BILL NUMBER: AB 591 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 15, 2010
AMENDED IN SENATE JULY 23, 2009
AMENDED IN ASSEMBLY JUNE 1, 2009
AMENDED IN ASSEMBLY APRIL 15, 2009
INTRODUCED BY Assembly Member De La Torre
FEBRUARY 25, 2009
An act to add Sections 1385.5 and 1363.08 to the Health
and Safety Code, and to amend Section 754 of, and to add Sections
10113.96 and 10123.133 to, the Insurance Code, relating to insurance.
An act to add Sections 1385.01 and 1385.02 to the
Health and Safety Code, and to add Sections 10181 and 10182 to the
Insurance Code, relating to health care coverage, and declaring the
urgency thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 591, as amended, De La Torre. Insurance: referral
fees: health plans and insurance: filings: identification cards.
Health care coverage: premium rates.
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 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.
Under existing law, no change in premium rates or coverage in a
health care service plan contract or health insurance policy may
become effective without written prior notification of the change to
the contractholder or policyholder. Existing law prohibits a plan or
insurer during the term of a group contract or policy from changing
the rate of the premium, copayment, coinsurance, or deducti
ble during specified time periods.
This bill would require health care service plans to annually file
with the Department of Managed Health Care a copy of each of their
plan contracts issued or outstanding in this state as of the end of
the previous calendar year and a list of the marketing names used for
those contracts, if any. The bill would require health insurers to
annually file with the Insurance Commissioner a list of their health
insurance policies issued or outstanding in this state in the
previous calendar year with more than 50,000 insureds, including the
form number and marketing name for those policies. The bill would
require the Department of Insurance to use those form numbers and
marketing names when tracking the associated insurers and policies.
The bill would also require a health care service plan or health
insurer that issues identification cards to enrollees or insureds to
include certain additional information in those cards and would
require a plan or insurer to update cards issued to enrollees or
insureds prior to January 1, 2010, with this additional information,
as specified.
This bill would prohibit a health care service plan or health
insurer from increasing the premium rate it charges a subscriber or
policyholder for a period of 90 days beginning with the date this
provision becomes operative. Thereafter, this provision would become
inoperative and the bill would prohibit a plan or insurer from
increasing premium rates by more than the average percentage increase
in the medical care component of the consumer price index for the
immediately preceding calendar year, as calculated by the United
States Bureau of Labor Statistics, unless the plan or insurer files
an application with the Department of Managed Health Care or the
Department of Insurance, respectively, and the application is
approved by that department. The bill would prohibit approval of an
application unless the applicant completes an audit showing that its
medical loss ratio would meet or exceed a certain percentage, as
specified. The bill would also prohibit a plan or insurer from
increasing the premium rate it charges a subscriber or policyholder
during the 12 months following the last premium rate increase. The
bill would authorize the Department of Managed Health Care and the
Department of Insurance to adopt regulations implementing certain of
these provisions.
Because a willful violation of the bill's requirements with
respect to health care service plans would be a crime, the bill would
impose a state-mandated local program.
Under existing law, it is unlawful for a person to solicit,
receive, offer, or pay a referral fee for the referral of an
individual for the furnishing of services or goods for which the
person knows or should have known that whole or partial reimbursement
is or may be made by an insurer. Existing law makes a violation of
those provisions a misdemeanor, punishable by a fine not to exceed
$1,000 for each violation.
This bill would increase that penalty to $5,000 for each
violation.
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.
This bill would declare that it is to take effect immediately as
an urgency statute.
Vote: majority 2/3 . Appropriation:
no. Fiscal committee: yes. State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1385.01 is added to the
Health and Safety Code , to read:
1385.01. (a) Notwithstanding Section 1374.20 or any other
provision of law, a health care service plan shall not increase the
premium rate it charges a subscriber for a period of 90 days
beginning on the date this section becomes operative.
(b) This section shall not apply to a plan that increases the
premium rate it charges a subscriber when the subscriber enters into
a new or amended contract that includes increased benefits, provided
that the increased premium rate is equivalent to the premium rate
charged by the plan for contracts that include similar increased
benefits.
