BILL NUMBER: SB 908 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JUNE 30, 2016
AMENDED IN SENATE MAY 31, 2016
AMENDED IN SENATE MARCH 29, 2016
INTRODUCED BY Senator Hernandez
JANUARY 26, 2016
An act to amend Sections 1374.21 1374.21,
1385.03, 1385.07, 1385.11, and 1389.25 of the Health and Safety
Code, and to amend Sections 10113.9 10113.9,
10181.3, 10181.7, 10181.11, and 10199.1 of the Insurance Code,
relating to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
SB 908, as amended, Hernandez. Health care coverage: premium rate
change: notice: other health coverage.
Existing
(1) Existing law, the Knox-Keene
Health Care Service Plan 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 its provisions a crime.
Existing law provides for the licensure and regulation of health
insurers by the Department of Insurance.
Existing law prohibits, among other things, a change in premium
rates for group health care service plan contracts and group health
insurance policies from becoming effective unless a written notice is
delivered delivered, as specified.
This bill would require, if the Department of Managed Health Care
or the Department of Insurance determines that a small
group rate is unreasonable or not justified, the contractholder or
policyholder of a small group health care service plan contract
or health insurance policy to be notified by the health care
service plan or health insurer in writing of that
determination, and would require the contractholder or policyholder
to be given 60 days to obtain other health coverage from the existing
coverage provider or another provider. With respect to small group
plan contracts or policies offered through the Exchange, the bill
would exempt these circumstances from the requirement that a health
care service plan or health insurer limit enrollment in a small group
health care service plan contract or health insurance policy to
specified open, annual, or special enrollment periods.
determination. The bill would require the notification to be
developed by the Department of Managed Health Care and the Department
of Insurance, as specified.
Existing law prohibits, among other things, a change in premium
rates for individual health care service plan contracts and
individual health insurance policies from becoming effective unless a
written notice is delivered delivered,
as specified. Existing law requires health care service plans and
health insurers to limit enrollment in individual health benefit
plans to specified open enrollment, annual enrollment, and special
enrollment periods. Existing law, subject to certain provisions,
requires a health care service plan or health insurer to allow an
individual to enroll in or change individual health benefit plans as
a result of specified triggering events for the purposes of a special
enrollment period.
This bill would require, if the Department of Managed Health Care
or the Department of Insurance determines that an individual rate is
unreasonable or not justified, the contractholder or policyholder to
be notified by the health care service plan or health insurer in
writing of that determination, and would require, if the open
enrollment period has closed for the applicable rate year or there
are fewer than 60 days remaining in the open enrollment period for
the applicable rate year, the contractholder or policyholder to be
given 60 days to obtain other coverage from the existing coverage
provider or another provider. During the 60-day period the
contractholder or policyholder would continue to be covered at the
prior rate. The bill would require the notification to
be developed by the Department of Managed Health Care and the
Department of Insurance, as specified. The bill would provide
that this notification provided to the contractholder or policyholder
constitutes a triggering event for purposes of special enrollment
periods in the individual market if the open enrollment period has
closed for the applicable rate year or there are fewer than 60 days
remaining in the open enrollment period for the applicable rate year.
(2) Existing law requires a health care service plan or health
insurer in the individual or small group market to file rate
information with the Department of Managed Health Care or the
Department of Insurance, as applicable, at least 60 days prior to
implementing any rate change and requires that the information
include a certification by an independent actuary that the rate
increase is reasonable or unreasonable. Existing law authorizes the
Department of Managed Health Care and the Department of Insurance to
review these filings to, among other things, make a determination
that an unreasonable rate increase is not justified.
This bill would instead require a health care service plan or
health insurer in the individual or small group market to file rate
information at least 120 days prior to implementing any rate change.
The bill would require a health care service plan or health insurer
to respond to any request for additional rate information necessary
for the Department of Managed Health Care or the Department of
Insurance to complete its review of the rate filing for products in
the individual or small group market within 3 business days of the
request and would require the Department of Managed Health Care and
the Department of Insurance to review these filings and make its
determination no later than 60 days following receipt of the rate
information.
This
(3) This bill would also revise
obsolete references and would make other conforming
and technical, nonsubstantive changes.
Because
(4) Because a willful violation
of the bill's requirements with respect to health care service plans
would be a crime, the bill would impose a state-mandated local
program.
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.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1374.21 of the Health and Safety Code is
amended to read:
1374.21. (a) (1) A change in premium rates or changes in coverage
stated in a group health care service plan contract shall not become
effective unless the plan has delivered in writing a notice
indicating the change or changes at least 60 days prior to the
contract renewal effective date.
(2) The notice delivered pursuant to paragraph (1) for large group
health plans shall also include the following information:
(A) Whether the rate proposed to be in effect is greater than the
average rate increase for individual market products negotiated by
the California Health Benefit Exchange for the most recent calendar
year for which the rates are final.
(B) Whether the rate proposed to be in effect is greater than the
average rate increase negotiated by the Board of Administration of
the Public Employees' Retirement System for the most recent calendar
year for which the rates are final.
