Article 4.5. Review Of Rate Increases of California Insurance Code >> Division 2. >> Part 2. >> Chapter 1. >> Article 4.5.
For purposes of this article, the following definitions
shall apply:
(a) "Large group health insurance policy" means a group health
insurance policy other than a policy issued to a small employer, as
defined in Section 10700, 10753, or 10755.
(b) "Small group health insurance policy" means a group health
insurance policy issued to a small employer, as defined in Section
10700, 10753, or 10755.
(c) "PPACA" means Section 2794 of the federal Public Health
Service Act (42 U.S.C. Sec. 300gg-94), as amended by the federal
Patient Protection and Affordable Care Act (Public Law 111-148), and
any subsequent rules, regulations, or guidance issued pursuant to
that law.
(d) "Unreasonable rate increase" has the same meaning as that term
is defined in PPACA.
This article shall apply to health insurance policies
offered in the individual or group market in California. However,
this article shall not apply to a specialized health insurance
policy; a Medicare supplement policy subject to Article 6 (commencing
with Section 10192.05); a health insurance policy offered in the
Medi-Cal program (Chapter 7 (commencing with Section 14000) of Part 3
of Division 9 of the Welfare and Institutions Code); a health
insurance policy offered in the Healthy Families Program (Part 6.2
(commencing with Section 12693)), the Access for Infants and Mothers
Program (Part 6.3 (commencing with Section 12695)), the California
Major Risk Medical Insurance Program (Part 6.5 (commencing with
Section 12700)), or the Federal Temporary High Risk Pool (Part 6.6
(commencing with Section 12739.5)); a health insurance conversion
policy offered pursuant to Section 12682.1; or a health insurance
policy offered to a federally eligible defined individual under
Chapter 9.5 (commencing with Section 10900).
(a) All health insurers shall file with the department all
required rate information for individual and small group health
insurance policies at least 60 days prior to implementing any rate
change.
(b) An insurer shall disclose to the department all of the
following for each individual and small group rate filing:
(1) Company name and contact information.
(2) Number of policy forms covered by the filing.
(3) Policy form numbers covered by the filing.
(4) Product type, such as indemnity or preferred provider
organization.
(5) Segment type.
(6) Type of insurer involved, such as for profit or not for
profit.
(7) Whether the products are opened or closed.
(8) Enrollment in each policy and rating form.
(9) Insured months in each policy form.
(10) Annual rate.
(11) Total earned premiums in each policy form.
(12) Total incurred claims in each policy form.
(13) Average rate increase initially requested.
(14) Review category: initial filing for new product, filing for
existing product, or resubmission.
(15) Average rate of increase.
(16) Effective date of rate increase.
(17) Number of policyholders or insureds affected by each policy
form.
(18) The insurer's overall annual medical trend factor assumptions
in each rate filing for all benefits and by aggregate benefit
category, including hospital inpatient, hospital outpatient,
physician services, prescription drugs and other ancillary services,
laboratory, and radiology. An insurer may provide aggregated
additional data that demonstrates or reasonably estimates
year-to-year cost increases in specific benefit categories in the
geographic regions listed in Sections 10753.14 and 10965.9. For
purposes of this paragraph, "major geographic region" shall be
defined by the department and shall include no more than nine
regions.
(19) The amount of the projected trend attributable to the use of
services, price inflation, or fees and risk for annual policy trends
by aggregate benefit category, such as hospital inpatient, hospital
outpatient, physician services, prescription drugs and other
ancillary services, laboratory, and radiology.
(20) A comparison of claims cost and rate of changes over time.
(21) Any changes in insured cost sharing over the prior year
associated with the submitted rate filing.
(22) Any changes in insured benefits over the prior year
associated with the submitted rate filing.
(23) The certification described in subdivision (b) of Section
10181.6.
(24) Any changes in administrative costs.
(25) Any other information required for rate review under PPACA.
