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 SENATE AUGUST 18, 2009
AMENDED IN SENATE JUNE 30, 2009
AMENDED IN ASSEMBLY JUNE 2, 2009
AMENDED IN ASSEMBLY APRIL 22, 2009
INTRODUCED BY Assembly Member Jones
FEBRUARY 26, 2009
An act to add Sections 1399.819, 1399.820, and 1399.821 to the
Health and Safety Code, and to add Sections 10903, 10904, and 10905
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-Keene 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 establishes the Office of Patient Advocate within the
department to represent the interests of plan enrollees. 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 individual health care service plan
contracts and individual health insurance policies issued, amended,
or renewed on or after January 1, 2011, to contain a maximum limit
, not to exceed $15,000 per person per year, on
out-of-pocket costs for covered benefits provided by
contracted or in-network providers, as specified. The bill
would require, by December 31, 2011, the Department of Managed Health
Care and the Department of Insurance to jointly, by regulation,
develop standard definitions and terminology for benefits and
cost-sharing provisions applicable to individual contracts and
policies to be offered and sold on and after September 1,
2012 , as specified, and to develop a system to
categorize those contracts and policies into coverage choice
categories that meet specified requirements. The bill would require
plans and insurers to submit certain information to the departments
by February 1, 2012, and would require the Director of the Department
of Managed Health Care and the Insurance Commissioner to categorize
the contracts and policies into the appropriate coverage choice
category on or before June 30, 2012. The bill would require the
Office of Patient Advocate to develop and maintain on its Internet
Web site a uniform benefits matrix of those contracts and policies
arranged by coverage choice category along with other specified
information. The bill would require health care service plans, health
insurers, solicitors, solicitor firms, brokers, and agents to make
prospective enrollees or insureds aware of the availability and
contents of the benefits matrix when marketing or selling a contract
or policy in the individual market.
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.
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) (1) On or before December 31,
2011, the department and the Department of Insurance shall jointly,
by regulation, develop standard definitions and terminology for
covered benefits and cost-sharing provisions, including, but not
limited to, copayments, coinsurance, deductibles, limitations, and
exclusions, applicable to all health care service plan
contracts and health insurance policies to be offered and sold to
individuals on or after September 1, 2012. applicable
to individual health care service plan contracts and
individual health insurance policies as described in paragraphs (2)
and (3). Standard definitions for covered benefits shall not include
standardized benefit limits or standardized benefit levels.
(2) Health care service plans shall comply with the standard
definitions and terminology developed pursuant to paragraph (1) for
all new individual plan contracts issued one year after the
departments develop those definitions and terminology.
(3) Individual health care service plan contracts in existence as
of the date the departments develop the standard definitions and
terminology pursuant to paragraph (1) shall have three years from
that date to comply with those definitions and terminology. In lieu
of compliance with respect to a specific health care service plan
contract, a plan may offer individuals enrolled in that contract the
opportunity to transfer, without medical underwriting, to an
alternative contract that offers comparable benefits and cost sharing
and that complies with the standard definitions and terminology.
This paragraph shall not apply to a health care service plan that no
longer markets or sells individual health care service plan
contracts.
(b) The regulations developed by the department and the Department
of Insurance pursuant to this section may identify and require the
submission of any information information
reasonably needed to develop the standard definitions and
terminology required by this section.
(c) (1) All individual health care service
plan contracts issued, amended, or renewed on or after January 1,
2011, shall contain a maximum limit , not to exceed fifteen
thousand dollars ($15,000) per person per year, on
out-of-pocket costs, including, but not limited to, copayments,
coinsurance, and deductibles, for covered benefits provided by
in-network contracted providers. With respect to
individual health care service plan contracts issued, amended, or
renewed on or after April 1, 2011, this limit shall not exceed ten
thousand dollars ($10,000) per person per year.
(2) Notwithstanding paragraph (1), a health care service plan
contract issued, amended, or renewed on or after January 1, 2011, may
include a separate out-of-pocket limit for cost sharing related to
prescription drugs. The contract shall clearly disclose this separate
out-of-pocket limit.
(3) The maximum permissible out-of-pocket cost limit described in
paragraph (1) shall be indexed to, and shall increase annually with,
the medical cost component of the consumer price index. The director
shall annually update and publish, by September 1, the maximum
out-of-pocket limit to be used for the next calendar year based on
changes in the medical cost component of the consumer price index.
(d) This section shall not apply to Medicare supplement contracts
or to coverage offered by specialized health care service plans,
other than specialized mental health plans, or to
government-sponsored programs.
SEC. 2. Section 1399.820 is added to the Health and Safety Code,
to read:
1399.820. (a) (1) On or before December 31, 2011, the department
and the Department of Insurance shall jointly, by regulation, and in
consultation with health care service plans, health insurers, and
consumer representatives, develop a system to categorize all health
care service plan contracts and health insurance policies to be
offered and sold to individuals on and after September 1, 2012, into
coverage choice categories in order to facilitate transparency and
consumer comparison shopping. These coverage choice categories shall
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 benefits.