(C) Whether the rate change includes any portion of the excise tax
paid by the health plan.
(b) A health care service plan that declines to offer coverage to
or denies enrollment for a large group applying for coverage shall,
at the time of the denial of coverage, provide the applicant with the
specific reason or reasons for the decision in writing, in clear,
easily understandable language.
(c) (1) Notwithstanding subdivision (b) of Section
1357.503, if For small group health care service plan
contracts, if the department determines that a rate is
unreasonable or not justified consistent with Article 6.2 (commencing
with Section 1385.01), the plan shall notify the contractholder of
this determination and shall offer the contractholder
coverage of no less than 60 days in order for the contractholder to
obtain other coverage, including coverage from another health care
service plan. determination.
(2) The notification to the contractholder shall state the
following in 14-point type:
"The Department of Managed Health Care has determined that the
rate for this product is not reasonable or not justified. All health
coverage offered to employers like you is reviewed to determine
whether the rates are reasonable and justified. For the next 60 days
from the date of this notice you have the option to obtain other
coverage from this health plan or another health plan. For small
business purchasers, you may contact Covered California at
www.coveredca.com for help in obtaining coverage."
(2) The notification to the contractholder shall be developed by
the department and shall include the following statements in 14-point
type:
(A) The Department of Managed Health Care has determined that the
rate for this product is unreasonable or not justified after
reviewing information submitted to it by the plan.
(B) The contractholder has the option to obtain other coverage
from this plan or another plan, or to keep this coverage.
(C) Small business purchasers may want to contact Covered
California at www.coveredca.com for help in understanding available
options.
(3) The development of the notification required under this
subdivision shall not be subject to the Administrative Procedure Act
(Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3
of Title 2 of the Government Code).
(3)
(4) The plan may include in the notification to the
contractholder the Internet Web site address at which the plan's
final justification for implementing an increase that has been
determined to be unreasonable by the director may be found pursuant
to Section 154.230 of Title 45 of the Code of Federal Regulations.
(4)
(5) The notice shall also be provided to the solicitor
for the contractholder, if any, so that the solicitor may assist the
purchaser in finding other coverage.
SEC. 2. Section 1385.03 of the Health
and Safety Code is amended to read:
1385.03. (a) All health care service plans shall file with the
department all required rate information for individual and small
group health care service plan contracts at least 60
120 days prior to implementing any rate change.
(b) A plan shall disclose to the department all of the following
for each individual and small group rate filing:
(1) Company name and contact information.
(2) Number of plan contract forms covered by the filing.
(3) Plan contract form numbers covered by the filing.
(4) Product type, such as a preferred provider organization or
health maintenance organization.
(5) Segment type.
(6) Type of plan involved, such as for profit or not for profit.
(7) Whether the products are opened or closed.
(8) Enrollment in each plan contract and rating form.
(9) Enrollee months in each plan contract form.
(10) Annual rate.
(11) Total earned premiums in each plan contract form.
(12) Total incurred claims in each plan contract form.
(13) Average rate increase initially requested.
(14) Review category: initial filing for new product, filing for
existing product, or resubmission.
(15) Average rate of increase.
(16) Effective date of rate increase.
(17) Number of subscribers or enrollees affected by each plan
contract form.
(18) The plan's overall annual medical trend factor assumptions in
each rate filing for all benefits and by aggregate benefit category,
including hospital inpatient, hospital outpatient, physician
services, prescription drugs and other ancillary services,
laboratory, and radiology. A plan may provide aggregated additional
data that demonstrates or reasonably estimates year-to-year cost
increases in specific benefit categories in the geographic regions
listed in Sections 1357.512 and 1399.855. A health plan that
exclusively contracts with no more than two medical groups in the
state to provide or arrange for professional medical services for the
enrollees of the plan shall instead disclose the amount of its
actual trend experience for the prior contract year by aggregate
benefit category, using benefit categories that are, to the maximum
extent possible, the same or similar to those used by other plans.
(19) The amount of the projected trend attributable to the use of
services, price inflation, or fees and risk for annual plan contract
trends by aggregate benefit category, such as hospital inpatient,
hospital outpatient, physician services, prescription drugs and other
ancillary services, laboratory, and radiology. A health plan that
exclusively contracts with no more than two medical groups in the
state to provide or arrange for professional medical services for the
enrollees of the plan shall instead disclose the amount of its
actual trend experience for the prior contract year by aggregate
benefit category, using benefit categories that are, to the maximum
extent possible, the same or similar to those used by other plans.
(20) A comparison of claims cost and rate of changes over time.
(21) Any changes in enrollee cost sharing over the prior year
associated with the submitted rate filing.
(22) Any changes in enrollee benefits over the prior year
associated with the submitted rate filing.
(23) The certification described in subdivision (b) of Section
1385.06.
(24) Any changes in administrative costs.
(25) Any other information required for rate review under PPACA.
