BILL NUMBER: SB 890 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JUNE 15, 2010
AMENDED IN SENATE MAY 20, 2010
AMENDED IN SENATE APRIL 27, 2010
AMENDED IN SENATE APRIL 13, 2010
AMENDED IN SENATE APRIL 6, 2010
INTRODUCED BY Senators Alquist and Steinberg
(Coauthors: Assembly Members De La Torre, Feuer, and Jones)
JANUARY 21, 2010
An act to amend Sections 1363 and 1389.25 of, to add
Sections 1367.001 and 1378.1 Section 1367.001
to, and to add Article 4.1 (commencing with Section 1366.10) to
Chapter 2.2 of Division 2 of, the Health and Safety Code, and to
amend Sections 10113.9, 10603, and 10604 of, to add Sections
10112.56, 10112.7, 10112.57, and
10604.2 to, and to add Chapter 9.6 (commencing with Section 10960) to
Part 2 of Division 2 of, the Insurance Code, relating to health care
coverage.
LEGISLATIVE COUNSEL'S DIGEST
SB 890, as amended, Alquist. Health care coverage.
Existing law, the federal Patient Protection and Affordable Care
Act, on and after January 1, 2014, requires a health insurance issuer
offering health insurance coverage in the individual or small group
market to accept every employer and individual in the state that
applies for that coverage, as specified, and requires those issuers
to ensure that the coverage includes a specified essential benefits
package. Among other things, the act allows premiums for that
coverage to vary only by rating area, age, tobacco use, and whether
the coverage is for an individual or family, as specified.
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 provides for the
regulation of health insurers by the Department of Insurance.
Existing law imposes various requirements with respect to
individual contracts and policies issued by health care service plans
and health insurers. Existing law requires a health care service
plan to permit, at least once each year, an individual who has been
covered for at least 18 months under an individual plan contract
issued by the health care service plan to transfer, without medical
underwriting, as defined, to another individual plan contract offered
by the health care service plan having equal or lesser benefits, as
specified. Existing law imposes a parallel requirement with respect
to individual policies issued by health insurers.
This bill would , commencing July 1, 2011, require
plans and insurers issuing individual coverage to make certain
standard benefit plan designs available to individuals, would require
that these designs be offered in five different coverage choice
categories, as specified, and would require a plan or insurer to
offer and market one standard benefit plan design
in each category. The bill would require plans to, on and after July
1, 2011, discontinue offering and selling benefit plan designs other
than the standard benefit plan designs, but would require plans and
insurers to renew benefit plan designs issued prior to that date
until July 1, 2012 January 1, 2014 .
The bill would , commencing July 1, 2011, allow a
subscriber or policyholder of an individual contract or policy, on
the annual renewal date of that contract or policy, to transfer on a
guarantee issue basis to another benefit plan design issued by his or
her plan or insurer or a benefit plan design issued by another plan
or insurer, provided that the new plan design is in the same or a
lower coverage choice category or has an equal or lower actuarial
value, as specified. The bill would require plans and insurers to
provide notice of these transfer rights in their evidence of coverage
and in notices regarding changes to premiums or coverage.
The bill would , commencing July 1, 2011, create the
Individual Insurance Market Reform Commission, which would consist of
9 voting members, appointed by the Legislature and the Governor, as
specified, and 3 specified nonvoting members. The bill would require
the commission to review and suggest changes to the standard benefit
plan designs described above and would require the Department of
Managed Health Care and the Department of Insurance to jointly adopt
regulations based on those suggestions. The bill would require the
commission to develop a standardized enrollment questionnaire to be
used by all plans and insurers when offering and selling individual
coverage, but would prohibit plans and insurers from requesting or
obtaining health information from applicants eligible for guaranteed
issuance of coverage on and after January 1, 2014. The bill would
also require the commission to establish a methodology for the
graduation of risk into three specified categories and would require
plans and insurers in the individual market to set rates consistent
with this methodology. The bill would place limits on the annualized
premium rate increase for a contract and the variation between the
highest standard premium rate and the lowest standard premium rate
and would enact other related provisions.
Existing law requires health care service plan contracts and
health insurance policies to provide coverage for certain benefits.
Under existing law, health care service plan contracts are required,
subject to certain exemptions, to provide basic health care services,
as defined, among other benefits.
This bill would require health insurance policies issued, amended,
or renewed on or after July 1, 2011, to provide coverage for
medically necessary basic health care services, as defined.
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. The Insurance Commissioner is required to
withdraw approval of an individual or mass-marketed policy of
disability insurance if the commissioner finds that the benefits
provided under the policy are unreasonable in relation to the premium
charged, as specified.
This bill would require full service health care service plans and
health insurers to expend no less than a certain percentage of the
aggregate fees, premiums, and other periodic payments they receive on
health care benefits, as specified, and would require plans and
insurers to provide for rebates to enrollees and insureds if they
fail to meet that percentage, as specified. The bill would authorize
plans and insurers to assess compliance with this requirement by
averaging their total costs across all plan contracts or insurance
policies issued, amended, or renewed by them and their affiliated
plans and insurers in California, as specified. The bill would
require the departments to jointly adopt and amend regulations to
implement these provisions, 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 provide an annual rebate to each
enrollee if the 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 applicable requirements imposed under
that act.
Existing law requires health care service plans and health
insurers to use disclosure forms containing certain information in
order to provide a full and fair disclosure of the provisions of a
contract or policy, as specified.
This bill would require that this disclosure be made available on
the plan's or insurer's Internet Web site. With respect to individual
plan contracts or policies, the bill would require the form to
include provisions relating to an individual's right to apply for any
benefit plan design issued by the plan or insurer at the time of
application for a new contract or policy and at the time of renewal
of a contract or policy and information concerning the availability
of a listing of all the contracts or policies and benefit designs
offered to individuals by the plan or insurer, as specified. The
bill would make these provisions apply as of July 1,
2011.
Existing law requires each health care service plan offering a
contract to an individual or small group to provide a uniform health
plan benefits and coverage matrix containing the plan's major
provisions, as specified.
This bill would , commencing July 1, 2011, also impose
that requirement on health insurers offering policies to individual
or small groups and would, with respect to both plans and insurers,
require that the matrix be made available on the plan's or insurer's
Internet Web site.
Existing law requires health care service plan contracts and
health insurance policies to provide coverage for certain benefits.
Under existing law, health care service plan contracts are required,
subject to certain exemptions, to provide basic health care services,
as defined, among other benefits.
This bill would require health insurance policies issued, amended,
or renewed on or after January 1, 2011, to provide coverage for
medically necessary basic health care services, as defined. The bill
would also prohibit health insurance policies and health care service
plan contracts issued, amended, or renewed on or after January 1,
2011, from imposing annual or lifetime limits on basic health care
services.
