Bill Text: CA AB786 | 2009-2010 | Regular Session | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Insurance: retained-asset accounts.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Engrossed - Dead) 2010-08-19 - Read second time. To third reading. Re-referred to Com. on RLS. pursuant to Senate Rule 29.10 (c) . [AB786 Detail]
Download: California-2009-AB786-Amended.html
Bill Title: Insurance: retained-asset accounts.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Engrossed - Dead) 2010-08-19 - Read second time. To third reading. Re-referred to Com. on RLS. pursuant to Senate Rule 29.10 (c) . [AB786 Detail]
Download: California-2009-AB786-Amended.html
BILL NUMBER: AB 786 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 22, 2009
INTRODUCED BY Assembly Member Jones
FEBRUARY 26, 2009
An act to add Sections 1399.819 and 127664.5 to the Health and
Safety Code, and to add Section 10903 to the Insurance Code, relating
to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
AB 786, as amended, Jones. Individual health care coverage:
coverage choice categories.
Existing law, the Knox-Keene Health Care Service Plan Act of 1975
(Knox-K eene Act) , 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. Existing law requires health care
service plans and health insurers that offer contracts or policies to
individuals to comply with specified requirements.
This bill would require, by September 1, 2010, the Department of
Managed Health Care and the Department of Insurance to jointly, by
regulation, develop a system to categorize all health care service
plan contracts and health insurance policies offered and sold to
individuals into 5 coverage choice categories that meet specified
requirements. The bill would require 4 of those categories to
consist of contracts and policies that meet the requirements imposed
under the Knox-Keene Act, and would require the fifth category to
consist solely of health insurance policies that do meet the
Knox-Keene Act requirements. The bill would require a health insurer
offering a policy in that fifth category to include a specified
notice in materials used to market the policy and in the offer of
coverage under the policy. The bill would require individual
health care service plan contracts and individual health insurance
policies offered or sold on or after January 1, 2011, to contain a
maximum dollar limit on out-of-pocket costs for covered benefits
, as specified . The bill would authorize health care service
plans and health insurers to offer plan contracts
products in any coverage choice category subject to
specified restrictions. The bill would also require health care
service plans and health insurers to establish prices for the
products offered to individuals that reflect a reasonable continuum
between the products offered in the coverage choice category with the
lowest level of benefits and the products offered in the coverage
choice category with the highest level of benefits. The bill would
require the Department of Managed Health Care and the Department of
Insurance to develop a notice providing information on the coverage
choice categories and would require this notice to be provided with
the marketing, purchase, and renewal of individual contracts and
policies, as specified. The bill would require the Director of
the Department of Managed Health Care and the Insurance
Commissioner to annually report on the contracts and policies offered
in each coverage choice category and on the enrollment in those
contracts and policies. The bill would also require, commencing
January 1, 2013, and every 3 years thereafter, the director and the
commissioner to jointly determine whether the coverage choice
categories should be revised to meet the needs of consumers. The bill
would enact other related provisions.
Because a willful violation of the bill's requirements relative to
health care service plans would be a crime, the bill would impose a
state-mandated local program.
Existing law requests the University of California to establish
the California Health Benefit Review Program to assess legislation
proposing to mandate or repeal a benefit or service, as defined, and
to prepare a written analysis in accordance with specified criteria.
This bill would request the University of California, as part of
that program, to prepare a written analysis with relevant data on,
among other things, the health insurance and health care service plan
products sold in the individual market. The bill would request the
University of California to provide this report 3 months prior to the
implementation of the bill's other provisions and would authorize
the Director of the Department of Managed Health Care
or in consultation with the Insurance
Commissioner to request that analysis prior to specified annual
reports and triennial reviews. The bill would also require those
departments to require data from health care service plans and health
insurers in order to assist the University of California in
fulfilling these responsibilities.
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 1399.819 is added to the Health and Safety
Code, to read:
1399.819. (a) On or before September 1, 2010, the department and
the Department of Insurance shall jointly, by regulation, develop a
system to categorize all health care service plan contracts and
health insurance policies offered and sold to individuals pursuant to
this chapter and Part 2 (commencing with Section 10110) of Division
2 of the Insurance Code into five coverage choice categories. In
developing these categories, the departments shall develop four
categories applicable to both individual health care service plan
contracts and individual health insurance policies. These four
categories shall consist of contracts and policies that meet the
requirements of this chapter and that, at a minimum, include basic
health care services as defined in Section 1345. The
departments shall also develop a fifth category applicable only to
individual health insurance policies subject to the jurisdiction of
the Department of Insurance. This fifth category shall be established
based on the highest cost sharing and the lowest benefit levels
among the five categories and shall apply to individual health
insurance policies where the benefit levels and cost sharing
requirements do not otherwise meet the requirements of this chapter.
