ABX1 1, Nunez, Amended 1-16-08. The Health Care Security and Cost Reduction Act. Summary by Len Doberne, MD 1/21/08.
The bill requires, by July 1, 2010, California residents to maintain at least a minimum policy of health care coverage for themselves and their dependents unless their income is less than or equal to 2.5X the federal policy level, a minimum policy costs more than 5% of the person's family income, a person has a undue financial hardship, or has been in California for less than 6 months and does not qualify for a guaranteed issue medical plan.
"California resident" means an individual who is a resident of the state or is physically present in the state for at least six months, having entered the state with an employment commitment or to obtain employment, whether or not employed at the time of application for health care coverage or after acceptance.
The Managed Risk Medical Insurance Board will develop a minimum creditable coverage requirement for the individual health insurance market including physician, hospital, and preventive services inclusive of existing coverage requirements under law, taking into account protecting purchasers from catastrophic medical costs, encouraging periodic health evaluations and use of services that have been shown to be effective in detecting, preventing, or managing serious illness and chronic conditions. The bill specifically considers covering treatments offered by a church or organization whose principles include healing entirely by prayer.
The Board will establish affordability and hardship standards, impact of premiums on affordability of other necessities of life, including housing, utilities, food, clothing, child care, transportation, education, and taxes.
The Board will inform the public of options available to obtain affordable coverage through public programs, the state purchasing pool, and commercial coverage.
The Board will work to establish point-of-service methods to facilitate enrollment of people who do not have minimum coverage.
The Board will pay for minimum coverage for people not covered for a period of 62 days, and attempt to recoup the funds afterwards.
Insurance plans are to compete on the basis of price, quality, and service, and not on risk selection.
Health insurance/plan offerings will be categorized into 5 coverage choice categories of approved health benefits, providing a reasonable continuum of lowest to highest level of health care benefits available for each health service plan. Health insurers may offer multiple products in each category. Each Health insurance plan will have one HMO and one PPO available with the lowest benefit of each category. Rates shall be in effect for at least 12 months. Rates for more than one subscriber shall be based on the younger spouse or domestic partner.
Health insurers will have flexibility in establishing provider networks, and the provider network offered for one health insurance policy in one coverage choice category must be offered for at least one health insurance policy in each coverage choice category.
Health insurance policies regulated by the bill excludes many types of specialty insurance including accidental death and dismemberment, disability, accident only, worker's comp, long term, dental, vision, Medicare supplement, specific disease insurance, and behavioral health only policies.
The Managed Risk Medical Insurance Board will determine the minimum policy of health care coverage offered after March 1, 2009. However, a non-compliant plan existing before March 1, 2009 may be renewed indefinitely without increasing benefits to the new requirements. However, plans with a lifetime benefit maximum will be modified to be in compliance with minimum policy requirements effective July 1, 2010.
There will be guaranteed issue of health insurance to those who agree to make premium payments, live or work in the service area of the health plan, provide the requested information needed to determine the rate. If the person rejected as not eligible for a specific plan, the plan must offer another plan for which the person is eligible. Health plans may also reject an individual enrollment if the person and dependents do not work or reside in a health plan's service area, if the health plan demonstrates to the director that it will not have sufficient resources to cover that or any individual new enrollee, the person has been in California 6 months or less, the plan is predominantly for Medi-Cal or Medi-Care enrollees, or the person has been granted a hardship exemption from purchasing health insurance.
If a person drops or is dropped from health insurance prior to the policy anniversary date of the policy, re-enrollment is limited to the same coverage choice category as previously.
Healthplan enrollees may change coverage categories only on the anniversary date of the policy. Enrollees can move up only one coverage category at the anniversary date of their policy, unless a qualifying event occurs. Qualifying events include: death of a policy subscriber, marriage or entrance into a domestic partnership by a subscriber, divorce or legal separation of an individual from a subscriber, loss of dependent status by a dependent enrolled in a group health care coverage, birth or adoption of a child, or loss of minimum coverage.
A health plan can be cancelled only upon non-payment of a premium for at least 15 days after the subscriber is notified of delinquency, fraud or intentional misrepresentation fo material fact by the individual, fraud or deception in the use of the services of the plan, or knowingly permitting fraud of deception by another person, movement of the subcriber outside the health plan's service area, or withdrawal of the health plan from the market.
For the 1st and 2nd year after the bill is adapted, risk factors can be adjusted by +/- 20%; for the 3rd and 4th years, risk factors can be adjusted by +/- 10%; a specific individual's risk factors cannot be adjusted more than 5% per year. After 4 years, no risk factor adjustments can be made.
A uniform evaluation process determined by the director, the Insurance Commissioner, the Managed Risk Medical Insurance Board, and a qualified independent acturary will determine risk factor adjustments to be applied to an individual's premium rate based on actual or expected health care use.
