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SB-641 Mexican prepaid health plans.(2017-2018)

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Date Published: 07/03/2018 09:00 PM
SB641:v95#DOCUMENT

Amended  IN  Assembly  July 03, 2018
Amended  IN  Assembly  June 18, 2018
Amended  IN  Senate  April 20, 2017
Amended  IN  Senate  March 28, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill No. 641


Introduced by Senators Lara and Hueso

February 17, 2017


An act to amend Section 1351.2 of the Health and Safety Code, relating to health care.


LEGISLATIVE COUNSEL'S DIGEST


SB 641, as amended, Lara. 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.
Existing law also authorizes the director to prescribe rules and regulations to provide safeguards with respect to the financial responsibility of health care service plans, generally.
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 department’s 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.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

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


SECTION 1.

 Section 1351.2 of the Health and Safety Code is amended to read:

1351.2.
 (a) If a prepaid health plan operating lawfully under the laws of Mexico elects to operate a health care service plan in this state, the prepaid health plan shall apply for licensure as a health care service plan under this chapter by filing an application for licensure in the form prescribed by the department and verified by an authorized representative of the applicant. The prepaid health plan shall be subject to the provisions of this chapter, and the rules adopted by the director thereunder, as determined by the director to be applicable. except as provided in paragraph (12). The application shall be accompanied by the fee prescribed by subdivision (a) of Section 1356 and shall demonstrate compliance with the following requirements:
(1) The prepaid health plan is constituted and operating lawfully under the laws of Mexico and, if required by Mexican law, is authorized as an Insurance Institution Specializing in Health by Mexico’s National Commission for Insurance and Finance (Comisión Nacional de Seguros y Fianzas) (CNSF). If the CNSF determines that the prepaid health plan is not required to be authorized as an Insurance Institution Specializing in Health under the laws of Mexico, the applicant shall obtain written verification from the CNSF stating that the applicant is not required to be authorized as an Insurance Institution Specializing in Health in Mexico. A Mexican prepaid health plan that is not required to be an Insurance Institution Specializing in Health shall obtain written verification from the Mexican Ministry of Health that the prepaid health plan and its provider network are operating in full compliance of Mexican law.
(2) The prepaid health plan offers and sells in this state only employer-sponsored group plan contracts exclusively for the benefit of persons legally employed in the County of San Diego or the County of Imperial, and for the benefit of their dependents, 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 for the provision or delivery of those health care services set forth in paragraph (4).
(3) Solicitation of plan contracts in this state is made only through insurance brokers and agents licensed in this state or a third-party administrator licensed in this state, each of which is authorized to offer and sell plan group contracts.
(4) Group contracts provide, through a contract of insurance between the prepaid health plan and an insurer admitted in this state, for the reimbursement of emergency and urgent care services provided out of area as required by subdivision (h) of Section 1345.
(5) All advertising, solicitation material, disclosure statements, evidences of coverage, and contracts are in compliance with the appropriate provisions of this chapter and the rules or orders of the director. The director shall require that each of these documents contain a legend in 10-point type, in both English and Spanish, declaring that the health care service plan contract provided by the prepaid health plan may be limited as to benefits, rights, and remedies under state and federal law.
(6) All funds received by the prepaid health plan from a subscriber are deposited in an account of a bank organized under the laws of this state or in an account of a national bank located in this state.
(7) The prepaid health plan maintains a tangible net equity as required by this chapter and the rules of the director, as calculated under United States generally accepted accounting principles, in the amount of a least one million dollars ($1,000,000). In lieu of an amount in excess of the minimum tangible net equity of one million dollars ($1,000,000), the prepaid health plan may demonstrate a reasonable acceptable alternative reimbursement arrangement that the director may in his or her discretion accept. the director pursuant to Section 1376 and any rules and regulations adopted pursuant to that authority, including Section 1300.76 of Title 28 of the California Code of Regulations. The prepaid health plan shall also maintain a fidelity bond and a surety bond as required by Section 1376 and the rules of the director.
(8) The prepaid health plan agrees to make all of its books and records, including the books and records of health care providers in Mexico, available to the director in the form and at the time and place requested by the director. Books and records shall be made available to the director no later than 24 hours from the date of the request.
