SECTIONS 123175-123220 - California Statutes

HEALTH AND SAFETY CODE

SECTION 123175-123220

123175. The Legislature finds and declares as follows:
(a) A catastrophic illness or injury may financially devastate an
individual or the family of that individual because of extraordinary
medical expenses. It is vitally necessary to the public health and
welfare of the State of California that:
(1) Its residents not be burdened with those financial costs. Most
health insurance policies contain a monetary limitation on the
amount of money that can be expended on a particular illness or
individual, leaving any balance to be paid by the patient. The state
has enacted this chapter to promote the availability of additional
insurance to help pay extensive medical costs.
(2) The state government not be financially burdened by residents
who may become indigent due to these catastrophic health costs.
(b) It is the intent of the Legislature in enacting this chapter
to institute a program to inform state residents of the need for
catastrophic health insurance, and to make this insurance available
to residents through an independent insurer at no cost or liability
to the state.

123180. As used in this chapter:
(a) "Catastrophic health insurance" means a supplementary
insurance contract that indemnifies a California resident for medical
expenses, including at least the costs of the basic health care
services that result from an illness, injury, or disease, and that
are greater than fifty thousand dollars ($50,000), subject to a
lifetime benefit limit of one million dollars ($1,000,000).
(b) "Resident" means any individual who lives in California for at
least 90 consecutive days.
(c) "Insurer" as used in this chapter includes a disability
insurer that covers hospital, medical, or surgical expenses, and a
nonprofit hospital service plan.
(d) "Basic health care services" includes, but is not limited to,
the following:
(1) Inpatient hospital treatment, including room and board,
general nursing services, diagnostic tests, supplies, and other
medically necessary services.
(2) Outpatient services for surgery, presurgical diagnostic tests,
emergency care, and chemotherapy.
(3) Surgery and anesthesia.
(4) Hospital and office visits and consultations.
(5) X-rays and laboratory tests; allergy tests, injections, and
sera.
(6) Maternity care for the subscriber or enrolled spouse.
(7) Psychotherapy.
(8) Chemotherapy and radiation therapy.
(9) Physical, speech, occupational and respiratory therapies.
(10) Prescription drugs.
(11) Prostheses and durable medical equipment, such as artificial
limbs, hospital beds, and wheelchairs.
(12) Cardiac rehabilitation program.
(13) Local ambulance service.
(14) Alcohol and drug abuse rehabilitation.
(15) Rehabilitative care.
(16) Outpatient skilled nursing care (up to two hours per day for
up to 50 days per calendar year).
(17) Home health care and hospice services provided by an approved
home health agency or hospice agency.

123185. The director shall, in consultation with, and approval of
the Department of Insurance, do all of the following:
(a) Contract with an insurer or insurers to provide any resident
catastrophic health insurance.
(b) Inform residents of the availability of catastrophic health
insurance.
(c) Provide oversight for all contract obligations of the insurer.
(d) Approve all advertising and marketing materials used by an
insurer in connection with catastrophic health insurance provided
under this chapter in order to ensure accuracy and fairness. The
advertising standards used shall be those set out in Section 1360.
(e) Determine the cost of the oversight function and make
provisions to cover all administrative costs.

123190. The director may appoint a full-time employee, and other
staff as required, to implement this chapter.

123195. (a) A contract provided for by this chapter shall not be
required to cover a preexisting medical condition of the resident
during the first 10 months the resident is covered by catastrophic
health insurance provided under this chapter. Charges for a
preexisting condition shall not apply toward the deductible during
the first 10 months of coverage. Charges for other conditions during
that initial period shall apply toward the deductible.
(b) The contract shall also prohibit the insurer from
discriminating against prospective insureds in their underwriting
practices on the basis of demographic factors, such as age, or
preexisting medical conditions.

123200. The state is not liable in any way for any claims arising
out of an arrangement for insurance established under this chapter.
The insurer shall bear the cost of all claims, and shall indemnify
the state against all claims and the cost of defending against all
claims in connection with an arrangement for catastrophic health
insurance established under this chapter.

123205. The director shall enter into contracts pursuant to
subdivision (a) of Section 123185 only with insurers that meet all of
the following criteria, as determined by the director:
(a) The insurer shall be actuarially sound.
(b) The insurer shall be fully self-supported by its policy
premiums or charges and investments.
(c) The insurer shall use advertising that is accurate.

123210. (a) The term of any contract entered into pursuant to
subdivision (a) of Section 123185 shall be determined by the
director, but shall not exceed three years.
(b) The contract shall contain a provision authorizing the
director to terminate the contract upon giving 60 days' written
notice to the insurer of any of the following causes for termination:
(1) The department has determined that management practices of the
insurer or the current financial condition of the insurer interferes
with the efficient and timely payment of catastrophic health
insurance benefits.
(2) Continuing failure of the insurer to timely pay the benefits
of its policies of catastrophic health insurance or provide
catastrophic health insurance services in accordance with the
contract.
(3) Other continuing unsatisfactory performance by the insurer
under the contract, based upon complaints received from insureds or
other sources, if the insurer has failed to take reasonable,
effective, and prompt actions to resolve the complaints.
(c) The contract shall contain a provision authorizing the
director to terminate the contract without cause upon any annual
anniversary date of the contract by giving at least 60 days' notice
to the insurer.
(d) The director may give up to 120 days' notice to terminate if
it is determined to be in the best interest of plan participants.
(e) The director shall annually certify that participating
providers meet the conditions of the program. In carrying out this
requirement, the director shall consult with the Department of
Insurance to obtain any audits performed by those agencies that may
be used in evaluating the performance of each provider.

123215. Premiums or charges paid for catastrophic health insurance
provided pursuant to this chapter shall include an increment to
defray the reasonable administrative costs of the department in
administering this chapter that shall be transmitted by insurers to
the department as provided in the contract.

123220. If studies or research demonstrate that it is in the best
interest of the program, the director may adopt regulations setting
forth modifications to the coverage provided under the program. No
modification shall apply to any coverage provided by a policy or
contract issued prior to the operative date of the regulation, except
that the modification shall apply to coverage provided after any
renewal of the policy or contract occurring after the operative date
of the regulation.