Bill Text: CA SB639 | 2013-2014 | Regular Session | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Health care coverage.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2013-09-20 - Chaptered by Secretary of State. Chapter 316, Statutes of 2013. [SB639 Detail]
Download: California-2013-SB639-Amended.html
Bill Title: Health care coverage.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2013-09-20 - Chaptered by Secretary of State. Chapter 316, Statutes of 2013. [SB639 Detail]
Download: California-2013-SB639-Amended.html
BILL NUMBER: SB 639 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY SEPTEMBER 6, 2013
AMENDED IN ASSEMBLY SEPTEMBER 3, 2013
AMENDED IN ASSEMBLY AUGUST 6, 2013
AMENDED IN SENATE MAY 28, 2013
AMENDED IN SENATE APRIL 9, 2013
AMENDED IN SENATE APRIL 1, 2013
INTRODUCED BY Senator Hernandez
FEBRUARY 22, 2013
An act to amend Section Sections 1357.503
and 1367 of, and to add Sections 1367.006,
1367.007, 1367.008, and 1367.009 to, and to add and repeal
Section 1367.0065 of, the Health and Safety Code, and to
amend Section 10753.05 of, and to add Sections 10112.28,
10112.29, 10112.295, 10112.297, and 10112.7 to , and to add and
repeal Section 10112.285 of, the Insurance Code,
relating to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
SB 639, as amended, Hernandez. Health care coverage.
Existing federal law, the federal Patient Protection and
Affordable Care Act (PPACA), enacts various health care coverage
market reforms that take effect January 1, 2014. Among other things,
PPACA establishes annual limits on deductibles for employer-sponsored
plans and defines bronze, silver, gold, and platinum levels of
coverage for the nongrandfathered individual and small group markets.
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.
This bill would prohibit the deductible under a small employer
health care service plan contract or health insurance policy offered,
sold, or renewed on or after January 1, 2014, from exceeding $2,000
in the case of a plan contract or policy covering a single
individual, or $4,000 in all other cases. That provision would
not apply to multiple employer welfare arrangements, as specified.
The bill would require, for nongrandfathered products in the
individual or small group markets, a health care service plan
contract or health insurance policy, except a specialized health
insurance policy, that is issued, amended, or renewed on or after
January 1, 2014, to provide for a limit on annual out-of-pocket
expenses for all covered benefits that meet the definition of
essential health benefits, as defined, and would require the contract
or policy, for nongrandfathered products in the large group market,
to provide that limit for covered benefits, including out-of-network
emergency care, to the extent that the limit does not conflict with
federal law or guidance, as specified. The bill would set the
limit at $6,500 for individual coverage and $12,700 for family
coverage for the 2014 plan and policy years, and would set a
specified limit for pediatric oral care benefits. For later years,
those limits would be set using a specified provision of federal law.
The bill would prohibit the total annual out-of-pocket maximum
for all covered essential benefits from exceeding that
limit for a specialized plan or specialized health insurance policy
that offers or provides an essential health benefit, as specified, in
plan or policy years beginning on or after January 1, 2015.
The bill would provide that in the first plan year or
policy year commencing on or after January 1, 2014, to the extent
allowed by federal law, for nongrandfathered products in the
individual and small group markets, when a plan or insurer uses a
separate service provider to administer pediatric oral care benefits,
the limit on annual out-of-pocket expenses would be satisfied if the
plan or policy complies with a specified out-of-pocket maximum for
all other essential health benefits and the separate out-of-pocket
maximum for the pediatric oral care benefits does not exceed the
out-of-pocket maximum requirements for pediatric dental benefits
established for stand-alone dental plans by the California Health
Benefit Exchange. The bill would also prohibit a plan or
insurer from applying a separate out-of-pocket maximum to mental
health or substance use disorder benefits.
The bill would define bronze, silver, gold, and platinum levels of
coverage for the nongrandfathered individual and small group markets
consistent with the definitions in PPACA. The bill would prohibit a
carrier that is not participating in the Exchange from offering a
catastrophic plan, as defined, in the individual market.
PPACA requires a health insurance issuer offering group or
individual coverage that provides or covers benefits with respect to
services in the emergency department of a hospital to cover emergency
services without the need for prior authorization, regardless of
whether the provider is a participating provider, and subject to the
same cost sharing required if the services were provided by a
participating provider, as specified.
This bill would impose that requirement with respect to health
insurance policies issued, amended, or renewed on or after January 1,
2014, as specified.
Existing law requires a health care service plan and carrier
providing coverage to small employers each calendar year to establish
an index rate for the small employer market in the state based on
the total combined claims costs for providing essential health
benefits within a single risk pool, as specified.
This bill would require that index rate to be established at least
each calendar year and no more frequently than each calendar
quarter.
Because a willful violation of these requirements with respect 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 1357.503 of the
Health and Safety Code , as amended by Chapter 2 of the
First Extraordinary Session of the Statutes of 2013, is
amended to read:
1357.503. (a) (1) On and after October 1, 2013, a plan shall
fairly and affirmatively offer, market, and sell all of the plan's
small employer health care service plan contracts for plan years on
or after January 1, 2014, to all small employers in each service area
in which the plan provides or arranges for the provision of health
care services.
(2) On and after October 1, 2013, a plan shall make available to
each small employer all small employer health care service plan
contracts that the plan offers and sells to small employers or to
associations that include small employers in this state for plan
years on or after January 1, 2014. Health coverage through an
association that is not related to employment shall be considered
individual coverage pursuant to Section 144.102(c) of Title 45 of the
Code of Federal Regulations.
(3) A plan that offers qualified health plans through the Exchange
shall be deemed to be in compliance with paragraphs (1) and (2) with
respect to small employer health care service plan contracts offered
through the Exchange in those geographic regions in which the plan
offers plan contracts through the Exchange.
(b) A plan shall provide enrollment periods consistent with PPACA
and described in Section 155.725 of Title 45 of the Code of Federal
Regulations. Commencing January 1, 2014, a plan shall provide special
enrollment periods consistent with the special enrollment periods
described in Section 1399.849, to the extent permitted by PPACA,
except for the triggering events identified in paragraphs (d)(3) and
(d)(6) of Section 155.420 of Title 45 of the Code of Federal
Regulations with respect to plan contracts offered through the
Exchange.
(c) No plan or solicitor shall induce or otherwise encourage a
small employer to separate or otherwise exclude an eligible employee
from a health care service plan contract that is provided in
connection with employee's employment or membership in a guaranteed
association.
(d) Every plan shall file with the director the reasonable
employee participation requirements and employer contribution
requirements that will be applied in offering its plan contracts.
Participation requirements shall be applied uniformly among all small
employer groups, except that a plan may vary application of minimum
employee participation requirements by the size of the small employer
group and whether the employer contributes 100 percent of the
eligible employee's premium. Employer contribution requirements shall
not vary by employer size. A health care service plan shall not
establish a participation requirement that (1) requires a person who
meets the definition of a dependent in Section 1357.500 to enroll as
a dependent if he or she is otherwise eligible for coverage and
wishes to enroll as an eligible employee and (2) allows a plan to
reject an otherwise eligible small employer because of the number of
persons that waive coverage due to coverage through another employer.
Members of an association eligible for health coverage under
subdivision (m) of Section 1357.500, but not electing any health
coverage through the association, shall not be counted as eligible
employees for purposes of determining whether the guaranteed
association meets a plan's reasonable participation standards.
(e) The plan shall not reject an application from a small employer
for a small employer health care service plan contract if all of the
following conditions are met:
(1) The small employer offers health benefits to 100 percent of
its eligible employees. Employees who waive coverage on the grounds
that they have other group coverage shall not be counted as eligible
employees.
(2) The small employer agrees to make the required premium
payments.
(3) The small employer agrees to inform the small employer's
employees of the availability of coverage and the provision that
those not electing coverage must wait until the next open enrollment
or a special enrollment period to obtain coverage through the group
if they later decide they would like to have coverage.
