Bill Text: CA AB2470 | 2009-2010 | 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) 2010-09-30 - Chaptered by Secretary of State - Chapter 658, Statutes of 2010. [AB2470 Detail]
Download: California-2009-AB2470-Amended.html
Bill Title: Health care coverage.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2010-09-30 - Chaptered by Secretary of State - Chapter 658, Statutes of 2010. [AB2470 Detail]
Download: California-2009-AB2470-Amended.html
BILL NUMBER: AB 2470 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 20, 2010
AMENDED IN SENATE AUGUST 17, 2010
AMENDED IN SENATE JUNE 16, 2010
INTRODUCED BY Assembly Member De La Torre
FEBRUARY 19, 2010
An act to amend Sections 1365, 1367.15,
1367.01, 1367.15, 1368, 1389.21, and 1389.3 of, and to repeal
Sections 1357.11, 1357.53, and 1357.54 of, the Health and Safety
Code, and to amend Sections 10176.10, 10273.5, 10384, and
10384.17 of, to repeal Sections 10273.6 and 10713 of, and to repeal
and add Section 10273.4 of, the Sections 10123.135,
10273.4, 10273.6, 10384.17, and 10713 of, and to add Section 10273.7
to, the Insurance Code, relating to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
AB 2470, as amended, De La Torre. Health care coverage:
cancellation: rescission.
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 its provisions a crime. Existing law provides for the
regulation of health insurers by the Department of Insurance.
Existing law prohibits the cancellation or nonrenewal of individual
or group health benefit plans by a health care service plan or a
health insurer except in specified circumstances, including for
nonpayment of premiums or for fraud or misrepresentation, as
specified, and gives an enrollee of a health care service plan
contract a right to appeal a cancellation or nonrenewal to the
Director of the Department of Managed Health Care. Existing law
prohibits a plan or insurer from engaging in postclaims underwriting,
as defined, and from rescinding an individual contract or policy for
any reason, or canceling the contract or policy due to
misrepresentation, as specified, after 24 months following issuance
of the contract or policy . Existing law sets forth a 72-hour
review period of an enrollee or insured grievance when the enrollee
or insured faces an imminent and serious threat to his or her health,
as specified .
This bill would make that 24-month limit apply to all health care
service plan contracts and health insurance policies , would
change that 72-hour review period to 24 hours, and would
consolidate various cancellation and nonrenewal provisions. The bill
would also prohibit a plan or insurer from rescinding an
individual a health care service plan contract
or individual health insurance policy, or limiting
any of the provisions of the contract or policy, once an enrollee or
insured is covered under the contract or policy unless the plan or
insurer can demonstrate that the enrollee or insured has performed an
act or practice constituting fraud or made an intentional
misrepresentation of material fact as prohibited by the terms of the
contract or policy. The bill would require a plan or insurer to send
a notice to the enrollee or subscriber or policyholder or insured at
least 30 days prior to the effective date of the rescission
containing specified information. The bill would modify the
cancellation and nonrenewal appeal rights that apply to health care
service plans and would make those appeal rights apply to health
insurers and rescissions, as specified. The bill would require
that coverage under the plan or policy shall continue pending the
appeal. The bill would make other related changes and
authorize the Director of the Department of Managed Health Care and
the Insurance Commissioner to issue guidance to health care service
plans and health insurers on compliance, as specified .
Because this bill would impose additional requirements on health
care service plans, the willful violation of which would be a crime,
it 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 1357.11 of the Health and Safety Code is
repealed.
SEC. 2. Section 1357.53 of the Health and Safety Code is repealed.
SEC. 3. Section 1357.54 of the Health and Safety Code is repealed.
SEC. 4. Section 1365 of the Health and Safety Code is amended to
read:
1365. (a) An enrollment or a subscription shall not be canceled
or not renewed except for the following reasons:
(1) For nonpayment of the required premiums by the individual or
group subscriber if the subscriber has been duly notified and billed
for the charge and at least 15 days has elapsed since the date of
notification.
(1) (A) For nonpayment of the required premiums by the individual,
employer, or contractholder if the individual, employer, or
contractholder has been duly notified and billed for the charge and
at least a 30-day grace period has elapsed since the date of
notification or, if longer, the period of time required for notice
and any other requirements pursuant to Section 2702, 2712, or 2742 of
the federal Public Health Service Act (42 U.S.C. Secs. 300gg-2,
300gg-12, and 300gg-42) and any subsequent rules or regulations has
elapsed.
(B) Pursuant to subparagraph (A), a health care service plan shall
continue to provide coverage as required by the individual's,
employer's, or contractholder's health care service plan contract
during the period described in subparagraph (A).
(2) The plan demonstrates fraud or an intentional
misrepresentation of material fact under the terms of the health care
service plan contract by the individual or group subscriber
contractholder or employer .
(3) In the case of an individual health care service plan
contract, the individual subscriber no longer resides, lives, or
works in the plan's service area, but only if the coverage is
terminated uniformly without regard to any health status-related
factor of covered individuals.
(4) In the case of a group health care service plan contract,
violation of a material contract provision relating to employer
contribution or group participation rates by the subscriber.
This paragraph shall become operative on January 1, 2014.
, contractholder, or employer.
(5) If the plan ceases to provide or arrange for the provision of
health care services benefit for new
health care service plan contracts in the individual or group market,
or all markets, in this state, provided, however, that the following
conditions are satisfied:
(A) Notice of the decision to cease new or existing health
care service plan contracts benefit plans
in the state is provided to the director and to the individual
or group subscriber contractholder or
employer , and the enrollees covered under those contracts, at
least 180 days prior to discontinuation of those contracts.
(B) Health care service plan contracts
benefit plans shall not be canceled for 180 days after the date
of the notice required under subparagraph (A) and for that business
of a plan that remains in force, any plan that ceases to offer for
sale new health care service plan contracts
benefit plans shall continue to be governed by this section
with respect to business conducted under this section.
(C) Except as authorized under subdivision (b) of Section 1357.09
and Section 1357.10, a plan that ceases to write new health
care service plan contracts benefit plans in the
individual or group market, or all markets, in this state shall be
prohibited from offering for sale health care service plan
contracts benefit plans in that market or
markets in this state for a period of five years from the date of the
discontinuation of the last coverage not so renewed.
(6) If the plan withdraws a health care service plan
contract benefit plans from the market, provided
that all of the following conditions are satisfied:
(A) The plan notifies all affected subscribers ,
contractholders, employers, and enrollees and the director at
least 90 days prior to the discontinuation of those contracts.
(B) The plan makes available to the individual or group
subscriber all health care service plan contracts that it makes
contractholder or employer all health benefit plans
that it makes available to new individual or group business,
respectively.
(C) In exercising the option to discontinue a health care
service plan contract benefit plan under this
paragraph and in offering the option of coverage under subparagraph
(B), the plan acts uniformly without regard to the claims experience
of the individual or group subscriber
contractholder or employer , or any health-status related
factor relating to enrollees or potential enrollees.
(D) For small employer health care service plan contracts offered
under Article 3.1 (commencing with Section 1357), the premium for the
new plan contract complies with the renewal increase requirements
set forth in Section 1357.12. This subparagraph shall not apply
after December 31, 2013.
(7) In the case of a group health benefit plan, if an individual
or employer ceases to be a member of a guaranteed association, as
defined in subdivision (n) of Section 1357, but only if that coverage
is terminated under this paragraph uniformly without regard to any
health status-related factor relating to any enrollee.
(b) (1) An enrollee or subscriber who alleges that an enrollment
or subscription has been or will be improperly canceled, rescinded,
or not renewed may request a review by the director pursuant to
Section 1368 .
(2) The director shall review a request under paragraph (1) within
seven days.
(2) If the director determines that a proper
complaint exists, the director shall immediately
notify the plan and the enrollee or subscriber who requested
the review. Within 15 days after receipt of that notice, the plan
shall either request a hearing or reinstate the enrollee or
subscriber.
(3) If the plan
requests a hearing under paragraph (2), the director shall hold the
hearing within 15 days of the request and shall give the plan and the
enrollee or subscriber sufficient notice of the date and location of
the hearing. The enrollee or subscriber and his or her
representative may attend and participate in the hearing.
requested the review.
(4) If, after the hearing under paragraph (3)
(3) If, after review , the
director determines that the cancellation, rescission, or failure to
renew is contrary to existing law, the director shall
immediately order the plan to reinstate the enrollee or
subscriber. Within 15 days after receipt of that order, the
health care service plan shall request a hearing or reinstate the
enrollee or subscriber.
(4) If an enrollee or subscriber requests a review of the health
care service plan's determination to cancel or rescind or failure to
renew the enrollee's or subscriber's health care service plan
contract pursuant to this section, the health care service plan shall
continue to provide coverage to the enrollee or subscriber under the
terms of the contract until a final determination of the enrollee's
or subscriber's request for review has been made by the director.
