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SB-134 Regional center contracts.(2017-2018)

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Date Published: 08/16/2018 09:00 PM
SB134:v98#DOCUMENT

Amended  IN  Assembly  August 16, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill No. 134


Introduced by Senator Hernandez
(Principal coauthor: Assembly Member Salas)

January 11, 2017


An act to amend Section 1357.503 of the Health and Safety Code, relating to health care coverage. 4629.5 of, and to add Article 1.1 (commencing with Section 4639.80) to Chapter 5 of Division 4.5 of, the Welfare and Institutions Code, relating to regional centers.


LEGISLATIVE COUNSEL'S DIGEST


SB 134, as amended, Hernandez. Small group market: single risk pool: index rate. Regional center contracts.
(1) Under existing law, the Lanterman Developmental Disabilities Services Act, the State Department of Developmental Services is authorized to contract with regional centers to provide services and supports to individuals with developmental disabilities. Existing law requires the state to enter into 5-year contracts with regional centers, subject to an annual appropriation by the Legislature, and specifies the responsibilities of the department and the requirements and qualifications of appropriate agencies for purposes of contracting for regional center services. Among other provisions, existing law requires a regional center contract to include annual performance objectives, as specified, and to provide that the regional center will render services in accordance with applicable laws and regulations.
This bill would require a contract between the State Department of Developmental Services and a private nonprofit association for the operation of a regional center that is entered into or renewed on and after January 1, 2019, to include specified procedures for employee retention, including requiring a successor contractor to agree to retain designated covered employees of the predecessor contractor for a transition period of 90 days, as specified. The bill would prohibit the successor contractor from reducing the compensation of a covered employee, or terminating a covered employee without cause, during the transition period, and would require the successor contractor to provide each covered employee with a written performance evaluation at the end of the transition period. The bill would authorize a successor contractor and a labor organization to supersede those prohibitions by collective bargaining agreement. If a successor contractor violates certain of these requirements with respect to a covered employee, the bill would authorize the employee to bring an action against the successor contractor for back pay and injunctive relief, as specified. The bill would declare that these provisions are severable.
(2) Existing law requires a regional center to include specified information on its Internet Web site for the purpose of promoting transparency and access to public information, including, among other things, contract awards, annual independent audits, and reports on all prior fiscal year expenditures from the regional center operations budget for all administrative services.
This bill would require that information to include the salaries, wages, and employee benefits for all managerial positions for which the primary purpose is the administrative management of the regional center, as specified.

Existing federal law, the federal Patient Protection and Affordable Care Act, creates various premium stabilization programs, such as the transitional reinsurance program and the risk adjustment program, to stabilize premiums in the individual market inside and outside of the Exchanges. Under the transitional reinsurance program, contributions are collected from contributing entities to fund reinsurance payments to issuers of nongrandfathered reinsurance-eligible individual market plans and the administrative costs of operating the reinsurance program for the 2014, 2015, and 2016 benefit years.

Existing law establishes the California Health Benefit Exchange within state government for the purpose of facilitating the purchase of qualified health plans through the Exchange by qualified individuals and small employers.

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 requires a health care service plan, on and after October 1, 2013, to fairly and affirmatively offer, market, and sell all of the plan’s small employer health care service plan contracts for plan years on or after January 1, 2014, to all small employers in each service area in which the plan provides or arranges for the provision of health care services. Existing law requires a plan to consider the claims experience of all enrollees in all nongrandfathered small employer health benefit plans offered by that plan in this state as a single risk pool for rating purposes in the small employer market. Existing law requires a plan to establish, at least each calendar year, and no more frequently than each calendar quarter, an index rate for the small employer market based on the total combined claims costs for providing essential health benefits, as defined, within the single risk pool and requires the index rate to be adjusted on a marketwide basis based on the total expected marketwide payments and charges under the risk adjustment and reinsurance programs established for the state under the federal provisions described above and the Exchange user fees. Existing law requires the premium rate for all of the nongrandfathered small employer health benefit plans within the single risk pool to use the applicable marketwide adjusted index rate, as specified.

This bill would delete the reference to the federal transitional reinsurance program in these provisions.

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

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


SECTION 1.