(4) The employees and their dependents who are to be covered by
the plan contract work or reside in the service area in which the
plan provides or otherwise arranges for the provision of health care
services.
(f) No plan or solicitor shall, directly or indirectly, engage in
the following activities:
(1) Encourage or direct small employers to refrain from filing an
application for coverage with a plan because of the health status,
claims experience, industry, occupation of the small employer, or
geographic location provided that it is within the plan's approved
service area.
(2) Encourage or direct small employers to seek coverage from
another plan because of the health status, claims experience,
industry, occupation of the small employer, or geographic location
provided that it is within the plan's approved service area.
(3) Employ marketing practices or benefit designs that will have
the effect of discouraging the enrollment of individuals with
significant health needs or discriminate based on an individual's
race, color, national origin, present or predicted disability, age,
sex, gender identity, sexual orientation, expected length of life,
degree of medical dependency, quality of life, or other health
conditions.
(g) A plan shall not, directly or indirectly, enter into any
contract, agreement, or arrangement with a solicitor that provides
for or results in the compensation paid to a solicitor for the sale
of a health care service plan contract to be varied because of the
health status, claims experience, industry, occupation, or geographic
location of the small employer. This subdivision does not apply to a
compensation arrangement that provides compensation to a solicitor
on the basis of percentage of premium, provided that the percentage
shall not vary because of the health status, claims experience,
industry, occupation, or geographic area of the small employer.
(h) (1) A policy or contract that covers a small employer, as
defined in Section 1304(b) of PPACA and in Section 1357.500, shall
not establish rules for eligibility, including continued eligibility,
of an individual, or dependent of an individual, to enroll under the
terms of the policy or contract based on any of the following health
status-related factors:
(A) Health status.
(B) Medical condition, including physical and mental illnesses.
(C) Claims experience.
(D) Receipt of health care.
(E) Medical history.
(F) Genetic information.
(G) Evidence of insurability, including conditions arising out of
acts of domestic violence.
(H) Disability.
(I) Any other health status-related factor as determined by any
federal regulations, rules, or guidance issued pursuant to Section
2705 of the federal Public Health Service Act.
(2) Notwithstanding Section 1389.1, a health care service plan
shall not require an eligible employee or dependent to fill out a
health assessment or medical questionnaire prior to enrollment under
a small employer health care service plan contract. A health care
service plan shall not acquire or request information that relates to
a health status-related factor from the applicant or his or her
dependent or any other source prior to enrollment of the individual.
(i) (1) A health care service plan shall consider as a single risk
pool for rating purposes in the small employer market the claims
experience of all enrollees in all nongrandfathered small employer
health benefit plans offered by the health care service plan in this
state, whether offered as health care service plan contracts or
health insurance policies, including those insureds and enrollees who
enroll in coverage through the Exchange and insureds and enrollees
covered by the health care service plan outside of the Exchange.
(2) Each At least each calendar
year, and no more frequently than each calendar
quarter, a health care service plan shall establish an index
rate for the small employer market in the state based on the total
combined claims costs for providing essential health benefits, as
defined pursuant to Section 1302 of PPACA and Section 1367.005,
within the single risk pool required under paragraph (1). The index
rate shall be adjusted on a marketwide basis based on the total
expected marketwide payments and charges under the risk adjustment
and reinsurance programs established for the state pursuant to
Sections 1343 and 1341 of PPACA. The premium rate for all of the
health care service plan's nongrandfathered small employer health
care service plan contracts shall use the applicable index rate, as
adjusted for total expected marketwide payments and charges under the
risk adjustment and reinsurance programs established for the state
pursuant to Sections 1343 and 1341 of PPACA, subject only to the
adjustments permitted under paragraph (3).
(3) A health care service plan may vary premium rates for a
particular nongrandfathered small employer health care service plan
contract from its index rate based only on the following actuarially
justified plan-specific factors:
(A) The actuarial value and cost-sharing design of the plan
contract.
(B) The plan contract's provider network, delivery system
characteristics, and utilization management practices.
(C) The benefits provided under the plan contract that are in
addition to the essential health benefits, as defined pursuant to
Section 1302 of PPACA. These additional benefits shall be pooled with
similar benefits within the single risk pool required under
paragraph (1) and the claims experience from those benefits shall be
utilized to determine rate variations for plan contracts that offer
those benefits in addition to essential health benefits.
(D) With respect to catastrophic plans, as described in subsection
(e) of Section 1302 of PPACA, the expected impact of the specific
eligibility categories for those plans.
(E) Administrative costs, excluding any user fees required by the
Exchange.
(j) A plan shall comply with the requirements of Section 1374.3.
(k) (1) Except as provided in paragraph (2), if Section 2702 of
the federal Public Health Service Act (42 U.S.C. Sec. 300gg-1), as
added by Section 1201 of PPACA, is repealed, this section shall
become inoperative 12 months after the repeal date, in which case
health care service plans subject to this section shall instead be
governed by Section 1357.03 to the extent permitted by federal law,
and all references in this article to this section shall instead
refer to Section 1357.03 except for purposes of paragraph (2).
(2) Subdivision (b) shall remain operative with respect to health
care service plan contracts offered through the Exchange.
SECTION 1. SEC. 2. Section 1367 of
the Health and Safety Code is amended to read:
1367. A health care service plan and, if applicable, a
specialized health care service plan shall meet the following
requirements:
(a) Facilities located in this state including, but not limited
to, clinics, hospitals, and skilled nursing facilities to be utilized
by the plan shall be licensed by the State Department of Public
Health, where licensure is required by law. Facilities not located in
this state shall conform to all licensing and other requirements of
the jurisdiction in which they are located.
(b) Personnel employed by or under contract to the plan shall be
licensed or certified by their respective board or agency, where
licensure or certification is required by law.
(c) Equipment required to be licensed or registered by law shall
be so licensed or registered, and the operating personnel for that
equipment shall be licensed or certified as required by law.
(d) The plan shall furnish services in a manner providing
continuity of care and ready referral of patients to other providers
at times as may be appropriate consistent with good professional
practice.
(e) (1) All services shall be readily available at reasonable
times to each enrollee consistent with good professional practice. To
the extent feasible, the plan shall make all services readily
accessible to all enrollees consistent with Section 1367.03.
(2) To the extent that telehealth services are appropriately
provided through telehealth, as defined in subdivision (a) of Section
2290.5 of the Business and Professions Code, these services shall be
considered in determining compliance with Section 1300.67.2 of Title
28 of the California Code of Regulations.
(3) The plan shall make all services accessible and appropriate
consistent with Section 1367.04.
(f) The plan shall employ and utilize allied health manpower for
the furnishing of services to the extent permitted by law and
consistent with good medical practice.
(g) The plan shall have the organizational and administrative
capacity to provide services to subscribers and enrollees. The plan
shall be able to demonstrate to the department that medical decisions
are rendered by qualified medical providers, unhindered by fiscal
and administrative management.
(h) (1) Contracts with subscribers and enrollees, including group
contracts, and contracts with providers, and other persons furnishing
services, equipment, or facilities to or in connection with the
plan, shall be fair, reasonable, and consistent with the objectives
of this chapter. All contracts with providers shall contain
provisions requiring a fast, fair, and cost-effective dispute
resolution mechanism under which providers may submit disputes to the
plan, and requiring the plan to inform its providers upon
contracting with the plan, or upon change to these provisions, of the
procedures for processing and resolving disputes, including the
location and telephone number where information regarding disputes
may be submitted.
(2) A health care service plan shall ensure that a dispute
resolution mechanism is accessible to noncontracting providers for
the purpose of resolving billing and claims disputes.
(3) On and after January 1, 2002, a health care service plan shall
annually submit a report to the department regarding its dispute
resolution mechanism. The report shall include information on the
number of providers who utilized the dispute resolution mechanism and
a summary of the disposition of those disputes.
