Amended in Senate April 29, 2014

Amended in Senate March 28, 2014

Senate Bill No. 1052

Introduced by Senator Torres

February 18, 2014

An act to amend Section 100503 of, and to add Section 100503.1 to, the Government Code, begin insert to amend Sections 1363.01 and 1368.016 of, and to add Section 1367.205 to, the Health and Safety Code, and to amend Section 10123.199 end insert begin insert of, and to add Section 10123.192 to, the Insurance Code, end insert relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

SB 1052, as amended, Torres. begin delete California Health Benefit Exchange: annual report: qualified health plan formularies. end delete begin insert Health care coverage. end insert

begin insert

Existing law, the Knox-Keene Health Care Service Plan Act (Knox-Keene Act) of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance. The Knox-Keene Act requires a health care service plan that provides prescription drug benefits and maintains one or more drug formularies to provide to members of the public, upon request, a copy of the most current list of prescription drugs on the formulary, as specified.

end insert begin insert

This bill would require a health care service plan or health insurer that provides prescription drug benefits and maintains one or more drug formularies to post those formularies on its Internet Web site, update that posting within 24 hours after making any formulary changes, use a standard template to display formularies, and include in any published formulary, among other information, the prior authorization or step edit requirements for, and the range of cost sharing for, each drug included on the formulary. The bill would authorize the Department of Managed Health Care and the Department of Insurance to develop a standard formulary template and would require plans and insurers to use that template to comply with specified provisions of the bill. The bill would make other related conforming changes. Because a willful violation of these requirements by a health care service plan would be a crime, the bill would impose a state-mandated local program.

end 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 undertake activities necessary to market and publicize the availability of health care coverage and federal subsidies through the Exchange and to undertake outreach and enrollment activities that seek to assist with enrolling in the Exchange in the least burdensome manner. Existing law also requires the board of the Exchange to annually prepare a written report on the implementation and performance of the Exchange functions during the preceding fiscal year, as specified, and requires that this report be submitted to the Legislature and the Governor and be made available to the public on the Internet Web site of the Exchange.

This bill, would also require the report to include the total number of uninsured Californians as a percentage of the state population and an independent evaluation of the marketing and outreach and enrollment activities undertaken by the Exchange.

Existing law requires the board of the Exchange to 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.

This bill would begin delete prohibit the Exchange from offering a qualified health plan unless the carrier offering the plan posts the formulary for the plan on the Internet Web site of the carrier, updates that posting within 24 hours after making any changes to the formulary, uses a standard template to display the formulary for all qualified health plans offered by the carrier, and includes in any published formulary the prior authorization or step edit requirements for, and the range of coinsurance cost of, each drug included on the formulary. The bill would end delete require the board of the Exchange to ensure that its Internet Web site provides a direct link to the begin delete formulary posted by a carrier before the plan is offered through the Exchange end delete begin insert formularies for each qualified health plan offered through the Exchange that are posted by carriers pursuant to the bill’s provisions end insert . The bill would also require the board to create a search tool on its Internet Web site that allows potential enrollees to search for qualified health plans by a particular drug and by a particular therapeutic condition.

begin insert

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

end insert begin insert

This bill would provide that no reimbursement is required by this act for a specified reason.

end insert

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

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

SECTION 1.  

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

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 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.

(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) (A) Annually prepare a written report on the
implementation and performance of the Exchange functions during
the preceding fiscal year, including, at a minimum, all of the
following:

(i) The manner in which funds were expended and the progress
toward, and the achievement of, the requirements of this title.

(ii) 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.

(iii) The total number of uninsured Californians as a percentage
of the state population.

(iv) An evaluation of the effectiveness of the activities
undertaken pursuant to subdivision (k). This evaluation shall be
conducted by an independent entity selected by the board.

(B) The report required by this paragraph 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 paragraph 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.

SEC. 2.  

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

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.

(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) (A) Annually prepare a written report on the
implementation and performance of the Exchange functions during
the preceding fiscal year, including, at a minimum, all of the
following:

(i) The manner in which funds were expended and the progress
toward, and the achievement of, the requirements of this title.

(ii) The total number of uninsured Californians as a percentage
of the state population.

(iii) An evaluation of the effectiveness of the activities
undertaken pursuant to subdivision (k). This evaluation shall be
conducted by an independent entity selected by the board.

