California Assembly Bill AB1602 Amended / Bill

 BILL NUMBER: AB 1602AMENDED BILL TEXT AMENDED IN SENATE AUGUST 17, 2010 AMENDED IN SENATE AUGUST 2, 2010 AMENDED IN SENATE JUNE 24, 2010 AMENDED IN ASSEMBLY APRIL 15, 2010 AMENDED IN ASSEMBLY APRIL 8, 2010 INTRODUCED BY Assembly Member John A. Perez (Principal coauthors: Assembly Members Bass and Monning) JANUARY 5, 2010  An act to add Title 22 (commencing with Section 100500) to the Government Code, to amend Sections 1357.06, 1357.51, and 1373 of, and to add Sections 1346.2 and 1367.001 to, the Health and Safety Code, and to amend Sections 10198.7, 10277, and 10708 of, and to add Sections 10112.1 and 10112.2 to, the Insurance   An act to add Sections 100502, 100503, 100504, 100505, 100506, 100507, 100520, 100521, and 100522 to the Government Code, to add Section 1366.6 to the Health and Safety Code, and to add Section 10112.3 to the Insurance  Code, relating to health care coverage, and making an appropriation therefor. LEGISLATIVE COUNSEL'S DIGEST AB 1602, as amended, John A. Perez. Health care coverage.  (1) Existing   Existing  law provides various programs to provide health care coverage to persons with limited financial resources, including the Medi-Cal program and the Healthy Families Program.  Existing law provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of its provisions a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance.  Existing law, the federal Patient Protection and Affordable Care Act  (PPACA)  , requires each state to, by January 1, 2014, establish an American Health Benefit Exchange that facilitates the purchase of qualified health plans by qualified individuals and qualified small employers, as specified, and meets certain other requirements. This bill would enact the California Patient Protection and Affordable Care Act  . The bill would create the California Health Benefit Exchange (the Exchange) in state government to be governed by an executive board with 5 members, including the Secretary of California Health and Human Services and 4 other members appointed by the Governor and the Legislature. The bill   , and  would  ,   contingent on the enactment of SB 900, which would create the California Health Benefit Exchange (the Exchange),  specify the powers and duties of the board  governing the Exchange  relative to determining eligibility for enrollment in the Exchange and arranging for coverage  with  under  qualified health plans, and would require the board to facilitate the purchase of qualified health plans through the Exchange by qualified individuals and qualified small employers by January 1, 2014.  The bill would prohibit a carrier that is not participating in the Exchange from offering a catastrophic plan, as defined, in the individual market.  The bill would create the California Health Trust Fund as a continuously appropriated fund and would enact other related provisions.  The bill would impose various requirements on participating plans and insurers and, commencing January 1, 2014, on nonparticipating plans and insurers, as specified. Because a willful violation of these requirements by a health care service plan would be a crime, the bill would impose a state-mandated local program.   The bill would require the Director of the Department of Managed Health Care and the Insurance Commissioner to review an Internet portal developed by the United States Department of Health and Human Services and to jointly develop and maintain an electronic clearinghouse of coverage available in the individual and small group markets if the federal Internet portal does not adequately achieve certain purposes.   (2) 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 that act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance. Existing law requires every health care service plan contract that provides for termination of coverage of a dependent child upon the attainment of the limiting age for dependent children to also provide that attainment of the limiting age shall not terminate the coverage of a child under certain conditions. Existing law establishes similar requirements for group health insurance policies that provide coverage of dependent children.   This bill would prohibit the limiting age in group or individual contracts or policies from being less than 26 years of age for dependent children covered by those plan contracts and insurance policies.   The bill would modify certain of the requirements applicable to group or individual health care service plan contracts and health insurance policies issued, amended, renewed, or delivered on or after September 23, 2010, consistent with requirements of the federal Patient Protection and Affordable Care Act. The bill would prohibit lifetime limits on the dollar value of benefits and would authorize annual limits on the dollar value of benefits only in specified circumstances. The bill would require coverage, and prohibit cost-sharing requirements applicable to enrollees or insureds, for certain health care benefits. The bill would also prohibit preexisting condition exclusions for enrollees or insureds under 19 years of age.   