(i) A health care service plan contract shall provide to
subscribers and enrollees all of the basic health care services
included in subdivision (b) of Section 1345, except that the director
may, for good cause, by rule or order exempt a plan contract or any
class of plan contracts from that requirement. The director shall by
rule define the scope of each basic health care service that health
care service plans are required to provide as a minimum for licensure
under this chapter. Nothing in this chapter shall prohibit a health
care service plan from charging subscribers or enrollees a copayment
or a deductible for a basic health care service consistent with
Section 1367.006 or 1367.007, provided that the copayments,
deductibles, or other cost sharing are reported to the director and
set forth to the subscriber or enrollee pursuant to the disclosure
provisions of Section 1363. Nothing in this chapter shall prohibit a
health care service plan from setting forth, by contract, limitations
on maximum coverage of basic health care services, provided that the
limitations are reported to, and held unobjectionable by, the
director and set forth to the subscriber or enrollee pursuant to the
disclosure provisions of Section 1363.
(j) A health care service plan shall not require registration
under the federal Controlled Substances Act (21 U.S.C. Sec. 801 et
seq.) as a condition for participation by an optometrist certified to
use therapeutic pharmaceutical agents pursuant to Section 3041.3 of
the Business and Professions Code.
Nothing in this section shall be construed to permit the director
to establish the rates charged subscribers and enrollees for
contractual health care services.
The director's enforcement of Article 3.1 (commencing with Section
1357) shall not be deemed to establish the rates charged subscribers
and enrollees for contractual health care services.
The obligation of the plan to comply with this chapter shall not
be waived when the plan delegates any services that it is required to
perform to its medical groups, independent practice associations, or
other contracting entities.
SEC. 2. SEC. 3. Section 1367.006 is
added to the Health and Safety Code, to read:
1367.006. (a) This section shall apply to nongrandfathered
individual and group health care service plan contracts that provide
coverage for essential health benefits, as defined in Section
1367.005, and that are issued, amended, or renewed on or after
January 1, 2015.
(b) (1) For nongrandfathered
products health care service plan contracts in
the individual or small group markets, a health care service plan
contract, except a specialized health care service plan contract,
that is issued, amended, or renewed on or after January 1,
2014, 2015, shall provide for a limit on annual
out-of-pocket expenses for all covered benefits that meet the
definition of essential health benefits in Section 1367.005 ,
including out-of-network emergency care consistent with Section
1317.4 .
(A) In the first plan year commencing on or after January 1, 2014,
to the extent allowed by federal law, for nongrandfathered products
in the individual and small group markets, when a health care service
plan uses a separate service provider to administer the pediatric
oral care benefits required by Section 1367.005, the limit on annual
out-of-pocket expenses shall be satisfied if both of the following
conditions are met:
(i) With respect to all essential health benefits except for the
pediatric oral care benefit, the health care service plan complies
with the out-of-pocket maximum requirements in Section 1302(c)(1) of
PPACA and any federal rules, regulations, and guidance implementing
that section.
(ii) The separate out-of-pocket maximum for pediatric oral care
benefits does not exceed the out-of-pocket maximum requirements for
pediatric dental benefits established for stand-alone dental plans by
the California Health Benefit Exchange.
(B) The health care service plan shall not apply a separate
out-of-pocket maximum to mental health or substance use disorder
benefits.
(2) For nongrandfathered products health
care service plan contracts in the large group market, a health
care service plan contract, except a specialized health care service
plan contract, that is issued, amended, or renewed on or after
January 1, 2014, 2015, shall provide
for a limit on annual out-of-pocket expenses for covered benefits,
including out-of-network emergency care consistent with Section
1371.4. This limit shall only apply to essential health
benefits, as defined in Section 1367.005, that are covered under the
plan to the extent that this provision does not conflict with federal
law or guidance on out-of-pocket maximums for nongrandfathered
products health care service plan contracts
in the large group market. For large group products
for the first plan year commencing on or after January 1, 2014, the
requirement that a product provide for a limit on annual
out-of-pocket expenses shall be satisfied if both of the following
apply:
(A) The product complies with the requirements of this paragraph
with respect to basic health care services, as defined in subdivision
(b) of Section 1345, services required under Sections 1374.72 and
1374.73, and any requirements of the Paul Wellstone and Pete Domenci
Mental Health Parity and Addiction Equity Act of 2008 (Public Law
110-343).
(B) To the extent the product includes an out-of-pocket maximum on
coverage other than the coverage described in subparagraph (A), that
out-of-pocket maximum also does not exceed the limit established
pursuant to this paragraph.
(b) The limit described in subdivision (a) shall apply to any
copayment, coinsurance, deductible, incentive payment, and any other
form of cost sharing for all covered benefits, including prescription
drugs covered pursuant to Section 1367.24.
(c) (1) The limit described in subdivision
(a) (b) shall not exceed the limit
described in Section 1302(c) of PPACA, and any subsequent rules,
regulations, or guidance issued under that section.
(2) The limit described in subdivision (b) shall result in a total
maximum out-of-pocket limit for all essential health benefits equal
to the dollar amounts in effect under Section 223(c)(2)(A)(ii) of the
Internal Revenue Code of 1986 with the dollar amounts adjusted as
specified in Section 1302(c)(1)(B) of PPACA.
(d) Nothing in this section shall be construed to affect the
reduction in cost sharing for eligible enrollees described in Section
1402 of PPACA, and any subsequent rules, regulations, or guidance
issued under that section.
(e) For plan years beginning on or after January 1, 2015,
if If an essential health benefit is offered or
provided by a specialized health care service plan, the
total annual out-of-pocket maximum for all covered
essential benefits shall not exceed the limit in this
section subdivision (b) . This section shall not
apply to a specialized health care service plan that does
not offer an essential health benefit as defined in Section
1367.005.
(f) The maximum out-of-pocket limit shall apply to any copayment,
coinsurance, deductible, and any other form of cost sharing for all
covered benefits that meet the definition of essential health
benefits in Section 1367.005.
(f)
(g) For nongrandfathered health plan contracts in the
group market, "plan year" has the meaning set forth in Section
144.103 of Title 45 of the Code of Federal Regulations. For
nongrandfathered health plan contracts sold in the individual market,
"plan year" means the calendar year.
(g)
(h) "PPACA" means 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.
SEC. 4. Section 1367.0065 is added to the
Health and Safety Code , to read:
1367.0065. (a) This section shall apply to nongrandfathered
individual and group health care service plan contracts that provide
coverage for essential health benefits defined in Section 1367.005
and that are issued, amended, or renewed for the 2014 plan year.
(b) (1) For nongrandfathered health care service plan contracts in
the individual market, and to the extent allowed by federal law,
regulations, and guidance, a health care service plan contract,
except a specialized health care service plan contract, shall provide
for a limit on annual out-of-pocket expenses for all covered
benefits that meet the definition of essential health benefits as
defined in Section 1367.005, including out-of-network emergency care
consistent with Section 1371.4. The total out-of-pocket maximum shall
not exceed six thousand three hundred fifty dollars ($6,350) for
individual coverage and twelve thousand seven hundred dollars
($12,700) for family coverage.
(2) For nongrandfathered specialized health care service plan
contracts in the individual market that provide the pediatric oral
care benefit meeting the definition in Section 1302(b)(1)(j) of
PPACA, the out-of-pocket maximum for the pediatric oral care benefit
shall not exceed one thousand dollars ($1,000) for one child and two
thousand dollars ($2,000) for more than one child.
(3) A health care service plan shall not apply a separate
out-of-pocket maximum to mental health or substance use disorder
benefits.
(c) For nongrandfathered health care service plan contracts in the
small group markets, and to the extent allowed by federal law,
regulations, and guidance, a health care service plan contract,
except a specialized health care service plan contract, shall provide
for a limit on annual out-of-pocket expenses for all covered
benefits that meet the definition of essential health benefits, as
defined in Section 1367.005, including out-of-network emergency care
consistent with Section 1371.4, as follows:
(1) With respect to all essential health benefits, except for the
pediatric oral care benefit, the total out-of-pocket maximum shall
not exceed six thousand three hundred fifty dollars ($6,350) for
individual coverage and twelve thousand seven hundred dollars
($12,700) for family coverage. For small group health plan contracts
the total out-of-pocket maximum limit in this paragraph may be split
between prescription drug services and all other essential health
benefits.
