BILL ANALYSIS
AB 1543
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1543 (Jones and Fletcher)
As Amended June 23, 2009
2/3 vote. Urgency
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|ASSEMBLY: |76-0 |(June 2, 2009) |SENATE: |40-0 |(June 28, |
| | | | | |2009) |
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Original Committee Reference: HEALTH
SUMMARY : Makes conforming changes to the requirements and
standards that apply to Medicare supplement contracts and
policies (collectively Medigap policies), for the purpose of
complying with recent federal law changes affecting the
benefits, the issuance and the pricing of Medigap policies.
Contains an urgency clause to ensure that the provisions of this
bill go into immediate effect upon enactment. Specifically,
this bill :
1)Makes conforming changes to standards applicable to Medigap
policies to comply with the Medicare Improvements for Patients
and Providers Act of 2008 (MIPPA) including the following:
a) Establishes requirements for 11 new standardized Medigap
policies with an effective date on or after June 1, 2010,
consistent with MIPPA, as follows:
i) Reduces from 17 to 11 the number of standardized
policies, eliminates Plans H, I, J and High-Deductible
Plan J as the existing standardized policies,
establishes the 11 new standardized policies as Plans
A-D, Plan F, High-Deductible Plan F, Plan G, and Plans
K-N;
ii) Requires health plan and health insurer issuers of
Medigap policies (issuers) to, at a minimum, offer the
basic plan, Plan A, and requires issuers choosing to
offer any Medigap policy or policies other than Plan A
to also offer either Plan C or Plan F;
iii) Deletes from the new standardized Medigap policies
preventive and at-home care benefits, and deletes
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prescription drug coverage from all standardized plans
because prescription drug coverage is now provided
through Medicare Part D;
iv) Includes hospice and respite care services as
basic (core) benefits which must be included in all
standardized Medigap policies;
v) Makes changes to cost-sharing elements of
standardized plans, as specified;
vi) Makes conforming changes to marketing and consumer
notice provisions to reflect the changes in
standardized Medigap policies;
vii) Prohibits issuers from requiring, requesting, or
obtaining health information, at the time of
application, from individuals entitled to coverage
under an annual open enrollment or guaranteed issue
provision, as specified; and,
viii) Prohibits issuers from using any new or innovative
benefits, including a change in cost sharing, to change
or reduce benefits.
b) Retains and revises the existing standards applicable to
Medigap policies with an effective date on or before June
1, 2010 and includes the following new provisions:
i) Permits issuers to allow an enrollee, subscriber,
policyholder, or certificate holder (enrollee) to
exchange an existing policy for one of the new
standardized policies, and requires issuers that chose to
do so to comply with specified requirements, including,
among other things, limiting any new preexisting
condition exclusion to six months, as specified, and only
for benefits not covered in the prior policy; and,
ii) Requires an issuer choosing to offer an enrollee the
opportunity to change to a newer policy pursuant to 1) b)
i) above to make the same offer to all enrollees in a
particular policy, unless to do so would be in violation
of state or federal law.
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c) Establishes a guaranteed issue right to a Medigap policy
for Medicare-eligible individuals (beneficiaries), who are
also eligible for Medi-Cal, but have a share of cost
imposed because of a change in their income, (known as the
Medi-Cal share of cost program) if the individual certifies
at the time of the Medigap application that he/she has not
met the share of cost. Existing law establishes a
guaranteed issue right for individuals losing Medi-Cal
coverage but does explicitly include those only eligible
with a Medi-Cal share of cost;
d) Requires, upon timely receipt of notice from an enrollee
of their eligibility for Medi-Cal, as specified, an issuer
to refund any portion of the premium, adjusted for paid
claims, for that period during which an enrollee is
eligible for Medi-Cal and, at the enrollee's request, the
Medigap policy was placed in suspension; and,
e) Clarifies that beneficiaries are entitled to guaranteed
issue of a Medigap policy when the employer no longer
provides insurance that covers all of the coinsurance
charges under Part B of Medicare. Existing law requires
guaranteed issue of a Medigap policy for beneficiaries when
the employer ceases to provide coverage for some or all of
the supplemental benefits, but does not specifically
include a drop in coverage for Part B costs where the
employer continues other Medigap coverage.