Because a willful violation of the bill's requirements with
respect to health care service plans would be a crime, the bill would
impose a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1363 of the Health and Safety Code is amended
to read:
1363. (a) The director shall require the use by each plan of
disclosure forms or materials containing information regarding the
benefits, services, and terms of the plan contract as the director
may require, so as to afford the public, subscribers, and enrollees
with a full and fair disclosure of the provisions of the plan in
readily understood language and in a clearly organized manner. The
director may require that the materials be presented in a reasonably
uniform manner so as to facilitate comparisons between plan contracts
of the same or other types of plans. Nothing contained in this
chapter shall preclude the director from permitting the disclosure
form to be included with the evidence of coverage or plan contract,
except that the disclosure form shall also be made available on the
plan's Internet Web site.
The disclosure form shall provide for at least the following
information, in concise and specific terms, relative to the plan,
together with additional information as may be required by the
director, in connection with the plan or plan contract:
(1) The principal benefits and coverage of the plan, including
coverage for acute care and subacute care.
(2) The exceptions, reductions, and limitations that apply to the
plan.
(3) The full premium cost of the plan.
(4) Any copayment, coinsurance, or deductible requirements that
may be incurred by the member or the member's family in obtaining
coverage under the plan.
(5) The terms under which the plan may be renewed by the plan
member, including any reservation by the plan of any right to change
premiums.
(6) A statement that the disclosure form is a summary only, and
that the plan contract itself should be consulted to determine
governing contractual provisions. The first page of the disclosure
form shall contain a notice that conforms with all of the following
conditions:
(A) (i) States that the evidence of coverage discloses the terms
and conditions of coverage.
(ii) States, with respect to individual plan contracts, small
group plan contracts, and any other group plan contracts for which
health care services are not negotiated, that the applicant has a
right to view the evidence of coverage prior to enrollment, and, if
the evidence of coverage is not combined with the disclosure form,
the notice shall specify where the evidence of coverage can be
obtained prior to enrollment.
(B) Includes a statement that the disclosure and the evidence of
coverage should be read completely and carefully and that individuals
with special health care needs should read carefully those sections
that apply to them.
(C) Includes the plan's telephone number or numbers that may be
used by an applicant to receive additional information about the
benefits of the plan or a statement where the telephone number or
numbers are located in the disclosure form.
(D) For individual contracts, and small group plan contracts as
defined in Article 3.1 (commencing with Section 1357), the disclosure
form shall state where the health plan benefits and coverage matrix
is located, including the location of that information on the plan's
Internet Web site.
(E) Is printed in type no smaller than that used for the remainder
of the disclosure form and is displayed prominently on the page.
(7) A statement as to when benefits shall cease in the event of
nonpayment of the prepaid or periodic charge and the effect of
nonpayment upon an enrollee who is hospitalized or undergoing
treatment for an ongoing condition.
(8) To the extent that the plan permits a free choice of provider
to its subscribers and enrollees, the statement shall disclose the
nature and extent of choice permitted and the financial liability
that is, or may be, incurred by the subscriber, enrollee, or a third
party by reason of the exercise of that choice.
(9) A summary of the provisions required by subdivision (g) of
Section 1373, if applicable.
(10) If the plan utilizes arbitration to settle disputes, a
statement of that fact.
(11) A summary of, and a notice of the availability of, the
process the plan uses to authorize, modify, or deny health care
services under the benefits provided by the plan, pursuant to
Sections 1363.5 and 1367.01.
(12) A description of any limitations on the patient's choice of
primary care physician, specialty care physician, or nonphysician
health care practitioner, based on service area and limitations on
the patient's choice of acute care hospital care, subacute or
transitional inpatient care, or skilled nursing facility.
(13) General authorization requirements for referral by a primary
care physician to a specialty care physician or a nonphysician health
care practitioner.
(14) Conditions and procedures for disenrollment.
(15) A description as to how an enrollee may request continuity of
care as required by Section 1373.96 and request a second opinion
pursuant to Section 1383.15.
(16) Information concerning the right of an enrollee to request an
independent review in accordance with Article 5.55 (commencing with
Section 1374.30).
(17) A notice as required by Section 1364.5.
(18) For individual contracts, both of the following:
(A) Provisions relating to an individual's right to apply for any
benefit plan design written, issued, or administered by the plan at
the time of application for a new health care service plan contract,
or at the time of renewal of a health care service plan contract.
(B) Information concerning the availability of a listing of all
the plan's contracts and benefit plan designs offered to individuals,
including the rates for each contract.
(b) (1) The director shall require each plan offering a contract
to an individual or small group to provide with the disclosure form
for individual and small group plan contracts a uniform health plan
benefits and coverage matrix containing the plan's major provisions
in order to facilitate comparisons between plan contracts. The
uniform matrix shall be made available on the plan's Internet Web
site and shall include the following category descriptions together
with the corresponding copayments and limitations in the following
sequence:
(A) Deductibles.
(B) Lifetime maximums.
(C) Professional services.
(D) Outpatient services.
(E) Hospitalization services.
(F) Emergency health coverage.
(G) Ambulance services.
(H) Prescription drug coverage.
(I) Durable medical equipment.
(J) Mental health services.
(K) Chemical dependency services.
(L) Home health services.
(M) Other.
(2) The following statement shall be placed at the top of the
matrix in all capital letters in at least 10-point boldface type:
THIS MATRIX IS INTENDED TO BE USED TO HELP YOU COMPARE COVERAGE
BENEFITS AND IS A SUMMARY ONLY. THE EVIDENCE OF COVERAGE AND PLAN
CONTRACT SHOULD BE CONSULTED FOR A DETAILED DESCRIPTION OF COVERAGE
BENEFITS AND LIMITATIONS.
(c) Nothing in this section shall prevent a plan from using
appropriate footnotes or disclaimers to reasonably and fairly
describe coverage arrangements in order to clarify any part of the
matrix that may be unclear.
(d) All plans, solicitors, and representatives of a plan shall,
when presenting any plan contract for examination or sale to an
individual prospective plan member, provide the individual with a
properly completed disclosure form, as prescribed by the director
pursuant to this section for each plan so examined or sold.
(e) In the case of group contracts, the completed disclosure form
and evidence of coverage shall be presented to the contractholder
upon delivery of the completed health care service plan agreement.
(f) Group contractholders shall disseminate copies of the
completed disclosure form to all persons eligible to be a subscriber
under the group contract at the time those persons are offered the
plan. If the individual group members are offered a choice of plans,
separate disclosure forms shall be supplied for each plan available.
Each group contractholder shall also disseminate or cause to be
disseminated copies of the evidence of coverage to all applicants,
upon request, prior to enrollment and to all subscribers enrolled
under the group contract.
(g) In the case of conflicts between the group contract and the
evidence of coverage, the provisions of the evidence of coverage
shall be binding upon the plan notwithstanding any provisions in the
group contract that may be less favorable to subscribers or
enrollees.