(2) The separate out-of-pocket maximum for pediatric oral care
benefits meeting the definition in Section 1302(b)(1)(j) of PPACA
shall not exceed one thousand dollars ($1,000) for one child or two
thousand dollars ($2,000) for more than one child.
(3) A health care service plan shall not apply a separate
out-of-pocket maximum to mental health or substance use disorder
benefits.
(d) For nongrandfathered health care service plan contracts in the
large group market, a health care service plan contract, except a
specialized health care service plan contract, shall provide for a
limit on annual out-of-pocket expenses for covered benefits,
including out-of-network emergency care consistent with Section
1371.4. This limit shall apply only to essential health benefits, as
defined in Section 1367.005, that are covered under the
plan contract. This limit shall be as
follows:
(1) The total out-of-pocket maximum shall not exceed six thousand
three hundred fifty dollars ($6,350) for individual coverage or
twelve thousand seven hundred dollars ($12,700) for family coverage
with respect to basic health care services as defined in subdivision
(b) of Section 1345, and services, except for prescription drugs,
required under Sections 1374.72 and 1374.73.
(2) To the extent the plan contract includes an out-of-pocket
maximum on coverage other than the coverage defined in paragraph (1),
that out-of-pocket maximum shall not exceed six thousand three
hundred fifty dollars ($6,350) for individual coverage or twelve
thousand seven hundred dollars ($12,700) for family coverage.
(3) An enrollee in a large group plan contract shall not be
subject to more than two limits on annual out-of-pocket expenses for
covered benefits that meet the definition of essential health
benefits.
(4) A health care service plan shall not apply a separate
out-of-pocket maximum to mental health or substance use disorder
benefits.
(5) This subdivision shall apply only to the extent that it does
not conflict with federal law or guidance on out-of-pocket maximums
for nongrandfathered health plan contracts in the large group market.
(e) Nothing in this section shall be construed to affect the
reduction in cost sharing for eligible enrollees described in Section
1402 of PPACA, and any subsequent rules, regulations, or guidance
issued under that section.
(f) The limits described in this section shall apply to any
copayment, coinsurance, deductible, and any other form of cost
sharing for all covered services that meet the definition of
essential health benefits.
(g) For nongrandfathered health plan contracts in the group
market, "plan year" has the meaning set forth in Section 144.103 of
Title 45 of the Code of Federal Regulations. For nongrandfathered
health plan contracts sold in the individual market, "plan year"
means the calendar year.
(h) "PPACA" means 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.
(i) This section shall remain in effect only until January 1,
2016, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2016, deletes or extends
that date.
SEC. 3. SEC. 5. Section 1367.007 is
added to the Health and Safety Code, to read:
1367.007. (a) (1) For a small employer health care service plan
contract offered, sold, or renewed on or after January 1, 2014, the
deductible under the plan shall not exceed:
(A) Two thousand dollars ($2,000) in the case of a plan contract
covering a single individual.
(B) Four thousand dollars ($4,000) in the case of any other plan
contract.
(2) The dollar amounts in this section shall be indexed consistent
with Section 1302(c)(2) of PPACA and any federal rules or guidance
pursuant to that section.
(3) The limitation in this subdivision shall be applied in a
manner that does not affect the actuarial value of any small employer
health care service plan contract.
(4) For small group products at the bronze level of coverage, as
defined in Section 1367.008, the department may permit plans to offer
a higher deductible in order to meet the actuarial value requirement
of the bronze level. In making this determination, the department
shall consider affordability of cost sharing for enrollees and shall
also consider whether enrollees may be deterred from seeking
appropriate care because of higher cost sharing.
(b) Nothing in this section shall be construed to allow a plan
contract to have a deductible that applies to preventive services as
defined in Section 1367.002.
(c) "PPACA" means 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.
SEC. 4. SEC. 6. Section 1367.008 is
added to the Health and Safety Code, to read:
1367.008. (a) Levels of coverage for the nongrandfathered
individual market are defined as follows:
(1) Bronze level: A health care service plan contract in the
bronze level shall provide a level of coverage that is actuarially
equivalent to 60 percent of the full actuarial value of the benefits
provided under the plan contract.
(2) Silver level: A health care service plan contract in the
silver level shall provide a level of coverage that is actuarially
equivalent to 70 percent of the full actuarial value of the benefits
provided under the plan contract.
(3) Gold level: A health care service plan contract in the gold
level shall provide a level of coverage that is actuarially
equivalent to 80 percent of the full actuarial value of the benefits
provided under the plan contract.
(4) Platinum level: A health care service plan contract in the
platinum level shall provide a level of coverage that is actuarially
equivalent to 90 percent of the full actuarial value of the benefits
provided under the plan contract.
(b) Actuarial value for nongrandfathered individual health care
service plan contracts shall be determined in accordance with the
following:
(1) Actuarial value shall not vary by more than plus or minus 2
percent.
(2) Actuarial value shall be determined on the basis of essential
health benefits as defined in Section 1367.005 and as provided to a
standard, nonelderly population. For this purpose, a standard
population shall not include those receiving coverage through the
Medi-Cal or Medicare programs.
(3) The department may use the actuarial value methodology
developed consistent with Section 1302(d) of PPACA.
(4) The actuarial value for pediatric dental benefits, whether
offered by a full service plan or a specialized plan, shall be
consistent with federal law and guidance applicable to the plan type.
(5) The department, in consultation with the Department of
Insurance and the Exchange, shall consider whether to exercise
state-level flexibility with respect to the actuarial value
calculator in order to take into account the unique characteristics
of the California health care coverage market, including the
prevalence of health care service plans, total cost of care paid for
by the plan, price of care, patterns of service utilization, and
relevant demographic factors.
(c) (1) A catastrophic plan is a health care service plan contract
that provides no benefits for any plan year until the enrollee has
incurred cost-sharing expenses in an amount equal to the annual limit
on out-of-pocket costs as specified in Section 1367.006 except that
it shall provide coverage for at least three primary care visits. A
carrier that is not participating in the Exchange shall not offer,
market, or sell a catastrophic plan in the individual market.
(2) A catastrophic plan may be offered only in the individual
market and only if consistent with this paragraph. Catastrophic plans
may be offered only if either of the following apply:
(A) The individual purchasing the plan has not yet attained 30
years of age before the beginning of the plan year.
(B) The individual has a certificate of exemption from Section
5000(A) of the Internal Revenue Code because the individual is not
offered affordable coverage or because the individual faces hardship.
(d) "PPACA" means 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.
SEC. 5. SEC. 7. Section 1367.009 is
added to the Health and Safety Code, to read:
1367.009. (a) Levels of coverage for the nongrandfathered small
group market are defined as follows:
(1) Bronze level: A health care service plan contract in the
bronze level shall provide a level of coverage that is actuarially
equivalent to 60 percent of the full actuarial value of the benefits
provided under the plan contract.
(2) Silver level: A health care service plan contract in the
silver level shall provide a level of coverage that is actuarially
equivalent to 70 percent of the full actuarial value of the benefits
provided under the plan contract.
(3) Gold level: A health care service plan contract in the gold
level shall provide a level of coverage that is actuarially
equivalent to 80 percent of the full actuarial value of the benefits
provided under the plan contract.
(4) Platinum level: A health care service plan contract in the
platinum level shall provide a level of coverage that is actuarially
equivalent to 90 percent of the full actuarial value of the benefits
provided under the plan contract.
(b) Actuarial value for nongrandfathered small employer health
care service plan contracts shall be determined in accordance with
the following:
(1) Actuarial value shall not vary by more than plus or minus 2
percent.
(2) Actuarial value shall be determined on the basis of essential
health benefits as defined in Section 1367.005 and as provided to a
standard, nonelderly population. For this purpose, a standard
population shall not include those receiving coverage through the
Medi-Cal or Medicare programs.
(3) The department may use the actuarial value methodology
developed consistent with Section 1302(d) of PPACA.
