BILL NUMBER: SB 1182 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Leno
FEBRUARY 20, 2014
An act to amend Sections 1385.03 and 1385.04 of the Health and
Safety Code, and to amend Section 10181.4 of the Insurance Code,
relating to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
SB 1182, as introduced, Leno. Health care coverage: rate review.
Existing law, the federal Patient Protection and Affordable Care
Act (PPACA), requires the United States Secretary of Health and Human
Services to establish a process for the annual review of
unreasonable increases in premiums for health insurance coverage in
which health insurance issuers submit to the secretary and the
relevant state a justification for an unreasonable premium increase
prior to implementation of the increase. 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 also provides for the regulation of health insurers by
the Department of Insurance. Existing law requires a health care
service plan or health insurer in the individual, small group, or
large group markets to file rate information with the Department of
Managed Health Care or the Department of Insurance. For individual
and small group contracts and policies, existing law requires a plan
or insurer to file rate information at least 60 days prior to
implementing a rate change and requires a plan or insurer to disclose
with each filing specified information by aggregate benefit
category. Existing law allows a health care service plan that
exclusively contracts with no more than 2 medical groups to provide
or arrange for professional medical services for enrollees of the
plan to meet this requirement by disclosing its actual trend
experience for the prior year using benefit categories that are the
same or similar to those used by other plans.
This bill would specify the benefit categories to be used for that
purpose and would make other related changes.
For large group plan contracts and policies, existing law requires
a plan or insurer to file rate information with the department at
least 60 days prior to implementing an unreasonable rate increase, as
defined in PPACA. Existing law requires the plan or insurer to also
disclose specified aggregate data with that rate filing.
This bill would instead require the plan or insurer to file rate
information with the department at least 60 days prior to
implementing a rate increase that exceeds 5% of the prior year's
rate. The bill would also require that the plan or insurer disclose
the aggregate data for all rate filings submitted under these
provisions on an annual basis. The bill would require a plan or
insurer to annually disclose additional aggregate data for all
products sold in the large group market and to provide deidentified
claims data at no charge to a large group purchaser that requests the
information and meets specified conditions.
Because a willful violation of the bill's requirements by a health
care service plan 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 1385.03 of the Health and Safety Code is
amended to read:
1385.03. (a) (1) All health care service plans shall file with
the department all required rate information for individual and small
group health care service plan contracts at least 60 days prior to
implementing any rate change.
(2) For individual health care service plan contracts, the filing
shall be concurrent with the notice required under Section 1389.25.
(3) For small group health care service plan contracts, the filing
shall be concurrent with the notice required under subdivision (a)
of Section 1374.21.
(b) A plan shall disclose to the department all of the following
for each individual and small group rate filing:
(1) Company name and contact information.
(2) Number of plan contract forms covered by the filing.
(3) Plan contract form numbers covered by the filing.
(4) Product type, such as a preferred provider organization or
health maintenance organization.
(5) Segment type.
(6) Type of plan involved, such as for profit or not for profit.
(7) Whether the products are opened or closed.
(8) Enrollment in each plan contract and rating form.
(9) Enrollee months in each plan contract form.
(10) Annual rate.
(11) Total earned premiums in each plan contract form.
(12) Total incurred claims in each plan contract form.
(13) Average rate increase initially requested.
(14) Review category: initial filing for new product, filing for
existing product, or resubmission.
(15) Average rate of increase.
(16) Effective date of rate increase.
(17) Number of subscribers or enrollees affected by each plan
contract form.
(18) The plan's overall annual medical trend factor assumptions in
each rate filing for all benefits and by aggregate benefit category,
including hospital inpatient, hospital outpatient, physician
services, prescription drugs and other ancillary services,
laboratory, and radiology. A plan may provide aggregated additional
data that demonstrates or reasonably estimates year-to-year cost
increases in specific benefit categories in major geographic regions
of the state. For purposes of this paragraph, "major geographic
region" shall be defined by the department and shall include no more
than nine regions. A health plan that exclusively contracts with no
more than two medical groups in the state to provide or arrange for
professional medical services for the enrollees of the plan shall
instead disclose the amount of its actual trend experience for the
prior contract year by aggregate benefit category, using
benefit service categories that are, to the
maximum extent possible, the same or similar to those
the benefit categories used by other plans.
For this purpose, benefit categories shall be those specified in
subdivision (e) of Section 1385.04.
