California Legal Codes and Statutes

Article 4.5 - Review of Rate Increases

California Insurance Code — §§ 10181-10181.14

Sections (5)

§ 10181

Amended by Stats. 2019, Ch. 807, Sec. 9. (AB 731) Effective January 1, 2020.

For purposes of this article, the following definitions shall apply:

(a)(1) “Blended” means a rating method that combines community rating and experience rating methods.
(2)“Community rated” means a rating method in the large group market that bases rates on the expected costs to a health insurer of providing covered benefits to all insureds, including both low-risk and high-risk insureds. Premiums may vary according to the factors in this article.
(3)“Experience rated” means a rating method in the large group market under which a health insurer

calculates the premiums for a large group in whole or blended based on the group’s prior experience.

(b)(1) For individual and small group market products, “geographic region” has the same meaning as in Sections 10753.14 and 10965.9.
(2)For large group market products, “geographic region” means one of the following areas, composed of the regions defined in Sections 10753.14 and 10965.9:
(A)An area composed of regions 2, 4, 5, 6, 7, and 8, which consist of the Counties of Alameda, Contra Costa, Marin, Napa, San Mateo, Santa Clara, Solano, and Sonoma and the City and County of San Francisco.
(B)An area composed of regions 1 and 3,

which consist of the Counties of Alpine, Amador, Butte, Calaveras, Colusa, Del Norte, El Dorado, Glenn, Humboldt, Lake, Lassen, Mendocino, Modoc, Nevada, Placer, Plumas, Sacramento, Shasta, Sierra, Siskiyou, Sutter, Tehama, Trinity, Tuolumne, Yolo, and Yuba.

(C)An area composed of regions 9 and 12, which consist of the Counties of Monterey, San Benito, San Luis Obispo, Santa Barbara, Santa Cruz, and Ventura.
(D)An area composed of regions 10, 11, and 14, which consist of the Counties of Fresno, Kern, Kings, Madera, Mariposa, Merced, San Joaquin, Stanislaus, and Tulare.
(E)An area composed of regions 13 and 17, which consist of the Counties of Imperial, Inyo, Mono, Riverside, and San Bernardino.
(F)An area composed of regions 15 and 16, which consist of the County of Los Angeles.
(G)An area composed of regions 18 and 19, which consist of the Counties of Orange and San Diego.
(c)“Large group health insurance policy” means a group health insurance policy other than a policy issued to a small employer, as defined in Section 10700, 10753, or 10755.
(d)“Small group health insurance policy” means a group health insurance policy issued to a small employer, as defined in Section 10700, 10753, or 10755.
(e)“PPACA” means Section 2794 of the federal Public Health Service Act (42 U.S.C. Sec.

300gg-94), as amended by the federal Patient Protection and Affordable Care Act (Public Law 111-148), and any subsequent rules, regulations, or guidance issued pursuant to that law.

(f)“Unreasonable rate increase” has the same meaning as that term is defined in PPACA.
§ 10181.10

Added by Stats. 2014, Ch. 577, Sec. 6. (SB 1182) Effective January 1, 2015.

(a)(1) A health insurer shall annually provide claims data at no charge to a large group purchaser if the large group purchaser requests the information and otherwise meets the requirements of this section.
(2)The health insurer shall provide claims data that a qualified statistician has determined are deidentified so that the claims data do not identify or do not provide a reasonable basis from which to identify an individual. If the statistician is unable to determine that the data has been deidentified, then the data that cannot be deidentified shall not be provided by the health insurer to the large group purchaser. A health insurer may provide the claims data in an

aggregated form as necessary to comply with subdivisions (e) and (f).

(b)(1) As an alternative to providing claims data required pursuant to subdivision (a), the insurer shall provide, at no charge to a large group purchaser, all of the following:

(A) Deidentified data sufficient for the large group purchaser to calculate the cost of obtaining similar services from other health insurers and plans and evaluate cost-effectiveness by service and disease category.

(B) Deidentified aggregated patient-level data on demographics, prescribing, encounters, inpatient services, outpatient services, and any other data that is comparable to what is required of the health insurer to comply with risk adjustment, reinsurance, or risk corridors pursuant to the federal Patient Protection and Affordable Care Act

(Public Law 111-148), as amended by the federal Health Care and Education Reconciliation Act of 2010 (Public Law 111-152), and any rules, regulations, or guidance issued thereunder.

(C) Deidentified aggregated patient-level data used to experience rate the large group, including diagnostic and procedure coding and costs assigned to each service that the insurer has available.

(2)The health insurer shall obtain a formal determination from a qualified statistician that the data provided pursuant to this subdivision have been deidentified so that the data do not identify or do not provide a reasonable basis from which to identify an individual. If the statistician is unable to determine that the data has been deidentified, the health insurer shall not provide the data that cannot be deidentified to the large group purchaser. The statistician shall document the formal determination

in writing and shall, upon request, provide the protocol used for deidentification to the department.