(B) The report required by this paragraph 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 paragraph 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.

SEC. 3.  

Section 100503.1 is added to the Government Code,
to read:

begin delete

100503.1.  

(a) A qualified health plan shall not be offered
through the Exchange unless the carrier offering the plan does all
of the following:

(1) Posts the formulary for the qualified health plan on the
Internet Web site of the carrier in a manner that is accessible and
searchable by potential enrollees, enrollees, and providers.

(2) Updates the formulary posted pursuant to paragraph (1) with
any change to that formulary within 24 hours after making the
change.

(3) Uses a standard template to display the formulary for all
qualified health plans offered by the carrier. This template shall
do both of the following:

(A) Use the United States Pharmacopeia classification system.

(B) Organize drugs by therapeutic class, listing drugs
alphabetically.

(4) Includes both of the following on any published formulary
for the qualified health plan, including, but not limited to, the
formulary posted pursuant to paragraph (1):

(A) Any prior authorization or step edit requirements for each
specific drug included on the formulary.

(B) The range of coinsurance cost to a potential enrollee of each
specific drug included on the formulary, as follows:

(i) Under $100 - $.

(ii) $100-$250 - $$.

(iii) $251-$500 - $$$.

(iv) Over $500 - $$$$.

(b)

end delete

begin insert

begin insert 100503.1. end insert   

end insert

begin insert (a) end insert  The board shall ensure that the Internet Web
site maintained under subdivision (c) of Section 100502 provides
a direct link to the formulary begin delete posted pursuant to paragraph (1) of
subdivision (a) before the plan is end delete begin insert , or formularies, for each qualified
health plan end insert offered through the Exchange begin insert that is posted by the
carrier pursuant to Section 1367.205 of the Health and Safety
Code or Section 10123.192 of the Insurance Code end insert .

begin delete

(c)

end delete

begin insert (b) end insert  The board shall create a search tool on the Internet Web site
maintained under subdivision (c) of Section 100502 that allows
potential enrollees to search for qualified health plans by a
particular drug and by a particular therapeutic condition.

begin delete

(d) For purposes of this section, “formulary for the qualified
health plan” means the complete list of drugs preferred for use and
eligible for coverage under the qualified health plan and includes
the drugs covered under both the pharmacy benefit of the plan and
the medical benefit of the plan.

end delete

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 1363.01 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

1363.01.  

(a)  Every plan that covers prescription drug benefits
shall provide notice in the evidence of coverage and disclosure
form to enrollees regarding whether the plan uses a formulary.
The notice shall be in language that is easily understood and in a
format that is easy to understand. The notice shall include an
explanation of what a formulary is, how the plan determines which
prescription drugs are included or excluded, and how often the
plan reviews the contents of the formulary.

(b)  Every plan that covers prescription drug benefits shall
provide to members of the public, upon request, information
regarding whether a specific drug or drugs are on the plan’s
formulary. Notice of the opportunity to secure this information
from the plan, including the plan’s telephone number for making
a request of this nature begin insert and the Internet Web site where the
formulary is posted under Section 1367.205 end insert , shall be included in
the evidence of coverage and disclosure form to enrollees.

(c)  Every plan shall notify enrollees, and members of the public
who request formulary information, that the presence of a drug on
the plan’s formulary does not guarantee that an enrollee will be
prescribed that drug by his or her prescribing provider for a
particular medical condition.

begin delete

(d)  This section shall become operative July 1, 1999.

end delete

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 1367.205 is added to the end insert begin insert Health and Safety
Code end insert begin insert , to read: end insert

begin insert

begin insert 1367.205. end insert   

(a) In addition to the list required to be provided
under Section 1367.20, a health care service plan that provides
prescription drug benefits and maintains one or more drug
formularies shall do all of the following:

(1) Post the formulary or formularies for each product offered
by the plan on the plan’s Internet Web site in a manner that is
accessible and searchable by potential enrollees, enrollees, and
providers.

(2) Update the formularies posted pursuant to paragraph (1)
with any change to those formularies within 24 hours after making
the change.

(3) Use a standard template to display the formulary or
formularies for each product offered by the plan. This template
shall do both of the following:

(A) Use the United States Pharmacopeia classification system.

(B) Organize drugs by therapeutic class, listing drugs
alphabetically.