(19) The amount of the projected trend attributable to the use of
services, price inflation, or fees and risk for annual plan contract
trends by aggregate benefit category, such as hospital inpatient,
hospital outpatient, physician services, prescription drugs and other
ancillary services, laboratory, and radiology. A health plan that
exclusively contracts with no more than two medical groups in the
state to provide or arrange for professional medical services for the
enrollees of the plan shall instead disclose the amount of its
actual trend experience for the prior contract year by aggregate
benefit service category, using
benefit service categories that are, to
the maximum extent possible, the same or similar to those used by
other plans. For this purpose, benefit categories shall be those
specified in subdivision (e) of Section 1385.04.
(20) A comparison of claims cost and rate of changes over time.
(21) Any changes in enrollee cost-sharing over the prior year
associated with the submitted rate filing.
(22) Any changes in enrollee benefits over the prior year
associated with the submitted rate filing.
(23) The certification described in subdivision (b) of Section
1385.06.
(24) Any changes in administrative costs.
(25) Any other information required for rate review under PPACA.
(c) A health care service plan subject to subdivision (a) shall
also disclose the following aggregate data for all rate filings
submitted under this section in the individual and small group health
plan markets:
(1) Number and percentage of rate filings reviewed by the
following:
(A) Plan year.
(B) Segment type.
(C) Product type.
(D) Number of subscribers.
(E) Number of covered lives affected.
(2) The plan's average rate increase by the following categories:
(A) Plan year.
(B) Segment type.
(C) Product type.
(3) Any cost containment and quality improvement efforts since the
plan's last rate filing for the same category of health benefit
plan. To the extent possible, the plan shall describe any significant
new health care cost containment and quality improvement efforts and
provide an estimate of potential savings together with an estimated
cost or savings for the projection period.
(d) The department may require all health care service plans to
submit all rate filings to the National Association of Insurance
Commissioners' System for Electronic Rate and Form Filing (SERFF).
Submission of the required rate filings to SERFF shall be deemed to
be filing with the department for purposes of compliance with this
section.
(e) A plan shall submit any other information required under
PPACA. A plan shall also submit any other information required
pursuant to any regulation adopted by the department to comply with
this article.
SEC. 2. Section 1385.04 of the Health and Safety Code is amended
to read:
1385.04. (a) For large group health care service plan contracts,
all health plans shall file with the department at least 60 days
prior to implementing any rate change all required rate information
for unreasonable rate increases that exceed 5
percent of the prior year's rate . This filing shall be
concurrent with the written notice described in subdivision (a) of
Section 1374.21.
(b) For large group rate filings, health plans shall submit all
information that is required by PPACA. A plan shall also submit any
other information required pursuant to any regulation adopted by the
department to comply with this article.
(c) A health care service plan subject to subdivision (a) shall
also annually disclose the following aggregate data for
all rate filings submitted under this section in the large
group health plan market :
(1) Number and percentage of rate filings reviewed by the
following:
(A) Plan year.
(B) Segment type.
(C) Product type.
(D) Number of subscribers.
(E) Number of covered lives affected.
(2) The plan's average rate increase by the following categories:
(A) Plan year.
(B) Segment type.
(C) Product type.
(D) Benefit category.
(E) Number of covered lives affected.
(3) Any cost containment and quality improvement efforts since the
plan's last rate filing for the same category of health benefit
plan. To the extent possible, the plan shall describe any significant
new health care cost containment and quality improvement efforts and
provide an estimate of potential savings together with an estimated
cost or savings for the projection period , including
an estimate of any reduction in the rate within the next five years
of implementation of those efforts .
(d) Except as provided in subdivision (e), a health care service
plan shall annually disclose the following aggregate data for all
products sold in the large group market:
(1) Plan year.
(2) Segment type.
(3) Product type.
(4) Number of subscribers.
(5) Number of covered lives affected.
(6) The plan's average rate increase by the following:
(A) Plan year.
(B) Segment type.
(C) Product type.
(D) Benefit category, including, but not limited to, hospital,
medical, ancillary, and other benefit categories reported publicly
for individual and small employer rate filings.
(E) Trend attributable to cost and trend attributable to
utilization by benefit category.
(e) A health care service plan that is unable to provide
information on rate increases by benefit categories, including, but
not limited to, hospital, outpatient medical, and mental health, or
information on trend attributable to cost and trend attributable to
utilization by benefit category pursuant to subdivision (d), shall
annually disclose all of the following aggregate data for its large
group health care service plan contracts:
(1) (A) The plan's overall aggregate data demonstrating or
reasonably estimating year-to-year cost increases in the aggregate
for large group rates by major service category. The plan shall
distinguish between the increase ascribed to the volume of services
provided and the increase ascribed to the cost of services provided
for those assumptions that shall include the following categories:
(i) Hospital inpatient.