(c) An insurer subject to subdivision (a) shall also disclose the
following aggregate data for all rate filings submitted under this
section in the individual and small group health insurance markets:
(1) Number and percentage of rate filings reviewed by the
following:
(A) Plan year.
(B) Segment type.
(C) Product type.
(D) Number of policyholders.
(E) Number of covered lives affected.
(2) The insurer's average rate increase by the following
categories:
(A) Plan year.
(B) Segment type.
(C) Product type.
(3) Any cost containment and quality improvement efforts since the
insurer's last rate filing for the same category of health benefit
plan. To the extent possible, the insurer shall describe any
significant new health care cost containment and quality improvement
efforts and provide an estimate of potential savings together with an
estimated cost or savings for the projection period.
(d) The department may require all health insurers to submit all
rate filings to the National Association of Insurance Commissioners'
System for Electronic Rate and Form Filing (SERFF). Submission of the
required rate filings to SERFF shall be deemed to be filing with the
department for purposes of compliance with this section.
(e) A health insurer shall submit any other information required
under PPACA. A health insurer shall also submit any other information
required pursuant to any regulation adopted by the department to
comply with this article.
(a) For large group health insurance policies, all health
insurers shall file with the department at least 60 days prior to
implementing any rate change all required rate information for
unreasonable rate increases. This filing shall be concurrent with the
written notice described in Section 10199.1.
(b) For large group rate filings, health insurers shall submit all
information that is required by PPACA. A health insurer shall also
submit any other information required pursuant to any regulation
adopted by the department to comply with this article.
(c) A health insurer subject to subdivision (a) shall also
disclose the following aggregate data for all rate filings submitted
under this section in the large group health insurance market:
(1) Number and percentage of rate filings reviewed by the
following:
(A) Plan year.
(B) Segment type.
(C) Product type.
(D) Number of insureds.
(E) Number of covered lives affected.
(2) The insurer's average rate increase by the following
categories:
(A) Plan year.
(B) Segment type.
(C) Product type.
(3) Any cost containment and quality improvement efforts since the
health insurer's last rate filing for the same category of health
insurance policy. To the extent possible, the health insurer shall
describe any significant new health care cost containment and quality
improvement efforts and provide an estimate of potential savings
together with an estimated cost or savings for the projection period.
(d) The department may require all health insurers to submit all
rate filings to the National Association of Insurance Commissioners'
System for Electronic Rate and Form Filing (SERFF). Submission of the
required rate filings to SERFF shall be deemed to be filing with the
department for purposes of compliance with this section.
(a) For large group health insurance policies, each
health insurer shall file with the department the weighted average
rate increase for all large group benefit designs during the 12-month
period ending January 1 of the following calendar year. The average
shall be weighted by the number of insureds in each large group
benefit design in the insurer's large group market and adjusted to
the most commonly sold large group benefit design by enrollment
during the 12-month period. For the purposes of this section, the
large group benefit design includes, but is not limited to, benefits
such as basic health care services and prescription drugs. The large
group benefit design shall not include cost sharing, including, but
not limited to, deductibles, copays, and coinsurance.
(b) (1) A health insurer shall also submit any other information
required pursuant to any regulation adopted by the department to
comply with this article.
(2) The department shall conduct an annual public meeting
regarding large group rates within three months of posting the
aggregate information described in this section in order to permit a
public discussion of the reasons for the changes in the rates,
benefits, and cost sharing in the large group market. The meeting
shall be held in either the Los Angeles area or the San Francisco Bay
area.
(c) A health insurer subject to subdivision (a) shall also
disclose the following for the aggregate rate information for the
large group market submitted under this section:
(1) For rates effective during the 12-month period ending January
1 of the following year, number and percentage of rate changes
reviewed by the following:
(A) Plan year.
(B) Segment type, including whether the rate is community rated,
in whole or in part.
(C) Product type.
(D) Number of insureds.
