BILL NUMBER: AB 1809 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 1, 2012
INTRODUCED BY Assembly Member Monning
FEBRUARY 21, 2012
An act to amend Section 100520 of the Government Code, to
amend Section 1367.003 of the Health and Safety Code, and to amend
Sections 10112.25 and 12923.5 of, and to repeal Sections
12693.925 and 12693.95 of, the Insurance Code, relating to health
care coverage , and making an appropriation therefor .
LEGISLATIVE COUNSEL'S DIGEST
AB 1809, as amended, Monning. Health care coverage:
reports. coverage.
Existing
(1) Existing law requires the
Managed Risk Medical Insurance Board to, by January 20, 2004,
report specified information with regard to the State Children'
s Health Insurance Program. Existing law also requires the board to
provide, by April 15, 1998, a proposal relating to drug and alcohol
treatment programs for children.
This bill would delete those obsolete provisions.
Existing
(2) Existing law requires the
Department of Managed Health Care and the Department of Insurance to
maintain a joint senior level working group to ensure clarity for
health care consumers about who enforces their patient rights and
consistency in the regulations of these departments. Existing law
requires the working group to report its findings to the Insurance
Commissioner and the Director of the Department of Managed Health
Care for review and approval and, commencing January 1, 2004,
requires the commissioner and the director to submit the approved
report to the Legislature every year for 5 years.
This bill would delete that reporting requirement.
(3) Existing law requires a health care service plan and a health
insurer to comply with minimum medical loss ratios and to provide an
annual rebate to each enrollee or insured if the medical loss ratio
of the amount of the revenue expended by the plan or insurer on costs
to the total amount of premium revenue is less than a certain
percentage, as specified. Existing federal law authorizes an issuer
of health care coverage to provide those premium rebates to its
current enrollees by a premium credit, lump-sum check, or, if the
enrollee paid the premium using a credit card or debit card, by a
lump-sum reimbursement to the account used to pay the premium.
Existing federal law requires an issuer of health care coverage to
provide the premium rebate to its former enrollees in the form of a
lump-sum check or lump-sum reimbursement using the same method that
the former enrollee used for payment of the premium.
This bill would make these provisions of federal law applicable to
a health care service plan and health insurer with respect to the
method by which it provides premium rebates to current and former
enrollees or insureds, as specified. The bill would require a health
care service plan and health insurer to make a good faith effort to
locate its former enrollees or insureds who are entitled to the
rebate.
(4) Existing law requires the executive board of the California
Health Benefit Exchange to establish a navigator program in
accordance with the federal Patient Protection and Affordable Care
Act to conduct public education activities and distribute information
on qualified health care plans. Existing law also creates the
California Health Trust Fund, a continuously appropriated fund,
within the State Treasury for purposes of the provisions establishing
the exchange.
This bill would create the Health Care Coverage Information,
Enrollment, and Eligibility Assistance Account within the California
Health Trust Fund. The bill would require a health care service plan
and health insurer that is unable to locate its former enrollees or
insureds who are entitled to a premium rebate to cause those rebate
funds to be deposited in the account to be continuously appropriated
for purposes of distributing funding for health care coverage
information, enrollment, and eligibility assistance.
Because this bill would cause additional moneys to be deposited
into a continuously appropriated fund, the bill would make an
appropriation.
(5) Under existing law, a willful violation of the Knox-Keene
Health Care Service Plan Act of 1975 is a crime.
Because a willful violation of the bill's requirements with
respect to a health care service plan would be 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.
Vote: majority 2/3 . Appropriation:
no yes . Fiscal committee: no
yes . State-mandated local program: no
yes .
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 100520 of the
Government Code is amended to read:
100520. (a) (1) The California Health Trust
Fund is hereby created in the State Treasury for the purpose of this
title. Notwithstanding Section 13340, all moneys in the fund shall
be continuously appropriated without regard to fiscal year for the
purposes of this title. Any moneys in the fund that are unexpended or
unencumbered at the end of a fiscal year may be carried forward to
the next succeeding fiscal year.
(2) The Health Care Coverage Information, Enrollment, and
Eligibility Assistance Account is hereby created within the fund for
the purposes of distributing funding for health care coverage
information, enrollment, and eligibility assistance. Notwithstanding
Section 13340, all moneys in the account shall be continuously
appropriated without regard to fiscal year for purposes of this
title. Any moneys in the account that are unexpended or unencumbered
at the end of a fiscal year may be carried forward to the next
succeeding fiscal year.