(4) The actuarial value for pediatric dental benefits, whether
offered by a full service plan or a specialized plan, shall be
consistent with federal law and guidance applicable to the plan type.
(5) The department, in consultation with the Department of
Insurance and the Exchange, shall consider whether to exercise
state-level flexibility with respect to the actuarial value
calculator in order to take into account the unique characteristics
of the California health care coverage market, including the
prevalence of health care service plans, total cost of care paid for
by the plan, price of care, patterns of service utilization, and
relevant demographic factors.
(6) Employer contributions toward health reimbursement accounts
and health savings accounts shall count toward the actuarial value of
the product in the manner specified in federal rules and guidance.
(c) "PPACA" means 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.
SEC. 8. Section 10753.05 of the
Insurance Code , as amended by Chapter 1 of the First
Extraordinary Session of the Statutes of 2013, is amended to read:
10753.05. (a) No group or individual policy or contract or
certificate of group insurance or statement of group coverage
providing benefits to employees of small employers as defined in this
chapter shall be issued or delivered by a carrier subject to the
jurisdiction of the commissioner regardless of the situs of the
contract or master policyholder or of the domicile of the carrier
nor, except as otherwise provided in Sections 10270.91 and 10270.92,
shall a carrier provide coverage subject to this chapter until a copy
of the form of the policy, contract, certificate, or statement of
coverage is filed with and approved by the commissioner in accordance
with Sections 10290 and 10291, and the carrier has complied with the
requirements of Section 10753.17.
(b) (1) On and after October 1, 2013, each carrier shall fairly
and affirmatively offer, market, and sell all of the carrier's health
benefit plans that are sold to, offered through, or sponsored by,
small employers or associations that include small employers for plan
years on or after January 1, 2014, to all small employers in each
geographic region in which the carrier makes coverage available or
provides benefits.
(2) A carrier that offers qualified health plans through the
Exchange shall be deemed to be in compliance with paragraph (1) with
respect to health benefit plans offered through the Exchange in those
geographic regions in which the carrier offers plans through the
Exchange.
(3) A carrier shall provide enrollment periods consistent with
PPACA and described in Section 155.725 of Title 45 of the Code of
Federal Regulations. Commencing January 1, 2014, a carrier shall
provide special enrollment periods consistent with the special
enrollment periods described in Section 10965.3, to the extent
permitted by PPACA, except for the triggering events identified in
paragraphs (d)(3) and (d)(6) of Section 155.420 of Title 45 of the
Code of Federal Regulations with respect to health benefit plans
offered through the Exchange.
(4) Nothing in this section shall be construed to require an
association, or a trust established and maintained by an association
to receive a master insurance policy issued by an admitted insurer
and to administer the benefits thereof solely for association
members, to offer, market or sell a benefit plan design to those who
are not members of the association. However, if the association
markets, offers or sells a benefit plan design to those who are not
members of the association it is subject to the requirements of this
section. This shall apply to an association that otherwise meets the
requirements of paragraph (8) formed by merger of two or more
associations after January 1, 1992, if the predecessor organizations
had been in active existence on January 1, 1992, and for at least
five years prior to that date and met the requirements of paragraph
(5).
(5) A carrier which (A) effective January 1, 1992, and at least 20
years prior to that date, markets, offers, or sells benefit plan
designs only to all members of one association and (B) does not
market, offer or sell any other individual, selected group, or group
policy or contract providing medical, hospital and surgical benefits
shall not be required to market, offer, or sell to those who are not
members of the association. However, if the carrier markets, offers
or sells any benefit plan design or any other individual, selected
group, or group policy or contract providing medical, hospital and
surgical benefits to those who are not members of the association it
is subject to the requirements of this section.
(6) Each carrier that sells health benefit plans to members of one
association pursuant to paragraph (5) shall submit an annual
statement to the commissioner which states that the carrier is
selling health benefit plans pursuant to paragraph (5) and which, for
the one association, lists all the information required by paragraph
(7).
(7) Each carrier that sells health benefit plans to members of any
association shall submit an annual statement to the commissioner
which lists each association to which the carrier sells health
benefit plans, the industry or profession which is served by the
association, the association's membership criteria, a list of
officers, the state in which the association is organized, and the
site of its principal office.
(8) For purposes of paragraphs (4) and (6), an association is a
nonprofit organization comprised of a group of individuals or
employers who associate based solely on participation in a specified
profession or industry, accepting for membership any individual or
small employer meeting its membership criteria, which do not
condition membership directly or indirectly on the health or claims
history of any person, which uses membership dues solely for and in
consideration of the membership and membership benefits, except that
the amount of the dues shall not depend on whether the member applies
for or purchases insurance offered by the association, which is
organized and maintained in good faith for purposes unrelated to
insurance, which has been in active existence on January 1, 1992, and
at least five years prior to that date, which has a constitution and
bylaws, or other analogous governing documents which provide for
election of the governing board of the association by its members,
which has contracted with one or more carriers to offer one or more
health benefit plans to all individual members and small employer
members in this state. Health coverage through an association that is
not related to employment shall be considered individual coverage
pursuant to Section 144.102(c) of Title 45 of the Code of Federal
Regulations.
(c) On and after October 1, 2013, each carrier shall make
available to each small employer all health benefit plans that the
carrier offers or sells to small employers or to associations that
include small employers for plan years on or after January 1, 2014.
Notwithstanding subdivision (d) of Section 10753, for purposes of
this subdivision, companies that are affiliated companies or that are
eligible to file a consolidated income tax return shall be treated
as one carrier.
(d) Each carrier shall do all of the following:
(1) Prepare a brochure that summarizes all of its health benefit
plans and make this summary available to small employers, agents, and
brokers upon request. The summary shall include for each plan
information on benefits provided, a generic description of the manner
in which services are provided, such as how access to providers is
limited, benefit limitations, required copayments and deductibles, an
explanation of how creditable coverage is calculated if a waiting
period is imposed, and a telephone number that can be called for more
detailed benefit information. Carriers are required to keep the
information contained in the brochure accurate and up to date, and,
upon updating the brochure, send copies to agents and brokers
representing the carrier. Any entity that provides administrative
services only with regard to a health benefit plan written or issued
by another carrier shall not be required to prepare a summary
brochure which includes that benefit plan.
(2) For each health benefit plan, prepare a more detailed evidence
of coverage and make it available to small employers, agents and
brokers upon request. The evidence of coverage shall contain all
information that a prudent buyer would need to be aware of in making
selections of benefit plan designs. An entity that provides
administrative services only with regard to a health benefit plan
written or issued by another carrier shall not be required to prepare
an evidence of coverage for that health benefit plan.
(3) Provide copies of the current summary brochure to all agents
or brokers who represent the carrier and, upon updating the brochure,
send copies of the updated brochure to agents and brokers
representing the carrier for the purpose of selling health benefit
plans.
(4) Notwithstanding subdivision (c) of Section 10753, for purposes
of this subdivision, companies that are affiliated companies or that
are eligible to file a consolidated income tax return shall be
treated as one carrier.
(e) Every agent or broker representing one or more carriers for
the purpose of selling health benefit plans to small employers shall
do all of the following:
(1) When providing information on a health benefit plan to a small
employer but making no specific recommendations on particular
benefit plan designs:
(A) Advise the small employer of the carrier's obligation to sell
to any small employer any of the health benefit plans it offers to
small employers, consistent with PPACA, and provide them, upon
request, with the actual rates that would be charged to that employer
for a given health benefit plan.
(B) Notify the small employer that the agent or broker will
procure rate and benefit information for the small employer on any
health benefit plan offered by a carrier for whom the agent or broker
sells health benefit plans.
(C) Notify the small employer that, upon request, the agent or
broker will provide the small employer with the summary brochure
required in paragraph (1) of subdivision (d) for any benefit plan
design offered by a carrier whom the agent or broker represents.
(D) Notify the small employer of the availability of coverage and
the availability of tax credits for certain employers consistent with
PPACA and state law, including any rules, regulations, or guidance
issued in connection therewith.
