BILL ANALYSIS �
AB 2152
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Date of Hearing: April 25, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2152 (Eng) - As Amended: April 17, 2012
Policy Committee: Health Vote:13-5
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill increases disclosure requirements for health insurance
plan contracts, requires notification and approval of "block
transfers," and authorizes the Insurance Commissioner to
promulgate implementing regulations and add additional
disclosure requirements. Specifically, this bill:
1)Applies a number of enrollee notification and disclosure
requirements that currently apply to health care service plans
regulated by the Department of Managed Health Care (DMHC) to
health insurance plans regulated by the California Department
of Insurance (CDI).
2)Requires health insurers to provide additional information if
specified by the Insurance Commissioner.
3)Requires health insurers to notify CDI of a contract
termination with a provider group or general acute care
hospital, and file a proposed written notice to insureds with
CDI at least 75 days prior to the contract termination, if the
termination results in a material change (defined as a change
affecting 800 or more covered lives) to the insurer's provider
network. Deems notice approved if not acted on in seven days.
Requires insurers to send specified written notice to insureds
at least 60 days before the contract termination.
4)Authorizes the Commissioner to issue regulations to implement
these provisions.
FISCAL EFFECT
1)One-time regulatory costs to CDI in the range of $50,000 to
AB 2152
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specify and provide initial review of disclosure requirements
(Insurance Fund).
2)Ongoing costs to CDI to monitor and enforce the new
requirements on an ongoing basis should be minor and
absorbable within existing resources. CDI indicates receiving
notice of block transfers can help them anticipate and manage
workload costs related to consumer complaints.
COMMENTS
1)Rationale . According to the author, AB 2152 would strengthen
consumer protections in California's regulation of health
insurance by aligning the Insurance Code and sections of the
Knox-Keene Act regarding required disclosure of health
insurance policy information to consumers. He indicates a
recent report commissioned by the nonprofit California Health
Care Foundation found a number of instances in California law
where DMHC statutory requirements were potentially more
protective or beneficial to consumers than those authorized
for CDI under the Insurance Code. He argues California's
health care consumers deserve the same protections regardless
of which regulatory body oversees their health plan. This
bill is sponsored by CDI.
2)Recent Blue Shield - UCLA Contract Dispute. As an example of
lack of disclosure in CDI-regulated plans leading to consumer
harm, the Insurance Commissioner points to a recent situation
where Blue Shield of California let contracts with UCLA
hospitals expire beginning January 1 of this year in the midst
of a bitter contract negotiation. He indicates CDI and Blue
Shield's insureds were made aware of this via the Los Angeles
Times, rather than by notification from Blue Shield. Such a
situation, where notice to CDI or consumers is not required by
statute, can present a circumstance where consumers receiving
care at a medical center may not learn that the center is no
longer in their network until they return for care, or after
they obtain care and receive an out-of-network bill. Since
many individuals base health insurance choices on the
inclusion of certain providers, CDI maintains that individuals
deserve to know when these providers are no longer in their
insurer's network.
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3)Dual Regulatory System . Oversight of health coverage in
California is divided between the Department of Managed Health
Care (DMHC) and the California Department of Insurance (CDI),
which have unique statutory histories, administrative
structures, and legal frameworks. CDI regulates health
insurance plans-generally plans that pay claims submitted for
services covered in the plan contract. DMHC regulates health
care service plans under the Knox-Keene Act of 1975, which has
minimum standards for health plan licensure that include
coverage of a core set of basic health services, as well as
oversight and consumer protections that are sometimes stronger
than for CDI plans. The distinction between the two plan
types has been explained as the "promise to pay" (CDI) versus
"promise to provide care" (DMHC), although statutory and
market changes in recent years have lessened these historical
distinctions.
4)Opposition . Health insurance trade groups oppose some of these
requirements as duplicative of existing ones, and indicate
that despite the stated intent to align disclosure
requirements between the Health and Safety Code and Insurance
Code, the current version of the bill still does not perfectly
align the requirements.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081