BILL ANALYSIS �
AB 2152
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ASSEMBLY THIRD READING
AB 2152 (Eng)
As Amended April 17, 2012
Majority vote
HEALTH 13-5 APPROPRIATIONS 12-4
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|Ayes:|Monning, Ammiano, Atkins, |Ayes:|Fuentes, Blumenfield, |
| |Bonilla, Eng, Gordon, | |Bradford, Charles |
| |Hayashi, | |Calderon, Campos, Davis, |
| |Roger Hern�ndez, Bonnie | |Gatto, Hall, Hill, Lara, |
| |Lowenthal, Mitchell, Pan, | |Mitchell, Solorio |
| |V. Manuel P�rez, Williams | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Logue, Mansoor, Nestande, |Nays:|Donnelly, Nielsen, Norby, |
| |Silva, Smyth | |Wagner |
| | | | |
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SUMMARY : Requires health insurers to notify the California
Department of Insurance (CDI), if a termination of a contract
results in a material change to the network, (affecting 800 or more
covered lives unless a higher threshold is determined by CDI by
regulation). Requires health insurers to disclose specified
information related to methods of payment and bonuses and other
disclosures required of the Department of Managed Health Care (DMHC)
licensees. Specifically, this bill :
1)Requires every health insurer, including those insurers that
contract for alternative rates of payment, as specified, to
include within its disclosure form a statement clearly describing
the basic method of reimbursement, including the scope and general
methods of payment, made to its contracting providers of health
care services, and whether financial bonuses or any other
incentives are used.
2)Requires health insurers, at least 75 days prior to the
termination date of its contract with a provider group or
general acute care hospital to provide services at alternative
rates of payment, as specified, to notify CDI and submit for
approval the written notice the insurer proposes to send to
affected insureds if the termination of the contract results in a
material change to the insurer's provider network.
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3)Requires a health insurer and a provider to include in all
written, printed, or electronic communications sent to an insured
that concern the contract termination or transition plan, the
following statement in not less than 8-point type: "If you have
been receiving care from a health care provider, you may have a
right to keep your provider for a designated time period. Please
contact your insurer's customer service department, and if you
have further questions, you are encouraged to contact the
Department of Insurance, which protects insurance consumers, by
telephone at its toll-free number, 800-927-HELP (4357), or at a
telecommunications device for the deaf (or TDD) number for the
hearing impaired at 800-482-4833, or online at
www.insurance.ca.gov."
4)Requires specified disclosures for a health insurance policy
relating to the terms and conditions of the policy.
FISCAL EFFECT : According to the Assembly Appropriations Committee:
1)One-time regulatory costs to CDI in the range of $50,000 to
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 : According to the author, in June 2011, the California
HealthCare Foundation issued a report which focused on the policies
and structures possibly needed to implement the Affordable Care Act
(ACA). The report identified considerations and options for
updating and strengthening California's regulatory context in light
of ACA requirements. One of the recommendations was to align
statutes and regulations between CDI and DMHC. The author states
that the report 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. The alignment of Insurance Code and Knox-Keene
Health Care Service Plan Act of 1975 (Knox-Keene) requirements will
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ensure that consumers receive equivalent, strong consumer
protections whether they purchase health insurance coverage
regulated under the Insurance Code or the Knox-Keene Act and also
provides for a level competitive environment. The CDI sponsors this
bill to further strengthen protections in California's regulation of
health insurance by aligning the Insurance Code and sections of the
Knox-Keene Act, specifically with regards to consumer disclosure
requirements. Health Access California supports this bill because
it adds to the Insurance Code two important consumer protections
that exist in the Knox-Keene Act by assuring an orderly transfer of
enrollees in the event of contract disputes between an insurer and a
major provider and by including disclosure notifications. BayBio
and the California Healthcare Institute support alignment of the
Insurance and Health and Safety Codes so that consumers can make
informed decisions and have access to the right treatment at the
right time, without interruption.
The Association of California Life and Health Insurance Companies
(ACLHIC) opposes this bill because many of the requirements related
to the contract termination process are not comparable to what is
currently required of preferred provider organizations (PPOs) or
Health Maintenance Organizations (HMOs). ACLHIC believes this bill
places a higher regulatory burden on insurance products under CDI
and it is unnecessary. ACLHIC indicates that HMOs only have to
provide notice if they are cancelling a contract with provider group
or a hospital and this bill applies to any health insurer provider
or facility contract. ACLHIC has great concerns about the cost
implications of having to send out a notice every time an individual
provider leaves the network. According to ACLHIC, the disclosure
requirements are in addition to requirements already placed on
insurers and the requirements in this bill do not make sense within
the PPO model. ACLHIC argues that PPOs do not require that benefits
under the contract be obtained through a primary care provider and
the hospital and providers contracted within the primary care
provider's medical group. ACLHIC suggests in order to ensure a
smooth transition and keep administrative costs to a minimum, it is
prudent to coordinate efforts to update forms with the pending ACA
requirements.
Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097
FN: 0003396
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