BILL NUMBER: SB 546 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Leno
FEBRUARY 26, 2015
An act to amend Section 1385.04 of, and to add Section 1385.045
to, the Health and Safety Code, and to amend Section 10181.4 of, and
to add Section 10181.45 to, the Insurance Code, relating to health
care coverage.
LEGISLATIVE COUNSEL'S DIGEST
SB 546, as introduced, Leno. Health care coverage: rate review.
Existing law, the federal Patient Protection and Affordable Care
Act (PPACA), requires the United States Secretary of Health and Human
Services to establish a process for the annual review of
unreasonable increases in premiums for health insurance coverage in
which health insurance issuers submit to the secretary and the
relevant state a justification for an unreasonable premium increase
prior to implementation of the increase. Existing law, the Knox-Keene
Health Care Service Plan Act of 1975, provides for the licensure and
regulation of health care service plans by the Department of Managed
Health Care and makes a willful violation of the act a crime.
Existing law also provides for the regulation of health insurers by
the Department of Insurance. Existing law requires a health care
service plan or health insurer in the individual, small group, or
large group markets to file rate information with the Department of
Managed Health Care or the Department of Insurance. For large group
plan contracts and policies, existing law requires a plan or insurer
to file rate information with the department at least 60 days prior
to implementing an unreasonable rate increase, as defined in PPACA.
Existing law requires the plan or insurer to also disclose specified
aggregate data with that rate filing.
This bill would recast the rate information requirement to require
large group health care service plans and health insurers to file
with the department at least 60 days prior to implementing any rate
change all required rate information for any product with a rate
change if any of certain conditions apply. The bill would require the
plan or insurer to file additional aggregate rate information with
the department on or before October 1, 2016. The bill would also
require that the plan or insurer disclose the aggregate data for all
products sold in the large group market for all rate filings
submitted under these provisions on an annual basis. The bill would
require the respective departments to conduct a public meeting
regarding large group rate changes. The bill would require these
meetings to occur annually after the department has reviewed the
large group rate information required to be submitted annually by the
plan or insurer. The bill would authorize a health care service plan
or health insurer that exclusively contracts with no more than 2
medical groups to provide or arrange for professional medical
services for enrollees or insureds to meet this requirement by
disclosing its actual trend experience for the prior year using
benefit categories that are the same or similar to those used by
other plans or health insurers.
Because a willful violation of the bill's requirements by a health
care service plan would be a crime, the bill would impose a
state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1385.04 of the Health and Safety Code is
amended to read:
1385.04. (a) For large group health care service plan contracts,
all health plans shall file with the department at least 60
days prior to implementing any rate change all required
rate information for unreasonable rate increases. This
filing shall be concurrent with the written notice described in
subdivision (a) of Section 1374.21. for rate changes
aggregated for the entire large group market. This information shall
be submitted on or before October 1, 201 6, and on or
before October 1, annually thereafter.
(b) (1) For large group rate filings, health
plans shall submit all information that is required by PPACA. A plan
shall also submit any other information required pursuant to any
regulation adopted by the department to comply with this article.
(2) For each health plan that offers coverage in the large group
market, the department shall conduct a public meeting regarding large
group rate changes. The meeting shall occur after the department has
reviewed the information required in (a), on or before November 1,
2016, and on or before November 1, annually thereafter.
(c) A health care service plan subject to subdivision (a) shall
also disclose the following aggregate data for all rate
filings for the aggregate rate filing for the large
group market submitted under this section in the large group
health plan market:
(1) Number and percentage of rate filings reviewed by the
following:
(A) Plan year.
(B) Segment type.
(C) Product type.
(D) Number of subscribers.
(E) Number of covered lives affected.
(2) The plan's average rate increase by the following categories:
(A) Plan year.
(B) Segment type.
(C) Product type.
(2) Any factors affecting the rate, and
the actuarial basis for those factors, including:
(A) Geographic region.
(B) Age, including age rating factors.
