Signed by Governor Arnold Schwarzenegger

Vote Smart's Synopsis:

Vote to concur with Senate amendments and pass a bill that modifies the California insurance code.

Highlights:

• Prohibits the cancellation or non-renewal of enrollment in a health care service plan except in, but not limited to, the following cases (Sec. 4):
• For non-payment of the required premiums by an individual, an employer, or contractholder, provided that a notified 30-day grace period has passed
• Fraud or misrepresentation is demonstrated as having been purported by the individual contract holder;
• An individual subscriber no longer lives or works in the plan's area; or
• If an employer or contractholder violates a material contract provision relating to employer contribution or group participation rates

• Requires any decisions to approve, modify, or deny coverage based on "medical necessity' to be made in a timely fashion, within 5 days of receiving the relevant information, appropriate for the patient's condition, or within 30 days if the review is retrospective (Sec. 5):

• If the condition of an enrollee is one of serious and imminent threat to the enrollee's health, or if the normal timeframe for decision-making would be detrimental to the enrollee's health, then an exception to the time frame will be made.

• Requires all health care service plans to do, but not be limited to, the following (Sec. 7):
• Establish and maintain a grievance system, and provide reasonable procedures that shall ensure consideration of enrollee grievances;
• Inform enrollees of the procedure of processing and resolving grievances;
• Provide enrollees with clear and concise responses to any grievances written or received; and
• Provide continuing coverage for grievances involving the cancellation of coverage until a final determination has been made relating to such cancellation.

• Prohibits the practice of postclaims underwriting (Sec. 9):
• Defines "postclaims underwriting" as the "rescinding, canceling, or limiting of a plan contract due to the plan's failure to complete medical underwriting and resolve all reasonable questions arising from written information submitted on or with an application before issuing the plan contract".

• Requires insurers of disabilities to have written policies that establish how the insurer reviews and either approves, modifies, delays, or denies requests by providers of health care services for those insured (Sec. 10).

• Prohibits any individual who is not a licensed physician or licensed health care professional to deny or modify any request for authorization of services for reasons of medical necessity (Sec. 10).

• Authorizes individuals who believe their coverage is about to be canceled, not renewed, or rescinded to request a review by the commissioner to determine whether or not a complaint, or cancellation, is justified (Sec. 13).

Full Bill Text

Vote Smart's Synopsis:

Vote pass a bill that modifies the California insurance code.

Highlights:

• Prohibits the cancellation or non-renewal of enrollment in a health care service plan except in, but not limited to, the following cases (Sec. 4):
• For non-payment of the required premiums by an individual, an employer, or contractholder, provided that a notified 30-day grace period has passed
• Fraud or misrepresentation is demonstrated as having been purported by the individual contract holder;
• An individual subscriber no longer lives or works in the plan's area; or
• If an employer or contractholder violates a material contract provision relating to employer contribution or group participation rates

• Requires any decisions to approve, modify, or deny coverage based on "medical necessity' to be made in a timely fashion, within 5 days of receiving the relevant information, appropriate for the patient's condition, or within 30 days if the review is retrospective (Sec. 5):

• If the condition of an enrollee is one of serious and imminent threat to the enrollee's health, or if the normal timeframe for decision-making would be detrimental to the enrollee's health, then an exception to the time frame will be made.

• Requires all health care service plans to do, but not be limited to, the following (Sec. 7):
• Establish and maintain a grievance system, and provide reasonable procedures that shall ensure consideration of enrollee grievances;
• Inform enrollees of the procedure of processing and resolving grievances;
• Provide enrollees with clear and concise responses to any grievances written or received; and
• Provide continuing coverage for grievances involving the cancellation of coverage until a final determination has been made relating to such cancellation.

• Prohibits the practice of postclaims underwriting (Sec. 9):
• Defines "postclaims underwriting" as the "rescinding, canceling, or limiting of a plan contract due to the plan's failure to complete medical underwriting and resolve all reasonable questions arising from written information submitted on or with an application before issuing the plan contract".

• Requires insurers of disabilities to have written policies that establish how the insurer reviews and either approves, modifies, delays, or denies requests by providers of health care services for those insured (Sec. 10).

