plan year.

4(B) Segment type.

5(C) Product type.

6(D) Number of subscribers.

7(E) Number of covered lives affected.

8(2) The plan’s average rate increase by the following categories:

9(A) Plan year.

10(B) Segment type.

11(C) Product type.

12(3) Any cost containment and quality improvement efforts since
13the plan’s last rate filing for the same category of health benefit
14plan. To the extent possible, the plan shall describe any significant
15new health care cost containment and quality improvement efforts
16and provide an estimate of potential savings together with an
17estimated cost or savings for the projection period.

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.

24(e) A plan shall submit any other information required under
25PPACA. A plan shall also submit any other information required
26pursuant to any regulation adopted by the department to comply
27with this article.

28

SEC. 2.  

Section 10181.3 of the Insurance Code is amended to
29read:

30

10181.3.  

(a) All health insurers shall file with the department
31all required rate information for individual and small group health
32insurance policies at least 60 days prior to implementing any rate
33change.

34(b) An insurer shall disclose to the department all of the
35following for each individual and small group rate filing:

36(1) Company name and contact information.

37(2) Number of policy forms covered by the filing.

38(3) Policy form numbers covered by the filing.

39(4) Product type, such as indemnity or preferred provider
40 organization.

P18   1(5) Segment type.

2(6) Type of insurer involved, such as for profit or not for profit.

3(7) Whether the products are opened or closed.

4(8) Enrollment in each policy and rating form.

5(9) Insured months in each policy form.

6(10) Annual rate.

7(11) Total earned premiums in each policy form.

8(12) Total incurred claims in each policy form.

9(13) Average rate increase initially requested.

10(14) Review category: initial filing for new product, filing for
11existing product, or resubmission.

12(15) Average rate of increase.

13(16) Effective date of rate increase.

14(17) Number of policyholders or insureds affected by each
15policy form.

16(18) The insurer’s overall annual medical trend factor
17assumptions in each rate filing for all benefits and by aggregate
18benefit category, including hospital inpatient, hospital outpatient,
19physician services, prescription drugs and other ancillary services,
20laboratory, and radiology. An insurer may provide aggregated
21additional data that demonstrates or reasonably estimates
22year-to-year cost increases in specific benefit categories in the
23geographic regions listed in Sections 10753.14 and 10965.9. For
24purposes of this paragraph, “major geographic region” shall be
25defined by the department and shall include no more than nine
26regions.

27(19) The amount of the projected trend attributable to the use
28of services, price inflation, or fees and risk for annual policy trends
29by aggregate benefit category, such as hospital inpatient, hospital
30outpatient, physician services, other medical professional services,
31ancillary services, prescription drugs and other medical devices
32and therapies, laboratory, and radiology.

33(20) A comparison of claims cost and rate of changes over time.

34(21) Any changes in insured cost sharing over the prior year
35associated with the submitted rate filing.

36(22) Any changes in insured benefits over the prior year
37associated with the submitted rate filing.

38(23) The certification described in subdivision (b) of Section
3910181.6.

40(24) Any changes in administrative costs.

P19   1(25) Any other information required for rate review under
2PPACA.

3(c) An insurer subject to subdivision (a) shall also disclose the
4following aggregate data for all rate filings submitted under this
5section in the individual and small group health insurance markets:

6(1) Number and percentage of rate filings reviewed by the
7following:

8(A) Plan year.

9(B) Segment type.

10(C) Product type.

11(D) Number of policyholders.

12(E) Number of covered lives affected.

13(2) The insurer’s average rate increase by the following
14categories:

15(A) Plan year.

16(B) Segment type.

17(C) Product type.

18(3) Any cost containment and quality improvement efforts since
19the insurer’s last rate filing for the same category of health benefit
20plan. To the extent possible, the insurer 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(d) The department may require all health insurers to submit all
25rate filings to the National Association of Insurance
26Commissioners’ System for Electronic Rate and Form Filing
27(SERFF). Submission of the required rate filings to SERFF shall
28be deemed to be filing with the department for purposes of
29compliance with this section.

30(e) A health insurer shall submit any other information required
31under PPACA. A health insurer shall also submit any other
32information required pursuant to any regulation adopted by the
33department to comply with this article.

34

SEC. 3.  

No reimbursement is required by this act pursuant to
35Section 6 of Article XIII B of the California Constitution because
36the only costs that may be incurred by a local agency or school
37district will be incurred because this act creates a new crime or
38infraction, eliminates a crime or infraction, or changes the penalty
39for a crime or infraction, within the meaning of Section 17556 of
40the Government Code, or changes the definition of a crime within
P20   1the meaning of Section 6 of Article XIII B of the California
2Constitution.

end delete


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