Bill Text: CA AB1249 | 2019-2020 | Regular Session | Amended

California Assembly Bill 1249 (Prior Session Legislation)

NOTE: There are more recent revisions of this legislation. Read Latest Draft

Bill Title: Health care service plans: regulations: exemptions.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Vetoed) 2020-01-21 - Consideration of Governor's veto stricken from file. [AB1249 Detail]

Download: California-2019-AB1249-Amended.html

Amended IN Assembly March 18, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill

No. 1249

Introduced by Assembly Member Maienschein

February 21, 2019

An act to ~~amend Section 1343 of~~ add and repeal Section 1343.3 to the Health and Safety Code, relating to health care service plans.

LEGISLATIVE COUNSEL'S DIGEST

AB 1249, as amended, Maienschein. Health care service plans: regulations: exemptions.

Existing federal law defines a voluntary employees’ beneficiary association as an organization comprised of a voluntary association of employees that provides for the payment of life, sick, accident, or similar benefits to members or their dependents, or designated beneficiaries. Existing federal law also provides for a trust fund established by a representative of an employer’s employees for the sole and exclusive benefit of the employees and their families and dependents.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care, and makes the willful violation of the act a crime. Existing law exempts specified persons or plans from the requirements of the act, including persons organized and operating pursuant to a certificate issued by the Insurance Commissioner, as specified. Existing law also authorizes the Director of the Department of Managed Health Care to exempt additional specified persons or plans if the director finds, among other things, that the exemption is in the public interest. Under existing law, upon the request of the Director of Health Care Services, the director must exempt a county-operated pilot program contracting with the State Department of Health Care Services, and may exempt a noncounty-operated pilot program, or a mental health plan contractor, subject to any conditions the Director of Health Care Services deems appropriate.

This bill would ~~additionally~~ require the ~~director to exempt from the requirements of the act, for a period of at least 5 years, a contract to provide health care services between~~ director, by May 1, 2020, to authorize 2 pilot programs, one in northern California and one in southern California, under which a voluntary employees’ beneficiary association, as defined, and a provider that utilizes risk-based or global risk payment, if the contract meets certain conditions, including that the purpose of the contract is to demonstrate cost savings compared to a fee-for-service reimbursement model. association with enrollment of more than 100,000 lives, or a trust fund as described above, would be exempt from licensure under the act for a period of 5 years, if the association or trust fund has entered into one or more contracts with a health care provider that uses risk-based or global risk payment and meets other criteria, including that the provider is registered with the department as a risk-based organization or limited or restricted licensee. The bill would require the association or trust fund and each health care provider participating in each pilot program to report to the department information regarding cost savings and clinical patient outcomes compared to a fee-for-service payment model, and would require the department to report those findings to the Legislature by June 1, 2026. The bill would repeal these provisions on January 1, 2029.