It will be an unfair labor practice fro an employer to refer an individual employee or their dependent to a government sponsored program in order to separate that person from the group health coverage provided by the employee's employment, or change the share-of-cost ratio based on the employee's wage base or job classification.
From 2010 through 2014, there shall be a credit against the "net tax" equal to qualified health care plan premiums in excess of 5.5% of a taxpayer's adjusted gross income for the taxable year, reduced by 1% for every 2% by which the taxpayer's income exceeds 3xfederal poverty level, and no tax credit over 4xfederal poverty level. [This provision has extended and complicated provisions that seem to spawn a new bureaucracy.]
The MRMIB will forward information on purchase of health plans through the MRMIB to the Franchise Tax Board. The Franchise Tax Board will provide the MRMIB with information on income, filing status, and dependents.
Provisions are made to allow changes in health care plan premium rates, including adjustment for high-cost cases or high-risk categories of patients for individual insurers. Reinsurance may be available, paid by the California Health Trust Fund.
Health insurance plan offerings will be changed to classes of approved health benefits, and may have PPO, EPO, POS, and HMO provider models; if a specific model is available for one class of health benefits, it must be available for all levels of health benefits offered.
When a premium payment is submitted by the 15th of a month, the coverage shall be effective by the the 1st of the next month.
Health plans shall have on their web sites a matrix showing benefits for all available individual health contracts including deductables, co-payments, out of pocket maximums, professional, outpatient, preventative, hospitalization, emergency, ambulance, home health, mental health and substance abuse services as well as prescription drug coverage, durable medical equipment, and phone numbers for additional assistance.
Health plans shall be priced according to the differences in benefits and the "effectiveness of a provider network".
Insurance benefits can be terminated for non-payment of premiums, for fraud or misrepresentation by the insured, movement of the insured outside the coverage area, or withdrawal of the plan or insurer from the individual health care market.
There may be a preexisting condition exclusion of up to 12 months for persons who fails to maintain required healthcare coverage for over 62 days, with the length of preexisting condition exclusion not to exceed the length of non-coverage in the prior 12 months for which medical advice was recommended or received by a licensed medical practitioner.
A Healthy Action Incentives and Rewards program must be offered with group healthcare plans that includes health risk appraisals, with access to appropriate health care provider to address the findings of the assessment. There will be an incentives offered for smoking cessation, physical activity, and other healthy behavior that may be in the form of premium reduction after successful completion of a program, or other incentives such as nonprescription pharmacy products.
The bill creates the California Cooperative Health Insurance Purchasing Program (Cal-CHIPP), a statewide purchasing pool for health care, administered by the Managed Risk Medical Insurance Board. The bill specifies complicated, but generally lax eligibility requirements for Cal-CHIPP; the board will develop a variety of benefit plan designs, including the Cal-CHIPP Healthy Families plan for low-income persons. There are no out-of-pocket costs or premiums for individuals with a family income of up to 1.5xfederal poverty level; for 1.5-2.5xfederal poverty level, premiums shall not exceed 5% of family income minus applicable deductions. The employer can pay all or a part of the premium for their employees enrolled in Cal-CHIPP.
Employees and their families shall be eligible fro Cal-CHIPP if the employer has elected to pay into the California Health Trust Fund, or if the individual is eligible for a state tax credit for purchasing affordable health care coverage.
People without healthcare coverage for >63 days after losing employment based healthcare coverage will have the premium paid by the Managed Risk Medical Insurance Board for a minimum coverage plan through CHIPP. The MRMIB may later seek to recoup the cost from the person.
There are long, complicated, and confusing passages regarding eligibility for various state and federally supported programs, mostly increasing eligibility for free or greatly subsidized care for up to 3xfederal poverty level. The details of these complex rules regarding coverage by government subsidized healthcare programs, including Medi-Cal and the Healthy Families program that are beyond the scope of this summary. However, some provisions are noted, including:
-Starting July 1, 2010, Medi-Cal will exempt all resources for applicants and recipients. In general, there will be no asset tests. [You could be a multi-millionaire and still get state-assisted medical care if you don't have an income.]
-Beneficiaries who are not required to pay premiums will have simplified semiannual reporting reduced to checking off a box on a return form verifying their address. Whole categories of beneficiaries will be exempted for this requirement, including aged, blind, under 19 years old, pregnant, and others "for simplicity of administration".
-There will be a local coverage option for Medi-Cal which appears to be a county run alternative program.
-If applicant's income documentation cannot be provided, a signed stated income shall constitute verification.
-Income between 2x and 3x the federal poverty level will be disregarded.
-After June 30, 2009, children who otherwise meet eligibility requirements for the program but for their immigration status are eligible for the program.