(h) In addition to the other disclosures required by this section,
every health care service plan and any agent or employee of the plan
shall, when presenting a plan for examination or sale to any
individual purchaser or the representative of a group consisting of
25 or fewer individuals, disclose in writing the ratio of premium
costs to health services paid for plan contracts with individuals and
with groups of the same or similar size for the plan's preceding
fiscal year. A plan may report that information by geographic area,
provided the plan identifies the geographic area and reports
information applicable to that geographic area.
(i) Subdivision (b) shall not apply to any coverage provided by a
plan for the Medi-Cal program or the Medicare Program pursuant to
Title XVIII and Title XIX of the Social Security Act.
(j) The amendments to this section made by the act adding this
subdivision shall become operative on July 1, 2011.
SEC. 2. Article 4.1 (commencing with Section 1366.10) is added to
Chapter 2.2 of Division 2 of the Health and Safety Code, to read:
Article 4.1. California Individual Market Simplification
1366.10. (a) It is the intent of the Legislature to require
health care service plans and health insurers issuing coverage in the
individual market to compete on the basis of price, quality, and
service, and not on risk selection.
(b) The purpose of this article is to provide for individual
coverage with standardized benefit plan designs and to facilitate
comparison shopping and price competition.
1366.11. For purposes of this article, the following definitions
shall apply:
(a) "Benefit plan design" means a specific individual health care
coverage product issued by a health care service plan.
(b) "Commission" means the Individual Insurance Market Reform
Commission established pursuant to Section 1366.14.
(c) "Coverage choice category" refers to the levels of coverage
identified in subdivision (c) of Section 1366.13.
1366.13. (a) A health care service plan offering individual plan
contracts shall fairly and affirmatively offer and
market all of the standard benefit plan designs provided for in this
section and any additional standard benefit plan designs authorized
through regulations adopted pursuant to subdivision (c) of Section
1366.14 to all individual purchasers in each service area in which
the plan provides or arranges for the provision of health care
services.
(b) Except as provided in subdivision (a) of Section 1366.15, no
benefit plan designs other than the standard benefit plan designs
described in this article shall be offered for sale to individuals in
this state.
(c) Standard benefit plan designs shall be offered in platinum,
gold, silver, bronze, and catastrophic coverage choice categories and
shall meet the requirements described in the following table, except
as modified by regulations adopted pursuant to subdivision (c) of
Section 1366.14: [GRAPHIC INSERT HERE: SEE PRINTED VERSION OF THE
BILL]
(d) For families enrolled in the same plan contract, the
deductible and out-of-pocket maximum thresholds shall be twice the
individual thresholds. In calculating these thresholds for the
catastrophic benefit plan design, a plan shall follow the
requirements for health savings accounts under Section 223 of the
Internal Revenue Code.
(e) A health care service plan shall offer and
market one standard benefit plan design in each coverage choice
category. A health care service plan may, but shall not be required,
to offer a preferred provider type of benefit plan design.
(f) A plan design in the catastrophic coverage choice category
shall have cost-sharing and an out-of-pocket maximum that enables it
to be offered with a health savings account that has preferred
federal income tax status under Section 223 of the Internal Revenue
Code.
(g) For the plan designs offered in the catastrophic coverage
choice category, all services, except preventive health services
, as defined in Section 2713 of the federal Patient
Protection and Affordable Care Act (Public Law 111-148), shall be
subject to the identified in Section 2713 of the
federal Public Health Service Act (42 U.S.C. Sec. 300gg-13) shall be
subject to the deductible. For all other standard benefit plan
designs, all services, except office visits and preventive health
services , as defined in Section 2713 of the federal Patient
Protection and Affordable Care Act (Public Law 111-148), shall be
subject to the deductible. identified in Section 2713
of the federal Public Health Service Act (42 U.S.C. Sec. 300gg-13)
shall be subject to the deductible.
(h) Compliance with the requirements of this article and Chapter
9.6 (commencing with Section 10960) of Part 2 of Division 2 of the
Insurance Code, and any regulations adopted pursuant to subdivision
(c) of Section 1366.14, shall be enforced consistently between health
care service plans and health insurers regardless of licensure.
(i) Nothing in this section shall require guarantee issue of
coverage.
1366.14. (a) The Individual Insurance Market Reform Commission is
hereby established to do both of the following:
(1) Develop, as required by Section 1366.16 of this code and
Section 10960.4 of the Insurance Code, a standardized enrollment
questionnaire to be used by all health care service plans and health
insurers that offer and sell individual coverage.
(2) Review and, if necessary, suggest changes to the standard
benefit plan designs required to be offered by health care service
plans in the individual market under this article, and the standard
benefit plan designs required to be offered by health insurers in the
individual market under Chapter 9.6 (commencing with Section 10960)
of Part 2 of Division 2 of the Insurance Code.
(b) (1) The commission shall consist of nine members, each of whom
shall have demonstrated knowledge and experience in health care and
issues relevant to the commission's responsibilities. The
appointments shall be made as follows:
(A) The Governor shall appoint five members as follows:
(i) One actuary with experience in health care coverage pricing in
the individual market.
(ii) One representative of a health insurer, which insurer has a
certificate of authority from the Department of Insurance, provides
preferred provider organization coverage, and has a significant
number of insureds in the individual market.
(iii) One representative of a health care service plan, which plan
is licensed by the department, provides health maintenance
organization coverage, and has a significant number of enrollees in
the individual market.
(iv) One representative of consumers who has a demonstrated record
of advocating health care issues on behalf of consumers before a
state regulatory agency.
(v) One health care economist with knowledge of the individual
market.
(B) The Senate Committee on Rules shall appoint two members as
follows:
(i) One representative of health care providers who is licensed
under Division 2 (commencing with Section 500) of the Business and
Professions Code or under an initiative act referred to in that
division.
(ii) One representative of consumers who has a demonstrated record
advocating health care issues on behalf of consumers before a state
regulatory agency.
(C) The Speaker of the Assembly shall appoint two members as
follows:
(i) One representative of consumers who has a demonstrated record
of advocating health care issues on behalf of consumers before a
state regulatory agency.
(ii) One representative of self-employed individuals who purchase
individual health insurance.
(2) In addition, the Secretary of California Health and Human
Services or his or her designee, the director or his or her designee,
and the Insurance Commissioner or his or her designee shall serve as
nonvoting members of the commission.
(c) (1) The commission shall conduct the review required by
paragraph (2) of subdivision (a) within six months following the
effective date of federal regulations adopted pursuant to Section
1302 of the federal Patient Protection and Affordable Care Act
(Public Law 111-148), and at least every two years thereafter.
