Section 1367.15 Of Article 5. Standards From California Health And Safety Code >> Division 2. >> Chapter 2.2. >> Article 5.
1367.15
. (a) This section shall apply to individual health care
service plan contracts and plan contracts sold to employer groups
with fewer than two eligible employees as defined in subdivision (b)
of Section 1357 covering hospital, medical, or surgical expenses,
which is issued, amended, delivered, or renewed on or after January
1, 1994.
(b) As used in this section, "block of business" means individual
plan contracts or plan contracts sold to employer groups with fewer
than two eligible employees as defined in subdivision (b) of Section
1357, with distinct benefits, services, and terms. A "closed block of
business" means a block of business for which a health care service
plan ceases to actively offer or sell new plan contracts.
(c) No block of business shall be closed by a health care service
plan unless (1) the plan permits an enrollee to receive health care
services from any block of business that is not closed and that
provides comparable benefits, services, and terms, with no additional
underwriting requirement, or (2) the plan pools the experience of
the closed block of business with all appropriate blocks of business
that are not closed for the purpose of determining the premium rate
of any plan contract within the closed block, with no rate penalty or
surcharge beyond that which reflects the experience of the combined
pool.
(d) A block of business shall be presumed closed if either of the
following is applicable:
(1) There has been an overall reduction in that block of 12
percent in the number of in force plan contracts for a period of 12
months.
(2) That block has less than 1,000 enrollees in this state. This
presumption shall not apply to a block of business initiated within
the previous 24 months, but notification of that block shall be
provided to the director pursuant to subdivision (e).
The fact that a block of business does not meet one of the
presumptions set forth in this subdivision shall not preclude a
determination that it is closed as defined in subdivision (b).
(e) A health care service plan shall notify the director in
writing within 30 days of its decision to close a block of business
or, in the absence of an actual decision to close a block of
business, within 30 days of its determination that a block of
business is within the presumption set forth in subdivision (d). When
the plan decides to close a block, the written notice shall fully
disclose all information necessary to demonstrate compliance with the
requirements of subdivision (c). When the plan determines that a
block is within the presumption, the written notice shall fully
disclose all information necessary to demonstrate that the
presumption is applicable. In the case of either notice, the plan
shall provide additional information within 15 days after any request
of the director.
(f) A health care service plan shall preserve for a period of not
less than five years in an identified location and readily accessible
for review by the director all books and records relating to any
action taken by a plan pursuant to subdivision (c).
(g) No health care service plan shall offer or sell any contract,
or provide misleading information about the active or closed status
of a block of business, for the purpose of evading this section.
(h) A health care service plan shall bring any blocks of business
closed prior to the effective date of this section into compliance
with the terms of this section no later than December 31, 1994.
(i) This section shall not apply to health care service plan
contracts providing small employer health coverage to individuals or
employer groups with fewer than two eligible employees if that
coverage is provided pursuant to Article 3.1 (commencing with Section
1357) and, with specific reference to coverage for individuals or
employer groups with fewer than two eligible employees, is approved
by the director pursuant to Section 1357.15, provided a plan electing
to sell coverage pursuant to this subdivision shall do so until such
time as the plan ceases to market coverage to small employers and
complies with paragraph (5) of subdivision (a) of Section 1365.
(j) This section shall not apply to coverage of Medicare services
pursuant to contracts with the United States government, Medicare
supplement, dental, vision, or conversion coverage.