(c) A health care service plan subject to subdivision (a) shall
also disclose the following aggregate data for all rate filings
submitted under this section in the individual and small group health
plan markets:
(1) Number and percentage of rate filings reviewed by the
following:
(A) Plan year.
(B) Segment type.
(C) Product type.
(D) Number of subscribers.
(E) Number of covered lives affected.
(2) The plan's average rate increase by the following categories:
(A) Plan year.
(B) Segment type.
(C) Product type.
(3) Any cost containment and quality improvement efforts since the
plan's last rate filing for the same category of health benefit
plan. To the extent possible, the plan shall describe any significant
new health care cost containment and quality improvement efforts and
provide an estimate of potential savings together with an estimated
cost or savings for the projection period.
(d) The department may require all health care service plans to
submit all rate filings to the National Association of Insurance
Commissioners' System for Electronic Rate and Form Filing (SERFF).
Submission of the required rate filings to SERFF shall be deemed to
be filing with the department for purposes of compliance with this
section.
(e) A plan shall submit any other information required under
PPACA. A plan shall also submit any other information required
pursuant to any regulation adopted by the department to comply with
this article.
(f) (1) A plan shall respond to the department's request for any
additional information necessary for the department to complete its
review of the plan's rate filing for individual and small group
health care service plan contracts under this article within three
business days of the department's request or as otherwise required by
the department.
(2) The department shall determine whether a plan's rate increase
for individual and small group health care service plan contracts is
unreasonable or not justified no later than 60 days following receipt
of all the information the department requires to makes its
determination.
SEC. 3. Section 1385.07 of the Health
and Safety Code is amended to read:
1385.07. (a) Notwithstanding Chapter 3.5 (commencing with Section
6250) of Division 7 of Title 1 of the Government Code, all
information submitted under this article shall be made publicly
available by the department except as provided in subdivision (b).
(b) (1) The contracted rates between a health care service plan
and a provider shall be deemed confidential information that shall
not be made public by the department and are exempt from disclosure
under the California Public Records Act (Chapter 3.5 (commencing with
Section 6250) of Division 7 of Title 1 of the Government Code). The
contracted rates between a health care service plan and a provider
shall not be disclosed by a health care service plan to a large group
purchaser that receives information pursuant to Section 1385.10.
(2) The contracted rates between a health care service plan and a
large group shall be deemed confidential information that shall not
be made public by the department and are exempt from disclosure under
the California Public Records Act (Chapter 3.5 (commencing with
Section 6250) of Division 7 of Title 1 of the Government Code).
Information provided to a large group purchaser pursuant to Section
1385.10 shall be deemed confidential information that shall not be
made public by the department and shall be exempt from disclosure
under the California Public Records Act (Chapter 3.5 (commencing with
Section 6250) of Division 7 of Title 1 of the Government Code).
(c) All information submitted to the department under this article
shall be submitted electronically in order to facilitate review by
the department and the public.
(d) In addition, the department and the health care service plan
shall, at a minimum, make the following information readily available
to the public on their Internet Web sites, in plain language and in
a manner and format specified by the department, except as provided
in subdivision (b). The For individual and
small group health care service plan contracts, the information shall
be made public for 120 days prior to the implementation of the rate
increase. For large group health care service plan cont
racts, the information shall be made public for 60 days prior
to the implementation of the rate increase. The information shall
include:
(1) Justifications for any unreasonable rate increases, including
all information and supporting documentation as to why the rate
increase is justified.
(2) A plan's overall annual medical trend factor assumptions in
each rate filing for all benefits.
(3) A health plan's actual costs, by aggregate benefit category to
include hospital inpatient, hospital outpatient, physician services,
prescription drugs and other ancillary services, laboratory, and
radiology.
(4) The amount of the projected trend attributable to the use of
services, price inflation, or fees and risk for annual plan contract
trends by aggregate benefit category, such as hospital inpatient,
hospital outpatient, physician services, prescription drugs and other
ancillary services, laboratory, and radiology. A health plan that
exclusively contracts with no more than two medical groups in the
state to provide or arrange for professional medical services for the
enrollees of the plan shall instead disclose the amount of its
actual trend experience for the prior contract year by aggregate
benefit category, using benefit categories that are, to the maximum
extent possible, the same or similar to those used by other plans.
SEC. 4. Section 1385.11 of the Health
and Safety Code is amended to read:
1385.11. (a) Whenever it appears to the department that any
person has engaged, or is about to engage, in any act or practice
constituting a violation of this article, including the filing of
inaccurate or unjustified rates or inaccurate or unjustified rate
information, the department may review the rate filing to ensure
compliance with the law.
(b) The department may review other filings.
(c) The department shall accept and post to its Internet Web site
any public comment on a rate increase submitted to the department
during the 60-day applicable period
described in subdivision (d) of Section 1385.07.
(d) The department shall report to the Legislature at least
quarterly on all unreasonable rate filings.
(e) The department shall post on its Internet Web site any changes
submitted by the plan to the proposed rate increase, including any
documentation submitted by the plan supporting those changes.