This paragraph shall not apply if the health care service plan
cancels or does not renew the enrollee's or subscriber's health care
service plan contract for nonpayment of premiums pursuant to
paragraph (1) of subdivision (a).
(5) A reinstatement pursuant to this subdivision shall be
immediate and retroactive to the time of cancellation,
rescission, or failure to renew and the plan shall be liable for the
expenses incurred by the subscriber or enrollee for covered health
care services from the date of cancellation, rescission, or
nonrenewal to and including the date of reinstatement. The
amount of expenses incurred that the plan shall reimburse to the
enrollee or subscriber shall be determined by the director using
reasonable documentation submitted by the enrollee or subscriber.
The health care service plan shall reimburse the
enrollee or subscriber for any expenses incurred pursuant to this
paragraph within 30 days of receipt of the completed claim.
(c) This section shall not abrogate any preexisting contracts
entered into prior to the effective date of this chapter between a
subscriber or enrollee and a health care service plan or a
specialized health care service plan including, but not limited to,
the financial liability of the plan, except that each plan shall, if
directed to do so by the director, exercise its authority, if any,
under those preexisting contracts to conform them to the provisions
of existing law.
(d) As used in this section, "health benefit plan" means any
individual or group insurance policy or health care service plan
contract that provides medical, hospital, and surgical benefits. The
term does not include accident only, credit, or disability income
coverage, coverage of Medicare services pursuant to contracts with
the United States government, Medicare supplement insurance,
long-term care insurance, dental or vision coverage, coverage issued
as a supplement to liability insurance, insurance arising out of
workers' compensation law or similar law, automobile medical payment
insurance, or insurance under which benefits are payable with or
without regard to fault and that is statutorily required to be
contained in any liability insurance policy or equivalent
self-insurance.
(e) On or before July 1, 2011, the director may issue guidance to
health care service plans regarding compliance with this section and
that guidance shall not be subject to the Administrative Procedure
Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code. Any guidance issued
pursuant to this subdivision shall only be effective through December
31, 2013, or until the director adopts and effects regulations
pursuant to the Administrative Procedure Act, whichever occurs first.
SEC. 5. Section 1367.01 of the Health
and Safety Code is amended to read:
1367.01. (a) A health care service plan and any entity with which
it contracts for services that include utilization review or
utilization management functions, that prospectively,
retrospectively, or concurrently reviews and approves, modifies,
delays, or denies, based in whole or in part on medical necessity,
requests by providers prior to, retrospectively, or concurrent with
the provision of health care services to enrollees, or that delegates
these functions to medical groups or independent practice
associations or to other contracting providers, shall comply with
this section.
(b) A health care service plan that is subject to this section
shall have written policies and procedures establishing the process
by which the plan prospectively, retrospectively, or concurrently
reviews and approves, modifies, delays, or denies, based in whole or
in part on medical necessity, requests by providers of health care
services for plan enrollees. These policies and procedures shall
ensure that decisions based on the medical necessity of proposed
health care services are consistent with criteria or guidelines that
are supported by clinical principles and processes. These criteria
and guidelines shall be developed pursuant to Section 1363.5. These
policies and procedures, and a description of the process by which
the plan reviews and approves, modifies, delays, or denies requests
by providers prior to, retrospectively, or concurrent with the
provision of health care services to enrollees, shall be filed with
the director for review and approval, and shall be disclosed by the
plan to providers and enrollees upon request, and by the plan to the
public upon request.
(c) A health care service plan subject to this section, except a
plan that meets the requirements of Section 1351.2, shall employ or
designate a medical director who holds an unrestricted license to
practice medicine in this state issued pursuant to Section 2050 of
the Business and Professions Code or pursuant to the Osteopathic Act,
or, if the plan is a specialized health care service plan, a
clinical director with California licensure in a clinical area
appropriate to the type of care provided by the specialized health
care service plan. The medical director or clinical director shall
ensure that the process by which the plan reviews and approves,
modifies, or denies, based in whole or in part on medical necessity,
requests by providers prior to, retrospectively, or concurrent with
the provision of health care services to enrollees, complies with the
requirements of this section.
(d) If health plan personnel, or individuals under contract to the
plan to review requests by providers, approve the provider's
request, pursuant to subdivision (b), the decision shall be
communicated to the provider pursuant to subdivision (h).
(e) No individual, other than a licensed physician or a licensed
health care professional who is competent to evaluate the specific
clinical issues involved in the health care services requested by the
provider, may deny or modify requests for authorization of health
care services for an enrollee for reasons of medical necessity. The
decision of the physician or other health care professional shall be
communicated to the provider and the enrollee pursuant to subdivision
(h).
(f) The criteria or guidelines used by the health care service
plan to determine whether to approve, modify, or deny requests by
providers prior to, retrospectively, or concurrent with, the
provision of health care services to enrollees shall be consistent
with clinical principles and processes. These criteria and guidelines
shall be developed pursuant to the requirements of Section 1363.5.
(g) If the health care service plan requests medical information
from providers in order to determine whether to approve, modify, or
deny requests for authorization, the plan shall request only the
information reasonably necessary to make the determination.
(h) In determining whether to approve, modify, or deny requests by
providers prior to, retrospectively, or concurrent with the
provision of health care services to enrollees, based in whole or in
part on medical necessity, a health care service plan subject to this
section shall meet the following requirements:
(1) Decisions to approve, modify, or deny, based on medical
necessity, requests by providers prior to, or concurrent with the
provision of health care services to enrollees that do not meet the
requirements for the 72-hour 24-hour
review required by paragraph (2), shall be made in a timely fashion
appropriate for the nature of the enrollee's condition, not to exceed
five business days from the plan's receipt of the information
reasonably necessary and requested by the plan to make the
determination. In cases where the review is retrospective, the
decision shall be communicated to the individual who received
services, or to the individual's designee, within 30 days of the
receipt of information that is reasonably necessary to make this
determination, and shall be communicated to the provider in a manner
that is consistent with current law. For purposes of this section,
retrospective reviews shall be for care rendered on or after January
1, 2000.
(2) When the enrollee's condition is such that the enrollee faces
an imminent and serious threat to his or her health, including, but
not limited to, the potential loss of life, limb, or other major
bodily function, or the normal timeframe for the decisionmaking
process, as described in paragraph (1), would be detrimental to the
enrollee's life or health or could jeopardize the enrollee's ability
to regain maximum function, decisions to approve, modify, or deny
requests by providers prior to, or concurrent with, the provision of
health care services to enrollees, shall be made in a timely fashion
appropriate for the nature of the enrollee's condition, not to exceed
72 24 hours after the plan's receipt
of the information reasonably necessary and requested by the plan to
make the determination. Nothing in this section shall be construed to
alter the requirements of subdivision (b) of Section 1371.4.
Notwithstanding Section 1371.4, the requirements of this division
shall be applicable to all health plans and other entities conducting
utilization review or utilization management.
(3) Decisions to approve, modify, or deny requests by providers
for authorization prior to, or concurrent with, the provision of
health care services to enrollees shall be communicated to the
requesting provider within 24 hours of the decision. Except for
concurrent review decisions pertaining to care that is underway,
which shall be communicated to the enrollee's treating provider
within 24 hours, decisions resulting in denial, delay, or
modification of all or part of the requested health care service
shall be communicated to the enrollee in writing within two business
days of the decision. In the case of concurrent review, care shall
not be discontinued until the enrollee's treating provider has been
notified of the plan's decision and a care plan has been agreed upon
by the treating provider that is appropriate for the medical needs of
that patient.
(4) Communications regarding decisions to approve requests by
providers prior to, retrospectively, or concurrent with the provision
of health care services to enrollees shall specify the specific
health care service approved. Responses regarding decisions to deny,
delay, or modify health care services requested by providers prior
to, retrospectively, or concurrent with the provision of health care
services to enrollees shall be communicated to the enrollee in
writing, and to providers initially by telephone or facsimile, except
with regard to decisions rendered retrospectively, and then in
writing, and shall include a clear and concise explanation of the
reasons for the plan's decision, a description of the criteria or
guidelines used, and the clinical reasons for the decisions regarding
medical necessity. Any written communication to a physician or other
health care provider of a denial, delay, or modification of a
request shall include the name and telephone number of the health
care professional responsible for the denial, delay, or modification.
The telephone number provided shall be a direct number or an
extension, to allow the physician or health care provider easily to
contact the professional responsible for the denial, delay, or
modification. Responses shall also include information as to how the
enrollee may file a grievance with the plan pursuant to Section 1368,
and in the case of Medi-Cal enrollees, shall explain how to request
an administrative hearing and aid paid pending under Sections 51014.1
and 51014.2 of Title 22 of the California Code of Regulations.