(b) Notwithstanding any other provision of law, moneys deposited
in the fund shall not be loaned to, or borrowed by, any other special
fund or the General Fund, or a county general fund or any other
county fund.
(c) The board of the California Health Benefit Exchange shall
establish and maintain a prudent reserve in the fund.
(d) The board or staff of the Exchange shall not utilize any funds
intended for the administrative and operational expenses of the
Exchange for staff retreats, promotional giveaways, excessive
executive compensation, or promotion of federal or state legislative
or regulatory modifications.
(e) Notwithstanding Section 16305.7, all interest earned on the
moneys that have been deposited into the fund shall be retained in
the fund and used for purposes consistent with the fund.
(f) Effective January 1, 2016, if at the end of any fiscal year,
the fund has unencumbered funds in an amount that equals or is more
than the board approved operating budget of the Exchange for the next
fiscal year, the board shall reduce the charges imposed under
subdivision (n) of Section 100503 during the following fiscal year in
an amount that will reduce any surplus funds of the Exchange to an
amount that is equal to the agency's operating budget for the next
fiscal year.
SEC. 2. Section 1367.003 of the
Health and Safety Code is amended to read:
1367.003. (a) Every health care service plan that issues, sells,
renews, or offers health care service plan contracts for health care
coverage in this state, including a grandfathered health plan, but
not including specialized health care service plan contracts, shall
provide an annual rebate to each enrollee under such
that coverage, on a pro rata basis, if the ratio
of the amount of premium revenue expended by the health care service
plan on the costs for reimbursement for clinical services provided
to enrollees under such that coverage
and for activities that improve health care quality to the total
amount of premium revenue, excluding federal and state taxes and
licensing or regulatory fees and after accounting for payments or
receipts for risk adjustment, risk corridors, and reinsurance, is
less than the following:
(1) With respect to a health care service plan offering coverage
in the large group market, 85 percent.
(2) With respect to a health care service plan offering coverage
in the small group market or in the individual market, 80 percent.
(b) Every health care service plan that issues, sells, renews, or
offers health care service plan contracts for health care coverage in
this state, including a grandfathered health plan, shall comply with
the following minimum medical loss ratios:
(1) With respect to a health care service plan offering coverage
in the large group market, 85 percent.
(2) With respect to a health care service plan offering coverage
in the small group market or in the individual market, 80 percent.
(c) (1) The total amount of an annual rebate required under this
section shall be calculated in an amount equal to the product of the
following:
(A) The amount by which the percentage described in paragraph (1)
or (2) of subdivision (a) exceeds the ratio described in paragraph
(1) or (2) of subdivision (a).
(B) The total amount of premium revenue, excluding federal and
state taxes and licensing or regulatory fees and after accounting for
payments or receipts for risk adjustment, risk corridors, and
reinsurance.
(2) A health care service plan shall provide any rebate owing to
an enrollee no later than August 1 of the calendar year following the
year for which the ratio described in subdivision (a) was
calculated.
(3) (A) A health care service plan that is required to provide a
rebate to its current enrollees pursuant to this section may choose
to provide that rebate in the form of a premium credit, a lump-sum
payment by check, or, if the enrollee paid the premium using a credit
card or debit card, by lump-sum through a reimbursement to the
enrollee's credit card or debit card.
(B) Any rebate provided in the form of a premium credit shall be
provided by applying the full amount due to the first month's premium
that is due on or after August 1. If the amount of the rebate
exceeds the premium due for August, then any overage shall be applied
to succeeding premium payments until the full amount of the rebate
has been credited to the enrollee.
(4) When a health care service plan is required to provide a
rebate pursuant to this section to its former enrollees, the plan
shall do all of the following:
(A) Make a good faith effort to locate each former enrollee
entitled to the rebate.
(B) Pay each former enrollee who was enrolled as an individual
plan participant, and who the plan is able to locate, the premium
rebate to which that former enrollee is entitled in the form of a
lump-sum payment by check or through a lump-sum reimbursement to the
enrollee's credit card or debit card that the enrollee used to make
the premium payment with respect to which the rebate is required.
(C) Cause the amount of all rebates that former individual
enrollees who the plan was unable to locate, following a good faith
effort, to be deposited in to the Health Care Coverage Information,
Enrollment, and Eligibility Assistance Account created by paragraph
(2) of subdivision (a) of Section 100520 of the Government Code.