(E) The number of products sold that have materially different
benefits, cost sharing, or other elements of benefit design.
(2) For rates effective during the 12-month period ending January
1 of the following year, any factors affecting the base rate, and the
actuarial basis for those factors, including all of the following:
(A) Geographic region.
(B) Age, including age rating factors.
(C) Occupation.
(D) Industry.
(E) Health status factors, including, but not limited to,
experience and utilization.
(F) Employee, and employee and dependents, including a description
of the family composition used.
(G) Insureds' share of premiums.
(H) Insureds' cost sharing.
(I) Covered benefits in addition to basic health care services, as
defined in Section 1345 of the Health and Safety Code, and other
benefits mandated under this article.
(J) Which market segment, if any, is fully experience rated and
which market segment, if any, is in part experience rated and in part
community rated.
(K) Any other factor that affects the rate that is not otherwise
specified.
(3) (A) The insurer's overall annual medical trend factor
assumptions for all benefits and by aggregate benefit category,
including hospital inpatient, hospital outpatient, physician
services, prescription drugs and other ancillary services,
laboratory, and radiology for the applicable 12-month period ending
January 1 of the following year. A health insurer that exclusively
contracts with no more than two medical groups in the state to
provide or arrange for professional medical services for the health
insurer's insureds shall instead disclose the amount of its actual
trend experience for the prior contract year by aggregate benefit
category, using benefit categories, to the maximum extent possible,
that are the same or similar to those used by other insurers.
(B) The amount of the projected trend separately attributable to
the use of services, price inflation, and fees and risk for annual
policy trends by aggregate benefit category, including hospital
inpatient, hospital outpatient, physician services, prescription
drugs and other ancillary services, laboratory, and radiology. A
health insurer that exclusively contracts with no more than two
medical groups in the state to provide or arrange for professional
medical services for the insureds shall instead disclose the amount
of its actual trend experience for the prior contract year by
aggregate benefit category, using benefit categories that are, to the
maximum extent possible, the same or similar to those used by other
insurers.
(C) A comparison of the aggregate per insured per month costs and
rate of changes over the last five years for each of the following:
(i) Premiums.
(ii) Claims costs, if any.
(iii) Administrative expenses.
(iv) Taxes and fees.
(D) Any changes in insured cost sharing over the prior year
associated with the submitted rate information, including both of the
following:
(i) Actual copays, coinsurance, deductibles, annual out of pocket
maximums, and any other cost sharing by the benefit categories
determined by the department.
(ii) Any aggregate changes in insured cost sharing over the prior
years as measured by the weighted average actuarial value, weighted
by the number of insureds.
(E) Any changes in insured benefits over the prior year, including
a description of benefits added or eliminated as well as any
aggregate changes as measured as a percentage of the aggregate claims
costs, listed by the categories determined by the department.
(F) Any cost containment and quality improvement efforts made
since the insurer's prior year's information pursuant to this section
for the same category of health insurer. To the extent possible, the
insurer shall describe any significant new health care cost
containment and quality improvement efforts and provide an estimate
of potential savings together with an estimated cost or savings for
the projection period.
(G) The number of products covered by the information that
incurred the excise tax paid by the health insurer.
(d) The information required pursuant to this section shall be
submitted to the department on or before October 1, 2016, and on or
before October 1 annually thereafter. Information submitted pursuant
to this section is subject to Section 10181.7.
Notwithstanding any provision in a contract between a
health insurer and a provider, the department may request from a
health insurer any information required under this article or PPACA.
(a) A filing submitted under this article shall be
actuarially sound.
(b) (1) The health insurer shall contract with an independent
actuary or actuaries consistent with this section.
(2) A filing submitted under this article shall include a
certification by an independent actuary or actuarial firm that the
rate increase is reasonable or unreasonable and, if unreasonable,
that the justification for the increase is based on accurate and
sound actuarial assumptions and methodologies. Unless PPACA requires
a certification of actuarial soundness for each large group health
insurance policy, a filing submitted under Section 10181.4 shall
include a certification by an independent actuary, as described in
this section, that the aggregate or average rate increase is based on
accurate and sound actuarial assumptions and methodologies.
