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Full text of "California Code of Regulations, (Vol. 38), Title 28, Managed Health Care"

^A. 



Barclays Official 

California 

Code of 
Regulations 



Title 28. Managed Health Care 

Complete Title 



Vol. 38 



THOIVISOiM 

* 

\A/EST 



Barclays Official California Code of Regulations 

425 Market Street • Fourth Floor • San Francisco, CA 94105 
800-888-3600 



Barclays Official California Code Of Regulations 

revised edition 

This edition of Barclays Official California Code of Regulations, revised on April 1 , 1990, has been 
published under the direction of the California Office of Administrative Law which is solely respon- 
sible for its contents. Comments or questions regarding regulations published in this edition should 
be addressed to the State of California, Office of Administrative Law, 300 Capitol Mall, Suite 1250, 
Sacramento, CA 95814, (916) 323-6225. Errors reported will be promptly corrected in subsequent 
supplements. 

OFFICIAL PUBLICATION 

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nia Code of Regulations (Gov. Code, § 1 1344.6). Barclays Official California Code of Regulations, 
as revised April 1 , 1990, has been certified by the Office of Administrative Law as the official publi- 
cation of the State of California for this purpose pursuant to title 1, California Code of Regulations, 
section 190. 

CODE SUPPLEMENTS 

Amendments to the official Code are certified weekly by the Office of Administrative Law for publi- 
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CODE CITATION 

Cite all materials in the Official California Code of Regulations by title number and section number. 
Example: Title 3, California Code of Regulations, section 432 (Short form: Cal. Code Regs., tit. 3, 

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© 2008, State of California. 

This material may not be commercially reproduced or sold in print or electronic forms without 

written permission of ThomsonAVest. 



Title 28 



Managed Health Care 



Title Table of Contents 



Title 28. Managed Health Care 



Table of Contents 



Page 

Division 1 . The Department of Managed Health 

Care 21 

Chapter 1 . Department Administration 21 

Article 1. Conflict of Interest 21 

Article 2. Administration 22 

Article 3. Electronic Filing 26 

Chapter 2. Health Care Service Plans 26 

Article 1 . Exemptions 26 

Article 2. Administration 30 

Article 3. Plan Applications and 

Amendments 31 

Article 4. Solicitors 45 



Page 

Article 5. Advertising and Disclosure 46 

Article 6. Appeals on Cancellation 49 

Article 7. Standards 50 

Article 8. Self-Policing Procedures 58.1 

Article 9. Financial Responsibility 64.12 

Article 10. Medical Surveys w 

Article 11 . Examinations 70 

Article 1 2. Reports 71 

Article 13. Books and Records 76 

Article 14. Miscellaneous Provisions 76 

Article 15. Charitable or Public 

Activities 81 



Page i 



^ 



Barclays Official 

California 

Code of 
Regulations 



Title 28. Managed Health Care 

Division 1. The Department of Managed Health Care 



Vol. 38 



XMOIVISON 

^ ^ 

WEST 



Barclays Official California Code of Regulations 

425 Market Street • Fourth Floor • San Francisco, CA 94105 
800-888-3600 



Title 28 



The Department of Managed Health Care 



Table of Contents 



Division 1. The Department of Managed Health Care 



Table of Contents 
Page 



Page 



Chapter ] . Department Administration 21 

Article 1 . ContTict of Interest 21 

§ 1000. Conflicl of Interest Code for ttie 

Department of Managed Health 

Care. 
Appendix 21 

Article 2. Administration 22 

S 100). [Department Internet Weh Page and 

Web Addresses. 
§ 1002. Appearanee and Practice Before the 

Department. 
§ 1002.4. Public Meetings and Hearings. 

§ 1003. Public Comment During 

Department Meetings. 
§ 1004. Verification. 

^ 1005. Interpretive Opinions. 

^ 1006. Inspection of Public Records. 

S 1007. Request for Confidentiality. 

i^ 1008. Availability of Department Forms, 

Publications and Notices; Fees. 
§ 1009. Retention of Department Records, 

§ 1010. Consumer Participation Program. 

§ 1011. Assessment for University of 

California Analysis of Proposed 

Mandate Legislation. 

Article 3. Electronic Filing 26 

§ 1300.41.8. Electronic Filing. 

Chapter 2. Health Care Service Plans 26 

Article 1 . Exemptions 26 

S 1-300.43. Small Plans. 

§ 1300.43.1. New Plans. 

§ 1300.43.2. Extension for Enrollers Under 

Medi-Cal Program. 
§ 1300.43.3. Ambulance Plans: Conditional 

Exemption. 
Jj 1 300.43.4. Employee Welfare Benefit Plans. 

§ 1300.43.5. Exemption for Licensees of 

Insurance Commissioner. 
^5 L300.43.6. Moribund Plans. 

§ 1300.43.7. Student Emergency Care 

Arrangements. 
§ 1300.43.8. Public^ Agencies. 

§ 1300.43.9. Unlicensed Solicitors and Solicitor 

Firms. 
§ 1300.43.10. Nonprofit Retirees' Plan. 

^ 1300.43.11. Exemption for Solicitors of 

Nonprofit Retirees' Plans. 
§ 1300.43.12. Medi-Cal Dental Contract. 
§ 1300.43. 1 3. Mutual Benefit Plans. 

§ 1300.43.14. Employee Assistance Programs. 
§1300.43.15. Foreign Plans. 

Article 2. Administration 30 

§1300.44. Interpretive Opinions. 

§ 1300.44.1. Application for Exemption from 

Rule. 
§ 1300.45. Definitions. 

§ 1300.46. Prohibition of Bonuses or Gratuities 

in Solicitations. 
§1300.47. Advisory Committee on Managed 

Health Care. 



Article 3. 



§ 1300.50. 



§ 1300.51. 



§ 1300.51.1. 
§ 1300.51.2. 
§ 1300.51.3. 



§ 1300.52. 
§ 1300.52.1. 
§ 1300.52.2. 
§ 1300.52.3. 

§ 1300.52.4. 

Article 4. 

§ 1300.57. 
§ 1300.57.1. 



§ 1300.57.2. 

§ 1300.57.3. 

§ 1300.57.4. 

§ 1300.59. 

§ 1300.59.1. 
§ 1300.59.2. 

Article 5. 

§ 1300.61. 

§ 1300.61.1. 
§ 1300.61.3. 
§ 1300.63. 
§ 1300.63.1. 
§ 1300.63.2. 

§ 1300.63.3. 
§ 1300.63.50. 

§ 1300.64.50. 

§ 1300.64.51. 

§ 1300.64.52. 

§ 1300.64.53. 
§ 1300.64.54. 

§ 1.300.64.55. 



Article 6. 

§ 1300.65. 
§ 1300.65.1. 
§ 1300.66. 



Plan Applications and 

Amendments 31 

Notice of Intention to Apply for 

Plan License. 

Application for License as a Health 

Care Service Plan or Specialized 

Health Care Service Plan. 

Individual Information Sheet. 

Consent to Service of Process. 

Prepiu-ation and Amendment of 

Application for License As a Health 

Care Service Plan Under Section 

1 300.5 1 . 

Amendments to Plan Application. 

Notice of Material Modification. 

Change in Plan Personnel. 

Filings and Actions Relating to 

Charitable or Public Activities. 

Standards for Amendments and 

Notices of Material Modification. 

Solicitors 45 

Solicitor Application. 
Solicitor Firm Application by 
Person Not Licensed by Insurance 
Commissioner. 
Amendment to Solicitor Firm 
Application. 

Fees Payable by Licensed Insurance 
Agents and Brokers. 
Solicitor Financial Records 
Authorization. 
Plan Assurances Prior to 
Solicitation. 
Examination Fee. 
Vv'aiver of Examination 
Requirements. 

Advertising and Disclosure 46 

Filing of Advertising and Disclosure 

Forms. 

Exempt Advertising. 

Deceptive Advertising. 

Disclosure Form. 

Evidence of Coverage. 

Combined Evidence of Coverage 

and Disclosure Form. 

Experimental Disclosure. 

Medicare Supplement Additional 

Disclosure. 

Medicare Supplement Application 

Information. 
Medicare Supplement "Buyer's 
CJuide." 
Standards for Marketing Medicare 

Supplement Contracts. 
Reporting of Multiple Coverage. 
Replacement Contracts: Elimination 
of Waiting Periods. 
Permitted Compensation 
Artangements for the Sale of 
Medicare Supplement Contracts. 



Appeals on Cancellation . . . 
Cancellation of Enrollment. 
Cancellation Complaint Form. 
Deceptive Plan Names. 



49 



Page 



(4-1 1-2008) 



Table of Contents 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



Page 

Article 7. Standards 50 

§ 1 300.67. Scope of Basic Health Caie 

Services. 
§ 1300.67.04. Language Assistance Programs. 

i^ ] 300.67.05. Acts of War Exclusions. " 

§ 1 300.67. 1 . Continuity of Care. 

§ 1 300.67. 1 .3. Block Transfer Filings, 
§ 1300.67.2. Accessibility of Services. 

§ 1300.67.2.1. Geographic Accessibility Standards. 
§ 1300.67.3. Standards for Plan Organization. 

v5 1300.67.4. Subscriber and Group Contracts. 

§ 1300.67.8. Contracts with Providers. 

§ 1300.67.10. Discrimination Prohibited. 

§ 1300.67.11. Disclosureof Conflicts of Interest. 

§ 1 300.67. 1 2. Contracts with Solicitor Firms. 

§ 1300.67.13. Coordination of Benefits CCOB"). 

§ 1300.67.24. Outpatient Prescription Drug 

Copayments, Coinsurance, 

Deductibles, Limitations and 

Exclusions. 
§ 1300.67.50. Certain Medicare Supplement 

Contracts: Presumption of 

Unfairness. 
§ 1300.67.51. Medicare Supplement Contract 

Provisions. 
§ 1300.67.52. Medicare Supplement Additional 

Benefit Requirements. 
§ 1300.67.53. Medicare Supplement Minimum 

Aggregate Benefits. 
§ 1300.67.55. Medicare Supplement Reporting 

Requirements. 
§ 1300.67.56. Transitional Requirements for the 

Conversion of Medicare 

Supplement Contracts to Conform 

to Medicare Program Revisions. 
§ 1300.67.57. Format For Notices of Changes in 

Coverage. 
§ 1300.67.58. Participating Physician or Supplier 

Claims Form Requirement. 

(Compliance with Section 4081 of 

the Omnibus Budget Reconciliation 

Act of 1987) 
§ 1300.67.59. Format for Reporting Loss Ratio 

Experience. 

Article 8. Self-Policing Procedures 58.1 

§ 1300.67.60. Standing Referral to HIV/AIDS 

Specialist. [Renumbered] 
§ 1300.68. Grievance System. 

§ 1300.68.01. Expedited Review of Grievances. 

§ 1300.68.2. Hospice Services. 

§ 1300.69. Public Policy Participation by 

Subscribers. 
§ 1 300.70. Health Care Service Plan Quality 

Assurance Program. 
§ 1300.70.4. Independent Medical Reviews 

Experimental and Investigational 

Therapies. 
§ 1300.71. Claims Settlement Practices. 

§ 1300.71 .38. Fast, Fair and Cost-Effective 

Dispute Resolution Mechanism. 
§ 1300.71.4. Emergency Medical Condition and 

Post-Stabilization Responsibilities 

for Medically Necessary Health 

Care Services. 
§ 1300.73.21. Arbitration and Settlement 

Agreements. 
§ 1 300.74. 1 6. Standing Referral to HIV/AIDS 

Specialist. 
§ 1300.74.30. Independent Medical Review 

System. 
§1300.74.72. Mental Health Parity. 

Article 9. Financial Responsibility 64.12 

§ 1300.75. Agreements with Subsequent 

Providers. 
§ 1300.75.1. Fiscal Soundness, Insurance, and 

Other Arrangements. 



Page 



§ 1300 
§ 1300 
§ 1.300 
§ 1300 
§ 1300 
§ 1300 
§ 1300 
§ 1300 
§ 1300 
§ 1300. 
S 1300, 
§ 1300 



75.2. 

75,3. 

75.4. 

75.4.1 

75.4.2 

75.4.3 

75.4.4 

75.4.5 

75.4.6 

75,4.7 

75.4.8 

76. 



§ 1300.76.1 
§ 1300.76.2 

§ 1300.76.3 
§ 1300.76.4 
§ 1300.77. 
§ 1300.77.1 

§ 1300.77.2 

§ 1300.77.3 

§ 1300.77.4 

§ 1300.78. 

Article 10. 

§ 1300.80. 
§ 1300.80.10. 

Article 11. 

§ 1300.81. 

§ 1300.82. 
§ 1300.82.1. 

Article 12. 

§ 1300.83. 
§ 1300.84. 
§ 1300.84.05. 
§ 1300.84.06. 
§ 1300.84.1. 
§ 1300.84.2. 
§ 1300.84.3. 
§ 1300.84.4. 

§ 1300.84.5. 
§ 1300.84.6. 
§ 1300.84.7. 

Article 13. 

§ 1300.85. 
§ 1300.85.1. 

Article 14. 

§ 1300.86. 

§ 1300.87. 
§ 1300.89. 
§ 1300.99. 
§ 1300.99.7. 

Article 15. 

§ 1300.824. 
§ 1300.824.1. 
§ 1300.826. 



69 



70 



Plan As Subsequent Provider 

Subsequent Provider Exemption. 

Definitions. 

Risk An-angement Disclosure. 

Organization Information. 

Plan Reporting. 

Confidentiality. 

Plan Compliance. 

Department Costs. 

Organization Evaluation. 

Corrective Action. 

Plan Tangible Net Equity 

Requirement. 

Deposits. 

Solicitor Firm Financial 

Requirement. 

Fidelity Bond. 

Prohibited Financial Practices. 

Reimbursements. 

Estimated Liability for 

Reimbursements. 

Calculation of Estimated Liability 

for Reimbursements. 

Report on Reimbursements 

Exceeding Ten Percent. 

Reimbursements on a 

Fee-for-Services Basis: 

Determination of Status of Claims. 

Administrative Costs. 

Medical Surveys 

Medical Survey Procedure. 
Medical Survey: Report of 
Cortection of Deficiencies. 

Examinations 

Removal of Books and Records 
from State. 

Examination Procedure. 
Additional or Nonroutine 
Examinations and Surveys. 

Reports 

Annual Report. 

Financial Statements. 

Change of Independent Accountant. 

Plan Annual Report. 

Verification of Reports. 

Quarterly Financial Reports. 

Monthly Financial Reports. 

Financial Reports by Solicitor 

Firms. 

Public Entity Plans. 

Plan Annual Enrollee Report. 

Special Reports Relating to 

Charitable or Public Activities. 

Books and Records 76 

Books and Records. 

Retention of Books and Records. 

Miscellaneous Provisions 76 

Assessment of Administrative 

Penalties. 

Civil Penalties. 

Petition for Restoration. 

Application to Surtender License. 

Application for Conversion or 

Restructuring. 

Charitable or Public 

Activities 81 



71 



Requirements Relating to Charitable 
or Public Activity Filings. 
Notices and Requests for Approval 
of Certain Transactions. 
Request for Ruling on Proposed 
Action or Article Amendment. 



Page 



(4-n-2008> 



Title 28 



The Department of Managed Health Care 



§ 1(H)0 



TITLE 28. MANAGED HEALTH CARE 



Division 1. 



The Department of Managed 
Health Care 



Chapter 1 . Department Administration 



Article 1. Conflict of Interest 

§ 1 000. Conflict of Interest Code for the Department of 
Managed Health Care. 

The Political Reform Act. Government Code Section 81000, eh sec/., 
requires state and local government agencies to adopt and promulgate 
conflict of interest codes. The Fair Political Practices Commission has 
adopted a regulation (Title 2, California Code of Regulations (CCR), sec- 
tion 18730) which contains the terms of a standard conflict of interest 
code, which can be incorporated by reference in an agency's code. After 
public notice and hearing it may be amended by the Fair Political Practic- 
es Commission to conform to amendments in the Political Reform Act. 
Therefore, the terms of 2 CCR, section 1 8730, and any amendments to 
it duly adopted by the Fair Political Practices Commission are hereby in- 
corporated by reference. This regulation, and the attached Appendix des- 
ignating officials and employees and establishing disclosure categories, 
shall constitute the conflict of interest code of the Department of Man- 
aged Health Care. 