(5) If the health care service plan cannot make a decision to
approve, modify, or deny the request for authorization within the
timeframes specified in paragraph (1) or (2) because the plan is not
in receipt of all of the information reasonably necessary and
requested, or because the plan requires consultation by an expert
reviewer, or because the plan has asked that an additional
examination or test be performed upon the enrollee, provided the
examination or test is reasonable and consistent with good medical
practice, the plan shall, immediately upon the expiration of the
timeframe specified in paragraph (1) or (2) or as soon as the plan
becomes aware that it will not meet the timeframe, whichever occurs
first, notify the provider and the enrollee, in writing, that the
plan cannot make a decision to approve, modify, or deny the request
for authorization within the required timeframe, and specify the
information requested but not received, or the expert reviewer to be
consulted, or the additional examinations or tests required. The plan
shall also notify the provider and enrollee of the anticipated date
on which a decision may be rendered. Upon receipt of all information
reasonably necessary and requested by the plan, the plan shall
approve, modify, or deny the request for authorization within the
timeframes specified in paragraph (1) or (2), whichever applies.
(6) If the director determines that a health care service plan has
failed to meet any of the timeframes in this section, or has failed
to meet any other requirement of this section, the director may
assess, by order, administrative penalties for each failure. A
proceeding for the issuance of an order assessing administrative
penalties shall be subject to appropriate notice to, and an
opportunity for a hearing with regard to, the person affected, in
accordance with subdivision (a) of Section 1397. The administrative
penalties shall not be deemed an exclusive remedy for the director.
These penalties shall be paid to the Managed Care Administrative
Fines and Penalties Fund and shall be used for the purposes specified
in Section 1341.45.
(i) A health care service plan subject to this section shall
maintain telephone access for providers to request authorization for
health care services.
(j) A health care service plan subject to this section that
reviews requests by providers prior to, retrospectively, or
concurrent with, the provision of health care services to enrollees
shall establish, as part of the quality assurance program required by
Section 1370, a process by which the plan's compliance with this
section is assessed and evaluated. The process shall include
provisions for evaluation of complaints, assessment of trends,
implementation of actions to correct identified problems, mechanisms
to communicate actions and results to the appropriate health plan
employees and contracting providers, and provisions for evaluation of
any corrective action plan and measurements of performance.
(k) The director shall review a health care service plan's
compliance with this section as part of its periodic onsite medical
survey of each plan undertaken pursuant to Section 1380, and shall
include a discussion of compliance with this section as part of its
report issued pursuant to that section.
(l) This section shall not apply to decisions made for the care or
treatment of the sick who depend upon prayer or spiritual means for
healing in the practice of religion as set forth in subdivision (a)
of Section 1270.
(m) Nothing in this section shall cause a health care service plan
to be defined as a health care provider for purposes of any
provision of law, including, but not limited to, Section 6146 of the
Business and Professions Code, Sections 3333.1 and 3333.2 of the
Civil Code, and Sections 340.5, 364, 425.13, 667.7, and 1295 of the
Code of Civil Procedure.
SEC. 5. SEC. 6. Section 1367.15 of
the Health and Safety Code is amended to read:
1367.15. (a) This section shall apply to individual health care
service plan contracts and plan contracts sold to employer groups
with fewer than two eligible employees as defined in subdivision (b)
of Section 1357 covering hospital, medical, or surgical expenses,
which is issued, amended, delivered, or renewed on or after January
1, 1994.
(b) As used in this section, "block of business" means individual
plan contracts or plan contracts sold to employer groups with fewer
than two eligible employees as defined in subdivision (b) of Section
1357, with distinct benefits, services, and terms. A "closed block of
business" means a block of business for which a health care service
plan ceases to actively offer or sell new plan contracts.
(c) No block of business shall be closed by a health care service
plan unless (1) the plan permits an enrollee to receive health care
services from any block of business that is not closed and that
provides comparable benefits, services, and terms, with no additional
underwriting requirement, or (2) the plan pools the experience of
the closed block of business with all appropriate blocks of business
that are not closed for the purpose of determining the premium rate
of any plan contract within the closed block, with no rate penalty or
surcharge beyond that which reflects the experience of the combined
pool.
(d) A block of business shall be presumed closed if either of the
following is applicable:
(1) There has been an overall reduction in that block of 12
percent in the number of in force plan contracts for a period of 12
months.
(2) That block has less than 1,000 enrollees in this state. This
presumption shall not apply to a block of business initiated within
the previous 24 months, but notification of that block shall be
provided to the director pursuant to subdivision (e).
The fact that a block of business does not meet one of the
presumptions set forth in this subdivision shall not preclude a
determination that it is closed as defined in subdivision (b).
(e) A health care service plan shall notify the director in
writing within 30 days of its decision to close a block of business
or, in the absence of an actual decision to close a block of
business, within 30 days of its determination that a block of
business is within the presumption set forth in subdivision (d). When
the plan decides to close a block, the written notice shall fully
disclose all information necessary to demonstrate compliance with the
requirements of subdivision (c). When the plan determines that a
block is within the presumption, the written notice shall fully
disclose all information necessary to demonstrate that the
presumption is applicable. In the case of either notice, the plan
shall provide additional information within 15 days after any request
of the director.
(f) A health care service plan shall preserve for a period of not
less than five years in an identified location and readily accessible
for review by the director all books and records relating to any
action taken by a plan pursuant to subdivision (c).
(g) No health care service plan shall offer or sell any contract,
or provide misleading information about the active or closed
status of a block of business, for
the purpose of evading this section.
(h) A health care service plan shall bring any blocks of business
closed prior to the effective date of this section into compliance
with the terms of this section no later than December 31, 1994.
(i) This section shall not apply to health care service plan
contracts providing small employer health coverage to individuals or
employer groups with fewer than two eligible employees if that
coverage is provided pursuant to Article 3.1 (commencing with Section
1357) and, with specific reference to coverage for individuals or
employer groups with fewer than two eligible employees, is approved
by the director pursuant to Section 1357.15, provided a plan electing
to sell coverage pursuant to this subdivision shall do so until such
time as the plan ceases to market coverage to small employers and
complies with paragraph (5) of subdivision (a) of Section 1365.
(j) This section shall not apply to coverage of Medicare services
pursuant to contracts with the United States government, Medicare
supplement, dental, vision, or conversion coverage.
SEC. 7. Section 1368 of the Health and
Safety Code is amended to read:
1368. (a) Every plan shall do all of the following:
(1) Establish and maintain a grievance system approved by the
department under which enrollees may submit their grievances to the
plan. Each system shall provide reasonable procedures in accordance
with department regulations that shall ensure adequate consideration
of enrollee grievances and rectification when appropriate.
(2) Inform its subscribers and enrollees upon enrollment in the
plan and annually thereafter of the procedure for processing and
resolving grievances. The information shall include the location and
telephone number where grievances may be submitted.
(3) Provide forms for grievances to be given to subscribers and
enrollees who wish to register written grievances. The forms used by
plans licensed pursuant to Section 1353 shall be approved by the
director in advance as to format.
(4) (A) Provide for a written acknowledgment within five calendar
days of the receipt of a grievance, except as noted in subparagraph
(B). The acknowledgment shall advise the complainant of the
following:
(i) That the grievance has been received.
(ii) The date of receipt.
(iii) The name of the plan representative and the telephone number
and address of the plan representative who may be contacted about
the grievance.
(B) Grievances received by telephone, by facsimile, by e-mail, or
online through the plan's Internet Web site pursuant to Section
1368.015, that are not coverage disputes, disputed health care
services involving medical necessity, or experimental or
investigational treatment and that are resolved by the next business
day following receipt are exempt from the requirements of
subparagraph (A) and paragraph (5). The plan shall maintain a log of
all these grievances. The log shall be periodically reviewed by the
plan and shall include the following information for each complaint:
(i) The date of the call.
(ii) The name of the complainant.
(iii) The complainant's member identification number.
(iv) The nature of the grievance.
(v) The nature of the resolution.
(vi) The name of the plan representative who took the call and
resolved the grievance.
(5) Provide subscribers and enrollees with written responses to
grievances, with a clear and concise explanation of the reasons for
the plan's response. For grievances involving the delay, denial, or
modification of health care services, the plan response shall
describe the criteria used and the clinical reasons for its decision,
including all criteria and clinical reasons related to medical
necessity. If a plan, or one of its contracting providers, issues a
decision delaying, denying, or modifying health care services based
in whole or in part on a finding that the proposed health care
services are not a covered benefit under the contract that applies to
the enrollee, the decision shall clearly specify the provisions in
the contract that exclude that coverage.