(2) When recommending a particular benefit plan design or designs,
advise the small employer that, upon request, the agent will provide
the small employer with the brochure required by paragraph (1) of
subdivision (d) containing the benefit plan design or designs being
recommended by the agent or broker.
(3) Prior to filing an application for a small employer for a
particular health benefit plan:
(A) For each of the health benefit plans offered by the carrier
whose health benefit plan the agent or broker is presenting, provide
the small employer with the benefit summary required in paragraph (1)
of subdivision (d) and the premium for that particular employer.
(B) Notify the small employer that, upon request, the agent or
broker will provide the small employer with an evidence of coverage
brochure for each health benefit plan the carrier offers.
(C) Obtain a signed statement from the small employer
acknowledging that the small employer has received the disclosures
required by this paragraph and Section 10753.16.
(f) No carrier, agent, or broker shall induce or otherwise
encourage a small employer to separate or otherwise exclude an
eligible employee from a health benefit plan which, in the case of an
eligible employee meeting the definition in paragraph (1) of
subdivision (f) of Section 10753, is provided in connection with the
employee's employment or which, in the case of an eligible employee
as defined in paragraph (2) of subdivision (f) of Section 10753, is
provided in connection with a guaranteed association.
(g) No carrier shall reject an application from a small employer
for a health benefit plan provided:
(1) The small employer as defined by subparagraph (A) of paragraph
(1) of subdivision (q) of Section 10753 offers health benefits to
100 percent of its eligible employees as defined in paragraph (1) of
subdivision (f) of Section 10753. Employees who waive coverage on the
grounds that they have other group coverage shall not be counted as
eligible employees.
(2) The small employer agrees to make the required premium
payments.
(h) No carrier or agent or broker shall, directly or indirectly,
engage in the following activities:
(1) Encourage or direct small employers to refrain from filing an
application for coverage with a carrier because of the health status,
claims experience, industry, occupation, or geographic location
within the carrier's approved service area of the small employer or
the small employer's employees.
(2) Encourage or direct small employers to seek coverage from
another carrier because of the health status, claims experience,
industry, occupation, or geographic location within the carrier's
approved service area of the small employer or the small employer's
employees.
(3) Employ marketing practices or benefit designs that will have
the effect of discouraging the enrollment of individuals with
significant health needs or discriminate based on the individual's
race, color, national origin, present or predicted disability, age,
sex, gender identity, sexual orientation, expected length of life,
degree of medical dependency, quality of life, or other health
conditions.
This subdivision shall be enforced in the same manner as Section
790.03, including through Sections 790.035 and 790.05.
(i) No carrier shall, directly or indirectly, enter into any
contract, agreement, or arrangement with an agent or broker that
provides for or results in the compensation paid to an agent or
broker for a health benefit plan to be varied because of the health
status, claims experience, industry, occupation, or geographic
location of the small employer or the small employer's employees.
This subdivision shall not apply with respect to a compensation
arrangement that provides compensation to an agent or broker on the
basis of percentage of premium, provided that the percentage shall
not vary because of the health status, claims experience, industry,
occupation, or geographic area of the small employer.
(j) (1) A health benefit plan offered to a small employer, as
defined in Section 1304(b) of PPACA and in Section 10753, shall not
establish rules for eligibility, including continued eligibility, of
an individual, or dependent of an individual, to enroll under the
terms of the plan based on any of the following health status-related
factors:
(A) Health status.
(B) Medical condition, including physical and mental illnesses.
(C) Claims experience.
(D) Receipt of health care.
(E) Medical history.
(F) Genetic information.
(G) Evidence of insurability, including conditions arising out of
acts of domestic violence.
(H) Disability.
(I) Any other health status-related factor as determined by any
federal regulations, rules, or guidance issued pursuant to Section
2705 of the federal Public Health Service Act.
(2) Notwithstanding Section 10291.5, a carrier shall not require
an eligible employee or dependent to fill out a health assessment or
medical questionnaire prior to enrollment under a health benefit
plan. A carrier shall not acquire or request information that relates
to a health status-related factor from the applicant or his or her
dependent or any other source prior to enrollment of the individual.
(k) (1) A carrier shall consider as a single risk pool for rating
purposes in the small employer market the claims experience of all
insureds in all nongrandfathered small employer health benefit plans
offered by the carrier in this state, whether offered as health care
service plan contracts or health insurance policies, including those
insureds and enrollees who enroll in coverage through the Exchange
and insureds and enrollees covered by the carrier outside of the
Exchange.
(2) Each At least each calendar
year, and no more frequently than each calendar quarter, a
carrier shall establish an index rate for the small employer market
in the state based on the total combined claims costs for providing
essential health
benefits, as defined pursuant to Section 1302 of PPACA and Section
10112.27, within the single risk pool required under paragraph (1).
The index rate shall be adjusted on a marketwide basis based on the
total expected marketwide payments and charges under the risk
adjustment and reinsurance programs established for the state
pursuant to Sections 1343 and 1341 of PPACA. The premium rate for all
of the carrier's nongrandfathered health benefit plans shall use the
applicable index rate, as adjusted for total expected marketwide
payments and charges under the risk adjustment and reinsurance
programs established for the state pursuant to Sections 1343 and 1341
of PPACA, subject only to the adjustments permitted under paragraph
(3).
(3) A carrier may vary premium rates for a particular
nongrandfathered health benefit plan from its index rate based only
on the following actuarially justified plan-specific factors:
(A) The actuarial value and cost-sharing design of the health
benefit plan.
(B) The health benefit plan's provider network, delivery system
characteristics, and utilization management practices.
(C) The benefits provided under the health benefit plan that are
in addition to the essential health benefits, as defined pursuant to
Section 1302 of PPACA. These additional benefits shall be pooled with
similar benefits within the single risk pool required under
paragraph (1) and the claims experience from those benefits shall be
utilized to determine rate variations for health benefit plans that
offer those benefits in addition to essential health benefits.
(D) Administrative costs, excluding any user fees required by the
Exchange.
(E) With respect to catastrophic plans, as described in subsection
(e) of Section 1302 of PPACA, the expected impact of the specific
eligibility categories for those plans.
(l) If a carrier enters into a contract, agreement, or other
arrangement with a third-party administrator or other entity to
provide administrative, marketing, or other services related to the
offering of health benefit plans to small employers in this state,
the third-party administrator shall be subject to this chapter.
(m) (1) Except as provided in paragraph (2), this section shall
become inoperative if Section 2702 of the federal Public Health
Service Act (42 U.S.C. Sec. 300gg-1), as added by Section 1201 of
PPACA, is repealed, in which case, 12 months after the repeal,
carriers subject to this section shall instead be governed by Section
10705 to the extent permitted by federal law, and all references in
this chapter to this section shall instead refer to Section 10705,
except for purposes of paragraph (2).
(2) Paragraph (3) of subdivision (b) of this section shall remain
operative as it relates to health benefit plans offered through the
Exchange.
SEC. 6. SEC. 9. Section 10112.28 is
added to the Insurance Code, to read:
10112.28. (a) This section shall apply to nongrandfathered
individual and group health insurance policies that provide coverage
for essential health benefits, as defined in Section 10112.27, and
that are issued, amended, or renewed on or after January 1, 2015.
(b) (1) For nongrandfathered products
health insurance policies in the individual or
small group markets, a health insurance policy, except a specialized
health insurance policy, that is issued, amended, or renewed on or
after January 1, 2014, 2015, shall
provide for a limit on annual out-of-pocket expenses for all covered
benefits that meet the definition of essential health benefits in
Section 10112.27 , including out-of-network emergency care
.
(A) In the first policy year commencing on or after January 1,
2014, to the extent allowed by federal law, for nongrandfathered
health insurance policies in the individual and small group markets,
when an insurer uses a separate service provider to administer the
pediatric oral care benefits required by Section 10112.27, the limit
on annual out-of-pocket expenses shall be satisfied if both of the
following conditions are met:
(i) With respect to all essential health benefits except for the
pediatric oral care benefit, the insurer complies with the
out-of-pocket maximum requirements in Section 1302(c)(1) of PPACA and
any federal rules, regulations, and guidance implementing that
section.
