Health care coverage.

(1) Existing federal law, the federal Patient Protection and Affordable Care Act (PPACA) , enacts various health care coverage market reforms that take effect January 1, 2014. Among other things, PPACA requires each state to, by January 1, 2014, establish an American Health Benefit Exchange that facilitates the purchase of qualified health plans by qualified individuals and qualified small employers. PPACA requires a health insurance issuer to consider all enrollees in its individual market plans to be part of a single risk pool and to consider all enrollees in its small group market plans to be part of a single risk pool. PPACA also requires an issuer to establish an index rate for each of those markets based on the total combined claim costs for providing essential health benefits within the single risk pool for that market and authorizes the issuer to vary premium rates from the index rate based only on specified factors. PPACA requires that the index rate be adjusted based on Exchange user fees and expected payments and charges under certain risk adjustment and reinsurance programs. Existing law establishes the California Health Benefit Exchange within state government for the purpose of facilitating the purchase of qualified health plans through the Exchange by qualified individuals and small employers. 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 and a health insurer to consider as a single risk pool the claims experience of all enrollees and insureds in its nongrandfathered small group market plans and to also consider as a single risk pool the claims experience of all enrollees and insureds in its nongrandfathered individual market plans. Existing law requires a plan or insurer to establish an index rate for those markets, as specified, and authorizes the plan or insurer to vary premium rates from the index rate based only on specified factors. Existing law requires that the index rate be adjusted based on expected payments and charges under the risk adjustment and reinsurance programs specified under PPACA. This bill would require that the index rate also be adjusted based on Exchange user fees, as specified under PPACA. PPACA requires a health insurance issuer offering coverage in the individual or small group market to ensure that the coverage includes the essential health benefits package and defines this package to mean coverage that, among other requirements, provides the platinum, gold, silver, or bronze level of coverage or, in the individual market, provides catastrophic coverage to specified individuals. Existing law requires health care service plans and health insurers participating in the Exchange to fairly and affirmatively offer, market, and sell in the Exchange at least one product in each of these 5 levels of coverage. Existing law requires a health care service plan or health insurer that does not participate in the Exchange to offer at least one standardized product designated by the Exchange in each of the platinum, gold, silver, and bronze levels of coverage. This bill would define the term "health benefit plan" for purposes of the provisions governing nongrandfathered small employer health care service plans. The bill would specify that health care service plans and health insurers participating in the small group market of the Exchange are only required to fairly and affirmatively offer, market, and sell in that market the platinum, gold, silver, and bronze levels of coverage. The bill would also specify that the requirement for plans or insurers not participating in the Exchange to offer at least one standardized product designated by the Exchange in each of those levels of coverage only applies to the individual and small group markets. (2) Existing law prohibits a health care service plan or a health insurer offering coverage in the individual market from changing the premium rate or coverage without providing specified notice to the subscriber or policyholder at least 60 days prior to the contract or policy renewal date. The bill would require that the notice be sent on the earlier of 60 days prior to the renewal date or 15 days prior to the start of the annual enrollment period applicable to the contract or policy. Existing law requires a plan or insurer that declines to offer coverage or denies enrollment for an individual or his or her dependents applying for individual coverage or that offers individual or small group coverage at a rate that is higher than the standard rate to provide the applicant with the reason for the decision in writing. Existing law also requires the plan or insurer to inform the applicant about specified high risk pools, including the California Major Risk Medical Insurance Program, and specifies that this requirement does not apply when a plan or insurer rejects an applicant for Medicare supplement coverage. This bill would delete the requirement that the plan or insurer provide the applicant with the reason for the denial or higher than standard rate. The bill would require a plan or insurer to inform specified applicants for a grandfathered health plan who are denied or charged a higher than standard rate, and applicants for Medicare supplement coverage who are denied due to a specified condition, about the California Major Risk Medical Insurance Program and the Exchange, as specified. (3) Existing law requires a health care service plan or health insurer in the individual or small group market to file rate information with the Department of Managed Health Care or the Department of Insurance, as applicable, at least 60 days prior to implementing a rate change and requires the filing to be concurrent with the notice sent to subscribers prior to increasing premium rates. Existing law requires that the rate filing include specified information regarding the proposed rate increase and the plan's overall annual medical trend factor assumptions in each rate filing for all benefits and by aggregate benefit category. Existing law authorizes the plan to provide aggregated additional data that demonstrates year-to-year cost increases in specific benefit categories in major geographic regions of the state to be defined by the departments to include no more than 9 regions. This bill would eliminate the requirement that the rate filing be concurrent with the notice sent to subscribers prior to increasing premium rates. The bill would also require that the geographic regions correspond with those regions used by the plan to establish premium rates. (4) This bill would incorporate additional changes to Section 10753.05 of the Insurance Code proposed by SB 1034 that would become operative if this bill and SB 1034 are both enacted and this bill is enacted last. (5) 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.