• Prohibits any individual who is not a licensed physician or licensed health care professional to deny or modify any request for authorization of services for reasons of medical necessity (Sec. 10).

• Authorizes individuals who believe their coverage is about to be canceled, not renewed, or rescinded to request a review by the commissioner to determine whether or not a complaint, or cancellation, is justified (Sec. 13).

Full Bill Text

Vote Smart's Synopsis:

Vote to pass a bill that amends current state health care guidelines for individual health care plans and insurers.

Highlights:

• Repeals heath and safety codes that prohibit the director from approving health care plan contracts unless the application meets certain state requirements (Sec. 1).

• Requires the director to establish standard information and health history questions that shall be used by all health care service plans for their individual health care coverage application forms (Sec. 2).

• Specifies that the approved questions be for use in health care service plan and health insurance application forms for individual health care service plan contracts and individual health insurance policies (Sec. 2).

• Specifies that the health care service plan and health insurance application forms for individual health care service plan contracts and health insurance policies may only contain questions approved by the director and commissioner (Sec. 2).

• Requires the application form to include a prominently displayed notice that reads, "California law prohibits an HIV test from being required or used by health care service plans as a condition of obtaining coverage" (Sec. 2).

• Establishes that health history questions will include a limitation on how far back in time from the date of the application the applicant was diagnosed with, or treated for, the health condition specified in the questions (Sec. 2).

• Specifies that on and after January 1, 2012, all individual health care service plan applications shall be reviewed and approved by the director before they may be used by a health care service plan (Sec. 2).

• Establishes that once a plan has issued an individual health care service plan contract, the health care service plan shall not rescind or cancel the health care service plan contract unless all the following conditions apply (Sec. 5):
• There was a material misrepresentation or omission in the information submitted by the applicant in the written application to the health care service plan prior to the issuance of the health care service plan contract which would have prevented an accurate representation of the applicant;
• The health care service plan completed medical underwriting before the issuance of the health care service plan contract;
• The health care service plan demonstrates that the applicant intentionally misrepresented or intentionally omitted material information on the application before the plan contract was issued in order to obtain health care coverage;
• The department approved the application form; -The health care service plan sent a copy of the complete written application and health care service plan contract to the applicant along with the written notice;
• Failure to pay the charge for coverage.

• Authorizes the health care service plan to investigate potential omissions or misrepresentations of an applicant's application to determine whether the subscriber or enrollee's health care service plan contract should be rescinded or canceled (Sec. 6).

• Requires that health care service continue to provide all medically necessary health care services required for enrollee or subscriber's health coverage included in the health care service plan until the effective date of cancellation or rescission (Sec. 7).

• Specifies that on or before January 1, 2012, the department will contract or coordinate with one or more independent organizations in the state who offer a not-for-profit or unaffiliated health care service plan agenda (Sec. 10).

• Requires an arbitrator to review all pertinent records of the enrollee, provider reports, and any other information submitted to the organization for cases reviewed by the independent review organization within 60 days though enrollees are given the opportunity to submit any additional information within 45 days before the final review is conducted and information is made available to the public upon request (Sec. 11).

• Authorizes the director to establish a reasonable, per -- case reimbursement schedule to pay the costs of independent review organization reviews, and an assessment fee system for affected health case service plans in the interest of enrollees and subscribers (Sec. 13).

• Specifies that "affected health care service plans" includes, but is not limited to, plans that seek to cancel or rescind individual health care service plan contracts (Sec. 13).

• Requires that on and after January 1, 2011, every health care service plan is to annually report the following to the department (Sec. 14):
• The total number of individual health care service plan contracts issued;
• Those health care service plan contracts that had a cancellation or rescission initiated;
• Or, those that were completed based on the provisions of the intended article in the previous calendar year; and
• The department will publish the information on or before March 31, 2011 on its website.

• Limits the application of article requirements for health care service plan contracts for coverage issued under the Medi-Cal program, Access for Infants and Mothers Program, Healthy Families Program, federal Medicare Program and/or those providing dental services (Sec. 15).

• Authorizes the commissioner to file or approve the withdrawal of life or disability insurance (Sec. 16).

Full Bill Text