Amended in Assembly March 28, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 2601

Introduced by Assembly Member begin delete Morrell end delete begin insert Conway end insert

February 21, 2014

An act to amend Section begin delete 100506 end delete begin insert 100503 end insert of the Government Code, relating to begin delete the California Health Benefit Exchange end delete begin insert health care coverage end insert .

LEGISLATIVE COUNSEL’S DIGEST

AB 2601, as amended, begin delete Morrell end delete   begin insert Conway end insert . California Health Benefit Exchange: begin delete appeals. end delete begin insert charge on qualified health plans. end insert

begin insert

Existing law establishes the California Health Benefit Exchange within state government, specifies the powers and duties of the board governing the Exchange, and requires the board to facilitate the purchase of qualified health plans through the Exchange by qualified individuals and small employers. Existing law requires the board to assess a charge on qualified health plans and supplemental coverage offered by carriers that is reasonable and necessary to support the development, operations, and prudent cash management of the Exchange.

end insert begin insert

This bill would prohibit the board from assessing a charge on qualified health plans or supplemental coverage, on or after January 1, 2016, or increasing that charge thereafter, unless the charge is enacted as a statute.

end insert begin delete

Existing law created the California Health Benefit Exchange (Exchange) as an independent public entity in the state government, not affiliated with an agency or department. The Exchange is governed by an executive board consisting of 5 members. Existing law requires the board to establish an appeal process for prospective and current enrollees of the Exchange that complies with all requirements of the federal Patient Protection and Affordable Care Act concerning the role of a state Exchange in facilitating federal appeals of Exchange-related determinations.

end delete begin delete

This bill would make technical, nonsubstantive changes to these provisions.

end delete

Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 100503 of the end insert begin insert Government Code end insert begin insert , as
amended by Section 4 of Chapter 5 of the First Extraordinary
Session of the Statutes of 2013, is amended to read: end insert

100503.  

In addition to meeting the minimum requirements of
Section 1311 of the federal act, the board shall do all of the
following:

(a) Determine the criteria and process for eligibility, enrollment,
and disenrollment of enrollees and potential enrollees in the
Exchange and coordinate that process with the state and local
government entities administering other health care coverage
programs, including the State Department of Health Care Services,
the Managed Risk Medical Insurance Board, and California
counties, in order to ensure consistent eligibility and enrollment
processes and seamless transitions between coverage.

(b) Develop processes to coordinate with the county entities
that administer eligibility for the Medi-Cal program and the entity
that determines eligibility for the Healthy Families Program,
including, but not limited to, processes for case transfer, referral,
and enrollment in the Exchange of individuals applying for
assistance to those entities, if allowed or required by federal law.

(c) Determine the minimum requirements a carrier must meet
to be considered for participation in the Exchange, and the
standards and criteria for selecting qualified health plans to be
offered through the Exchange that are in the best interests of
qualified individuals and qualified small employers. The board
shall consistently and uniformly apply these requirements,
standards, and criteria to all carriers. In the course of selectively
contracting for health care coverage offered to qualified individuals
and qualified small employers through the Exchange, the board
shall seek to contract with carriers so as to provide health care
coverage choices that offer the optimal combination of choice,
value, quality, and service.

(d) Provide, in each region of the state, a choice of qualified
health plans at each of the five levels of coverage contained in
subsections (d) and (e) of Section 1302 of the federal act.

(e) Require, as a condition of participation in the Exchange,
carriers to fairly and affirmatively offer, market, and sell in the
Exchange at least one product within each of the five levels of
coverage contained in subsections (d) and (e) of Section 1302 of
the federal act. The board may require carriers to offer additional
products within each of those five levels of coverage. This
subdivision shall not apply to a carrier that solely offers
supplemental coverage in the Exchange under paragraph (10) of
subdivision (a) of Section 100504.

(f) (1) Except as otherwise provided in this section and Section
100504.5, require, as a condition of participation in the Exchange,
carriers that sell any products outside the Exchange to do both of
the following:

(A) Fairly and affirmatively offer, market, and sell all products
made available to individuals in the Exchange to individuals
purchasing coverage outside the Exchange.

