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<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-02-20</ns0:ActionDate>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Assembly Member Lowenthal</ns0:AuthorText>
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<ns0:Name>Lowenthal</ns0:Name>
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<ns0:Title> An act to amend Section 1343.3 of the Health and Safety Code, relating to health care coverage. </ns0:Title>
<ns0:RelatingClause>health care coverage</ns0:RelatingClause>
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<ns0:Subject>Voluntary employees’ beneficiary association pilot program. </ns0:Subject>
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<html:p>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. Existing law authorizes the Director of the Department of Managed Health Care to authorize a pilot program in southern California under which approved providers may undertake risk-bearing arrangements with a voluntary employees’ beneficiary association with enrollment of more than 100,000 lives, as specified, beginning no earlier than January 1, 2022, to December 31, 2027, inclusive, if certain criteria are met. Existing law requires the association and each participating health care provider to report to the department information regarding cost savings and clinical patient outcomes compared to a fee-for-service payment model. Existing law requires the department to report those findings to the Legislature after
the termination of the pilot program and before January 1, 2027. Existing law repeals these provisions on January 1, 2030.</html:p>
<html:p>This bill would extend that repeal date to January 1, 2033. The bill would authorize the pilot program to be throughout California and would extend the end date of the pilot program to December 31, 2032. The bill would instead require the department to submit an interim report of the findings to the Legislature before December 31, 2029.</html:p>
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<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
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<ns0:Num>SECTION 1.</ns0:Num>
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Section 1343.3 of the
<ns0:DocName>Health and Safety Code</ns0:DocName>
is amended to read:
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<html:p>
(a)
<html:span class="EnSpace"/>
The director, no later than May 1, 2021, may authorize one pilot program in California whereby providers approved by the department may undertake risk-bearing arrangements with a voluntary employees’ beneficiary association, as defined in Section 501(c)(9) of Title 26 of the United States Code or in Section 1349.2, notwithstanding paragraph (3) of subdivision (a) of Section 1349.2, with enrollment of greater than 100,000 lives, beginning no earlier than January 1, 2022, to December 31, 2032, inclusive, if all of the following criteria are
met:
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<html:p>
(1)
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The purpose of the pilot program is to demonstrate the control of costs for health care services and the improvement of health outcomes and quality of service when compared against a sole fee-for-service provider reimbursement model.
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<html:p>
(2)
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The voluntary employees’ beneficiary association has entered into a contract with one or more health care providers under which each provider agrees to accept risk-based or global risk payment from the voluntary employees’ beneficiary association.
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<html:p>
(3)
<html:span class="EnSpace"/>
Each risk-bearing provider is registered as a risk-bearing organization pursuant to Section 1375.4 and applicable department regulations if the provider accepts professional capitation and is delegated the responsibility for the processing and payment of claims.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Each global risk-bearing provider holds or will obtain in conjunction with the pilot program application a limited or restricted license pursuant to Section 1349 or 1351, or Section 1300.49 of Title 28 of the California Code of Regulations.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
Each risk-bearing provider continues to comply with applicable financial solvency standards and audit requirements under this chapter, including, but not limited to, financial reporting on a quarterly basis, during the term of the pilot program.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
The voluntary employees’ beneficiary association shall be responsible for providing all of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Basic health care services.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Prescription drug benefits.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Continuity
of care.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
Standards for network adequacy and timely access to care, including, but not limited to, access to specialty care.
</html:p>
<html:p>
(E)
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Language assistance programs.
</html:p>
<html:p>
(F)
<html:span class="EnSpace"/>
A process for filing and resolving consumer grievances and appeals, including, but not limited to, independent medical review.
</html:p>
<html:p>
(G)
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Prohibitions against deceptive marketing.
</html:p>
<html:p>
(H)
<html:span class="EnSpace"/>
Member documents that include a description of the benefit coverage, any applicable copays, how to access services, and how to submit a grievance.
</html:p>
<html:p>
(I)
<html:span class="EnSpace"/>
Mechanisms for resolving provider disputes, including an appeals process.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
The contract between the voluntary employees’ beneficiary association and each health care provider shall include all of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Provisions dividing financial responsibility between the parties and defining which party is financially responsible for services rendered, including arrangements for member care should a global or risk-bearing provider become insolvent.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
A delegation agreement.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Requirements regarding utilization review or utilization management.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
Provisions stating the risk-based organization, limited licensee, or restricted licensee, as applicable, has the organizational and administrative capacity to provide services to covered employees, and that medical decisions are rendered by qualified medical
providers, unhindered by fiscal and administrative management, including the disclosure of the percentage of risk assumed in relation to its total risk-based business.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
Requirements regarding the submission of claims by providers and the timely processing of provider claims, including a guarantee that the voluntary employees’ beneficiary association will indemnify any outstanding unpaid provider claim in the event of the insolvency of a participating provider to the pilot program.