Designated employees shall file statements of economic interests with 
the Office of Administration of the Department of Managed Health Care, 
which will make the statements available for public inspection and repro- 
duction. (Government Code, Section 81008). Upon receipt of the state- 
ment of the Director of the Department of Managed Health Care, the Of- 
fice of Administration shall make and retain a copy and forward the 
original to the Fair Political Practices Commission. Statements for all 
other designated employees will be retained by the Office of Administra- 
tion of the Department of Managed Health Care. 

NoTE; Authority cited: Section 1344, Health and Safety Code: Section 87300, 
Government Code. Reference: Sections 87300-87302 and 87306, Government 
Code (the Political Reform Act). 

History 

1 . New chapter I , article 1 (section ] 000), section and appendix fded 1 2- 1 2-200 1 , 
including editorial renumbering of former chapter 1 to chapter 2; operative 
1-11-2002. Approved by Fair Political Practices Commission 10-3-2001 
(Register 2001, No. 50). 

2. Amendment of division heading filed 8-12-2002; operative 9-11 -2002 (Regis- 
ter 2002, No. 33). 

3. Change without regulatory effect amending chapter 1 heading, section and ap- 
pendix disclosure categoi7 C( 1 )-(2) filed 1 1-21-2002 pursuant to section 100, 
title 1, California Code of Regulations (Register 2002, No. 47). 

4. Amendment of Appendix filed 7-2 1-2003; operative 8-20-2003. Approved by 
Fair Political Practices Commission 5-12-2003 (Register 2003, No. 30). 

5. Change without regulatory effect amending first paragraph filed 2-24-2004 
pursuant to section 100, title 1, California Code of Regulations (Register 2004, 
No. 9). 

6. Amendment of Appendix filed 2-3-2005; operative 3-5-2005. Approved by 
Fair Political Practices Commission 12-3-2004 (Register 2005, No. 5). 

Appendix 



Desii-naled Positions 

Director, Department of Managed Health Care 

Chief Deputy Director 

Deputy Director, Communications and Planning 

Deputy Director, External Affairs 

Medical Advisor to Directors Office 

Deputy Director, Plan & Provider Relations 

Deputy Director Financial Solvency Standards Board 



Assigned 
Disclosure Categories 
A, B 
A, B 
A, B 
A, B 
A, B 
A, B 
A, B 



All Counsel, supervisory or nonsupervisory, regardless of level, 

wherever assigned 
All Health Analysts, supervisory or nonsupervisory, regardless of level. 

wherever assigned 
All Examiners, supervisory or nonsupervisory, regardless of level, 

wherever assiened 
Chief, HMO Hefp Center 

Assistant Deputy Director. Office of Health Plan Oversight 
Assistant Deputy Director, Office of Legal Services 
Assistant Deputy Director, HMO Help Center 
Assistant Deputy Director, Office of Technology and Innovation 
Assistant Deputy Director, Office of Enforcement 
Assistant Deputy Director, Office of Administration 
Auditor 

Chief, Division of Financial Oversight 
Chief, Division of Plan Surveys 
Nurses, wherever assigned 

Consultants used by the Office of Technology and Innovation 
Chief. Accounting Section 
Chief, Business Management Section 
Supervisor, Application Support Section 
Supervisor, Support Services Section 
Application Architect 
Lead Systems Engineer 
Other Consultants* 



A. B 

A. H 

A. B 
A. B 
A. B 
A. B 
A. B 
A. B 
A. B 
A. B 
A. B 
A. B 
A. B 
B 
B.C 
B.C 
B.C 
B.C 
B.C 
B.C 
B.C 
A* 



^Consultants shall disclose pursuant to the broadest disclosure category in the 
code (Category A) subject to the following limitations: 

The Director of the Department of Managed Health Care may determine in 
writing that a particular consultant, although a "designated position," is hired to 
perform a range of duties that is limited in scope and thus is not required to fully 
comply with the disclosure requirements in this section. Such written determina- 
tion shall include a description of the consultant's duties and, based upon that de- 
scription, a statement of the extent of disclosure requirements. The Director's de- 
termination is a public record and shall be retained for public inspection in the 
same manner and location as this conflict of interest code. Nothing herein excuses 
any such consultant from any other provisions of this Conflict of Interest Code. 



Disclosure Categories 
Category A 
Each "designated employee" in this category shall report; 

(1) Income from any source, investments in any business entity, or 
business positions in any entity which has "transacted business" with the 
Department or has been the "subject of any legislation or rulemaking ac- 
tivity" during the previous two years or which the employee has reason 
to know is planning to transact business with the Department or be sub- 
ject of any legislation or rulemaking activity. 

(2) Any real property which during the preceding two years was 
rented, leased, or sold to a business entity, or leased or purchased from 
a business entity, which has transacted business with the Department or 
been the subject of any legislation or rulemaking activity during the pre- 
ceding two years or which the designated employee knows or has reason 
to know is planning to transact business with the Department or be the 
subject of any legislation or rulemaking activity. 

(3) For purposes of this category, "transacting business with the De- 
partment" includes, but is not limited to, any activity or contact with the 
Department in connection with a permit, order, registration, license, cer- 
tificate, opinion, complaint known to or directly involving the employee, 
or enforcement action known to or directly involving the employee. A 
business endty has been or will be "the subject of any legislation or rule- 
making activity" if the business entity is, was, will be, or would have been 
directly affected by any legislation or rule in connection with the laws 
over which the Department Director has jurisdiction, whether or not such 
legislation or rule was enacted, adopted, amended, or repealed. 

Category B 

Each "designated employee" in this category shall report: 
(l)(a) Income from any source, investments in any business entity, or 
business positions in any business entity which is subject to, or which the 



Page 21 



Register 2006, No. 37; 9- 15-2006 



§1001 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



designated employee knows or has reason to know may be subject to, or 
by rule of the Director exempted from, the provisions of the Knox-Keene 
Heakh Care Service Plan Act of 1975. 

(b) Income from any source, investments in any business entity, or 
business positions in any business entity which provides medical ser- 
vices, including but not limited to, privately owned hospitals, medical 
clinics, laboratories, pharmacies, and ambulance companies. 

(c) Income from any source, investments in any business entity, or 
business positions in any business entity which provides training or 
education for persons engaged in medical service activities or programs. 

(2) Real property which during the preceding two years was rented, 
leased or sold to a business entity, or leased, or purchased from a business 
entity, which is subject to. or which he or she knows or has reason to 
know may be subject to. or by rule of the Director exempted from the pro- 
visions of the Knox-Keene Health Care Service Plan Act of 1975. 

Category C 

Each "designated employee" in this category shall report: 

(1) Income from any source, investments in any business entity, or 
business positions in any business entity which is, of the type that, during 
the preceding two years provided the Department of Managed Health 
Care or its immediate predecessor agency (the Department of Corpora- 
tions) with services, supplies, materials, machines, equipment or office 
space. 

(2) Real property which during the preceding two years has been 
rented, leased or sold to a business entity or leased or purchased from a 
business entity, which is of the type which during the preceding two years 
has provided, the Department of Managed Health Care or its predecessor 
agencies (i.e., the Department of Corporations) with services, supplies, 
materials, machines, or office space. 

Article 2. Administration 

§ 1 001 . Department Internet Web Page and Web 
Addresses. 

The Department shall maintain an internet web page containing in- 
formation about the Department, its functions and activities. The internet 
web page may be accessed to obtain departmental forms, notices, and 
other publications. The internet web page shall be accessible by either of 
two web addresses: http://www.dmhc.ca.gov, or http://www.hmo- 
help.ca.gov. 

Note. Authority cited: Section 1344, Health and Safety Code. Reference: Section 
1344. Health and Safety Code. 

History 
1. New article 2 (sections 1001-1008) and section filed 8-12-2002; operative 
9-1 1-2002 (Register 2002, No. 33). 

§ 1002. Appearance and Practice Before the Department. 

A person may be represented by an attorney at law in any proceeding 
before the Director or Department, provided the attorney is admitted to 
practice before the highest court of any state or territory of the United 
States, or the Court of Appeals or the District Court of the United States 
for the District of Columbia. Alternatively, a person may appear before 
the Director or Department on his or her own behalf; a member of a part- 
nership may represent the partnership; and an authorized officer of a cor- 
poration, trust or association may represent that corporation, trust or 
association. 

NOTE: Authority cited: Sections 1344 and 1346, Health and Safety Code. Refer- 
ence: Sections 1341, 1342, 1348-1349, 1370, 1386-1388 and 1390-1393, Health 
and Safety Code. 

History 

1. New section filed 8-12-2002; operative 9-1 1-2002 (Register 2002, No. 33). 

§ 1002.4. Public Meetings and Hearings. 

(a) A public meeting or hearing may be held pursuant to Health and 
Safety Code section 1346(a)(5) at the discretion of the Director for the 
following types of proceedings: 



(1) Investigation or analysis of matters affecting the interests of plans, 
subscribers, enrollees, or the public. 

(2) Educational programs for the public, subscribers, enrollees, and li- 
censees. 

(3) An amendment, material modification or other plan filing that pro- 
poses: 

(A) Any change that may have a significant impact, as determined by 
the Director, on the ability of enrollees to access health care services; or 

(B) Any change that may have a material effect, as determined by the 
Director, on the health care service plan (plan) or on its operations. 

(b) Factors that may be considered by the Director in determining 
whether to hold a public meeting or hearing include: 

( 1 ) Whether the proposal has a significant impact on plans, providers, 
subscribers, enrollees, or Californians generally, including the nature, 
scope, and significance of any such impact; 

(2) Whether a public meeting or hearing would help to assure identifi- 
cation of all relevant issues raised in the proposal, and/or ongoing moni- 
toring of the plan, and inform their resolution; 

(3) Whether a public meeting or hearing would provide additional 
facts or opinions relevant to a decision whether to approve the filing, in- 
cluding any conditions or undertakings to impose on the approval; 

(4) Whether a public meeting or hearing would provide a greater depth 
or scope of understanding of the potential short-term and long-term re- 
sults or ramifications of an approval, with or without conditions; 

(5) Whether the likely costs to the Department outweigh the potential 
benefit; and 

(6) Whether there is sufficient time to hold a meeting or hearing. 

(c) Requests for Public Meeting or Hearing. 

(1) Any person may request a public meeting or hearing by filing a 
written request with the Department. 

(2) A request for public meeting or hearing shall: 

(A) Be in writing addressed to the Director, in care of the Office of Le- 
gal Services, Department of Managed Health Care, 980 Ninth Street, 
Suite 500, Sacramento, CA 95814, or by e-mail addressed to 
publichearing@dmhc.ca.gov; and 

(B) Clearly state that it is a request for a public meefing or hearing and 
state the matter upon which the public meeting or hearing is requested, 
including the relevant facts and/or circumstances upon which the request 
is made; and 

(C) Identify the persons or entities on whose behalf the request is made 
and specify the address to which the Director's determination pursuant 
to subsection (c)(3) may be mailed or e-mailed. 

(3) The Director will determine whether the request for a meeting or 
hearing warrants a public meeting or hearing. 

(4) The Director will notify the person requesfing a meeting or hearing 
of the determination within ten business days of the date the request is 
submitted. 

NOTE: Authority cited: Sections 1342, 1344 and 1346, Health and Safety Code. 
Reference: Section 1346(a)(5), Health and Safety Code. 

History 

1. New section filed 9-1 1-2006; operative 10-1 1-2006 (Register 2006, No. 37). 

§ 1003. Public Comment During Department Meetings. 

At all Department committee, panel or board meetings that are subject 
to the Bagley-Keene Open Meeting Act (Government Code § 1 11 20 et 
seq.), members of the public will be permitted to address the committee, 
panel or board prior to the committee, panel or board making any deci- 
sion. Public comments will be heard in the order in which speakers sign 
up; limited to only agenda items; and may be no longer than five minutes 
in length unless otherwise permitted. 

NOTE: Authority cited: Sections 1 344 and 1 346, Health and Safety Code; and Sec- 
tion 11 125.7, Government Code. Reference: Sections 1347, 1347.1 and 1347.15, 
Health and Safety Code. 

History 

1. New section filed 8-12-2002; operative 9-11-2002 (Register 2002, No. 33). 



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Title 28 



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ij 1007 



§1004. Verification. 

(a) Whenever a slatule, regulation or the Director requires that a docu- 
ment filed with the Department be verified, the verification shall be by 
declaration under penalty of perjury pursuant to Code of Civil Procedure 
section 2015.5. 

(b) "Declaration" means a cerlificalion in substantially the following 
form: 

(1)1 declare under penalty o\' perjury under the laws of the State of 
California that the foregoing is true and correct. 

Executed at on 

(Location) 



(Dale) (Signature) (Typed or printed name) 

NOTL-: Authority cited: Sections 1 344 and I .^46. Health and Safely Code. Reler- 
cnce: Scelions 201 2-201. S. 5, Code of Civil Procedure. 

History 
I. New section fded 8-12-2002; operative 9-1 1-2002 (Register 2002, No. 3?,). 

§1005. interpretive Opinions. 

(a) The Director in his or her discretion may honor requests from inter- 
ested person(s) for written interpretive opinions regarding any provision 
of, or regulation promulgated pursuant to, the Act. 

(b) An interpretive opinion request shall satisfy each of the following 
conditions: 

( 1 ) The request shall be in writing addressed to the Director in care of 
the Office of Legal Services at the Sacramento Office of the Department 
or by e-mail at interpreliveopinion@dmhc.ca.gov. The request shall 
clearly state that it is a request for an interpretive opinion and set forth the 
question(s) presented, including the relevant facts and/or circumstances 
upon which the request is made. 

(2) The persons or entities on whose behalf the request is made shall 
be identified and all documents relevant to the request shall be appended 
to the request. 

(c) Each interpretive opinion is applicable only to the matter identified 
in the specific written request for which the interpretive opinion was pre- 
pared. The interpretive opinion may not be relied upon in connection 
with any other matter. 

(d) Attorneys seeking interpretive opinions on behalf of clients shall 
include with the opinion requests their own analyses of the issues pres- 
ented by the request, their views with respect to the issues presented and 
citations of legal authority in support of those views. 

(e) The Department shall maintain an index of the person(s) on whose 
behalf an interpretive opinion was prepared, and the nature of the request. 

(0 The Director may select interpretive opinions for publication. Pub- 
lished opinions will be available on the Department's web page. The de- 
cision to publish an interpretive opinion will be made solely by the Direc- 
tor with regard to the public interest and the legal question(s) considered. 
The Director may rescind any published opinion and shall notify the 
party for whom the opinion was prepared of the rescission. Rescission 
of a published opinion shall be indicated on the Department's website. 
NOTE: Authority cited: Section 1 344, Health and Safety Code. Reference: Section 
1344, Health and Safety Code. 

History 

1 . New section filed 8-12-2002; operative 9-1 1-2002 (Register 2002, No. 33). 

2. Amendment of subsection (a), new subsections (b)-(d), subsection relettering 
and amendment of newlv desienated subsection (f) filed 1 0-27-2003; operative 
1 1-26-2003 (Register 2003, No. 44). 

3. Change without regulatory effect amending subsection (b)(1) filed 5-5-2004 
pursuant to section 100, title 1, California Code of Regulations (Register 2004, 
No. 19). 

4. Change without regulatory effect amending subsection (b)(1) filed 9-9-2004 
pursuant to section 100, title 1, California Code of Regulations (Register 2004, 

No. .37). 

§ 1006. Inspection of Public Records. 

(a) Public access to records maintained by the Department is governed 
by the California Public Records Act (Government Code § 6250 et. seq.). 
The term "public record," as used in this section, is defined in Govern- 



ment Code section 6252(e). Public records are available for inspection 
and/or copying pursuant to the following procedures: 

( 1 ) Requests for the inspection and/or copying of public records must 
be sufficiently descriptive to enable Department personnel to identify, 
locate, and retrieve the records. 