(B) Fairly and affirmatively offer, market, and sell all products
made available to small employers in the Exchange to small
employers purchasing coverage outside the Exchange.

(2) For purposes of this subdivision, “product” does not include
contracts entered into pursuant to Part 6.2 (commencing with
Section 12693) of Division 2 of the Insurance Code between the
Managed Risk Medical Insurance Board and carriers for enrolled
Healthy Families beneficiaries or contracts entered into pursuant
to Chapter 7 (commencing with Section 14000) of, or Chapter 8
(commencing with Section 14200) of, Part 3 of Division 9 of the
Welfare and Institutions Code between the State Department of
Health Care Services and carriers for enrolled Medi-Cal
beneficiaries. “Product” also does not include a bridge plan product
offered pursuant to Section 100504.5.

(3) Except as required by Section 1301(a)(1)(C)(ii) of the federal
act, a carrier offering a bridge plan product in the Exchange may
limit the products it offers in the Exchange solely to a bridge plan
product contract.

(g) Determine when an enrollee’s coverage commences and the
extent and scope of coverage.

(h) Provide for the processing of applications and the enrollment
and disenrollment of enrollees.

(i) Determine and approve cost-sharing provisions for qualified
health plans.

(j) Establish uniform billing and payment policies for qualified
health plans offered in the Exchange to ensure consistent
enrollment and disenrollment activities for individuals enrolled in
the Exchange.

(k) Undertake activities necessary to market and publicize the
availability of health care coverage and federal subsidies through
the Exchange. The board shall also undertake outreach and
enrollment activities that seek to assist enrollees and potential
enrollees with enrolling and re begin insert end insert enrolling in the Exchange in the
least burdensome manner, including populations that may
experience barriers to enrollment, such as the disabled and those
with limited English language proficiency.

(l) Select and set performance standards and compensation for
navigators selected under subdivision (l) of Section 100502.

(m) Employ necessary staff.

(1) The board shall hire a chief fiscal officer, a chief operations
officer, a director for the SHOP Exchange, a director of Health
Plan Contracting, a chief technology and information officer, a
general counsel, and other key executive positions, as determined
by the board, who shall be exempt from civil service.

(2) (A) The board shall set the salaries for the exempt positions
described in paragraph (1) and subdivision (i) of Section 100500
in amounts that are reasonably necessary to attract and retain
individuals of superior qualifications. The salaries shall be
published by the board in the board’s annual budget. The board’s
annual budget shall be posted on the Internet Web site of the
Exchange. To determine the compensation for these positions, the
board shall cause to be conducted, through the use of independent
outside advisors, salary surveys of both of the following:

(i) Other state and federal health insurance exchanges that are
most comparable to the Exchange.

(ii) Other relevant labor pools.

(B) The salaries established by the board under subparagraph
(A) shall not exceed the highest comparable salary for a position
of that type, as determined by the surveys conducted pursuant to
subparagraph (A).

(C) The Department of Human Resources shall review the
methodology used in the surveys conducted pursuant to
subparagraph (A).

(3) The positions described in paragraph (1) and subdivision (i)
of Section 100500 shall not be subject to otherwise applicable
provisions of the Government Code or the Public Contract Code
and, for those purposes, the Exchange shall not be considered a
state agency or public entity.

(n) Assess a charge on the qualified health plans offered by
carriers that is reasonable and necessary to support the
development, operations, and prudent cash management of the
Exchange. This charge shall not affect the requirement under
Section 1301 of the federal act that carriers charge the same
premium rate for each qualified health plan whether offered inside
or outside the Exchange. begin insert The board shall not assess a charge on
qualified health plans pursuant to this subdivision, or on
supplemental coverage pursuant to paragraph (10) of subdivision
(a) of Section 100504, on or after January 1, 2016, or increase
that charge thereafter, unless the charge or increase is enacted
as a statute. end insert

(o) Authorize expenditures, as necessary, from the California
Health Trust Fund to pay program expenses to administer the
Exchange.