(4) Include all of the following on any published formulary for
any product offered by the plan, including, but not limited to, the
formulary or formularies posted pursuant to paragraph (1) and
the list provided pursuant to Section 1367.20:

(A) Any prior authorization or step edit requirements for each
specific drug included on the formulary.

(B) The range of cost sharing for a potential enrollee of each
specific drug included on the formulary, as follows:

(i) Under $100 - $.

(ii) $100-$250 - $$.

(iii) $251-$500 - $$$.

(iv) Over $500 - $$$$.

(C) Identification of any drugs on the formulary that are
preferred over other drugs on the formulary.

(D) The notification described in subdivision (c) of Section
1363.01.

(b) The department may develop a standard formulary template
provided that the department consults with the Department of
Insurance on the template design. If the department develops this
template, a health care service plan shall use the template to
comply with paragraph (3) of subdivision (a).

(c) For purposes of this section, “formulary” means the
complete list of drugs preferred for use and eligible for coverage
under a health care service plan product and includes the drugs
covered under both the pharmacy benefit of the product and the
medical benefit of the product.

end insert

begin insert

begin insert SEC. 6. end insert   

end insert

begin insert Section 1368.016 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

1368.016.  

(a)  begin delete On or before January 1, 2012, every end delete begin insert A end insert health
care service plan that provides coverage for professional mental
health services, including a specialized health care service plan
that provides coverage for professional mental health services,
shall, pursuant to subdivision (f) of Section 1368.015, include on
its Internet Web site, or provide a link to, the following
information:

(1) A telephone number that the enrollee or provider can call,
during normal business hours, for assistance obtaining mental
health benefits coverage information, including the extent to which
benefits have been exhausted, in-network provider access
information, and claims processing information.

(2) A link to prescription drug formularies begin insert posted pursuant to
Section 1367.205, end insert or instructions on how to obtain the formulary,
as described in Section 1367.20.

(3) A detailed summary that describes the process by which the
plan reviews and authorizes or approves, modifies, or denies
requests for health care services as described in Sections 1363.5
and 1367.01.

(4) Lists of providers or instructions on how to obtain the
provider list, as required by Section 1367.26.

(5) A detailed summary of the enrollee grievance process as
described in Sections 1368 and 1368.015.

(6) A detailed description of how an enrollee may request
continuity of care pursuant to subdivisions (a) and (b) of Section
1373.95.

(7) Information concerning the right, and applicable procedure,
of an enrollee to request an independent medical review pursuant
to Section 1374.30.

(b) Any modified material described in subdivision (a) shall be
updated at least quarterly.

(c) The information described in subdivision (a) may be made
available through a secured Internet Web site that is only accessible
to enrollees.

(d) The material described in subdivision (a) shall also be made
available to enrollees in hard copy upon request.

(e) Nothing in this article shall preclude a health care service
plan from including additional information on its Internet Web
site for applicants, enrollees or subscribers, or providers, including,
but not limited to, the cost of procedures or services by health care
providers in a plan’s network.

(f) The department shall include on the department’s Internet
Web site a link to the Internet Web site of each health care service
plan and specialized health care service plan described in
subdivision (a).

(g) This section shall not apply to Medicare supplement
insurance, Employee Assistance Programs, short-term limited
duration health insurance, Champus-supplement insurance, or
TRI-CARE supplement insurance, or to hospital indemnity,
accident-only, and specified disease insurance. This section shall
also not apply to specialized health care service plans, except
behavioral health-only plans.

(h) This section shall not apply to a health care service plan that
contracts with a specialized health care service plan, insurer, or
other entity to cover professional mental health services for its
enrollees, provided that the health care service plan provides a link
on its Internet Web site to an Internet Web site operated by the
specialized health care service plan, insurer, or other entity with
which it contracts, and that plan, insurer, or other entity complies
with this section or Section 10123.199 of the Insurance Code.

begin insert

begin insert SEC. 7. end insert   

end insert

begin insert Section 10123.192 is added to the end insert begin insert Insurance Code end insert begin insert , to
read: end insert

begin insert

begin insert 10123.192. end insert   

(a) A health insurer that provides prescription
drug benefits and maintains one or more drug formularies shall
do all of the following:

(1) Post the formulary or formularies for each product offered
by the insurer on the insurer’s Internet Web site in a manner that
is accessible and searchable by potential insureds, insureds, and
providers.