(6) For grievances involving the cancellation, rescission, or
nonrenewal of a health care service plan contract, the health care
service plan shall continue to provide coverage to the enrollee or
subscriber under the terms of the health care service plan contract
until a final determination of the enrollee's or subscriber's request
for review has been made by the health care service plan or the
director pursuant to Section 1365 and this section. This paragraph
shall not apply if the health care service plan cancels or fails to
renew the enrollee's or subscriber's health care service plan
contract for nonpayment of premiums pursuant to paragraph (1) of
subdivision (a) of Section 1365.
(6)
(7) Keep in its files all copies of grievances, and the
responses thereto, for a period of five years.
(b) (1) (A) After either completing the grievance process
described in subdivision (a), or participating in the process for at
least 30 days, a subscriber or enrollee may submit the grievance to
the department for review. In any case determined by the department
to be a case involving an imminent and serious threat to the health
of the patient, including, but not limited to, severe pain, the
potential loss of life, limb, or major bodily function,
cancellations, rescissions, or the nonrenewal of a health care
service plan contract, or in any other case where the department
determines that an earlier review is warranted, a subscriber or
enrollee shall not be required to complete the grievance process or
to participate in the process for at least 30 days before submitting
a grievance to the department for review.
(B) A grievance may be submitted to the department for review and
resolution prior to any arbitration.
(C) Notwithstanding subparagraphs (A) and (B), the department may
refer any grievance that does not pertain to compliance with this
chapter to the State Department of Health Services
Public Health , the California Department of Aging, the
federal Health Care Financing Administration, or any other
appropriate governmental entity for investigation and resolution.
(2) If the subscriber or enrollee is a minor, or is incompetent or
incapacitated, the parent, guardian, conservator, relative, or other
designee of the subscriber or enrollee, as appropriate, may submit
the grievance to the department as the agent of the subscriber or
enrollee. Further, a provider may join with, or otherwise assist, a
subscriber or enrollee, or the agent, to submit the grievance to the
department. In addition, following submission of the grievance to the
department, the subscriber or enrollee, or the agent, may authorize
the provider to assist, including advocating on behalf of the
subscriber or enrollee. For purposes of this section, a "relative"
includes the parent, stepparent, spouse, adult son or daughter,
grandparent, brother, sister, uncle, or aunt of the subscriber or
enrollee.
(3) The department shall review the written documents submitted
with the subscriber's or the enrollee's request for review, or
submitted by the agent on behalf of the subscriber or enrollee. The
department may ask for additional information, and may hold an
informal meeting with the involved parties, including providers who
have joined in submitting the grievance or who are otherwise
assisting or advocating on behalf of the subscriber or enrollee. If
after reviewing the record, the department concludes that the
grievance, in whole or in part, is eligible for review under the
independent medical review system established pursuant to Article
5.55 (commencing with Section 1374.30), the department shall
immediately notify the subscriber or enrollee, or agent, of that
option and shall, if requested orally or in writing, assist the
subscriber or enrollee in participating in the independent medical
review system.
(4) If after reviewing the record of a grievance, the department
concludes that a health care service eligible for coverage and
payment under a health care service plan contract has been delayed,
denied, or modified by a plan, or by one of its contracting
providers, in whole or in part due to a determination that the
service is not medically necessary, and that determination was not
communicated to the enrollee in writing along with a notice of the
enrollee's potential right to participate in the independent medical
review system, as required by this chapter, the director shall, by
order, assess administrative penalties. A proceeding for the issuance
of an order assessing administrative penalties shall be subject to
appropriate notice of, and the opportunity for, a hearing with regard
to the person affected in accordance with Section 1397. The
administrative penalties shall not be deemed an exclusive remedy
available to the director. These penalties shall be paid to the
Managed Care Administrative Fines and Penalties Fund and shall be
used for the purposes specified in Section 1341.45.
(5) The department shall send a written notice of the final
disposition of the grievance, and the reasons therefor, to the
subscriber or enrollee, the agent, to any provider that has joined
with or is otherwise assisting the subscriber or enrollee, and to the
plan, within 30 calendar days of receipt of the request for review
unless the director, in his or her discretion, determines that
additional time is reasonably necessary to fully and fairly evaluate
the relevant grievance. In any case not eligible for the independent
medical review system established pursuant to Article 5.55
(commencing with Section 1374.30), the department's written notice
shall include, at a minimum, the following:
(A) A summary of its findings and the reasons why the department
found the plan to be, or not to be, in compliance with any applicable
laws, regulations, or orders of the director.
(B) A discussion of the department's contact with any medical
provider, or any other independent expert relied on by the
department, along with a summary of the views and qualifications of
that provider or expert.
(C) If the enrollee's grievance is sustained in whole or in part,
information about any corrective action taken.
(6) In any department review of a grievance involving a disputed
health care service, as defined in subdivision (b) of Section
1374.30, that is not eligible for the independent medical review
system established pursuant to Article 5.55 (commencing with Section
1374.30), in which the department finds that the plan has delayed,
denied, or modified health care services that are medically
necessary, based on the specific medical circumstances of the
enrollee, and those services are a covered benefit under the terms
and conditions of the health care service plan contract, the
department's written notice shall do either of the following:
(A) Order the plan to promptly offer and provide those health care
services to the enrollee.
(B) Order the plan to promptly reimburse the enrollee for any
reasonable costs associated with urgent care or emergency services,
or other extraordinary and compelling health care services, when the
department finds that the enrollee's decision to secure those
services outside of the plan network was reasonable under the
circumstances.
The department's order shall be binding on the plan.
(7) Distribution of the written notice shall not be deemed a
waiver of any exemption or privilege under existing law, including,
but not limited to, Section 6254.5 of the Government Code, for any
information in connection with and including the written notice, nor
shall any person employed or in any way retained by the department be
required to testify as to that information or notice.
(8) The director shall establish and maintain a system of aging of
grievances that are pending and unresolved for 30 days or more that
shall include a brief explanation of the reasons each grievance is
pending and unresolved for 30 days or more.
(9) A subscriber or enrollee, or the agent acting on behalf of a
subscriber or enrollee, may also request voluntary mediation with the
plan prior to exercising the right to submit a grievance to the
department. The use of mediation services shall not preclude the
right to submit a grievance to the department upon completion of
mediation. In order to initiate mediation, the subscriber or
enrollee, or the agent acting on behalf of the subscriber or
enrollee, and the plan shall voluntarily agree to mediation. Expenses
for mediation shall be borne equally by both sides. The department
shall have no administrative or enforcement responsibilities in
connection with the voluntary mediation process authorized by this
paragraph.
(c) The plan's grievance system shall include a system of aging of
grievances that are pending and unresolved for 30 days or more. The
plan shall provide a quarterly report to the director of grievances
pending and unresolved for 30 or more days with separate categories
of grievances for Medicare enrollees and Medi-Cal enrollees. The plan
shall include with the report a brief explanation of the reasons
each grievance is pending and unresolved for 30 days or more. The
plan may include the following statement in the quarterly report that
is made available to the public by the director:
"Under Medicare and Medi-Cal law, Medicare enrollees and Medi-Cal
enrollees each have separate avenues of appeal that are not available
to other enrollees. Therefore, grievances pending and unresolved may
reflect enrollees pursuing their Medicare or Medi-Cal appeal rights."
If requested by a plan, the director shall include this statement in
a written report made available to the public and prepared by the
director that describes or compares grievances that are pending and
unresolved with the plan for 30 days or more. Additionally, the
director shall, if requested by a plan, append to that written report
a brief explanation, provided in writing by the plan, of the reasons
why grievances described in that written report are pending and
unresolved for 30 days or more. The director shall not be required to
include a statement or append a brief explanation to a written
report that the director is required to prepare under this chapter,
including Sections 1380 and 1397.5.
(d) Subject to subparagraph (C) of paragraph (1) of subdivision
(b), the grievance or resolution procedures authorized by this
section shall be in addition to any other procedures that may be
available to any person, and failure to pursue, exhaust, or engage in
the procedures described in this section shall not preclude the use
of any other remedy provided by law.
(e) Nothing in this section shall be construed to allow the
submission to the department of any provider grievance under this
section. However, as part of a provider's duty to advocate for
medically appropriate health care for his or her patients pursuant to
Sections 510 and 2056 of the Business and Professions Code, nothing
in this subdivision shall be construed to prohibit a provider from
contacting and informing the department about any concerns he or she
has regarding compliance with or enforcement of this chapter.
(f) To the extent required by Section 2719 of the federal Public
Health Service Act (42 U.S.C. Sec. 300gg-19) and any subsequent rules
or regulations, there shall be an independent external review
pursuant to the standards required by the United States Secretary of
Health and Human Services of a health care service plan's
cancellation, rescission, or nonrenewal of an enrollee's or
subscriber's coverage.