(2) Requests must be in writing and sent to the Department's mailing 
address at Department of Managed Health Care. 980 9th Street. Suite 
500, Sacramento. CA 95814. Attention: Office of Legal Services. A 
properly addressed request will ensure prompt response by the Depart- 
ment. 

(3) Retrieval and inspection of any record shall not interfere with the 
ordinary business operations of the Department. Operational functions 
of the Department will not be suspended to permit inspection of records 
where the records are reasonably required by Department personnel in 
the performance of their duties. If the request requires reviewing numer- 
ous records, a mutually agreeable time will be established for the inspec- 
tion of the records. All inspections will occur during regular business 
hours of the Department. 

(4) Physical inspection of records is permitted in Department offices. 
Upon completion of the inspection, the person conducting the inspection 
shall relinquish possession of the records. Persons inspecting Depart- 
ment records shall not destroy, mutilate, deface, alter, or remove any such 
records from the Department. The Department reserves the right to have 
Departmental personnel present during the inspection of records in order 
to prevent the loss or destruction of records. 

(b) The Department may refuse to disclose records that are exempt 
from disclosure under the Public Records Act. (See e.g. Gov. Code, 
§ 6254.) 

(c) Requests for copies of public records will be conducted pursuant 
to the following procedures: 

( 1 ) The Department shall charge the person requesting copies of public 
records made by Department personnel at the rate of thirty cents ($0.30) 
per page. Payment of the total estimated copy charge shall be required 
before Department personnel copy any records. The Department may 
waive copying costs when the total copying cost for records requested is 
less than ten dollars ($10.00) per year. 

(2) If the number of records requiring copying is determined to be vo- 
luminous by Department personnel, then the Department may require the 
person requesting the records to supply or hire his/her own copy service 
to photocopy the records. The cost associated with providing the copy 
service shall be borne entirely by the requesting person. 

(3) Persons requesting copies of transcripts from Department commit- 
tees, panels or boards shall be charged a flat fee of $30.00 per transcript 
regardless of page length. Tape-recorded cassette transcripts of Depart- 
ment committees, panels or board meetings shall be charged a fiat fee of 
$5.00 per proceeding. 

NOTE; Authority cited: Section 6253.4, Government Code; and Section 1344. 
Health and Safety Code. References: Section 6250, 6253, 6254 and 6255, Govern- 
ment Code. 

History 

1. New section filed 8-12-2002; operative 9-1 1-2002 (Register 2002, No. 33). 



§ 1007. Request for Confidentiality. 

(a) The Director will withhold from public inspection, pursuant to the 
applicable state and/or federal law, information received in connection 
with an application (including applications for interpretive opinions) or 
report, if in the opinion of the Director, the public inspection of such in- 
formation is not necessary for the purposes of the law under which the 
information was filed, and the information is reasonably shown to meet 
either of the following: 

( 1 ) The information is proprietary or of a confidential business nature, 
including but not limited to trade secrets, and has been confidentially 
maintained by the business entity and the release of which would be dam- 
aging or prejudicial to the business concern. 

(2) The information is such that the private and/or public interest is 
served in withholding the information. 



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BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



(b) Requests for Confidential treatment. A request for confidential 
treatment of any information received in connection with an application 
or report submitted to the Department must be filed with the information 
submitted. The information intended to remain confidential must be filed 
separately from the remaining parts of the application or report and 
marked "Confidential Treatment Requested." The person filing the ap- 
plication or report and requesting confidential treatment must sign the re- 
quest. The signed request must contain the following: 

(1) A statement identilying the information that is the subject of the 
request and the application or report relating thereto. 

(2) A statement specifying the provisions of subsection (a) pursuant 
to which the request is made. 

(3) A statement of the grounds upon which the request is made, includ- 
ing (if applicable) a statement as to the information's confidentiality and 
the measures taken to protect its confidentiality, and a statement of the 
adverse consequences that are expected to result if the information is dis- 
closed through the public records of the Department. 

(4) A statement of the specific time for which confidential treatment 
of the information is necessary, and the basis for such conclusion. 

(5) If appropriate, a statement of the extent to which such information 
has been, or will be, disclosed to present or proposed investors, or other 
persons appropriate under the statute pursuant to which the information 
is filed. 

(c) Request for Confidentiality Available for Public Inspection. Re- 
quests for confidentiality will be available for public inspection. There- 
fore, the request for confidentiality should not contain information that 
is itself confidential. 

(d) Granting of Request. If a request for confidential treatment is 
granted, the person making such request will be notified in writing, the 
information will be marked "confidential" and kept separate from the 
public file, and the application or report will be noted with the following 
legend: "Additional portions of this filing have been granted confidential 
treatment pursuant to Secfion 1007 of Title 28, Chapter 1, of the Califor- 
nia Code of Regulations. They are contained in a separate confidenUal 
file." 

(e) Denial of Request. Material for which confidential treatment is re- 
quested shall not be deemed filed unless the request is granted, and may 
be withdrawn by the applicant if the request is denied, unless (1) the Di- 
rector has already taken an official action in reliance on such information 
prior to receiving the request for confidential treatment; or (2) the Direc- 
tor determines that the withdrawal of such information is otherwise con- 
trary to the public interest. If withdrawn, such information will not be 
considered by the Director in connection with the application or report. 

(0 Permissible Disclosure of Information Held Confidential. Informa- 
tion held confidential pursuant to this section may be disclosed by the Di- 
rector, at any time and in the Director's sole discretion, whether on the 
Director's own motion or upon the request of any person, under the fol- 
lowing circumstances: 

(1) To other local, state, or federal regulatory or law-enforcement 
agencies, in accordance with the law; 

(2) When necessary or appropriate in any proceeding or investigation 
pursuant to the law under which the information was filed; 

(3) Upon a determination by the Director that the private and/or public 
interest in disclosing such information outweighs the public interest in 
non-disclosure; or 

(4) Upon a determination by the Director that the justifications for the 
confidential treatment no longer exist. 

(5) If the Director determines to disclose confidentially held informa- 
tion pursuant to subsections (f)(1) through (0(4), and concludes that the 
disclosure of such information is necessary and urgent, or that it is im- 
practical under the circumstances to give notice to the person who re- 
quested confidential treatment of the information, the information may 
be disclosed without notice. Otherwise, the person who requested confi- 
dential treatment of such information shall be given written and actual 
notice through certified mail that the release of such information is under 



consideration and the reasons therefor. Thereafter, the person will be giv- 
en five business days to explain why the need and justification for contin- 
ued confidentiality exists. 

(g) Requests to Inspect Confidential Information. A request to inspect 
confidential information pursuant to subsections (0(1) through (f)(4) 
shall be in writing, state the jusufication for the request, and be signed by 
the person making the request. A copy of the request for inspection shall 
be forwarded to the person who requested confidential treatment of the 
information in accordance with subsection (0(5). If a request for inspec- 
tion should be held confidential and not disclo.sed to the owner of the con- 
fidential information, the reasons therefor must be stated in such request, 
in accordance with subsection (b). 

(h) Nothing contained herein shall be interpreted as affording any per- 
son a right to withdraw information once it has been received by the Di- 
rector, except as provided in subsection (e). 

NOTF.: Authority cited: Sections 1344 and 1346, Health and Safety Code. Refer- 
ences: Sections 6253, 62.54 and 6255, Government Code; Section 1040, Evidence 
Code; and Sections 1344 and 1351, Health and Safety Code. 

History 
1. New section tiled 8-12-2002; operative 9-1 1-2002 (Register 2002, No. 33). 

§ 1008. Availability of Department Forms, Publications and 
Notices; Fees. 

(a) Department forms required by the Act or regulations, releases, no- 
tice of regulatory changes, and other publications are available free of 
charge on the Department's web page. 

(b) Department forms required by the Act or regulations, releases, no- 
tice of regulatory changes, and other publications are available at either 
the Department's Sacramento or Los Angeles office, or via the mail. The 
Department will charge thirty cents ($0.30) per page for any document 
picked up at the Department's offices. Documents requested by mail 
should be directed to the Department of Managed Health Care, 980 9th 
Street, Suite 500, Sacramento, CA 95814-2724. The fee for any docu- 
ment mailed will be thirty cents ($0.30) per page, plus postage. The mini- 
mum charge for any single order by mail will be $5.00. No charges will 
be incurred for providing a single copy of the Department's consumer 
complaint form. 

NOTE: Authority cited: Sections 1 344 and 1 346.4, Health and Safety Code. Refer- 
ence: Sections 1344 and 1346, Health and Safety Code. 

History 
1. New section filed 8-12-2002; operative 9-1 1-2002 (Register 2002, No. 33). 

§ 1009. Retention of Department Records. 

(a) The Department shall maintain records and files necessary to ac- 
complish the Department's regulatory function according to subdivision 
(b) and the approved Record Retention Schedule by the Department of 
General Services. Records and files may be maintained by the Depart- 
ment using either paper, electronic or other alternative storage technolo- 
gies, including but not limited to, photography, microphotography, elec- 
tronically recorded video images on magnetic surfaces, electronic data 
processing systems, opfical disk storage, or any other trusted medium 
that does not permit addiUons, deletions, or changes to the original docu- 
ment. Unless specifically superseded by another legal obligation. De- 
partment records and files shall be destroyed pursuant to the schedule in 
subsection (b). 

(b) Department records and files shall be destroyed as follows: 

(1) Plan license applications, amendments, and material modifica- 
tions: 

(A) A plan's license, original application and execufion pages A 
through D, as described in section 1300.51, shall be retained by the De- 
partment until a plan's license is surrendered or revoked. Records and 
files pertaining to the plan's license will be maintained by the Depart- 
ment for a minimum of two years following the plan's surrender or re- 
vocation of the license. Thereafter, the records and files shall be de- 
stroyed. 

(B) Exhibits to a plan's license application, as described in section 
1300.51 subsections E through FF, amendments, and material modifica- 



• 



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§ 1010 



lions shall be retained by the Department lor a minimum of five years 
from the date of filing. Thereafter, the reeords and files shall be de- 
stroyed. 

(C) Reeords and files regarding a plan's finaneial status and fiseal ar- 
rangements, as described in section 1300.5 1 . shall be retained for a mini- 
mum of five years from the dale oi' filing. Thereafter, the records and files 
shall be destroyed. 

(2) Correspondence between a plan and Department counsel or staff 
may be retained by the Department if it is determined that the correspon- 
dence is of material value in the continued regulation of the plan. Such 
correspondence shall be maintained for a minimum of five years. There- 
after, the correspondence shall be destroyed. 

(3) Final financial and medical survey plan reports shall be maintained 
by the Department for a minimum of five years from the date of the final 
report's release or until release of the next final report, whichever is later. 
Examiner and surveyor working documents used in preparing the report 
shall also be maintained for a minimumof five years from the date of the 
final report's release. Thereafter, the report and all working documents 
shall be destroyed. 

(4) Records and files pertaining to Department enforcement investiga- 
tions and actions, and Department litigation shall be retained for a mini- 
mum of five years from the date the matter is closed. Thereafter, the re- 
cords and files shall be destroyed. 

(5) Records and files pertaining to enrollee and consumer complaints, 
and the Independent Medical Review process, shall be retained for a 
minimum of two years from the date the Department closes the matter ex- 
cept any medical x-rays may be destroyed immediately following the 
closure of the matter. Thereafter, the records and files shall be destroyed. 
Records and files that are determined to be outside of the Department's 
jurisdiction pertaining to enrollee and consumer complaints, and the In- 
dependent Medical Review process may be destroyed immediately fol- 
lowing the closure of the matter. 

(c) Notwithstanding this section the Department may retain a record, 
file, or document at the Director's discretion. 

(d) The record retention schedule outlined in subsection (b) shall apply 
to all records and files maintained by the Department after January 1 . 
1998. Documents filed with the Department, or its predecessor Depart- 
ment of Corporations before January 1 , 1 998, may be destroyed at the Di- 
rector' s discretion. 

NOTH: Authority cited: Section 14750, Government Code; and Section 1344. 
Health and Safety Code. Reference: Sections 14741, 14743, 14750, 14755 and 
14756. Government Code: and Section 1344, Health and Safety Code. 

History 
1. New section filed 10-29-2003; operative 1 1-28-2003 (Register 2003, No. 44). 

§ 1010. Consumer Participation Program. 

(a) Intent and Regulatory Purpose. 

The purpose of this regulation is to establish the Department's sub- 
stantive and procedural process and criteria, in accordance with section 
1348.9 of the Health & Safety Code for determining discretionary 
awards, if any, of reasonable advocacy and witness fees to Participants 
on the basis that the Participant Represent the Interests of Consumers in 
a Proceeding, and has made Substantial Contribution to the Department 
in its deliberations. Nothing in this article shall be construed to prohibit 
any person from participating in a Proceeding if that person does not seek 
compensation pursuant to this article. 

(b) Definitions. 

For purposes of this .section, the following definitions shall apply: 

( 1 ) "Advocacy Fee" means expenses, incurred for in-house advocates 
or billed, by a Participant for the services of an advocate in the proceed- 
ing. An advocate need not be an attorney. Advocacy fees shall not exceed 
market rates as defined in this .section. 

(2) "Compensation" means payment for all or part of the amount re- 
quested by a Participant for advocacy fees and witness fees in any pro- 
ceeding relating to the adoption of any regulation or to an order or deci- 
sion, including a decision not to adopt a regulation, made by the Director. 



(3) "Market Rate" means, with respect to advocacy and witness fees, 
the prevailing rate for comparable services in the private sector in the Los 
Angeles and San Francisco Bay Areas at the time of the Director's deci- 
sion awarding compensation to a Participant for attorney advocates, 
non-attorney advocates, or experts with similar experience, skill and 
ability. Billing rates shall not exceed the Market Rate. 

(4) "Participant" means a person whose Request for Finding of Eligi- 
bility to Participate, filed under subsection (c) or Petition to Participate, 
filed under subsection (d) below, has been granted by the Director. 

(5) "Proceeding" or "Administrative Proceeding" mean an adminis- 
trative decision-making process of the Department of Managed Health 
Care that results in the adoption of a regulation, or in an order or decision 
of the Director that has the potential to impact a significant numberof en- 
rollees. For purposes of this Article, "order or decision made by the Di- 
rector" shall include a decision not to adopt a regulation or take an action 
and shall not include resolution of individual grievances, complaints, or 
cases. 

(6) "Represents the Interests of Consumers" means that the person or 
organization has a record of advocacy on behalf of health care consumers 
in administrative or legislative proceedings. A party which represents, in 
whole or in part, any entity regulated by the Department shall not be eligi- 
ble for compensation. 

(7) "Submit to the Director" means to send material electronically to 
The Director, at dmhc.ca.gov.. or, for entities that do not have access to 
e-mail, by mail to The Director. Department of Managed Health Care. 
980 9th Street, Suite 500, Sacramento, CA 95814. 

(8) "Substantial Contribution" means that the Participant significantly 
assisted the Department in its deliberations by presenting relevant issues, 
evidence, or arguments which were helpful, and seriously considered, 
and the Participant's involvement resulted in more relevant, credible, and 
non-frivolous information being available to the Director. 

(9) "Verified" means executing a statement stating that the facts con- 
tained in the Request for Finding of Eligibility to receive an award of 
compensation are true and correct, to the best of their knowledge. 

(10) "Witness Fees" means expenses, incurred or billed, by a Partici- 
pant for the services of an expert witness in the proceeding. Witness fees 
shall not exceed market rates as defined in this section. 

(c) Request for Finding of Eligibility to Participate and Seek Com- 
pensation. 

( 1 ) A person who intends to seek an award under this article shall sub- 
mit to the Director a Request for Finding of Eligibility to Participate and 
Seek Compensation, giving notice that it represents the interests of con- 
sumers and of its intent to claim compensation. The request shall be veri- 
fied, and may be submitted at any time independent of the pendency of 
a proceeding in which the person seeks to participate. 