(ii) The separate out-of-pocket maximum for pediatric oral care
benefits does not exceed the out-of-pocket maximum requirements for
pediatric dental benefits established for stand-alone dental policies
by the California Health Benefit Exchange.
(B) The insurer shall not apply a separate out-of-pocket maximum
to mental health or substance use disorder benefits.
(2) For nongrandfathered products health
insurance policies in the large group market, a health
insurance policy, except a specialized health insurance policy, that
is issued, amended, or renewed on or after January 1, 2014,
2015, shall provide for a limit on annual
out-of-pocket expenses for covered benefits, including out-of-network
emergency care. This limit shall apply only to essential
health benefits, as defined in Section 10112.27, that are covered
under the policy to the extent that this provision does not conflict
with federal law or guidance on out-of-pocket maximums for
nongrandfathered products health insurance
policies in the large group market. For large group
products for the first plan year commencing on or after January 1,
2014, the requirement that a product provide for a limit on annual
out-of-pocket expenses shall be satisfied if both of the following
apply:
(A) The product complies with the requirements of this paragraph
with respect to basic health care services, as defined in Sections
10112.27, 10144.05, 10144.51, and any requirements of the Paul
Wellstone and Pete Domenci Mental Health Parity and Addiction Equity
Act of 2008 (Public Law 110-343).
(B) To the extent the product includes an out-of-pocket maximum on
coverage other than the coverage described in subparagraph (A), that
out-of-pocket maximum also does not exceed the limit established
pursuant to this paragraph.
(b) The limit described in subdivision (a) shall apply to any
copayment, coinsurance, deductible, incentive payment and any other
form of cost sharing for all covered benefits, including nonformulary
prescription drugs that are authorized as medically necessary.
(c) (1) The limit described in subdivision
(a) (b) shall not exceed the limit
described in Section 1302(c) of PPACA and any subsequent rules,
regulations, or guidance issued under that section.
(2) The limit described in subdivision (b) shall result in a total
maximum out-of-pocket limit for all covered essential health
benefits that shall equal the dollar amounts in effect under Section
223(c)(2)(A)(ii) of the Internal Revenue Code of 1986 with the dollar
amounts adjusted as specified in Section 1302(c)(1)(B) of PPACA.
(d) Nothing in this section shall be construed to affect the
reduction in cost sharing for eligible enrollees
insureds described in Section 1402 of PPACA and any
subsequent rules, regulations, or guidance issued under that section.
(e) For policy years beginning on or after January 1,
2015, if If an essential health
benefit is offered or provided by a specialized health insurance
policy, the total annual out-of-pocket maximum for all covered
essential benefits shall not exceed the limit in this
section subdivision (b) . This section shall not
apply to a specialized health insurance policy that does
not offer an essential health benefit as defined in Section 10112.28.
(f) The maximum out-of-pocket limit shall apply to any copayment,
coinsurance, deductible, and any other form of cost sharing for all
covered benefits that meet the definition of essential health
benefits, as defined in Section 10112.28.
(f)
(g) For nongrandfathered health insurance policies in
the group market, "policy year" has the meaning set forth in Section
144.103 of Title 45 of the Code of Federal Regulations. For
nongrandfathered health insurance policies sold in the individual
market, "policy year" means the calendar year.
(g)
(h) "PPACA" means 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.
SEC. 10. Section 10112.285 is added to the
Insurance Code , to read:
10112.285. (a) This section shall apply to nongrandfathered
individual and group health insurance policies that provide coverage
for essential health benefits defined in Section 10112.27 and that
are issued, amended, or renewed for the 2014 policy year.
(b) (1) For nongrandfathered health insurance policies in the
individual market, and to the extent allowed by federal law,
regulations, and guidance, a health insurance policy, except a
specialized health insurance policy, shall provide for a limit on
annual out-of-pocket expenses for all covered benefits that meet the
definition of essential health benefits, as defined in Section
10112.27, including out-of-network emergency care. The total
out-of-pocket maximum shall not exceed six thousand three hundred
fifty dollars ($6,350) for individual coverage and twelve thousand
seven hundred dollars ($12,700) for family coverage.
(2) For nongrandfathered specialized health insurance policies in
the individual market that provide the pediatric oral care benefit
meeting the definition in Section 1302(b)(1)(j) of PPACA, the
out-of-pocket maximum for the pediatric oral care benefit shall not
exceed one thousand dollars ($1,000) for one child and two thousand
dollars ($2,000) for more than one child.
(3) A health insurance policy shall not apply a separate
out-of-pocket maximum to mental health or substance use disorder
benefits.
(c) For nongrandfathered health insurance policies in the small
group markets, and to the extent allowed by federal law, regulations,
and guidance, a health insurance policy, except a specialized health
insurance policy, shall provide for a limit on annual out-of-pocket
expenses for all covered benefits that meet the definition of
essential health benefits, as defined in Section 10112.27, including
out-of-network emergency care, as follows:
(1) With respect to all essential health benefits, except for the
pediatric oral care benefit, the total out-of-pocket maximum shall
not exceed six thousand three hundred fifty dollars ($6,350) for
individual coverage and twelve thousand seven hundred dollars
($12,700) for family coverage. For small group health insurance
policies the total out-of-pocket maximum limit in this paragraph may
be split between prescription drug services and all other essential
health benefits.
(2) The separate out-of-pocket maximum for pediatric oral care
benefits meeting the definition in Section 1302(b)(1) of PPACA shall
not exceed one thousand dollars ($1,000) for one child and two
thousand dollars ($2,000) for more than one child.
(3) A health insurance policy shall not apply a separate
out-of-pocket maximum to mental health or substance use disorder
benefits.
(d) For nongrandfathered health insurance policies in the large
group market, a health insurance policy, except a specialized health
insurance policy, shall provide for a limit on annual out-of-pocket
expenses for covered benefits, including out-of-network emergency
care. This limit shall apply only to essential health benefits, as
defined in Section 10112.27, that are covered under the policy. This
limit shall be as follows:
(1) The total out-of-pocket maximum shall not exceed six thousand
three hundred fifty dollars ($6,350) for individual coverage or
twelve thousand seven hundred dollars ($12,700) for family coverage
with respect to basic health care services described in Section
10112.27, and services, except for prescription drugs, required under
Sections 10144.5 and 10144.51.
(2) To the extent the policy includes an out-of-pocket maximum on
coverage other than the coverage described in paragraph (1), that
out-of-pocket maximum shall not exceed six thousand three hundred
fifty dollars ($6,350) for individual coverage or twelve thousand
seven hundred dollars ($12,700) for family coverage.
(3) An insured in a large group policy shall not be subject to
more than two limits on annual out-of-pocket expenses for covered
benefits that meet the definition of essential health benefits.
(4) A health insurance policy shall not apply a separate
out-of-pocket maximum to mental health or substance use disorder
benefits.
(5) This subdivision shall apply only to the extent that it does
not conflict with federal law or guidance on out-of-pocket maximums
for nongrandfathered policies in the large group market.
(e) Nothing in this section shall be construed to affect the
reduction in cost sharing for eligible insureds described in Section
1402 of PPACA, and any subsequent rules, regulations, or guidance
issued under that section.
(f) The limits described in this section shall apply to any
copayment, coinsurance, deductible, and any other form of cost
sharing for all covered services that meet the definition of
essential health benefits.
(g) For nongrandfathered health insurance policies in the group
market, "policy year" has the meaning set forth in Section 144.103 of
Title 45 of the Code of Federal Regulations. For nongrandfathered
health insurance policies sold in the individual market, "policy year"
means the calendar year.
(h) "PPACA" means 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.
(i) This section shall remain in effect only until January 1,
2016, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2016, deletes or extends
that date.