(p) Keep an accurate accounting of all activities, receipts, and
expenditures, and annually submit to the United States Secretary
of Health and Human Services a report concerning that accounting.
Commencing January 1, 2016, the board shall conduct an annual
audit.

(q) (1) Annually prepare a written report on the implementation
and performance of the Exchange functions during the preceding
fiscal year, including, at a minimum, the manner in which funds
were expended and the progress toward, and the achievement of,
the requirements of this title. The report shall also include data
provided by health care service plans and health insurers offering
bridge plan products regarding the extent of health care provider
and health facility overlap in their Medi-Cal networks as compared
to the health care provider and health facility networks contracting
with the plan or insurer in their bridge plan contracts. This report
shall be transmitted to the Legislature and the Governor and shall
be made available to the public on the Internet Web site of the
Exchange. A report made to the Legislature pursuant to this
subdivision shall be submitted pursuant to Section 9795.

(2) The Exchange shall prepare, or contract for the preparation
of, an evaluation of the bridge plan program using the first three
years of experience with the program. The evaluation shall be
provided to the health policy and fiscal committees of the
Legislature in the fourth year following federal approval of the
bridge plan option. The evaluation shall include, but not be limited
to, all of the following:

(A) The number of individuals eligible to participate in the
bridge plan program each year by category of eligibility.

(B) The number of eligible individuals who elect a bridge plan
option each year by category of eligibility.

(C) The average length of time, by region and statewide, that
individuals remain in the bridge plan option each year by category
of eligibility.

(D) The regions of the state with a bridge plan option, and the
carriers in each region that offer a bridge plan, by year.

(E) The premium difference each year, by region, between the
bridge plan and the first and second lowest cost plan for individuals
in the Exchange who are not eligible for the bridge plan.

(F) The effect of the bridge plan on the premium subsidy amount
for bridge plan eligible individuals each year by each region.

(G) Based on a survey of individuals enrolled in the bridge plan:

(i) Whether individuals enrolling in the bridge plan product are
able to keep their existing health care providers.

(ii) Whether individuals would want to retain their bridge plan
product, buy a different Exchange product, or decline to purchase
health insurance if there was no bridge plan product available. The
Exchange may include questions designed to elicit the information
in this subparagraph as part of an existing survey of individuals
receiving coverage in the Exchange.

(3) In addition to the evaluation required by paragraph (2), the
Exchange shall post the items in subparagraphs (A) to (F),
inclusive, on its Internet Web site each year.

(4) In addition to the report described in paragraph (1), the board
shall be responsive to requests for additional information from the
Legislature, including providing testimony and commenting on
proposed state legislation or policy issues. The Legislature finds
and declares that activities including, but not limited to, responding
to legislative or executive inquiries, tracking and commenting on
legislation and regulatory activities, and preparing reports on the
implementation of this title and the performance of the Exchange,
are necessary state requirements and are distinct from the
promotion of legislative or regulatory modifications referred to in
subdivision (d) of Section 100520.

(r) Maintain enrollment and expenditures to ensure that
expenditures do not exceed the amount of revenue in the fund, and
if sufficient revenue is not available to pay estimated expenditures,
institute appropriate measures to ensure fiscal solvency.

(s) Exercise all powers reasonably necessary to carry out and
comply with the duties, responsibilities, and requirements of this
act and the federal act.

(t) Consult with stakeholders relevant to carrying out the
activities under this title, including, but not limited to, all of the
following:

(1) Health care consumers who are enrolled in health plans.

(2) Individuals and entities with experience in facilitating
enrollment in health plans.

(3) Representatives of small businesses and self-employed
individuals.

(4) The State Medi-Cal Director.

(5) Advocates for enrolling hard-to-reach populations.

(u) Facilitate the purchase of qualified health plans in the
Exchange by qualified individuals and qualified small employers
no later than January 1, 2014.