(2) The request shall contain: 

a. TTie petitioner's name, mailing address, telephone number, and e- 
mail address, if any. 

b. A showing that the petitioner Represents the Interests of Consum- 
ers, including a description of its experience in advocaUng on behalf of 
health care consumers in administrative or legislative proceedings. 

c. For pefifioners that are organizations, the following information 
about the organizafion: 

1. Names, addresses, and titles of the members of the organization's 
governing body. 

2. A descripfion of the organization's general purposes, size, and 
structure, 

3. Whether the organization is a nonprofit organization, and 

4. Under what statute the organizafion is incorporated. 

(3) Within 30 days of the receipt of the Request for Finding of Eligibil- 
ity to Participate, the Director shall rule on the requestor's eligibility to 
participate and to seek an award of compensation. If the Director finds 
that the requestor has met the requirements for eligibility, the Director 
shall grant the request. A finding of eligibility lo seek compensation shall 
be valid in any proceeding in which a Participant's involvement corn- 



Page 24.1 



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§1010 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



mences within two years of the Tinding of eligibility so long as the Partici- 
pant still Represents the Interests of Consumers. 

(4) A person found eligible to participate and seek compensation shall 
promptly disclose to the Department any material changes in the in- 
formation submitted in its request. 

(d) Procedure for Petition to Participate. 

( 1 ) Periodically, the Director may identify regulatory proceedings in 
which he or she believes consumer participation would be helpful and an- 
ticipates that fees may be awarded. Nothing in this subsection shall be 
construed as limiting compensation only to those proceedings on the Di- 
rector's list, if any. A person desiring to participate in a proceeding and 
seek an award of fees under this subsection shall submit electronically to 



the Director a Petition to Participate, as described in this subdivision. The 
request shall be submitted no later than the end of the public comment 
period or the date of the first public hearing in the proceeding in which 
the proposed Participant seeks to become involved, whichever is later. 
For orders or decisions, the request shall be submitted within ten working 
days after the order or decision becomes final. 

(2) The Petition to Participate shall contain the following: 

a. The petitioner's name, mailing address, telephone number, and e- 
mail address, if any. 

b. An identification of the proceeding in which the petitioner seeks to 
participate. 



[The next page is 25.] 



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§1011 



c. A clear and concise statement of the petitioner's interest in the pro- 
ceeding explaining why participation is needed. 

d. A statement adopting or amending the information submitted in 
support of the request lor a determination of eligibility to participate and 
seek compensation, or. if there has been no prior submission, a showing 
of eligibility to participate on the basis that the petitioner Represents the 
hiteresls of Consumers as set forth in subpart c of this section. 

e. An estimate of the fees to be sought. 

{}) Approval of a Petition to Participate shall not guarantee the pay- 
ment of the dollar amounts set forth in the estimate, or any amount what- 
ever. 

(4) Within 30 days of the receipt of a completed Petition to Participate, 
the Director shall rule on whether the Petition to Participate shall be 
granted. The petition may be denied if the Director determines that he or 
she elects not to award compensation to any participants in that proceed- 
ing, or that the petition does not meet the requirements of this regulation 
or the governing statute. 

(5) An amended estimate shall be submitted as soon as possible when 
the Participant learns that the total estimated amount substantially in- 
creases. The Director may approve or disapprove of an amended amount. 

(e) Procedure for Applying For An Award Of Fees. 

( 1 ) Following the issuance of a final regulation, order or decision by 
the Director in the proceeding, a Participant who has been found to be eli- 
gible for an award of compensation may submit within 60 days an ap- 
plication for an award of advocacy and witness fees. A Participant who 
makes a Substantia] Contribution may be eligible for full compensation. 

(2) The application for an award of compensation shall be submitted 
electronically to the designated departmental hearing officer and shall in- 
clude: 

a. A detailed, itemized description of the advocacy and witness ser- 
vices for which the Participant seeks compensation; 

b. Legible time and/or billing records, created contemporaneously 
when the work was performed, which show the date and the exact amount 
of time spent on each specific task; and 

c. A description of the ways in which the Participant's involvement 
made a Substantial Contribution to the proceeding as defined in subpart 
(b)(8), supported by specific citations to the record. Participant's testi- 
mony, cross-examination, arguments, briefs, letters, motions, discovery, 
or any other appropriate evidence. 

(3) As used in this subdivision, the phrase "exact amount of time 
spent" refers either to quarters (15 minutes) of an hour for attorneys, or 
to thirty (30) minute increments for non-attorney advocates. The phrase 
"each specific task," refers to activities including, but not limited to: 

a. Telephone calls or meetings/conferences, identifying the parties 
participating in the telephone call, meeting or conference and the subject 
matter discussed; 

b. Legal pleadings or research, or other research, identifying the plead- 
ing or research and the subject matter; 

c. Letters, correspondence or memoranda, identifying the parties and 
the subject matter; and, 

d. Attendance at hearings, specifying when the hearing occurred, sub- 
ject matter of the hearing and the names of witnesses who appeared at the 
hearing, if any. 

(4) Within 30 days after submission of the request, which will be 
posted on the Department's web site, the Department or any other person 
participating in the proceeding may file an objection to the request, which 
must be submitted to the Department and sent to the claiming Participant. 

(5) If any person participating in the proceeding questions the Market 
Rates or reasonableness of any amount set forth in an application for an 
award of compensation, it shall disclose, in a verified declaration in sup- 
port of its memorandum, the fees and rates which it anticipates will be, 
and which have been, billed or incurred for its advocates and witnesses 
in connection with the proceeding. 

(6) The hearing officer may request additional information or docu- 
mentation from the Participant to clarify or substantiate the claim, and, 
if considered necessary by the hearing officer, may request additional 



memoranda, and/or audit the records and books of the Participant to the 
extent necessary to verify the basis for the amount claimed in seeking the 
award. 

(7) The hearing officer shall issue a written decision that determines 
whether or not the Participant has made a substantial contribution to the 
proceeding; and, if so, shall determine the amount of compensation to be 
paid, which may be all or part of the amount claimed. The decision will 
be posted promptly on the Department's web site and will be sent, elec- 
tronically or by mail, as appropriate, to all parties who participated in the 
hearing. 

(8) Within 30 days after posting and sending of the decision by the 
hearing officer, a Participant who is dissatisfied with that decision may 
appeal to the Director for review of the hearing officer's decision. The 
notice of appeal should state the relief which the Participant is seeking 
and the reasons why the decision by the hearing officer should be modi- 
fied or changed. The Director may request additional briefing if the Di- 
rector deems that would be helpful in reaching a decision. The review 
shall be of the written record and limited to whether the hearing officer's 
decision constituted an abuse of discretion. The Director's decision is fi- 
nal and there is no further administrative remedy. 

NOTE: Authority cited: Sections 1341 and 1344, Health and Safety Code. Refer- 
ence: Section 1348.9, Health and Safety Code. 

History 

1. New section filed 6-20-2003; opt;rativc 7-2()-2(X)3 (Register 2003. No. 2.S). 

§1011. Assessment for University of California Analysis 
of Proposed Mandate Legislation. 

(a) For the fiscal years 2004-05 and 2005-06, the Department shall as- 
sess each full service plan its share of the amount necessary to fund the 
Health Care Benefits Fund for that fiscal year. The amount necessary for 
each fiscal year will be determined by the Department and the Depan- 
ment of Insurance in consultation with the University of California (Uni- 
versity) and will be based on the amount necessary to fund the actual and 
necessary expenses of the University, not to exceed $2 million, in the 
analysis of legislafive health care benefit mandates for the fiscal year. 

(b) The total amount owed by all full-service health plans will be 
87.6% of the total amount necessary to fund the Health Care Benefits 
Fund. That percentage is based on the ratio between persons enrolled in 
full-service health care service plans and those persons enrolled in health 
reimbursement plans regulated by the Department of Insurance as re- 
ported in the publication "Accident & Health Covered Lives 2002" (Re- 
vised December 1 1, 2003) published by the Department of Insurance in 
May, 2002. 

(c) The Department shall annually calculate each full-service health 
plan's porfion of the amount specified in subsection (b) as follows: 

(1) The Department shall calculate the per-enrollee cost by dividing 
the amount of revenues required to be paid by all full-service health care 
service plans, by the total number of enrollees in this state that are en- 
rolled in all full-service plans as of the March 31 immediately preceding 
the date of the assessment. 

(2) Tlie Department shall calculate each plan's annual fee by multiply- 
ing the per-enrollee cost determined pursuant to paragraph (1) of this 
subsecfion (c) by the number of enrollees in the plan as of the March 3 1 
immediately preceding the date of the assessment. 

(d) The Department shall notify affected plans of the amount of the as- 
sessment on or before June 1 5 of each fiscal year and all amounts due un- 
der the assessments will be due and payable from the affected plans on 
or before the first day of August immediately following the date of the 
notice. 

(e) Any amount that remains due from a plan for assessments issued 
for the 2002-2003 and 2003-2004 fiscal years (pursuant to Section 
1 27662 of the California Health and Safety Code) that have not been paid 
to the Department by May 3 1 . 2004, will be added to the amount of the 
assessment due under the notice to be issued on or before June 1 5 of each 
fiscal year. 



Page 25 



Register 2004, No. 23; 6-4-2004 



§ 1300.41.8 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



NOTE: Authority cited: Sections 1 344, 1 346 and 1 27662. Health and Satcty Code. 
Relei-ence: Sections ]3.'^6, 127660, 127661, 127662, 127663, 127664 and 12766.'^. 
Health and Safety Code. 

History 
1 . New section filed 6-2-2004; operative 7-2-2004 (Register 2004, No. 23). 



Article 3. Electronic Filing 



§ 1 300.41 .8. Electronic Filing. 

(a) Definitions: 

( 1 ) "Electronic" means relating lo technology having electrical, digi- 
tal, magnetic, wireless, optical, electromagnetic, or similar capabilities; 

(2) "Electronic signature" means an electronic sound, symbol, or pro- 
cess attached to or logically associated with an electronic record, 
executed or adopted by a party with the intent to represent a manual sig- 
nature. 

(b) Notwithstanding any other provision of the regulations contained 
in title 28 of the CCR. plans shall file electronically any document re- 
quired or permitted by law to be filed with the Department, or its desig- 
nated agent, except as specified in subsection (d). 

(c) Signatures: 

(1) The Plan shall submit to the Director for approval, the manner, 
type, and format of signatures, including electronic signatures, which 
shall be required by the Department to be affixed to all filings. 

(2) Prior to submitting electronically, the plan shall certify, under pen- 
alty of perjury, that all statements within all documents filed electronical- 
ly with the Department are true and correct. 

(3) Electronic signatures may be used to sign a legally effective decla- 
ration under penalty of perjury. 

(4) If notarization is required, an electronic signature to be notarized 
must be accompanied by the electronic signature of a notary public and 
must include all other information to render the notarization effective un- 
der California law. 

(5) The signature requirements apply to all plans, and their designated 
agents or representatives. 

(d) The Director may grant a one-time limited exemption upon a satis- 
factory showing that a plan lacks the electronic capacity to satisfy the re- 
quirements for electronic filings. 

NOTE: Authority cited: Section 1344. Health and Safety Code. Reference: Sec- 
tions 1341.8, 1349. 1351, 1352, 1386 and 1387. Health and Safety Code; Sections 
1633.1-1633.17, Civil Code (Uniform Electronic Transactions Act); and Section 
16.5, Government Code. 

History 

1 . New section filed 12-27-2(X)l as an emergency; operative 12-27-2001 (Regis- 
ter 2001 , No. 52). A Certificate of Compliance must be transmitted to OAL by 
4-24-2002 or emergency language will be repealed by operation of law on ihe 
following day. 

2. New section refiled 4-24-2002 as an emergency; operative 4-24-2002 (Regis- 
ter 2002, No. 1 7). A Certificate of Compliance must be transmitted to OAL by 
8-22-2002 or emergency language will be repealed by operation of law on the 
following day. 

3. Certificate of Compliance as to 4-24-2002 order transmitted to OAL 
6-28-2002 and filed 8-8-2002 (Register 2002, No. 32). 

4. New article 3 heading filed 8-12-2002; operative 9-1 1-2002 (Register 2002, 
No. 33). 



Chapter 2. Health Care Service Plans 



History 

1 . Change without regulatory effect renumbering former Title 10, Chapter 3, Sub- 
chapter 5.5 (sections 1300.43-1300.826) to new Title 28, Division 1, Chapter 
1 (sections 1300.43-1300.826) filed 1 2-22-2000 pursuant to section 100. title 
1, California Code of Regulations (Register 2000, No. 51). 

2. Editorial renumbering of former chapter 1 to new chapter 2 (Register 2001 , No. 
50). 



Article 1. Exemptions 

§1300.43. Small Plans. 

A health care service plan or specialized health care service plan which 
provides health care services or specialized health care services only to 
the employees of one employer, or only to the employees of employers 
under common ownership and control, which is administered solely by 
the employer, and which does not have more than five subscribers (re- 
gardless of the number of persons enrolled based upon their relationship 
to or dependence upon such subscribers) is exempt from all provisions 
ofthe Act and the rules thereunder, except Sections 1381, 1384 and 1385. 
Such plans are exempt from any rules adopted pursuant to such sections 
unless such rules are made specifically applicable lo plans exempted un- 
der this section. 

NOTE: Authority cited: Section 6, Chapter 941, Statutes 1975, and Section 1344, 
Health and Safety Code. Reference: Knox-Keene Health Care Service Plan Act 
of 1975. 

History 

1. New Subchapter 5.5, Articles 1-14 (1300.43-1300.99, not consecutive) filed 
6-1-76; effective thirtieth day thereafter (Register 76, No. 23). 

§1300.43.1. New Plans. 

NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Section 
1343, Health and Safety Code. 

History 

1. Amendment filed 1 1-30-76 as an emergency; effective upon filing (Register 
76. No. 49). For prior history, see Register 76, No. 42. 

2. Reinstatement of section as it existed prior to emergency amendment filed 
1 1 -30-76, by operation of Section 1 1 422. 1 (b). Government Code (Register 77, 
No. 24). 

3. Repealer filed 6-29-84; effective thirtieth day thereafter (Register 84, No. 26). 

§ 1300.43.2. Extension for Enrollers Under Medi-Cal 
Program. 

NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Section 
1343, Health and Safety Code. 

History 

1 . New section filed 8-12-76 as an emergency; effective upon filing (Register 76, 
No. 33). 

2. Amendment filed 9-30-76 as an emergency; effective upon filing (Register 76, 
No. 40). 

3. Amendment filed 10-12-76 as an emergency; effective upon filing. Certificate 
of Compliance included (Register 76, No. 42). 

4. Repealer filed 1-12-83; effective thirtieth day thereafter (Register 83, No. 3). 

§ 1300.43.3. Ambulance Plans: Conditional Exemption. 

(a) Definitions. For the purposes of this section: 

( 1 ) "Ground ambulance services" means the emergency, including ad- 
vanced life support services, and non-emergency transportation of an en- 
roUee by an individual licensed pursuant to Articles 1 and 2 of Chapter 
2.5 of Division 2 ofthe Vehicle Code where health care services are pro- 
vided to an enrollee for the duration of such transportation. 

(2) "Air ambulance services" means the emergency, including ad- 
vanced life support services, and non-emergency transportation of an en- 
rollee by legally authorized air ambulance where health care services are 
provided to the enrollee for the duration of such transportation. 

(b) A health care service plan which lawfully operates air and/or 
ground ambulances and provides pursuant to a plan contract only air and/ 
or ground ambulance services to subscribers and enrollees in ambulances 
owned or leased by it and operated by its employees (hereinafter "Ambu- 
lance Plan") is exempted from all provisions ofthe Knox-Keene Health 
Care Service Plan Act of 1975 (Health and Safety Code section 1340 et 
seq.) except those provisions specified herein, and subject to the condi- 
tion that the Ambulance Plan complies with each of the following re- 
quirements: 

( 1 ) Every Ambulance Plan shall directly provide ground and/or air am- 
bulance services for its enrollees throughout the Ambulance Plan's ser- 
vice area exclusively in ambulances owned or leased by it and operated 
by its employees. 

