BILL ANALYSIS �
AB 1809
Page 1
Date of Hearing: May 8, 2012
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 1809 (Monning) - As Amended: May 1, 2012
SUBJECT : Health care coverage.
SUMMARY : Causes the amount of all Medical Loss Ratio (MLR)
rebates due to former individual enrollees a health care service
plan (health plan) or health insurer is unable to locate,
following a good faith effort, to be deposited into the Health
Care Coverage Information, Enrollment, and Eligibility
Assistance Account for distribution for health care coverage
information, enrollment, and eligibility assistance. Repeals
obsolete requirements that various state agencies report to the
Legislature. Specifically, this bill :
1)Establishes the Health Care Coverage Information, Enrollment,
and Eligibility Assistance Account within the California
Health Trust Fund for the purposes of distributing funding for
health care coverage information, enrollment, and eligibility
assistance.
2)Permits a health plan or health insurer that is required to
provide a rebate to its current enrollees, pursuant to
existing law related to MLR, to 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, a lump-sum reimbursement to the enrollee's credit
card or debit card.
3)Requires any rebate provided in the form of a premium credit
to be provided by applying the full amount to the first
month's premium that is due on or after August 1. Requires
any amount of the rebate that exceeds the premium due for
August to be applied to succeeding premium payments until the
full amount of the rebate has been credited to the enrollee.
4)Requires a health plan or insurer when required to provide a
rebate to a former enrollee, to do 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 the plan is able to locate,
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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; and,
c) Cause the amount of all rebates due to former individual
enrollees a plan or 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.
5)States that nothing in existing law, as specified, shall be
construed to require the rebate funds to be deposited with the
State Controller as unclaimed tangible personal property.
6)Repeals the requirement that the Managed Risk Medical
Insurance Board (MRMIB) report to the Legislature, on or
before January 30, 2004, information regarding the State
Children's Health Insurance Program with regard to vulnerable
children, public health initiatives, and recommendations for
addressing health needs and barriers.
7)Repeals the requirement that MRMIB provide to the Legislature,
in consultation with the Department of Alcohol and Drug
Programs (DADP), by April 15, 1998, a proposal assessing the
viability of providing additional drug and alcohol treatment
services for children enrolled in the Healthy Families Program
(HFP).
8)Repeals the requirement that DADP, in cooperation with MRMIB,
review capacity needs for alcohol and drug benefits in HFP,
request utilization and services data from the counties, and
request HFP plans collect data on the unmet need for a
substance abuse benefit and report to the policy and fiscal
committees of the Legislature, by September 1, 1999.
9)Repeals a requirement that a joint senior level working group
of the department of Managed Health Care (DMHC) and the
California Department of Insurance (CDI) report findings
relating to grievances, consumer complaints, and enforcement
to the Legislature for five years, effective 2003.
EXISTING LAW :
1)Establishes the Patient Protection and Affordable Care Act
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(ACA) which among other provisions includes requirements on
health plans and health insurers to annually submit to the
federal Department of Health and Human Services (HHS) ratios
of incurred losses to earned premiums or MLRs, and requires
beginning in 2012, health plans and health insurers offering
group or individual health coverage to provide an annual
rebate to enrollees if an MLR is less than 85% for its large
group business, or 80% for its small or individual group
business.
2)Requires, under state law, every health plan and health
insurer that issues, sells, renews, or offers health plan
contracts or policies for health care coverage, including
grandfathered plans, but not including specialized health plan
contracts or policies, to provide an annual rebate to each
enrollee under such coverage if certain conditions exist,
relating to the following MLRs:
a) 85% for a health plan or health insurer in the large
group market; or,
b) 80% for a health plan or health insurer in the small
group or individual market.
3)Establishes, under state law, the navigator program in
accordance with ACA, and requires any entity chosen by the
California Health Benefit Exchange (Exchange) as a navigator
to do all of the following:
a) Conduct public education activities to raise awareness
of the availability of qualified health plans;
b) Distribute fair and impartial information concerning
enrollment in qualified health plans, and the availability
of premium tax credits and cost-sharing reductions, as
specified;
c) Facilitate enrollment in qualified health plans;
d) Provide referrals to any applicable office of health
insurance consumer assistance or health insurance
ombudsman, as specified, or any other appropriate state
agency or agencies, for any enrollee with a grievance,
complaint, or question regarding his or her health plan,
coverage, or a determination under that plan or coverage;
and,
e) Provide information in a manner that is culturally and
linguistically appropriate to the needs of the population
being served by the Exchange.