Because a willful violation of these requirements with respect to a health care service plan would be a crime, the bill would impose a state-mandated local program.   (3) The   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. Vote: majority. Appropriation: yes. Fiscal committee: yes. State-mandated local program: yes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. This act shall be known and may be cited as the California Patient Protection and Affordable Care Act. SEC. 2. It is the intent of the Legislature to enact the necessary statutory changes to California law in order to  be   establish an American Health Benefit Exchange in California and its administrative authority in a manner that is  consistent with 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), hereafter the federal act. In doing so, it is the intent of the Legislature to do all of the following: (a) Reduce the number of uninsured Californians by creating an organized, transparent marketplace for Californians to purchase affordable, quality health care coverage, to claim available federal tax credits and cost-sharing subsidies, and to meet the personal responsibility requirements imposed under the federal act. (b) Strengthen the health care delivery system. (c) Guarantee the availability and renewability of health care coverage through the private health insurance market to qualified individuals and qualified small employers. (d) Require that health care service plans and health insurers issuing coverage in the individual and small employer markets compete on the basis of price, quality, and service, and not on risk selection. (e) Meet the requirements of the federal act  and all applicable federal guidance and regulations  .  SEC. 3.   Title 22 (commencing with Section 100500) is added to the Government Code, to read: TITLE 22. CALIFORNIA HEALTH BENEFIT EXCHANGE 100500. For purposes of this division, the following definitions shall apply: (a) "Board" means the board described in subdivision (a) of Section 100501. (b) "Carrier" means either a private health insurer holding a valid outstanding certificate of authority from the Insurance Commissioner or a health care service plan, as defined under subdivision (f) of Section 1345 of the Health and Safety Code, licensed by the Department of Managed Health Care. (c) "Exchange" means the California Health Benefit Exchange established by Section 100501. (d) "Federal act" means 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). (e) "Fund" means the California Health Trust Fund established by Section 100520. (f) "SHOP Program" means the Small Business Health Options Program established by subdivision (m) of Section 100502. 100501. (a) There is in state government the California Health Benefit Exchange, an independent public entity, which shall be known as the Exchange. The Exchange shall be governed by an executive board consisting of five members who are residents of California. Of the members of the board, two shall be appointed by the Governor, one shall be appointed by the Senate Committee on Rules, and one shall be appointed by the Speaker of the Assembly. The Secretary of California Health and Human Services or his or her designee shall serve as a voting, ex officio member of the board. (b) Members of the board, other than an ex officio member, shall be appointed for a term of four years. Vacancies shall be filled by appointment for the unexpired term. (c) Each person appointed to the board shall have demonstrated and acknowledged expertise in at least two of the following areas: (1) Individual health care coverage. (2) Small group health care coverage. (3) Health benefits plan administration. (4) Health care finance. (5) Administering a public or private health care delivery system. (6) Health plan purchasing. (d) Each member of the board shall have the responsibility and duty to meet the requirements of this act and the federal act, to serve the public interest of the individuals and small businesses seeking health care coverage through the Exchange, and to ensure the operational well-being and fiscal solvency of the Exchange. (e) In making appointments to the board, the appointing authorities shall take into consideration the cultural, ethnic, and geographical diversity of the state so that the board's composition reflects the communities of California. (f) A member of the board or of the staff of the Exchange shall not be employed by, a consultant to, a member of the board of directors of, affiliated with, an agent of, or otherwise a representative of, a carrier or other insurer, an agent or broker, a health care provider, or a health care facility or health clinic while serving on the board and during the first year following his or her service on the board. A board member shall not receive compensation for his or her service on the board but may receive a per diem and reimbursement for travel and other necessary expenses, as provided in Section 103 of the Business and Professions Code, while engaged in the performance of official duties of the board. (g) No member of the board shall make, participate in making, or in any way attempt to use his or her official position to influence the making of any decision that he or she knows or has reason to know