2023 California Code › Insurance Code - INS › DIVISION 2 - CLASSES OF INSURANCE › PART 2 - LIFE AND DISABILITY INSURANCE › CHAPTER 1 - The Contract › ARTICLE 4.5 - Review of Rate Increases › Section 10181.3.

10181.3. (a) (1) A health insurer shall file with the department all required rate information for grandfathered individual and grandfathered and nongrandfathered group health insurance policies at least 120 days before implementing any rate change.
(2) A health insurer shall file with the department all required rate information for nongrandfathered individual health insurance policies on the earlier of the following dates:
(A) One hundred days before the commencement of the annual enrollment period of the preceding policy year.
(B) The date specified in the federal guidance issued pursuant to Section 154.220(b) of Title 45 of the Code of Federal Regulations.
(3) For large group products that are either experience rated, in whole or blended, or community rated, a health insurer shall file the information required by this article at least annually and shall file 120 days before any change in the methodology, factors, or assumptions that would affect the rates paid by a large group.
(b) An insurer shall disclose to the department all of the following for each rate filing for products in the individual, small group, community-rated segment of the large group market, and experience-rated segment, in whole or blended, in the large group market:
(1) Company name and contact information.
(2) Number of policy forms covered by the filing.
(3) Policy form numbers covered by the filing.
(4) Product type, such as indemnity or preferred provider organization.
(5) Segment type.
(6) Type of insurer involved, such as for profit or not for profit.
(7) Whether the products are opened or closed.
(8) Enrollment in each policy and rating form.
(9) Insured months in each policy form.
(10) Annual rate.
(11) Total earned premiums in each policy form.
(12) Total incurred claims in each policy form.
(13) Average rate increase initially requested.
(14) Review category: initial filing for new product, filing for existing product, or resubmission.
(15) Average rate of increase.
(16) Effective date of rate increase.
(17) Number of policyholders or insureds affected by each policy form.
(18) A comparison of claims cost and rate of changes over time.
(19) Any changes in insured cost sharing over the prior year associated with the submitted rate filing.
(20) Any changes in insured benefits over the prior year associated with the submitted rate filing.
(21) The certification described in subdivision (b) of Section 10181.6.
(22) Any changes in administrative costs.
(23) Any other information required for rate review under PPACA.
(c) A health insurer subject to subdivision (a) shall disclose the following by geographic region for individual, grandfathered group, and nongrandfathered group policies:
(1) The insurer’s overall annual medical trend factor assumptions for all benefits and by aggregate benefit category, including hospital inpatient, hospital outpatient, physician services, prescription drugs and other ancillary services, laboratory, and radiology. The insurer shall also disclose integrated care management fees or other similar fees, as well as reclassification of services from one benefit category to another, such as from inpatient to outpatient.
(2) Aggregated additional data that demonstrates or reasonably estimates year-to-year cost increases in specific benefit categories.
(3) Information by benefit category that demonstrates the price paid compared to the price paid by the Medicare Program for the same services.
(4) Variation in trend, by geographic region, if the insurer serves more than one geographic region.
(d) A health insurer subject to subdivision (a) shall disclose, by geographic region for individual, grandfathered group, and nongrandfathered group policies, the amount of the projected trend attributable to the use of services, price inflation, or fees and risk for annual policy trends by aggregate benefit category, such as hospital inpatient, hospital outpatient, physician services, prescription drugs and other ancillary services, laboratory, and radiology.
(e) An insurer subject to subdivision (a) shall also disclose the following aggregate data for all rate filings submitted under this section in the individual and group health insurance markets:
(1) Number and percentage of rate filings reviewed by the following:
(A) Plan year.
(B) Segment type.
(C) Product type.
(D) Number of policyholders.
(E) Number of covered lives affected.
(2) The insurer’s average rate increase by the following categories:
(A) Plan year.
(B) Segment type.
(C) Product type.
(3) Any cost containment and quality improvement efforts since the insurer’s last rate filing for the same category of health benefit plan. To the extent possible, the insurer shall describe any significant new health care cost containment and quality improvement efforts and provide an estimate of potential savings together with an estimated cost or savings for the projection period. If rate filings in a prior year or years included a description of cost containment or quality improvement efforts, the insurer shall document the effects of those efforts, if any, including the impact on rates and documented improvements in quality, such as reduction of readmissions, reduction of emergency room use, or other recognized measures of quality improvement.