(5) Nothing in Chapter 7 (commencing with Section 1500) of Title
10 of Part 3 of the Code of Civil Procedure shall be construed to
require the rebate funds described in subparagraph (C) of paragraph
(4) to be deposited with the Controller as unclaimed tangible
personal property.
(d) (1) The director may adopt regulations in accordance with the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code)
that are necessary to implement the medical loss ratio as described
under Section 2718 of the federal Public Health Service Act (42
U.S.C. Sec. 300gg-18), and any federal rules or regulations issued
under that section.
(2) The director may also adopt emergency regulations in
accordance with the Administrative Procedure Act (Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code) when it is necessary to implement the
applicable provisions of this section and to address specific
conflicts between state and federal law that prevent implementation
of federal law and guidance pursuant to Section 2718 of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-18). The initial
adoption of the emergency regulations shall be deemed to be an
emergency and necessary for the immediate preservation of the public
peace, health, safety, or general welfare.
(e) The department shall consult with the Department of Insurance
in adopting necessary regulations, and in taking any other action for
the purpose of implementing this section.
(f) This section shall be implemented to the extent required by
federal law and shall comply with, and not exceed, the scope of
Section 2791 of the federal Public Health Service Act (42 U.S.C. Sec.
300gg-91) and the requirements of Section 2718 of the federal Public
Health Service Act (42 U.S.C. Sec. 300gg-18) and any rules or
regulations issued under those sections.
(g) Nothing in this section shall be construed to apply to
provisions of this chapter pertaining to financial statements,
assets, liabilities, and other accounting items to which subdivision
(s) of Section 1345 applies.
(h) Nothing in this section shall be construed to apply to a
health care service plan contract or insurance policy issued, sold,
renewed, or offered for health care services or coverage provided in
the Medi-Cal program (Chapter 7 (commencing with Section 14000) of
Part 3 of Division 9 of the Welfare and Institutions Code), the
Healthy Families Program (Part 6.2 (commencing with Section 12693) of
Division 2 of the Insurance Code), the Access for Infants and
Mothers Program (Part 6.3 (commencing with Section 12695) of Division
2 of the Insurance Code), the California Major Risk Medical
Insurance Program (Part 6.5 (commencing with Section 12700) of
Division 2 of the Insurance Code), or the Federal Temporary High Risk
Insurance Pool (Part 6.6 (commencing with Section 12739.5) of
Division 2 of the Insurance Code), to the extent consistent with the
federal Patient Protection and Affordable Care Act (Public Law
111-148).
SEC. 3. Section 10112.25 of the
Insurance Code is amended to read:
10112.25. (a) Every health insurer that issues, sells, renews, or
offers health insurance policies for health care coverage in this
state, including a grandfathered health plan, but not including
specialized health insurance policies, shall provide an annual rebate
to each insured under such coverage, on a pro rata basis, if the
ratio of the amount of premium revenue expended by the health insurer
on the costs for reimbursement for clinical services provided to
insureds under such coverage and for activities that improve health
care quality to the total amount of premium revenue, excluding
federal and state taxes and licensing or regulatory fees and after
accounting for payments or receipts for risk adjustment, risk
corridors, and reinsurance, is less than the following:
(1) With respect to a health insurer offering coverage in the
large group market, 85 percent.
(2) With respect to a health insurer offering coverage in the
small group market or in the individual market, 80 percent.
(b) Every health insurer that issues, sells, renews, or offers
health insurance policies for health care coverage in this state,
including a grandfathered health plan, shall comply with the
following minimum medical loss ratios:
(1) With respect to a health insurer offering coverage in the
large group market, 85 percent.
(2) With respect to a health insurer offering coverage in the
small group market or in the individual market, 80 percent.
(c) (1) The total amount of an annual rebate required under this
section shall be calculated in an amount equal to the product of the
following:
(A) The amount by which the percentage described in paragraph (1)
or (2) of subdivision (a) exceeds the ratio described in paragraph
(1) or (2) of subdivision (a).
(B) The total amount of premium revenue, excluding federal and
state taxes and licensing or regulatory fees and after accounting for
payments or receipts for risk adjustment, risk corridors, and
reinsurance.
(2) A health insurer shall provide any rebate owing to an insured
no later than August 1 of the calendar year following the year for
which the ratio described in subdivision (a) was calculated.
(3) (A) A health insurer that is required to provide a rebate to
an insured pursuant to this section may choose to provide that rebate
in the form of a premium credit, or a lump sum payment by check, or,
if the insured paid the premium using a credit card or debit card,
by lump-sum through a reimbursement to the insured's credit card or
debit card.