The coverage choice categories shall be based on the actuarial value
of each product and shall be identified based on the benefits
covered and the consumer cost sharing elements .
(2) The coverage choice categories shall be based on the benefits
covered and the out-of-pocket costs. The categories shall be
(2) The coverage choice categories
shall be developed to ensure ease of consumer comparison and
understanding of the benefit design choices in the individual market.
The coverage choice categories shall be developed
to be user-friendly for consumers, with the lowest number of
choice categories necessary to include the full
range of individual products into meaningful categories, but, in any
event, there shall be no more than a total of 10 coverage
choice categories across all products offered and sold to
individuals, including health care service plan contracts and health
insurance policies. There shall be no fewer than two categories in
common between products in the two departments.
(3) The first coverage choice category shall provide the most
comprehensive benefits and the lowest cost sharing and shall be
comparable to the coverage provided by large employers to their
employees.
(3) The department and the Department of Insurance shall develop
consumer-oriented descriptions for each coverage choice category in
order to provide for ease of consumer use and product choice.
(4) The regulations developed pursuant to this section shall take
into account any applicable federal requirements.
(b) The regulations developed by the department and the Department
of Insurance pursuant to this section shall identify and require the
submission of any information information
reasonably needed to categorize each health care service plan
contract and health insurance policy subject to this section,
including, but not limited to, the copayments, coinsurance,
deductibles, limitations, exclusions, and premium rates applicable
to, and the actuarial value of, each contract or policy. The
regulations shall require health insurers and health care service
plans to use a standard method of calculation, as established by
those regulations, for the purpose of submitting the
actuarial values of their products to the departments.
(c) A health care service plan shall submit the information
required by the department to implement this section no later than
February 1, 2012, for all new individual contracts to be offered or
sold on or after September 1, 2012.
(d) The director shall categorize each individual health care
service plan contract to be offered by a plan into the appropriate
coverage choice category on or before June 30, 2012.
(e) This section shall not apply to Medicare supplement plans or
to coverage offered by specialized health care service plans or
government-sponsored programs.
SEC. 3. Section 1399.821 is added to the Health and Safety Code,
to read:
1399.821. (a) The Office of Patient Advocate shall develop and
maintain on its Internet Web site a description of each coverage
choice category developed by the department and the Department of
Insurance pursuant to Section 1399.820 of this code and Section 10904
of the Insurance Code and a uniform benefits matrix of all
available individual health care service plan contracts
and individual health insurance policies arranged by coverage choice
category , as developed pursuant to Section 1399.820 of this
code and Section 10904 of the Insurance Code . This
uniform benefit matrix shall include, but not be limited to, all of
the following information:
(1) Benefit information submitted by health care service plans
pursuant to Section 1399.820 and by health insurers pursuant to
Section 10904 of the Insurance Code, including, but not limited to,
the following category descriptions:
(A) Standard rates by age, family size, and geographic region.
(B) Deductibles.
(C) Copayments or coinsurance, as applicable.
(D) Annual out-of-pocket maximums.
(E) Professional services.
(F) Outpatient services.
(G) Preventive services.
(H) Hospitalization services.
(I) Emergency health services.
(J) Ambulance services.
(K) Prescription drug coverage.
(L) Durable medical equipment.
(M) Mental health and substance abuse services.
(N) Home health services.
(O) Other.
(2) The telephone number or numbers that may be used by an
applicant to contact either the department or the Department of
Insurance, as appropriate, for additional assistance.
(3) For each health care service plan contract or health insurance
policy included in the matrix, a link to provider network
information on the Internet Web site of the corresponding health care
service plan or health insurer.
(b) The Office of Patient Advocate may also utilize the
information provided by health care service plans and health insurers
pursuant to Section 1399.819 of this code and Section 10903 of the
Insurance Code to develop additional information and tools to
facilitate consumer comparison shopping of individual health care
service plan contracts and individual health insurance policies.
(c) When marketing or selling a health care service plan contract
in the individual market, a health care service plan, a solicitor, or
a solicitor firm shall make the prospective enrollee aware of the
availability and contents of the benefit matrix described in this
section. This subdivision shall not apply until the Office of Patient
Advocate has developed the benefit matrix required by this section.
SEC. 4. Section 10903 is added to the Insurance Code, to read:
10903. (a) (1) On or before December 31,
2011, the department and the Department of Managed Health Care shall
jointly, by regulation, develop standard definitions and terminology
for covered benefits and cost-sharing provisions, including, but not
limited to, copayments, coinsurance, deductibles, limitations, and
exclusions, applicable to all health care service plan
contracts and health insurance policies to be offered and sold to
individuals on or after September 1, 2012. exclusions,
applicable to individual health care service plan
contracts and individual health insurance policies as described in
paragraphs (2) and (3). Standard definitions for covered benefits
shall not include standardized benefit limits or standardized benefit
levels.
(2) Health insurers shall comply with the standard definitions and
terminology developed pursuant to paragraph (1) for all new
individual health insurance policies issued on year after the
departments develop those standard definitions and terminology.