These coverage choice categories shall do all of the following:
(1) Reflect a reasonable continuum between the coverage choice
category with the lowest level of health care benefits and the
coverage choice category with the highest level of health care
benefits based on the actuarial value of each product.
(2) Permit reasonable benefit variation within each coverage
choice category.
(3) Be enforced consistently between health care service plans and
health insurers in the same marketplace regardless of licensure.
(3) For the four categories applicable to both health care service
plan contracts and health insurance policies, the director shall
coordinate with the Insurance Commissioner to ensure consistent
interpretation across products and markets and ease of comparison for
consumers.
(4) Within each coverage choice category, include one standard
health maintenance organization (HMO) contract
product and one standard preferred provider organization
(PPO) contract product , as defined by
regulation. For the coverage choice category with the
highest cost sharing and the least comprehensive benefit, the
standard HMO contract and the standard PPO contract shall not be the
lowest benefit level in that category. regulation,
except for the fifth category with the highest cost sharing and the
lowest benefit levels applicable only to health insurance policies,
which shall include a standard preferred provider organization health
insurance product and no standard health care service plan product.
(5) Within each coverage choice category, have a maximum dollar
limit on out-of-pocket costs, including, but not limited to,
copayments, coinsurance, and deductibles, for covered benefits.
(6) Use standard definitions and terminology for covered benefits
and cost sharing between health care service plans and health
insurers in the same marketplace regardless of licensure.
(7) Be developed by taking into account any written analysis
provided by the University of California pursuant to Section
127664.5.
(b) (1) In establishing the five coverage choice categories, the
department and the Department of Insurance shall establish the third
category as the midpoint of the individual market for contracts and
policies that cover medical, surgical, and hospital expenses and that
meet the coverage requirements of existing applicable law.
(2) The first category shall provide the most comprehensive
benefits and the lowest cost sharing, shall be comparable to coverage
provided by large employers to their employees, and shall be
described as such.
(3) The second category shall provide benefits and cost sharing
that fall between the first and the third categories.
(4) The fourth category, which shall apply to both health care
service plan contracts and health insurance policies, shall have the
highest cost sharing permitted for health care service plan contracts
under this chapter.
(5) The fifth category, which shall apply only to health insurance
policies, shall have the highest cost sharing and least
comprehensive benefits among the five categories, shall include
coverage for medical, surgical, and hospital expenses, and shall meet
the minimum benefit standards applicable to health insurance
policies under the Insurance Code.
(b)
(c) The regulations developed by the department and the
Department of Insurance pursuant to this section shall identify and
require the submission of any information needed to categorize each
health care service plan contract and health insurance policy subject
to this section.
(c)
(d) All health care service plan contracts offered or
sold to individuals on or after January 1, 2011, shall contain a
maximum dollar limit on out-of-pocket costs, including, but not
limited to, copayments, coinsurance, and deductibles, for covered
benefits.
(d)
(e) All health care service plans shall submit filings
no later than April 1, 2011, for all individual health care service
plan contracts to be offered or sold on or after that date, and
thereafter any additional individual health care plan contracts shall
be filed with the department. The director shall categorize each
individual health care service plan contract offered by a plan into
the appropriate coverage choice category within 90 days of the date
the contract is filed pursuant to this section. A health care service
plan shall not offer or sell an individual health care service plan
contract until the director has categorized the contract pursuant to
this subdivision.
(e)
(f) To facilitate accurate information about consumer
choices, a health care service plan may offer plan contracts
products in any coverage choice category.
However, if a plan offers a plan contract
product in the least comprehensive
fifth category, it shall also offer the standard
contract the least comprehensive product in the fifth
category, the standard contract in one of the two most
comprehensive categories product in either the first
or second category , and the standard contract in the
middle product in the third category. Every plan
shall offer at least the standard contract in the middle
product in the third category, except that a
plan that offers the standard contract in one of the two
most comprehensive categories product in either the
first or second category shall not be required to offer
contracts in the less comprehensive categories
products in the third, fourth, or fifth category . For
purposes of this subdivision, "standard contract" means the
contract product" means the product developed
pursuant to paragraph (4) of subdivision (a). A plan may meet its
obligations under this subdivision with products filed with and
approved by the department as well as products filed with and
approved by the Department of Insurance.