4)Establishes California's Unclaimed Property Law which requires
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corporations, businesses, associations, financial
institutions, and insurance companies to annually report and
deliver property to the State Controller's Office after there
has been no activity on the account or contact with the owner
for a period of time, as specified (generally three years).
5)Transfers the Office of Patient Advocate (OPA), effective July
1, 2012, from DMHC to the California Health and Human Services
Agency (CHHSA), to provide assistance to, and advocate on
behalf of, individuals served by health plans regulated by
DMHC, insureds covered by CDI, and individuals who receive or
are eligible for other health care coverage in California,
including coverage available through the Medi-Cal program
administered by the Department of Health Care Services, MRMIB,
and the Exchange.
6)Establishes duties of the OPA, including but not limited to,
developing consumer educational and information guides,
rendering assistance to consumers regarding procedures,
rights, and responsibilities related to the filing of
complaints, grievances, and appeals, making referrals to
appropriate state agencies, and coordinating and working with
other patient assistance programs.
7)Confers new responsibilities to OPA related to the enactment
of ACA, including assisting consumers in navigating both
public and private health care coverage, assisting consumers
in determining which regulator regulates the health care
coverage of a particular consumer, and providing and assisting
in the provision of, outreach, and education about health care
options including information and assistance regarding public
programs such as Medi-Cal, HFP, and Medicare.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . The author states that the ACA is a
monumental health policy reform that will expand access to
public and private health coverage for millions of
Californians. There are limited state and federal funds
available to support consumer outreach and enrollment efforts
to inform Californians about their rights and responsibilities
associated with obtaining health coverage. MLR rebates are a
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penalty on health insurers that do not meet ACA requirements
for ensuring 80% to 85% of the premium dollar is spent on
health care claims and quality management, not administration.
The top priority of those rebates should be to deliver those
funds to enrollees entitled to receive the rebates. However,
after good faith efforts by health plans and insurers to
deliver the rebates to those entitled to receive them, this
bill is intended to ensure unclaimed rebates can be used to
support consumer assistance activities to enroll individuals
in public and private health care coverage programs. It is
the author's belief that unclaimed rebate funds should be
directed to purposes that benefit consumers.
2)ACA AND MLR . The ACA (Public Law (P.L.) 111-148) was signed
into law on March 23, 2010. On March 30, 2010, ACA was
amended by P.L. 111-152, the Health Care and Education
Reconciliation Act of 2010. In general, P.L. 111-148 and its
amendments are referred to as ACA. According to a report on
insurance regulation and ACA published by the California
HealthCare Foundation, the ACA imposes greater transparency
and accountability on health plans and insurers by requiring
that they publicly report spending of health insurance premium
dollars and meet federal MLR standards. The ACA requires
health plans and insurers that do not meet the federal MLR
standards to provide rebates to enrollees beginning in 2012.
The MLR interim final rule (IFR) issued by HHS in December
2010 requires health plans and insurers to submit specified
MLR data and information directly to HHS for products offered
by the health plan or insurer, based on detailed standards
recommended by the National Association of Insurance
Commissioners. HHS will be responsible for direct enforcement
of the MLR reporting and rebate requirements. The IFR
provides for the imposition of federal civil monetary
penalties if health plans and insurers fail to comply with the
reporting and rebate requirements. According to an April 2012
report published by the Kaiser Family Foundation, by August of
2012 insurance companies will be required to issue consumer
rebates if they were not in compliance with the MLR provision
of the ACA for 2011. Insurers reported their estimated 2012
rebates (based on 2011) in a supplemental health care exhibit
submitted to state insurance departments. These filings were
analyzed to estimate the amount of rebates consumers and
employers can expect to receive this year by market segment.
California data were excluded because plans regulated by the
state DMHC have not reported data yet. Based on preliminary
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estimates from insurers who reported, nationally rebates would
total $1.3 billion this year, including $426 million in the
individual market, $377 million in the small group market, and
$541 million in the large group market.