SEC. 6. SEC. 8. Section 1389.21 of
the Health and Safety Code is amended to read:
1389.21. (a) A health care service plan shall not rescind a plan
contract, or limit any provisions of a plan contract, once an
enrollee is covered under the contract unless the plan can
demonstrate that the enrollee has performed an act or practice
constituting fraud or made an intentional misrepresentation of
material fact as prohibited by the terms of the contract.
(b) If a plan intends to rescind a plan contract pursuant to
subdivision (a), the plan shall send a notice to the enrollee or
subscriber via regular certified mail at least 30 days prior to the
effective date of the rescission explaining the reasons for the
intended rescission and notifying the enrollee or subscriber of his
or her right to appeal that decision to the director pursuant to
subdivision (b) of Section 1365.
(c) Notwithstanding subdivision (a), Section 1365 or any other
provision of law, after 24 months following the issuance of a health
care service plan contract, a plan shall not rescind the plan
contract for any reason, and shall not cancel the plan contract,
limit any of the provisions of the plan contract, or raise premiums
on the plan contract due to any omissions, misrepresentations, or
inaccuracies in the application form, whether willful or not. Nothing
in this subdivision shall be construed to alter existing law that
otherwise applies to a health care service plan within the first 24
months following the issuance of a health care service plan contract.
SEC. 7. SEC. 9. Section 1389.3 of
the Health and Safety Code is amended to read:
1389.3. No health care service plan shall engage in the practice
of postclaims underwriting. For purposes of this section, "postclaims
underwriting" means the rescinding, canceling, or limiting of a plan
contract due to the plan's failure to complete medical underwriting
and resolve all reasonable questions arising from written information
submitted on or with an application before issuing the plan
contract. This section shall not limit a plan's remedies described in
subdivision (a) of Section 1389.21 or paragraph (2) of
subdivision (a) of Section 1365 .
SEC. 8. Section 10176.10 of the Insurance Code
is amended to read:
10176.10. (a) On or after January 1, 1994, no disability insurer
issuing policies covering hospital, surgical, or medical expenses
delivered or renewed in this state or certificates of group
disability insurance delivered or renewed in this state pursuant to a
master group policy delivered or renewed in another state, to
individuals, or to employer groups with fewer than two eligible
employees, as defined in subdivision (g) of Section 10700, shall
close a block of business without complying with this section.
(b) As used in this section, "block of business" means individual,
group, or blanket disability insurance contracts covering hospital,
medical, or surgical expenses of a particular policy form that has
distinct benefits or marketing methods. "Closed block of business"
means a block of business for which an insurer ceases to actively
market and sell new contracts under a particular policy form in this
state.
(c) Notwithstanding subdivision (b), a block of business shall be
presumed closed if either of the following applies:
(1) There has been an overall reduction of 12 percent in the
number of in force policies of a particular form for a period of 12
months.
(2) The block has less than 2,000 insured nationally or 1,000
insureds in California. This presumption shall not apply to a block
of business initiated within the previous 24 months, but notification
of that block shall be provided to the commissioner. The
notification shall not be subject to the approval required by
subdivision (d).
An insurer may present evidence for consideration by the
commissioner that the presumption in the particular case is
incorrect. Should the determination be made that the block is closed,
the insurer shall be given those remedy options contained in
subdivision (d). The fact that a block of business does not meet one
of the presumptions set forth in this subdivision shall not preclude
a determination that it is closed as defined in subdivision (b).
(d) An insurer shall notify the commissioner within 30 days of its
decision to close a block or, in the absence of an actual decision
to close a block of business, within 30 days of its determination
that the block is within the presumptions set forth in subdivision
(c). The commissioner may notify an insurer that he or she has
determined that the presumptions contained in subdivision (c) apply
to a block. No insurer providing disability insurance covering
hospital, medical, or surgical expenses shall close a policy form or
group certificate without notification to the commissioner. That
notification shall include a plan to permit an insured to move to any
open block, providing comparable benefits with no additional
underwriting requirement or, alternatively, the insurer shall be
required to pool the closed block's experience with all appropriate
open forms for purposes of renewal rate determination, with no rate
penalty or surcharge, beyond that which reflects the experience of
the combined pool. When the insurer chooses to pool, the notice shall
include the insurer's plan for pooling the closed block's
experience. The insurer may implement the pooling plan if 30 days
expire after the submission is filed without written notice from the
commissioner specifying the reasons for his or her opinion that the
pooling plan does not comply with the requirements of this section,
or, prior to that time, if the commissioner provides the insurer
written notice that the pooling plan complies with the requirements
of this section.
The approval shall be based upon consideration of the accumulative
recent and expected future experience of the closed form and those
with which the closed form is to be combined.
(e) No insurer shall offer or sell any form nor provide misleading
information about the active or closed status of its business for
the purpose of evading this section.
(f) An insurer shall bring any blocks of business closed prior to
the effective date of this section into compliance with the terms of
this section no later than December 31, 1994.
(g) This section shall not apply to small employer carriers
providing small employer health insurance to individuals or employer
groups with fewer than two eligible employees if that coverage is
provided pursuant to Chapter 14 (commencing with Section 10700) of
Part 2 of Division 2, and with specific reference to coverage for
individuals or employer groups with fewer than two eligible
employees, is approved by the commissioner pursuant to Section 10705,
provided a carrier electing to sell coverage pursuant to this
subdivision shall continue to do so until such time as the carrier
ceases to market coverage to small employers and complies with
paragraph (5) of subdivision (a) of Section 10273.4.
(h) This section shall not apply to accident only coverage,
coverage of Medicare services pursuant to contracts with the United
States government, Medicare supplement coverage, long-term care
insurance, dental, vision, or conversion coverage, coverage issued as
a supplement to liability insurance, or automobile medical payment
insurance.
SEC. 9. Section 10273.4 of the Insurance Code
is repealed.
SEC. 10. Section 10273.4 is added to the
Insurance Code, to read:
10273.4. (a) A health insurance policy shall not be canceled or
not renewed except for the following reasons:
(1) Nonpayment of the required premiums by the individual or group
policyholder if the policyholder has been duly notified and billed
for the charge and at least 15 days has elapsed since the date of
notification.
(2) The insurer demonstrates fraud or an intentional
misrepresentation of material fact under the terms of the health
insurance policy by the individual or group policyholder.
(3) In the case of an individual health insurance policy that
offers coverage through a network, the individual policyholder no
longer resides, lives, or works in the network service area, but only
if the coverage is terminated uniformly without regard to any health
status-related factor of covered individuals.
(4) In the case of a group health insurance policy, violation of a
material policy provision relating to employer contribution or group
participating rates by the policyholder. This paragraph shall become
operative on January 1, 2014.
(5) If the insurer ceases to provide new health insurance policies
in the individual or group market, or all markets, in this state,
provided, however, that the following conditions are satisfied:
(A) Notice of the decision to cease new or existing health
insurance policies in the state is provided to the commissioner and
to the individual or group policyholder, and the insureds covered
under those policies, at least 180 days prior to discontinuation of
those policies.
(B) Health insurance policies shall not be canceled for 180 days
after the date of the notice required under subparagraph (A) and for
that business of an insurer that remains in force, any insurer that
ceases to offer for sale new insurance policies shall continue to be
governed by this section with respect to business conducted under
this section.
(C) Except as authorized under subdivision (d) of Section 10711
and Section 10712, an insurer that ceases to write new health
insurance policies in the individual or group market, or all markets,
in this state shall be prohibited from offering for sale health
insurance policies in that market or markets in this
state for a period of five years from
the date of the discontinuation of the last coverage not so renewed.
(6) If the insurer withdraws a health insurance policy from the
market, provided that all of the following conditions are satisfied:
(A) The insurer notifies all affected policyholders and insureds
and the commissioner at least 90 days prior to the discontinuation of
those policies.
(B) The insurer makes available to the individual or group
policyholder all health insurance policies that it makes available to
new individual or group business, respectively.
(C) In exercising the option to discontinue a health insurance
policy under this paragraph and in offering the option of coverage
under subparagraph (B), the insurer acts uniformly without regard to
the claims experience of the individual or group policyholder, or any
health-status related factor relating to insureds or potential
insureds.
(D) For small employer health insurance policies offered under
Chapter 8 (commencing with Section 10700), the premium for the new
insurance policies complies with the renewal increase requirements
set forth in Section 10714.
(b) (1) A policyholder or insured who alleges that a policy has
been or will be improperly canceled, rescinded, or not renewed may
request a review by the commissioner.
(2) The commissioner shall review a request under paragraph (1)
within seven days. If the commissioner determines that a proper
complaint exists, the commissioner shall immediately notify the
insurer and the policyholder or insured who requested the review.
Within 15 days after receipt of that notice, the insurer shall either
request a hearing or reinstate the policyholder or insured.