will have a reasonably foreseeable material financial effect, distinguishable from its effect on the public generally, on him or her or a member of his or her immediate family, or on either of the following: (1) Any source of income, other than gifts and other than loans by a commercial lending institution in the regular course of business on terms available to the public without regard to official status aggregating two hundred fifty dollars ($250) or more in value provided to, received by, or promised to the member within 12 months prior to the time when the decision is made. (2) Any business entity in which the member is a director, officer, partner, trustee, employee, or holds any position of management. (h) There shall not be any liability in a private capacity on the part of the board or any member of the board, or any officer or employee of the board, for or on account of any act performed or obligation entered into in an official capacity, when done in good faith, without intent to defraud, and in connection with the administration, management, or conduct of this title or affairs related to this title. (i) The board shall hire an executive director to organize, administer, and manage the operations of the Exchange. The executive director shall serve at the pleasure of the board. (j) The board shall be subject to the Bagley-Keene Open Meeting Act (Article 9 (commencing with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2), except that the board may hold closed sessions when considering matters related to litigation, personnel, contracting, and rates. (k) The board shall apply for planning and establishment grants made available to the Exchange pursuant to Section 1311 of the federal act. If an executive director has not been hired under subdivision (i) when the United States Secretary of Health and Human Services makes the initial planning and establishment grants available, the California Health and Human Services Agency shall, upon request of the board, submit the initial application for planning and establishment grants to the United States Secretary of Health and Human Services. If a majority of the board has not been appointed when the United States Secretary of Health and Human Services makes the initial planning and establishment grants available, the California Health and Human Services Agency shall submit the initial application for planning and establishment grants to the United States Secretary of Health and Human Services. The board shall be responsible for using the funds awarded by the United States Secretary of Health and Human Services for the planning and establishment of the Exchange, consistent with subdivision (b) of Section 1311 of the federal act. 100502. The board shall, at a minimum, do all of the following   SEC. 3.   Section 100502 is added to the Government Code, to read:   100502.   The board shall, at a minimum, do all of the following  to implement Section 1311 of the federal act: (a) Implement procedures for the certification, recertification, and decertification, consistent with guidelines established by the United States Secretary of Health and Human Services, of health plans as qualified health plans. The board shall require health plans seeking certification as qualified health plans to do all of the following: (1) Submit a justification for any premium increase prior to implementation of the increase. The plans shall prominently post that information on their Internet Web sites. The board shall take this information, and the information and the recommendations provided to the board by the Department of Insurance or the Department of Managed Health Care under paragraph (1) of subdivision (b) of Section 2794 of the federal Public Health Service Act, into consideration when determining whether to make the health plan available through the Exchange. The board shall take into account any excess of premium growth outside the Exchange as compared to the rate of that growth inside the Exchange, including information reported by the Department of Insurance and the Department of Managed Health Care. (2) (A) Make available to the public and submit to the board, the United States Secretary of Health and Human Services, and the Insurance Commissioner or the Department of Managed Health Care, as applicable, accurate and timely disclosure of the following information: (i) Claims payment policies and practices. (ii) Periodic financial disclosures. (iii) Data on enrollment. (iv) Data on disenrollment. (v) Data on the number of claims that are denied. (vi) Data on rating practices. (vii) Information on cost sharing and payments with respect to any out-of-network coverage. (viii) Information on enrollee and participant rights under Title I of the federal act. (ix) Other information as determined appropriate by the United States Secretary of Health and Human Services. (B) The information required under subparagraph (A) shall be provided in plain language, as defined in subparagraph (B) of paragraph (3) of subdivision (e) of Section 1311 of the federal act. (3) Permit individuals to learn, in a timely manner upon the request of the individual, the amount of cost sharing, including, but not limited