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  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  and 127664.5 
 , 1399.820, and 1399.821 to the Health and Safety Code, and
to add  Section 10903   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 on out-of-pocket costs for covered benefits provided by
contracted or in-network providers, as specified. The bill 
would require, by  September 1, 2010,   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, and to develop 
a system to categorize all health care service plan
contracts and health insurance policies offered and sold to
individuals   those contracts and policies  into
 6  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 and
sixth categories to consist solely of health insurance policies that
do not meet the Knox-Keene Act requirements, as specified. The bill
would require a health insurer offering a policy in that fifth or
sixth 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 services by in-network providers, as specified. The
bill would authorize health care service plans and health insurers
to offer 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. 
 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 mark  
eting 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. 
   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, 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 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.
   (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 needed to develop the standard
definitions and terminology required by this section.
   (c) All individual health care service plan contracts issued,
amended, or renewed on or after January 1, 2011, shall contain a
maximum limit on out-of-pocket costs, including, but not limited to,
copayments, coinsurance, and deductibles, for covered benefits
provided by 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. 
   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.
   (2) The coverage choice categories shall be based on the benefits
covered and the out-of-pocket costs. The 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.
   (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 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.
   (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 uniform benefits matrix of all
available individual health 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) 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.
   (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 needed to develop the
standard definitions and terminology required by this section.
   (c) All individual health insurance policies issued, amended, or
renewed on or after January 1, 2011, shall contain a maximum limit 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. 
   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.
   (2) The coverage choice categories shall be based on the benefits
covered and the out-of-pocket costs. The 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."

   (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 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.
   (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. 
   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.  All matter omitted in this version of
the bill appears in the bill as amended in the Assembly, June 2, 2009
(JR11)