(f)
(g) To facilitate consumer comparison shopping, the
department and the Department of Insurance shall develop a notice
that provides information about the coverage choice categories
developed pursuant to this section, including the range of cost
sharing and the benefits and services provided in each category,
including any variation in those benefits and services. For each
product, the notice shall include the percentage of expense paid by
the coverage, the estimated annual out-of-pocket cost and the
estimated total annual cost, including both premium and out-of-pocket
costs for persons with average health care costs and persons with
high health care needs. A health care service plan, solicitor, or
solicitor firm shall provide this notice when marketing any
individual health care service plan contract. The notice shall also
accompany the purchase and renewal of an individual health care
service plan contract. With the agreement of the consumer, the notice
may be provided electronically.
(g)
(h) A health care service plan shall establish prices
for its products that reflect a reasonable continuum between the
products offered in the coverage choice category with the lowest
level of benefits and the products offered in the coverage choice
category with the highest level of benefits. A health care service
plan shall not establish a standard risk rate for a product in a
coverage choice category at a lower rate than a product offered in a
lower coverage choice category for a consumer of the same age and the
same risk rate living in the same geographic region. For purposes of
this subdivision, "geographic region" shall mean the geographic
regions established pursuant to paragraph (3) of subdivision (k) of
Section 1357.
(h)
(i) The director shall annually report on the health
care service plan contracts offered by plans in each coverage choice
category pursuant to this section and on the enrollment in those
contracts within each coverage choice category. Commencing January 1,
2013, and every three years thereafter, the director and the
Insurance Commissioner shall jointly determine whether the coverage
choice categories should be revised to meet the needs of consumers.
(i)
(j) The department shall require data from health care
service plans in order to assist the University of California in
fulfilling the responsibilities of Section 127664.5 and shall
promptly provide that data to the University of California.
(j)
(k) This section shall not apply to Medicare supplement
plans or to coverage offered by specialized health care service
plans or government-sponsored programs.
SEC. 2. Section 127664.5 is added to the Health and Safety Code,
to read:
127664.5. (a) In order to assist the Department of Managed Health
Care and the Insurance Commissioner
Department of Insurance with the implementation of Section
1399.819 of this code and Section 10903 of the Insurance Code, the
Legislature requests the University of California, as part of the
California Health Benefit Review Program established pursuant to
Section 127660, to prepare a written analysis with relevant data on
all of the following:
(1) The health care service plan and health insurance products
that are sold in the individual market.
(2) The benefits and services covered by the products described in
paragraph (1), including any limitations or exclusions.
(3) The cost sharing applicable to the products described in
paragraph (1), including deductibles, copayments, coinsurance,
maximum out-of-pocket limits, and other limits or exclusions that
require individual consumers to pay for basic health care services in
whole or in part.
(4) The distribution of health care service plan and health
insurance products purchased by individuals in terms of the benefits
and services included and the cost sharing involved.
(5) The share of the individual health care coverage market that
is short-term coverage, conversion coverage, renewal of existing
coverage, or coverage sold to a person not previously covered by
individual health care coverage.
(b) In providing the data described in subdivision (a), the
University of California is requested to distinguish between products
provided by entities regulated by the Department of Managed Health
Care and those provided by entities regulated by the
Insurance Commissioner Department of Insurance .
(c) The Legislature requests that the written analysis described
in subdivision (a) be provided three months prior to the
implementation of Section 1399.819 of this code and Section 10903 of
the Insurance Code.
(d) The Director of the Department of Managed Health
Care in consultation with the Insurance Commissioner shall request
the University of California to provide the written analysis
described in subdivision (a) prior to the annual reports and
triennial reviews required by Section 1399.819 of this code and
Section 10903 of the Insurance Code.
(e) The Department of Managed Health Care and the Department of
Insurance shall assist the University of California by requiring and
collecting data from health care service plans and health insurers in
order to fulfill the responsibilities of this section and of Section
1399.819 of this code and Section 10903 of the Insurance Code.
(f) The work of the University of California in providing the
written analyses specified in this section shall be supported by
moneys in the fund established pursuant to Section 127662.
SEC. 3. Section 10903 is added to the Insurance Code, to read:
10903. (a) On or before September 1, 2010, the department and the
Department of Managed Health Care shall jointly, by regulation,
develop a system to categorize all health insurance policies and
health care service plan contracts offered and sold to individuals
pursuant to this part and Chapter 2.2 (commencing with Section 1340)
of Division 2 of the Health and Safety Code into five coverage choice
categories. In developing these categories, the departments
shall develop four categories applicable to both individual health
care service plan contracts and individual health insurance policies.