(f) If the director makes a decision that an unreasonable rate
increase is not justified or that a rate filing contains inaccurate
information, the department shall post that decision on its Internet
Web site.
(g) Nothing in this article shall be construed to impair or impede
the department's authority to administer or enforce any other
provision of this chapter.
SEC. 2. SEC. 5. Section 1389.25 of
the Health and Safety Code is amended to read:
1389.25. (a) (1) This section shall apply only to a full service
health care service plan offering health coverage in the individual
market in California and shall not apply to a specialized health care
service plan, a health care service plan contract in the Medi-Cal
program (Chapter 7 (commencing with Section 14000) of Part 3 of
Division 9 of the Welfare and Institutions Code), a health care
service plan conversion contract offered pursuant to Section 1373.6,
a health care service plan contract in the Healthy Families Program
(Part 6.2 (commencing with Section 12693) of Division 2 of the
Insurance Code), or a health care service plan contract offered to a
federally eligible defined individual under Article 4.6 (commencing
with Section 1366.35).
(2) A local initiative, as defined in subdivision (w) of Section
53810 of Title 22 of the California Code of Regulations, that is
awarded a contract by the State Department of Health Care Services
pursuant to subdivision (b) of Section 53800 of Title 22 of the
California Code of Regulations, shall not be subject to this section
unless the plan offers coverage in the individual market to persons
not covered by Medi-Cal or the Healthy Families Program.
(b) (1) No change in the premium rate or coverage for an
individual plan contract shall become effective unless the plan has
delivered a written notice of the change at least 15 days prior to
the start of the annual enrollment period applicable to the contract
or 60 days prior to the effective date of the contract renewal,
whichever occurs earlier in the calendar year.
(2) The written notice required pursuant to paragraph (1) shall be
delivered to the individual contractholder at his or her last
address known to the plan. The notice shall state in italics and in
12-point type the actual dollar amount of the premium rate increase
and the specific percentage by which the current premium will be
increased. The notice shall describe in plain, understandable English
any changes in the plan design or any changes in benefits, including
a reduction in benefits or changes to waivers, exclusions, or
conditions, and highlight this information by printing it in italics.
The notice shall specify in a minimum of 10-point bold typeface, the
reason for a premium rate change or a change to the plan design or
benefits.
(c) (1) Notwithstanding subdivision (c) of Section 1399.849, if
the department determines that a rate is unreasonable or not
justified consistent with Article 6.2 (commencing with Section
1385.01), the plan shall notify the contractholder of this
determination and, if the open enrollment period has closed for the
applicable rate year or there are fewer than 60 days remaining in the
open enrollment period for the applicable rate year, shall offer the
contractholder coverage of no less than 60 days to obtain other
coverage, including coverage from another health care service plan.
During the 60-day period, the prior rate shall remain in
effect to allow the purchaser the opportunity to obtain other
coverage. The notification to the contractholder shall
be developed by the department. The development of the notification
required under this subdivision shall not be subject to the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(2) If it is prior to the open enrollment period for the
applicable rate year, the notification to the contractholder shall
state the following include the following
statements in 14-point type:
"The Department of Managed Health Care has determined that the
rate for this product is not reasonable or not justified. All health
coverage offered to individuals like you is reviewed to determine
whether the rates are reasonable and justified. Open enrollment is
from insert day of month and year] to insert day of month and
year]. During that time, you have the option to obtain other coverage
from this health plan or another health plan. You may also contact
Covered California at www.coveredca.com for help in obtaining
coverage. Many Californians are eligible for financial assistance
from Covered California to help pay for coverage."
(A) The Department of Managed Health Care has determined that the
rate for this product is unreasonable or not justified after
reviewing information submitted to it by the plan.
(B) During the upcoming open enrollment period, the contractholder
has the option to obtain other coverage from this plan or another
plan, or to keep this coverage.
(C) The contractholder may want to contact Covered California at
www.coveredca.com for help in understanding available options.
(D) Many Californians are eligible for financial assistance from
Covered California to help pay for coverage.
(3) If there are less than 60 days remaining in the open
enrollment period for the applicable rate year or after the open
enrollment period has closed for the applicable rate year, the
notification to the contractholder shall state the following
include the following statements in
14-point type:
"The Department of Managed Health Care has determined that the
rate for this product is not reasonable or not justified. All health
coverage offered to individuals like you is reviewed to determine
whether the rates are reasonable and justified. For the next 60 days
from the date of this notice you have the option to obtain other
coverage from this health plan or another health plan. During this
60-day period, the prior rate shall remain in effect. You may also
contact Covered California at www.coveredca.com for help in obtaining
coverage. Many Californians are eligible for financial assistance
from Covered California to help pay for coverage."
(A) The Department of Managed Health Care has determined that the
rate for this product is unreasonable or not justified after
reviewing information submitted to it by the plan.
(B) The contractholder has the option to obtain other coverage
from this plan or another plan, or to keep this coverage.
(C) The contractholder may want to contact Covered California at
www.coveredca.com for help in understanding available options.
(D) Many Californians are eligible for financial assistance from
Covered California to help pay for coverage.