(C) Occupation.
(D) Industry.
(E) Health status, including health status factors considered.
(F) Employee, employee and dependents, including a description of
the family composition used.
(G) Enrollee share of premiums.
(H) Enrollee cost sharing.
(I) Covered benefits in addition to basic health care services, as
defined in subdivision (b) of Section 1345, and other benefits
mandated under this article.
(J) Any other factors that affect the rate that are not otherwise
specified.
(3) (A) The plan's overall annual medical trend factor assumptions
in each rate filing for all benefits and by aggregate benefit
category, including hospital inpatient, hospital outpatient,
physician services, prescription drugs and other ancillary services,
laboratory, and radiology. A health plan that exclusively contracts
with no more than two medical groups in the state to provide or
arrange for professional medical services for the enrollees of the
plan shall instead disclose the amount of its actual trend experience
for the prior contract year by aggregate benefit category, using
benefit categories that are, to the maximum extent possible, the same
or similar to those used by other plans.
(B) The amount of the projected trend attributable to the use of
services, price inflation, or fees and risk for annual plan contract
trends by aggregate benefit category, such as hospital inpatient,
hospital outpatient, physician services, prescription drugs and other
ancillary services, laboratory, and radiology. A health plan that
exclusively contracts with no more than two medical groups in the
state to provide or arrange for professional medical services for the
enrollees of the plan shall instead disclose the amount of its
actual trend experience for the prior contract year by aggregate
benefit category, using benefit categories that are, to the maximum
extent possible, the same or similar to those used by other plans.
(C) A comparison of claims cost and rate of changes over time.
(D) Any changes in enrollee cost sharing over the prior year
associated with the submitted rate filing.
(E) Any changes in enrollee benefits over the prior year
associated with the submitted rate filing.
(3)
(F) Any cost containment and quality improvement
efforts since the plan's last rate filing for the same category of
health benefit plan. To the extent possible, the plan shall describe
any significant new health care cost containment and quality
improvement efforts and provide an estimate of potential savings
together with an estimated cost or savings for the projection period.
(d) The department may require all health care service plans to
submit all rate filings to the National Association of Insurance
Commissioners' System for Electronic Rate and Form Filing (SERFF).
Submission of the required rate filings to SERFF shall be deemed to
be filing with the department for purposes of compliance with this
section.
SEC. 2. Section 1385.045 is added to the Health and Safety Code,
to read:
1385.045. (a) (1) For large group health care service plan
contracts, all health plans shall file with the department at least
60 days prior to implementing any rate change all required rate
information for any product with a rate change if any of the
following apply:
(A) The rate change is equal to or greater than the average rate
increase for individual market products approved by the California
Health Benefits Exchange.
(B) The rate change is equal to or greater than the average rate
increase approved by the CalPERS board for the subsequent calendar
year.
(C) The rate change would cause the large group purchaser to incur
the excise tax.
(D) At the request of the large group purchaser.
(2) This filing shall be concurrent with the written notice
described in subdivision (a) of Section 1374.21, except for a filing
at the request of the large group purchaser. A filing at the request
of a large group purchaser may occur at any time after receipt of the
written notice and prior to the rate taking effect.
(b) A plan shall disclose to the department all of the following
for each large group rate filing described in (a):
(1) Company name of plan and contact information.
(2) Number of plan contract forms covered by the filing.
(3) Plan contract form numbers covered by the filing.
(4) Product type, such as a preferred provider organization or
health maintenance organization.
(5) Segment type.
(6) Type of plan involved, such as for profit or not for profit.
(7) Whether the products are opened or closed.
(8) Enrollment in each plan contract and rating form.
(9) Enrollee months in each plan contract form.
(c) Any factors affecting the rate, and the actuarial basis for
the factor, including but not limited to:
(1) Geographic region.
(2) Age, including age rating factors.
(3) Occupation.
(4) Industry.
(5) Health status, including health status factors considered.