(c)Data provided pursuant to this section shall only be provided to a large group purchaser that meets both of the following conditions:
(1)Is able to demonstrate its ability to comply with state and federal privacy laws.
(2)Is a large group purchaser that is either an employer with an enrollment of greater than 1,000 covered lives and at least 500 covered lives enrolled with the health insurer providing the information or a multiemployer trust with an enrollment of greater than 500 covered lives and at least 250 covered lives enrolled with the health insurer providing the information.
(d)Nothing in this section shall be construed to prohibit an

insurer and purchaser from negotiating the release of additional information not described in this section.

(e)All disclosures of data to the large group purchaser made pursuant to this section shall comply with the federal Health Insurance Portability and Accountability Act of 1996 (Public Law 104-191) and the federal Health Information Technology for Economic and Clinical Health Act, Title XIII of the federal American Recovery and Reinvestment Act of 2009 (Public Law 111-5), and implementing regulations.
(f)All disclosures of data to the large group purchaser made pursuant to this section shall comply with the Insurance Information and Privacy Protection Act (Chapter 1 (commencing with Section 791) of Part 2 of Division 1 of the Insurance Code).
§ 10181.11

Amended by Stats. 2016, Ch. 498, Sec. 9. (SB 908) Effective January 1, 2017.

(a)Whenever it appears to the department that any person has engaged, or is about to engage, in any act or practice constituting a violation of this article, including the filing of inaccurate or unjustified rates or inaccurate or unjustified rate information, the department may review rate filing to ensure compliance with the law.
(b)The department may review other filings.
(c)The department shall accept and post to its Internet Web site any public comment on a rate increase submitted to the department during the applicable period described in subdivision (d) of Section 10181.7.
(d)The

department shall report to the Legislature at least quarterly on all unreasonable rate filings.

(e)The department shall post on its Internet Web site any changes submitted by the insurer to the proposed rate increase, including any documentation submitted by the insurer supporting those changes.
(f)If the commissioner makes a decision that an unreasonable rate increase is not justified or that a rate filing contains inaccurate information, the department shall post that decision on its Internet Web site.
(g)Nothing in this article shall be construed to impair or impede the department’s authority to administer or enforce any other provision of this code.
§ 10181.13

Added by Stats. 2010, Ch. 661, Sec. 7. (SB 1163) Effective January 1, 2011.

The department shall do all of the following in a manner consistent with applicable federal laws, rules, and regulations:

(a)Provide data to the United States Secretary of Health and Human Services on health insurer rate trends in premium rating areas.
(b)Commencing with the creation of the Exchange, provide to the Exchange such information as may be necessary to allow compliance with federal law, rules, regulations, and guidance.
§ 10181.14

Added by Stats. 2023, Ch. 557, Sec. 6. (AB 1048) Effective January 1, 2024.

(a)This section shall apply only to a specialized health insurance policy covering dental services, as defined in Section 10120.41.
(b)On or after January 1, 2025, and at least annually thereafter, a

health insurer shall file with the department the information required by this article, as applicable, including, but not limited to, all of the following:

(1)Type of insurer involved, such as for profit or not for profit.
(2)Product type.
(3)Whether the products are opened or closed.
(4)Annual rate.
(5)Total earned premiums in

each policy form.

(6)Total incurred claims in each policy form.
(7)Review category: initial filing for new product, filing for existing product, or resubmission.
(8)Average rate of increase.
(9)Effective date of rate increase.
(10)Number of policyholders or insureds affected by each policy form.
(11)A comparison of claims cost and rate changes over time.
(12)Any changes in insured cost sharing over the prior year associated with the submitted rate filing.
(13)Any changes in insured benefits over the prior year associated with the submitted rate filing.
(14)Any changes in administrative costs.
(15)Variation in trend, by geographic region, if the insurer serves more than one geographic region.
(16)The loss ratio for the policy as described in Section 10112.26 and the lifetime loss ratio as described in the regulations adopted pursuant to Section 10293.
(17)Proposed and effective rates for all products.
(18)A rating manual that outlines the methodology used in the development of the premium

rates, along with a description of how rates were determined.

(19)The base rate or rates and the factors used to determine the base rate or rates.
(20)Trend, including overall average, and by-product, if different.
(21)Any other factors affecting dental premium rates.
(22)An actuarial certification signed by a qualified actuary.
(23)Any other information required for the department to make its determination.
(c)(1) The

health insurer shall file with the department the required information at least 120 days before any change in the methodology, factors, or assumptions that would affect rates.

(2)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 within five business days of the department’s request or as otherwise required by the department.
(3)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)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 an individual or group applicant or policyholder.
(5)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).

(d)For all health insurers covering dental services, the department shall issue a determination that the health insurer’s rate change is unreasonable or not justified no later than 60 days following receipt of all the information the department requires to make its determination. The determination by the department shall also apply to the methodology, factors, and assumptions used to determine rates.
(e)The department may review the rate filings to ensure compliance with the law, as described in Section 10181.11, excluding subdivision (c).
(f)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.

(g)(1) The department may adopt emergency regulations implementing this section. 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.
(2)On or before July 1, 2024, the commissioner may issue guidance to health insurers regarding compliance

with this section. This guidance 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).

(3)The department shall consult with the Department of Managed Health Care when issuing guidance on adopting necessary regulations pursuant to this subdivision.