 Section 4629.5 of the Welfare and Institutions Code is amended to read:

4629.5.
 (a) In addition to the requirements set forth in Section 4629, the department’s contract with a regional center shall require the regional center to adopt, maintain, and post on its Internet Web site a board-approved policy regarding transparency and access to public information. The transparency and public information policy shall provide for timely public access to information, including, but not limited to, information regarding requests for proposals and contract awards, service provider rates, documentation related to establishment of negotiated rates, audits, and IRS Form 990. The transparency and public information policy shall be in compliance with applicable law relating to the confidentiality of consumer service information and records, including, but not limited to, Section 4514.
(b) To promote transparency, each regional center shall include on its Internet Web site, as expeditiously as possible, at least all of the following:
(1) Regional center annual independent audits.
(2) Biannual fiscal audits conducted by the department.
(3) Regional center annual reports pursuant to Section 4639.5.
(4) Contract awards, including the organization or entity awarded the contract, and the amount and purpose of the award.
(5) Purchase of service policies.
(6) The names, types of service, and contact information of all vendors, except consumers or family members of consumers.
(7) Board meeting agendas and approved minutes of open meetings of the board and all committees of the board.
(8) Bylaws of the regional center governing board.
(9) The annual performance contract and year-end performance contract entered into with the department pursuant to this division.
(10) The biannual Home and Community-based Services Waiver program review conducted by the department and the State Department of Health Care Services.
(11) The board-approved transparency and public information policy.
(12) The board-approved conflict-of-interest policy.
(13) Reports required pursuant to Section 4639.5.
(14) A link to the page on the department’s Internet Web site specified in subdivision (d).
(15) The salaries, wages, and employee benefits for all managerial positions for which the primary purpose is the administrative management of the regional center, including, but not limited to, directors and chief executive officers.
(c) The department shall establish and maintain a transparency portal on its Internet Web site that allows consumers, families, advocates, and others to access provider and regional center information. Posted information on the department’s Internet Web site transparency portal shall include, but need not be limited to, all of the following:
(1) A link to each regional center’s Internet Web site information referenced in subdivision (b).
(2) Biannual fiscal audits conducted by the department.
(3) Vendor audits.
(4) Biannual Home and Community-based Services Waiver program reviews conducted by the department and the State Department of Health Care Services.
(5) Biannual targeted case management program and federal nursing home reform program reviews conducted by the department.
(6) Early Start Program reviews conducted by the department.
(7) Annual performance contract and year-end performance contract reports.
(d) The department shall establish and maintain a page on its Internet Web site that includes both a list of services purchased by regional centers or provided directly to consumers by regional centers and a brief description of those services.

SEC. 2.

 Article 1.1 (commencing with Section 4639.80) is added to Chapter 5 of Division 4.5 of the Welfare and Institutions Code, to read:
Article  1.1. Regional Center Worker Retention

4639.80.
 The Legislature finds and declares all of the following:
(a) Regional centers established pursuant to the Lanterman Developmental Disabilities Services Act provide critical services to Californians with developmental disabilities, who are among the most vulnerable members of our communities. The State Department of Social Services contracts with private, nonprofit organizations to operate the regional centers to provide these crucial services.
(b) The state has a compelling interest in maintaining the continuity of services provided to Californians with developmental disabilities pursuant to the Lanterman Act during a change in the identity of the nonprofit organization with which the State Department of Developmental Services contracts to operate a regional center.
(c) Mass displacement of regional center employees resulting from a change in the operator of a regional center causes excessive reliance on the unemployment insurance system, public social services, and health programs, increasing costs to these vital governmental programs, and places a significant burden on the state and California taxpayers.
(d) A transitional retention period for regional center employees resulting from a change in the operator of a regional center ensures stability and continuity in services provided to developmentally disabled Californians and prevents undue costs to the state and taxpayers.