(9) The prepaid health plan files a consent to service of process with the director and agrees to be subject to the laws of this state and the United States in any investigation, examination, dispute, or other matter arising from the advertising, solicitation, or offer and sale of a plan contract, or the management or provision of health care services in this state or throughout the United States. The prepaid health plan shall agree to notify the director, immediately and in no case later than one business day, if it is subject to any investigation, examination, or administrative or legal action relating to the prepaid health plan or the operations of the prepaid health plan initiated by the government of Mexico or the government of any state of Mexico against the prepaid health plan or any officer, director, security holder, or contractor owning 10 percent or more of the securities of the prepaid health plan. The prepaid health plan shall agree that in the event of conflict of laws in any action arising out of the license, the laws of California and the United States shall apply.
(10) The prepaid health plan agrees that disputes arising from the group contracts involving group contractholders and providers of health care services in the United States shall be subject to the jurisdiction of the courts of this state and the United States.
(11) The prepaid health plan shall employ or designate a medical director who holds an unrestricted license to practice medicine in this state issued pursuant to Section 2050 of the Business and Professions Code or pursuant to the Osteopathic Act for health care services set forth in paragraph (4). For health care services that are to be provided or delivered wholly in Mexico, the prepaid health plan may employ or designate a medical director operating under the laws of Mexico.
(12) (A) Except as provided in subparagraph (C), for policies issued, amended, or renewed on or after January 1, 2019, the director by formal decision may exempt the prepaid health plan from the requirements of this chapter, or the rules adopted thereunder, if all of the following apply:
(i) The director determines that the exemption is in the best interest of enrollees.
(ii) The director has provided a 60-day public notice and sought public comment prior to issuing the formal decision.
(iii) The director determines that the prepaid health plan is unable to comply with specific, enumerated provisions of this chapter because it is a Mexican prepaid health plan that is otherwise operating consistently with this section.
(B) The formal decision of the director issued pursuant to subparagraph (A) shall be posted on the department’s Internet Web site.
(C) The director shall not exempt the prepaid health plan from the provisions governing grievances, independent medical review, guaranteed issue, guaranteed renewal, or prohibitions on preexisting conditions or health status factors.
(D) An exemption granted pursuant to subparagraph (A) shall remain in effect for not more than five years from the date of the director’s decision. An exemption may be renewed for a period not to exceed five years if, upon review by the department of grievances, medical surveys, and enforcement actions, the director determines by formal decision that the exemption remains consistent with clauses (i) to (iii), inclusive, of subparagraph (A).
(E) Exemptions granted prior to January 1, 2019, shall remain in effect until January 1, 2021, and thereafter shall be subject to this paragraph.
(b) The prepaid health plan shall pay the application processing fee and other fees and assessments set forth in Section 1356. The director, by order, may designate provisions of this chapter and rules adopted thereunder that need not be applied to a prepaid health plan licensed under the laws of Mexico when consistent with the intent and purpose of this chapter, and in the public interest.
(c) If the plan ceases to operate legally in Mexico, the director shall immediately deliver written notice to the health care service plan that it is not in compliance with the provisions of this section. If this occurs, a health care service plan shall do all of the following:
(1) Provide the director with written proof that the prepaid health plan has complied with the laws of Mexico not later than 45 days after the date the written notice is received by the health care service plan.
(2) If, by the 45th day, the health care service plan is unable to provide written confirmation that it is in full compliance with Mexican law, the director shall notify the health care service plan in writing that it is prohibited from accepting any new enrollees or subscribers. The health care service plan shall be given an additional 180 days to comply with Mexican law or to become a licensed health care service plan.
(3) If, at the end of the 180-day notice period in paragraph (2), the health care service plan has not complied with the laws of Mexico or California, the director shall issue an order that the health care service plan cease and desist operations in California.
(d) If a group plan that is subject to this section is issued or sold to a group subscriber, that group subscriber shall offer to enrollees and dependents coverage that is fully consistent with this chapter or, if the group subscriber is a large group as defined in this chapter the group subscriber shall offer self-insured coverage that is consistent with the federal Patient Protection and Affordable Care Act (Public Law 111-148) and the federal Employee Retirement Income Security Act of 1974 (Public Law 93-406).

SEC. 2.

 The Legislature finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the following unique circumstances in the Counties of San Diego and Imperial:
(a) The prepaid health plans that are subject to this act are only offered to persons who are legally employed in those counties for health care services that are delivered or provided in Mexico, except for emergency and urgent care.
(b) These counties have the closest geographic proximity to Mexico of any counties in this state.

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.