2)For Medigap policies that become effective on or after May 21,
2009, requires issuers, including a third party administrator
acting on behalf of an issuer, to adhere to requirements of
the federal Genetic Information Nondiscrimination Act of 2008
(GINA) including, among other things, all of the following:
a) Prohibits an issuer from denying or conditioning the
issuance, eligibility or effectiveness of a Medigap policy,
including any preexisting condition exclusion, or
discriminating in the pricing of a Medigap policy, on the
basis of genetic information with respect to an individual
or family member;
b) Prohibits an issuer from requesting or requiring an
individual or a family member of that individual to undergo
a genetic test, except for specified limited exceptions,
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including that an issuer may request, but not require, a
genetic test for research purposes, as defined, providing
that the issuer complies with specified disclosures and any
genetic information collected is not used for underwriting,
determination of eligibility, premiums, or issuance,
renewal or replacement of a Medigap policy; and,
c) Enacts in state Medicare supplement law relevant
definitions from federal GINA, including the definition of
"genetic information" which means, with respect to any
individual, information about the individual's genetic
tests, the genetic tests of family members of the
individual, and the manifestation of a disease or disorder
in a family member of the individual. Provides that
Medicare supplement policies must also comply with existing
state law applicable to genetic testing and genetic
information.
3)Makes other technical and conforming changes.
The Senate amendments :
1)Clarify that the entitlement to guaranteed issue of a Medigap
policy for individuals who have lost eligibility for Medi-Cal
extends to those persons who are notified they are only
eligible for Medi-Cal with a share of cost, if the individual
certifies at the time of the Medigap application that he/she
has not met the share of cost.
2)Make clarifying changes to the provision which prohibits an
issuer of a Medigap policy from requiring, requesting, or
obtaining health information as part of the application
process from any Medigap applicant entitled to guaranteed
issue of coverage under state and federal laws, so that the
prohibition extends to individuals entitled to coverage during
specified open enrollment periods.
3)Delete a provision intended to clarify that health plans
operating as Medicare Advantage plans under federal Medicare
rules are subject to the jurisdiction of the Department of
Managed Health Care (DMHC) under the Knox-Keene Health Care
Service Plan Act of 1975 (Knox-Keene).
4)Change the author from Committee on Health to Assemblymembers
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Jones and Fletcher, add co-authors, and make other technical
and conforming changes.
EXISTING LAW :
1)Provides for regulation of health plans by DMHC under
Knox-Keene and for regulation of health insurers by the
California Department of Insurance (CDI) under the Insurance
Code.
2)Establishes standards for Medigap policies sold in California
which provide Medicare beneficiaries with coverage for
benefits and cost-sharing not covered by Medicare. Medigap
policies are subject to the jurisdiction of either DMHC or CDI
depending on the type of policy, in a manner generally
consistent with federal laws applicable to Medigap policies,
including benefit and cost-sharing requirements for 17
standardized benefit plans, open enrollment and guaranteed
issue of Medigap policies for specified individuals, and
specified notices and disclosures that must be provided to
Medigap policy applicants and enrollees.
3)Establishes in federal law the Medicare program as a
government-administered health insurance program for people
age 65 or older and certain people younger than age 65, such
as those with disabilities and those who have permanent kidney
failure or amyotrophic lateral sclerosis (Lou Gehrig's
disease).
4)Under the federal MIPPA, requires states to adopt by September
24, 2009, specific modernization changes to Medigap policies,
as outlined in the model regulations developed by the National
Association of Insurance Commissioners (NAIC), and consistent
with requirements in MIPPA. MIPPA reduces from 17 to 11 the
number of standardized Medigap policies and makes other
changes to Medigap coverage including changes to benefit and
cost-sharing requirements, and changes to disclosure and
issuance requirements.
5)Under federal GINA, prohibits a health insurer, including
issuers of Medigap policies, from denying or conditioning the
issuance, effectiveness, or pricing of the policy on the basis
of genetic information. Requires states to enact conforming
changes by July 1, 2009.
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AS PASSED BY THE ASSEMBLY , this bill made conforming changes to
the requirements and standards that apply to Medigap policies,
for the purpose of complying with recent federal law changes
affecting the benefits, the issuance and the pricing of Medigap
policies. This bill contained an urgency clause to ensure that
the provisions of this bill go into immediate effect upon
enactment.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS : According to the authors, this bill conforms
California law related to Medigap policies to requirements in
two new federal laws: GINA and MIPPA. MIPPA requires states to
conform state Medigap law to changes made by the NAIC model
Medigap regulation as a result of the two new federal laws. The
authors point out that failure to enact the changes in the NAIC
model act by July 1, 2009, will result in California losing its
ability to regulate Medigap policies.
CDI, sponsor of this bill, states that this bill is urgently
needed because if California fails to adopt the revisions by the
mandated deadlines, the state will be deemed to be out of
compliance with federal law, and thereby, lose the authority to
regulate the Medigap market. America's Health Insurance Plans,
the national association representing health insurance plans,
writes in support of this bill that the timeliness with which
these conforming provisions must take effect and consistency
with the NAIC model regulation are essential to ensuring that
Medicare supplement policies are available to millions of
California seniors.
Analysis Prepared by : Deborah Kelch / HEALTH / (916) 319-2097
FN: 0001559