(ii) Outpatient visits.
(iii) Outpatient surgical or other procedures.
(iv) Professional medical.
(v) Mental health.
(vi) Substance abuse.
(vii) Skilled nursing facility, if covered.
(viii) Prescription drugs.
(ix) Other ancillary services.
(x) Laboratory.
(xi) Radiology or imaging.
(B) A plan may provide aggregated additional data that demonstrate
or reasonably estimate year-to-year cost increases in each of the
specific service categories specified in subparagraph (A) for each of
the major geographic regions of the state.
(2) The amount of projected trend attributable to the following
categories:
(A) Use of services by service and disease category.
(B) Capital investment.
(C) Community benefit expenditures, excluding bad debt and valued
at cost.
(3) The amount and proportion of costs attributed to contracting
medical groups that would not have been attributable as medical
losses if incurred by the health plan rather than the medical group.
(f) (1) A health care service plan shall annually provide claims
data at no charge to a large group purchaser if the large group
purchaser requests the information. The health care service plan
shall provide claims data that a qualified statistician has
determined are deidentified so that the claims data do not identify
or do not provide a reasonable basis from which to identify an
individual.
(2) Information provided to a large group purchaser under this
subdivision is not subject to Section 1385.07.
(3) (A) If claims data are not available, the plan shall provide,
at no charge to the purchaser, all of the following:
(i) Deidentified data sufficient for the large group purchaser to
calculate the cost of obtaining similar services from other health
plans and evaluate cost-effectiveness by service and disease
category.
(ii) Deidentified patient-level data on demographics, prescribing,
encounters, inpatient services, outpatient services, and any other
data as may be required of the health plan to comply with risk
adjustment, reinsurance, or risk corridors pursuant to the federal
Patient Protection and Affordable Care Act (Public Law 111-148), as
amended by the federal Health Care and Education Reconciliation Act
of 2010 (Public Law 111-152), and any rules, regulations, or guidance
issued thereunder.
(iii) Deidentified patient-level data used to experience rate the
large group, including diagnostic and procedure coding and costs
assigned to each service.
(B) The health care service plan shall obtain a formal
determination from a qualified statistician that the data provided
pursuant to this paragraph have been deidentified so that the data do
not identify or do not provide a reasonable basis from which to
identify an individual. The statistician shall certify the formal
determination in writing and shall, upon request, provide the
protocol used for deidentification to the department.
(4) Data provided pursuant to this subdivision shall only be
provided to a large group purchaser that meets both of the following
conditions:
(A) Is able to demonstrate its ability to comply with state and
federal privacy laws.
(B) Is a large group purchaser that is either an
employer-sponsored plan with an enrollment of greater than 1,000
covered lives or a multiemployer trust.
(d)
(g) The department may require all health care service
plans to submit all rate filings to the National Association of
Insurance Commissioners' System for Electronic Rate and Form Filing
(SERFF). Submission of the required rate filings to SERFF shall be
deemed to be filing with the department for purposes of compliance
with this section.
SEC. 3. Section 10181.4 of the Insurance Code is amended to read:
10181.4. (a) For large group health insurance policies, all
health insurers shall file with the department at least 60 days prior
to implementing any rate change all required rate information for
unreasonable rate increases that exceed 5
percent of the pri or year's rate . This filing
shall be concurrent with the written notice described in Section
10199.1.
(b) For large group rate filings, health insurers shall submit all
information that is required by PPACA. A health insurer shall also
submit any other information required pursuant to any regulation
adopted by the department to comply with this article.
(c) A health insurer subject to subdivision (a) shall also
annually disclose the following aggregate data for all rate
filings submitted under this section in the large group
health insurance market :
(1) Number and percentage of rate filings reviewed by the
following:
(A) Plan Policy year.
(B) Segment type.
(C) Product type.
(D) Number of insureds.
(E) Number of covered lives affected.
(2) The insurer's average rate increase by the following
categories:
(A) Plan Policy year.
(B) Segment type.
(C) Product type.
(D) Benefit category.
(E) Number of covered lives affected.