(6) Employee, employee and dependents, including a description of
the family composition used.
(7) Enrollee share of premiums.
(8) Enrollee cost sharing.
(9) Covered benefits in addition to basic health care services, as
defined in subdivision (b) of Section 1345, and other benefits
mandated under this article.
(10) Any other factor that affects the rate that is not otherwise
specified.
(d) The plan shall also disclose the following:
(1) Annual rate.
(2) Total earned premiums in each plan contract form.
(3) Total incurred claims in each plan contract form.
(4) Average rate increase initially requested.
(5) Review category: initial filing for new product, filing for
existing product, or resubmission.
(6) Average rate of increase.
(7) Effective date of rate increase.
(8) Number of subscribers or enrollees affected by each plan
contract form.
(9) The plan's overall annual medical trend factor assumptions in
each rate filing for all benefits and by aggregate benefit category,
including hospital inpatient, hospital outpatient, physician
services, prescription drugs and other ancillary services,
laboratory, and radiology. A health plan that exclusively contracts
with no more than two medical groups in the state to provide or
arrange for professional medical services for the enrollees of the
plan shall instead disclose the amount of its actual trend experience
for the prior contract year by aggregate benefit category, using
benefit categories that are, to the maximum extent possible, the same
or similar to those used by other plans.
(10) The amount of the projected trend attributable to the use of
services, price inflation, or fees and risk for annual plan contract
trends by aggregate benefit category, such as hospital inpatient,
hospital outpatient, physician services, prescription drugs and other
ancillary services, laboratory, and radiology. A health plan that
exclusively contracts with no more than two medical groups in the
state to provide or arrange for professional medical services for the
enrollees of the plan shall instead disclose the amount of its
actual trend experience for the prior contract year by aggregate
benefit category, using benefit categories that are, to the maximum
extent possible, the same or similar to those used by other plans.
(11) A comparison of claims cost and rate of changes over time.
(12) Any changes in enrollee cost sharing over the prior year
associated with the submitted rate filing.
(13) Any changes in enrollee benefits over the prior year
associated with the submitted rate filing.
(14) The certification described in subdivision (b) of Section
1385.06.
(15) Any changes in administrative costs.
(16) Any other information required for rate review under PPACA.
(17) Any cost containment and quality improvement efforts since
the plan's last rate filing for the same category of health care
service plan. To the extent possible, the plan shall describe any
significant new health care cost containment and quality improvement
efforts and provide an estimate of potential savings together with an
estimated cost or savings for the projection period.
(e) For rate filings subject to this section, the director shall
make a decision to modify or deny a rate change that is unreasonable,
inadequate, or otherwise in violation of this article or federal law
prior to the implementation of the rate change by the plan.
(f) The department may require all health care service plans to
submit all rate filings to the National Association of Insurance
Commissioners' System for Electronic Rate and Form Filing (SERFF).
Submission of the required rate filings to SERFF shall be deemed to
be filing with the department for purposes of compliance with this
section.
(g) A plan shall submit any other information required under
PPACA. A plan shall also submit any other information required
pursuant to any regulation adopted by the department to comply with
this article.
SEC. 3. Section 10181.4 of the Insurance Code is amended to read:
10181.4. (a) For large group health insurance policies, all
health insurers shall file with the department at least 60
days prior to implementing any rate change all required
rate information for unreasonable rate increases. This
filing shall be concurrent with the written notice described in
Section 10199.1. rate changes aggregated for the
entire large group market. This information shall be submitted on or
before October 1, 2016, and on or before October 1, annually
thereafter.
(b) (1) For large group rate filings, health
insurers shall submit all information that is required by PPACA. A
health insurer shall also submit any other information required
pursuant to any regulation adopted by the department to comply with
this article.
(2) For each health insurer that offers coverage in the large
group market, the department shall conduct a public meeting regarding
large group rate changes. The meeting shall occur after the
department has reviewed the information required in (a), on or before
November 1, 2016, and on or before November 1, annually thereafter.
