Section 1394.7 Of Article 8.5. Service Of Process From California Health And Safety Code >> Division 2. >> Chapter 2.2. >> Article 8.5.
1394.7
. (a) As used in this section the following definitions shall
apply:
(1) "Health care service plan" means any plan as defined in
Section 1345, but this section does not apply to specialized health
care service contracts.
(2) "Carrier" means a health care service plan, an insurer issuing
group disability coverage which covers hospital, medical, or
surgical expenses, a nonprofit hospital service plan, or any other
entity responsible for either the payment of benefits or the
provision of hospital, medical, and surgical benefits under a group
contract.
(3) "Insolvency" means that the director has determined that the
health care service plan is not financially able to provide health
care services to its enrollees and (A) the director has taken an
action pursuant to Section 1386, 1391, or 1399, or (B) an order
requested by the director or the Attorney General has been issued by
the superior court under Section 1392, 1393, or 1394.1.
(b) In the event of the insolvency of a health care service plan
and upon order of the director, any health care service plan which
the director determines to have sufficient health care delivery
resources and sufficient financial and administrative capacity and
that participated in the enrollment process with the insolvent health
care service plan at the last regular open enrollment period of a
group shall offer enrollees of the group in the insolvent health care
service plan a 30-day enrollment period commencing upon the date
specified by the director. Each health care service plan shall offer
enrollees of the group in the insolvent health care service plan the
same coverages and rates that it offered to enrollees of the group at
the last regular open enrollment period of the group. Coverage shall
be effective upon receipt by the successor plan of an application
for enrollment by or on behalf of a subscriber or enrollee of the
insolvent plan. The director shall send a notice of the insolvency of
a health care service plan to the Insurance Commissioner.
(c) If no other carrier had been offered to groups enrolled in the
insolvent health care service plan, or if the director determines
that the other carriers do not include a sufficient number of health
care service plans that have adequate health care delivery resources
or the financial or administrative capacity to assure that health
care services will be available and accessible to all of the group
enrollees of the insolvent health care service plan, then the
director shall allocate equitably the insolvent health care service
plan's group contracts for the groups, except for Medi-Cal contracts
made pursuant to Section 14200 of the Welfare and Institutions Code,
among all health care service plans which operate within at least a
portion of the service area of the insolvent health care service
plan, taking into consideration the health care delivery resources
and the financial and administrative capacity of each health care
service plan. The director shall also have the authority to allocate
equitably enrollees, except Medi-Cal enrollees, if he or she has been
unable to successfully place them through the open enrollment
procedure in subdivision (b). The director shall make every
reasonable effort to allocate enrollees within 30 days of the
insolvency of the plan, but not later than 45 days after insolvency.
Each health care service plan to which a group or groups are so
allocated shall offer the group or groups the health care service
plan's coverage which is most similar to each group's coverage with
the insolvent health care service plan, as determined by the
director, at rates determined in accordance with the successor health
care service plan's existing rating methodology. Coverage shall be
effective upon the date specified by the director. Further, except to
the extent benefits for any condition would have been reduced or
excluded under the insolvent health care service plan's contract or
policy, no provision in a successor health care service plan's
contract of coverage that would operate to reduce or exclude benefits
on the basis that the condition giving rise to benefits preexisted
on the effective date of the enrollee's assignment to the succeeding
health care service plan shall be applied with respect to those
enrollees validly covered under the insolvent health care service
plan's contract or policy on the date of the assignment.
The State Department of Health Services shall have the authority
to allocate Medi-Cal enrollees to other carriers with valid Medi-Cal
contracts, which operate within the same service area of an insolvent
Medi-Cal contractor and that have sufficient capacity to absorb the
Medi-Cal enrollees allocated to them.
(d) The director shall also allocate equitably the insolvent
health care service plan's nongroup enrollees among all health care
service plans which operate within at least a portion of the service
area of the insolvent health care service plan, taking into
consideration the health care delivery resources or the financial and
administrative capacity of each health care service plan. Each
health care service plan to which nongroup enrollees are allocated
shall offer the nongroup enrollees the health care service plan's
most similar coverage for individual or conversion coverage, as
determined by the director, taking into consideration his or her type
of coverage in the insolvent health care service plan, at rates
determined in accordance with the successor health care service plan'
s existing rating methodology. Coverage shall be effective upon the
date specified by the director. Further, except to the extent
benefits for any condition would have been reduced or excluded under
the insolvent health care service plan's contract or policy, no
provision in a successor health care service plan's contract of
coverage that would operate to reduce or exclude benefits on the
basis that the condition giving rise to benefits preexisted on the
effective date of the enrollee's assignment to the succeeding health
care service plan shall be applied with respect to those enrollees
validly covered under the insolvent health care service plan's
contract or policy on the date of the assignment. Successor health
care service plans which do not offer direct nongroup enrollment may
aggregate all allocated nongroup enrollees into one group for rating
and coverage purposes.
(e) Contracting providers shall continue to provide services to
enrollees of an insolvent plan until the effective date of an
enrollee's coverage in a successor plan selected pursuant to either
open enrollment or the allocation process but in no event for the
period exceeding that required by their contract or 45 days in the
case of allocation, whichever is greater; or for a period exceeding
that required by their contract or 30 days in the case of open
enrollment, whichever is greater.
(f) The failure to comply with an order under this section shall
constitute a violation of this section.