BILL NUMBER: SB 780	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Jackson

                        FEBRUARY 22, 2013

   An act to amend Sections 10123.12, 10601, and 10604 of, and to add
Section 10133.57 to, the Insurance Code, relating to insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 780, as introduced, Jackson. Disability insurance.
   Existing law provides for the regulation of health insurers by the
Department of Insurance. Under existing law, a health insurer may
contract with providers for alternative rates of payment. Existing
law requires those insurers to file a policy with the department
describing how the insurer facilitates the continuity of care for new
insureds under group policies receiving services for an acute
condition from a noncontracting provider. Existing law also requires
those health insurers to, at the request of an insured, arrange for
the completion of covered services by a terminated provider if the
insured is undergoing treatment for certain conditions, as specified.

   The bill would require a health insurer to notify the department
at least 30 days prior to terminating a contract with a provider
group or general acute care hospital to provide services at
alternative rates of payment if the contract termination would result
in a material change to the provider network, and would require the
insurer to send written notice, at least 15 days prior to the
termination date of the contract, to all insureds who have obtained
services from the provider group or general acute hospital within the
last 6 months, as specified.
   Existing law requires disability insurance policies to include a
disclosure form that contains specified information, including the
principal benefits and coverage of the policy, the exceptions,
reductions, and limitations that apply to the policy, and a
statement, with respect to health insurance policies, describing how
participation in the policy may affect the choice of physician,
hospital, or health care providers, and describing the extent of
financial liability that may be incurred if care is furnished by a
nonparticipating provider.
   With respect to health insurance policies, this bill would require
the disclosure form to include additional information, including
conditions and procedures for cancellation, rescission, or
nonrenewal, a description of the limitations on the insured's choice
of provider, and, with respect to insurers that contract for
alternate rates of payment, a statement describing the basic method
of reimbursement made to its participating providers, as specified.
The bill would also require the first page of the disclosure form for
health insurance policies to include other specified information.
The bill would require a health insurer, medical group, or
participating provider that uses or receives financial bonuses or
other incentives to provide a written summary of specified
information to any requesting person.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 10123.12 of the Insurance Code is amended to
read:
   10123.12.   (a)    Every health insurer,
including those insurers that contract for alternative rates of
payment pursuant to Section 10133, and every self-insured employee
welfare benefit plan that will affect the choice of physician,
hospital, or other health care providers  ,  shall include
within its disclosure form and within its evidence or certificate of
coverage a statement clearly describing how participation in the
policy or plan may affect the choice of physician, hospital, or other
health care providers, and describing the nature and extent of the
financial liability that is, or that may be, incurred by the insured,
enrollee, or covered dependents if care is furnished by a provider
that does not have a contract with the insurer or plan to provide
service at alternative rates of payment pursuant to Section 10133.
The form shall clearly inform prospective insureds or plan enrollees
that participation in the policy or plan will affect the person's
choice in this regard by placing the following statement in a
conspicuous place on all material required to be given to prospective
insureds or plan enrollees including promotional and descriptive
material, disclosure forms, and certificates and evidences of
coverage:
       PLEASE READ THE FOLLOWING INFORMATION SO YOU WILL KNOW FROM
WHOM OR WHAT GROUP OF PROVIDERS HEALTH CARE MAY BE OBTAINED