(3) If the insurer requests a hearing under paragraph (2), the
commissioner shall hold the hearing within 15 days of the request and
shall give the insurer and the policyholder or insured sufficient
notice of the date and location of the hearing. The policyholder or
insured and his or her representative may attend and participate in
the hearing.
(4) If, after the hearing under paragraph (3), the commissioner
determines that the cancellation, rescission, or failure to renew is
contrary to existing law, the commissioner shall immediately order
the insurer to reinstate the policyholder or insured.
(5) A reinstatement pursuant to this subdivision shall be
immediate and retroactive to the time of cancellation, rescission, or
failure to renew and the insurer shall be liable for the expenses
incurred by the policyholder or insured for covered health care
services from the date of cancellation, rescission, or nonrenewal to
and including the date of reinstatement. The amount of expenses
incurred that the insurer shall reimburse to the policyholder or
insured shall be determined by the commissioner using reasonable
documentation submitted by the policyholder or insured.
(c) This section shall not abrogate any preexisting policies
entered into prior to the effective date of this part between a
policyholder or insured and a health insurer including, but not
limited to, the financial liability of the insurer, except that each
insurer shall, if directed to do so by the commissioner, exercise its
authority, if any, under those preexisting policies to conform them
to the provisions of existing law.
SEC. 11. Section 10273.5 of the Insurance Code
is amended to read:
10273.5. No person shall cause or permit to be issued, circulated
or used any representation that a policy described in Section
10273.3 is "non-can," noncancelable (not cancelable) or noncancelable
and guaranteed renewable.
No person shall cause or permit to be issued, circulated or used
any representation concerning the right to continue a policy such as
is defined in Section 10273.3 unless such representation contains a
declaration of the terms under which the insurer has reserved the
right to change the premium in a manner which shall not minimize or
obscure the same.
Any person knowingly violating any provision of this section shall
be subject to the penalties provided for misrepresentation by this
code.
SEC. 12. Section 10273.6 of the Insurance Code
is repealed.
SEC. 13. Section 10384 of the Insurance Code is
amended to read:
10384. No insurer issuing or providing any policy of disability
insurance covering hospital, medical, or surgical expenses shall
engage in the practice of postclaims underwriting. For purposes of
this section, "postclaims underwriting" means the rescinding,
canceling, or limiting of a policy or certificate due to the insurer'
s failure to complete medical underwriting and resolve all reasonable
questions arising from written information submitted on or with an
application before issuing the policy or certificate. This section
shall not limit an insurer's remedies described in subdivision (a) of
Section 10384.17 or paragraph (2) of subdivision (b) of Section
10273.4.
SEC. 10. Section 10123.135 of the
Insurance Code is amended to read:
10123.135. (a) Every disability insurer, or an entity with which
it contracts for services that include utilization review or
utilization management functions, that covers hospital, medical, or
surgical expenses and that prospectively, retrospectively, or
concurrently reviews and approves, modifies, delays, or denies, based
in whole or in part on medical necessity, requests by providers
prior to, retrospectively, or concurrent with the provision of health
care services to insureds, or that delegates these functions to
medical groups or independent practice associations or to other
contracting providers, shall comply with this section.
(b) A disability insurer that is subject to this section, or any
entity with which an insurer contracts for services that include
utilization review or utilization management functions, shall have
written policies and procedures establishing the process by which the
insurer prospectively, retrospectively, or concurrently reviews and
approves, modifies, delays, or denies, based in whole or in part on
medical necessity, requests by providers of health care services for
insureds. These policies and procedures shall ensure that decisions
based on the medical necessity of proposed health care services are
consistent with criteria or guidelines that are supported by clinical
principles and processes. These criteria and guidelines shall be
developed pursuant to subdivision (f). These policies and procedures,
and a description of the process by which an insurer, or an entity
with which an insurer contracts for services that include utilization
review or utilization management functions, reviews and approves,
modifies, delays, or denies requests by providers prior to,
retrospectively, or concurrent with the provision of health care
services to insureds, shall be filed with the commissioner, and shall
be disclosed by the insurer to insureds and providers upon request,
and by the insurer to the public upon request.
(c) If the number of insureds covered under health benefit plans
in this state that are issued by an insurer subject to this section
constitute at least 50 percent of the number of insureds covered
under health benefit plans issued nationwide by that insurer, the
insurer shall employ or designate a medical director who holds an
unrestricted license to practice medicine in this state issued
pursuant to Section 2050 of the Business and Professions Code or the
Osteopathic Initiative Act, or the insurer may employ a clinical
director licensed in California whose scope of practice under
California law includes the right to independently perform all those
services covered by the insurer. The medical director or clinical
director shall ensure that the process by which the insurer reviews
and approves, modifies, delays, or denies, based in whole or in part
on medical necessity, requests by providers prior to,
retrospectively, or concurrent with the provision of health care
services to insureds, complies with the requirements of this section.
Nothing in this subdivision shall be construed as restricting the
existing authority of the Medical Board of California.
(d) If an insurer subject to this section, or individuals under
contract to the insurer to review requests by providers, approve the
provider's request pursuant to subdivision (b), the decision shall be
communicated to the provider pursuant to subdivision (h).
(e) An individual, other than a licensed physician or a licensed
health care professional who is competent to evaluate the specific
clinical issues involved in the health care services requested by the
provider, may not deny or modify requests for authorization of
health care services for an insured for reasons of medical necessity.
The decision of the physician or other health care provider shall be
communicated to the provider and the insured pursuant to subdivision
(h).
(f) (1) An insurer shall disclose, or provide for the disclosure,
to the commissioner and to network providers, the process the
insurer, its contracting provider groups, or any entity with which it
contracts for services that include utilization review or
utilization management functions, uses to authorize, delay, modify,
or deny health care services under the benefits provided by the
insurance contract, including coverage for subacute care,
transitional inpatient care, or care provided in skilled nursing
facilities. An insurer shall also disclose those processes to
policyholders or persons designated by a policyholder, or to any
other person or organization, upon request.
(2) The criteria or guidelines used by an insurer, or an entity
with which an insurer contracts for utilization review or utilization
management functions, to determine whether to authorize, modify,
delay, or deny health care services, shall comply with all of the
following:
(A) Be developed with involvement from actively practicing health
care providers.
(B) Be consistent with sound clinical principles and processes.
(C) Be evaluated, and updated if necessary, at least annually.
(D) If used as the basis of a decision to modify, delay, or deny
services in a specified case under review, be disclosed to the
provider and the policyholder in that specified case.
(E) Be available to the public upon request. An insurer shall only
be required to disclose the criteria or guidelines for the specific
procedures or conditions requested. An insurer may charge reasonable
fees to cover administrative expenses related to disclosing criteria
or guidelines pursuant to this paragraph that are limited to copying
and postage costs. The insurer may also make the criteria or
guidelines available through electronic communication means.
(3) The disclosure required by subparagraph (E) of paragraph (2)
shall be accompanied by the following notice: "The materials provided
to you are guidelines used by this insurer to authorize, modify, or
deny health care benefits for persons with similar illnesses or
conditions. Specific care and treatment may vary depending on
individual need and the benefits covered under your insurance
contract."
(g) If an insurer subject to this section requests medical
information from providers in order to determine whether to approve,
modify, or deny requests for authorization, the insurer shall request
only the information reasonably necessary to make the determination.
(h) In determining whether to approve, modify, or deny requests by
providers prior to, retrospectively, or concurrent with the
provision of health care services to insureds, based in whole or in
part on medical necessity, every insurer subject to this section
shall meet the following requirements:
(1) Decisions to approve, modify, or deny, based on medical
necessity, requests by providers prior to, or concurrent with, the
provision of health care services to insureds that do not meet the
requirements for the 72-hour 24-hour
review required by paragraph (2), shall be made in a timely fashion
appropriate for the nature of the insured's condition, not to exceed
five business days from the insurer's receipt of the information
reasonably necessary and requested by the insurer to make the
determination. In cases where the review is retrospective, the
decision shall be communicated to the individual who received
services, or to the individual's designee, within 30 days of the
receipt of information that is reasonably necessary to make this
determination, and shall be communicated to the provider in a manner
that is consistent with current law. For purposes of this section,
retrospective reviews shall be for care rendered on or after January
1, 2000.
(2) When the insured's condition is such that the insured faces an
imminent and serious threat to his or her health, including, but not
limited to, the potential loss of life, limb, or other major bodily
function, or the normal timeframe for the decisionmaking process, as
described in paragraph (1), would be detrimental to the insured's
life or health or could jeopardize the insured's ability to regain
maximum function, decisions to approve, modify, or deny requests by
providers prior to, or concurrent with, the provision of health care
services to insureds shall be made in a timely fashion, appropriate
for the nature of the insured's condition, but not to exceed
72 24 hours after the insurer's receipt of the
information reasonably necessary and requested by the insurer to make
the determination.