(3) The actuary or actuarial firm acting under paragraph (2) shall
not be an affiliate or a subsidiary of, nor in any way owned or
controlled by, a health insurer or a trade association of health
insurers. A board member, director, officer, or employee of the
actuary or actuarial firm shall not serve as a board member,
director, or employee of a health insurer. A board member, director,
or officer of a health insurer or a trade association of health
insurers shall not serve as a board member, director, officer, or
employee of the actuary or actuarial firm.
(c) Nothing in this article shall be construed to permit the
commissioner to establish the rates charged insureds and
policyholders for covered health care services.
(a) Notwithstanding Chapter 3.5 (commencing with Section
6250) of Division 7 of Title 1 of the Government Code, all
information submitted under this article shall be made publicly
available by the department except as provided in subdivision (b).
(b) (1) Any contracted rates between a health insurer and a
provider shall be deemed confidential information that shall not be
made public by the department and are exempt from disclosure under
the California Public Records Act (Chapter 3.5 (commencing with
Section 6250) of Division 7 of Title 1 of the Government Code). The
contracted rates between a health insurer and a provider shall not be
disclosed by a health insurer to a large group purchaser that
receives information pursuant to Section 10181.10.
(2) The contracted rates between a health insurer and a large
group shall be deemed confidential information that shall not be made
public by the department and are exempt from disclosure under the
California Public Records Act (Chapter 3.5 (commencing with Section
6250) of Division 7 of Title 1 of the Government Code). Information
provided to a large group purchaser pursuant to Section 10181.10
shall be deemed confidential information that shall not be made
public by the department and shall be exempt from disclosure under
the California Public Records Act (Chapter 3.5 (commencing with
Section 6250) of Division 7 of Title 1 of the Government Code).
(c) All information submitted to the department under this article
shall be submitted electronically in order to facilitate review by
the department and the public.
(d) In addition, the department and the health insurer shall, at a
minimum, make the following information readily available to the
public on their Internet Web sites, in plain language and in a manner
and format specified by the department, except as provided in
subdivision (b). The information shall be made public for 60 days
prior to the implementation of the rate increase. The information
shall include:
(1) Justifications for any unreasonable rate increases, including
all information and supporting documentation as to why the rate
increase is justified.
(2) An insurer's overall annual medical trend factor assumptions
in each rate filing for all benefits.
(3) An insurer's actual costs, by aggregate benefit category to
include, hospital inpatient, hospital outpatient, physician services,
prescription drugs and other ancillary services, laboratory, and
radiology.
(4) The amount of the projected trend attributable to the use of
services, price inflation, or fees and risk for annual policy trends
by aggregate benefit category, such as hospital inpatient, hospital
outpatient, physician services, prescription drugs and other
ancillary services, laboratory, and radiology.
(a) On or before July 1, 2012, the commissioner may issue
guidance to health insurers regarding compliance with this article.
This guidance shall not be subject to the Administrative Procedure
Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code).
(b) The department shall consult with the Department of Managed
Health Care in issuing guidance under subdivision (a), in adopting
necessary regulations, in posting information on its Internet Web
site under this article, and in taking any other action for the
purpose of implementing this article.
(a) (1) A health insurer shall annually provide claims
data at no charge to a large group purchaser if the large group
purchaser requests the information and otherwise meets the
requirements of this section.
(2) The health insurer shall provide claims data that a qualified
statistician has determined are deidentified so that the claims data
do not identify or do not provide a reasonable basis from which to
identify an individual. If the statistician is unable to determine
that the data has been deidentified, then the data that cannot be
deidentified shall not be provided by the health insurer to the large
group purchaser. A health insurer may provide the claims data in an
aggregated form as necessary to comply with subdivisions (e) and (f).