-Applicants to the purchasing pool shall pay, or have paid by a family contribution sponsor the following flat fees and amounts for health, dental, and vision plans selected by the applicant that exceed the highest cost family value package in the geographic area. Monthly flat fee payments for family value packages are:
$7/child, maximum $14/family up to 1.5xpoverty level
$9/child, maximum $27/family 1.5xpoverty level to 2xpoverty level.
In areas that are designated as the Community Provider Plan, the fees are reduced to:
$4/child, maximum $8/family up to 1.5xpoverty level
$6/child, maximum $18/family 1.5xpoverty level to 2xpoverty level.
-Families that pay 3 months of contributions in advance will get the 4th month free.
-The Medi-Cal Hospital Rate Stabilization Act specifies reimbursement for 21 public hospitals, and for private hospitals in a very long and complicated section.
-The Medi-Cal Physician Services Rate Increase Act intends to increase payment to physicians and non-physician providers up to the Medicare reimbursement rate, dependent on funding, with up to 25% of the rate increase to be directly linked to performance measures, plus a supplemental rate augmentation paid for physician services in California Children Services.
There will be a health care coverage credit for persons between 50-64, not qualified taxpayers, up to $50,000,000 annually, subject to appropriation.
At least 85% of insurance premiums, after deduction of taxes, are to be spent on "health care benefits". "Health care benefits" includes health care services and costs of programs, activities, training and informational materials to improve the provision of quality care, improve outcomes, or encourage the use of evidence-based medicines, disease management expences, plan medical advice by telephone, and payments to providers for pay-for performance initiatives, and other expenses to be specified in conjunction with the Department of Insurance. The 85% requirement can be waived for up to 2 years for new health service plan offerings in California, and does not apply to Medicare supplemental plans or specialized plans re: ambulance, dental, behavioral health, chiropractic, naturopathic services.
Health plans can use electronic communication with patients, and such communications are confidential.
Health care plans and disability insurers may not compensate claim review personnel based on the amount of claim payment reduction or number of claims denied. Health care plans and disability insurers may not set goals based on the number of people removed from health care coverage or associated health care plan financial savings.
There will be a $100-$500 fine per employee on employers who do not establish or maintain a cafeteria plan.
This bill requires the California Health and Human Services Agency, in consultation with the Board of Administration of PERS, to develop health care provider performance measurement benchmarks to advance a common statewide framework for health care quality measurement and reporting, and incorporate these benchmarks into a common pay-for-performance model for every state-administered health care program.
Hospitals will be unable to bill patients with non-contracted insurance beyond co-payments/share of cost amounts for emergency services and post-stabilization care.
The Office of Patient Advocate shall provide public access data obtained by the Office of Statewide Health Planning and Development to assist the public in choosing health plans, hospitals, medical groups, nursing homes, and other providers about whom the office has collected information.
The Secretary of California Health and Human Services will track the effects of the act on sustainability and solvency of the program, data on persons purchasing health care coverage through the act, the cost of health care purchased through various private and government sources, reviews of the plans available, their financial conditions, and medical loss ratios. There will be an assessment of the effect of the act on employers, employment, administrative costs, employee turnover rates, wages, changes in the labor market, underground economic activity, uncompensated care, and emergency room use. Racial, ethnic, and regional disparities in access to health care will be assessed. Capacity of the healthcare professions and facilities will be monitored.
Physician assistants may, upon specific written authorization of a physician, nurse practitioner, nurse-midwife, physician assistant, or licensed podiatrist, administer intradermal, subcutaneous, or intramuscular medications, perform skin tests, and follow written instructions in the performance of tasks or supportive services, supervised by a physician, podiatrist, nurse practitioner, nurse-midwife, or physician assistant, and does not need a licensed physician on site.
A Task Force on Nurse Practitioner Scope of Practice consisting of the Director of Consumer Affairs, 3 members of the Medical Board of California (2 appointed by the Governor and 1 by the Speaker of the Assembly), 3 members of the Board of Registered Nursing (2 appointed by the governor and 1 by the Senate Committee on Rules), and 2 non-voting representatives of an institution of higher education appointed by the Governor will recommend changes in scope of practice for nurse practitioners by June 30, 2009, that will, consistent with existing law, be implemented by the Director of Consumer Affairs by July 1, 2010. There is no provision for legislative or public oversight of the changes recommended by the board and subsequently implemented. The cost of implementing these changes will be paid by the Medical Board of California and the Board of Registered Nursing.
There would be an electronic personal health record that will provide real-time patient-specific information regarding eligibility for covered benefits through an internet-based system. Enrolees may opt to include personal health information as well.
Electronic prescription capability will be required for all prescribers and pharmacies in California by January 1, 2012, with real time verification of an individual's eligibility for benefits and whether the prescribed medication is a covered benefit, with written receipts to patients. A pilot program for Medi-Cal providers will be developed, contingent on FFP or Federal grant funds. The department may provide electronic prescribing equipment and software to Medi-Cal prescribers.