(3) Decisions to approve, modify, or deny requests by providers
for authorization prior to, or concurrent with, the provision of
health care services to insureds shall be communicated to the
requesting provider within 24 hours of the decision. Except for
concurrent review decisions pertaining to care that is underway,
which shall be communicated to the insured's treating provider within
24 hours, decisions resulting in denial, delay, or modification of
all or part of the requested health care service shall be
communicated to the insured in writing within two business days of
the decision. In the case of concurrent review, care shall not be
discontinued until the insured's treating provider has been notified
of the insurer's decision and a care plan has been agreed upon by the
treating provider that is appropriate for the medical needs of that
patient.
(4) Communications regarding decisions to approve requests by
providers prior to, retrospectively, or concurrent with the provision
of health care services to insureds shall specify the specific
health care service approved. Responses regarding decisions to deny,
delay, or modify health care services requested by providers prior
to, retrospectively, or concurrent with the provision of health care
services to insureds shall be communicated to insureds in writing,
and to providers initially by telephone or facsimile, except with
regard to decisions rendered retrospectively, and then in writing,
and shall include a clear and concise explanation of the reasons for
the insurer's decision, a description of the criteria or guidelines
used, and the clinical reasons for the decisions regarding medical
necessity. Any written communication to a physician or other health
care provider of a denial, delay, or modification or a request shall
include the name and telephone number of the health care professional
responsible for the denial, delay, or modification. The telephone
number provided shall be a direct number or an extension, to allow
the physician or health care provider easily to contact the
professional responsible for the denial, delay, or modification.
Responses shall also include information as to how the provider or
the insured may file an appeal with the insurer or seek department
review under the unfair practices provisions of Article 6.5
(commencing with Section 790) of Chapter 1 of Part 2 of Division 1
and the regulations adopted thereunder.
(5) If the insurer cannot make a decision to approve, modify, or
deny the request for authorization within the timeframes specified in
paragraph (1) or (2) because the insurer is not in receipt of all of
the information reasonably necessary and requested, or because the
insurer requires consultation by an expert reviewer, or because the
insurer has asked that an additional examination or test be performed
upon the insured, provided that the examination or test is
reasonable and consistent with good medical practice, the insurer
shall, immediately upon the expiration of the timeframe specified in
paragraph (1) or (2), or as soon as the insurer becomes aware that it
will not meet the timeframe, whichever occurs first, notify the
provider and the insured, in writing, that the insurer cannot make a
decision to approve, modify, or deny the request for authorization
within the required timeframe, and specify the information requested
but not received, or the expert reviewer to be consulted, or the
additional examinations or tests required. The insurer shall also
notify the provider and enrollee of the anticipated date on which a
decision may be rendered. Upon receipt of all information reasonably
necessary and requested by the insurer, the insurer shall approve,
modify, or deny the request for authorization within the timeframes
specified in paragraph (1) or (2), whichever applies.
(6) If the commissioner determines that an insurer has failed to
meet any of the timeframes in this section, or has failed to meet any
other requirement of this section, the commissioner may assess, by
order, administrative penalties for each failure. A proceeding for
the issuance of an order assessing administrative penalties shall be
subject to appropriate notice to, and an opportunity for a hearing
with regard to, the person affected. The administrative penalties
shall not be deemed an exclusive remedy for the commissioner. These
penalties shall be paid to the Insurance Fund.
(i) Every insurer subject to this section shall maintain telephone
access for providers to request authorization for health care
services.
(j) Nothing in this section shall cause a disability insurer to be
defined as a health care provider for purposes of any provision of
law, including, but not limited to, Section 6146 of the Business and
Professions Code, Sections 3333.1 and 3333.2 of the Civil Code, and
Sections 340.5, 364, 425.13, 667.7, and 1295 of the Code of Civil
Procedure.
SEC. 11. Section 10273.4 of the
Insurance Code is amended to read:
10273.4. All disability insurers writing, issuing, or
administering group health benefit plans shall make all of these
health benefit plans renewable with respect to the policyholder,
contractholder, or employer except in case of the following:
(a) (1) Nonpayment of the required premiums
by the policyholder, contractholder, or employer if the
policyholder, contractholder, or employer has been duly notified and
billed for the premium and at least a 30-day grace period has elapsed
since the date of notification or, if longer, the period of time
required for notice and any other requirements pursuant to Section
2702, 2712, or 2742 of the federal Public Health Service
Act (42 U.S.C. Secs. 300gg-2, 300gg-12, and 300gg-42) and any
subsequent rules or regulations has elapsed .
(2) Pursuant to paragraph (1), the disability insurer shall
continue to provide coverage as required by the policyholder's,
certificate holder's, or other insured's policy during the period
described in paragraph (1).
(b) Fraud The insurer demonstrates fraud
or other an intentional
misrepresentation of material fact under the terms of the policy
by the policyholder, contractholder, or employer.
(c) Noncompliance with a material health benefit plan
contract provision. Violation of a material contract
provision relating to employer or other group contribution or group
participation rates by the contractholder or employer.
(d) The insurer ceases to provide or arrange for the provision of
health care services for new group health benefit plans in this
state, provided that the following conditions are satisfied:
(1) Notice of the decision to cease writing, issuing, or
administering new or existing group health benefit plans in this
state is provided to the commissioner and to either the policyholder,
contractholder, or employer at least 180 days prior to
discontinuation of that coverage.
(2) Group health benefit plans shall not be canceled for 180 days
after the date of the notice required under paragraph (1) and for
that business of a plan that remains in force, any disability insurer
that ceases to write, issue, or administer new group health benefit
plans shall continue to be governed by this section with respect to
business conducted under this section.
(3) Except as provided under subdivision (h) of Section 10705, or
unless the commissioner had made a determination pursuant to Section
10712, a disability insurer that ceases to write, issue, or
administer new group health benefit plans in this state after the
effective date of this section shall be prohibited from writing,
issuing, or administering new group health benefit plans to employers
in this state for a period of five years from the date of notice to
the commissioner.
(e) The disability insurer withdraws a group health benefit plan
from the market; provided, that the plan notifies all affected
contractholders, policyholders, or employers and the commissioner at
least 90 days prior to the discontinuation of the health benefit
plans, and that the insurer makes available to the contractholder,
policyholder, or employer all health benefit plans that it makes
available to new employer business without regard to the claims
experience of health-related factors of insureds or individuals who
may become eligible for the coverage.
(f) I f the coverage is
offered through a network plan, there is no longer any
covered individual in connection with the plan who lives, resides, or
works in the service area of the disability insurer.
(g) If coverage is made available in the individual market through
a bona fide association, the membership of the individual in the
association on the basis of which the coverage is provided, ceases,
but only if that coverage is terminated under this subdivision
uniformly without regard to any health status-related factor of
covered individuals.
(f)
(h) For the purposes of this section, "health benefit
plan" shall have the same meaning as in subdivision (a) of Section
10198.6 and Section 10198.61.
(g)
(i) For the purposes of this section, "eligible
employee" shall have the same meaning as in Section 10700, except
that it applies to all health benefit plans issued to employer groups
of two or more employees.
SEC. 12. Section 10273.6 of the
Insurance Code is amended to read:
10273.6. All individual health benefit plans, except for
short-term limited duration insurance, shall be renewable with
respect to all eligible individuals or dependents at the option of
the individual except as follows:
(a) (1) For nonpayment of the required
premiums or contributions by the individual
in accordance with the terms of the health insurance
coverage or the timeliness of the payments if the
individual has been duly notified and billed for the premium and at
least a 30-day grace period has elapsed since the date of
notification or, if longer, the period of time required for notice
and any other requirements pursuant to Section 2702, 2712, or 2742 of
the federal Public Health Service Act (42 U.S.C. Secs. 300gg-2,
300gg-12, and 300gg-42) and any subsequent rules or regulations has
elapsed .
(2) Pursuant to paragraph (1), the disability insurer shall
continue to provide coverage as required by the policyholder's,
certificate holder's, or other insured's policy during the period
described in paragraph (1).
(b) For The insurer demonstrates
fraud or intentional misrepresentation of material fact under
the terms of the coverage by the policy by
the individual.
(c) Movement of the individual contractholder outside the service
area but only if coverage is terminated uniformly without regard to
any health status-related factor of covered individuals.
(d) If the disability insurer ceases to provide or arrange for the
provision of health care services for new individual health benefit
plans in this state; provided, however, that the following conditions
are satisfied:
(1) Notice of the decision to cease new or existing individual
health benefit plans in this state is provided to the commissioner
and to the individual policy or contractholder at least 180 days
prior to discontinuation of that coverage.