(2) If the commission suggests changes to the standard benefit
plan designs established under Section 1366.13 of this code and
Section 10960.4 of the Insurance Code or suggests standard benefit
plan designs that are in addition to those established under those
sections, the director and the Insurance Commissioner shall jointly
adopt regulations, pursuant 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), that shall contain standardized
benefits and cost sharing and shall be substantially based on the
standard benefit plan designs suggested by the commission.
1366.15. (a) On and after July 1, 2011, health care service plans
participating in the individual market shall discontinue offering
and selling health benefit plan designs other than those that meet
the requirements of the standard benefit plan designs described in
this article. However, health care service plans shall renew health
benefit plan designs issued to individuals and their dependents prior
to July 1, 2011, until July 1, 2012 January
1, 2014 .
(b) (1) Notwithstanding Section 1389.5, an individual enrolled in
a benefit plan design may, on a guarantee issue basis, change to a
different benefit plan design issued by the same plan or to a benefit
plan design issued by a health insurer or a different health care
service plan only as set forth in this subdivision. For individuals
enrolled as a family, only the subscriber may change plan designs or
switch to a health insurer or a different health care service plan
for himself or herself and for his or her enrolled spouse, registered
domestic partner, and dependents.
(2) On the annual renewal date of an individual plan contract, an
individual shall have the right to select, on a guarantee issue
basis, a different benefit plan design issued by the same plan, or a
benefit plan design issued by a health insurer or a different health
care service plan, provided that the new plan design is within the
same or a lower coverage choice category. A subscriber enrolled in a
benefit plan design issued prior to July 1, 2011, may switch to a
standard benefit plan design pursuant to this paragraph that is of
equal or lesser actuarial value.
(3) Notice of the right to change benefit plan designs and to
switch to a health insurer or a different health care service plan
established by paragraph (2) shall be included in the plan's evidence
of coverage and in the notice required pursuant to paragraph (2) of
subdivision (b) of Section 1389.25.
(c) Nothing in this section shall prohibit a subscriber or
enrollee from changing benefit plan designs, health care service
plans, or health insurers at any time if the individual passes
medical underwriting, or as required by federal law.
1366.16. (a) (1) The commission shall develop a standardized
enrollment questionnaire to be used by all health care service plans
and health insurers that offer and sell individual coverage. The
questionnaire shall be written in clear and easy to understand
language. The questionnaire, which shall be completed by a
prospective subscriber applying for individual coverage from a plan
or insurer, shall provide for an objective evaluation of the
potential subscriber's health status, and that of his or her
dependents applying for coverage, by assigning a discrete measure,
such as a system of point scoring, to each potential subscriber.
(2) No later than six months following the date the commission
develops the standardized enrollment questionnaire, all health care
service plans shall do both of the following:
(A) Exclusively use that questionnaire and not use other
questionnaires or forms in order to conduct underwriting, except as
provided in paragraph (3).
(B) Utilize the objective evaluation developed by the commission
under paragraph (1) in determining whether to provide coverage.
(3) On and after January 1, 2014, a health care service plan shall
not require, request, or obtain health information as part of the
application process for an applicant who is eligible for guaranteed
issuance of coverage. The application form shall include a clear and
conspicuous statement that the applicant is not required to provide
health information.
(b) The commission shall establish a methodology for the
graduation of accepted risk into three risk categories based on
responses to the questionnaire: "higher risk," "standard risk," and
"preferred risk."
(c) On and after January 1, 2011, rates between the highest risk
category and the lowest risk category shall not vary by more than a
ratio of 2 to 1 within each standard benefit plan design offered by a
health care service plan within each coverage choice category.
1366.17. (a) Except as provided in subdivision (b), a health care
service plan shall rate its entire portfolio of health benefit plan
designs in the individual market utilizing the methodology
established under subdivision (b) of Section 1366.16.
(b) The annualized premium rate increase for a health care service
plan contract issued by a health care service plan to an individual
shall not vary by more than 10 percent above or below the weighted
average premium rate increase when calculated across all of the
health care service plan's health benefit plan designs. This
limitation shall exclude any change in the annual premium rate due to
a change in the individual's age. In addition, the highest standard
premium rate for a standard benefit plan design offered in the
individual market by a health care service plan (at any age,
geographic area, family size, contract type, network, and effective
date) shall not exceed the lowest standard premium rate for a
standard benefit plan design offered in the individual market by the
health care service plan (at the same age, geographic area, family
size, contract type, network, and effective date) by more than 50
percent, after taking into consideration the actuarial difference of
the standard benefit plan designs offered.
(c) In rating individuals, only the following characteristics of
an individual shall be used: age, geographic region, and family
composition, plus the health benefit plan design selected by the
individual, except that health status may also be used until January
1, 2014. In using age as a rating factor, benefit plan designs in the
individual market shall use single-use year age categories for
individuals above 18 years of age and under 65 years of age. In using
geographic region as a rating factor, a health care service plan
shall use the same geographic rating requirements required under
paragraph (3) of subdivision (k) of Section 1357. Health care service
plans shall base rates for individuals using no more than the
following family size categories:
(1) Single.
(2) More than one child 18 years of age or under and no adults.
(3) Married couple or registered domestic partners.
(4) One adult and child.
(5) One adult and children.
(6) Married couple and child or children, or registered domestic
partners and child or children.
1366.18. This article shall not apply to individual health care
service plan contracts for coverage of Medicare services pursuant to
contracts with the United States government, Medi-Cal contracts with
the State Department of Health Care Services, Healthy Families
Program contracts with the Managed Risk Medical Insurance Board,
contracts with the Managed Risk Medical Insurance Board under the
Major Risk Medical Insurance Program, Medicare supplement contracts,
long-term care contracts, or specialized health care service plan
contracts.
1366.19. This article shall become operative on July 1, 2011.
SEC. 3. Section 1367.001 is added to the Health
and Safety Code, to read:
1367.001. A full service health care service plan contract
issued, amended, or renewed on or after January 1, 2011, shall have
no annual or lifetime limits on basic health care services.
SEC. 4. Section 1378.1 is added to the Health
and Safety Code, to read:
1378.1. (a) For purposes of this section, the following
definitions apply:
(1) (A) "Health care benefits" means health care services that are
either provided by or reimbursed by the plan or its contracted
providers as plan benefits. "Health care benefits" shall also include
all of the following:
(i) The costs of programs or activities, including training and
the provision of informational materials that are determined as part
of the regulations under subdivision (e) to improve the provision of
quality care, improve health care outcomes, or encourage the use of
evidence-based medicine.
(ii) Disease management expenses using cost-effective
evidence-based guidelines.
(iii) Plan medical advice by telephone.
(iv) Payments to providers as risk pool payments of
pay-for-performance initiatives.
(B) "Health care benefits" shall not include administrative costs
listed in Section 1300.78 of Title 28 of the California Code of
Regulations in effect on January 1, 2010.
(2) "Large group coverage," "large group health care service plan
contract," or "large group health insurance policy" means group
coverage other than coverage issued to a small employer, as defined
in Section 1357.