3)SUPPORT . According to Consumers Union (CU), a major reform
under the ACA, embodied in California law last year, was the
requirement that insurers and health plans spend a minimum
amount on medical versus administrative costs (MLR) and rebate
to consumers the difference between their expenditures and the
ratio if they fail to meet it, and this was intended to cut
waste and administrative costs of health plans and insurers,
and to instead keep premiums in check and provide adequate
funding for actual medical expenditures. CU states that by
June 1, 2012, insurers and health plans will report to the
California regulators at DMHC and CDI on their expected ratios
and required rebates to consumers in California, and by August
1, 2012, the first round of those rebates must be made to
current insureds or enrollees in accordance with federal
regulations by check, premium credit, or debit/credit card
disbursement. CU adds that as always happens when funds are
to be paid, for example in a class action lawsuit settlement
or regarding dormant bank accounts, some eligible people will
have moved or otherwise not be findable. CU contends this
bill provides that in the case of insurer or health plan
rebates to former insureds or enrollees who, after a good
faith effort by the plan or insurer, cannot be found, those
funds will be put to the next best use: supporting enrollment,
eligibility, and/or consumer assistance or information
activities which California will need to undertake to
implement its ACA responsibility to help consumers apply for,
choose, and obtain required health coverage. The Western
Center on Law and Poverty (Western Center) writes that this
bill creates a fund to use these unallocated dollars for a
necessary function, which is increasingly necessary as
California prepares to roll out coverage to millions more
people in the coming years. A large portion of the
newly-insured will have been uninsured in the recent past, and
it is estimated that 4.7 million children and adults who were
uninsured during some part of 2009 will be eligible for health
coverage under the ACA. California's uninsured population has
different needs than those who are consistently covered. This
includes people who primarily speak a language other than
English, those who have never navigated a health insurance
plan, and those who have perhaps never consistently seen a
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health care provider. Starting in 2013, the OPA will increase
their functions by providing information on coverage options,
education and referrals about how to navigate the system, and
assistance with complaints and grievances. This bill provides
much needed funding, which it draws from existing streams and
resources to the State to realize the goal of enrolling
Californians in health coverage and helping them use their new
health benefits.
4)RELATED LEGISLATION .
a) AB 1869 (John A. P�rez), pending in the Senate, adds
federal veterans health benefits to the example of the type
of information and assistance regarding public programs
that the OPA shall undertake in order to assist in
implementing federal health reform in California commencing
January 1, 2013.
b) AB 2315 (Monning), pending in the Senate, would make a
technical clean up in the Government Code consistent with
AB 922 (Monning), Chapter 552, Statutes of 2011, which
transfers the DMHC and OPA to the CHHSA, among other
provisions.
5)PREVIOUS LEGISLATION .
a) SB 51 (Alquist), Chapter 644, Statutes of 2011,
establishes enforcement authority in California law to
implement provisions of the ACA related to MLR requirements
on health plan and health insurers and prohibitions on
annual and lifetime benefits.
b) AB 922 transfers the DMHC from the Business,
Transportation and Housing Agency to the CHHSA, transfers
the OPA from DMHC to CHHSA effective July 1, 2012 and
requires existing OPA duties to apply to health insurers
regulated by CDI and their insureds (in addition to
DMHC-regulated health plans), assigns new duties to OPA
related to assisting consumers obtain public and private
health care coverage and navigate public and private
coverage consistent with requirements under the ACA.
c) AB 1602 (John A. P�rez), Chapter 655, Statutes of 2010,
establishes the Exchange as an independent public entity to
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purchase health insurance on behalf of Californians,
including those with incomes of between 100% and 400% of
the federal poverty level, and small businesses. Clarifies
the powers and duties of the board governing the Exchange
relative to the administration of the Exchange, determining
eligibility and enrollment in the Exchange, and arranging
for coverage under qualified carriers.
d) SB 900 (Alquist), Chapter 659, Statues of 2010,
establishes the Exchange and requires the Exchange to be
governed by a five-member board, as specified.
6)POLICY QUESTION . Should this bill be amended to define "good
faith effort?" Under California's Unclaimed Property Law
corporations, businesses, associations, financial
institutions, and insurance companies are required to annually
report and deliver property to the State Controller's Office
after there has been no activity on the account or contact
with the owner for a period time, generally three years. Does
the committee wish to require health plans and health insurers
to report and deliver unclaimed rebates to the Health Care
Coverage Information, Enrollment and Eligibility Account only
after a three year period?
REGISTERED SUPPORT / OPPOSITION :
Support
Consumers Union
Health Access California
Western Center on Law and Poverty
Opposition
None on file.
Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097