(2) At the time of initial enrollment or renewal, every plan contract be- 
tween an Ambulance Plan and a group or individual subscriber, and ev- 



Page 26 



Register 2004, No. 23; 6-4-2004 



Title 28 



The Department of Managed Health Care 



§ 1300.43.3 



• 



• 



ery disclosure form, evidence of coverage or plan brochure siiali promi- 
nently display as a separate article the following legend, in boldface type 
and font size not smaller than the font size used in the general body of the 
document, either on the first page or on another page if referenced as "See 
Important Notices on Page [insert page number] Prior to Purchase" in 
boldlace type and font size not smaller than the font size used in the gen- 
eral body of the document on the front page: 

(A) "BEFORE YOU PURCHASE: If you are currently enrolled in a 
health maintenance organization (HMO) or other health insurance, the 
benefits provided by an Ambulance Plan may duplicate the benefits pro- 
vided by your HMO or other health insurance, if you have a question re- 
garding whether your HMO or other health insurance offers benefits for 
ambulance services, you should contact that other company directly." 

(B) "WARNING: This Ambulance Plan is not an insurance program. 
It will not compensate or reimburse another ambulance company that 
provides emergency transportation to you or your family. This may occur 
when the 91 1 Emergency System has independently determined that 
another company could provide more expeditious service or is next in the 
rotation to receive a call. This might also occur when this Ambulance 
Plan is unable to perform within a medically appropriate timeframe due 
to a mechanical or maintenance problem or being on another call." im- 
mediately following this warning, the Ambulance Plan shall include the 
words, "sign or initial here," and include a line for the subscriber's signa- 
ture or initials. 

(C) "COMPLAINTS: For complaints regarding this Ambulance Plan, 
first attempt to call the plan at [plan's toll-free telephone number]. If the 
Ambulance Plan fails to resolve the complaint to your satisfaction, con- 
tact the Department of Managed Health Care at 1 -800-400-08 1 5. The 
Department's website is http://www.dmhc.ca.gov. You may obtain com- 
plaint forms and instructions online." 

(D) "OPERATING UNDER CONDITIONAL EXEMPTION: This 
Ambulance Plan is operating pursuant to an exemption from the Knox- 
Keene Health Care Service Plan Act of \975 (Health and Safety Code 
section L'^40 et seq.)." 

The Ambulance Plan may amend the wording of the legend to use its 
name and personal pronouns. 

(.^) Ambulance Plans that fail to comply with all of subsection (b)(2), 
including obtaining the signature or initials of subscribers next to or un- 
der the "WARNING" statement, shall be responsible for paying, reim- 
bursing, or covering the enroUee' s cost for ambulance transportation ser- 
vices provided by another ambulance company, less any compensation 
received from the subscriber's HMO, health insurer, or managed care or- 
ganization, if any. and less any applicable overall annual deductible or 
any co-payment. 

(4) An Ambulance Plan shall operate in compliance with the require- 
ments of each local emergency medical services agency (Health and 
Safety Code section 1797.94) that regulates emergency services in any 
portion of the plan's service area and that has developed an emergency 
medical services plan (Health and Safety Code section 1 797.76) for an 
emergency medical services system (Health and Safety Code section 
1797.78). implemented pursuant to the authority granted in Health and 
Safety Code section 1797.105(b). 

(5) No Ambulance Plan shall offer or sell plan contracts to or for per- 
sons who do not live or work in the plan's service area, or use or permit 
the use of any advertising or solicitation regarding its services outside of 
its service area. Every Ambulance Plan shall comply with the following 
sections of the Health and Safety Code: 1360. 1363.1, 1365(a). 1365.5, 

1366, subsections (a), (b). (c), (d), (e)(1), (f), (g). and (h)(1) of section 

1367, 1368, 1368.01. 1368.02(b), 1373(a), 1379, 1381, subsections (a), 
(d). and (f) of 1384, and 1385, except that approval by the Department 
under section 1368(a)(1) is waived. 

(6) Every Ambulance Plan shall maintain a procedure whereby enroll- 
ees. or authorized persons on their behalf, may submit grievances to the 
pJan and in each case receive from the plan a written acknowledgement 
within five days of receipt of the grievance and a written response sent 
within 30 days of receipt of the grievance indicating what the plan will 



do to resolve the grievance. Both the acknowledgement and the response 
shall include a notice that the enrollee may contact the Department of 
Managed Health Care through the Department's toll-free telephone 
number after the grievance has been pending with the plan for at least 30 
days. 

(7) No Ambulance Plan contract shall require, nor shall the Ambu- 
lance Plan or any contracting provider collect, a co-payment of greater 
than 50 percent of an ambulance or other emergency care provider's ne- 
gotiated fee-for-service rate pursuant to a contract with the ambulance 
service, or, in the absence of such a contract. 50 percent of the ambulance 
company's usual, customary, and reasonable rate (within the meaning of 
Business and Professions Code section 657(c)) for the particular .service, 
or $500. whichever amount is less. An Ambulance Plan that does not im- 
pose any co-payments may impose an overall annual deductible of a spe- 
cified dollar amount applicable to all covered services, provided that the 
deductible for an enrollee shall not exceed: 

(A) 200 percent of the amount of prepaid or periodic charge for one 
year for the enrollee; or 

(B) 2(X) percent of the amount of prepaid or periodic charge for one 
year for the family, whichever is less. 

(8) Every Ambulance Plan operating ground or air ambulances shall: 

(A) If operating a ground ambulance, provide proof to the Director 
upon request that the Ambulance Plan currently complies with Articles 
I and 2 of Chapter 2.5 of Division 2 of the California Vehicle Code, in- 
cluding but not limited to license and certification requirements, and with 
professionally recognized standards of patient care and safety in emer- 
gency medical services and transport. 

(B) If operating an air ambulance, provide proof to the Director upon 
request that the Ambulance Plan currently complies with regulations es- 
tablished by the Federal Aviation Administration and with professionally 
recognized standards of patient care and safety in emergency medical air 
services and transport. 

(9) Every Ambulance Plan operating air ambulances shall comply 
with the general standards and other applicable standards and provisions 
of the "Association of Air Medical Services Standards and Safety Guide- 
lines for Fixed Wing, Rotorwing, & Critical Care Ground Services," re- 
vised June 2000 and published by the Association of Air Medical Ser- 
vices, which is incorporated by reference. 

( 1 0) No Ambulance Plan shall receive prepaid or periodic charges pur- 
suant to its plan contract for more than one year in advance. 

(11) Every Ambulance Plan shall deliver: 

(A) To each prospective subscriber, upon presenting a plan contract 
for offer or sale, a disclosure form, combined disclosure form and evi- 
dence of coverage, or copy of its plan contract, 

(B) Annually, to each subscriber a copy of its plan contract and evi- 
dence of coverage, and 

(C) To each subscriber and enrollee a membership card or other form 
of identification easily carried by the subscriber or enrollee that indicates 
that the subscriber or enrollee is an Ambulance Plan member and that 
lists phone numbers and other instructions for activating ambulance 
transport. 

(12) The plan contract and any disclosure form and evidence of cover- 
age used by the Ambulance Plan, shall comply with Health and Safety 
Code sections 1 362 and 1363 and the rules of the Director of the Depart- 
ment of Managed Health Care pursuant to and including sections 
1300.63, 1300.63.1, 1300.63.2, and 1300.63.3 of title 28. 

(13) Every Ambulance Plan must maintain documentation demon- 
strating compliance with all the conditions of the exemption and provide 
to the Department of Managed Health Care all or any part of such docu- 
mentation as required by the Department within 30 days of request. 

(14) No Ambulance Plan shall purport to rely on the exemption pur- 
suant to this section if the Director has issued an order of termination pur- 
suant to subsection (c). 

(c) An Ambulance Plan's exemption pursuant to this section may be 
terminated by order of the Director, upon a determination that such action 



Page 26.1 



Register 2004, No. 23; 6-4-2004 



§ 1300.43.4 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



is in the public interest and lor the protection of enrollces, or for any o\' 
the following reasons: 

( 1 ) The services of the Ambulance Plan are not accessible to enroUees. 

(2) The Ambulance Plan, or a person employed by the Ambulance 
Plan, has failed to comply with licensing or certification requirements 
imposed by law. 

(3) The Ambulance Plan is operating in an unsafe, unfair, unreason- 
able or discriminatory manner as to its enrollees or as to its enrollment 
practices. 

(4) The financial condition of the Ambulance Plan is such that its con- 
tinued operation will constitute a substantial risk to its subscribers and 
enrollees. 

(5) The Ambulance Plan has engaged in conduct proscribed by the 
Health and Safety Code section 1386(b), subsections (5), (6). (7). (8). (9), 
(10). (11), or (14). 

(6) The Ambulance Plan has been or is subject to a limitation, require- 
ment, condition, adverse action, or disciplinary action taken by a licens- 
ing agency or an emergency medical services agency that would materi- 
ally impair its ability to perform its plan contracts or constitute or result 
in a violation of the provisions of this section or of the referenced provi- 
sions of the Act. 

(7) The Ambulance Plan has violated any condition of this exemption. 

(d) An Ambulance Plan's exemption pursuant to this section shall ter- 
minate automatically by operation of law upon the plan's failure to com- 
ply with any of the conditions set forth in subsection (b). 

(e) An Ambulance Plan whose exemption has been terminated by op- 
eration of law because of failure to comply with the conditions set forth 
in subsection (b) or by order of the Director under subsection (c) shall be 
in violation of section 1349 of the Health and Safety Code and shall be 
subject to all of the provisions of the Knox-Keene Health Care Service 
Plan Act of 1975, including but not limited to the provisions relating to 
discipline and enforcement procedures. 

NOTE: Authority cited: Section 1 .^44, Health and Safety Code. Reference: Section 
1343(b), Health and Safety Code. 

History 
i . New section filed 9-30-76 as an emergency; effective upon filing (Register 76, 
No. 40). 

2. Certificate of Compliance filed 1-27-77 (Register 77, No. 5). 

3. Amendment filed 4-2-79; effective thirtieth day thereafter (Register 79, No. 
14). 

4. Editorial correction of subsections (a)7.f. and (b)(6) (Register 80, No. 4). 

5. Change without regulatory effect amending section filed 4-4-2000 pursuant to 
section 100, title 1, California Code of Regulations (Register 2000, No. 14). 

6. Change without regulatory effect amending section filed 7-18-2000 pursuant 
to section 100, title 1, California Code of Regulations (Register 2000, No. 29). 

7. Change without regulatory effect updating title references in Notice filed 
12-22-2000 pursuant to section 100, title f, California Code of Regulations 
(Register2000, No. 51). 

8. Change without regulatory effect amending subsection (a) — form filed 
11-21-2002 pursuant to section 100, title 1, California Code of Regulations 
(Register 2002, No. 47). 

9. Repealer and new section heading and section and amendment of Notl filed 
7-24-2003; operative 8-23-2003 (Register 2003, No. 30). 

§ 1300.43.4. Employee Welfare Benefit Plans. 

NOTE: Authority cited: Sections 1343 and 1344, Health and Safety Code. Refer- 
ence: Section 1.M3, Health and Safety Code. 

History 

1 . Amendment filed 3-6-78 as an emergency; designated effective 3-6-78 (Reg- 
ister 78, No. 10). For prior history, see Register 77, No. 36. 

2. Certificate of Compliance filed 4-20-78 (Register 78, No. 16). 

3. Amendment filed 8-14-78 as an emergency; designated effective 8-15-78 
(Register 78, No. 33). 

4. Certificate of Compliance filed 1 1-8-78 (Register 78, No. 45). 

5. Repealer filed 9-27-79; effective thirtieth day thereafter (Register 79, No. 39). 

§ 1300.43.5. Exemption for Licensees of Insurance 
Commissioner. 

NOTE: Authority cited: Section 1 344, Health and Safety Code. Reference: Section 
1343, Health and Safety Code. 



History 

1 . New section filed 12-20-77 as an emergency: effective upon filing (Regi.ster 

77, No. .52). 

2. Certificate of Compliance filed 4-4-78 (Register 78. No. 14). 

3. Repealer filed 1-12-83; effective thirtieth day thereafter (Register 83, No. 3). 

§ 1300.43.6. Moribund Plans. 

A health care service plan which is a general acute care hospital whose 
business as a plan is liinited to providing, administering, or otherwise ar- 
ranging for the provision of health care services to members of one mori- 
bund group of not more than 250 members is exempted from the provi- 
sions of the Knox-Keene Health Care Service Plan Act of 1975, subject 
to each of the following conditions: 

(a) That such plan is licensed as a health facility pursuant to Chapter 
2 (cominencing with Section 1250) of the Health and Safety Code, and 
is not insolvent. 

(b) That such plan has not accepted any new members for the last 
twenty years and does not accept any new members for the duration of 
this exemption. 

(c) That such plan receives prepaid or periodic charges, if any, from 
members of such group in an amount not exceeding $5 per member per 
month and has received no substantial payment or transfer of property 
from or on behalf of such contracting group during the last twenty years. 

(d) That such plan derives not more than one-half of one percent of its 
annual income from prepaid or periodic charges paid by or on behalf of 
members of such group, and has a minimum net worth of $15,0(X),000 
based upon its most recent certified financial statements (prepared as of 
a date within the preceding 15 months). 

(e) That such plan establish and maintain a grievance procedure sub- 
stantially complying with Section 1300.68. 

(f) That such plan deliver to each subscriber and enroUee within 60 
days of the adoption of this section, and thereafter to any subscriber or 
enrollee upon request, the following written notice: 

"(Name of plan) IS A HEALTH CARE SERVICE PLAN OPERAT- 
ING PURSUANT TO AN EXEMPTION FROM THE KNOX-KEENE 
HEALTH CARE SERVICE PLAN ACT OF 1975 PROVIDED BY 
RULE OF THE DIRECTOR OF THE DEPARTMENT OF MANAGED 
HEALTH CARE OF THE STATE OF CALIFORNIA." 
Note: Authority cited: Sections 1343 and 1344, Health and Safety Code. Refer- 
ence: Section 1343, Health and Safety Code. 

History 

1 . New section filed 6-13-78 as an emergency; effective upon filing (Register 78, 
No. 24). 

2. Certificate of Compliance filed 8-18-78 (Register 78, No. 33). 

3. Editorial correction of subsection (f) (Register 95, No. 12). 

4. Change without regulatory effect amending subsection (f) filed 7-1 8-2000 pur- 
suant to section 1 00, title 1 , California Code of Regulations (Register 20(X), No. 
29). 

5. Change without regulatory effect amending subsection (f) filed 1 1-21-2002 
pursuant to section 100, utie I, California Code of Regulations (Register 2002, 
No. 47). 

§ 1300.43.7. Student Emergency Care Arrangements. 

There is exempted from the provisions of the Act any nonprofit corpo- 
ration or association all of whose members are licensed physicians and 
which is a health care service plan as defined by subdivision (0 of Section 
1345 only by reason of health care service plan contracts with one or 
more colleges or universities pursuant to which such nonprofit corpora- 
tion or association furnishes or arranges only emergency health care ser- 
vices and health care services ancillary thereto to members of the student 
body of, employees of, and visitors to such colleges or universities, pro- 
vided that each of the following conditions is met: 

(a) At least 95 percent of the cost of health care services furnished pur- 
suant to such contracts is furnished by employees or members of such 
nonprofit corporation or association or contracting providers. 

(b) All services furnished by members pursuant to such contracts are 

furnished pursuant to provider contracts which comply with Section 

1379 of the Act. 

NOTE: Authority cited: Section 1343, Health and Safety Code. Reference: Section 
1343, Health and Safety Code. 



Page 26.2 



Register 2(X)4, No. 23; 6-4-2004 



Title 28 



The Department of Managed Health Care 



8 1300.43.10 



History 

1 . New section tiled 8-22-78; effective thiilietii day tiiereafter (Resister 78. No. 
34). 

§1300.43.8. Public Agencies. 

NOTE; Authority cited: Section 1 343. Health and Safety Code. Reference: Section 
1.343. Health and Safely Code. 

History 

1 . New section filed 9-27-79: effective thiilieth day thereafter (Register 79, No. 

.39). 

2. Repealer tiled 1-12-83: effective thirtieth day thereafter (Register 83. No. 3). 

§ 1300.43.9. Unlicensed Solicitors and Solicitor Firms. 