(4) The plan may include in the notification to the contractholder
the Internet Web site address at which the plan's final
justification for implementing an increase that has been determined
to be unreasonable by the director may be found pursuant to Section
154.230 of Title 45 of the Code of Federal Regulations.
(5) The notice shall also be provided to the solicitor for the
contractholder, if any, so that the solicitor may assist the
purchaser in finding other coverage.
(6) The notice shall constitute a triggering event for purposes of
special enrollment, as defined in Section 1399.849 if the open
enrollment period has closed for the applicable rate year or there
are fewer than 60 days remaining in the open enrollment period for
the applicable rate year.
(d) If a plan rejects a dependent of a subscriber applying to be
added to the subscriber's individual grandfathered health plan,
rejects an applicant for a Medicare supplement plan contract due to
the applicant having end-stage renal disease, or offers an individual
grandfathered health plan to an applicant at a rate that is higher
than the standard rate, the plan shall inform the applicant about the
California Major Risk Medical Insurance Program (MRMIP) (Chapter 4
(commencing with Section 15870) of Part 3.3 of Division 9 of the
Welfare and Institutions Code) and about the new coverage options and
the potential for subsidized coverage through Covered California.
The plan shall direct persons seeking more information to MRMIP,
Covered California, plan or policy representatives, insurance agents,
or an entity paid by Covered California to assist with health
coverage enrollment, such as a navigator or an assister.
(e) A notice provided pursuant to this section is a private and
confidential communication and, at the time of application, the plan
shall give the individual applicant the opportunity to designate the
address for receipt of the written notice in order to protect the
confidentiality of any personal or privileged information.
(f) For purposes of this section, the following definitions shall
apply:
(1) "Covered California" means the California Health Benefit
Exchange established pursuant to Section 100500 of the Government
Code.
(2) "Grandfathered health plan" has the same meaning as that term
is defined in Section 1251 of PPACA.
(3) "PPACA" means the federal Patient Protection and Affordable
Care Act (Public Law 111-148), as amended by the federal Health Care
and Education Reconciliation Act of 2010 (Public Law 111-152), and
any rules, regulations, or guidance issued pursuant to that law.
SEC. 3. SEC. 6. Section 10113.9 of
the Insurance Code is amended to read:
10113.9. (a) This section shall not apply to short-term limited
duration health insurance, vision-only, dental-only, or
CHAMPUS-supplement insurance, or to hospital indemnity,
hospital-only, accident-only, or specified disease insurance that
does not pay benefits on a fixed benefit, cash payment only basis.
(b) (1) No change in the premium rate or coverage for an
individual health insurance policy shall become effective unless the
insurer has delivered a written notice of the change at least 15 days
prior to the start of the annual enrollment period applicable to the
policy or 60 days prior to the effective date of the policy renewal,
whichever occurs earlier in the calendar year.
(2) The written notice required pursuant to paragraph (1) shall be
delivered to the individual policyholder at his or her last address
known to the insurer. The notice shall state in italics and in
12-point type the actual dollar amount of the premium increase and
the specific percentage by which the current premium will be
increased. The notice shall describe in plain, understandable English
any changes in the policy or any changes in benefits, including a
reduction in benefits or changes to waivers, exclusions, or
conditions, and highlight this information by printing it in italics.
The notice shall specify in a minimum of 10-point bold typeface, the
reason for a premium rate change or a change in coverage or
benefits.
(c) (1) Notwithstanding subdivision (c) of Section 10965.3, if the
department determines that a rate is unreasonable or not justified
consistent with Article 4.5 (commencing with Section 10181), the
insurer shall notify the policyholder of this determination and, if
the open enrollment period has closed for the applicable rate year or
there are fewer than 60 days remaining in the open enrollment period
for the applicable rate year, shall offer the policyholder coverage
of no less than 60 days in order to obtain other coverage, including
coverage from another health insurer. During the 60-day
period, the prior rate shall remain in effect to allow the purchaser
the opportunity to obtain other coverage. The
notification to the policyholder shall be developed by the
department. The development of the notification required under this
subdivision shall not be subject
to the Administrative Procedure Act (Chapter 3.5 (commencing
with Section 11340) of Part 1 of Division 3 of Title 2 of the
Government Code).
(2) If it is prior to the open enrollment period for the
applicable rate year, the notification to the policyholder shall
state the following include the following
statements in 14-point type:
"The Department of Insurance has determined that the rate for this
product is not reasonable and is not justified. All health coverage
offered to individuals like you is reviewed to determine whether the
rates are reasonable and justified. Open enrollment is from insert
day of month and year] to insert day of month and year]. During that
time, you have the option to obtain other coverage from this health
insurer or another health insurer. You may also contact Covered
California at www.coveredca.com for help in obtaining coverage. Many
Californians are eligible for financial assistance from Covered
California to help pay for coverage."
(A) The Department of Insurance has determined that the rate for
this product is unreasonable or not justified after reviewing
information submitted to it by the insurer.
