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AB-2427 Medi-Cal: anticompetitive conduct.(2017-2018)

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Date Published: 06/07/2018 09:00 PM
AB2427:v95#DOCUMENT

Amended  IN  Senate  June 07, 2018
Amended  IN  Assembly  May 25, 2018
Amended  IN  Assembly  April 30, 2018
Amended  IN  Assembly  March 23, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 2427


Introduced by Assembly Member Wood
(Coauthors: Assembly Members Arambula, Chiu, and Friedman)

February 14, 2018


An act to add Section 1360.7 to the Health and Safety Code, and to add Section 14197.25 to the Welfare and Institutions Code, relating to health care coverage. Medi-Cal.


LEGISLATIVE COUNSEL'S DIGEST


AB 2427, as amended, Wood. Health care coverage: Medi-Cal. Medi-Cal: anticompetitive conduct.

(1)Existing

Existing law establishes the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid program provisions. Existing law authorizes the Director of Health Care Services to contract, on a bid or nonbid basis, with any qualified individual, organization, or entity to provide services to, arrange for or case manage the care of Medi-Cal beneficiaries.
Existing law authorizes the renewal of a contract if the provider continues to meet the requirements of the Medi-Cal program and the contract. Under existing law, failure to meet those requirements is cause for nonrenewal of the contract. Existing law authorizes the department to terminate or decline to renew a contract, in whole or in part, if the director determines that such action is necessary to protect the health of the beneficiaries or the funds appropriated to carry out the Medi-Cal program.
Under existing law, one of the methods by which Medi-Cal services are provided is pursuant to contracts with various types of managed care plans. Existing law, commencing July 1, 2019, requires a Medi-Cal managed care plan to comply with a minimum 85% medical loss ratio. Existing law requires, effective for contract rating periods commencing on or after July 1, 2023, a Medi-Cal managed care plan to provide a remittance to the state if the ratio does not meet the minimum ratio of 85% for the corresponding reporting year.
This bill would require the department to decline to renew or award a contract, in whole or in part, of a for-profit Medi-Cal managed care plan if the Attorney General determines that the Medi-Cal managed care plan engaged or engages in anticompetitive conduct or practices, as defined, or if the department determines that the Medi-Cal managed care plan has a pattern or practice of not complying with the medical loss ratio, as described above. The bill would specify that nonrenewal of a contract under these provisions would not qualify the applicant for an administrative hearing. The bill would apply these provisions only to new contracts, and renewals of existing contracts, executed on or after January 1, 2019.

(2)Existing federal law, the federal Patient Protection and Affordable Care Act (PPACA), enacted various health care coverage market reforms that took effect on January 1, 2014. PPACA required each state, by January 1, 2014, to establish an American Health Benefit Exchange to facilitate the purchase of qualified health benefit plans by qualified individuals and qualified small employers. Existing state law creates the California Health Benefit Exchange, also known as Covered California, to facilitate the purchase of qualified health plans by qualified individuals and qualified 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, including individual health benefit plans, by the Department of Managed Health Care, and makes a willful violation of its provisions a crime.

Existing law requires a health care service plan, on and after October 1, 2013, to offer, market, and sell all of the plan’s health benefit plans that are sold in the individual market for policy years on or after January 1, 2014, to all individuals and dependents in a service area in which the plan provides or arranges for the provision of health care services.

This bill, commencing January 1, 2020, would require a health care service plan that has a contract with the State Department of Health Care Services to offer Medi-Cal managed care plans or prepaid health plans, and that meets specified criteria, to negotiate with the Exchange regarding offering individual products on the Exchange in approved service areas that overlap with counties where there are 2 or fewer health care service plans offering products on the Exchange, as specified. Because a willful violation of the bill’s requirements 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.

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

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


SECTION 1.Section 1360.7 is added to the Health and Safety Code, to read:
1360.7.

(a)On or after January 1, 2020, if a health care service plan has a contract with the State Department of Health Care Services pursuant to Chapter 7 (commencing with Section 14000) or Chapter 8 (commencing with Section 14200) of Part 3 of Division 9 of the Welfare and Institutions Code, and the plan meets the criteria specified in subdivision (b), the plan shall negotiate with the Exchange regarding offering individual products on the Exchange in the plan’s approved service areas that overlap with counties where there are two or fewer health care service plans offering products on the Exchange as of the plan year beginning in 2018.

(b)A health care service plan required to negotiate with the Exchange pursuant to subdivision (a) shall meet the following criteria:

(1)The health care service plan is licensed to offer Medi-Cal managed care, as a Knox-Keene licensed entity, through its existing license, subsidiary, or affiliate.

(2)The health care service plan, or its subsidiary or affiliate, is licensed to offer individual products on the Exchange.

(3)The health care service plan, or its subsidiary or affiliate, has been approved previously to offer individual products on the Exchange in counties where there are two or fewer health care service plans offering products on the Exchange.

SEC. 2.SECTION 1.

 Section 14197.25 is added to the Welfare and Institutions Code, immediately following Section 14197.2, to read:

14197.25.
 (a) The department shall decline to renew or award a contract, in whole or in part, of a for-profit Medi-Cal managed care plan if the Attorney General determines that the Medi-Cal managed care plan engaged or engages in anticompetitive conduct or practices, or if the department determines that the Medi-Cal managed care plan has a pattern or practice of not complying with the medical loss ratio pursuant to Section 14197.2.
(b) Nonrenewal of a contract under this section shall not qualify the applicant for an administrative hearing, including a hearing pursuant to Section 14123.
(c) This section shall apply only to new contracts, and renewals of existing contracts, entered into by a Medi-Cal managed care plan and the department on or after January 1, 2019.
(d) For purposes of this section, the following definitions apply:
(1) “Medi-Cal managed care plan” shall have the same meaning as described in Section 14197.2.
(2) “Anticompetitive conduct or practices” includes, but is not limited to, any arrangement, agreement, conspiracy, or practice that prohibits or otherwise prevents Medi-Cal managed care plans from entering a market or a specific geographic area, from offering or selling managed care or health care services and benefits, from administering employee benefits, or from contracting with providers.

SEC. 3.

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.