California has put some of its own teeth in its health insurance rate review laws.
California Gov. Jerry Brown, D, has signed S.B. 51, which will make the new federal medical loss ratio (MLR) rules created by the Patient Protection and Affordable Care Act of 2010 (PPACA) part of state law.
The main PPACA MLR provision requires carriers to spend at least 85% of large group premium revenue and 80% of individual or small group premium revenue on health care and quality improvement efforts.
By putting the MLR requirements in California state law, the state government has increased the likelihood that the requirements will apply in California even if part or all of PPACA is repealed by Congress or struck down by the U.S. Supreme Court. The law is set to take effect Jan. 1, 2012.
S.B. 51 was sponsored by Dave Jones, the California insurance commissioner, and authored by state Sen. Elaine Alquist, D-Santa Clara, Calif.
California regulates health maintenance organizations separately from insurers. In California, the MLR rules will apply to HMOs as well as to insurers.
In the past, some California health insurers have had MLRs as low as 60%, officials say.
RATE REVIEW REVIEW
In Washington, the U.S. Department of Health and Human Services (HHS) is seeking emergency clearance for the PPACA health insurance rate review program.