(B) During the upcoming open enrollment period, the policyholder
has the option to obtain other coverage from this insurer or another
insurer, or to keep this coverage.
(C) The policyholder may want to contact Covered California at
www.coveredca.com for help in understanding available options.
(D) Many Californians are eligible for financial assistance from
Covered California to help pay for coverage.
(3) If there are less than 60 days remaining in the open
enrollment period for the applicable rate year or after the open
enrollment period has closed for the applicable rate year, the
notification to the policyholder shall state the following
include the following statements in 14-point
type:
"The Department of Insurance has determined that the rate for this
product is not reasonable or not justified. All health coverage
offered to individuals like you is reviewed to determine whether the
rates are reasonable and justified. For the next 60 days from the
date of this notice you have the option to obtain other coverage from
this health insurer or another health insurer. During the 60-day
period, the prior rate shall remain in effect. You may also contact
Covered California at www.coveredca.com for help in obtaining
coverage. Many Californians are eligible for financial assistance
from Covered California to help pay for coverage."
(A) The Department of Insurance has determined that the rate for
this product is unreasonable or not justified after reviewing
information submitted to it by the insurer.
(B) The policyholder has the option to obtain other coverage from
this insurer or another insurer, or to keep this coverage.
(C) The policyholder may want to contact Covered California at
www.coveredca.com for help in understanding available options.
(D) Many Californians are eligible for financial assistance from
Covered California to help pay for coverage.
(4) The insurer may include in the notification to the
policyholder the Internet Web site address at which the insurer's
final justification for implementing an increase that has been
determined to be unreasonable by the commissioner may be found
pursuant to Section 154.230 of Title 45 of the Code of Federal
Regulations.
(5) The notice shall also be provided to the agent of record for
the policyholder, if any, so that the agent may assist the purchaser
in finding other coverage.
(6) The notice shall constitute a triggering event for purposes of
special enrollment, as defined in Section 10965.3 if the open
enrollment period has closed for the applicable rate year or there
are fewer than 60 days remaining in the open enrollment period for
the applicable rate year.
(d) If an insurer rejects a dependent of a policyholder applying
to be added to the policyholder's individual grandfathered health
plan, rejects an applicant for a Medicare supplement policy due to
the applicant having end-stage renal disease, or offers an individual
grandfathered health plan to an applicant at a rate that is higher
than the standard rate, the insurer shall inform the applicant about
the California Major Risk Medical Insurance Program (MRMIP) (Chapter
4 (commencing with Section 15870) of Part 3.3 of Division 9 of the
Welfare and Institutions Code) and about the new coverage options and
the potential for subsidized coverage through Covered California.
The insurer shall direct persons seeking more information to MRMIP,
Covered California, plan or policy representatives, insurance agents,
or an entity paid by Covered California to assist with health
coverage enrollment, such as a navigator or an assister.
(e) A notice provided pursuant to this section is a private and
confidential communication and, at the time of application, the
insurer shall give the applicant the opportunity to designate the
address for receipt of the written notice in order to protect the
confidentiality of any personal or privileged information.
(f) For purposes of this section, the following definitions shall
apply:
(1) "Covered California" means the California Health Benefit
Exchange established pursuant to Section 100500 of the Government
Code.
(2) "Grandfathered health plan" has the same meaning as that term
is defined in Section 1251 of PPACA.
(3) "PPACA" means the federal Patient Protection and Affordable
Care Act (Public Law 111-148), as amended by the federal Health Care
and Education Reconciliation Act of 2010 (Public Law 111-152), and
any rules, regulations, or guidance issued pursuant to that law.
SEC. 7. Section 10181.3 of the
Insurance Code is amended to read:
10181.3. (a) All health insurers shall file with the department
all required rate information for individual and small group health
insurance policies at least 60 120 days
prior to implementing any rate change.
(b) An insurer shall disclose to the department all of the
following for each individual and small group rate filing:
(1) Company name and contact information.
(2) Number of policy forms covered by the filing.
(3) Policy form numbers covered by the filing.
(4) Product type, such as indemnity or preferred provider
organization.
(5) Segment type.
(6) Type of insurer involved, such as for profit or not for
profit.
(7) Whether the products are opened or closed.
(8) Enrollment in each policy and rating form.
(9) Insured months in each policy form.
(10) Annual rate.
(11) Total earned premiums in each policy form.
(12) Total incurred claims in each policy form.
(13) Average rate increase initially requested.
(14) Review category: initial filing for new product, filing for
existing product, or resubmission.
(15) Average rate of increase.
(16) Effective date of rate increase.
(17) Number of policyholders or insureds affected by each policy
form.
(18) The insurer's overall annual medical trend factor assumptions
in each rate filing for all benefits and by aggregate benefit
category, including hospital inpatient, hospital outpatient,
physician services, prescription drugs and other ancillary services,
laboratory, and radiology. An insurer may provide aggregated
additional data that demonstrates or reasonably estimates
year-to-year cost increases in specific benefit categories in the
geographic regions listed in Sections 10753.14 and 10965.9. For
purposes of this paragraph, "major geographic region" shall be
defined by the department and shall include no more than nine
regions.