to, deductibles, copayments, and coinsurance, under the individual's plan or coverage that the individual would be responsible for paying with respect to the furnishing of a specific item or service by a participating provider. At a minimum, this information shall be made available to the individual through an Internet Web site and through other means for individuals without access to the Internet. (b) Provide for the operation of a toll-free telephone hotline to respond to requests for assistance. (c) Maintain an Internet Web site through which enrollees and prospective enrollees of qualified health plans may obtain standardized comparative information on those plans. (d) Assign a rating to each qualified health plan offered through the Exchange in accordance with the criteria developed by the United States Secretary of Health and Human Services. (e) Utilize a standardized format for presenting health benefits plan options in the Exchange, including the use of the uniform outline of coverage established under Section 2715 of the federal Public Health Service Act. (f) Inform individuals of eligibility requirements for the Medi-Cal program, the Healthy Families Program, or any applicable state or local public program and, if, through screening of the application by the Exchange, the Exchange determines that an individual is eligible for any such program, enroll that individual in the program. (g) Establish and make available by electronic means a calculator to determine the actual cost of coverage after the application of any premium tax credit under Section 36B of the Internal Revenue Code of 1986 and any cost-sharing reduction under Section 1402 of the federal act. (h) Grant a certification attesting that, for purposes of the individual responsibility penalty under Section 5000A of the Internal Revenue Code of 1986, an individual is exempt from the individual requirement or from the penalty imposed by that section because of either of the following: (1) There is no affordable qualified health plan available through the Exchange or the individual's employer covering the individual. (2) The individual meets the requirements for any other exemption from the individual responsibility requirement or penalty. (i) Transfer to the Secretary of the Treasury all of the following: (1) A list of the individuals who are issued a certification under subdivision (h), including the name and taxpayer identification number of each individual. (2) The name and taxpayer identification number of each individual who was an employee of an employer but who was determined to be eligible for the premium tax credit under Section 36B of the Internal Revenue Code of 1986 because of either of the following: (A) The employer did not provide minimum essential coverage. (B) The employer provided the minimum essential coverage but it was determined under subparagraph (C) of paragraph (2) of subsection (c) of Section 36B of the Internal Revenue Code of 1986 to either be unaffordable to the employee or not provide the required minimum actuarial value. (3) The name and taxpayer identification number of each individual who notifies the Exchange under paragraph (4) of subsection (b) of Section 1411 of the federal act that they have changed employers and of each individual who ceases coverage under a qualified health plan during a plan year and the effective date of that cessation. (j) Provide to each employer the name of each employee of the employer described in paragraph (2) of subdivision (i) who ceases coverage under a qualified health plan during a plan year and the effective date of that cessation. (k) Perform duties required of, or delegated to, the Exchange by the United States Secretary of Health and Human Services or the Secretary of the Treasury related to determining eligibility for premium tax credits, reduced cost sharing, or individual responsibility exemptions. (l) Establish the navigator program in accordance with subdivision (i) of Section 1311 of the federal act. Any entity chosen by the Exchange as a navigator shall do all of the following: (1) Conduct public education activities to raise awareness of the availability of qualified health plans. (2) Distribute fair and impartial information concerning enrollment in qualified health plans, and the availability of premium tax credits under Section 36B of the Internal Revenue Code of 1986 and cost-sharing reductions under Section 1402 of the federal act. (3) Facilitate enrollment in qualified health plans. (4) Provide referrals to any applicable office of health insurance consumer assistance or health insurance ombudsman established under Section 2793 of the federal Public Health Service Act, or any other appropriate state agency or agencies, for any enrollee with a grievance, complaint, or question regarding his or her health plan, coverage, or a determination under that plan or coverage. (5) Provide information in a manner that is culturally and linguistically appropriate to the needs of the population being served by the Exchange. (m) Establish the Small Business Health Options Program, separate from the activities of the board related to the individual market, to assist qualified small employers in facilitating the enrollment of their employees in qualified health plans offered through the Exchange in the small  group   employer  market in a manner consistent with paragraph (2) of subdivision (a) of Section 1312 of the federal act.  100503. In addition to meeting the minimum requirements of   SEC. 4.   