(f) For large group experience-rated, in whole or blended, and community-rated filings, the insurer shall also submit the following:
(1) The geographic regions used.
(2) Age, including age rating factors.
(3) Industry or occupation adjustments.
(4) Family composition.
(5) Insured cost sharing.
(6) Covered benefits in addition to basic health care services, as defined in subdivision (b) of Section 1345 of the Health and Safety Code, and other benefits mandated by this article.
(7) The base rate or rates and the factors used to determine the base rate or rates.
(8) Whether benefits, including prescription drugs, dental, and vision, are separately contracted.
(9) Variations in covered benefits, including durable medical equipment, infertility, and other similar benefits.
(10) Cost-sharing variations, described with actuarial value ranges and any expected impact on rates.
(11) Any other factor that affects the community rating.
(g) For large group filings that are experience rated, either in whole or blended, the insurer shall submit the methodology for modifying the rate based on experience.
(h) (1) The department may require all health insurers to submit all rate filings to the National Association of Insurance Commissioners’ System for Electronic Rate and Form Filing (SERFF). Submission of the required rate filings to SERFF shall be deemed to be filing with the department for purposes of compliance with this section.
(2) If California-specific information is required, the department may require additional schedules or documents.
(i) A health insurer shall submit any other information required under PPACA. A health insurer shall also submit any other information required pursuant to a regulation adopted by the department to comply with this article.
(j) (1) A health insurer shall respond to the department’s request for any additional information necessary for the department to complete its review of the health insurer’s rate filing for individual and group health insurance policies under this article within five business days of the department’s request or as otherwise required by the department.
(2) Except as provided in paragraph (3), the department shall determine whether a health insurer’s rate change for individual and small group insurance policies is unreasonable or not justified no later than 60 days following receipt of all the information the department requires to make its determination. For both experience-rated, in whole or blended, and community-rated large groups, the department shall determine whether the methodology, factors, and assumptions used to determine rates are unreasonable or not justified no later than 60 days following receipt of all the information the department requires to make its determination.
(3) For all nongrandfathered individual health insurance policies, the department shall issue a determination that the health insurer’s rate change is unreasonable or not justified no later than 15 days before the start of the next annual enrollment period. If a health insurer fails to provide all the information the department requires in order for the department to make its determination, the department may determine that a health insurer’s rate change is unreasonable or not justified.
(4) The department may contract with a consultant or consultants with expertise to assist the department in its review. Contracts entered into pursuant to the authority in this article shall be exempt from Chapter 6 (commencing with Section 14825) of Part 5.5 of Division 3 of Title 2 of the Government Code, Article 4 (commencing with Section 19130) of Chapter 5 of Part 2 of Division 5 of Title 2 of the Government Code, and the State Contract Act (Chapter 1 (commencing with Section 10100) of Part 2 of Division 2 of the Public Contract Code).
(k) If the department determines that a health insurer’s rate change for individual or group health insurance policies is unreasonable or not justified consistent with this article, the health insurer shall provide notice of that determination to any individual or group applicant. For both experience-rated, in whole or blended, and community-rated large groups, the determination by the department shall apply to methodology, factors, and assumptions used to determine rates. The notice provided to an individual applicant shall be consistent with the notice described in subdivision (c) of Section 10113.9. The notice provided to a group applicant shall be consistent with the notice described in subdivision (d) of Section 10199.1.
(l) Failure to provide the information required by subdivision (b), (c), (d), (e), (f), or (g) shall constitute an unjustified rate.
(m) For purposes of this section, “policy year” has the same meaning as set forth in subdivision (g) of Section 10965.
(n) (1) The department may adopt emergency regulations implementing this section. The department may, on a one-time basis, readopt an emergency regulation authorized by this section that is the same as, or substantially equivalent to, an emergency regulation previously adopted under this section.
(2) The initial adoption of emergency regulations implementing this section and the readoption of emergency regulations authorized by this subdivision shall be deemed an emergency and necessary for the immediate preservation of the public peace, health, safety, or general welfare. The initial emergency regulations and the readoption of emergency regulations authorized by this section shall be submitted to the Office of Administrative Law for filing with the Secretary of State and each shall remain in effect for no more than 180 days, by which time final regulations may be adopted.
(o) The amendments made to this section by Chapter 807 of the Statutes of 2019 (Assembly Bill 731 of the 2019–20 Regular Session) shall become operative on July 1, 2020.
(Amended by Stats. 2020, Ch. 370, Sec. 219. (SB 1371) Effective January 1, 2021.)