</html:p>
<html:p>
(F)
<html:span class="EnSpace"/>
Require the health care provider to comply with the voluntary employees’ beneficiary association’s requirements for all of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Continuity of care.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Language assistance.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Consumer
grievances and appeals, including, but not limited to, independent medical review.
</html:p>
<html:p>
(8)
<html:span class="EnSpace"/>
The term of each contract between the voluntary employees’ beneficiary association and a health care provider does not exceed the period of the pilot program.
</html:p>
<html:p>
(9)
<html:span class="EnSpace"/>
To participate in the pilot program, each voluntary employees’ beneficiary association shall submit to the department an application consistent with paragraph (2) of subdivision (h).
</html:p>
<html:p>
(10)
<html:span class="EnSpace"/>
Each health care provider that has entered into a contract with the voluntary employees’ beneficiary association is a party to the pilot program application submitted to the department. The application shall include a copy of each contract between the voluntary employees’ beneficiary association and a participating health care provider.
</html:p>
<html:p>
(11)
<html:span class="EnSpace"/>
(A)
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The voluntary employees’ beneficiary association and each health care provider participating in the pilot program agree to collect and report to the department, in each year of the pilot program, in a manner and frequency determined by the department, information regarding the comparative cost savings when compared to fee-for-service payment, performance measurements for clinical patient outcomes, and enrollee satisfaction. The department may require additional information be reported. Any additional reporting requirements shall not be subject to the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The department may authorize a public or private agency to receive the information specified in this paragraph and monitor the pilot program under the data standard
currently used by the Integrated Healthcare Association’s “Align. Measure. Perform.” (AMP) program and the California Regional Health Care Cost & Quality Atlas.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
This section does not exempt a health care provider that contracts with a voluntary employees’ beneficiary association as part of a pilot program authorized by subdivision (a) from the financial solvency requirements of Section 1375.4 and related department regulations, Section 1349 or 1351, or Section 1300.49 of Title 28 of the California Code of Regulations, as applicable, or any other provision of this chapter required by the department as part of the pilot program.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
Notwithstanding paragraph (3) of subdivision (a), this section does not exempt a voluntary employees’ beneficiary association participating in a program authorized by subdivision (a) of Section 1349.2 from the requirement to reimburse providers
on a fee-for-service basis.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
The participating voluntary employees’ beneficiary association shall appoint an ombudsperson to monitor and respond to any complaint lodged by a participating enrollee in the pilot program. If the enrollee is not satisfied with the result, the ombudsperson shall refer the enrollee to the department’s grievance and appeal process as established pursuant to Section 1368. Determinations made by the department pursuant to the grievance and appeal process shall be binding upon the voluntary employees’ beneficiary association.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
The participating voluntary employees’ beneficiary association shall report on a quarterly basis to the department any complaint lodged by a participating enrollee in the pilot program, along with a description of the response and resolution.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
The global and
risk-bearing providers participating in a pilot program authorized by subdivision (a) shall be approved by the department. The department shall retain the right to disapprove any pilot program application for any reason consistent with this chapter, including, but not limited to, failure to demonstrate to the department’s satisfaction adequate enrollee protection and compliance with all criteria and requirements in this section.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
The department, before December 31, 2029, shall submit an interim
report to the Legislature regarding the costs and clinical patient outcomes of the pilot program through December 31, 2027, compared to fee-for-service payment models, including data on enrollee satisfaction, consumer and provider grievances, appeals, and independent medical reviews. The department may authorize a public or private agency in subparagraph (B) of paragraph (11) of subdivision (a) to prepare the report on behalf of the department. This report shall be submitted in compliance with Section 9795 of the Government Code.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
The pilot program participants shall reimburse the department for reasonable regulatory costs of up to five hundred thousand dollars ($500,000) for all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Commissioning the report described in subdivision (g).
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Developing an application process for the pilot program described in this section.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Monitoring compliance with this section.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
This section shall remain in effect only until January 1, 2033,
and as of that date is repealed.
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