Section 100503 is added to the Government Code, to read:   100503.   In addition to meeting the minimum requirements of  Section 1311 of the federal act, the board shall do all of the following: (a) Determine the criteria and process for eligibility, enrollment, and disenrollment of enrollees and potential enrollees in the Exchange  and coordinate that process with the state and local government entities administering other health care coverage programs, including the State Department of Health Care Services, the Managed Risk Medical Insurance Board, and California counties, in order to ensure consistent eligibility and   enrollment processes and seamless transitions between coverage  . (b) Develop processes to coordinate with the county entities that administer eligibility for the Medi-Cal program and the entity that determines eligibility for the Healthy Families Program, including, but not limited to, processes for case transfer, referral, and enrollment in the Exchange of individuals applying for assistance to those entities, if allowed or required by federal law. (c) Determine the minimum requirements a health plan must meet to be considered for participation in the Exchange as a qualified health plan, and the standards and criteria for selecting qualified health plans to be offered through the Exchange. In the course of selectively contracting for health care coverage offered to qualified individuals and qualified small employers through the Exchange, the board shall seek to contract with carriers to provide health insurance choices that offer the optimal choice, value, quality, and service. (d) Provide, in each region of the state, a choice of qualified health plans at each of the five levels of coverage contained in subdivisions (d) and (e) of Section 1302 of the federal act. (e) Require, as a condition of participation in the Exchange, carriers to fairly and affirmatively offer, market, and sell in the Exchange  at least one product within each of  the five levels of coverage contained in subdivisions (d) and (e) of Section 1302 of the federal act.  The board may require carriers to offer additional products within each of those five levels of coverage. This subdivision shall not apply to a carrier that solely offers supplemental coverage in the Exchange under paragraph (10) of subdivision (a) of   Section 100504.  (f) Require, as a condition of participation in the Exchange, carriers that sell any products outside the Exchange to do both of the following: (1) Fairly and affirmatively offer, market, and sell all products made available to individuals in the Exchange to individuals purchasing coverage outside the Exchange. (2) Fairly and affirmatively offer, market, and sell all products made available to small employers in the Exchange to small employers purchasing coverage outside the Exchange. (g) Determine when an enrollee's coverage commences and the extent and scope of coverage. (h) Provide for the processing of applications and the enrollment and disenrollment of enrollees. (i) Determine and approve cost-sharing provisions for qualified health plans.  (j) Establish uniform billing and payment policies for qualified health plans offered in the Exchange to ensure consistent enrollment and disenrollment activities for individuals enrolled in the Exchange.   (j)   (k)  Undertake activities necessary to market and publicize the availability of health care coverage and federal subsidies through the Exchange. The board shall also undertake outreach and enrollment activities that seek to assist enrollees and potential enrollees with enrolling and reenrolling in the Exchange in the least burdensome manner, including populations that may experience barriers to enrollment, such as the disabled and those with limited English language proficiency.  (k)   (l)  Select and set performance standards and compensation for navigators selected under subdivision (l) of Section 100502.  (l)   (m)  Employ necessary staff.  (m) Assess a charge, at the lowest possible rate, on the qualified health plans offered by carriers to support the development,   (n)    Assess a charge on the qualified health plans offered by carriers that is reasonable and necessary to support the development,  operations, and prudent cash management of the Exchange. This charge shall not affect the requirement under Section 1301 of the federal act that carriers charge the same premium rate for each qualified health plan whether offered inside or outside the Exchange.  (n)   (o)  Authorize expenditures, as necessary, from the California Health Trust Fund to pay program expenses to administer the Exchange.  (o)   (p)  Keep an accurate accounting of all activities, receipts, and expenditures, and annually submit to the United States Secretary of Health and Human Services a report concerning that accounting.  (p)   (q)  Maintain enrollment and expenditures to ensure that expenditures do not exceed the amount of revenue in the fund, and if sufficient revenue is not available to pay estimated expenditures, institute appropriate measures to ensure fiscal solvency.  (q)   (r)  Exercise all powers reasonably necessary to carry out  the powers and responsibilities expressly granted or imposed by this act.   and comply with the duties, responsibilities, and requirements of this act and the federal act.   (r)   (s)  Consult with stakeholders relevant to carrying out the activities under this title, including, but not limited to, all of the following: (1) Health care consumers who are enrolled in health plans. (2) Individuals and entities with experience in facilitating enrollment in health plans. (3) Representatives of small businesses and self-employed individuals. (4) The Director of Health Care Services. (5) Advocates for enrolling hard-to-reach populations.  (s)   (t)  Facilitate the purchase of qualified health plans in the Exchange by qualified individuals and qualified small employers no later than January 1, 2014.  (t)   (u)  Report, or contract with an independent entity to report, to the Legislature by December 1, 2018, on whether to adopt the option in paragraph (3) of subdivision (c) of Section 1312 of the federal act to merge the individual and small  group   employer  markets. In its report, the board shall provide information, based on at least two years of data from the Exchange, on the potential impact on rates paid by individuals and by small employers in a merged individual and small  group   employer  market, as compared to the rates paid by individuals and small employers if a separate individual and small  group   employer  market is maintained. A report made pursuant to this paragraph shall be submitted pursuant to Section 9795.  (u)   (v)  With respect to the SHOP Program, collect premiums and administer all other necessary and related tasks, including, but not limited to, enrollment and plan payment, in order to make the offering of employee plan choice as simple as possible for qualified small employers.  (v)   (w)  Require carriers participating in the Exchange to immediately notify the Exchange, under the terms and conditions established by the board when an individual is or will be enrolled in or disenrolled from any qualified health plan offered by the carrier.  (w)   (x)  Ensure that the Exchange provides oral interpretation services in any language for individuals seeking coverage through the Exchange and makes available a toll-free telephone number for the hearing and speech impaired. The board shall ensure that written information made available by the Exchange is presented in a plainly worded, easily understandable format and made available in prevalent languages.  100504. (a) The board may do the following:   SEC. 5.   Section 100504 is added to the Government Code, to read:   100504.   (a) The board may do the following:  (1) With respect to individual coverage made available in the Exchange, collect premiums and assist in the administration of subsidies. (2) Enter into contracts. (3) Sue and be sued. (4) Receive and accept gifts, grants, or donations of moneys from any agency of the United States, any agency of the state, any municipality, county, or other political subdivision of the state. (5) Receive and accept gifts, grants, or donations from individuals, associations, private foundations, or corporations, subject to the adoption by the board at a public meeting of conflict of interest provisions. (6) Adopt rules and regulations, as necessary. Until January 1, 2016, any necessary rules and regulations may be adopted as emergency regulations in accordance with the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2). The adoption of these regulations shall be deemed to be an emergency and necessary for the immediate preservation of the public peace, health and safety, or general welfare. (7) Collaborate with the State Department of Health Care Services  and the Managed Risk Medical Insurance Board  , to the extent possible, to allow an individual the option to remain enrolled with his or her carrier and provider network in the event the individual experiences a loss of eligibility of premium tax credits and becomes eligible for the Medi-Cal program or the Healthy Families Program, or loses eligibility for the Medi-Cal program or the Healthy Families Program and becomes eligible for premium tax credits through the Exchange. (8) Share information with relevant state departments, consistent with the confidentiality provisions in Section 1411 of the federal act, necessary for the administration of the Exchange. (9) Require carriers participating in the Exchange to make available to the Exchange and regularly update an electronic directory of contracting health care providers so that individuals seeking coverage through the Exchange can search by health care provider name to determine which health plans in the Exchange include that health care provider in their network. The board may also require a carrier to provide regularly updated information to the Exchange as to whether a health care provider is accepting new patients for a particular health plan. The Exchange may provide an integrated and uniform consumer directory of health care providers indicating which carriers the providers contract with and whether the providers are currently accepting new patients. The Exchange may also establish methods by which health care providers may transmit relevant information directly to the Exchange, rather than through a carrier.  (10) Make available supplemental coverage for enrollees of the Exchange to the extent permitted by the federal act, provided that no General Fund money is used to subsidize the cost of that coverage.  (b) The Exchange shall only collect information from individuals or designees of individuals necessary to administer the Exchange and consistent with Section 1411 of the federal act.  (c) The Exchange shall have the authority to offer standardized products.   100505. A carrier that is not participating in the Exchange shall not offer, market, or sell a catastrophic plan, as defined in subdivision (e) of Section 1302 of the federal act, in the individual market.   100520. (a) The California Health Trust Fund is hereby   SEC. 6.   Section 100505 is added to the   Government Code   , to read:   100505. The board shall establish and use a competitive process to select participating carriers and any other contractors under this title. Any contract entered into pursuant to this title shall be exempt from Chapter 2 (commencing with Section 10100) of Division 2 of the Public Contract Code, and shall be exempt from the review or approval of any division of the Department of General Services.   SEC. 7.   Section 100506 is added to the   Government Code   , to read:   100506. (a) The board shall establish an appeal process for prospective and current enrollees of the Exchange that complies with all requirements of the federal act concerning the role of a state Exchange in facilitating federal appeals of Exchange-related determinations. In no event shall the scope of those appeals be construed to be broader than the requirements of the federal act. Once the federal regulations concerning appeals have been issued in final form by the United States Secretary of Health and Human Services, the board may establish additional requirements related to appeals. (b) The board shall not be required to provide an appeal if the subject of the appeal is within the jurisdiction of the Department of Managed Health Care pursuant to the Knox-Keene Health Care Service Plan Act of 1975 (Chapter 2.2 (commencing with Section 1340) of Division 2 of the Health and Safety Code) and its implementing regulations, or within the jurisdiction of the Department of Insurance pursuant to the Insurance Code and its implementing regulations.   SEC. 8.   Section 100507 is added to the   Government Code   , to read:   100507. (a) Notwithstanding any other provision of law, the Exchange shall not be subject to licensure or regulation by the Department of Insurance or the Department of Managed Health Care. (b) Carriers that contract with the Exchange shall have a license or certificate of authority from, and shall be in good standing with, their respective regulatory agencies.   SEC. 9.   Section 100520 is added to the Government Code, to read:   100520.   (a)     The California Health Trust Fund is hereby  created in the State Treasury for the purpose of this title. Notwithstanding Section 13340, all moneys in the fund shall be continuously appropriated without regard to fiscal year for the purposes of this title. Any moneys in the fund that are unexpended or unencumbered at the end of a fiscal year may be carried forward to the next succeeding fiscal year. (b) Notwithstanding any other provision of law, moneys deposited in the fund shall not be loaned to, or borrowed by, any other special fund or the General Fund, or a county general fund or any other county fund. (c) The board of the California Health Benefit Exchange shall establish and maintain a prudent reserve in the fund. (d) The board or staff of the Exchange shall not utilize any funds intended for the administrative and operational expenses of the Exchange for staff retreats, promotional giveaways, excessive executive compensation, or promotion of federal or state legislative or regulatory modifications. (e) Notwithstanding Section 16305.7, all interest earned on the moneys that have been deposited into the fund shall be retained in the fund and used for purposes consistent with the fund.  SEC. 10.   Section 100521 is added to the   Government Code   , to read:   100521. The state shall not be liable beyond the assets of the fund for any obligations incurred, or liabilities sustained, in the operation of the Exchange.   SEC. 11.   Section 100522 is added to the   Government Code   , to read:   100522. The Exchange shall not make expenditures that exceed the amount of available moneys in the fund.   SEC. 12.   