(B) Any rebate provided in the form of a premium credit shall be
provided by applying the full amount due to the first month's premium
that is due on or after August 1. If the amount of the rebate
exceeds the premium due for August, then any overage shall be applied
to succeeding premium payments until the full amount of the rebate
has been credited to the insured.
(4) When a health insurer is required to provide a rebate pursuant
to this section to a former insured it shall do all of the
following:
(A) Make a good faith effort to locate each former insured
entitled to the rebate.
(B) Pay each former insured who held an individual policy, and who
the health insurer is able to locate, the premium rebate to which
that person is entitled pursuant to this section in the form of a
lump-sum payment by check or through a lump-sum reimbursement to the
insured's credit card or debit card that the insured used to make the
premium payment with respect to which the rebate is required.
(C) Cause the amount of all rebates to which the former individual
insureds were entitled, but who the health insurer was unable to
locate following a good faith effort, to be deposited in to the
Health Care Coverage Information, Enrollment, and Eligibility
Assistance Account created by paragraph (2) of subdivision (a) of
Section 100520 of the Government Code.
(5) Nothing in Chapter 7 (commencing with Section 1500) of Title
10 of Part 3 of the Code of Civil Procedure shall be construed to
require the rebate funds described in subparagraph (C) of paragraph
(4) to be deposited with the Controller as unclaimed tangible
personal property.
(d) (1) The commissioner may adopt regulations in accordance with
the Administrative Procedure Act (Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code) that are necessary to implement the medical loss ratio as
described under Section 2718 of the federal Public Health Service Act
(42 U.S.C. Sec. 300gg-18), and any federal rules or regulations
issued under that section.
(2) The commissioner may also adopt emergency regulations in
accordance with the Administrative Procedure Act (Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code) when it is necessary to implement the
applicable provisions of this section and to address specific
conflicts between state and federal law that prevent implementation
of federal law and guidance pursuant to Section 2718 of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-18). The initial
adoption of the emergency regulations shall be deemed to be an
emergency and necessary for the immediate preservation of the public
peace, health, safety, or general welfare.
(e) The department shall consult with the Department of Managed
Health Care in adopting necessary regulations, and in taking any
other action for the purpose of implementing this section.
(f) This section shall be implemented to the extent required by
federal law and shall comply with, and not exceed, the scope of
Section 2791 of the federal Public Health Service Act (42 U.S.C. Sec.
300gg-91) and the requirements of Section 2718 of the federal Public
Health Service Act (42 U.S.C. Sec. 300gg-18) and any rules or
regulations issued under those sections.
(g) Nothing in this section shall be construed to apply to a
health care service plan contract or insurance policy issued, sold,
renewed, or offered for health care services or coverage provided in
the Medi-Cal program (Chapter 7 (commencing with Section 14000) of
Part 3 of Division 9 of the Welfare and Institutions Code), the
Healthy Families Program (Part 6.2 (commencing with Section 12693)),
the Access for Infants and Mothers Program (Part 6.3 (commencing with
Section 12695)), the California Major Risk Medical Insurance Program
(Part 6.5 (commencing with Section 12700)), or the Federal Temporary
High Risk Insurance Pool (Part 6.6 (commencing with Section
12739.5)), to the extent consistent with the federal Patient
Protection and Affordable Care Act (Public Law 111-148).
SECTION 1. SEC. 4. Section 12693.925
of the Insurance Code is repealed.
SEC. 2. SEC. 5. Section 12693.95 of
the Insurance Code is repealed.
SEC. 3. SEC. 6. Section 12923.5 of
the Insurance Code is amended to read:
12923.5. (a) The Department of Managed Health Care and the
Department of Insurance shall maintain a joint senior level working
group to ensure clarity for health care consumers about who enforces
their patient rights and consistency in the regulations of these
departments.
(b) The joint working group shall undertake a review and
examination of the Health and Safety Code, the Insurance Code, and
the Welfare and Institutions Code as they apply to the Department of
Managed Health Care and the Department of Insurance to ensure
consistency in consumer protection.
(c) The joint working group shall review and examine all of the
following processes in each department:
(1) Grievance and consumer complaint processes, including, but not
limited to, outreach, standard complaints, including coverage and
medical necessity complaints, independent medical review, and
information developed for consumer use.
(2) The processes used to ensure enforcement of the law,
including, but not limited to, the medical survey and audit process
in the Health and Safety Code and market conduct exams in the
Insurance Code.
(3) The processes for regulating the timely payment of claims.
SEC. 7. 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.