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<ns0:Id>20250AB__095597AMD</ns0:Id>
<ns0:VersionNum>97</ns0:VersionNum>
<ns0:History>
<ns0:Action>
<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2025-02-20</ns0:ActionDate>
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<ns0:Action>
<ns0:ActionText>AMENDED_ASSEMBLY</ns0:ActionText>
<ns0:ActionDate>2025-04-10</ns0:ActionDate>
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<ns0:Action>
<ns0:ActionText>AMENDED_ASSEMBLY</ns0:ActionText>
<ns0:ActionDate>2025-04-28</ns0:ActionDate>
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<ns0:LegislativeInfo>
<ns0:SessionYear>2025</ns0:SessionYear>
<ns0:SessionNum>0</ns0:SessionNum>
<ns0:MeasureType>AB</ns0:MeasureType>
<ns0:MeasureNum>955</ns0:MeasureNum>
<ns0:MeasureState>AMD</ns0:MeasureState>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Assembly Member Alvarez</ns0:AuthorText>
<ns0:Authors>
<ns0:Legislator>
<ns0:Contribution>LEAD_AUTHOR</ns0:Contribution>
<ns0:House>ASSEMBLY</ns0:House>
<ns0:Name>Alvarez</ns0:Name>
</ns0:Legislator>
</ns0:Authors>
<ns0:Title> An act to amend Section 1351.2 of the Health and Safety Code, relating to health care service plans. </ns0:Title>
<ns0:RelatingClause>health care service plans</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Mexican prepaid health plans.</ns0:Subject>
</ns0:GeneralSubject>
<ns0:DigestText>
<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, and makes a willful violation of the act a crime.</html:p>
<html:p>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 their dependents, that pay for the delivery of
health care services that are provided wholly in Mexico, except as specified. Existing law also requires the application for licensure to demonstrate that the prepaid health plan maintains a tangible net equity of at least $1,000,000 or to demonstrate a reasonable acceptable alternative reimbursement arrangement that the Director of the Department of Managed Health Care is authorized, in the director’s discretion, to accept.</html:p>
<html:p>This bill would modify the above-described requirement that a prepaid health plan offers and sells in this state only employer-sponsored group plan contracts exclusively for the benefit of specified Mexican nationals to additionally include employer-sponsored group plan contracts for the benefit of individuals legally employed in the County of San Diego or the County of Imperial, and for the benefit of their dependents regardless of
nationality. The bill would authorize a prepaid health plan operating lawfully under the laws of Mexico that is licensed to operate a health care service plan to offer and sell that employer-sponsored group plan contract only to an employer that provides alternative health care coverage through either a specified full-service health care service plan or a health insurance policy. The bill would modify the above-described requirement that a prepaid health plan maintains a tangible net equity of at least $1,000,000 to instead require a prepaid health plan to maintain a tangible net equity of at least $2,300,000 or to demonstrate an alternative reimbursement arrangement subject to the director’s discretion, as described above. Because a willful violation of these provisions by a prepaid health plan, as described above, would be a crime, the bill would impose a state-mandated local program.</html:p>
<html:p>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.</html:p>
<html:p>This bill would provide that no reimbursement is required by this act for a specified reason.</html:p>
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<ns0:DigestKey>
<ns0:VoteRequired>MAJORITY</ns0:VoteRequired>
<ns0:Appropriation>NO</ns0:Appropriation>
<ns0:FiscalCommittee>YES</ns0:FiscalCommittee>
<ns0:LocalProgram>YES</ns0:LocalProgram>
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<ns0:ImmediateEffect>NO</ns0:ImmediateEffect>
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<ns0:Urgency>NO</ns0:Urgency>
<ns0:TaxLevy>NO</ns0:TaxLevy>
<ns0:Election>NO</ns0:Election>
<ns0:UsualCurrentExpenses>NO</ns0:UsualCurrentExpenses>
<ns0:BudgetBill>NO</ns0:BudgetBill>
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<ns0:Bill id="bill">
<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
<ns0:BillSection id="id_B58797EA-8C40-43B4-BC4F-E1C92C4C080B">
<ns0:Num>SECTION 1.</ns0:Num>
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Section 1351.2 of the
<ns0:DocName>Health and Safety Code</ns0:DocName>
is amended to read:
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<ns0:Num>1351.2.</ns0:Num>
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<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
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 this chapter, and the rules adopted by the director to implement this chapter that the director determines to be applicable. The application shall be accompanied by the fee prescribed by subdivision (a) of Section 1356 and shall demonstrate compliance with the following requirements:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
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 the Mexican Insurance Commission. If the Mexican Insurance Commission 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 Mexican Insurance Commission 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.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
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, or, subject to subparagraph (B), for the benefit of other individuals 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 for the provision or delivery of those health care services set forth in paragraph (4).
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
A prepaid health plan operating lawfully under the laws of Mexico that is licensed under this chapter to operate a health care service plan may offer and sell in this state the employer-sponsored group plan contracts described in subparagraph (A) for the benefit of individuals legally employed in the County of San Diego or the County of Imperial who are not Mexican nationals, and for their dependents regardless of nationality, only to an employer that provides alternative health care coverage through either a full-service health care service plan that is not required to comply with
this section or a health insurance policy.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
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, of at least two million three hundred thousand dollars ($2,300,000). In lieu of an amount in excess of the minimum tangible net equity of two million three hundred thousand dollars ($2,300,000), the prepaid health plan may demonstrate a reasonable acceptable alternative reimbursement arrangement that the director may, in the director’s discretion, accept. 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.
</html:p>
<html:p>
(8)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(9)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(10)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(11)
<html:span class="EnSpace"/>
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 Chapter 5 (commencing with Section 2000) of Division 2 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.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
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 this section. If this occurs, a health care service plan shall do all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
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 have an additional 180 days to comply with Mexican law or to become a licensed health care service plan.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
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.
</html:p>
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</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_6EC191B3-6083-4838-A813-E3C201BFBD8C">
<ns0:Num>SEC. 2.</ns0:Num>
<ns0:Content>
<html:p>
No reimbursement is required by this act pursuant to Section 6 of Article XIII
<html:span class="ThinSpace"/>
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
<html:span class="ThinSpace"/>
B of the California Constitution.
</html:p>
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