(c) A health insurer subject to subdivision (a) shall also
disclose the following aggregate data for all rate filings
for the aggregate rate filing for the large group
market submitted under this section in the large group health
insurance market:
(1) Number and percentage of rate filings reviewed by the
following:
(A) Plan year.
(B) Segment type.
(C) Product type.
(D) Number of insureds.
(E) Number of covered lives affected.
(2) The insurer's average rate increase by the following
categories:
(A) Plan year.
(B) Segment type.
(C) Product type.
(2) Any factors affecting the rate, and the actuarial basis for
those factors, including:
(A) Geographic region.
(B) Age, including age rating factor.
(C) Occupation.
(D) Industry.
(E) Health status, including health status factors considered.
(F) Employee, employee and dependents, including a description of
the family composition used.
(G) Insured share of premiums.
(H) Insured cost sharing.
(I) Covered benefits in addition to basic health care services, as
defined in subdivision (b) of Section 1345 of the Health and Safety
Code, and other benefits mandated under this article.
(J) Any other factors that affect the rate that are not otherwise
specified.
(3) (A) The health insurer's overall annual medical trend factor
assumptions in each rate filing for all benefits and by aggregate
benefit category, including hospital inpatient, hospital outpatient,
physician services, prescription drugs and other ancillary services,
laboratory, and radiology. A health insurer that exclusively
contracts with no more than two medical groups in the state to
provide or arrange for professional medical services for the insureds
of the health insurer shall instead disclose the amount of its
actual trend experience for the prior contract year by aggregate
benefit category, using benefit categories that are, to the maximum
extent possible, the same or similar to those used by other health
insurers.
(B) The amount of the projected trend attributable to the use of
services, price inflation, or fees and risk for annual health insurer
contract trends by aggregate benefit category, such as hospital
inpatient, hospital outpatient, physician services, prescription
drugs and other ancillary services, laboratory, and radiology. A
health insurer that exclusively contracts with no more than two
medical groups in the state to provide or arrange for professional
medical services for the insureds of the health insurer shall instead
disclose the amount of its actual trend experience for the prior
contract year by aggregate benefit category, using benefit categories
that are, to the maximum extent possible, the same or similar to
those used by other health insurers.
(C) A comparison of claims cost and rate of changes over time.
(D) Any changes in insured cost sharing over the prior year
associated with the submitted rate filing.
(E) Any changes in insured benefits over the prior year associated
with the submitted rate filing.
(3)
(F) Any cost containment and quality improvement
efforts since the health insurer's last rate filing for the same
category of health insurance policy. To the extent possible, the
health insurer shall describe any significant new health care cost
containment and quality improvement efforts and provide an estimate
of potential savings together with an estimated cost or savings for
the projection period.
(d) The department may require all health insurers to submit all
rate filings to the National Association of Insurance Commissioners'
System for Electronic Rate and Form Filing (SERFF). Submission of the
required rate filings to SERFF shall be deemed to be filing with the
department for purposes of compliance with this section.
SEC. 4. Section 10181.45 is added to the Insurance Code, to read:
10181.45. (a) (1) For large group health insurance policies, all
health insurers shall file with the department at least 60 days prior
to implementing any rate change all required rate information for
any product with a rate change if any of the following apply:
(A) The rate change is equal to or greater than the average rate
increase for individual market products approved by the California
Health Benefits Exchange.
(B) The rate change is equal to or greater than the average rate
increase approved by the CalPERS board for the subsequent calendar
year.
(C) The rate change would cause the large group purchaser to incur
the excise tax.
(D) At the request of the large group purchaser.
(2) This filing shall be concurrent with the written notice
described in subdivision (a) of Section 10199.1, except for a filing
at the request of the large group purchaser. A filing at the request
of a large group purchaser may occur at any time after receipt of the
written notice and prior to the rate taking effect.