Section 1366.6 is added to the   Health and Safety Code   , to read:   1366.6. (a) For purposes of this section, the following definitions shall apply: (1) "Exchange" means the California Health Benefit Exchange established in Title 22 (commencing with Section 100500) of the Government Code. (2) "Federal act" means 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 amendments to, or regulations or guidance issued under, those acts. (3) "Qualified health plan" has the same meaning as that term is defined in Section 1301 of the federal act. (4) "Small employer" has the same meaning as that term is defined in Section 1357. (b) Health care service plans participating in the Exchange shall fairly and affirmatively offer, market, and sell in the Exchange at least one product within each of the five levels of coverage contained in subdivisions (d) and (e) of Section 1302 of the federal act. The board established under Section 100501 of the Government Code may require plans to sell additional products within each of those levels of coverage. This subdivision shall not apply to a plan that solely offers supplemental coverage in the Exchange under paragraph (10) of subdivision (a) of Section 100504 of the Government Code. (c) Health care service plans participating in the Exchange that sell any products outside the Exchange shall do both of the following: (1) Fairly and affirmatively offer, market, and sell all products made available to individuals in the Exchange to individuals purchasing coverage outside the Exchange. (2) Fairly and affirmatively offer, market, and sell all products made available to small employers in the Exchange to small employers purchasing coverage outside the Exchange. (d) Commencing January 1, 2014, a health care service plan shall, with respect to plan contracts that cover hospital, medical, or surgical expenses, only sell the five levels of coverage contained in subdivisions (d) and (e) of Section 1302 of the federal act, except that a health care service plan that does not participate in the Exchange shall, with respect to plan contracts that cover hospital, medical, or surgical benefits, only sell the four levels of coverage contained in subdivision (d) of Section 1302 of the federal act. (e) Commencing January 1, 2014, a health care service plan that does not participate in the Exchange shall, with respect to plan contracts that cover hospital, medical, or benefits, offer the standardized products for qualified health plans offered in the Exchange. This subdivision shall not be construed to prohibit the plan from offering other products provided that it complies with subdivision (d).   SEC. 13.   Section 10112.3 is added to the   Insurance Code   , to read:   10112.3. (a) For purposes of this section, the following definitions shall apply: (1) "Exchange" means the California Health Benefit Exchange established in Title 22 (commencing with Section 100500) of the Government Code. (2) "Federal act" means 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 amendments to, or regulations or guidance issued under, those acts. (3) "Qualified health plan" has the same as that term is defined in Section 1301 of the federal act. (4) "Small employer" has the same meaning as that term is defined in Section 10700. (b) Health insurers participating in the Exchange shall fairly and affirmatively offer, market, and sell in the Exchange at least one product within each of the five levels of coverage contained in subdivisions (d) and (e) of Section 1302 of the federal act. The board established under Section 100501 of the Government Code may require insurers to sell additional products within each of those levels of coverage. This subdivision shall not apply to an insurer that solely offers supplemental coverage in the Exchange under paragraph (10) of subdivision (a) of Section 100504 of the Government Code. (c) Health insurers participating in the Exchange that sell any products outside the Exchange shall do both of the following: (1) Fairly and affirmatively offer, market, and sell all products made available to individuals in the Exchange to individuals purchasing coverage outside the Exchange. (2) Fairly and affirmatively offer, market, and sell all products made available to small employers in the Exchange to small employers purchasing coverage outside the Exchange. (d) Commencing January 1, 2014, a health insurer, with respect to policies that cover hospital, medical, or surgical benefits, may only sell the five levels of coverage contained in subdivisions (d) and (e) of Section 1302 of the federal act, except that a health insurer that does not participate in the Exchange may, with respect to policies that cover hospital, medical, or surgical benefits only sell the four levels of coverage contained in subdivision (d) of Section 1302 of the federal act. (e) Commencing January 1, 2014, a health insurer that does not participate in the Exchange shall, with respect to policies that cover hospital, medical, or surgical expenses, offer the standardized products for qualified health plans offered in the Exchange. This subdivision shall not be construed to prohibit the insurer from offering other products provided that it complies with subdivision (d).  SEC. 14.   No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.   SEC. 15.   This act shall become operative only if Senate Bill 900 of the 2009-10 Regular Session is also enacted and becomes operative.  All matter omitted in this version of the bill appears in the bill as amended in the Senate, August 2, 2010. (JR11)