SB 641: Mexican prepaid health plans.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, 1975 (the act), provides for the licensure and regulation of health care service plans by the Department of Managed Health Care, under the direction of the Director of the Department of the Managed Health Care, and makes a willful violation of the act a crime.

Existing law requires a prepaid health plan to apply for licensure as a health care service plan if the prepaid health plan operating lawfully under the laws of Mexico elects to operate a health care service plan in this state. Existing law requires the application for licensure to demonstrate compliance with specified requirements, including that the prepaid health plan offers and sells in this state only employer-sponsored group plan contracts exclusively for the benefit of Mexican nationals legally employed in the County of San Diego or the County of Imperial, and for the benefit of their dependents regardless of nationality, that pay for, reimburse the cost of, or arrange for the provision or delivery of health care services that are to be provided or delivered wholly in Mexico, except as specified. Existing law also requires the plan to demonstrate that the plan maintains a specified tangible net equity or is able to demonstrate a reasonable acceptable alternative reimbursement arrangement.

This bill would instead require that application for licensure to demonstrate that the plan offers and sells in this state only employer-sponsored group plan contracts exclusively for the benefit of persons, rather than Mexican nationals, legally employed in the County of San Diego or the County of Imperial. The bill would eliminate the tangible net equity requirement specified for these plans and would instead require these plans to maintain a tangible net equity as required by the director pursuant to the authority granted to the director with respect to health care service plans, generally. The bill would, for policies issued, amended, or renewed on or after January 1, 2019, authorize the director to exempt, for not more than 5 years, a prepaid health plan from requirements of the act, and would authorize exemptions granted prior to January 1, 2019, to remain in effect until January 1, 2021, as specified. The bill would require the director to post the formal decision regarding the exemption on the departments Internet Web site. The bill would also require, if a prepaid health plan that is subject to these provisions is issued or sold to a group subscriber, the group subscriber to offer to enrollees and dependents coverage that is fully consistent with the provisions of the act or federal law, as specified. The bill would also make technical changes. Because a violation of these provisions by a health care service plan would be a crime, the bill would impose a state-mandated local program.

This bill would make legislative findings and declarations as to the necessity of a special statute for the Counties of San Diego and Imperial.

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.