(3) Individual health insurance policies in existence as of the
date the departments develop the standard definitions and terminology
pursuant to paragraph (1) shall have three years from that date to
comply with those definitions and terminology. In lieu of compliance
with respect to a specific health insurance policy, an insurer may
offer individuals enrolled in that policy the opportunity to
transfer, without medical underwriting, to an alternative policy that
offers comparable benefits and cost sharing and that complies with
the standard definitions and terminology. This paragraph shall not
apply to a health insurer that no longer markets or sells individual
health insurance policies.
(b) The regulations developed by the department and the Department
of Managed Health Care pursuant to this section may identify and
require the submission of any information
information reasonably needed to develop the standard
definitions and terminology required by this section.
(c) (1) All individual health insurance
policies issued, amended, or renewed on or after January 1, 2011,
shall contain a maximum limit , not to exceed fifteen thousand
dollars ($15,000) per person per year, on out-of-pocket costs,
including, but not limited to, copayments, coinsurance, and
deductibles, for covered benefits provided by in-network providers.
With respect to individual health insurance policies issued,
amended, or renewed on or after April 1, 2011, this limit shall not
exceed ten thousand dollars ($10,000) per person per year.
(2) Notwithstanding paragraph (1), a health insurance policy
issued, amended, or renewed on or after January 1, 2011, may include
a separate out-of-pocket limit for cost sharing related to
prescription drugs. The policy shall clearly disclose this separate
out-of-pocket limit.
(3) The maximum permissible out-of-pocket cost limit described in
paragraph (1) shall be indexed to, and shall increase annually with,
the medical cost component of the consumer price index. The
commissioner shall annually update and publish, by September 1, the
maximum out-of-pocket limit to be used for the next calendar year
based on changes in the medical cost component of the consumer price
index.
(d) This section shall not apply to Medicare supplement policies
or to specialized health insurance policies, other than specialized
mental health policies.
SEC. 5. Section 10904 is added to the Insurance Code, to read:
10904. (a) (1) On or before December 31, 2011, the department and
the Department of Managed Health Care shall jointly, by regulation,
and in consultation with health care service plans, health insurers,
and consumer representatives, develop a system to categorize all
health care service plan contracts and health insurance policies to
be offered and sold to individuals on and after September 1, 2012,
into coverage choice categories in order to facilitate transparency
and consumer comparison shopping. These coverage choice categories
shall 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
benefits. The coverage choice categories shall be
based on the actuarial value of each product and shall be identified
based on the benefits covered and the consumer cost sharing elements
.
(2) The coverage choice categories shall be based on the benefits
covered and the out-of-pocket costs. The categories shall be
(2) The coverage choice categories
shall be developed to ensure ease of consumer comparison and
understanding of the benefit design choices in the individual market.
The coverage choice categories shall be developed
to be user-friendly for consumers, with the lowest number of
choice categories necessary to include the full
range of individual products into meaningful categories, but, in any
event, there shall be no more than a total of 10 coverage
choice categories across all products offered and sold to
individuals, including health care service plan contracts and health
insurance policies. There shall be no fewer than two categories in
common between products in the two departments.
(3) The first coverage choice category shall provide the most
comprehensive benefits and the lowest cost sharing and shall be
comparable to the coverage provided by large employers to their
employees.
(4) The commissioner shall require health insurers, agents, and
brokers selling products in the coverage choice category with the
lowest benefits to provide a standard written notice to potential
purchasers as follows:
"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 product 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 product carefully before
purchasing."
(3) The department and the Department of Managed Health Care shall
develop consumer-oriented descriptions for each coverage choice
category in order to provide for ease of consumer use and product
choice.
(4) The regulations developed pursuant to this section shall take
into account any applicable federal requirements.
(b) 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
information reasonably needed to categorize each health care
service plan contract and health insurance policy subject to this
section, including, but not limited to, the copayments, coinsurance,
deductibles, limitations, exclusions, and premium rates applicable
to, and the actuarial value of, each contract or policy. The
regulations shall require health insurers and health care service
plans to use a standard method of calculation, as established by
those regulations, for the purpose of submitting the actuarial values
of their products to the departments.
(c) A health insurer shall submit the information required by the
department to implement this section no later than February 1, 2012,
for all new individual policies to be offered or sold on or after
September 1, 2012.
(d) The commissioner shall categorize each individual health
insurance policy to be offered by an insurer into the appropriate
coverage choice category on or before June 30, 2012.
(e) 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.
(e) This section shall not apply to specialized health insurance,
Medicare supplement insurance, short-term limited duration health
insurance, CHAMPUS supplement insurance, TRI-CARE supplement
insurance, government-sponsored programs, or to hospital indemnity,
accident-only, or specified disease insurance.
SEC. 6. Section 10905 is added to the Insurance Code, to read:
10905. When marketing or selling a health insurance policy in the
individual market, a health insurer, a broker, or an agent shall
make the prospective insured aware of the availability and contents
of the benefit matrix described in Section 1399.821 of the Health and
Safety Code. This section shall not apply until the Office of
Patient Advocate has developed the benefit matrix required by Section
1399.821 of the Health and Safety Code.
SEC. 7. 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.