NOTI.: Authority cited: Sections 1343 and 1.344, Health and Safety Code. Refer- 
ence: Section 1343. Health and Safety Code. 



History 

1 . New .section filed 1 1-9-79 a.s an emergency; effective upon filing ( Register 79. 
No. 4.5). A Certificate of Compliance must be filed within 120 days or emergen- 
cy language will be repealed on 3-9-80. 

2. Repealed by operation of Section 1 1422. 1(c). Government Code (Register 80. 
No. 24). 

§ 1300.43.10. Nonprofit Retirees' Plan. 

A health care service plan which was registered under the Kno.x-Miils 
Health Plan Act as in effect on June .30, 1976. whose activity a.s a plan 
is limited to reimbursing part or all of the cost oi' health caie services as 
a supplement to Medicare (Parts A and B) to persons who were retired 
from professions associated with higher learning after having been 
employed therein for not less than 1 cumulative years and such persons" 



[The next page is 27.] 



Page 26.3 



Register 2004, No. 23; 6-4-2004 



Title 28 



The Department of Managed Health Care 



§ 1300.43.12 



spouses. piDviding all such persons are enrolled in Medicare, is ex- 
empted from the provisions ot" Section 1349 of the Knox-Keene Health 
Care Service Plan Act of 1975. subject to each of the following condi- 
tions: 

(a) That such plan is a nonprofit corporation which does not engage, 
directly or indirectly, in any for prollt business, which is not affiliated 
with (Rule 1 300.4.5 (c)) a corporation or other entity which engages, di- 
rectly or indirectly, in any for profit business, and which does not contract 
or otherwise arrange for the performance by persons other than its direc- 
tors, officers or employees of any portion of its administrative or other 
functions. 

(b) That such plan is exempted from federal income tax as an organiza- 
tion described in Section 501(c)(3) of the Internal Revenue Code and 
from state income tax on similar grounds. 

(c) That such plan is a charitable corporation subject to, and in com- 
pliance with, the Uniform Supervision of Trustees for Charitable Pur- 
poses Act. 

(d) That such plan does not directly provide any health care services 
through entity-owned or contracting health facilities or providers. 

(e) That such plan has a tangible net equity within the meaning of Sec- 
tion 1300.76(b) of not less than $300.0()0. including liquid tangible as- 
sets in an amount not less than $300,000, based upon its most recent certi- 
fied financial statement (prepared as of a date within the preceding 1 5 
months and such other date as may be requested by the Director pursuant 
to Section 1 384 of the Act) and its most recent quarterly and monthly un- 
certified statements prepared on a basis consistent with the annual certi- 
fied statement, with additional liquid tangible assets in an amount not less 
than $1,000 for each person enrolled in excess of 400; provided that the 
maximum number of enrollees shall not exceed 500. 

(f) That not more than 15% of the total charges paid by or on behalf 
of subscribers or enrollees for enrollment in. or for health care benefits 
from, such plan is expended for administrative costs, including all costs 
of solicitation and enrollment; except that such plan may expend addi- 
tional sums of money for administrative costs excluding costs of solicita- 
tion and enrollment provided that such money is not derived from reve- 
nue obtained from subscribers or enrollees. 

(g) That such plan issues a uniform health care service plan contract 
to all subscribers 

( 1 ) which provides, except for a permissible calendar year deductible 
not to exceed $100 per enrollee, full coverage for all copayments and de- 
ductibles relating to allowable charges under Medicare (Parts A and B) 
for all health care services covered by Medicare (Parts A and B) pursuant 
to Title XVIIl of the Social Security Act as amended, and not less than 
50% of the reasonable charges for each health care service which is not 
covered by Medicare but is covered by such plan; provided, however, 
that such coverage may be subject to a lifetime limitation allowing not 
less than $300,000 of benefits per lifetime and 

(2) which provides that an enrollment or subscription may not be can- 
celled except upon grounds complying with Section 1365 of the Act. 

(h) That such plan provides to each subscriber a disclosure statement 
covering the provisions of its health care service plan contract which 
complies substantially with the provisions of Section 1363 of the Act and 
which also states, if such is the case, that such contract does not cover, 
and that subscribers and enrollees will be solely liable for, 

(1) any charges in excess of allowable charges under Medicare with 
respect to health care services covered by Medicare, 

(2) any charges in excess of reasonable charges for any health care ser- 
vices covered by such plan but not covered by Medicare and any copay- 
ments related to such health care services, and 

(3) any permissible plan deductible. 

(i) TTiat no less than 75% of the officers and of the directors of such 
corporation are persons who are retired from the professions associated 
with higher learning after having been employed therein not less than 1 
cumulative years, are enrolled in Medicare, and are enrolled in such plan 
subject to terms and conditions no more favorable than any other enroll- 



ee, and that no officer or director receives any compensation from such 
corporation. 

ij) That such plan solicits enrollments or subscriptions in this stale 
only through persons who are officers or employees of such plan. 

(k) That such plan establishes and maintains a grievance procedure 
substantially complying with Section 1300.68 of these rules. 

(/) That such plan not represent any contract of such plan as a Medicare 
supplement contract and discloses to each prospective subscriber and en- 
rollee when presenting any information regarding the plan, and again at 
the time of application, the following written notice: 

THE HEALTH PLAN CONTRACT OFFERED BY (Name of plan) 
DOES NOT MEET THE REQUIREMENTS FOR CERTIFICATION 
AS A MEDICARE SUPPLEMENT CONTRACT PURSUANT TO 
APPLICABLE STATE OR FEDERAL LAW, AND HAS NOT BEEN 
CERTIFIED. PERSONS DESIRING INFORMATION REGARDING 
CERTIFIED MEDICARE SUPPLEMENT COVERAGE SHOULD 
CONTACT THEIR LOCAL MEDICARE OFFICE." 

(m) That such plan delivers to each subscriber and enrollee within 60 
days of the adoption of this section, and annually thereafter, the following 
written notice: 

"(Name of plan) IS A HEALTH CARE SERVICE PLAN OPERAT- 
ING PURSUANT TO AN EXEMPTION FROM THE KNOX-KEENE 
HEALTH CARE SERVICE PLAN ACT OF 1975. COMPLAINTS RE- 
GARDING THIS PLAN, THE ADMINISTRATION THEREOF, AND 
THE SERVICES PROVIDED THEREBY MAY BE DIRECTED TO 
THE DIRECTOR OFTHE DEPARTMENT OF MANAGED HEALTH 
CARE OF THE STATE OF CALIFORNIA." 

(n) That such plan provides written notice to the Director of its intent 
to rely on the exemption provided by this section, executed by a duly au- 
thorized officer of such plan, together with a signed opinion of legal 
counsel to the effect that such plan complies with subsections (a), (b), (c), 
(d) and (g) of this section. 

NOTE; Authority cited: Sections 1343 and 1.144, Health and Safety Code. Refer- 
ence: Section 1343. Health and Safety Code. 

History 

1 . New section filed 1 1-2 1-79; effective thirtieth day thereafter (Register 79, No. 

47), 

2. Amendment filed 8-12-82; effective thirtieth day (hereafter (Register 82. No. 
33). 

3. Change without regulatory effect amending subsections (e), (m) and (n) filed 
7-]8-2(X)0 pursuant to section 100, title 1. California Code of Regulations 
(Register2000, No. 29). 

4. Change without regulatory effect amending subsection (m) filed 1 1-21-2002 
pursuant to section 100, title 1. California Code of Regulations (Register 2002. 
No. 47). 

§ 1 300.43.1 1 . Exemption for Solicitors of Nonprofit 
Retirees' Plans. 

NOTE: Authority cited: Sections 1343 and 1344, Health and Safety Code. Refer- 
ence: Section IM3, Health and Safety Code. 

History 

1. New section filed 11-2 1-79; effective thirtieth day (hereafter (Register 79, No. 

47). 

2. Repealer filed 1-12-83; effective thirtieth day thereafter (Register 83. Nt). 3). 

§ 1300.43.12. Medi-Cal Dental Contract. 

The contract of the Department of Health Services which is entered as 
the result of successful bidding in response to said Department's request 
for proposal and which requires the contractor to provide only dental 
benefits for the stale's Medi-Cal beneficiaries pursuant to Section 
14104.3 of the Welfare and Institutions Code and incorporates the terms 
and provisions set forth in the request for proposal, is exempt from the 
provisions of the Act, if the successful bidder ("entity") is not already li- 
censed under the Act, for the period indicated below, subject to each of 
the following: 

(a) The entity engages in no activities as a plan other than those pur- 
suant to the Medi-Cal dental contract described above or pursuant to a 
separate exemption in the Act or these rules. 



Page 27 



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§ 1300.43.13 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



(b) The entity properly files an application for licensure under the Act, 
as required by Sections J 35 1 and 1 356 of the Act, prior to executing the 
contract referred to above, except that the information contained in the 
application submitted at the time of filing need not include information 
not required to be provided to the Department of Health Services pur- 
suant to its request for proposal, so long as the additional information re- 
quired by Section 1 35 1 of the Act or by the application form provided by 
the Director is filed as an amendment to the license application within six 
weeks of the date of execution of the contract referred to above, or any 
longer period as the Director by order may allow under the Director's 
waiver authority set forth in Section 1344(a) of the Act. 

(c) The entity reasonably pursues the completion of its application and 
compliance with the provisions of the Act and applicable rules thereun- 
der. 

(d) The entity, for the duration of the exemption provided by this sec- 
tion, shall be subject to the provisions of Sections 1351.1, 1381. 1384. 
and 1 385 of the Act, and may be examined by the Director in the manner 
and subject to the arrangements provided in Section 1382 of the Act. 

(e) The exemption provided by this section shall be effective only until 
the earlier of 

(1 ) final action by the Director on the application, or 

(2) the expiration of nine months after execution of the contract re- 
ferred to above, except that said nine month period may be waived by or- 
der of the Director for any additional one month periods under the Direc- 
tor's waiver authority set forth in Section 1344(a) of the Act. 

(f) For the purposes of this section, the term "order" means a written 
waiver applicable to a specific case issued by the Director pursuant to 
Section 1344(a) of the Act. 

NOTE: Authority cited: Sections 1343 and 1344. Health and Safely Code. Refer- 
ence: Sections 1.143. 1344, B.'^l, 1351.1, L3.S3, 13.56, 1381, 1382, 1384 and 138.5, 
Health and Safety Code. 

History 

1. New section filed 3-9-84; effective thirtieth day thereafter (Register 84, No. 
10). 

2. Change without regulatory effect amending subsections (b) and (d)-(O filed 
7-18-2000 pursuant to section 100, title 1, California Code of Regulations 
(Register2000, No. 29). 

§ 1300.43.13. Mutual Benefit Plans. 

A health care service plan which is a bona fide mutual benefit society 
within the meaning of this section and which was registered under the 
Knox-Mills Health Plan Act as in effect on June 30, 1976 is exempted 
from the provisions of the Knox-Keene Health Care Service Plan Act, 
except as otherwise indicated below, subject to each of the following 
conditions: 

(a) That such a plan is a corporation organized and operating as a Cali- 
fornia nonprofit corporation; does not engage, directly or indirectly, in 
any for-profit business; is not affiliated (Rule 1 300.45(c)) with any other 
plan or with any corporation or other enfity which engages, directly or 
indirectly, in any for-profit business; and does not contract or otherwise 
arrange for the performance of any portion of its administrative functions 
by persons other than its officers, directors, or employees. 

(b) That such plan consists of a mother lodge and not more than one 
subordinate lodge; provided, however, that such mother lodge and any 
such subordinate lodge are located in a county whose population exceeds 
1,500,000 persons. 

(c) That the assets and funds available for the payment of health care 
services are held in trust by and under the sole control of the mother lodge 
exclusively for the benefit of the beneficiary members of the mother 
lodge and any subordinate lodge. 

(d) That such plan is exempted from federal income tax as an organiza- 
tion described in Section 501(c)(8) of the Internal Revenue Code and 
from stale income tax on similar grounds. 

(e) That such plan is in compliance with the Uniform Supervision of 
Trustees for Charitable F*urposes Act (Article 7 (commencing with Sec- 
tion 1 2580) of Chapter 6 of Part 2 of Division 3 of Title 2 of the Govern- 
ment Code.) 



(f) That such plan not practice any discrimination in violation of state 
or federal law or constitutional provision. 

(g) That the beneficial membership in such plan is limited to beneficial 
members of the mutual benefit society (including only the mother lodge 
and any subordinate lodge) and consists of a total of not more than 800 
persons. 

(h) That such plan not receive any prepaid or periodic charges, except 
that admission fees of not more than $500 per each beneficial or social 
member may be received and dues of not more than $ 1 00 per each benefi- 
cial or social member per year may be received, provided, however, that 
no part of any admission fees or membership dues may be deposited in 
the health care trust or used to pay for or reimburse any part of the cost 
of health care services. 

(i) That such plan, at all times while it relies upon this exemption, has 
a tangible net equity within the meaning of Section 1 300.76(b) of not less 
than $500,000, including liquid tangible assets in an amount not less than 
$500,000, based upon its most recent annual certified financial statement 
and its most recent quarterly and monthly statements prepared on a basis 
consistent with the annual cerfified statement, with additional liquid tan- 
gible assets in an amount not less than $ 1 .000 for each beneficial member 
in excess of 700; provided that the maximum number of beneficial mem- 
bers shall not exceed 800. 

(j) That such plan, upon request of the Director, pursuant to Section 
1384(a) of the Act, submits to the Director a copy of its most recent annu- 
al cerfified financial statement, and, upon request of the Director pur- 
suant to Secfion 1 384(0 of the Act. submits to the Director its most recent 
quarterly and monthly statements prepared on a basis consistent with the 
annual certified statement. 

(k) That such plan issues to all beneficial members health care service 
plan contracts which provide at least all of the benefits indicated below, 
except that such contracts may diminish or qualify any of the benefits in- 
dicated below through the use of such copayments, limitafions, and other 
terms as may be determined from time to time by vote of the plan's bene- 
ficial members: 

( 1 ) Physician services (including consultation and referral) through 
contracfing physicians; 

(2) Hospital inpatient services through at least one contracting non- 
profit, nongovernmental hospital; 

(3) Hospital outpafient services through at least one contracting non- 
profit, nongovernmental hospital when prescribed by the treating, con- 
tracfing physician. 

(/) That all of the plan's contracts with providers comply with, and re- 
cite that the contracting providers are bound by, the provisions of Section 
1379 of the Act. 

(m) That such plan provides to each beneficial member a disclosure 
statement covering the provisions of its health care service plan contract 
which complies substanfially with the provisions of Secfion 1363 of the 
Act. 

(n) That the officers and directors of such corporation are enrolled in 
such plan subject to terms and conditions no more favorable than any oth- 
er beneficial member, and that no officer or director receives any com- 
pensafion from such corporafion. 

(o) That such plan solicits beneficial members in this state only 
through persons who are officers, directors, or employees of such plan, 
and not by means of any unsolicited telephone call or written or printed 
communication or by radio, television, or similar communicafions me- 
dia. 

(p) That such plan establishes and maintains a grievance procedure 
substanfially complying with Secfion 1 368 of the Act. 

(q) That such plan delivers to each beneficial member within 60 days 
of the effecfive date of this section, and annually thereafter, the following 
written notice: 

"(Name of Plan) IS A HEALTH CARE SERVICE PLAN OPERAT- 
ING PURSUANT TO AN EXEMPTION FROM THE KNOX-KEENE 
HEALTH CARE SERVICE PLAN ACT OF 1975. COMPLAINTS RE- 
GARDING THIS PLAN, THE ADMINISTRATION THEREOF, AND 



Page 28 



Register 2002, No. 47; 1 1 - 22 - 2002 



Title 28 



The Department of Managed Health Care 



§ 1300.43.14 



THE SERVICES PROVIDED THEREBY MAY BE DIRECTED TO 
THE DIRECTOR OF THE DEPARTMENT OF MANAGED HEALTH 
CARE OF THE STATE OF CALIFORNIA." 

