BILL ANALYSIS �
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 2350
AUTHOR: Monning
AMENDED: April 11, 2012
HEARING DATE: June 20, 2012
CONSULTANT: Trueworthy
SUBJECT : Health care coverage.
SUMMARY : Requires health care service plans and health insurers
to annually provide specified information regarding their plan
contracts or policies to the Department of Managed Health Care
(DMHC) or the California Department of Insurance (CDI),
including claims payment policies and practices, periodic
financial disclosures, and data on enrollment and disenrollment.
Existing law:
1.Provides for the regulation of health plans by DMHC under the
Knox-Keene Health Care Service Plan Act of 1975 (Knox-Keene)
and health insurers by CDI under the Insurance Code.
2.Establishes the Patient Protection Affordability Care Act
(ACA), which imposes various requirements, some of which take
effect on January 1, 2014, on states, carriers, employers, and
individuals regarding health care coverage.
3.Establishes the California Health Benefit Exchange (Exchange),
pursuant to the ACA, to facilitate the purchase of qualified
health plans (QHPs) by qualified individuals and qualified
small employers by January 1, 2014.
This bill:
1.Requires, as of March 1, 2013, and at least annually
thereafter, every health plan and insurer, except for
specialized health care plans, to provide to DMHC or CDI, the
following information:
a. Claims payment policies and practices;
b. Periodic financial disclosures;
c. Data on enrollment;
d. Data on disenrollment;
e. Data on the number of claims that are denied;
f. Data on rating practices;
g. Information on cost-sharing and payments with respect to
any out-of-network coverage;
Continued---
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h. Information on enrollee rights; and
i. Enrollee cost-sharing transparency.
2.Requires the enrollment data to include the number of
enrollees as of December 31 of the prior year that receive
health care coverage under a health care service plan contract
that covers individuals, a small group health care service
plan contract, a large group health care service plan
contract, or under administrative services only business
lines.
3.Requires health plans and insurers to include the unduplicated
enrollment data in specific product lines as determined by the
respective department, including, but not limited to, HMO,
point-of-service, PPO, Medicare excluding Medicare supplement,
Medi-Cal managed care, and traditional indemnity non-PPO
health insurance.
4.Requires DMHC and CDI to publicly report the data provided,
including, but not limited to, posting the data on their
website.
5.Requires DMHC and CDI to consult to ensure that the data
reported to each department is comparable and consistent.
6.States legislative intent that the reporting requirements for
health plans and health insurers be consistent with the
reporting requirements, including the form and manner, imposed
on QHPs pursuant to federal regulations.
FISCAL EFFECT : According to the Assembly Appropriations
Committee analysis, AB 2350 has one-time costs to DMHC and CDI
in the range of $200,000 (Managed Care Fund and Insurance Fund)
to specify the form and manner of reporting. The analysis states
that the annual costs to DMHC and CDI may be minor and
absorbable, as this bill does not specify requirements, but the
collection of additional data will create cost pressure to
analyze the data, potentially exceeding $50,000 special fund
annually.
PRIOR VOTES :
Assembly Health: 13- 5
Assembly Appropriations:12- 5
Assembly Floor: 50- 26
COMMENTS :
1.Author's statement. This bill would establish a more
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consistent and better coordinated data reporting approach to
ensure more precise private health coverage enrollment
estimates for purposes of the ACA in California. All of these
policy changes will have an impact on the market which will
make it important for California policy makers to monitor for
irregularities and unintended consequences. Consumers could
also benefit from this bill. Disclosure of information such as
claim payment policies and practices, information on cost
sharing and payments for out-of-network coverage would assist
consumers in determining the better health plan or policy for
their needs, and give them a better and broader understanding
of their health coverage.
