Bill Text: CA SB51 | 2011-2012 | Regular Session | Chaptered
Bill Title: Health care coverage.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2011-10-09 - Chaptered by Secretary of State. Chapter 644, Statutes of 2011. [SB51 Detail]
Download: California-2011-SB51-Chaptered.html
BILL NUMBER: SB 51 CHAPTERED
BILL TEXT
CHAPTER 644
FILED WITH SECRETARY OF STATE OCTOBER 9, 2011
APPROVED BY GOVERNOR OCTOBER 9, 2011
PASSED THE SENATE SEPTEMBER 9, 2011
PASSED THE ASSEMBLY SEPTEMBER 9, 2011
AMENDED IN ASSEMBLY SEPTEMBER 1, 2011
AMENDED IN ASSEMBLY JULY 11, 2011
AMENDED IN ASSEMBLY JUNE 28, 2011
AMENDED IN SENATE MAY 31, 2011
AMENDED IN SENATE MAY 9, 2011
AMENDED IN SENATE APRIL 25, 2011
AMENDED IN SENATE APRIL 5, 2011
INTRODUCED BY Senator Alquist
DECEMBER 15, 2010
An act to add Sections 1367.001 and 1367.003 to the Health and
Safety Code, and to add Sections 10112.1 and 10112.25 to the
Insurance Code, relating to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
SB 51, Alquist. Health care coverage.
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 prohibits a health care
service plan from expending for administrative costs, as defined, an
excessive amount of the payments the plan receives for providing
health care services to its subscribers and enrollees.
Existing law provides for the regulation of health insurers by the
Department of Insurance. The Insurance Commissioner is required to
withdraw approval of an individual or mass-marketed health insurance
policy if the commissioner finds that the benefits provided under the
policy are unreasonable in relation to the premium charged, as
specified.
The federal Patient Protection and Affordable Care Act prohibits a
health insurance issuer issuing health insurance coverage from
establishing lifetime limits or unreasonable annual limits on the
dollar value of benefits for any participant or beneficiary, as
specified. The act also requires a health insurance issuer issuing
health insurance coverage to comply with minimum medical loss ratios
and to provide an annual rebate to each insured if the medical loss
ratio of the amount of the revenue expended by the issuer on costs to
the total amount of premium revenue is less than a certain
percentage, as specified.
This bill would require health care service plans and health
insurers to comply with the requirements imposed under those federal
provisions, as specified. The bill would authorize the Director of
the Department of Managed Health Care and the Insurance Commissioner
to promulgate regulations and emergency regulations to implement
requirements relating to medical loss ratios, as specified.
Because a willful violation of those 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.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1367.001 is added to the Health and Safety
Code, to read:
1367.001. (a) To the extent required by federal law, every health
care service plan that issues, sells, renews, or offers contracts
for health care coverage in this state shall comply with the
requirements of Section 2711 of the federal Public Health Service Act
(42 U.S.C. Sec. 300gg-11) and any rules or regulations issued under
that section, in addition to any state laws or regulations that do
not prevent the application of those requirements.
(b) Nothing in this section shall be construed to apply to a
health care service plan contract or insurance policy issued, sold,
renewed, or offered for health care services or coverage provided in
the Medi-Cal program (Chapter 7 (commencing with Section 14000) of
Part 3 of Division 9 of the Welfare and Institutions Code), the
Healthy Families Program (Part 6.2 (commencing with Section 12693) of
Division 2 of the Insurance Code), the Access for Infants and
Mothers Program (Part 6.3 (commencing with Section 12695) of Division
2 of the Insurance Code), the California Major Risk Medical
Insurance Program (Part 6.5 (commencing with Section 12700) of
Division 2 of the Insurance Code), or the Federal Temporary High Risk
Insurance Pool (Part 6.6 (commencing with Section 12739.5) of
Division 2 of the Insurance Code), to the extent consistent with the
federal Patient Protection and Affordable Care Act (Public Law
111-148).
SEC. 2. Section 1367.003 is added to the Health and Safety Code,
to read:
1367.003. (a) Every health care service plan that issues, sells,
renews, or offers health care service plan contracts for health care
coverage in this state, including a grandfathered health plan, but
not including specialized health care service plan contracts, shall
provide an annual rebate to each enrollee under such coverage, on a
pro rata basis, if the ratio of the amount of premium revenue
expended by the health care service plan on the costs for
reimbursement for clinical services provided to enrollees under such
coverage and for activities that improve health care quality to the
total amount of premium revenue, excluding federal and state taxes
and licensing or regulatory fees and after accounting for payments or
receipts for risk adjustment, risk corridors, and reinsurance, is
less than the following:
(1) With respect to a health care service plan offering coverage
in the large group market, 85 percent.