4639.81.
 (a) Notwithstanding Section 4630 or any other law, a contract between the State Department of Developmental Services and a private nonprofit association for the operation of a regional center pursuant to Article 1 (commencing with Section 4620) that is entered into or renewed on and after January 1, 2019, shall include procedures for employee retention, as provided in this article.
(b) The following definitions apply for purposes of this article:
(1) “Change of operator” means the replacement, by the department, of a contractor with a successor contractor.
(2) “Contractor” means a nonprofit corporation with which the department contracts to operate a regional center pursuant to Sections 4621 and 4621.5.
(3) (A) “Covered employee” means an individual who has been employed by a contractor for at least 90 days immediately before a change of operator.
(B) “Covered employee” does not include any of the following:
(i) A managerial, supervisory, or confidential employee.
(ii) A temporary employee.
(iii) A part-time employee who has worked less than 20 hours per week for the predecessor contractor for at least 90 days immediately before the change of operator.
(4) “Department” means the State Department of Developmental Services.
(5) “Predecessor contractor” means the contractor before the change of operator.
(6) “Regional center” means a regional center as that term is used in this chapter.
(7) “Successor contractor” means the contractor following the change of operator.
(8) “Total compensation” means the combined value of the covered employee’s wages and benefits immediately before the change of operator. Total compensation may be paid entirely as wages or in any combination of wages and fringe benefits, to be determined by the successor contractor. Total compensation includes the following amounts:
(A) The covered employee’s hourly wage rate or per diem value of the covered employee’s monthly salary.
(B) Employer payments toward the covered employee’s health and welfare and pension benefits. Employer payments toward health and welfare and pension benefits shall include only those payments that are recognized as employer payments under paragraphs (1) and (2) of subdivision (b) of section 1773.1. of the Labor Code.
(9) “Transition period” means a period of 90 days immediately following the effective date of a change of operator.
(c) (1) The department shall notify a contractor operating a regional center that the department has awarded, or intends to award, the contract to a different contractor. The notification shall include the effective date of the change of operator and the name, address, and contact information of the successor contractor.
(2) At least 15 days before the effective date of the change of operator, the predecessor contractor shall provide to the successor contractor a list of the names, addresses, hire dates, total compensation, and classification of all covered employees.

4639.82.
 A contract entered into or renewed pursuant to this article shall be subject to all of the following conditions:
(a) Except as otherwise provided in this section, the successor contractor shall agree to retain all covered employees for at least 90 days following a change of operator.
(1) During the transition period, the successor contractor shall not reduce the total compensation of any covered employee.
(2) During the transition period, the successor contractor shall not terminate a covered employee without cause.
(3) If the successor contractor determines in good faith that it requires fewer employees at a covered employee’s principal place of employment during the transition period than were required by the predecessor contractor, the successor contractor shall retain qualified covered employees by seniority within each job classification.
(4) At the end of the transition period, the successor contractor shall make a written performance evaluation for each covered employee retained during the transition period.
(5) A successor contractor and a labor organization representing covered employees may, by collective bargaining agreement, provide that the agreement supersedes the requirements of this subdivision.
(b) At least 15 days before the effective date of a change of operator, the predecessor contractor shall cause to be posted public notice of the change of operator at each principal place of employment of any covered employee. The notice shall include the name of the predecessor contractor and its contact information, the name of the successor contractor and its contact information, and the effective date of the change of operator. The notice shall be posted in a conspicuous place in a manner to be readily viewed by covered employees. At least 15 days before the effective date of a change of operator, the predecessor contractor shall also cause the notice to be sent to any labor organization that represents the covered employees.
(c) A successor contractor shall retain the following records, in written or electronic format, for at least three years:
(1) The list provided to the successor contractor pursuant to paragraph (2) of subdivision (c) of Section 4639.81.
(2) All offers of employment made to covered employees.
(3) All terminations of covered employees during a transition period, including the reasons for termination.
(4) All written performance evaluations of covered employees made pursuant to paragraph (4) of subdivision (a).

4639.83.
 (a) A covered employee who is not offered employment, who has been discharged in violation of this article, or who has been paid less than the covered employee’s total compensation during the transition period, may bring an action against a successor contractor in any superior court of the State of California with jurisdiction over the successor contractor.
(b) Upon finding a violation of this article, the court may award back pay, calculated at the rate of the covered employee’s total compensation, for each day the violation has occurred and continues to occur. The court may issue an injunction or appropriate order to stop the continued violation of this article, and provide any other relief as the court deems appropriate.
(c) If the covered employee is the prevailing party in the legal action, the court shall award the employee reasonable attorney’s fees and costs as part of the costs recoverable.
(d) A covered employee shall not maintain a cause of action under this section solely due to the failure of a successor contractor to provide a written performance evaluation pursuant to paragraph (4) of subdivision (a) of Section 4639.82.
(e) The rights and remedies provided by this section are in addition to, and are not intended to supplant, any existing rights or remedies.