2.Federal health care reform. On March 23, 2010, President
Obama signed the ACA (Public Law 111-148), as amended by the
Health Care and Education Reconciliation Act of 2010 (Public
Law 111-152). Among other provisions, the ACA makes statutory
changes affecting the regulation of and payment for certain
types of private health insurance. Beginning in 2014,
individuals will be required to maintain health insurance or
pay a penalty, with exceptions for financial hardship (if
health insurance premiums exceed 8 percent of household
adjusted gross income), religion, incarceration, and
immigration status. Several insurance market reforms are
required such as prohibitions against health insurers imposing
lifetime benefit limits and preexisting health condition
exclusions. These reforms impose new requirements on states
related to the allocation of insurance risk, prohibit insurers
from basing eligibility for coverage on health status-related
factors, allow the offering of premium discounts or rewards
based on enrollee participation in wellness programs, impose
nondiscrimination requirements, require insurers to offer
coverage on a guaranteed issue and renewal basis, and
determine premiums based on adjusted community rating (age,
family, geography and tobacco use).
Additionally, by 2014, either a state will establish separate
exchanges to offer individual and small group coverage, or the
federal government will establish one. Exchanges will not be
insurers but will provide eligible individuals and small
businesses with access to private QHPs in a comparable way. In
2014, some individuals with income below 400 percent of the
federal poverty level (FPL) will qualify for credits toward
their premium costs and for subsidies toward their cost
sharing. California has established an Exchange that is
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operating as an independent government entity with a
five-member Board of Directors.
3.Transparency in coverage. In February 2012, a final rule was
issued implementing the ACA requirement that all health plans
provide a uniform summary of coverage for all enrollees and
applicants. Specifically, the federal rules require the
Exchange to collect information relating to coverage
transparency from QHP issuers, and from multi-state plans, as
specified. Specifically, a QHP issuer must provide the
following information: claims payment policies and practices;
periodic financial disclosures; data on enrollment; data on
disenrollment; data on the number of claims that are denied;
data on rating practices; information on cost sharing and
payments with respect to any out-of-network coverage;
information on enrollee rights; and enrollee cost-sharing
transparency. The federal rules require that the information
provided must be in plain language and contain no fine print.
4.Related legislation. AB 1083 (Monning) would reform the small
group market to conform to the ACA and would require health
plans and health insurers to report similar data on
enrollment. AB 1083 is pending on the Senate Floor.
5.Prior legislation. SB 1163 (Leno), Chapter 661, Statutes of
2010, among other provisions, requires health plans and health
insurers to file with DMHC and CDI specified rate information
for individual and small group contracts or policies at least
60 days prior to implementing any rate change, as specified.
6.Support. The American Federation of State, County and
Municipal Employees (AFSCME) writes that AB 2350 increases
consumer transparency by codifying reporting requirements
required under the ACA. AFSCME writes this bill will create a
more consistent and better coordinated data reporting approach
to ensure better enrollment estimates. Congress of California
Seniors writes the information provided by these reporting
requirements will allow for monitoring of programs for
irregularities and unintended consequences. Health Access
California writes that they have been frustrated for years by
the lack of information about health coverage in California.
AB 2350 will require plans and insurers to provide basic data
on enrollment.
7.Oppose unless amended. California Association of Health Plans
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(CAHP) is opposed to AB 2350 unless it is amended to be
consistent with the general parameters and timelines of
reports already required under Knox-Keene. CAHP argues AB 2350
should not conflict with pending federal guidance and should
strictly conform to existing state reports and the ACA.
8.Amendments. In an effort to address some of the concerns
raised by the opposition, the author is proposing the
following amendments:
a. Specify that the implementation date of this bill is
consistent with the date established pursuant to federal
law;
b. Provide that the definition of the terms for information
required to be reported must be consistent with ACA
definitions;
c. Require DMHC to determine how to ensure when a health
plan subcontracts with another health plan that duplicated
enrollment data is not reported for the same enrollees;
d. Allow the Director of DMHC and the Insurance
Commissioner to adopt rules and regulations necessary to
implement this bill;
e. Require CDI and DMHC to work with stakeholders to
achieve the appropriate format and manner for reporting the
data consistent with federal requirements and to avoid
redundant reporting;
f. Allow CDI and DMHC to waive some or all existing
reporting requirements it deems duplicative and modify the
timeframe for submission of these duplicative reports if
necessary; and
g. Other technical amendments.
SUPPORT AND OPPOSITION :
Support: American Federation of State, County and Municipal
Employees, AFL-CIO
California Optometric Association
Congress of California Seniors
Health Access California
SEIU California
Western Center on Law and Poverty
Oppose: California Association of Health Plans (unless
amended)
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