BILL ANALYSIS
AB 1759
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1759 (Blumenfield)
As Amended August 18, 2010
Majority vote
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|ASSEMBLY: |44-28|(May 6, 2010) |SENATE: |22-14|(August 23, |
| | | | | |2010) |
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Original Committee Reference: HEALTH
SUMMARY : Requires health care service plans (health plans) and
health insurers that include a provision in a group contract or
policy that authorizes or requires a change in premium rates,
copayments, coinsurances, or deductibles, to provide an
additional disclosure that describes the circumstances under
which a change may occur and that provides defined terms and
examples of those circumstances, to be signed by the group
contractholder or group policyholder and provided to the
subscribers or insureds, as specified.
The Senate amendments delete the Assembly version of this bill
and instead:
1)Require health plans and insurers that include a provision in
a group contract or policy that authorizes or requires a
change in premium rates, copayments, coinsurances, or
deductibles, other than for small group contracts or policies,
to provide, at the point of sale, a separate disclosure to the
subscribers and insureds, as specified. Require the group
contract or policy holder to sign the disclosure before that
provision can be entered into as part of the contract.
2)Permit the health plan or insurer to make the contract
contingent upon the group contractholder's signature of the
separate disclosure. Require that disclosure to explain the
circumstances under which a change in premium rates or
applicable copayments, coinsurances, or deductibles in a
contract may occur, and to include defined terms and specific
examples of those circumstances.
EXISTING LAW :
1)Provides for the regulation of health plans by Department of
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Managed Health Care (DMHC) [under the Knox-Keene Health Care
Service Plan Act of 1975 (Knox-Keene)] and regulation of
disability insurers who sell health insurance by the
California Department of Insurance (CDI).
2)Prohibits, except as specified, a health plan or health
insurer from changing its premium rates or applicable
copayments or coinsurances or deductibles for group health
plan contracts or group health insurance policies after the
group contractholder or group policyholder has delivered
written acceptance of the contract or policy, after the start
of the open enrollment period, or after receipt of the premium
payment for the first month of coverage.
AS PASSED BY THE ASSEMBLY , this bill prohibited health plans and
health insurers from using a change in enrollment as the basis
for a premium rate change in the group market during the length
of a contract. Exempted a violation of this prohibition by a
health plan from being subject to the crime provision that
applies to the Knox-Keene Act.
FISCAL EFFECT : According to the Senate Appropriations Committee
pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS : Regulation and oversight of health insurance in
California is split between DMHC and CDI. DMHC regulates health
plans, including health maintenance organizations (or HMOs) and
some Preferred Provider Organization (PPO) plans. CDI regulates
multiple lines of insurance, including disability insurers
offering health insurance, generally PPO plans and traditional
indemnity coverage.
Although DMHC and CDI both regulate carriers providing health
coverage, each department approaches that regulation very
differently. At the heart of the difference between health
plans and health insurers is the "promise to pay" versus the
"promise to deliver care." DMHC-licensed plans, often referred
to as Knox-Keene health plans, arrange for and organize the
delivery of health care and services through contracted or owned
providers and facilities and are required to cover all medically
necessary services. Disability insurers protect against
(indemnify) the expense or charges (losses) associated with
illness or injury and typically provide coverage for defined
benefits that may be specifically limited in the policy, such as
number of visits or annual dollar limits. The distinction
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between the two regulatory frameworks has blurred over time
because of the historical exceptions made for two large PPO
carriers, Blue Cross and Blue Shield, who offer PPO products
under both DMHC and CDI, but fundamental differences remain in
the expectations and regulatory oversight by each regulator. In
general, DMHC has greater authority and responsibility to review
and approve health plan products and benefit designs than CDI
has to review health insurance products under its purview.
Analysis Prepared by : Melanie Moreno / HEALTH / (916)
319-2097
FN: 0006556