(v) Report, or contract with an independent entity to report, to
the Legislature by December 1, 2018, on whether to adopt the
option in Section 1312(c)(3) of the federal act to merge the
individual and small employer markets. In its report, the board
shall provide information, based on at least two years of data from
the Exchange, on the potential impact on rates paid by individuals
and by small employers in a merged individual and small employer
market, as compared to the rates paid by individuals and small
employers if a separate individual and small employer market is
maintained. A report made pursuant to this subdivision shall be
submitted pursuant to Section 9795.

(w) With respect to the SHOP Program, collect premiums and
administer all other necessary and related tasks, including, but not
limited to, enrollment and plan payment, in order to make the
offering of employee plan choice as simple as possible for qualified
small employers.

(x) Require carriers participating in the Exchange to immediately
notify the Exchange, under the terms and conditions established
by the board when an individual is or will be enrolled in or
disenrolled from any qualified health plan offered by the carrier.

(y) Ensure that the Exchange provides oral interpretation
services in any language for individuals seeking coverage through
the Exchange and makes available a toll-free telephone number
for the hearing and speech impaired. The board shall ensure that
written information made available by the Exchange is presented
in a plainly worded, easily understandable format and made
available in prevalent languages.

(z) This section shall become inoperative on the October 1 that
is five years after the date that federal approval of the bridge plan
option occurs, and, as of the second January 1 thereafter, is
repealed, unless a later enacted statute that is enacted before that
date deletes or extends the dates on which it becomes inoperative
and is repealed.

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 100503 of the end insert begin insert Government Code end insert begin insert , as added by
Section 5 of Chapter 5 of the First Extraordinary Session of the
Statutes of 2013, is amended to read: end insert

100503.  

In addition to meeting the minimum requirements of
Section 1311 of the federal act, the board shall do all of the
following:

(a) Determine the criteria and process for eligibility, enrollment,
and disenrollment of enrollees and potential enrollees in the
Exchange and coordinate that process with the state and local
government entities administering other health care coverage
programs, including the State Department of Health Care Services,
the Managed Risk Medical Insurance Board, and California
counties, in order to ensure consistent eligibility and enrollment
processes and seamless transitions between coverage.

(b) Develop processes to coordinate with the county entities
that administer eligibility for the Medi-Cal program and the entity
that determines eligibility for the Healthy Families Program,
including, but not limited to, processes for case transfer, referral,
and enrollment in the Exchange of individuals applying for
assistance to those entities, if allowed or required by federal law.

(c) Determine the minimum requirements a carrier must meet
to be considered for participation in the Exchange, and the
standards and criteria for selecting qualified health plans to be
offered through the Exchange that are in the best interests of
qualified individuals and qualified small employers. The board
shall consistently and uniformly apply these requirements,
standards, and criteria to all carriers. In the course of selectively
contracting for health care coverage offered to qualified individuals
and qualified small employers through the Exchange, the board
shall seek to contract with carriers so as to provide health care
coverage choices that offer the optimal combination of choice,
value, quality, and service.

(d) Provide, in each region of the state, a choice of qualified
health plans at each of the five levels of coverage contained in
subsections (d) and (e) of Section 1302 of the federal act.

(e) Require, as a condition of participation in the Exchange,
carriers to fairly and affirmatively offer, market, and sell in the
Exchange at least one product within each of the five levels of
coverage contained in subsections (d) and (e) of Section 1302 of
the federal act. The board may require carriers to offer additional
products within each of those five levels of coverage. This
subdivision shall not apply to a carrier that solely offers
supplemental coverage in the Exchange under paragraph (10) of
subdivision (a) of Section 100504.

(f) (1) Require, as a condition of participation in the Exchange,
carriers that sell any products outside the Exchange to do both of
the following:

(A) Fairly and affirmatively offer, market, and sell all products
made available to individuals in the Exchange to individuals
purchasing coverage outside the Exchange.

(B) Fairly and affirmatively offer, market, and sell all products
made available to small employers in the Exchange to small
employers purchasing coverage outside the Exchange.

