AB 2499: Health care coverage: medical loss ratios.

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 a willful violation of the act a crime. Existing law provides for the regulation of health insurers by the Department of Insurance.

Existing law requires a health care service plan or health insurer that issues, sells, renews, or offers a health care service plan contract or health insurance policy, respectively, for health care coverage in this state to comply with minimum medical loss ratios. Existing law requires a health care service plan or health insurer, excluding specialized health care service plan contracts and specialized health insurance policies, to provide, no later than August 1, an annual rebate to each enrollee or insured under that coverage, on a pro rata basis, if the medical loss ratio of the amount of premium revenue expended by the plan or health insurer on the costs for reimbursement for clinical services and for activities that improve health care quality to the total amount of premium revenue is less than a certain percentage.

Existing law requires the adoption of emergency regulations, pursuant to consultation between the departments, to implement those provisions. Existing law requires the medical loss ratio provisions to be implemented to the extent required by federal law and to comply with, and not exceed, the scope of specified federal laws, rules, and regulations.

This bill would exempt only specialized health care service plan contracts and specialized health insurance policies that provide only dental or vision services from the annual rebate requirement. The bill would require the annual rebate to be provided to each enrollee or insured no later than September 30. The bill would repeal the emergency regulation and consultation requirements. The bill would revise the requirements relating to the specified federal provisions, to require instead that the medical loss ratio provisions be consistent with those federal provisions as in effect on January 1, 2017. The bill would delete certain obsolete provisions and would make other technical, nonsubstantive changes. Because a willful violation of the bills requirements relative to health care service plans would be a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.