(r) That such plan provides, within 60 days of its initial reliance on this 
section, and within 30 days of any subsequent request oi' the Director 
therefor, written notice to the Director of its intent to rely on the exemp- 
tion provided hy this section, executed by a duly authorized officer of 
such plan, together with a signed opinion of legal counsel to the effect 
that such plan complies with subsections (a), (b). (c), (d), (e), (f), (g), (h), 
(i), (k). (1). and (m) of this section. 

NOTIi: Auihority cited: Sections 1343 and 1344, Health and Safety Code. Rcler- 
encc: Sections 1343 and 1344. Health and Safely Code. 

History 

1. New section filed 6-.'i-H4: effective thirtieth day thereafter (Reeister 84. No. 

23). 

2. Change without regulatory etYecl amending subsections (j) and (q)-(r) tiled 
7-18-2000 pursuant to section 100, title 1, California Code of Reeulations 
(r^egisler2000. No. 29). 

3. Change without regulatory effect amending subsection (q) filed 11-21-2002 
pursuant to section 100. title 1. California Code of Regulations (Register 2002, 

No. 47). 

§ 1 300.43.1 4. Employee Assistance Programs. 

(a) A health care service plan which, pursuant to a contract with an em- 
ployer, labor union or licensing board within the Department of Consum- 
er Affairs, consults with employees, members of their families or licens- 
ees of such board to identify their health, mental health, alcohol and 
substance abuse problems and refer them to health care providers and 
other community resources for counseling, therapy or treatment, is ex- 
empt from the provisions of the Act (other than Sections 1360, 1360.1, 
1 368 and 1381, relating to advertising, client grievance procedures and 
the inspection of records by the Director) if the plan complies with each 
of the following provisions, and the contracts of a licensed health care 
service plan are exempt from the provisions of the Act if they comply 
with each of the following provisions: 

( 1 ) The plan has filed a notice with the Director as provided in subsec- 
tion (c) within the preceding 24 months. 

(2) The purpose of the contract, insofar as it relates to the provision of 
services to clients is either 

(A) to maintain or improve employee efficiency through identification 
and referrals for counseling, treatment or therapy, in connection with per- 
sonal problems affecting employee performance and the contract does 
not provide for counseling, treatment or therapy with respect to health, 
mental health, alcohol or substance abuse problems or 

(B) to identify alcohol and substance abuse problems or mental health 
or health problems of DCA licensees and refer them to appropriate health 
care providers or organizations for treatment, and the plan does not pro- 
vide for counseling, treatment or therapy with respect to health, mental 
health, alcohol or substance abuse problems. 

(3) No client or member of his or her family, directly or indirectly shall 
pay any prepaid or periodic charge under the contract or pay any copay- 
ment, fee or other charge for any service rendered under the contract in 
connection with a health, mental health, alcohol or substance abuse prob- 
lem. The payment of regular union dues by an employee, a license fee by 
a DCA licensee, or of a benefit payment by an employer on behalf of an 
employee and members of the employee's family which does not affect 
the employee's compensation or other benefits is not a "prepaid or peri- 
odic charge" for the purpose of this subsection. 

(4) If such plan, its employees or contracting consultants, or an affili- 
ate of any of the foregoing, has a financial interest in referrals made under 
the contract in connection with a health, mental health, alcohol or sub- 
stance abuse problem, such person prior to making any such referral shall 
disclose to the contracting employer, union or state licensing agency and 
to the person who is referred, the existence of such financial interest; pro- 
vided that neither the plan nor its employees shall receive any payment, 
fee or commission directly or indirectly from any person to whom an em- 
ployee, licensee or family member is referred for counseling, treatment 



or therapy. The disclosure requirement to the employer may be a single 
blanket disclosure provided it identifies the providers to which referrals 
will be made and identifies the financial interest involved. 

(.'S)Thenumberof sessions with any client under the contract shall not 
exceed 3 within any six month period. 

(6) Except as otherwise provided in Division 2 (commencing with 
Section 500) of the Business and Professions Code, the plan shall main- 
tain a record for a period of not less than two years of each session with 
a client concerning a health, mental health, alcohol or substance abuse 
problem, and each consultation excluded from the definition of "ses- 
sion." The record shall include the name of or identifier for the client, the 
date and purpose of the session and the outcome if any, including the 
name of the provider to which the client was referred. The employee as- 
sistance program contracts and the records specified pursuant to subpara- 
graph (6) shall be available for inspection by the Director as provided in 
Section 1381 of the Act. 

(7) The plan and the personnel, facilities and equipment of the plan, 
including that employed under contract, shall be licen.sed or certified 
when required by applicable law and persons engaged in identification 
and referral who are not licensed under Division 2 of the Business and 
Professions Code shall be certified by any of the following organizations: 

(A) Any organization accredited by the National Commission for Ac- 
creditation of Alcohol/Drug Abuse Counselors' Credentialing Bodies, 
Inc. 

(B) Alcoholism Council of California. 

(C) California Association of Alcoholism and Drug Abuse Counsel- 
ors. 

(D) Association of Labor-Management Administrators and Consul- 
tants on Alcoholism. 

(8) Unless the plan is licensed under the Act, no prepaid fees shall be 
collected more than 45 days in advance. 

(b) For the purposes of this section the following definitions apply: 

(1) "Client" means the employee, the employee's family member, the 
DCA licensee or other person eligible for the services provided under the 
plan contract. 

(2) "DCA licensee" means a licensee of the Department of Consumer 
Affairs. 

(3) "Session" means any in-person or telephone consultation with the 
client in connection with the client's health, mental health, alcohol or 
substance abuse problems, excluding a consultation that occurs in an 
acute emergency situation, a consultation after referral for motivation or 
re-referral or a consultation due to a management, state licensing agency 
or union request for information or assessment regarding work perform- 
ance issues. 

(c) The notice specified in subsection (a)( I ) shall be in the following 
form and contain the information specified below: 

DEPARTMENT OF MANAGED HEALTH CARE 
STATE OF CALIFORNIA 

NOTICE OF EMPLOYEE ASSISTANCE PROGRAM 

EXEMPTION RULE 1 300.43. 1 4. 

KNOX-KEENE HEALTH CARE SERVICE PLAN ACT 

( ) Original Notice ( ) Amendment to Notice Dated 



The person/entity named in Item 1 below files this notice/amended notice 
claiming the exemption pursuant to Rule 13(X).43.I4 under the Knox-Keene 
Health Care Service Plan Act: 

1. Legal name of person or entity filing this notice: 



2. Address of principal office, and if different, mailing address: 



3. Fictitious names used in connection with the operation of employee assis- 
tance programs (if none, so specify): 



Page 29 



Register 2002, No. 47; 1 1-22-2002 



§ 1300.43.15 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



4. Identify each location at which the plan maintains records subject to inspec- 
tion by the Director under Rule 1300.43. 14(a)(6) (if space is insufficient, continue 
on separate sheet): 



5. Name, title, address and telephone number of representative who may be 
contacted concerning this notice: 

6. The person/entity filing this notice declares hereby that il is in compliance 
with the provisions of Rule 1 300.43. 1 4. and undertakes to amend this notice within 
30 calendar days of any material change in the information specified in its cunent 
notice as filed with the Director of the Department of Managed Health Care. 



Date of Notice 



(Name of Person/Entity Filing Notice) 



(Signature of Authorized Officer) 



(Printed Name and Title of Signatory) 

Verification: 

I certify (or declare) under penalty of perjury under the laws of the State of Cali- 
fornia that I have read this Notice and its attachments thereto and know the con- 
tents thereof and that the statements therein are true and correct. 
Executed at on 



(City atid State) 



(Date) 



(Signature) 
NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Section 
1343, Health and Safety Code. 

History 

1. New section filed 6-12-87; operative 6-12-87 (Register 87, No. 28). 

2. Change without regulatory effect amending section filed 4-4-2(X)0 pursuant to 
section 100, title 1, California Code of Regulations (Register 2000, No. 14). 

3. Change without regulatory effect amending subsections (a)-(a)(l), (a)(6) and 
(c) filed 7-1 8-2000 pursuant to secfion 1 00, title 1 , California Code of Regula- 
tions (Register 2000, No. 29). 

4. Change without regulatory effect amending subsection (c) — form filed 
1 1-21-2002 pursuant to section 100, title 1, California Code of Regulations 
(Register 2002, No. 47). 

§ 1 300.43.1 5. Foreign Plans. 

(a) There is exempted from the provisions of the Act (other than Sec- 
tions 1360, 1360.1, 1381 and 1395) any plan whose activity in this state 
is limited to the offer and sale of plan contracts for enrollees who are resi- 
dents of or domiciled in a foreign country, provided: 

(1) the provision of health care services by the plan, and the receipt of 
consideration from persons located in this State, does not violate any law 
of the foreign country in which the enrollee resides or any law of the 
United States, 

(2) the annual premium per enrollee does not exceed $200 (US), 

(3) the solicitors or solicitor firms authorized to solicit on behalf of the 
plan are physically present in this state, and 

(4) the plan has filed a notice with the Director as provided in subsec- 
tion (b) within the preceding 24 months. 

(b) The notice specified in subsection (a) shall be in the following form 
and contain the information specified below: 

DEPARTMENT OF MANAGED HEALTH CARE 
STATE OF CALIFORNIA 

NOTICE OF FOREIGN PLAN EXEMPTION 

RULE 1300.43.15, KNOX-KEENE HEALTH CARE 

SERVICE PLAN ACT 



( ) Original Notice 



( ) Amendment to Notice Dated 



The person/entity named in Item 1 below files this notice/amended notice 
claiming the exemption pursuant to Rule 1300.43.15 under the Knox-Keene 
Health Care Service Plan Act: 

1. Legal name of person or entity filing this notice: 

2. Address of principal office, and if different, mailing address: 



3. List name, address and telephone number of authorized solicitors or solicitor 
firms who will be soliciting on behalf of the plan in this state. (Continue on .separate 
sheet if space is insufficient.) 

4. Name, title, address and telephone number of representative who may be 
contacted concerning this notice: 

5. The person/entity filing this notice declares hereby that it is in compliance 
with the provisions of Rule 1 300.43. 1 5, and undertakes to amend this notice within 
30 calendar days of any material change in the information specified in it current 
notice as filed with the Director of the Department of Managed Health Care. 
Date of Notice 

(Name of Person/Entitv Filing Notice) 



(Signature of Authorized Officer) 



(Printed Name and Title of Signatory) 

Verification: 

1 certify (or declare) under penalty of perjury under the laws of the State of Cali- 
fornia that I have read this Notice and its attachments thereto and know the con- 
tents thereof and that the statements therein are true and correct. 
Executed At on 19 . 



(Signature) 
NOTE: Authority cited: Sections 1343 and 1344, Health and Safety Code. Refer- 
ence: Section 1343, Health and Safety Code. 

History 

1. New section filed 9-8-88; operative 10-8-88 (Register 88, No. 38). 

2. Change without regulatory effect amending subsections (a)(4) and (b) filed 
7-18-2000 pursuant to section 100, fitle 1, California Code of Regulations 
(Register 2000, No. 29). 

3. Change without regulatory effect amending subsection (b) — form filed 
1 1-21-2002 pursuant to section 100, title 1, California Code of Regulations 
(Register2002, No. 47). 



Article 2. Administration 

§1300.44. Interpretive Opinions. 

NOTE: Authority cited: Section 1344, Health and Safety Code. 

History 

I . Repealer filed 6-29-84; effective thirtieth day thereafter (Register 84, No. 26). 

§ 1300.44.1. Application for Exemption from Rule. 

NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Sec- 
tions 1344. 1351 and 1352, Health and Safety Code. 

History 

1. Amendment of subsection (b) filed 1-12-83; effective thirtieth day thereafter 
(Register 83. No. 3). 

2. Repealer filed 6-29-84; effective thirtieth day thereafter (Register 84, No. 26). 

§1300.45. Definitions. 

In addition to the definitions contained in Section 1345 of the Act, the 
following definitions apply to the interpretation of these inles and the 
Act: 

(a) "Act" means the Knox-Keene Health Care Service Plan Act of 
1975. 

(b) "Advertisement" includes the disclosure form required pursuant to 
Section 1363 of the Act. 

(c) ( 1) An "affiliate" of a person is a person controlled by, under com- 
mon control with, or controlling such person. 

(2) A person's relationship with another person is that of an "affiliated 
person" if such person is, as to such other person, a director, tinastee or a 
member of its executive committee or other governing board or commit- 
tee, or that of an officer or general partner, or holds any other position in- 
volving responsibility and authority similar to that of a principal officer 
or general partner; or who is the holder of 5% or more of its outstanding 
equity securities; or who has any such relationship with an affiliate of 
such person. An affiliate is also an affiliated person. 

(d) The term "control" (including the terms "controlling," "controlled 
by" and "under common control with") means the possession, direct or 



Page 30 



Register 2002, No. 47; 11-22-2002 



Title 28 



The Department of Managed Health Care 



§ 1300.51 



indirect, of the power to direct or cause the direction of the management 
and policies ota person, whether through the ownership of voting shares, 
debt, by contract, or otherwise. 

(e) The term "certified" or "'audited,'" when used in regard to financial 
statements, means examined and reported upon with an opinion ex- 
pressed by an independent pubhc or certified public accountant. 

(f) "Code" means the California Health and Safety Code. 

(g) "Copayment" means an additional fee charged to a subscriber or 
enrollee which is approved by the Director, provided for in the plan con- 
tract and disclosed in the evidence of coverage or the disclosure form 
u.sed as the evidence of coverage. 

(h) "Department" means the California Department of Managed 
Health Care. 

(i) "Facility" means 

( 1 ) any premises owned, leased, used or operated directly or indirectly 
by or for the benefit of a plan or any affiliate thereof, and 

(2) any premises maintained by a provider to provide services on be- 
half of a plan. 

(j) "Family unit" means a unit composed of a subscriber and each per- 
son whose eligibility for benefits is based upon such person's relation- 
ship with, or dependency upon, such subscriber. 

(k) "Hospital based plan" means a health care service plan which 
owns, operates or is affiliated with a hospital as an integral part of deli ver- 
ing health care services. 

(/) "Material": A factor is "material" with respect to a matter if it is one 
to which a reasonable person would attach importance in determining the 
action to be taken upon the matter. 

(m) "Primary care physician" means a physician who has the responsi- 
bility for providing initial and primary care to patients, for maintaining 
the continuity of patient care, or for initiating referral for specialist care. 
A primary care physician may be either a physician who has limited his 
practice of medicine to general practice or who is a board-certified or 
board-eligible internist, pediatrician, obstetrician-gynecologist, or fam- 
ily practitioner. 

(n) "Principal creditor" means 

( 1 ) a person who has loaned funds to another for the operation of such 
other person's business, and 

(2) a person who has, directly or indirectly, 20 percent or more of the 
outstanding debts of a person. 

(o) "Principal officer" means a president, vice-president, secretary, 
treasurer or chairman of the board of a corporation, a sole proprietor, the 
managing general partner of a partnership, or a person having similar re- 
sponsibilities or functions. 

(p) "Surcharge" means an additional fee which is charged to a sub- 
scriber or enrollee for a covered service but which is not approved by the 
Director, provided for in the plan contract and disclosed in the evidence 
of coverage or the disclosure form used as the evidence of coverage. 

(q) The term "generally accepted accounting principles," when used 
in regard to financial statements, assets, liabilities and other accounting 
items, means generally accepted accounting principles as used by busi- 
ness enterprises organized for profit. Accordingly, Financial Accounting 
Standards Board statements, Accounting Principles Board opinions, ac- 
counting research bulletins and other authoritative pronouncements of 
the accounting profession should be applied in determining generally ac- 
cepted accounting principles unless such statements, opinions, bulletins 
and pronouncements are inapplicable. Section 5 10.05 of the AICPA Pro- 
fessional Standards, in and of itself, shall not be sufficient reason for de- 
termining inapplicability of statements, opinions, bulletins and pro- 
nouncements. 

NOTE: Authority cited: Sections 1344 and 1352, Health and Safety Code. Refer- 
ence: Sections 13,51, 1351.1 and 1352, Health and Safety Code. 