(3) Any cost containment and quality improvement efforts since the
health insurer's last rate filing for the same category of health
insurance policy. To the extent possible, the health insurer shall
describe any significant new health care cost containment and quality
improvement efforts and provide an estimate of potential savings
together with an estimated cost or savings for the projection period
, including an estimate of any reduction in the rate within the
next five years of implementation of those efforts .
(d) Except as provided in subdivision (e), a health insurer shall
annually disclose the following aggregate data for all products sold
in the large group market:
(1) Policy year.
(2) Segment type.
(3) Product type.
(4) Number of policyholders.
(5) Number of covered lives affected.
(6) The insurer's average rate increase by the following:
(A) Policy year.
(B) Segment type.
(C) Product type.
(D) Benefit category, including, but not limited to, hospital,
medical, ancillary, and other benefit categories reported publicly
for individual and small employer rate filings.
(E) Trend attributable to cost and trend attributable to
utilization by benefit category.
(e) A health insurer that is unable to provide information on rate
increases by benefit categories, including, but not limited to,
hospital, outpatient medical, and mental health, or information on
trend attributable to cost and trend attributable to utilization by
benefit category pursuant to subdivision (d), shall annually disclose
all of the following aggregate data for its large group health
insurance policies:
(1) (A) The insurer's overall aggregate data demonstrating or
reasonably estimating year-to-year cost increases in the aggregate
for large group rates by major service category. The insurer shall
distinguish between the increase ascribed to the volume of services
provided and the increase ascribed to the cost of services provided
for those assumptions that shall include the following categories:
(i) Hospital inpatient.
(ii) Outpatient visits.
(iii) Outpatient surgical or other procedures.
(iv) Professional medical.
(v) Mental health.
(vi) Substance abuse.
(vii) Skilled nursing facility, if covered.
(viii) Prescription drugs.
(ix) Other ancillary services.
(x) Laboratory.
(xi) Radiology or imaging.
(B) An insurer may provide aggregated additional data that
demonstrate or reasonably estimate year-to-year cost increases in
each of the specific service categories specified in subparagraph (A)
for each of the major geographic regions of the state.
(2) The amount of projected trend attributable to the following
categories:
(A) Use of services by service and disease category.
(B) Capital investment.
(C) Community benefit expenditures, excluding bad debt and valued
at cost.
(3) The amount and proportion of costs attributed to contracting
medical groups that would not have been attributable as medical
losses if incurred by the health insurer rather than the medical
group.
(f) (1) A health insurer shall annually provide claims data at no
charge to a large group purchaser if the large group purchaser
requests the information. The health insurer shall provide claims
data that a qualified statistician has determined are deidentified so
that the claims data do not identify or do not provide a reasonable
basis from which to identify an individual.
(2) Information provided to a large group purchaser under this
subdivision is not subject to Section 10181.7.
(3) (A) If claims data are not available, the insurer shall
provide, at no charge to the purchaser, all of the following:
(i) Deidentified data sufficient for the large group purchaser to
calculate the cost of obtaining similar services from other health
insurers and plans and evaluate cost-effectiveness by service and
disease category.
(ii) Deidentified patient-level data on demographics, prescribing,
encounters, inpatient services, outpatient services, and any other
data as may be required of the health insurer to comply with risk
adjustment, reinsurance, or risk corridors pursuant to the federal
Patient Protection and Affordable Care Act (Public Law 111-148), as
amended by the federal Health Care and Education Reconciliation Act
of 2010 (Public Law 111-152), and any rules, regulations, or guidance
issued thereunder.
(iii) Deidentified patient-level data used to experience rate the
large group, including diagnostic and procedure coding and costs
assigned to each service.
(B) The health insurer shall obtain a formal determination from a
qualified statistician that the data provided pursuant to this
paragraph have been deidentified so that the data do not identify or
do not provide a reasonable basis from which to identify an
individual. The statistician shall certify the formal determination
in writing and shall, upon request, provide the protocol used for
deidentification to the department.
(4) Data provided pursuant to this subdivision shall only be
provided to a large group purchaser that meets both of the following
conditions:
(A) Is able to demonstrate its ability to comply with state and
federal privacy laws.
(B) Is a large group purchaser that is either an
employer-sponsored plan with an enrollment of greater than 1,000
covered lives or a multiemployer trust.
(d)
(g) The department may require all health insurers to
submit all rate filings to the National Association of Insurance
Commissioners' System for Electronic Rate and Form Filing (SERFF).
Submission of the required rate filings to SERFF shall be deemed to
be filing with the department for purposes of compliance with this
section.
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.