(b) (1) As an alternative to providing claims data required
pursuant to subdivision (a), the insurer shall provide, at no charge
to a large group purchaser, all of the following:
(A) Deidentified data sufficient for the large group purchaser to
calculate the cost of obtaining similar services from other health
insurers and plans and evaluate cost-effectiveness by service and
disease category.
(B) Deidentified aggregated patient-level data on demographics,
prescribing, encounters, inpatient services, outpatient services, and
any other data that is comparable to what is required of the health
insurer to comply with risk adjustment, reinsurance, or risk
corridors pursuant to the federal Patient Protection and Affordable
Care Act (Public Law 111-148), as amended by the federal Health Care
and Education Reconciliation Act of 2010 (Public Law 111-152), and
any rules, regulations, or guidance issued thereunder.
(C) Deidentified aggregated patient-level data used to experience
rate the large group, including diagnostic and procedure coding and
costs assigned to each service that the insurer has available.
(2) The health insurer shall obtain a formal determination from a
qualified statistician that the data provided pursuant to this
subdivision have been deidentified so that the data do not identify
or do not provide a reasonable basis from which to identify an
individual. If the statistician is unable to determine that the data
has been deidentified, the health insurer shall not provide the data
that cannot be deidentified to the large group purchaser. The
statistician shall document the formal determination in writing and
shall, upon request, provide the protocol used for deidentification
to the department.
(c) Data provided pursuant to this section shall only be provided
to a large group purchaser that meets both of the following
conditions:
(1) Is able to demonstrate its ability to comply with state and
federal privacy laws.
(2) Is a large group purchaser that is either an employer with an
enrollment of greater than 1,000 covered lives and at least 500
covered lives enrolled with the health insurer providing the
information or a multiemployer trust with an enrollment of greater
than 500 covered lives and at least 250 covered lives enrolled with
the health insurer providing the information.
(d) Nothing in this section shall be construed to prohibit an
insurer and purchaser from negotiating the release of additional
information not described in this section.
(e) All disclosures of data to the large group purchaser made
pursuant to this section shall comply with the federal Health
Insurance Portability and Accountability Act of 1996 (Public Law
104-191) and the federal Health Information Technology for Economic
and Clinical Health Act, Title XIII of the federal American Recovery
and Reinvestment Act of 2009 (Public Law 111-5), and implementing
regulations.
(f) All disclosures of data to the large group purchaser made
pursuant to this section shall comply with the Insurance Information
and Privacy Protection Act (Chapter 1 (commencing with Section 791)
of Part 2 of Division 1 of the Insurance Code).
(a) Whenever it appears to the department that any person
has engaged, or is about to engage, in any act or practice
constituting a violation of this article, including the filing of
inaccurate or unjustified rates or inaccurate or unjustified rate
information, the department may review rate filing to ensure
compliance with the law.
(b) The department may review other filings.
(c) The department shall accept and post to its Internet Web site
any public comment on a rate increase submitted to the department
during the 60-day period described in subdivision (d) of Section
10181.7.
(d) The department shall report to the Legislature at least
quarterly on all unreasonable rate filings.
(e) The department shall post on its Internet Web site any changes
submitted by the insurer to the proposed rate increase, including
any documentation submitted by the insurer supporting those changes.
(f) If the commissioner makes a decision that an unreasonable rate
increase is not justified or that a rate filing contains inaccurate
information, the department shall post that decision on its Internet
Web site.
(g) Nothing in this article shall be construed to impair or impede
the department's authority to administer or enforce any other
provision of this code.
The department shall do all of the following in a manner
consistent with applicable federal laws, rules, and regulations:
(a) Provide data to the United States Secretary of Health and
Human Services on health insurer rate trends in premium rating areas.
(b) Commencing with the creation of the Exchange, provide to the
Exchange such information as may be necessary to allow compliance
with federal law, rules, regulations, and guidance.