These four categories shall consist of contracts and policies that
meet the requirements of the Knox-Keene Health Care Service Plan Act
of 1975 (Chapter 2.2 (commencing with Section 1340) of
Division 2 of the Health and Safety Code) and that, at a minimum,
include basic health care services as defined in Section 1345 of the
Health and Safety Code. The departments shall also develop a fifth
category applicable only to individual health insurance policies
subject to the jurisdiction of the Department of Insurance. This
fifth category shall be established based on the highest cost sharing
and the lowest benefit levels among the five categories and shall
apply to individual health insurance policies where the benefit
levels and cost sharing requirements would not otherwise meet the
requirements of the Knox-Keene Health Care Service Plan Act of 1975.
These coverage choice categories shall do all of the following:
(1) Reflect a reasonable continuum between the coverage choice
category with the lowest level of health care benefits and the
coverage choice category with the highest level of health care
benefits based upon the actuarial value of each product.
(2) Permit reasonable benefit variation within each coverage
choice category.
(3) Be enforced consistently between health insurers and health
care service plans in the same marketplace regardless of licensure.
(3) For the four categories applicable to both health care service
plan contracts and health insurance policies, the commissioner shall
coordinate with the Director of Managed Health Care to ensure
consistent interpretation across products and markets and ease of
comparison for consumers.
(4) Within each coverage choice category, include one standard
preferred provider organization (PPO) policy, as defined by
regulation. For the coverage choice category with the highest cost
sharing and the least comprehensive benefit, the standard PPO policy
shall not be the lowest benefit level in that category.
health maintenance organization (HMO) product, and one standard
preferred provider organization (PPO) product, as defined by
regulation, except for the fifth category with the highest cost
sharing and the lowest benefit levels applicable only to health
insurance policies, which include a standard preferred provider
organization health insurance product and no standard health care
service product.
(5) Within each coverage choice category, have a maximum dollar
limit on out-of-pocket costs, including, but not limited to,
copayments, coinsurance, and deductibles, for covered benefits.
(6) Use standard definitions and terminology for covered benefits
and cost sharing between health insurers and health care service
plans in the same marketplace regardless of licensure.
(7) Be developed by taking into account any written analysis
provided by the University of California pursuant to Section 127664.5
of the Health and Safety Code.
(b) (1) In establishing the five coverage choice categories, the
department and the Department of Managed Health Care shall establish
the third category as the midpoint of the individual market for
contracts and policies that cover medical, surgical, and hospital
expenses and that meet the coverage requirements of existing
applicable law.
(2) The first category shall provide the most comprehensive
benefits and the lowest cost sharing, shall be comparable to coverage
provided by large employers to their employees, and shall be
described as such.
(3) The second category shall provide benefits and cost sharing
that fall between the first and the third categories.
(4) The fourth category, which shall apply to both health care
service plan contracts and health insurance policies, shall have the
highest cost sharing permitted for health care service plan contracts
under the Knox-Keene Health Care Service Plan Act of 1975 (chapter
2.2 (commencing with Section 1340) of Division 2 of the Health and
Safety Code).
(5) The fifth category, which shall apply only to health insurance
policies, shall have the highest cost sharing and least
comprehensive benefits among the five categories, shall include
coverage for medical, surgical, and hospital expenses, and shall meet
the minimum benefit standards applicable to health insurance
policies under this code.
(b)
(c) The regulations developed by the department and the
Department of Managed Health Care pursuant to this section shall
identify and require the submission of any information needed to
categorize each health insurance policy and health care service plan
contract subject to this section.
(c)
(d) All health insurance policies offered or sold to
individuals on or after January 1, 2011, shall contain a maximum
dollar limit on out-of-pocket costs, including, but not limited to,
copayments, coinsurance, and deductibles, for covered benefits
and, shall, at a minimum, cover hospital, medical, and surgical
expenses, and meet existing coverage requirements applicable to
health insurance policies under this code. Effective January 1, 2011,
for the fifth coverage category that applies only to health
insurance policies, the maximum out-of-pocket expenditure, including
copayments, coinsurance, and deductibles, shall not exceed ten
thousand dollars ($10,000) per year. The commissioner shall adjust
this amount annually according to changes in the California Consumer
Price Index .