(3) "Small group coverage," "small group health care service plan
contract," or "small group health insurance policy" means group
coverage issued to a small employer, as defined in Section 1357.
(b) Except as provided in subdivision (g), on and after January 1,
2011, a full-service health care service plan shall
expend in the form of health care benefits
no less than the following percentage of the aggregate dues, fees,
premiums, or other periodic payments received by the plan:
(1) Eighty-five percent, with respect to large group coverage.
(2) Eighty percent, with respect to individual and small group
coverage.
(c) For purposes of this section, the plan may deduct from the
aggregate dues, fees, premiums, or other periodic payments received
by the plan the amount of income taxes or other taxes that the plan
expensed.
(d) (1) To assess compliance with paragraph (1) of subdivision
(b), a plan licensed to operate in California may average its total
costs across all large group health care service plan contracts
issued, amended, or renewed by the plan in California and all large
group health insurance policies issued, amended, or renewed in
California by its affiliated health insurers with valid California
certificates of authority, except for those policies listed in
subdivision (g) of Section 10112.7 of the Insurance Code.
(2) To assess compliance with paragraph (2) of subdivision (b), a
plan licensed to operate in California may average its total costs
across all individual and small group health care service plan
contracts issued, amended, or renewed by the plan in California and
all individual and small group health insurance policies issued,
amended, or renewed in California by its affiliated health insurers
with valid California certificates of authority, except for those
policies listed in subdivision (g) of Section 10112.7 of the
Insurance Code.
(e) The department and the Department of Insurance shall jointly
adopt and amend regulations to implement this section and Section
10112.7 of the Insurance Code to establish uniform reporting by plans
and insurers of the information necessary to determine compliance
with this section. These regulations may include additional elements
in the definition of health care benefits not identified in paragraph
(1) of subdivision (a) in order to consistently implement the
requirements of this section among health plans and health insurers,
but such regulatory additions shall be consistent with the
legislative intent that health plans expend at least 80 or 85 percent
of aggregate payments on health care benefits as provided in
subdivision (b).
(f) A health care service plan shall, in a manner specified by the
department and the Department of Insurance in regulations adopted
pursuant to subdivision (e), provide for rebates to enrollees
reflecting the amount by which the plan's medical loss ratio is less
than the level required by this section.
(g) This section shall not apply to Medicare supplement plans or
to coverage offered by specialized health care service plans,
including, but not limited to, ambulance, dental, vision, behavioral
health, chiropractic, and naturopathic.
SEC. 3. Section 1367.001 is added to the
Health and Safety Code , to read:
1367.001. Notwithstanding any other provision of law, every
health care service plan that issues, sells, renews, or offers
contracts for health care coverage in this state shall meet the
applicable requirements of Section 2711 of the federal Public Health
Service Act (42 U.S.C. Sec. 300gg-11) and Section 2718 of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-18).
SEC. 5. SEC. 4. Section 1389.25 of
the Health and Safety Code is amended to read:
1389.25. (a) (1) This section shall apply only to a full service
health care service plan offering health coverage in the individual
market in California and shall not apply to a specialized health care
service plan, a health care service plan contract in the Medi-Cal
program (Chapter 7 (commencing with Section 14000) of Part 3 of
Division 9 of the Welfare and Institutions Code), a health care
service plan conversion contract offered pursuant to Section 1373.6,
a health care service plan contract in the Healthy Families Program
(Part 6.2 (commencing with Section 12693) of Division 2 of the
Insurance Code), or a health care service plan contract offered to a
federally eligible defined individual under Article 4.6 (commencing
with Section 1366.35).
(2) A local initiative, as defined in subdivision (v) of Section
53810 of Title 22 of the California Code of Regulations, that is
awarded a contract by the State Department of Health Care Services
pursuant to subdivision (b) of Section 53800 of Title 22 of the
California Code of Regulations, shall not be subject to this section
unless the plan offers coverage in the individual market to persons
not covered by Medi-Cal or the Healthy Families Program.
(b) (1) A health care service plan that declines to offer coverage
or denies enrollment for an individual or his or her dependents
applying for individual coverage or that offers individual coverage
at a rate that is higher than the standard rate, shall provide the
individual applicant with the specific reason or reasons for the
decision in writing at the time of the denial or offer of coverage.
(2) No change in the premium rate or coverage for an individual
plan contract shall become effective unless the plan has delivered a
written notice of the change at least 30 days prior to the effective
date of the contract renewal or the date on which the rate or
coverage changes. A notice of an increase in the premium rate shall
include the reasons for the rate increase.
(3) The written notice required pursuant to paragraph (2) shall be
delivered to the individual contractholder at his or her last
address known to the plan, at least 30 days prior to the effective
date of the change. The notice shall state in italics either the
actual dollar amount of the premium rate increase or the specific
percentage by which the current premium will be increased. The notice
shall describe in plain, understandable English any changes in the
plan design or any changes in benefits, including a reduction in
benefits or changes to waivers, exclusions, or conditions, and
highlight this information by printing it in italics. The notice
shall specify in a minimum of 10-point bold typeface, the reason for
a premium rate change or a change to the plan design or benefits.
The notice
(4) The written notice required
pursuant to paragraph (2) shall also describe the individual
contractholder's right to change benefit plan designs and to switch
to a health insurer or a different health care service plan, as set
forth in Section 1366.15. This paragraph shall become operative
on July 1, 2011.
(4)
(5) If a plan rejects an applicant or the dependents of
an applicant for coverage or offers individual coverage at a rate
that is higher than the standard rate, the plan shall inform the
applicant about the state's high-risk health insurance pool, the
California Major Risk Medical Insurance Program (Part 6.5 (commencing
with Section 12700) of Division 2 of the Insurance Code). The
information provided to the applicant by the plan shall specifically
include the program's toll-free telephone number and its Internet Web
site address. The requirement to notify applicants of the
availability of the California Major Risk Medical Insurance Program
shall not apply when a health plan rejects an applicant for Medicare
supplement coverage.
(c) A notice provided pursuant to this section is a private and
confidential communication and at the time of application, the plan
shall give the individual applicant the opportunity to designate the
address for receipt of the written notice in order to protect the
confidentiality of any personal or privileged information.
SEC. 6. SEC. 5. Section 10112.56 is
added to the Insurance Code, to read:
10112.56. (a) For purposes of this section, "basic health care
services" has the same meaning as set forth in Section 1345 of the
Health and Safety Code and in Section 1300.67 of Title 28 of the
California Code of Regulations.
(b) A health insurance policy issued, amended, or renewed on or
after January July 1, 2011, shall
provide coverage for medically necessary basic health care services.
(c) A health insurance policy issued, amended, or renewed on or
after January 1, 2011, shall have no annual or lifetime limits on
basic health care services.