(2) For purposes of this subdivision, “product” does not include
contracts entered into pursuant to Part 6.2 (commencing with
Section 12693) of Division 2 of the Insurance Code between the
Managed Risk Medical Insurance Board and carriers for enrolled
Healthy Families beneficiaries or contracts entered into pursuant
to Chapter 7 (commencing with Section 14000) of, or Chapter 8
(commencing with Section 14200) of, Part 3 of Division 9 of the
Welfare and Institutions Code between the State Department of
Health Care Services and carriers for enrolled Medi-Cal
beneficiaries.

(g) Determine when an enrollee’s coverage commences and the
extent and scope of coverage.

(h) Provide for the processing of applications and the enrollment
and disenrollment of enrollees.

(i) Determine and approve cost-sharing provisions for qualified
health plans.

(j) Establish uniform billing and payment policies for qualified
health plans offered in the Exchange to ensure consistent
enrollment and disenrollment activities for individuals enrolled in
the Exchange.

(k) Undertake activities necessary to market and publicize the
availability of health care coverage and federal subsidies through
the Exchange. The board shall also undertake outreach and
enrollment activities that seek to assist enrollees and potential
enrollees with enrolling and reenrolling in the Exchange in the
least burdensome manner, including populations that may
experience barriers to enrollment, such as the disabled and those
with limited English language proficiency.

(l) Select and set performance standards and compensation for
navigators selected under subdivision (l) of Section 100502.

(m) Employ necessary staff.

(1) The board shall hire a chief fiscal officer, a chief operations
officer, a director for the SHOP Exchange, a director of Health
Plan Contracting, a chief technology and information officer, a
general counsel, and other key executive positions, as determined
by the board, who shall be exempt from civil service.

(2) (A) The board shall set the salaries for the exempt positions
described in paragraph (1) and subdivision (i) of Section 100500
in amounts that are reasonably necessary to attract and retain
individuals of superior qualifications. The salaries shall be
published by the board in the board’s annual budget. The board’s
annual budget shall be posted on the Internet Web site of the
Exchange. To determine the compensation for these positions, the
board shall cause to be conducted, through the use of independent
outside advisors, salary surveys of both of the following:

(i) Other state and federal health insurance exchanges that are
most comparable to the Exchange.

(ii) Other relevant labor pools.

(B) The salaries established by the board under subparagraph
(A) shall not exceed the highest comparable salary for a position
of that type, as determined by the surveys conducted pursuant to
subparagraph (A).

(C) The Department of Human Resources shall review the
methodology used in the surveys conducted pursuant to
subparagraph (A).

(3) The positions described in paragraph (1) and subdivision (i)
of Section 100500 shall not be subject to otherwise applicable
provisions of the Government Code or the Public Contract Code
and, for those purposes, the Exchange shall not be considered a
state agency or public entity.

(n) Assess a charge on the qualified health plans offered by
carriers that is reasonable and necessary to support the
development, operations, and prudent cash management of the
Exchange. This charge shall not affect the requirement under
Section 1301 of the federal act that carriers charge the same
premium rate for each qualified health plan whether offered inside
or outside the Exchange. begin insert The board shall not assess a charge on
qualified health plans pursuant to this subdivision, or on
supplemental coverage pursuant to paragraph (10) of subdivision
(a) of Section 100504, on or after January 1, 2016, or increase
that charge thereafter, unless the charge or increase is enacted
as a statute. end insert

(o) Authorize expenditures, as necessary, from the California
Health Trust Fund to pay program expenses to administer the
Exchange.

(p) Keep an accurate accounting of all activities, receipts, and
expenditures, and annually submit to the United States Secretary
of Health and Human Services a report concerning that accounting.
Commencing January 1, 2016, the board shall conduct an annual
audit.

(q) (1) Annually prepare a written report on the implementation
and performance of the Exchange functions during the preceding
fiscal year, including, at a minimum, the manner in which funds
were expended and the progress toward, and the achievement of,
the requirements of this title. This report shall be transmitted to
the Legislature and the Governor and shall be made available to
the public on the Internet Web site of the Exchange. A report made
to the Legislature pursuant to this subdivision shall be submitted
pursuant to Section 9795.