(b) A health insurer shall disclose to the department all of the
following for each large group rate filing described in (a):
(1) Company name of the health insurer and contact information.
(2) Number of health insurance policies covered by the filing.
(3) Health insurance policy form numbers covered by the filing.
(4) Product type, such as a preferred provider organization or
health maintenance organization.
(5) Segment type.
(6) Type of health insurer involved, such as for profit or not for
profit.
(7) Whether the products are opened or closed.
(8) Enrollment in each health insurance policy and rating form.
(9) Insured months in each health insurance policy form.
(c) Any factors affecting the rate, and the actuarial basis for
the factor, including but not limited to:
(1) Geographic region.
(2) Age, including age rating factors.
(3) Occupation.
(4) Industry.
(5) Health status, including health status factors considered.
(6) Employee, employee and dependents, including a description of
the family composition used.
(7) Insured share of premiums.
(8) Insured cost sharing.
(9) Covered benefits in addition to basic health care services, as
defined in subdivision (b) of Section 1345, and other benefits
mandated under this article.
(10) Any other factor that affects the rate that is not otherwise
specified.
(d) The health insurer shall also disclose the following:
(1) Annual rate.
(2) Total earned premiums in each health insurance policy form.
(3) Total incurred claims in each health insurance policy form.
(4) Average rate increase initially requested.
(5) Review category: initial filing for new product, filing for
existing product, or resubmission.
(6) Average rate of increase.
(7) Effective date of rate increase.
(8) Number of insureds affected by each health insurance policy
form.
(9) The health insurer's overall annual medical trend factor
assumptions in each rate filing for all benefits and by aggregate
benefit category, including hospital inpatient, hospital outpatient,
physician services, prescription drugs and other ancillary services,
laboratory, and radiology. A health insurer that exclusively
contracts with no more than two medical groups in the state to
provide or arrange for professional medical services for the insureds
of the health insurer shall instead disclose the amount of its
actual trend experience for the prior contract year by aggregate
benefit category, using benefit categories that are, to the maximum
extent possible, the same or similar to those used by other health
insurers.
(10) The amount of the projected trend attributable to the use of
services, price inflation, or fees and risk for annual health
insurance policy trends by aggregate benefit category, such as
hospital inpatient, hospital outpatient, physician services,
prescription drugs and other ancillary services, laboratory, and
radiology. A health insurer that exclusively contracts with no more
than two medical groups in the state to provide or arrange for
professional medical services for the insureds of the health insurer
shall instead disclose the amount of its actual trend experience for
the prior contract year by aggregate benefit category, using benefit
categories that are, to the maximum extent possible, the same or
similar to those used by other health insurers.
(11) A comparison of claims cost and rate of changes over time.
(12) Any changes in insured cost sharing over the prior year
associated with the submitted rate filing.
(13) Any changes in insured benefits over the prior year
associated with the submitted rate filing.
(14) The certification described in subdivision (b) of Section
10181.6.
(15) Any changes in administrative costs.
(16) Any other information required for rate review under PPACA.
(17) Any cost containment and quality improvement efforts since
the health insurer's last rate filing for the same category of health
insurance policy. To the extent possible, the health insurer shall
describe any significant new health care cost containment and quality
improvement efforts and provide an estimate of potential savings
together with an estimated cost or savings for the projection period.
(e) For rate filings subject to this section, the commissioner
shall make a decision to modify or deny a rate change that is
unreasonable, inadequate, or otherwise in violation of this article
or federal law prior to the implementation of the rate change by the
health insurer.
(f) The department may require all health insurers to submit all
rate filings to the National Association of Insurance Commissioners'
System for Electronic Rate and Form Filing (SERFF). Submission of the
required rate filings to SERFF shall be deemed to be filing with the
department for purposes of compliance with this section.
(g) A health insurer shall submit any other information required
under PPACA. A health insurer shall also submit any other information
required pursuant to any regulation adopted by the department to
comply with this article.
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.