(c) This section shall not apply to a health care service plan
contract that is issued through a publicly funded state health care
coverage program, including the Medi-Cal program and the Healthy
Families Program, or to Medicare supplement contracts. This
subdivision shall not be construed to exempt health care service plan
contracts issued through the Public Employees' Medical and Hospital
Care Act.
(d) This section shall become inoperative 90 days after it becomes
operative.
SEC. 2. Section 1385.02 is added to the
Health and Safety Code , to read:
1385.02. (a) A health care service plan shall not increase the
premium rate it charges a subscriber by more than the average
percentage increase in the medical care component of the consumer
price index for the immediately preceding calendar year, as
calculated by the United States Bureau of Labor Statistics, unless it
submits an application to the department, and the application is
approved by the department. An application shall not be approved
unless the applicant completes an audit showing that the medical loss
ratio of the applicant, taking into account the proposed premium
rate increase, would meet or exceed the applicable percentage
provided for in Section 2718 of the federal Public Health Service Act
(Public Law 111-148). The department shall have six months following
the receipt of an application to approve or disapprove the
application.
(b) A health care service plan shall not increase the premium rate
it charges a subscriber during the 12 months following the effective
date of the immediately preceding premium rate increase applied by
the plan to the subscriber.
(c) The department may adopt regulations to implement this section
in accordance with Chapter 3.5 (commencing with Section 11340) of
Division 3 of Title 2 of the Government Code.
(d) This section shall not apply to a health care service plan
contract that is issued through a publicly funded state health care
coverage program, including the Medi-Cal program and the Healthy
Families Program, or to Medicare supplement contracts. This
subdivision shall not be construed to exempt health care service plan
contracts issued through the Public Employees' Medical and Hospital
Care Act.
(e) This section shall become operative on the date that Section
1385.01 becomes inoperative.
SEC. 3. Section 10181 is added to the
Insurance Code , to read:
10181. (a) Notwithstanding Section 10199.48 or any other
provision of law, a health insurer shall not increase the premium
rate it charges a policyholder for a period of 90 days beginning on
the date this section becomes operative.
(b) This section shall not apply to an insurer that increases the
premium rate it charges a policyholder when the policyholder enters
into a new or amended policy that includes increased benefits,
provided that the increased premium rate is equivalent to the premium
rate charged by the insurer for policies that include similar
increased benefits.
(c) This section shall not apply to a health insurance policy that
is issued through a publicly funded state health care coverage
program, including the Medi-Cal program and the Healthy Families
Program, or to Medicare supplement policies. This subdivision shall
not be construed to exempt health insurance policies issued through
the Public Employees' Medical and Hospital Care Act.
(d) This section shall become inoperative 90 days after it becomes
operative.
SEC. 4. Section 10182 is added to the
Insurance Code , to read:
10182. (a) A health insurer shall not increase the premium rate
it charges a policyholder by more than the average percentage
increase in the medical care component of the consumer price index
for the immediately preceding calendar year, as calculated by the
United States Bureau of Labor Statistics, unless it submits an
application to the department, and the application is approved by the
department. An application shall not be approved unless the
applicant completes an audit showing that the medical loss ratio of
the applicant, taking into account the proposed premium rate
increase, would meet or exceed the applicable percentage provided for
in Section 2718 of the federal Public Health Service Act (Public Law
111-148). The department shall have six months following the receipt
of an application to approve or disapprove the application.
(b) A health insurer shall not increase the premium rate it
charges a policyholder during the 12 months following the effective
date of the immediately preceding premium rate increase applied by
the insurer to the policyholder.
(c) The department may adopt regulations to implement this section
in accordance with Chapter 3.5 (commencing with Section 11340) of
Division 3 of Title 2 of the Government Code.
(d) This section shall not apply to a health insurance policy that
is issued through a publicly funded state health care coverage
program, including the Medi-Cal program and the Healthy Families
Program, or to Medicare supplement policies. This subdivision shall
not be construed to exempt health insurance policies issued through
the Public Employees' Medical and Hospital Care Act.