(2) Individual health benefit plans shall not be canceled for 180
days after the date of the notice required under paragraph (1) and
for that business of a disability insurer that remains in force, any
disability insurer that ceases to offer for sale new individual
health benefit plans shall continue to be governed by this section
with respect to business conducted under this section.
(3) A disability insurer that ceases to write new individual
health benefit plans in this state after the effective date of this
section shall be prohibited from offering for sale individual health
benefit plans in this state for a period of five years from the date
of notice to the commissioner.
(e) If the disability insurer withdraws an individual health
benefit plan from the market; provided, that the disability insurer
notifies all affected individuals and the commissioner at least 90
days prior to the discontinuation of these plans, and that the
disability insurer makes
available to the individual all health benefit plans that it makes
available to new individual businesses without regard to a health
status-related factor of enrolled individuals or individuals who may
become eligible for the coverage.
(f) If coverage is made available in the individual market through
a bona fide association, the membership of the individual in the
association on the basis of which the coverage is provided, ceases,
but only if that coverage is terminated under this subdivision
uniformly without regard to any health status-related factor of
covered individuals.
SEC. 13. Section 10273.7 is added to the
Insurance Code , to read:
10273.7. (a) A policyholder, certificate holder, or other insured
who alleges that a policy or coverage has been or will be canceled,
rescinded, or not renewed in violation of Section 10713, 10273.4,
10273.6, 10384.17, or 10384, or any regulations promulgated
thereunder, may request a review by the commissioner.
(b) If the commissioner determines that a proper complaint exists,
the commissioner shall notify the insurer and the policyholder,
certificate holder, or other insured. The insurer shall either
request a hearing or reinstate the policyholder, certificate holder,
or other insured.
(c) If, after review, the commissioner determines that the
cancellation, rescission, or failure to renew is contrary to existing
law, the commissioner shall order the insurer to reinstate the
policyholder, certificate holder, or other insured. Within 15 days
after receipt of that order, the insurer shall either request a
hearing or reinstate the policyholder, certificate holder, or other
insured.
(d) If a policyholder, certificate holder, or other insured
requests a review of the insurer's determination to cancel, rescind,
or failure to renew the policyholder's, certificate holder's, or
other insured's policy or coverage pursuant to subdivision (a), the
insurer shall continue to provide coverage to the policyholder,
certificate holder, or other insured under the terms of the contract
or policy until a final determination of the policyholder,
certificate holder, or other insured's request for review has been
made by the commissioner. This subdivision shall not apply if the
insurer cancels the policy or coverage for nonpayment of premiums
pursuant to Section 10713, 10273.4, 10273.6, 10384.17, or 10384, or
any regulations promulgated thereunder.
(e) A reinstatement pursuant to this section shall be retroactive
to the time of cancellation, rescission, or failure to renew and the
insurer shall be liable for the expenses incurred by the
policyholder, certificate holder, or other insured for covered health
care services from the date of cancellation, rescission, or
nonrenewal to and including the date of reinstatement. The insurer
shall reimburse the policyholder, certificate holder, or insured for
any expenses incurred pursuant to this subdivision within 30 days of
receipt of the completed claim.
(f) This section shall not abrogate any preexisting contracts or
policies entered into prior to January 1, 2011, between a
policyholder, certificate holder, or other insured and an insurer,
except that each insurer shall, if directed to do so by the
commissioner, exercise its authority, if any, under any such
preexisting contracts or policies to conform them to the provisions
of existing law.
(g) On or before July 1, 2011, the commissioner may issue guidance
regarding compliance with this section and Sections 10713, 10273.4,
10273.6, 10384.17, and 10384, or any regulations promulgated under
those provisions. The guidance shall not be subject to the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code).
The guidance shall only be effective through December 31, 2013, or
until the commissioner adopts and effects regulations pursuant to the
Administrative Procedure Act, whichever occurs first.
(h) To the extent required by Section 2719 of the federal Public
Health Service Act (42 U.S.C. Sec. 300gg-19) and any subsequent rules
or regulations, there shall be an independent external review
pursuant to the standards required by the United States Secretary of
Health and Human Services of an insurer's cancellation, rescission,
or nonrenewal of a policyholder's, certificate holder's, or other
insured's coverage.
SEC. 14. Section 10384.17 of the Insurance Code is amended to
read:
10384.17. (a) A health insurer shall not rescind a health
insurance policy, or limit any provisions of a health insurance
policy, once an insured is covered under the policy unless the
insurer can demonstrate that the insured has performed an act or
practice constituting fraud or made an intentional misrepresentation
of material fact as prohibited by the terms of the policy.
(b) If a health insurer intends to rescind a health insurance
policy pursuant to subdivision (a), the insurer shall send a notice
to the policyholder or insured via regular certified mail at least 30
days prior to the effective date of the rescission explaining the
reasons for the intended rescission and notifying the policyholder or
insured of his or her right to appeal that decision to the
commissioner pursuant to subdivision (b) of Section 10273.4.
(c) Notwithstanding subdivision (a) of Section 10273.4 or any
other provision of law, after 24 months following the issuance of a
health insurance policy, a health insurer shall not rescind the
policy for any reason, and shall not cancel the policy, limit any of
the provisions of the policy, or raise premiums on the policy due to
any omissions, misrepresentations, or inaccuracies in the application
form, whether willful or not. Nothing in this subdivision shall be
construed to alter existing law that otherwise applies to a health
insurer within the first 24 months following the issuance of a health
insurance policy.
SEC. 15. Section 10713 of the Insurance Code is
repealed.
SEC. 15. Section 10713 of the Insurance
Code is amended to read:
10713. All health benefit plans written, issued, or administered
by carriers on or after the effective date of this chapter, and all
health benefit plans in force on or after the effective date of this
chapter shall be renewable with respect to all eligible employees or
dependents at the option of the policyholder, contractholder, or
small employer except as follows:
(a) (1) For nonpayment of the required
premiums by the policyholder, contractholder, or small employer
, if the policyholder, contractholder, or small employer has been
duly notified and billed for the charge and at least a 30-day grace
period has elapsed since the date of notification or, if
longer, the period of time required for notice and any other
requirements pursuant to Section 2702, 2712, or 2742 of the federal
Public Health Service Act (42 U.S.C. Secs. 300gg-2, 300gg-12, and
300gg-42) and any subsequent rules or regulations has elapsed .
(2) An insurer shall continue to provide coverage as required by
the policyholder's, contractholder's, or small employer's policy
during the period described in paragraph (1). Nothing in this section
shall be construed to affect or impair the policyholder's,
contractholder's, small employer's, or insurer's other rights and
responsibilities pursuant to the subscriber contract.
(b) For If the insurer
demonstrates fraud or an intentional
misrepresentation of material fact under the terms of the policy
by the policyholder, contractholder, or small employer or,
with respect to coverage of individual enrollees, the enrollees or
their representative.
(c) For noncompliance with a carrier's participation or
employer contribution requirements at the time of renewal.
Violation of a material contract provision relating to employer
contribution or group participation rates by the policyholder,
contractholder, or small employe r.
(d) When the carrier ceases to write, issue, or administer new
small employer health benefit plans in this state, provided, however,
that the following conditions are satisfied:
(1) Notice of the decision to cease writing, issuing, or
administering new or existing small employer health benefits plans in
this state is provided to the commissioner, and to either the
policyholder, contractholder, or small employer at least 180 days
prior to the discontinuation of the coverage.
(2) Small employer health benefit plans subject to this chapter
shall not be canceled for 180 days after the date of the notice
required under paragraph (1). For that business of a carrier that
remains in force, any carrier that ceases to write, issue, or
administer new health benefit plans shall continue to be governed by
this chapter.
(3) Except in the case where a certification has been approved
pursuant to subdivision (h) (1) of
Section 10705 or the commissioner has made a determination pursuant
to subdivision (a) of Section 10712, a carrier that ceases to write,
issue, or administer new health benefit plans to small employers in
this state after the passage of this chapter shall be prohibited from
writing, issuing, or administering new health benefit plans to small
employers in this state for a period of five years from the date of
notice to the commissioner.
(e) When a carrier withdraws a benefit plan design from the small
employer market, provided that the carrier notifies all affected
policyholders, contractholders, or small employers and the
commissioner at least 90 days prior to the discontinuation of those
contracts, and that the carrier makes available to the small employer
all small employer benefit plan designs which it markets and
satisfies the requirements of paragraph (3) of subdivision (b) of
Section 10714.
(f) If coverage is made available through a bona fide association
pursuant to subdivision (w) of Section 10700 or a guaranteed
association pursuant to subdivision (y) of Section 10700, the
membership of the employer or the individual, respectively, ceases,
but only if that coverage is terminated under this subdivision
uniformly without regard to any health status-related factor of
covered individuals.
SEC. 16. 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.