(19) The amount of the projected trend attributable to the use of
services, price inflation, or fees and risk for annual policy trends
by aggregate benefit category, such as hospital inpatient, hospital
outpatient, physician services, prescription drugs and other
ancillary services, laboratory, and radiology.
(20) A comparison of claims cost and rate of changes over time.
(21) Any changes in insured cost sharing over the prior year
associated with the submitted rate filing.
(22) Any changes in insured benefits over the prior year
associated with the submitted rate filing.
(23) The certification described in subdivision (b) of Section
10181.6.
(24) Any changes in administrative costs.
(25) Any other information required for rate review under PPACA.
(c) An insurer subject to subdivision (a) shall also disclose the
following aggregate data for all rate filings submitted under this
section in the individual and small group health insurance markets:
(1) Number and percentage of rate filings reviewed by the
following:
(A) Plan year.
(B) Segment type.
(C) Product type.
(D) Number of policyholders.
(E) Number of covered lives affected.
(2) The insurer's average rate increase by the following
categories:
(A) Plan year.
(B) Segment type.
(C) Product type.
(3) Any cost containment and quality improvement efforts since the
insurer's last rate filing for the same category of health benefit
plan. To the extent possible, the insurer shall describe any
significant new health care cost containment and quality improvement
efforts and provide an estimate of potential savings together with an
estimated cost or savings for the projection period.
(d) The department may require all health insurers to submit all
rate filings to the National Association of Insurance Commissioners'
System for Electronic Rate and Form Filing (SERFF). Submission of the
required rate filings to SERFF shall be deemed to be filing with the
department for purposes of compliance with this section.
(e) A health insurer shall submit any other information required
under PPACA. A health insurer shall also submit any other information
required pursuant to any regulation adopted by the department to
comply with this article.
(f) (1) A health insurer shall respond to the department's request
for any additional information necessary for the department to
complete its review of the health insurer's rate filing for
individual and small group health insurance policies under this
article within three business days of the department's request or as
otherwise required by the department.
(2) The department shall determine whether a health insurer's rate
increase for individual and small group insurance policies is
unreasonable or not justified no later than 60 days following receipt
of all the information the department requires to make its
determination.
SEC. 8. Section 10181.7 of the
Insurance Code is amended to read:
10181.7. (a) Notwithstanding Chapter 3.5 (commencing with Section
6250) of Division 7 of Title 1 of the Government Code, all
information submitted under this article shall be made publicly
available by the department except as provided in subdivision (b).
(b) (1) Any contracted rates between a health insurer and a
provider shall be deemed confidential information that shall not be
made public by the department and are exempt from disclosure under
the California Public Records Act (Chapter 3.5 (commencing with
Section 6250) of Division 7 of Title 1 of the Government Code). The
contracted rates between a health insurer and a provider shall not be
disclosed by a health insurer to a large group purchaser that
receives information pursuant to Section 10181.10.
(2) The contracted rates between a health insurer and a large
group shall be deemed confidential information that shall not be made
public by the department and are exempt from disclosure under the
California Public Records Act (Chapter 3.5 (commencing with Section
6250) of Division 7 of Title 1 of the Government Code). Information
provided to a large group purchaser pursuant to Section 10181.10
shall be deemed confidential information that shall not be made
public by the department and shall be exempt from disclosure under
the California Public Records Act (Chapter 3.5 (commencing with
Section 6250) of Division 7 of Title 1 of the Government Code).
(c) All information submitted to the department under this article
shall be submitted electronically in order to facilitate review by
the department and the public.
(d) In addition, the department and the health insurer shall, at a
minimum, make the following information readily available to the
public on their Internet Web sites, in plain language and in a manner
and format specified by the department, except as provided in
subdivision (b). The For individual and small
group health insurance policies, the information shall be made
public for 120 days prior to the implementation of the rate increase.
For large group health care insurance policies, the
information shall be made public for 60 days prior to the
implementation of the rate increase. The information shall include:
(1) Justifications for any unreasonable rate increases, including
all information and supporting documentation as to why the rate
increase is justified.
(2) An insurer's overall annual medical trend factor assumptions
in each rate filing for all benefits.
(3) An insurer's actual costs, by aggregate benefit category to
include, hospital inpatient, hospital outpatient, physician services,
prescription drugs and other ancillary services, laboratory, and
radiology.
(4) The amount of the projected trend attributable to the use of
services, price inflation, or fees and risk for annual policy trends
by aggregate benefit category, such as hospital inpatient, hospital
outpatient, physician services, prescription drugs and other
ancillary services, laboratory, and radiology.
SEC. 9. Section 10181.11 of the
Insurance Code is amended to read:
10181.11. (a) Whenever it appears to the department that any
person has engaged, or is about to engage, in any act or practice
constituting a violation of this article, including the filing of
inaccurate or unjustified rates or inaccurate or unjustified rate
information, the department may review rate filing to ensure
compliance with the law.