(2) Update the formularies posted pursuant to paragraph (1)
with any change to those formularies within 24 hours after making
the change.

(3) Use a standard template to display the formulary or
formularies for each product offered by the insurer. This template
shall do both of the following:

(A) Use the United States Pharmacopeia classification system.

(B) Organize drugs by therapeutic class, listing drugs
alphabetically.

(4) Include all of the following on any published formulary for
any product offered by the insurer, including, but not limited to,
the formulary or formularies posted pursuant to paragraph (1):

(A) Any prior authorization or step edit requirements for each
specific drug included on the formulary.

(B) The range of cost sharing for a potential insured of each
specific drug included on the formulary, as follows:

(i) Under $100 - $.

(ii) $100-$250 - $$.

(iii) $251-$500 - $$$.

(iv) Over $500 - $$$$.

(C) Identification of any drugs on the formulary that are
preferred over other drugs on the formulary.

(D) A notification that the presence of a drug on the insurer’s
formulary does not guarantee that an insured will be prescribed
that drug by his or her prescribing provider for a particular
medical condition.

(b) The department may develop a standard formulary template
provided that the department consults with the Department of
Managed Health Care on the template design. If the department
develops this template, a health insurer shall use the template to
comply with paragraph (3) of subdivision (a).

(c) For purposes of this section, “formulary” means the
complete list of drugs preferred for use and eligible for coverage
under a health insurance product and includes the drugs covered
under both the pharmacy benefit of the product and the medical
benefit of the product.

end insert

begin insert

begin insert SEC. 8. end insert   

end insert

begin insert Section 10123.199 of the end insert begin insert Insurance Code end insert begin insert is amended
to read: end insert

10123.199.  

(a)  begin delete On or before January 1, 2012, every end delete begin insert A end insert health
insurer that provides coverage for professional mental health
services shall establish an Internet Web site. Each Internet Web
site shall include, or provide a link to, the following information:

(1) A telephone number that the insured or provider can call,
during normal business hours, for assistance obtaining mental
health benefits coverage information, including the extent to which
benefits have been exhausted, in-network provider access
information, and claims processing information.

(2) A link to prescription drug formularies begin insert posted pursuant to
Section 10123.192, end insert or instructions on how to obtain formulary
information.

(3) A detailed summary description of the process by which the
insurer reviews and approves, modifies, or denies requests for
health care services as described in Section 10123.135.

(4) Lists of providers or instructions on how to obtain a provider
list as required by Section 10133.1.

(5) A detailed summary of the health insurer’s grievance process.

(6) A detailed description of how the insured may request
continuity of care as described in Section 10133.55.

(7) Information concerning the right, and applicable procedure,
of the insured to request an independent medical review pursuant
to begin delete subdivision (i) of end delete Section 10169.

(b) Except as otherwise specified, the material described in
subdivision (a) shall be updated at least quarterly.

(c) The information described in subdivision (a) may be made
available through a secured Internet Web site that is only accessible
to the insured.

(d) The material described in subdivision (a) shall also be made
available to insureds in hard copy upon request.

(e) Nothing in this article shall preclude an insurer from
including additional information on its Internet Web site for
applicants or insureds, including, but not limited to, the cost of
procedures or services by health care providers in an insurer’s
network.

(f) The department shall include on the department’s Internet
Web site, a link to the Internet Web site of each health insurer
described in subdivision (a).

(g) This section shall not apply to Medicare supplement
insurance, Employee Assistance Programs, short-term limited
duration health insurance, Champus-supplement insurance, or
TRI-CARE supplement insurance, or to hospital indemnity,
accident-only, and specified disease insurance. This section shall
also not apply to specialized health insurance policies, except
behavioral health-only policies.

(h) This section shall not apply to a health insurer that contracts
with a specialized health care service plan, insurer, or other entity
to cover professional mental health services for its insureds,
provided that the health insurer provides a link on its Internet Web
site to an Internet Web site operated by the specialized health care
service plan, insurer, or other entity with which it contracts, and
that plan, insurer, or other entity complies with this section or
Section 1368.016 of the Health and Safety Code.

begin insert

begin insert SEC. 9. end insert   

end insert begin insert

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

end insert