(2) With respect to a health care service plan offering coverage
in the small group market or in the individual market, 80 percent.
(b) Every health care service plan that issues, sells, renews, or
offers health care service plan contracts for health care coverage in
this state, including a grandfathered health plan, shall comply with
the following minimum medical loss ratios:
(1) With respect to a health care service plan offering coverage
in the large group market, 85 percent.
(2) With respect to a health care service plan offering coverage
in the small group market or in the individual market, 80 percent.
(c) (1) The total amount of an annual rebate required under this
section shall be calculated in an amount equal to the product of the
following:
(A) The amount by which the percentage described in paragraph (1)
or (2) of subdivision (a) exceeds the ratio described in paragraph
(1) or (2) of subdivision (a).
(B) The total amount of premium revenue, excluding federal and
state taxes and licensing or regulatory fees and after accounting for
payments or receipts for risk adjustment, risk corridors, and
reinsurance.
(2) A health care service plan shall provide any rebate owing to
an enrollee no later than August 1 of the calendar year following the
year for which the ratio described in subdivision (a) was
calculated.
(d) (1) The director may adopt regulations in accordance with the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code)
that are necessary to implement the medical loss ratio as described
under Section 2718 of the federal Public Health Service Act (42
U.S.C. Sec. 300gg-18), and any federal rules or regulations issued
under that section.
(2) The director may also adopt emergency regulations in
accordance with the Administrative Procedure Act (Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code) when it is necessary to implement the
applicable provisions of this section and to address specific
conflicts between state and federal law that prevent implementation
of federal law and guidance pursuant to Section 2718 of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-18). The initial
adoption of the emergency regulations shall be deemed to be an
emergency and necessary for the immediate preservation of the public
peace, health, safety, or general welfare.
(e) The department shall consult with the Department of Insurance
in adopting necessary regulations, and in taking any other action for
the purpose of implementing this section.
(f) This section shall be implemented to the extent required by
federal law and shall comply with, and not exceed, the scope of
Section 2791 of the federal Public Health Service Act (42 U.S.C. Sec.
300gg-91) and the requirements of Section 2718 of the federal Public
Health Service Act (42 U.S.C. Sec. 300gg-18) and any rules or
regulations issued under those sections.
(g) Nothing in this section shall be construed to apply to
provisions of this chapter pertaining to financial statements,
assets, liabilities, and other accounting items to which subdivision
(s) of Section 1345 applies.
(h) Nothing in this section shall be construed to apply to a
health care service plan contract or insurance policy issued, sold,
renewed, or offered for health care services or coverage provided in
the Medi-Cal program (Chapter 7 (commencing with Section 14000) of
Part 3 of Division 9 of the Welfare and Institutions Code), the
Healthy Families Program (Part 6.2 (commencing with Section 12693) of
Division 2 of the Insurance Code), the Access for Infants and
Mothers Program (Part 6.3 (commencing with Section 12695) of Division
2 of the Insurance Code), the California Major Risk Medical
Insurance Program (Part 6.5 (commencing with Section 12700) of
Division 2 of the Insurance Code), or the Federal Temporary High Risk
Insurance Pool (Part 6.6 (commencing with Section 12739.5) of
Division 2 of the Insurance Code), to the extent consistent with the
federal Patient Protection and Affordable Care Act (Public Law
111-148).
SEC. 3. Section 10112.1 is added to the Insurance Code, to read:
10112.1. (a) To the extent required by federal law, every health
insurer that issues, sells, renews, or offers policies for health
care coverage in this state shall comply with the requirements of
Section 2711 of the federal Public Health Service Act (42 U.S.C. Sec.
300gg-11) and any rules or regulations issued under that section, in
addition to any state laws or regulations that do not prevent the
application of those requirements.