(e) This section shall become operative on the date that Section
10181 becomes inoperative.
SEC. 5. No reimbursement is required by this act
pursuant to Section 6 of Article XIII B 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 XIII B of the
California Constitution.
SEC. 6. This act is an urgency statute necessary
for the immediate preservation of the public peace, health, or safety
within the meaning of Article IV of the Constitution and shall go
into immediate effect. The facts constituting the necessity are:
In order to protect consumers from health care coverage premium
rate increases, it is necessary that this act take effect
immediately.
SECTION 1. Section 1385.5 is added to the
Health and Safety Code, to read:
1385.5. A health care service plan shall, by June 30 of each
year, file with the department a copy of each of its plan contracts
issued or outstanding in this state as of the end of the previous
calendar year and a list of the marketing names used for those
contracts, if any.
SEC. 2. Section 1363.08 is added to the Health
and Safety Code, to read:
1363.08. If a health care service plan issues identification
cards to enrollees, the cards shall identify the department as the
entity that regulates the plan and shall include, but not be limited
to, the appropriate telephone number of the department that an
enrollee may call for purposes of obtaining assistance or information
about submitting a grievance to either the plan or the department
pursuant to subdivision (b) of Section 1368. A plan shall update
identification cards issued to enrollees prior to January 1, 2010,
with the information required by this section during the plan's next
annual reissuance of the cards or, if the plan does not annually
reissue cards, by July 1, 2010.
SEC. 3. Section 754 of the Insurance Code is
amended to read:
754. (a) It is unlawful for any person to solicit, receive,
offer, or pay any referral fee for the referral of an individual for
the furnishing of services or goods for which the person knows or
should have known that whole or partial reimbursement is or may be
made, directly or indirectly, by any insurer. As used in this
section, a referral fee is a fee paid by a person furnishing goods or
services to another in return for the referral of an individual to
that person for the furnishing of services or goods. It includes any
referral fee, kickback, bribe, or rebate, whether made directly or
indirectly, overtly or covertly, or in cash or in kind. This
subdivision does not apply to any of the following:
(1) Discounts or similar reductions in prices.
(2) Referral fees between attorneys if legal services are provided
pursuant to a contingency fee arrangement if any referral fee is
consistent with the Rules of Professional Conduct of the State Bar of
California.
(b) This section applies to all forms of insurance covering a
motor vehicle, including commercial and personal lines, and
comprehensive coverage, property damage coverage, collision coverage,
and liability coverage.
(c) A violation of this section is a misdemeanor punishable by a
fine not to exceed five thousand dollars ($5,000) for each violation.
Proceedings to enforce this section may be brought by any district
attorney or other prosecuting attorney.
SEC. 4. Section 10113.96 is added to the
Insurance Code, to read:
10113.96. (a) A health insurer shall, by June 30 of each year,
file with the commissioner a list of its health insurance polices
with more than 50,000 insureds issued or outstanding in this state as
of the end of the previous calendar year. This list shall identify
each type of policy by the form number approved by the department and
by marketing name.
(b) The department shall use the form number and marketing name
provided pursuant to subdivision (a) when tracking the associated
health insurance policy or health insurer under this part.
(c) The filing required by this section shall be in addition to
the annual filing required under Section 10192.13.
SEC. 5. Section 10123.133 is added to the
Insurance Code, to read:
10123.133. If a health insurer issues identification cards to
insureds, the cards shall identify the department as the entity that
regulates the insurer and shall include, but not be limited to, the
toll-free telephone number of the unit of the department that deals
with consumer affairs. A health insurer shall update identification
cards issued to insureds prior to January 1, 2010, with the
information required by this section during the insurer's next annual
reissuance of the cards or, if the insurer does not annually reissue
cards, by July 1, 2010.
SEC. 6. No reimbursement is required by this
act pursuant to Section 6 of Article XIII B 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 XIII B of the
California Constitution.