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.Section 1343 of the Health and Safety Code is amended to read:
1343.
~~(a)This chapter shall apply to health care service plans and specialized health care service plan contracts as defined in subdivisions (f) and (o) of Section 1345.~~
(b)The director may by the adoption of rules or the issuance of orders deemed necessary and appropriate, either unconditionally or upon specified terms and conditions or for specified periods, exempt from this chapter any class of persons or plan contracts if the director finds the action to be in the public interest and not detrimental to the protection of subscribers, enrollees, or persons regulated under this chapter, and that the regulation of the persons or plan contracts is not essential to the purposes of this chapter.
(c)The director, upon request of the Director of Health Care Services, shall exempt from this chapter any county-operated pilot program contracting with the State Department of Health Care Services pursuant to Article 7 (commencing with Section 14490) of Chapter 8 of Part 3 of Division 9 of the Welfare and Institutions Code. The director may exempt noncounty-operated pilot programs upon request of the Director of Health Care Services. Those exemptions may be subject to conditions the Director of Health Care Services deems appropriate.
(d)Upon the request of the Director of Health Care Services, the director may exempt from this chapter any mental health plan contractor or any capitated rate contract under Chapter 8.9 (commencing with Section 14700) of Part 3 of Division 9 of the Welfare and Institutions Code. Those exemptions may be subject to conditions the Director of Health Care Services deems appropriate.
(e)The director, upon application, shall exempt from this chapter, for a period of at least five years from the date the exemption is granted, a contract to provide health care services executed between a voluntary employees’ beneficiary association, as defined in Section 501(c)(9) of the Internal Revenue Code, and a provider that utilizes risk-based or global risk payment, if all of the following criteria are met:
~~(1)The purpose of the contract is to demonstrate the control of costs for health care services when compared against a sole fee-for-service provider reimbursement model.~~
(2)The parties to the contract agree to collect and report information regarding the comparative cost savings when compared to fee-for-service payment and performance measurements for clinical patient outcomes.
~~(3)The term of the contract does not exceed five years from the date of approval by the director.~~
(4)The participating providers under the contract are currently registered with the department as a risk-bearing organization, limited licensee, or restricted licensee, and agree to report on any payments within the normal course of reporting made by the provider to the department on a quarterly and annual basis.
~~(f)~~
~~This chapter shall not apply to:~~
(1)A person organized and operating pursuant to a certificate issued by the Insurance Commissioner unless the entity is directly providing the health care service through those entity-owned or contracting health facilities and providers, in which case this chapter shall apply to the insurer’s plan and to the insurer.
(2)A plan directly operated by a bona fide public or private institution of higher learning that directly provides health care services only to its students, faculty, staff, administration, and their respective dependents.
~~(3)A person who does all of the following:~~
~~(A)Promises to provide care for life or for more than one year in return for a transfer of consideration from, or on behalf of, a person 60 years of age or older.~~
~~(B)Has obtained a written license pursuant to Chapter 2 (commencing with Section 1250) or Chapter 3.2 (commencing with Section 1569).~~
~~(C)Has obtained a certificate of authority from the State Department of Social Services.~~
(4)The Major Risk Medical Insurance Board when engaging in activities under Chapter 8 (commencing with Section 10700) of Part 2 of Division 2 of the Insurance Code, Part 6.3 (commencing with Section 12695) of Division 2 of the Insurance Code, and Part 6.5 (commencing with Section 12700) of Division 2 of the Insurance Code.
~~(5)The California Small Group Reinsurance Fund.~~

SECTION 1.

Section 1343.3 is added to the Health and Safety Code, to read:

1343.3.
(a) The director, by May 1, 2020, shall authorize one pilot program in northern California, and one pilot program in southern California, under which a voluntary employees’ beneficiary association, as defined in Section 501(c)(9) of Title 26 of the United States Code, with enrollment of greater than 100,000 lives, or a trust fund described in Section 186(c)(5) to (8), inclusive, of Title 29 of the United States Code, shall be exempt from this chapter for the period of January 1, 2021, to December 31, 2025, inclusive, if all of the following criteria are met:
(1) The purpose of the pilot program is to demonstrate the control of costs for health care services and the improvement of health outcomes and quality of service when compared against a sole fee-for-service provider reimbursement model.
(2) The voluntary employees’ beneficiary association or trust fund has entered into a contract with one or more health care providers that meet all of the following:
(A) The health care provider utilizes risk-based or global risk payment.
(B) The health care provider is currently registered with the department, or will become registered through the pilot program application, as a risk-bearing organization, limited licensee, or restricted licensee.
(C) The health care provider agrees to report on any payments within the normal course of reporting made by the provider to the department on a quarterly and annual basis.
(3) The term of each contract between the voluntary employees’ beneficiary association or trust fund and a health care provider does not exceed the period of the pilot program.
(4) Each health care provider that has entered into a contract with the voluntary employees’ beneficiary association or trust fund is a party to the pilot program application submitted to the department.
(5) The voluntary employees’ beneficiary association or trust fund and each health care provider participating in the pilot program agree to collect and report to the department, in each year of the pilot program, information regarding the comparative cost savings when compared to fee-for-service payment and performance measurements for clinical patient outcomes.
(b) The department, after the termination of both pilot programs, and before June 1, 2026, shall submit a report to the Legislature regarding the costs and clinical patient outcomes of the pilot programs compared to fee-for-service payment models. This report shall be submitted in compliance with Section 9795 of the Government Code.
(c) This section shall remain in effect only until January 1, 2029, and as of that date is repealed.