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California bill mandating standard benefit designs for all managed care plans sold outside exchange marketplace conflicts with existing state law

Earlier this year, California’s health benefit exchange marketplace, Covered California, exercised an option under its enabling legislation to standardize benefit designs for health plans sold on the exchange, consistent with its active purchaser role.

Pending legislation, SB 639, would require plans sold off the exchange marketplace to also employ standard benefit designs. (The measure would apply solely to managed care plans and not insurance products.) SB 639 would do so by adding California Health & Safety Code Section 1367.008 mandating standardized product designs for all managed care plan products at each of the metal tier actuarial value rating levels.  It does so with language barring the sale of any product at each of the metal tier levels “unless it is a standardized product consistent with [Health & Safety Code] Section 1366.6.”

But therein lay a conflict. Section 1366.6(e) requires health care service plans not participating in the exchange “offer at least one standardized product that has been designated by the Exchange,” provided the Exchange exercises its authority to require standardized benefit designs. At least one obviously does not encompass all plans offered outside the exchange marketplace.  (Emphasis added)

SB 639 awaits approval on the floor of the California Senate.

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