(d)
(c) Nothing in this section shall prohibit a health
insurer from charging policyholders or insureds a copayment or a
deductible for a basic health care service or from setting forth, by
contract, limitations on maximum coverage of basic health care
services, provided that the copayments, deductibles, or limitations
are reported to, and held unobjectionable by, the commissioner and
set forth to the policyholder or insured pursuant to the disclosure
provisions of Section 10604.
(e)
(d) This section shall not apply to specialized health
insurance policies, Medicare supplement policies, CHAMPUS-supplement
insurance policies, TRICARE supplement insurance policies,
accident-only insurance policies, or insurance policies excluded from
the definition of "health insurance" under subdivision (b) of
Section 106.
SEC. 7. Section 10112.7 is added to the
Insurance Code, to read:
10112.7. (a) For purposes of this section, the following
definitions apply:
(1) (A) "Health care benefits" means health care services that are
either provided or reimbursed by the insurer or its contracted
providers as covered benefits. "Health care benefits" shall also
include all of the following:
(i) The costs of programs or activities, including training and
the provision of informational materials that are determined as part
of the regulations under subdivision (e) to improve the provision of
quality care, improve health care outcomes, or encourage the use of
evidence-based medicine.
(ii) Disease management expenses using cost-effective
evidence-based guidelines.
(iii) Plan medical advice by telephone.
(iv) Payments to providers as risk pool payments of
pay-for-performance initiatives.
(B) "Health care benefits" shall not include administrative costs
listed in Section 1300.78 of Title 28 of the California Code of
Regulations in effect on January 1, 2010.
(2) "Large group coverage," "large group health care service plan
contract," or "large group health insurance policy" means group
coverage other than coverage issued to a small employer, as defined
in Section 10700.
(3) "Small group coverage," "small group health care service plan
contract," or "small group health insurance policy" means group
coverage issued to a small employer, as defined in Section 10700.
(b) Except as provided in subdivision (g), on and after January 1,
2011, a health insurer shall expend in the form of health care
benefits no less than the following percentage of the aggregate dues,
fees, premiums, or other periodic payments received by the insurer:
(1) Eighty-five percent, with respect to large group coverage.
(2) Eighty percent, with respect to individual and small group
coverage.
(c) For purposes of this section, the insurer may deduct from the
aggregate dues, fees, premiums, or other periodic payments received
by the insurer the amount of income taxes or other taxes that the
insurer expensed.
(d) (1) To assess compliance with paragraph (1) of subdivision
(b), a health insurer with a valid certificate of authority may
average its total costs across all large group health insurance
policies issued, amended, or renewed by the insurer in California and
all large group health care service plan contracts issued, amended,
or renewed in California by its affiliated health care service plans
licensed to operate in California, except for those contracts listed
in subdivision (g) of Section 1378.1 of the Health and Safety Code.
(2) To assess compliance with paragraph (2) of subdivision (b), a
health insurer with a valid certificate of authority may average its
total costs across all individual and small group health insurance
policies issued, amended, or renewed by the insurer in California and
all individual and small group health care service plan contracts
issued, amended, or renewed in California by its affiliated health
care service plans licensed to operate in California, except for
those contracts listed in subdivision (g) of Section 1378.1 of the
Health and Safety Code.
(e) The department and the Department of Managed Health Care shall
jointly adopt and amend regulations to implement this section and
Section 1378.1 of the Health and Safety Code to establish uniform
reporting by plans and insurers of the information necessary to
determine compliance with this section. These regulations may include
additional elements in the definition of health care benefits not
identified in paragraph (1) of subdivision (a) in order to
consistently implement the requirements of this section among health
plans and health insurers, but such regulatory additions shall be
consistent with the legislative intent that health plans and health
insurers expend at least 80 or 85 percent of aggregate payments on
health care benefits as provided in subdivision (b).
(f) A health insurer shall, in a manner specified by the
department and the Department of Managed Health Care in regulations
adopted pursuant to subdivision (e), provide for rebates to insureds
reflecting the amount by which the insurer's medical loss ratio is
less than the level required by this section.
(g) This section shall not apply to Medicare supplement policies,
administrative services-only policies, or other similar
administrative arrangements, short-term limited duration health
insurance policies, vision-only, dental-only, behavioral health-only,
or pharmacy-only policies, CHAMPUS-supplement or TRICARE-supplement
insurance policies, or to hospital indemnity, hospital only, accident
only, or specified disease insurance policies that do not pay
benefits on a fixed benefit, cash payment only basis.
SEC. 6. Section 10112.57 is added to the
Insurance Code , to read:
10112.57. Notwithstanding any other provision of law, every
health insurer that issues, sells, renews, or offers policies for
health care coverage in this state shall meet the applicable
requirements of Section 2711 of the federal Public Health Service Act
(42 U.S.C. Sec. 300gg-11) and Section 2718 of the federal Public
Health Service Act (42 U.S.C. Sec. 300gg-18).
SEC. 8. SEC. 7. Section 10113.9 of
the Insurance Code is amended to read:
10113.9. (a) This section shall not apply to short-term limited
duration health insurance, vision-only, dental-only, or
CHAMPUS-supplement insurance, or to hospital indemnity,
hospital-only, accident-only, or specified disease insurance that
does not pay benefits on a fixed benefit, cash payment only basis.
(b) No change in the premium rate or coverage for an individual
health insurance policy shall become effective unless the insurer has
delivered a written notice of the change at least 30 days prior to
the effective date of the contract renewal or the date on which the
rate or coverage changes. A notice of an increase in the premium rate
shall include the reasons for the rate increase.
(c) (1) The written notice required pursuant
to subdivision (b) shall be delivered to the individual policyholder
at his or her last address known to the insurer, at least 30 days
prior to the effective date of the change. The notice shall state in
italics either the actual dollar amount of the premium increase or
the specific percentage by which the current premium will be
increased. The notice shall describe in plain, understandable English
any changes in the policy or any changes in benefits, including a
reduction in benefits or changes to waivers, exclusions, or
conditions, and highlight this information by printing it in italics.
The notice shall specify in a minimum of 10-point bold typeface, the
reason for a premium rate change or a change in coverage or
benefits. The notice shall also
(2) The written notice required pursuant
to subdivision (b) shall also describe the individual
policyholder's right to change benefit plan designs and to switch to
a health care service plan or a different health insurer, as set
forth in Section 10960.3. This paragraph shall become operative
on July 1, 2011.
(d) If an insurer rejects an applicant or the dependents of an
applicant for coverage or offers individual coverage at a rate that
is higher than the standard rate, the insurer shall inform the
applicant about the state's high-risk health insurance pool, the
California Major Risk Medical Insurance Program (Part 6.5 (commencing
with Section 12700)). The information provided to the applicant by
the insurer shall specifically include the program's toll-free
telephone number and its Internet Web site address. The requirement
to notify applicants of the availability of the California Major Risk
Medical Insurance Program shall not apply when a health plan rejects
an applicant for Medicare supplement coverage.