(b) Nothing in this section shall be construed to apply to a
health care service plan contract or insurance policy issued, sold,
renewed, or offered for health care services or coverage provided in
the Medi-Cal program (Chapter 7 (commencing with Section 14000) of
Part 3 of Division 9 of the Welfare and Institutions Code), the
Healthy Families Program (Part 6.2 (commencing with Section 12693)),
the Access for Infants and Mothers Program (Part 6.3 (commencing with
Section 12695)), the California Major Risk Medical Insurance Program
(Part 6.5 (commencing with Section 12700)), or the Federal Temporary
High Risk Insurance Pool (Part 6.6 (commencing with Section
12739.5)), to the extent consistent with the federal Patient
Protection and Affordable Care Act (Public Law 111-148).
SEC. 4. Section 10112.25 is added to the Insurance Code, to read:
10112.25. (a) Every health insurer that issues, sells, renews, or
offers health insurance policies for health care coverage in this
state, including a grandfathered health plan, but not including
specialized health insurance policies, shall provide an annual rebate
to each insured under such coverage, on a pro rata basis, if the
ratio of the amount of premium revenue expended by the health insurer
on the costs for reimbursement for clinical services provided to
insureds under such coverage and for activities that improve health
care quality to the total amount of premium revenue, excluding
federal and state taxes and licensing or regulatory fees and after
accounting for payments or receipts for risk adjustment, risk
corridors, and reinsurance, is less than the following:
(1) With respect to a health insurer offering coverage in the
large group market, 85 percent.
(2) With respect to a health insurer offering coverage in the
small group market or in the individual market, 80 percent.
(b) Every health insurer that issues, sells, renews, or offers
health insurance policies for health care coverage in this state,
including a grandfathered health plan, shall comply with the
following minimum medical loss ratios:
(1) With respect to a health insurer offering coverage in the
large group market, 85 percent.
(2) With respect to a health insurer offering coverage in the
small group market or in the individual market, 80 percent.
(c) (1) The total amount of an annual rebate required under this
section shall be calculated in an amount equal to the product of the
following:
(A) The amount by which the percentage described in paragraph (1)
or (2) of subdivision (a) exceeds the ratio described in paragraph
(1) or (2) of subdivision (a).
(B) The total amount of premium revenue, excluding federal and
state taxes and licensing or regulatory fees and after accounting for
payments or receipts for risk adjustment, risk corridors, and
reinsurance.
(2) A health insurer shall provide any rebate owing to an insured
no later than August 1 of the calendar year following the year for
which the ratio described in subdivision (a) was calculated.
(d) (1) The commissioner may adopt regulations in accordance with
the Administrative Procedure Act (Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code) that are necessary to implement the medical loss ratio as
described under Section 2718 of the federal Public Health Service Act
(42 U.S.C. Sec. 300gg-18), and any federal rules or regulations
issued under that section.
(2) The commissioner may also adopt emergency regulations in
accordance with the Administrative Procedure Act (Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code) when it is necessary to implement the
applicable provisions of this section and to address specific
conflicts between state and federal law that prevent implementation
of federal law and guidance pursuant to Section 2718 of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-18). The initial
adoption of the emergency regulations shall be deemed to be an
emergency and necessary for the immediate preservation of the public
peace, health, safety, or general welfare.
(e) The department shall consult with the Department of Managed
Health Care in adopting necessary regulations, and in taking any
other action for the purpose of implementing this section.
(f) This section shall be implemented to the extent required by
federal law and shall comply with, and not exceed, the scope of
Section 2791 of the federal Public Health Service Act (42 U.S.C. Sec.
300gg-91) and the requirements of Section 2718 of the federal Public
Health Service Act (42 U.S.C. Sec. 300gg-18) and any rules or
regulations issued under those sections.
(g) Nothing in this section shall be construed to apply to a
health care service plan contract or insurance policy issued, sold,
renewed, or offered for health care services or coverage provided in
the Medi-Cal program (Chapter 7 (commencing with Section 14000) of
Part 3 of Division 9 of the Welfare and Institutions Code), the
Healthy Families Program (Part 6.2 (commencing with Section 12693)),
the Access for Infants and Mothers Program (Part 6.3 (commencing with
Section 12695)), the California Major Risk Medical Insurance Program
(Part 6.5 (commencing with Section 12700)), or the Federal Temporary
High Risk Insurance Pool (Part 6.6 (commencing with Section
12739.5)), to the extent consistent with the federal Patient
Protection and Affordable Care Act (Public Law 111-148).
SEC. 5. 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.
