BILL ANALYSIS �
AB 1809
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Date of Hearing: May 16, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1809 (Monning) - As Amended: May 1, 2012
Policy Committee: HealthVote:13-5
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill directs unclaimed rebates, owed to enrollees by health
plans and insurers for failure to spend a certain percentage of
premium dollars on medical care, to a newly created account that
is to be used for health care outreach and enrollment efforts.
It also exempts this redirection of rebates from current law
governing unclaimed property, and repeals several obsolete
reports. 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 specified payment methods for rebate payments to
individuals, and describes how rebates provided in the form of
a premium credit shall be applied.
3)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,
c) Deposit all rebates due to former individual enrollees a
plan or insurer was unable to locate, following a good
faith effort, into the Health Care Coverage Information,
Enrollment, and Eligibility Assistance Account.
4)States that nothing in existing law, as specified, shall be
construed to require the rebate funds to be deposited with the
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State Controller as unclaimed tangible personal property.
5)Repeals obsolete reporting requirements related to the Managed
Risk Medical Insurance Board, the Department and Drug and
Alcohol Programs, the Department of Managed Health Care
(DMHC), and the California Department of Insurance (CDI).
FISCAL EFFECT
1)Minor one-time costs to CDI and DMHC to issue regulations.
Ongoing costs from enforcement are unknown, and may be minor
and absorbable or significant, depending upon the number of
rebates issued and plan/insurer compliance.
2)Unknown, potentially significant future revenue loss to the GF
associated with the redirection of funds to the Health Care
Coverage Information, Enrollment, and Eligibility Assistance
Account. Losses to the GF could exceed $150,000 depending on
the number and amount of unclaimed rebates.
In absence of this bill, unclaimed rebates would be available
to consumers through the Unclaimed Property Program
administered by the State Controller's Office (SCO). Unclaimed
property value, less the SCO's administrative costs, claims
costs, and other expenses, is transferred to the GF monthly by
the SCO. Once property value is transferred to the GF, there
are no further restrictions on the use of the funds. The
state would remain liable to pay consumer claims for property
that belongs to them, but the program does not "hold"
unclaimed property aside. There is currently no expiration
date for unclaimed property claims; under current law the
state remains liable in perpetuity for payment. In the
meantime, property value remains in the GF.
Even given the availability of unclaimed property through the
SCO's program, some rebates would still likely remain
unclaimed. The state GF would experience a net benefit from
the use of that property in absence of this bill.
3)The level of funding that may be generated for consumer
assistance programs by this bill is unknown. Revenues
generated by this diversion of funds may be very volatile and
thus may not be an appropriate funding source for ongoing
programs. In addition, assuming some period of time must
elapse before a good faith effort to locate individuals is
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complete, funds will likely not be available for expenditure
for at least 1-2 years after the enactment of this
legislation. Health consumer assistance programs, including
the navigator program, will likely require other sources of
one-time and ongoing funding in order to meet consumer demand
for information associated with significant changes in the
health insurance marketplace going into effect January 1,
2014.
COMMENTS
1)Rationale . According to the author, federal regulations allow
the state decide what to do with unclaimed rebates.
California will have at least two programs to assist potential
enrollees in health care coverage obtain information and
enroll in coverage programs: the navigator program through
the California Health Benefit Exchange, and the Office of
Patient Advocate. While it is unknown at this time how much
funding may be generated by unclaimed rebates, it is the
intent of the author to set aside unclaimed funding after a
good faith effort is made to deliver the rebate to the
entitled former enrollee, to support consumer assistance
programs related to health care coverage.
2)Two consumer assistance efforts are expected to help guide
potential enrollees into coverage. The California Health
Benefit Exchange will offer health plans to California
individuals and small businesses, and also establish a
"navigator" program to conduct outreach and facilitate
enrollment in plans through the Exchange. The account created
by this bill is placed in the California Health Trust Fund,
which, is a continuously appropriated fund created by SB 900
(Alquist), Chapter 659, Statues of 2010 and used to fund the
operations of the Exchange.
AB 922 (Monning), Chapter 552, Statutes of 2011 expanded the
duties of the Office of the Patient Advocate (OPA) to serve
all California consumers, and required the OPA to help
individuals secure the health care services to which they are
entitled or for which they are eligible under the law.
3)California's Unclaimed Property Law requires corporations,
businesses, associations, financial institutions, and
insurance companies to annually report and deliver property to
the SCO after there has been no activity on the account or
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contact with the owner for a period of time specified in the
law-generally three years. This law details a variety of
requirements related to the transmittal of unclaimed property
to the state, including notifications to consumers,
documentation, and time that must elapse without contact
before property is turned over to the state.
This bill requires but does not define what constitutes a
"good faith effort" to locate former enrollees entitled to the
rebates. This would have to be defined through regulation by
both CDI and DMHC. The Unclaimed Property Law requires
holders of property to attempt to contact owners before
reporting their property to the SCO. The SCO also attempts to
contact consumers to make them aware that the state has
property they can claim, and provides an internet database
where individuals can search for their unclaimed property.
The proposed exemption of rebates from current law governing
unclaimed property, along with the vague definition about what
constitutes a good faith effort to return rebates to the
consumer, raises questions about the appropriateness of
diverting a consumer's rebate to a continuously appropriated
state fund regardless of potential policy merit of the
activity being funded.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081