SEC. 9. SEC. 8. Section 10603 of the
Insurance Code is amended to read:
10603. (a) On or before April 1, 1975, the commissioner shall
promulgate a standard supplemental disclosure form for all disability
insurance policies. Upon the appropriate disclosure form as
prescribed by the commissioner, each insurer shall provide, in easily
understood language and in a uniform, clearly organized manner, as
prescribed and required by the commissioner, such summary information
about each disability insurance policy offered by the insurer as the
commissioner finds is necessary to provide for full and fair
disclosure of the provisions of the policy.
(b) Nothing in this section shall preclude the disclosure form
from being included with the evidence of coverage or certificate
of coverage or policy, except that, with respect to health
insurance policies, the disclosure form shall also be made available
on the insurer's Internet Web site. of coverage or
policy.
(c) Notwithstanding subdivision (b), with respect to health
insurance policies, the disclosure form shall also be made available
on the insurer's Internet Web site. This subdivision shall become
operative on July 1, 2011.
SEC. 10. SEC. 9. Section 10604 of
the Insurance Code is amended to read:
10604. The disclosure form described in Section 10603 shall
include the following information, in concise and specific terms,
relative to the disability insurance policy:
(a) The applicable category or categories of coverage provided by
the policy, from among the following:
(1) Basic hospital expense coverage.
(2) Basic medical-surgical expense coverage.
(3) Hospital confinement indemnity coverage.
(4) Major medical expense coverage.
(5) Disability income protection coverage.
(6) Accident only coverage.
(7) Specified disease or specified accident coverage.
(8) Such other categories as the commissioner may prescribe.
(b) The principal benefits and coverage of the disability
insurance policy.
(c) The exceptions, reductions, and limitations that apply to such
policy.
(d) A summary, including a citation of the relevant contractual
provisions, of the process used to authorize or deny payments for
services under the coverage provided by the policy including coverage
for subacute care, transitional inpatient care, or care provided in
skilled nursing facilities. This subdivision shall only apply to
policies of disability insurance that cover hospital, medical, or
surgical expenses.
(e) The full premium cost of such policy.
(f) Any copayment, coinsurance, or deductible requirements that
may be incurred by the insured or his or her family in obtaining
coverage under the policy.
(g) The terms under which the policy may be renewed by the
insured, including any reservation by the insurer of any right to
change premiums.
(h) A statement that the disclosure form is a summary only, and
that the policy itself should be consulted to determine governing
contractual provisions.
(i) For individual health insurance policies and health benefit
plans, as defined in Section 10700, identification of the location of
the health plan benefits and coverage matrix required by Section
10604.2, including the location of this information on the insurer's
Internet Web site.
(j) (1) For individual health insurance
policies, both of the following:
(A) Provisions relating to an individual's right to apply for any
benefit plan design written, issued, or administered by the health
insurer at the time of application for a new health insurance policy,
or at the time of renewal of a health insurance policy.
(B) Information concerning the availability of a listing of all
the health insurer's policies and benefit plan designs offered to
individuals, including the rates for each policy.
(2) This subdivision shall become operative on July 1, 2011.
SEC. 11. SEC. 10. Section 10604.2 is
added to the Insurance Code, to read:
10604.2. (a) The commissioner shall require each health insurer
offering a policy of health insurance to an individual or small
employer, as defined in Section 10700, to provide with the disclosure
form described in Section 10603 for individual policies and health
benefit plans, as defined in Section 10700, a uniform health plan
benefits and coverage matrix containing the policy's major provisions
in order to facilitate comparisons between policies. The uniform
matrix shall be available on the insurer's Internet Web site, and
shall include the following category descriptions together with the
corresponding copayments and limitations in the following sequence:
(1) Deductibles.
(2) Lifetime maximums.
(3) Professional services.
(4) Outpatient services.
(5) Hospitalization services.
(6) Emergency health coverage.
(7) Ambulance services.
(8) Prescription drug coverage.
(9) Durable medical equipment.
(10) Mental health services.
(11) Chemical dependency services.
(12) Home health services.
(13) Other.
(b) The following statement shall be placed at the top of the
matrix in all capital letters in at least 10-point boldface type:
THIS MATRIX IS INTENDED TO BE USED TO HELP YOU COMPARE COVERAGE
BENEFITS AND IS A SUMMARY ONLY. THE EVIDENCE OF COVERAGE AND POLICY
SHOULD BE CONSULTED FOR A DETAILED DESCRIPTION OF COVERAGE BENEFITS
AND LIMITATIONS.
(c) This section shall become operative on July 1, 2011.
SEC. 12. SEC. 11. Chapter 9.6
(commencing with Section 10960) is added to Part 2 of Division 2 of
the Insurance Code, to read:
CHAPTER 9.6. CALIFORNIA INDIVIDUAL MARKET SIMPLIFICATION
10960. (a) It is the intent of the Legislature to require health
care service plans and health insurers issuing coverage in the
individual market to compete on the basis of price, quality, and
service, and not on risk selection.
(b) The purpose of this chapter is to provide for individual
coverage with standardized benefit plan designs, and to facilitate
comparison shopping and price competition.
10960.1. For purposes of this chapter, the following definitions
shall apply:
(a) "Benefit plan design" means a specific individual health care
coverage product issued by a health insurer.
(b) "Commission" means the Individual Insurance Market Reform
Commission established pursuant to Section 1366.14 of the Health and
Safety Code.
(c) "Coverage choice category" refers to the levels of coverage
identified in subdivision (c) of Section 10960.2.
10960.2. (a) An insurer offering individual health insurance
policies shall fairly and affirmatively offer and
market all of the standard benefit plan designs provided for in this
section and any additional standard benefit plan designs authorized
through regulations adopted pursuant to subdivision (c) of Section
1366.14 of the Health and Safety Code to all individual purchasers in
each service area in which the insurer makes coverage available or
provides benefits.
(b) Except as provided in subdivision (a) of Section 10960.3, no
benefit plan designs other than the standard benefit plan designs
described in this chapter shall be offered for sale to individuals in
this state.
(c) Standard benefit plan designs shall be offered in platinum,
gold, silver, bronze, and catastrophic coverage choice categories and
shall meet the requirements described in the following table, except
as modified by regulations adopted pursuant to subdivision (c) of
Section 1366.14 of the Health and Safety Code: [GRAPHIC INSERT HERE:
SEE PRINTED VERSION OF THE BILL]
(d) For families enrolled in the same policy, the deductible and
maximum out-of-pocket thresholds shall be twice the individual
thresholds. In calculating these thresholds for the catastrophic
benefit plan design, an insurer shall follow the requirements for
health savings accounts under Section 223 of the Internal Revenue
Code.
