BILL NUMBER: AB 1266	CHAPTERED
	BILL TEXT

	CHAPTER   535
	FILED WITH SECRETARY OF STATE   OCTOBER 4, 1995
	APPROVED BY GOVERNOR   OCTOBER 4, 1995
	PASSED THE SENATE   SEPTEMBER 15, 1995
	PASSED THE ASSEMBLY   SEPTEMBER 15, 1995
	AMENDED IN SENATE   AUGUST 30, 1995
	AMENDED IN SENATE   JUNE 13, 1995
	AMENDED IN ASSEMBLY   APRIL 17, 1995

INTRODUCED BY  Assembly Member Goldsmith

                        FEBRUARY 23, 1995

   An act to amend Section 1363 of the Health and Safety Code, and to
amend Sections 10603 and 10604 of the Insurance Code, relating to
health coverage.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 1266, Goldsmith.  Health coverage:  required disclosures.
   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 Commissioner of Corporations.  Under existing law,
willful violation of the act is a misdemeanor.
   Existing law requires the commissioner to require the use by plans
of certain disclosure forms containing specified information.
   This bill would add additional information required to be
disclosed by plans.
   Existing law provides for the regulation of disability insurance
policies by the Department of Insurance and requires disclosure forms
for disability insurance policies to contain certain information.
   This bill would require the disclosure forms to also contain a
summary of the process used to authorize or deny payments for
services under the coverage provided by the policy.
   By changing the definition of a crime, this 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.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 1363 of the Health and Safety Code is amended
to read:
   1363.  (a) The commissioner shall require the use by each plan of
disclosure forms or materials containing information regarding the
benefits, services, and terms of the plan contract as the
commissioner may require, so as to afford the public, subscribers,
and enrollees with a full and fair disclosure of the provisions of
the plan in readily understood language and in a clearly organized
manner.  The commissioner may require that the materials be presented
in a reasonably uniform manner so as to facilitate comparisons
between plan contracts of the same or other types of plans.  Nothing
contained in this chapter shall preclude the commissioner from
permitting the disclosure form to be included with the evidence of
coverage or plan contract.
   The disclosure form shall provide for at least the following
information, in concise and specific terms, relative to the plan,
together with additional information as may be required by the
commissioner, in connection with the plan or plan contract:
   (1) The principal benefits and coverage of the plan.
   (2) The exceptions, reductions, and limitations that apply to the
plan.
   (3) The full premium cost of the plan.
   (4) Any copayment, coinsurance, or deductible requirements that
may be incurred by the member or the member's family in obtaining
coverage under the plan.
   (5) The terms under which the plan may be renewed by the plan
member, including any reservation by the plan of any right to change
premiums.
   (6) A statement that the disclosure form is a summary only, and
that the plan contract itself should be consulted to determine
governing contractual provisions.
   (7) A statement as to when benefits shall cease in the event of
nonpayment of the prepaid or periodic charge and the effect of
nonpayment upon an enrollee who is hospitalized or undergoing
treatment for an ongoing condition.
   (8) To the extent that the plan permits a free choice of provider
to its subscribers and enrollees, the statement shall disclose the
nature and extent of choice permitted and the financial liability
which is, or may be, incurred by the subscriber, enrollee, or a third
party by reason of the exercise of that choice.
   (9) A summary of the provisions required by subdivision (g) of
Section 1373, if applicable.
   (10) If the plan utilizes arbitration to settle disputes, a
statement of that fact.
   (11) A summary of, and a notice of the availability of, the
process the plan uses to authorize or deny health care services under
the benefits provided by the plan, pursuant to Section 1363.5.
   (12) A description of any limitations on the patient's choice of
primary care or specialty care physician based on service area.
   (13) General authorization requirements for referral by a primary
care physician to a specialty care physician.
   (14) Conditions and procedures for disenrollment.
   (b) All plans, solicitors, and representatives of a plan shall,
when presenting any plan contract for examination or sale to an
individual prospective plan member, provide the individual with a
properly completed disclosure form, as prescribed by the commissioner
pursuant to this section for each plan so examined or sold.
   (c) In the case of group contracts, the completed disclosure form
and evidence of coverage shall be presented to the contractholder
upon delivery of the completed health care service plan agreement.
   (d) Group contractholders shall disseminate copies of the
completed disclosure form to all persons eligible to be a subscriber
under the group contract at the time those persons are offered the
plan.  Where the individual group members are offered a choice of
plans, separate disclosure forms shall be supplied for each plan
available.  Each group contractholder shall also disseminate or cause
to be disseminated copies of the evidence of coverage to all
subscribers enrolled under the group contract.
   (e) In the case of conflicts between the group contract and the
evidence of coverage, the provisions of the evidence of coverage
shall be binding upon the plan notwithstanding any provisions in the
group contract which may be less favorable to subscribers or
enrollees.
   (f) In addition to the other disclosures required by this section,
every health care service plan and any agent or employee of the plan
shall, when presenting a plan for examination or sale to any
individual purchaser or the representative of a group consisting of
25 or fewer individuals, disclose in writing the ratio of premium
costs to health services paid for plan contracts with individuals and
with groups of the same or similar size for the plan's preceding
fiscal year.  A plan may report that information by geographic area,
provided the plan identifies the geographic area and reports
information applicable to that geographic area.
  SEC. 2.  Section 10603 of the Insurance Code is amended to read:
   10603.  (a) On or before April 1, 1975, the commissioner shall
promulgate a standard supplemental disclosure form for all disability
insurance policies.  Upon the appropriate disclosure form as
prescribed by the commissioner, each insurer shall provide, in easily
understood language and in a uniform, clearly organized manner, as
prescribed and required by the commissioner, such summary information
about each such policy offered by such insurer as the commissioner
finds is necessary to provide for full and fair disclosure of the
provisions of their policies.
   (b) Nothing contained in this section shall preclude the
disclosure form from being included with the evidence of coverage or
certificate of coverage or policy.
  SEC. 3.  Section 10604 of the Insurance Code is amended to read:
   10604.  The disclosure form shall include the following
information, in concise and specific terms, relative to the
disability insurance policy:
   (a) The applicable category or categories of coverage provided by
the policy, from among the following:
   (1) Basic hospital expense coverage.
   (2) Basic medical-surgical expense coverage.
   (3) Hospital confinement indemnity coverage.
   (4) Major medical expense coverage.
   (5) Disability income protection coverage.
   (6) Accident only coverage.
   (7) Specified disease or specified accident coverage.
   (8) Such other categories as the commissioner may prescribe.
   (b) The principal benefits and coverage of the disability
insurance policy.
   (c) The exceptions, reductions, and limitations that apply to such
policy.
   (d) A summary, including a citation of the relevant contractual
provisions, of the process used to authorize or deny payments for
services under the coverage provided by the policy.  This subdivision
shall only apply to policies of disability insurance that cover
hospital, medical, or surgical expenses.
   (e) The full premium cost of such policy.
   (f) Any copayment, coinsurance, or deductible requirements that
may be incurred by the insured or his family in obtaining coverage
under the policy.
   (g) The terms under which the policy may be renewed by the
insured, including any reservation by the insurer of any right to
change premiums.
   (h) A statement that the disclosure form is a summary only, and
that the policy itself should be consulted to determine governing
contractual provisions.
  SEC. 4.  No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.
   Notwithstanding Section 17580 of the Government Code, unless
otherwise specified, the provisions of this act shall become
operative on the same date that the act takes effect pursuant to the
California Constitution.