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News: 2012 Press Release

For Release: May 4, 2012
Media Calls Only: 916-492-3566
Insurance Commissioner Dave Jones Applauds Passage of AB 2152 (Eng) by State Assembly
Bill Further Strengthens Consumer Protections in Health Insurance Regulation

Insurance Commissioner Dave Jones announced that the California State Assembly passed AB 2152, authored by Assembly Member Mike Eng (D-Alhambra) by a vote of 46 to 25. AB 2152 is sponsored by Commissioner Jones and the California Department of Insurance. The bill would further strengthen consumer protections in California's regulation of health insurance by aligning the Insurance Code and sections of the Knox-Keene Act, which is the Health and Safety Code used by the Department of Managed Health Care.

The Insurance Code authorizes health insurers to contract with providers to offer services at alternative rates of payment. These contracts are the basis of provider networks in Preferred Provider Organizations (PPOs). AB 2152 requires health insurers to notify the Department of Insurance at least 75 days prior to terminating a provider group or hospital contract so that the Department can review the notices to be mailed to consumers and act if the insurer fails to maintain an adequate provider network. The bill also requires health insurers to send a written notice at least 60 days prior to the cancellation of the contract with the medical provider group or hospital to all policyholders who've undergone treatment with that entity during the last six months. This will help prevent consumers from unknowingly seeking care that will have higher (out-of-network) costs than expected.

"This bill will provide important consumer protections to make sure policyholders are notified when the doctor or hospital where they are receiving health care is no longer in their provider network. Consumers should not be in the dark when they face significant increased medical costs because their health insurer no longer has a contract with their medical provider," said Commissioner Jones.

"This bill provides for a level competitive environment and will ensure that consumers receive equivalent, strong consumer protections whether they purchase a health insurance product that is regulated by the Department of Insurance or the Department of Managed Health Care," said Assembly Member Mike Eng. 

In addition, the bill would require improved disclosure of the benefits provided by the health insurance policy, a description of any limitations on the policyholder's choice of provider and a statement describing how reimbursements will be made to participating providers. "These disclosures will make the process of buying health insurance coverage much easier and clearer for consumers," said Commissioner Jones.

The bill now heads to the State Senate for consideration.

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The California Department of Insurance, established in 1868, is the largest consumer protection agency in California, regulating the $123 billion insurance marketplace. In 2012 the California Department of Insurance received more than 160,000 calls from consumers and helped recover over $64 million in claims and premiums. Please visit the Department of Insurance web site at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.HELP. Out-of-state callers, please dial 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.

If you are a member of the public wishing information, please visit our Consumer Services.

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