Drug formularies will be available electronically to prescibers and pharmacies by January 1, 2010.
School districts may provide information regarding health insurance requirements and toll free telephone numbers for government subsidized health insurance programs.
The bill will create the California Health Benefits Service Program to identify barriers and incentives, and to facilitate joint ventures licensed as Knox-Keene health care service plans between certain county-organized health plans and 22 designated public hospitals, county health clinics, and community clinics.There will be a Stakeholder Committee appointed by the Director of Health Care Services, the Senate Committee on Rules, and the Speaker of the Assembly that will provide input into the program.
The California Diabetes Program will provide information on screening, prevention, and treatment programs for pre-diabetes and diabetes.
The 10 largest health care insurance providers will be surveyed for smoking cessation benefits, with a summary posted on the Web. One year later the awareness of availability of smoking cessation benefits and thier effect on smoking will be evaluated.
A Community Makeover Grant program will promote active living and healthy eating, and educate the public about obesity prevention. Schools shall promote fresh fruits, vegetables, and whole grains. Employers will be given assistance for integrating wellness programs into benefit plans and worksites.
Community clinics in underserved areas shall receive funds. Clinics will receive a minimum of $71.50 payment for each patient visit.
By July 1, 2010, there will be an electronic system developed to provide broad service clinics, in underserved areas or in which 50% of the population are at or below 2.5 times the federal poverty level, with information on eligibility for patients. The department shall pay claims from selected primary care clinics up to each clinic's annual allocation.
Risk-adjusted outcome reports will be issued starting Jan. 1, 2010 re: outcome for percutaneous coronary interventions. Based on statistical and technical information, individual hospitals and surgeons may be excluded from the reports.
The bill creates the California Health Care Cost and Quality Transparency Committee: 16 members, 10 appointed by the governor (1 researcher experienced in health care data and cost efficiency, 1 each of public hospitals, private hospitals, multi-speciality medical groups, health insurers, licensed health professionals in independent practice, large employers that purchase group health care coverage for their employees, labor unions, employers that purchase group health care coverage or representative of a nonprofit organization with experience working with employers to enhance value of health care coverage), 3 appointed by the Senate Committee on Rules (a practicing physician, a representative of a labor union, and a representative of consumers with a record of advocating health care issues, and ), and 3 appointed by the Assembly Speaker (1 representative each of consumers, small employers, and nonprofit labor-management purchaser coalition), with non voting ex officio members (Executive officer or designee each of CALPERS,directro of Managed Health Care, Insurance Commissioner, Department of Public Health, and the State Department of Health Care Services. The committee will develop and regularly update a Health Care Cost and Quality and Transparency Plan, with an annual report. They will appoint at least one technical committee. They will appoint at least one clinical panel with 2 committee members, and a majority of clinicians with expertise related to the activities and any issues under consideration, and experts in collecting and reporting data. The initial panel will report on how to measure quality improvement, necessary data elements, and appropriate risk-adjustment methods, along with statistical validity and limitations on conclusions that can be drawn from the data. The panel will recommend implementation of data acquisiton that is cost effective, reliable, and reasonable for data sources. The Health Care Cost and Quality and Transparency Plan will result in public reporting of safety, quality, and cost efficiency of service from health plans, medical groups, facilities, licensed physicians, and other licensed health professionals in independent practice. It will recommend a fee schedule to be charged to each data source and user sufficient to fund implementation, which will be approved by the Legislature and the Governor in the annual Budget Act. Fees charged to a hospital for data collection and fees pursuant to Section 127280 of the Health and Safety Code shall not exceed 0.06 % of the gross operating cost of the hospital. The Secretary of California Health and Human Services will accept the Plan and start implementation, or refer the plan back for modification. Patient privacy will be protected, and all data sources identified in any outcome report will be able to review, comment on, and appeal any outcome report in which the data source is identified, before it is released to the public. Confidential contracted rates between payers and providers will not be disclosed, but relative or comparative cost to payers or purchasers of health care services will be disclosed.
Adoption and readoption of some regulations in the bill would be deemed an emergency and necessary for the immediate preservation of public peace, health, and safety, or general welfare for purposes of Sections 11346.1 and 11349.6 of the Government Code, and the board is exempted from the requirement that it describe specific facts showing the need for immediate action and from review by the Office of Administrative Law.
Violation of several of the bill's provisions and requirements would be a crime.
Funding for the act shall come from employers, individuals, governments, and health care providers. Hospitals will pay fees at 4% of patient revenues. There will be an increased tax on cigarettes.
Implementation of the act is dependent on a finding by the Director of Finance that the financial resources necessary to implement the provisions of the act are available.
-Len Doberne, MD