On November 16, 2011, the California Department of Insurance ("CDI") and the California Department of Managed Health Care ("DMHC") conducted a joint workshop to consider comments from interested persons regarding issues and concerns that should be considered when the agencies develop regulations to implement California SB 51, the California legislation intended to implement the annual and lifetime limits and medical loss ratio provisions of the Patient Protection and Affordable Care Act ("PPACA").
The workshop was conducted in San Francisco and was scheduled to last approximately three hours. Although the hearing room was full of interested persons and there were several additional participants on the telephone, the moderators struggled to make the workshop last 30 minutes. The contact person at the CDI for further comments is Bruce Hinse, Staff Counsel III and the contact person at the DMHC is Elaine Paniewski, Staff Services Manger I.
It was announced at the commencement of the workshop that neither the CDI nor the DMHC has any draft proposed regulations to implement SB 51 and that there is currently no language to review or consider. As a result, subject to certain exceptions, the comments consisted of questions to the panel or statements of positions that are not germane to the proposed regulations. The agencies indicated that they are collaborating on the implementation of SB 51 and the development of any proposed regulations. The agencies also stated that they did not have an estimate of when proposed regulations would be available for comment.
The Association of California Life and Health Insurance Companies testified that the federal legislation is clear and that there is no need for a California MLR implementing regulation. The Association also recommended that if regulations are proposed, they should track the federal law to avoid the need to amend any California regulations to keep them consistent with any subsequent changes in federal law. It was also observed that if the required medial loss ratios are included in regulations, that California could be barred by state law from seeking a waiver of the MLR requirements from the Department of Health and Human Services.
The California Medical Association urged the panel to utilize the administrative rule-making process to allow for comments on any proposed regulation and not to issue emergency regulations without the opportunity for the industry to provide comments.
Representatives of the producer community and the consumer community disagreed on whether producer commission should be excluded from the MLR calculation. The producer representatives testified that producers provide valuable services beyond selling insurance and their value should be reflected in the MLR calculation. The consumer groups expressed the view that consumers should not be required to pay higher premiums to compensate producers.
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