(2) In addition to the report described in paragraph (1), the board
shall be responsive to requests for additional information from the
Legislature, including providing testimony and commenting on
proposed state legislation or policy issues. The Legislature finds
and declares that activities including, but not limited to, responding
to legislative or executive inquiries, tracking and commenting on
legislation and regulatory activities, and preparing reports on the
implementation of this title and the performance of the Exchange,
are necessary state requirements and are distinct from the
promotion of legislative or regulatory modifications referred to in
subdivision (d) of Section 100520.

(r) Maintain enrollment and expenditures to ensure that
expenditures do not exceed the amount of revenue in the fund, and
if sufficient revenue is not available to pay estimated expenditures,
institute appropriate measures to ensure fiscal solvency.

(s) Exercise all powers reasonably necessary to carry out and
comply with the duties, responsibilities, and requirements of this
act and the federal act.

(t) Consult with stakeholders relevant to carrying out the
activities under this title, including, but not limited to, all of the
following:

(1) Health care consumers who are enrolled in health plans.

(2) Individuals and entities with experience in facilitating
enrollment in health plans.

(3) Representatives of small businesses and self-employed
individuals.

(4) The State Medi-Cal Director.

(5) Advocates for enrolling hard-to-reach populations.

(u) Facilitate the purchase of qualified health plans in the
Exchange by qualified individuals and qualified small employers
no later than January 1, 2014.

(v) Report, or contract with an independent entity to report, to
the Legislature by December 1, 2018, on whether to adopt the
option in Section 1312(c)(3) of the federal act to merge the
individual and small employer markets. In its report, the board
shall provide information, based on at least two years of data from
the Exchange, on the potential impact on rates paid by individuals
and by small employers in a merged individual and small employer
market, as compared to the rates paid by individuals and small
employers if a separate individual and small employer market is
maintained. A report made pursuant to this subdivision shall be
submitted pursuant to Section 9795.

(w) With respect to the SHOP Program, collect premiums and
administer all other necessary and related tasks, including, but not
limited to, enrollment and plan payment, in order to make the
offering of employee plan choice as simple as possible for qualified
small employers.

(x) Require carriers participating in the Exchange to immediately
notify the Exchange, under the terms and conditions established
by the board when an individual is or will be enrolled in or
disenrolled from any qualified health plan offered by the carrier.

(y) Ensure that the Exchange provides oral interpretation
services in any language for individuals seeking coverage through
the Exchange and makes available a toll-free telephone number
for the hearing and speech impaired. The board shall ensure that
written information made available by the Exchange is presented
in a plainly worded, easily understandable format and made
available in prevalent languages.

(z) This section shall become operative only if Section 4 of the
act that added this section becomes inoperative pursuant to
subdivision (z) of that Section 4.

begin delete

SECTION 1.  

Section 100506 of the Government Code is
amended to read:

100506.  

(a) The board shall establish an appeals process for
prospective and current enrollees of the Exchange that complies
with all requirements of the federal act concerning the role of a
state Exchange in facilitating federal appeals of Exchange-related
determinations. The scope of those appeals shall not be construed
to be broader than the requirements of the federal act in any event.
Once the federal regulations concerning appeals have been issued
in final form by the United States Secretary of Health and Human
Services, the board may establish additional requirements related
to appeals, provided that the board determines, prior to adoption,
that any additional requirement results in no cost to the General
Fund and no increase in the charge imposed under subdivision (n)
of Section 100503.

(b) The board shall not be required to provide an appeal if the
subject of the appeal is within the jurisdiction of the Department
of Managed Health Care pursuant to the Knox-Keene Health Care
Service Plan Act of 1975 (Chapter 2.2 (commencing with Section
1340) of Division 2 of the Health and Safety Code) and its
implementing regulations, or within the jurisdiction of the
Department of Insurance pursuant to the Insurance Code and its
implementing regulations.

end delete