Bill Text: CA AB786 | 2009-2010 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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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

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BILL NUMBER: AB 786	AMENDED
	BILL TEXT

	AMENDED IN SENATE  SEPTEMBER 1, 2009
	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
    (   Principal coauthor:   Senator 
 Steinberg   ) 

                        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,
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 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, 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
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 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.  For purposes of
this subdivision, out-of-pocket costs do not include premium payments
or prepaid periodic charges paid by the subscriber or enrollee.

   (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. 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 developed to ensure
ease of consumer comparison and understanding of the benefit design
choices in the individual market. The categories shall be developed
to be user-friendly for consumers, with the lowest number of
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 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 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 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. 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
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 
 one  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 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.  For purposes of this
subdivision, out-of-pocket costs do not include premium payments paid
by the policyholder or   insured. 
   (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. 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 developed to ensure
ease of consumer comparison and understanding of the benefit design
choices in the individual market. The categories shall be developed
to be user-friendly for consumers, with the lowest number of
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 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 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 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) 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.