   It is not the intent of this section to require that the names of
individual health care providers be enumerated to prospective
insureds or enrollees.
   If a health insurer providing coverage for hospital, medical, or
surgical expenses provides a list of facilities to patients or
contracting providers, the insurer shall include within the 
provider  listing a notification that insureds or enrollees
may contact the insurer in order to obtain a list of the facilities
with which the health insurer is contracting for subacute care and/or
transitional inpatient care. 
   (b) Every health insurer that contracts for alternative rates of
payment pursuant to Section 10133 shall include within its disclosure
form a statement clearly describing the basic method of
reimbursement, including the scope and general methods of payment,
made to its contracting providers of health care services, and
whether financial bonuses or any other incentives are used. The
disclosure form shall indicate that, if an insured wishes to know
more about these issues, the insured may request additional
information from the insurer, the insured's provider, or the provider'
s medical group regarding the information required pursuant to
subdivision (c).  
   (c) If a health insurer, medical group, or participating health
care provider uses or receives financial bonuses or any other
incentives, the insurer, medical group, or health care provider shall
provide a written summary to any person who requests it that
includes both of the following:  
   (1) A general description of the bonus and any other incentive
arrangements used in its compensation agreements. Nothing in this
paragraph shall be construed to require disclosure of trade secrets
or commercial or financial information that is privileged or
confidential, such as payment rates, as determined by the
commissioner, pursuant to state law.  
   (2) A description regarding whether, and in what manner, the
bonuses and any other incentives are related to a provider's use of
referral services.  
   (d) The statements and written information provided pursuant to
subdivisions (b) and (c) shall be communicated in clear and simple
language that enables consumers to evaluate and compare health
insurance policies. 
  SEC. 2.  Section 10133.57 is added to the Insurance Code, to read:
   10133.57.  (a) At least 30 days prior to the termination date of a
contract between a health insurer and a provider group or a general
acute care hospital to provide services at alternative rates of
payment pursuant to Section 10133, the insurer shall submit a written
notice notifying the department of the termination if the
termination of the contract would result in a material change to the
insurer's provider network, as defined by the department by
regulation. The insurer shall include with that notice the written
notice the insurer proposes to send to affected insureds pursuant to
subdivision (b).
   (b) At least 15 days prior to the termination date of a contract
between a health insurer and a provider group or a general acute care
hospital to provide services at alternative rates of payment
pursuant to Section 10133, the insurer shall send the written notice
described in subdivision (a) by United States mail to all insureds
who have obtained services from the provider group or general acute
care hospital within the preceding six months.
   (c) If an individual provider terminates his or her contract or
employment with a provider group that contracts with a health insurer
and that termination is subject to the requirements of subdivision
(b), the insurer may require that the provider group send the notice
required by subdivision (b).
   (d) If, after sending the notice required by subdivision (b), a
health insurer reaches an agreement with a terminated provider group
or general acute care hospital to renew or enter into a new contract
or to not terminate its contract, the insurer shall send a written
notice notifying the affected covered lives that the provider group
or hospital remains in their provider network.
   (e) A health insurer or a provider group shall include in the
written notice sent pursuant to subdivision (b) or (c) the following
information in not less than 12-point type:
   (1) The name of the terminated provider group or general acute
care hospital, or in the case of a notice sent pursuant to
subdivision (c), the name of the terminated individual provider.
   (2) The date of the pending contract termination.
   (3) A description explaining how to access a list of contracted
providers in the insured's provider network.
   (4) A statement that the insured may contact the insurer's
customer service department to request completion of care for an
ongoing course of treatment from a terminated provider and a
telephone number for further explanation.
   (5) A statement informing the insured that he or she may be
required to pay a larger portion of costs if the insured continues to
use the terminated provider.
   (6) The following statement:

   "If you have been receiving care from a health care provider, you
may have a right to keep your provider for a designated time period.
Please contact your insurer's customer service department, and if you
have further questions, you are encouraged to contact the Department
of Insurance, which protects insurance consumers, by telephone at
its toll-free number, 800-927-HELP (4357), or at a TDD number for the
hearing impaired at 800-482-4833, or online at www.insurance.ca.gov."