4639.84.
 The provisions of this article are severable. If any provision of this article or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.

SECTION 1.Section 1357.503 of the Health and Safety Code is amended to read:
1357.503.

(a)(1)On and after October 1, 2013, a plan shall fairly and affirmatively offer, market, and sell all of the plan’s small employer health care service plan contracts for plan years on or after January 1, 2014, to all small employers in each service area in which the plan provides or arranges for the provision of health care services.

(2)On and after October 1, 2013, a plan shall make available to each small employer all small employer health care service plan contracts that the plan offers and sells to small employers or to associations that include small employers in this state for plan years on or after January 1, 2014. Health coverage through an association that is not related to employment shall be considered individual coverage pursuant to Section 144.102(c) of Title 45 of the Code of Federal Regulations.

(3)A plan that offers qualified health plans through the Exchange shall be deemed to be in compliance with paragraphs (1) and (2) with respect to small employer health care service plan contracts offered through the Exchange in those geographic regions in which the plan offers plan contracts through the Exchange.

(b)A plan shall provide enrollment periods consistent with PPACA and described in Section 155.725 of Title 45 of the Code of Federal Regulations. Commencing January 1, 2014, a plan shall provide special enrollment periods consistent with the special enrollment periods described in Section 1399.849, to the extent permitted by PPACA, except for the triggering events identified in paragraphs (d)(3) and (d)(6) of Section 155.420 of Title 45 of the Code of Federal Regulations with respect to plan contracts offered through the Exchange.

(c)No plan or solicitor shall induce or otherwise encourage a small employer to separate or otherwise exclude an eligible employee from a health care service plan contract that is provided in connection with employee’s employment or membership in a guaranteed association.

(d)Every plan shall file with the director the reasonable employee participation requirements and employer contribution requirements that will be applied in offering its plan contracts. Participation requirements shall be applied uniformly among all small employer groups, except that a plan may vary application of minimum employee participation requirements by the size of the small employer group and whether the employer contributes 100 percent of the eligible employee’s premium. Employer contribution requirements shall not vary by employer size. A health care service plan shall not establish a participation requirement that (1) requires a person who meets the definition of a dependent in Section 1357.500 to enroll as a dependent if he or she is otherwise eligible for coverage and wishes to enroll as an eligible employee and (2) allows a plan to reject an otherwise eligible small employer because of the number of persons that waive coverage due to coverage through another employer. Members of an association eligible for health coverage under subdivision (m) of Section 1357.500, but not electing any health coverage through the association, shall not be counted as eligible employees for purposes of determining whether the guaranteed association meets a plan’s reasonable participation standards.

(e)The plan shall not reject an application from a small employer for a small employer health care service plan contract if all of the following conditions are met:

(1)The small employer offers health benefits to 100 percent of its eligible employees. Employees who waive coverage on the grounds that they have other group coverage shall not be counted as eligible employees.

(2)The small employer agrees to make the required premium payments.

(3)The small employer agrees to inform the small employer’s employees of the availability of coverage and the provision that those not electing coverage must wait until the next open enrollment or a special enrollment period to obtain coverage through the group if they later decide they would like to have coverage.

(4)The employees and their dependents who are to be covered by the plan contract work or reside in the service area in which the plan provides or otherwise arranges for the provision of health care services.

(f)No plan or solicitor shall, directly or indirectly, engage in the following activities:

(1)Encourage or direct small employers to refrain from filing an application for coverage with a plan because of the health status, claims experience, industry, occupation of the small employer, or geographic location provided that it is within the plan’s approved service area.

(2)Encourage or direct small employers to seek coverage from another plan because of the health status, claims experience, industry, occupation of the small employer, or geographic location provided that it is within the plan’s approved service area.

(3)Employ marketing practices or benefit designs that will have the effect of discouraging the enrollment of individuals with significant health needs or discriminate based on an individual’s race, color, national origin, present or predicted disability, age, sex, gender identity, sexual orientation, expected length of life, degree of medical dependency, quality of life, or other health conditions.