(e) A health insurer shall offer and market one
standard benefit plan design in each coverage choice category. A
health insurer shall not be required to offer a health maintenance
organization benefit plan design.
(f) A plan design in the catastrophic coverage choice category
shall have cost-sharing and an out-of-pocket maximum that enables it
to be offered with a health savings account that has preferred
federal income tax
status under Section 223 of the Internal Revenue Code.
(g) For the plan designs offered in the catastrophic coverage
choice category, all services, except preventive health services
, as defined in Section 2713 of the federal Patient
Protection and Affordable Care Act (Public Law 111-148), shall be
subject to the identified in Section 2713 of the
federal Public Health Service Act (42 U.S.C. Sec. 300gg-13) shall be
subject to the deductible. For all other standard benefit plan
designs, all services, except office visits and preventive health
services , as defined in Section 2713 of the federal Patient
Protection and Affordable Care Act (Public Law 111-148), shall be
subject to the deductible. identified in Section 2713
of the federal Public Health Service Act (42 U.S.C. Sec. 300gg-13)
shall be subject to the deductible.
(h) Compliance with the requirements of this chapter and Article
4.1 (commencing with Section 1366.10) of Chapter 2.2 of Division 2 of
the Health and Safety Code, and any regulations adopted pursuant to
subdivision (c) of Section 1366.14 of the Health and Safety Code,
shall be enforced consistently between health insurers and health
care service plans regardless of licensure.
(i) Nothing in this section shall require guarantee issue of
coverage.
10960.3. (a) On and after July 1, 2011, health insurers
participating in the individual market shall discontinue offering and
selling health benefit plan designs other than those that meet the
requirements of the standard health benefit plan designs described in
this chapter. However, health insurers shall renew health benefit
plan designs issued to individuals and their dependents prior to July
1, 2011, until July 1, 2012 January 1, 2014
.
(b) (1) Notwithstanding Section 10119.1, an individual enrolled in
a benefit plan design may change to a different benefit plan design
issued by the same insurer or to a benefit plan design issued by a
health care service plan or a different health insurer on a guarantee
issue basis only as set forth in this subdivision. For individuals
enrolled as a family, only the policyholder may change plan designs
or switch to a health care service plan or a different health insurer
for himself or herself and for his or her enrolled spouse,
registered domestic partner, and dependents.
(2) On the annual renewal date of an individual health insurance
policy, an individual shall have the right to select, on a guarantee
issue basis, a different benefit plan design issued by the same
insurer, or a benefit plan design issued by a health care service
plan or a different health insurer, provided that the new plan design
is within the same or a lower coverage choice category. A
policyholder enrolled in a benefit plan design issued prior to July
1, 2011, may switch to a standard benefit plan design pursuant to
this paragraph that is of equal or lesser actuarial value.
(3) Notice of the right to change benefit plan designs and to
switch to a health care service plan or a different health insurer
established by paragraph (2) shall be included in the insurer's
evidence of coverage and in the notice required pursuant to
subdivision (c) of Section 10113.9.
(c) Nothing in this section shall prohibit a policyholder or
insured from changing benefit plan designs, health care service
plans, or health insurers at any time if the individual passes
medical underwriting, or as required by federal law.
10960.4. (a) (1) The commission shall develop a standardized
enrollment questionnaire to be used by all health care service plans
and health insurers that offer and sell individual coverage. The
questionnaire shall be written in clear and easy to understand
language. The questionnaire, which shall be completed by a
prospective policyholder applying for individual coverage from an
insurer, shall provide for an objective evaluation of the potential
policyholder's health status, and that of his or her dependents
applying for coverage, by assigning a discrete measure, such as a
system of point scoring, to each potential policyholder.
(2) No later than six months following the date the commission
develops the standardized enrollment questionnaire, all health
insurers shall do both of the following:
(A) Exclusively use that questionnaire and not use other
questionnaires or forms in order to conduct underwriting, except as
provided in paragraph (3).
(B) Utilize the objective evaluation developed by the commission
under paragraph (1) in determining whether to provide coverage.
(3) On and after January 1, 2014, a health insurer shall not
require, request, or obtain health information as part of the
application process for an applicant who is eligible for guaranteed
issuance of coverage. The application form shall include a clear and
conspicuous statement that the applicant is not required to provide
health information.
(b) The commission shall establish a methodology for the
graduation of accepted risk into three risk categories based on
responses to the questionnaire: "higher risk," "standard risk," and
"preferred risk."
(c) On and after January 1, 2011, rates between the highest risk
category and the lowest risk category shall not vary by more than a
ratio of 2 to 1 within each standard benefit plan design offered by a
health insurer within each coverage choice category.
10960.5. (a) Except as provided in subdivision (b), a health
insurer shall rate its entire portfolio of health benefit plan
designs in the individual market utilizing the methodology
established under subdivision (b) of Section 10960.4.
(b) The annualized premium rate increase for a health insurance
policy issued by a health insurer to an individual shall not vary by
more than 10 percent above or below the weighted average premium rate
increase when calculated across all of the health insurer's health
benefit plan designs. This limitation shall exclude any change in the
annual premium rate due to a change in the individual's age. In
addition, the highest standard premium rate for a standard benefit
plan design offered in the individual market by a health insurer (at
any age, geographic area, family size, contract type, network, and
effective date) shall not exceed the lowest standard premium rate for
a standard benefit plan design offered in the individual market by
the health insurer (at the same age, geographic area, family size,
contract type, network, and effective date) by more than 50 percent,
after taking into consideration the actuarial difference of the
standard benefit plan designs offered.
(c) In rating individuals, only the following characteristics of
an individual shall be used: age, geographic region, and family
composition, plus the health benefit plan design selected by the
individual, except that health status may also be used until January
1, 2014. In using age as a rating factor, benefit plan designs in the
individual market shall use single-year age categories for
individuals above 18 years of age and under 65 years of age. In using
geographic region as a rating factor, a health insurer shall use the
same geographic rating requirements required under paragraph (3) of
subdivision (v) of Section 10700. Health insurers shall base rates
for individuals using no more than the following family size
categories:
(1) Single.
(2) More than one child 18 years of age or under and no adults.
(3) Married couple or registered domestic partners.
(4) One adult and child.
(5) One adult and children.
(6) Married couple and child or children, or registered domestic
partners and child or children.
10962. This chapter shall not apply to individual health
insurance policies for coverage of Medicare services pursuant to
contracts with the United States Government, Medi-Cal contracts with
the State Department of Health Care Services, Healthy Families
Program contracts with the Managed Risk Medical Insurance Board,
contracts with the Managed Risk Medical Insurance Board under the
Major Risk Medical Insurance Program, Medicare supplement policies,
long-term care policies, or specialized health insurance policies.
10963. This article shall become operative on July 1, 2011.
SEC. 13. SEC. 12. 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.