SEC. 7. SEC. 11. Section 10112.29 is
added to the Insurance Code, to read:
10112.29. (a) (1) For a small employer health insurance policy
offered, sold, or renewed on or after January 1, 2014, the deductible
under the policy shall not exceed:
(A) Two thousand dollars ($2,000) in the case of a policy covering
a single individual.
(B) Four thousand dollars ($4,000) in the case of any other
policy.
(2) The dollar amounts in this section shall be indexed consistent
with Section 1302(c)(2) of PPACA and any federal rules or guidance
pursuant to that section.
(3) The limitation in this subdivision shall be applied in a
manner that does not affect the actuarial value of any small employer
health insurance policy.
(4) For small group products at the bronze level of coverage, as
defined in Section 10112.295, the department may permit insurers to
offer a higher deductible in order to meet the actuarial value
requirement of the bronze level. In making this determination, the
department shall consider affordability of cost sharing for insureds
and shall also consider whether insureds may be deterred from seeking
appropriate care because of higher cost sharing.
(b) Nothing in this section shall be construed to allow a policy
to have a deductible that applies to preventive services as defined
in PPACA.
(c) This section shall not apply to multiple employer welfare
arrangements regulated pursuant to Article 4.7 (commencing with
Section 742.20) of Chapter 1 of Part 2 of Division 1 that provide
health care benefits to their members and that comply with small
group health reforms unless otherwise required by federal law or
guidance.
(c)
(d) "PPACA" means 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.
SEC. 8. SEC. 12. Section 10112.295
is added to the Insurance Code, to read:
10112.295. (a) Levels of coverage for the nongrandfathered
individual market are defined as follows:
(1) Bronze level: A health insurance policy in the bronze level
shall provide a level of coverage that is actuarially equivalent to
60 percent of the full actuarial value of the benefits provided under
the policy.
(2) Silver level: A health insurance policy in the silver level
shall provide a level of coverage that is actuarially equivalent to
70 percent of the full actuarial value of the benefits provided under
the policy.
(3) Gold level: A health insurance policy in the gold level shall
provide a level of coverage that is actuarially equivalent to 80
percent of the full actuarial value of the benefits provided under
the policy.
(4) Platinum level: A health insurance policy in the platinum
level shall provide a level of coverage that is actuarially
equivalent to 90 percent of the full actuarial value of the benefits
provided under the policy.
(b) Actuarial value for nongrandfathered individual health
insurance policies shall be determined in accordance with the
following:
(1) Actuarial value shall not vary by more than plus or minus 2
percent.
(2) Actuarial value shall be determined on the basis of essential
health benefits as defined in Section 10112.27 and as provided to a
standard, nonelderly population. For this purpose, a standard
population shall not include those receiving coverage through the
Medi-Cal or Medicare programs.
(3) The department may use the actuarial value methodology
developed consistent with Section 1302(d) of PPACA.
(4) The actuarial value for pediatric dental benefits, whether
offered by a major medical policy or a specialized health insurance
policy, shall be consistent with federal law and guidance applicable
to the policy type.
(5) The department, in consultation with the Department of Managed
Health Care and the Exchange, shall consider whether to exercise
state-level flexibility with respect to the actuarial value
calculator in order to take into account the unique characteristics
of the California health care coverage market, including the
prevalence of health insurance policies, total cost of care paid for
by the health insurer, price of care, patterns of service
utilization, and relevant demographic factors.
(c) (1) A catastrophic policy is a health insurance policy that
provides no benefits for any plan year until the insured has incurred
cost-sharing expenses in an amount equal to the annual limit on
out-of-pocket costs as specified in Section 10112.28 except that it
shall provide coverage for at least three primary care visits. A
carrier that is not participating in the Exchange shall not offer,
market, or sell a catastrophic plan in the individual market.
(2) A catastrophic policy may be offered only in the individual
market and only if consistent with this paragraph. Catastrophic
policies may be offered only if either of the following apply:
(A) The individual purchasing the policy has not yet attained 30
years of age before the beginning of the plan year.
(B) The individual has a certificate of exemption from Section
5000(A) of the Internal Revenue Code because the individual is not
offered affordable coverage or because the individual faces hardship.
(d) This section shall apply to a policy of health insurance, as
defined in subdivision (b) of Section 106, that covers any essential
health benefit as defined in Section 10112.27. This section shall not
apply to a specialized health insurance policy that does not cover
any of the essential health benefits.
(d)
(e) "PPACA" means 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.
SEC. 9. SEC. 13. Section 10112.297
is added to the Insurance Code, to read:
10112.297. (a) Levels of coverage for the nongrandfathered small
group market are defined as follows:
(1) Bronze level: A health insurance policy in the bronze level
shall provide a level of coverage that is actuarially equivalent to
60 percent of the full actuarial value of the benefits provided under
the policy.
(2) Silver level: A health insurance policy in the silver level
shall provide a level of coverage that is actuarially equivalent to
70 percent of the full actuarial value of the benefits provided under
the policy.
(3) Gold level: A health insurance policy in the gold level shall
provide a level of coverage that is actuarially equivalent to 80
percent of the full actuarial value of the benefits provided under
the policy.
(4) Platinum level: A health insurance policy in the platinum
level shall provide a level of coverage that is actuarially
equivalent to 90 percent of the full actuarial value of the benefits
provided under the policy.
(b) Actuarial value for nongrandfathered small employer health
insurance policies shall be determined in accordance with the
following:
(1) Actuarial value shall not vary by more than plus or minus 2
percent.
(2) Actuarial value shall be determined on the basis of essential
health benefits as defined in paragraph (1) of subdivision (a) of
Section 10112.27 and as provided to a standard, nonelderly
population. For this purpose, a standard population shall not include
those receiving coverage through the Medi-Cal or Medicare programs.
(3) The department may use the actuarial value methodology
developed consistent with Section 1302(d) of PPACA.
(4) The actuarial value for pediatric dental benefits, whether
offered by a major medical policy or a specialized health insurance
policy, shall be consistent with federal law and guidance applicable
to the policy type.
(5) The department, in consultation with the Department of Managed
Health Care and the Exchange, shall consider whether to exercise
state-level flexibility with respect to the actuarial value
calculator in order to take into account the unique characteristics
of the California health care coverage market, including the
prevalence of health insurance policies, total cost of care paid for
by the health insurer, price of care, patterns of service
utilization, and relevant demographic factors.
(6) Employer contributions toward health reimbursement accounts
and health savings accounts shall count toward the actuarial value of
the product in the manner specified in federal rules and guidance.
(c) "PPACA" means 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.
SEC. 10. SEC. 14. Section 10112.7 is
added to the Insurance Code, to read:
10112.7. (a) A group or individual health insurance policy
issued, amended, or renewed on or after January 1, 2014, that
provides or covers any benefits with respect to services in an
emergency department of a hospital shall cover emergency services as
follows:
(1) Without the need for any prior authorization determination.
(2) Whether the health care provider furnishing the services is a
participating provider with respect to those services.
(3) In a manner so that, if the services are provided to an
insured:
(A) By a nonparticipating health care provider with or without
prior authorization; or
(B) (i) The services will be provided without imposing any
requirement under the policy for prior authorization of services or
any limitation on coverage where the provider of services does not
have a contractual relationship with the insurer for the providing of
services that is more restrictive than the requirements or
limitations that apply to emergency department services received from
providers who do have such a contractual relationship with the
insurer; and
(ii) If the services are provided to an insured out-of-network,
the cost-sharing requirement, expressed as a copayment amount or
coinsurance rate, is the same requirement that would apply if the
services were provided in-network.
(b) For the purposes of this section, the term "emergency services"
means, with respect to an emergency medical condition:
(1) A medical screening examination that is within the capability
of the emergency department of a hospital, including ancillary
services routinely available to the emergency department to evaluate
that emergency medical condition.
(2) Within the capabilities of the staff and facilities available
at the hospital, further medical examination and treatment as are
required under Section 1867(e)(3) of the federal Social Security Act
(42 U.S.C. 1395dd(e)(3)) to stabilize the patient.
SEC. 11. SEC. 15. 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.