(b) The department may review other filings.
(c) The department shall accept and post to its Internet Web site
any public comment on a rate increase submitted to the department
during the 60-day applicable period
described in subdivision (d) of Section 10181.7.
(d) The department shall report to the Legislature at least
quarterly on all unreasonable rate filings.
(e) The department shall post on its Internet Web site any changes
submitted by the insurer to the proposed rate increase, including
any documentation submitted by the insurer supporting those changes.
(f) If the commissioner makes a decision that an unreasonable rate
increase is not justified or that a rate filing contains inaccurate
information, the department shall post that decision on its Internet
Web site.
(g) Nothing in this article shall be construed to impair or impede
the department's authority to administer or enforce any other
provision of this code.
SEC. 4. SEC. 10. Section 10199.1 of
the Insurance Code is amended to read:
10199.1. (a) (1) An insurer or nonprofit hospital service plan or
administrator acting on its behalf shall not terminate a group
master policy or contract providing hospital, medical, or surgical
benefits, increase premiums or charges therefor, reduce or eliminate
benefits thereunder, or restrict eligibility for coverage thereunder
without providing prior notice of that action. The action shall not
become effective unless written notice of the action was delivered by
mail to the last known address of the appropriate insurance producer
and the appropriate administrator, if any, at least 45 days prior to
the effective date of the action and to the last known address of
the group policyholder or group contractholder at least 60 days prior
to the effective date of the action. If nonemployee certificate
holders or employees of more than one employer are covered under the
policy or contract, written notice shall also be delivered by mail to
the last known address of each nonemployee certificate holder or
affected employer or, if the action does not affect all employees and
dependents of one or more employers, to the last known address of
each affected employee certificate holder, at least 60 days prior to
the effective date of the action.
(2) The notice delivered pursuant to paragraph (1) for large group
health insurance policies shall also include the following
information:
(A) Whether the rate proposed to be in effect is greater than the
average rate increase for individual market products negotiated by
the California Health Benefit Exchange for the most recent calendar
year for which the rates are final.
(B) Whether the rate proposed to be in effect is greater than the
average rate increase negotiated by the Board of Administration of
the Public Employees' Retirement System for the most recent calendar
year for which the rates are final.
(C) Whether the rate change includes any portion of the excise tax
paid by the health insurer.
(b) A holder of a master group policy or a master group nonprofit
hospital service plan contract or administrator acting on its behalf
shall not terminate the coverage of, increase premiums or charges
for, or reduce or eliminate benefits available to, or restrict
eligibility for coverage of a covered person, employer unit, or class
of certificate holders covered under the policy or contract for
hospital, medical, or surgical benefits without first providing prior
notice of the action. The action shall not become effective unless
written notice was delivered by mail to the last known address of
each affected nonemployee certificate holder or employer, or if the
action does not affect all employees and dependents of one or more
employers, to the last known address of each affected employee
certificate holder, at least 60 days prior to the effective date of
the action.
(c) A health insurer that declines to offer coverage to or denies
enrollment for a large group applying for coverage shall, at the time
of the denial of coverage, provide the applicant with the specific
reason or reasons for the decision in writing, in clear, easily
understandable language.
(d) (1) Notwithstanding paragraph (3) of subdivision (b)
of Section 10753.05, if For small group health
insurance policies, if the department determines that a rate is
unreasonable or not justified consistent with Article 4.5
(commencing with Section 10181), the insurer shall notify the
policyholder of this determination and shall offer the
policyholder coverage of no less than 60 days in order for the
policyholder to obtain coverage from this health insurer or another
health insurer. determination.
(2) The notification to the policyholder shall state the following
in 14-point type:
"The Department of Insurance has determined that the rate for this
product is not reasonable or not justified. All health coverage
offered to employers like you is reviewed to determine whether the
rates are reasonable and justified. For the next 60 days from the
date of this notice you have the option to obtain other coverage from
this health insurer or another health insurer. For small business
purchasers, you may contact Covered California at www.coveredca.com
for help in obtaining coverage."
(2) The notification to the policyholder shall be developed by the
department and shall include the following statements in 14-point
type:
(A) The Department of Insurance has determined that the rate for
this product is unreasonable or not justified after reviewing
information submitted to it by the insurer.
(B) The policyholder has the option to obtain other coverage from
this insurer or another insurer, or to keep this coverage.
(C) Small business purchasers may want to contact Covered
California at www.coveredca.com for help in understanding available
options.
(3) The development of the notification required under this
subdivision shall not be subject to the Administrative Procedure Act
(Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3
of Title 2 of the Government Code).
(3)
(4) The insurer may include in the notification to the
policyholder the Internet Web site address at which the insurer's
final justification for implementing an increase that has been
determined to be unreasonable by the commissioner may be found
pursuant to Section 154.230 of Title 45 of the Code of Federal
Regulations.
(4)
(5) The notice shall also be provided to the agent of
record for the policyholder, if any, so that the agent may assist the
purchaser in finding other coverage.
SEC. 5. SEC. 11. 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.