(g)A plan shall not, directly or indirectly, enter into any contract, agreement, or arrangement with a solicitor that provides for or results in the compensation paid to a solicitor for the sale of a health care service plan contract to be varied because of the health status, claims experience, industry, occupation, or geographic location of the small employer. This subdivision does not apply to a compensation arrangement that provides compensation to a solicitor on the basis of percentage of premium, provided that the percentage shall not vary because of the health status, claims experience, industry, occupation, or geographic area of the small employer.

(h)(1)A policy or contract that covers a small employer, as defined in Section 1304(b) of PPACA and in Section 1357.500, shall not establish rules for eligibility, including continued eligibility, of an individual, or dependent of an individual, to enroll under the terms of the policy or contract based on any of the following health status-related factors:

(A)Health status.

(B)Medical condition, including physical and mental illnesses.

(C)Claims experience.

(D)Receipt of health care.

(E)Medical history.

(F)Genetic information.

(G)Evidence of insurability, including conditions arising out of acts of domestic violence.

(H)Disability.

(I)Any other health status-related factor as determined by any federal regulations, rules, or guidance issued pursuant to Section 2705 of the federal Public Health Service Act.

(2)Notwithstanding Section 1389.1, a health care service plan shall not require an eligible employee or dependent to fill out a health assessment or medical questionnaire prior to enrollment under a small employer health care service plan contract. A health care service plan shall not acquire or request information that relates to a health status-related factor from the applicant or his or her dependent or any other source prior to enrollment of the individual.

(i)(1)A health care service plan shall consider as a single risk pool for rating purposes in the small employer market the claims experience of all enrollees in all nongrandfathered small employer health benefit plans offered by the health care service plan in this state, whether offered as health care service plan contracts or health insurance policies, including those insureds and enrollees who enroll in coverage through the Exchange and insureds and enrollees covered by the health care service plan outside of the Exchange.

(2)At least each calendar year, and no more frequently than each calendar quarter, a health care service plan shall establish an index rate for the small employer market in the state based on the total combined claims costs for providing essential health benefits, as defined pursuant to Section 1302 of PPACA and Section 1367.005, within the single risk pool required under paragraph (1). The index rate shall be adjusted on a marketwide basis based on the total expected marketwide payments and charges under the risk adjustment program established for the state pursuant to Section 1343 of PPACA and Exchange user fees, as described in subdivision (d) of Section 156.80 of Title 45 of the Code of Federal Regulations. The premium rate for all of the nongrandfathered small employer health benefit plans within the single risk pool required under paragraph (1) shall use the applicable marketwide adjusted index rate, subject only to the adjustments permitted under paragraph (3).

(3)A health care service plan may vary premium rates for a particular nongrandfathered small employer health care service plan contract from its index rate based only on the following actuarially justified plan-specific factors:

(A)The actuarial value and cost-sharing design of the plan contract.

(B)The plan contract’s provider network, delivery system characteristics, and utilization management practices.

(C)The benefits provided under the plan contract that are in addition to the essential health benefits, as defined pursuant to Section 1302 of PPACA. These additional benefits shall be pooled with similar benefits within the single risk pool required under paragraph (1) and the claims experience from those benefits shall be utilized to determine rate variations for plan contracts that offer those benefits in addition to essential health benefits.

(D)With respect to catastrophic plans, as described in subsection (e) of Section 1302 of PPACA, the expected impact of the specific eligibility categories for those plans.

(E)Administrative costs, excluding any user fees required by the Exchange.

(j)A plan shall comply with the requirements of Section 1374.3.

(k)(1)Except as provided in paragraph (2), if Section 2702 of the federal Public Health Service Act (42 U.S.C. Sec. 300gg-1), as added by Section 1201 of PPACA, is repealed, this section shall become inoperative 12 months after the repeal date, in which case health care service plans subject to this section shall instead be governed by Section 1357.03 to the extent permitted by federal law, and all references in this article to this section shall instead refer to Section 1357.03 except for purposes of paragraph (2).

(2)Subdivision (b) shall remain operative with respect to health care service plan contracts offered through the Exchange.