   (f) The commissioner may adopt regulations in accordance with the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code)
that are necessary to implement the provisions of this section.
  SEC. 3.  Section 10601 of the Insurance Code is amended to read:
   10601.  As used in this chapter:
   (a) "Benefits and coverage" means the accident, sickness ,
 or disability indemnity available under a policy of disability
insurance.
   (b) "Exception" means any provision in a policy whereby coverage
for a specified hazard or condition is entirely eliminated.
   (c) "Reduction" means any provision in a policy  which
  that  reduces the amount of a policy benefit to
some amount or period less than would be otherwise payable for
medically authorized expenses or services had  such a
  the  reduction not been used.
   (d) "Limitation" means any provision other than an exception or a
reduction  which   that  restricts coverage
under the policy.
   (e) "Presenting for examination or sale" means either (1)
publication and dissemination of any brochure, mailer, advertisement,
or form  which   that  constitutes a
presentation of the provisions of the policy and  which
  that  provides a policy enrollment or application
form, or (2) consultations or discussions between prospective
beneficiaries or their contract agents and employees or agents of
disability insurers, when such   those 
consultations or discussions include presentation of formal,
organized information about the policy  which  
that  is intended to influence or inform the prospective insured
or beneficiary, such as brochures, summaries, charts, slides, or
other modes of information in lieu of or in addition to the policy
itself.
   (f) "Disability insurance" means every policy of disability
insurance  ,   and  self-insured employee
welfare benefit plan  , and nonprofit hospital service plan
 issued, delivered, or entered into pursuant to or described
in Chapter 1 (commencing with Section 10110)  , 
 or  Chapter 4 (commencing with Section 10270)  , or
Chapter 11A (commencing with Section 11491)  of this part.
   (g) "Insurer" means every insurer transacting disability insurance
 ,   and  every self-insured employee
welfare plan  , and every nonprofit hospital service plan
 specified in subdivision  (e)   (f)
 .
   (h) "Disclosure form" means the standard supplemental disclosure
form required pursuant to Section 10603. 
   (i) "Small group health insurance policy" means a group health
insurance policy issued to a small employer, as defined in Section
10700, 10753, or 10755. 
  SEC. 4.  Section 10604 of the Insurance Code is amended to read:
   10604.  The disclosure form shall include  at least  the
following information, in concise and specific terms, relative to the
disability insurance policy  , together with additional
information as the commissioner may require in connection with the
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   Other  categories as
the commissioner may prescribe.
   (b) The principal benefits and coverage of the disability
insurance policy  , including coverage for acute care and
subacute care if the policy is a health insurance policy, as defined
in Section 106  .
   (c) The exceptions, reductions, and limitations that apply to
 such   the  policy.
   (d) A summary, including a citation of the relevant contractual
provisions, of the process used to authorize  , modify, delay,
 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
  health insurance as defined in Section 106  .
   (e) The full premium cost of  such   the
 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 a health insurance policy, as defined in Section 106, all
of the following:  
   (1) A notice on the first page of the disclosure form that
conforms with all of the following conditions:  
   (A) (i) States that the form discloses the terms and conditions of
coverage.  
   (ii) States, with respect to individual health insurance policies,
small group health insurance policies, and any group health
insurance policies, that the applicant has a right to view the
disclosure form and policy prior to beginning coverage under the
policy, and, if the policy does not accompany the disclosure form,
the notice shall specify where the policy can be obtained prior to
beginning coverage.  
   (B) Includes a statement that the disclosure and the policy 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 insurer's telephone number or numbers that may be
used by an applicant to receive additional information about the
benefits of the policy, or states where those telephone number or
numbers are located in the disclosure form.  
   (D) For individual health insurance policies and small group
health insurance policies, states where a health policy benefits and
coverage matrix is located.  
   (E) Is printed in type no smaller than that used for the remainder
of the disclosure form and is displayed prominently on the page.
 
   (2) A statement as to when benefits shall cease in the event of
nonpayment of premium and the effect of nonpayment upon an insured
who is hospitalized or undergoing treatment for an ongoing condition.
 
   (3) To the extent that the policy or insurer permits a free choice
of provider to its insureds, the statement shall disclose,
consistent with Section 10123.12, the nature and extent of choice
permitted and the financial liability that is, or may be, incurred by
the insured, covered dependents, or a third party by reason of the
exercise of that choice.  
   (4) For group health insurance policies, including small group
health insurance policies, a summary of the terms and conditions
under which insureds may remain in the policy in the event the group
ceases to exist, the group policy is terminated, an individual
insured leaves the group, or the insureds' eligibility status
changes.  
   (5) If the policy utilizes arbitration to settle disputes, a
statement of that fact. If the policy requires binding arbitration, a
disclosure pursuant to Section 10123.19.  
   (6) A description of any limitations on the insured's choice of
primary care physician, specialty care physician, or nonphysician
health care practitioner, based on service area and limitations on
the insured's choice of acute care hospital care, subacute or
transitional inpatient care, or skilled nursing facility.  
   (7) Conditions and procedures for cancellation, rescission, or
nonrenewal.  
   (8) A description as to how an insured may request continuity of
care as required by Sections 10133.55 and 10133.56, and request a
second opinion pursuant to Section 10123.68.  
   (9) Information concerning the right of an insured to request an
independent medical review in accordance with Article 3.5 (commencing
with Section 10169) of Chapter 1.  
   (10) A notice as required by Section 791.04.