(d)
(e) All health insurers shall submit the filings no
later than April 1, 2011, for all individual health insurance
policies to be offered or sold on or after that date, and thereafter
any additional individual health insurance policies shall be filed
with the commissioner. The commissioner shall categorize each
individual health insurance policy offered by a health insurer into
the appropriate coverage choice category within 90 days of the date
the policy is filed pursuant to this section. A health insurer shall
not offer or sell an individual health insurance policy until the
commissioner has categorized the policy pursuant to this subdivision.
(e)
(f) To facilitate accurate information about consumer
choices, a health insurer may offer health insurance
policies products in any coverage choice
category. However, if a health insurer offers a health insurance
policy in the least comprehensive product in
the fifth category, it shall also offer the standard
policy in the least comprehensive product in the fifth
category, the standard policy in one of the two most
comprehensive categories product in either the first
or second category , and the standard policy in the
middle product in the third category. Every
insurer shall offer at least the standard policy in the
middle product in the third category, except
that an insurer that offers the standard policy in one of
the two most comprehensive categories product in
either the first or second category shall not be required to
offer policies in the less comprehensive categories
products in the third, fourth, or fifth category
. For purposes of this subdivision, "standard policy" means
the policy product" means the product developed
pursuant to paragraph (4) of subdivision (a). An insurer may meet
its obligations under this subdivision with products filed with and
approved by the department as well as products filed with and
approved by the Department of Managed Health Care.
(f)
(g) To facilitate consumer comparison shopping, the
department and the Department of Managed Health Care shall develop a
notice that provides information about the coverage choice categories
developed pursuant to this section, including the range of cost
sharing and the benefits and services provided in each category,
including any variation in those benefits and services. For each
product, the notice shall include the percentage of expense paid by
the coverage, the estimated annual out-of-pocket cost and the
estimated total annual cost, including both premium and out-of-pocket
costs for persons with average health care costs and persons with
high health care needs. A health insurer, broker, or agent shall
provide this notice when marketing any individual health insurance
policy. The notice shall also accompany the purchase and renewal of
an individual health insurance policy. With the agreement of the
consumer, the notice may be provided electronically.
(h) An insurer selling a policy under the fifth category shall
include the following disclosure in 14-point type in all materials
used to market the policy and in the offer of coverage under the
policy:
"Insurance products in this category include significant limits on
benefits and the health care services that are covered. If you have
a serious injury, a serious illness such as a heart attack or cancer,
or ongoing health care costs associated with a chronic condition
such as diabetes or heart disease, coverage under this policy may not
pay for a substantial share of the costs of doctors, hospitals, or
other treatments. You may face additional out-of-pocket costs for
doctors, hospitals, and other services even if you have met your
deductible or out-of-pocket maximum. This product does not provide
maternity coverage. Please examine this policy carefully before
purchasing."
(g)
(i) A health insurer shall establish prices for its
products that reflect a reasonable continuum between the products
offered in the coverage choice category with the lowest level of
benefits and the products offered in the coverage choice category
with the highest level of benefits. A health insurer shall not
establish a standard risk rate for a product in a coverage choice
category at a lower rate than a product offered in a lower coverage
choice category for a consumer of the same age and the same risk rate
living in the same geographic region. For purposes of this
subdivision, "geographic region" shall mean the geographic regions
established pursuant to paragraph (3) of subdivision (v) of Section
10700.
(h)
(j) The commissioner shall annually report on the
health insurance policies offered by health insurers in each coverage
choice category pursuant to this section and on the enrollment in
those policies within each coverage choice category. Commencing
January 1, 2013, and every three years thereafter, the commissioner
and the Director of the Department of Managed Health Care shall
jointly determine whether the coverage choice categories should be
revised to meet the needs of consumers.
(i) All health insurance policies offered and sold to individuals
on or after January 1, 2011, shall contain a maximum dollar limit on
out-of-pocket costs, shall cover physician services, hospitals, and
preventive services, and shall, at a minimum, meet existing coverage
requirements.
(j)
(k) The department shall require data from health
insurers in order to assist the University of California in
fulfilling the responsibilities of Section 127664.5 of the Health and
Safety Code and shall promptly provide that data to the University
of California.
(k)
(l) Nothing in this section shall be construed to limit
disability insurance, including, but not limited to, hospital
indemnity, accident only, and specified disease insurance that pays
benefits on a fixed benefit, cash payment only basis, from being sold
as supplemental insurance.
(l)
(m) This section shall not apply to Medicare
supplement, Tricare supplement, or CHAMPUS supplement insurance, to
specialized health insurance policies, as defined in subdivision (c)
of Section 106, or to coverage offered by government-sponsored
programs.
SEC. 4. 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.