History 

I. Amendment of subsection (c) tiled 6-2-78; effective thirtieth day thereafter 
(Register 78, No. 22). 



2. New subsection (q) tiled 4-27-79: effective thirtieth day iherealter (Rcuistcr 
79. No. 17). 

3. Amendment of subsection (e) filed 1-12-83: effective thirtieth day thereatter 
(Register 83, No. 3). 

4. Amendment of subsection (c) filed l2-17-85:elleclive thirtieth day therealier 
(Regisler85, No. 51). 

5. Change without regulatory effect amending subsections (g)-(h) and (p) filed 
7-18-2000 pursuant to section 100, title 1. California Code of Regulations 
(Register2000. No. 29). 

6. Change without regulatory effect amending subsection (h) filed 1 i-21-2(X)2 
pursuant to section 100. title 1 . California Code of Regulations (Register 2002. 
No. 47). 

§ 1300.46. Prohibition of Bonuses or Gratuities in 
Solicitations. 

No person subject to the provisions of the Act shall offer or otherwise 
distribute any bonus or gratuity to potential sub.scribers for the purpo.se 
of inducing enrollment or to existing subscribers for the purpose oi in- 
ducing the continuation of enrollment. 

§ 1300.47. Advisory Committee on Managed Health Care. 

Each member of the Advisory Committee on Managed Health Care 
shall file with the Director a statement setting forth the following: 

(a) The firm with which such meinber is employed or affiliated and the 
capacity in which employed or affiliated. 

(b) Whether such firm is a health care service plan or solicitor firm un- 
der the Act or is a provider, or a fiscal intermediary for a plan, or furnish- 
ing services, goods or facilities to any plan, solicitor firm or provider. 

(c) Whether such member has any financial interest in any firm speci- 
fied in (b) or receives compensaUon from such firm. 

(d) The name of each plan in which the member is enrolled, or has been 

enrolled during the preceding 10 years. 

NOTE: Authority cited: Section 1 344, Health and Safety Code. Reference: Section 
1347, Health and Safety Code. 

History 

1. Amendment filed 1-12-83; effective thirtieth day thereafter (Recister 83. No. 
3). 

2. Change without regulatory effect amending section heading and first paragraph 
filed 7-1 8-2000 pursuant to section 1 00, title 1 . California Code of Resulalions 
(Register 2000. No. 29). 

3. Change without regulatory effect amending section heading and first paragraph 
filed 11-21-2002 pursuant to section 100. title 1. California Code of Regula- 
tions (Register 2002, No. 47). 



Article 3. Plan Applications and 
Amendments 

§ 1300.50. Notice of Intention to Apply for Plan License. 

NOTE; Authority cited: Section 1344, Health and Safety Code. 

History 
1 . Repealer filed 6-29-84; effective thirtieth day thereafter (Register 84. No. 26). 

§ 1300.51. Application for License as a Health Care 
Service Plan or Specialized Health Care 
Service Plan. 

(a) An application for license as a health care service plan or special- 
ized health care service plan shall be filed in the form specified in sub.sec- 
tion (c) and contain the information specified in this section and prepared 
as required by Rule 1300.51.-3. 

(b) Applications filed prior to the effective date of subsection (c) (re- 
vised plan application form) and which remain pending on that date will 
be processed; however, amendments to such applicafions filed prior to 
licensure shall be filed upon the form specified in subsection (c) in accor- 
dance with the instructions specified in Rule 1300.51.3. and in accor- 
dance with the correlation table for the old and new applications provided 
in Form HP 1300.5 1 -COR. Such amendments will be required only to 
update the information contained in the application and to remedy defi- 
ciencies in the information provided therein. 



Page 31 



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§ 1300.51 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



(c) Revised Health Care Service Plan Applicaiion Form. 



OIllC'lAl. USI-ONI.V 

ri:i HMDS 

KIt'L.IPTNO. 



DLl'AKTMl-m ()[ MANACrn HLALTH t'AKI 
MCIINSI- NO. 



1 ILIN(ilL.F:: 

iTo ho complcied hy Applicaiil.) Ndi ivUind;ihlc 
c\ccpi piiiMiaiii Id Seclion 250.15. Tiilc 10. 
tjlilomia Code ol Kesiulaiions. 



PLAN LiCENSK APPLICATION 

KNOX-KLhNE HEALTH CARE SERVICE PLAN ACT 

(EXECUTION PAGE) 

A. ldentit"ication of Plan 
1 . Name of Applicanl. 
a. Lejjal Name 



b. Please list all fielitious names you intend to use: 



2. Applicant's Principal Executive Office. 
a. Street Address: 





b. Mailinji Address: 


c. Telephone Number: 


d. Fax Number: 


e. Email Address: 


i. Person who is to receive communications regard 
licensure, the Depailment will correspond only 
a. Name: 


ing this 
with this 


filing. (Note: 
i person.) 


Prior to 


b. Title: 


c. Address: 




d. Telephone Number: 


e. Fax Number: 



4. EXECUTION: The applicant has duly caused this applicaiion to be signed on 
its behalf by the undersigned, thereunto duly authorized. 

By: 



(Applicant) 



Title: 



(Type the name of the authorized 
signatory for Applicant or Licensee) 



I certify (or declare) under penalty of perjury under the laws of the State of Califor- 
nia that I have read this application and the exhibits and attachments thereto and 
know the contents thereof, and that the statements therein are true and correct. 

Executed at (City & State) 

Executed on (Date) 



By 

(Type the Name of the authorized signatory 
certifying the contents of this e-Filing on 
behalf of Applicant or Licensee) 

Title: 

B. Type of Filing: Indicate the type of filing by checking the single applicable box 
in Item Nos. 1-7, below, and listing all Exhibits at Item No. 8 below. 

1 . D Original application for a plan license. 

2. n Amendment # to a pending license application initially filed 

2nd 3rd g|(. 

on , Associated Filing No. 

3. D Notice of a proposed material modification in the form required by Rule 

1. '^00. 52.1. 

4. D Amendment # to a pending notice of material modification 



2iid 3rd ^^^Q 



iniually filed on_ 



_, Associated Filing No.. 



5. n Amendment filed by a licensee pursuant to Section 1352(3) because of a 
change in the information contained in the original application. 

6. D Amendment # to a pending amendment filed pursuant to 



Tlld ^rd QiQ 

section 1352(a) initially filed on_ 



; Associated Filing No. 



7. D Report/Other electronic submission filed by licensee. (Specify type in Ex- 
hibit E- 1) 

8. Scope of Filing: Exhibits included in this filing (Specify subsections, e.g., 
F-1-0 



C. Type of Plan Contract(s): Indicate the type of a plan conlract(s) by checking and 
completing the statements which most nearly describe the plan: 

1 . D Full Service Health Plan Contracts, which provide as benefits at least the 
six basic health care services listed in Section 1345(b) of the Act. (Check 
types below as appropriate.) 

D Commercial 

n Waxman-Duffy prepaid health plan contract 

D Other Medi-Cal (Explain) 

D Medicare Supplement 

D Other (Explain) 

2. Specialized Health Plan Contract(s): 

D Dental D Vision D Mental Health 

D Other (Explain) 

3. n Contracts with subscribers and enrollees which are not limited to a single 
specialized area of health care but do not provide as benefits at least the six 
basic health care services listed in Section 1345(b) of the Act. 

D. Name and address or officer or partner of applicant who is to receive com- 
pliance and inforinational communication from the Department and is responsible 
for disseininating the same within applicant's organization. (Note: After licensure, 
and except with respect to amendments and material modifications, the Depart- 
ment will correspond only with this person, unless the Department and applicant 
agree to other airangements.) 

1 . Name: 

2. Title: 

3. Address: 

4. Telephone Number: 

5. Fax Number: 



6. Email Address: 

E. Other Agencies: 

1 . If applicant is seeking or intends to seek federal qualification under the Fed- 
eral Health Maintenance Organization Act of 1973. check here D. 

2. If the applicant has made or intends to make any filing relating to its plan to 
any other state or federal agency, check here D, and attach Exhibit D-2 iden- 
tifying each such agency, and the nature, purpose and (projected) date of 
each such fiUng. 

Additional Exhibits: An original application for health care service plan license 
must include the completed form specified in this subsection and the exhibits re- 
quired by Subsection (d). 

(d) Exhibits to Plan Application. 

E. Summary of Information in Application. 

1. Summary Description of Plan Organization and Operation. Provide 
as Exhibit E-l a summary description of the organization and operation 
of applicant's business as a health care service plan, covering the high- 
lights and essential features of the information provided in response to 
the other portions of this application which is essential or desirable to an 
effective overview of the applicant health care service plan business. 

2. Summary Description of Start-up. Provide as Exhibit E-2 a concise 
description of applicant's start-up program and its assumptions. Indicate 
applicant's projected date for the beginning of plan operations, and dis- 
cuss the factors which require such date. 

F. Organization and Affiliated Persons. 
1 . Type of Organization. 

a. Corporation. If applicant is a corporation, and attach as Exhibits 
F-l-a-i, F-l-a-ii and F-1-a-iii, respectively, the Articles of Incorpora- 
tion, Bylaws, and the Corporation Information Form. (Form HP 
1300.51 -A) 

b. Partnership. If applicant is a partnership, and attach as Exhibits 
F-l-b-i, and F-l-b-ii, respectively, the Partnership Agreement, and the 
Partnership Information Form. (Form HP 1300.51-B) 

c. Sole Proprietor. If applicants a sole proprietorship, and attach as Ex- 
hibit F-l-c the Sole Proprietorship Information Form. (Form HP 
1 300.5 1-C) 

d. Other Organization. If applicant is any other type of organization, 
and attach as Exhibit F-l-d, Articles of Association, trust agreement, or 
any other applicable documents, and any other organizational documents 
relating to the conduct of the internal affairs of the applicant, and attach 
as Exhibit F-l-d-ii the Information Form for other than Corporations, 
Partnerships, and Sole Proprietorships. (Form HP 1 300.5 1-D) 

e. Public Agency. If applicant is a public agency, and attach as Exhibit 
F-l-e-i a description of the public agency, its legal authority, organiza- 



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Title 28 



The Department of Managed Health Care 



§ 1300.51 



lion, decision making body. Also attach as Exhibit F- 1 -e-ii a description 
o(" the division or unit ol" the public agency which is to be responsible for 
operating the plan, its legal authority, organization, and decision making 
role. Also attach as Exhibit F-1-e-iii the name and address of the local 
public agency which is the plan. 

f. Individual Information Sheet. Attach as Exhibit F- 1-f, an Individual 
Information Sheet (Form HP J 300.51. J) for each natural person named 
in any exhibit in Item F-1. 

2. Contracts with Affiliated Persons, Principal Creditors and Providers 
of Administrative Services. 

a. Persons to Be Identified. Attach as Exhibit F-2-a list identifying 
each individual or entity who is a party to a contract with applicant, if 
such contract is one for the provision of administrative services to the 
applicant or any such party is an Affiliated Person or Principal Creditor 
(Rule 1300.45(c) and (n)) or of the applicant. As to each such person, 
show the following information in columnar form: 

(i) The names in alphabetical order. 

(ii) The exhibit and page number of the contract (including loans and 
other obligations). 

(iii) The type of contract of loan. 

(iv) Each relationship which such individual or entity bears to the 
applicant (officer, director, partner, trustee, member. Principal Creditor, 
employee, administrative services provider, health care services provid- 
er, or shareholder). 

( v) Whether (yes or no) such individual or entity is intended to become 
a Principal Creditor (Rule 1300.45(n)) of applicant. 

(vi) Whether (yes or no) such individual or entity is intended to be- 
come an "Affiliated Person" of applicant, or to become an Affiliated Per- 
son in any capacity other than that disclosed in item F-2-a-iv. 

b. Copies of Contracts. Attach as Exhibit F-2-b a copy of each con- 
tract (other than a contract for the provision of administrative services or 
health care services furnished pursuant to Items K or N below) identified 
in Item F-2-a. Preceding the first page of each such contract, attach a 
summary sheet which 

( 1 ) identifies the contract, 

(2) specifies its terms, including its expiration date, and 

(3) if a loan or obligation, specifies the unpaid balance of principal and 
interest and states whether applicant is in default upon the loan or obliga- 
tion. 

3. Other Controlhng Persons. Does any individual or entity not named 
as a contracting party in Item F-2 or any exhibit thereto have any power, 
directly or indirectly, to manage, influence, or administer the operation, 
or to control the operations or decisions, of applicant? 

If the appropriate response to this item is "yes," attach as Exhibit F-3 
a statement identifying each such person or entity and explaining fully, 
and summarizing every contract or other arrangement or understanding 
(if any) with each such person. (Each such contract should be submitted 
pursuant to Subsection F-2 or Subsection G-2, as appropriate.) 

4. Criminal, Civil and Administrative Proceedings. Within the preced- 
ing 1 years, has the applicant, its management company, or any Affiliate 
of the applicant (Rule 1 300.45(c)), or any controlling person, officer, di- 
rector or other person occupying a principal management or supervisory 
position in such plan, management company or Affiliate, or any person 
intended to hold such a relationship or position, been convicted of or 
pleaded nolo contendere to a crime, or been held to have committed any 
act involving dishonesty, fraud or deceit in a judicial or administrative 
proceeding to which such person was a party? 

If "yes," attach a separate exhibit as to each such person designated 
Exhibit F-4, identifying such person and fully explaining the crime or act 
committed. Also, attach a copy of the exhibit for an individual to any In- 
dividual Information Sheet required by Item F-l-f for such individual. 

5. Employment of Barred Persons. Has the plan engaged or does the 
plan intend to engage, as an officer, director, employee, associate, or pro- 
vider, any person named in any order of the Director pursuant to Section 
1386(c) or Section 1388(d) of the Act? Ifthe appropriate response to this 



item is "yes," attach as Exhibit F-5 a statement identifying each such per- 
son and explaining fully. 
G. Miscellaneous. 

1 . Consent to Service of Process. If applicant is not a California corpo- 
ration, attach as Exhibit G- 1 a Consent to Service of Process, in the form 
required by Rule 1300.51.2. 

2. Disclosure of Financial Information. Attach as Exhibit G-2. autho- 
rizations for the disclosure of financial records of the applicant, and of 
any association, partnership or corporation controlling, controlled by or 
otherwise affihated with the applicant pursuant to Section 1 35 1 . 1 olthe 
Act. (See Items F-3 and F-5.) 

HEALTH CARE DELIVERY SYSTEM 

H. Geographical Area Served. 

Note: The applicant is required to demonstrate that, throughout (he geographic 
regions designated as the plan's Service Area, a comprehensive range of primary, 
specialty, institutional and ancillary services are readily available at reasonable 
times to all enrollees and, lo the extent feasible, that all services are readily accessi- 
ble to all enrollees. 

For the purpose of evaluating the geographic aspects of availability 
and accessibility, consideration v^-ill be given to the actual and projected 
enrollment of the plan based on the residence and place of work of enroll- 
ees within and. if applicable, outside the service area, including the indi- 
vidual and group enrollment projections furnished in Items CC, DD and 
EE of this application. 

An applicant for plan license must demonstrate compliance with the 
accessibility requirement in each of the areas specified in paragraphs (i) 
through (iv) below, either by demonstrating compliance with the guide- 
line specified in such paragraphs or, in the alternative, by presenting oth- 
er informafion demonstrating compliance with reasonable accessibility. 
These guidelines apply only with respect to initial license applications 
and provide presumpfively reasonable standards in the absence of actual 
operating experience. Such guidelines are not intended to express mini- 
mum standards of accessibihty either for applicants or for licensees nor 
to create any inference that a plan which does not meet these guidelines 
does not meet the requirement of reasonable accessibility. 

(i) Primary Care Providers. All enrollees have a residence or work- 
place within 30 minutes or 1 5 miles of a contracfing or plan-operated pri- 
mary care provider in such numbers and distribufion as to accord to all 
enrollees a rafio of at least one primary care provider (on a full-time 
equivalent basis) to each 2,000 enrollees. 

(ii) Hospitals. In the case of a full-service plan, all enrollees have a res- 
idence or workplace within 30 minutes or 15 miles of a contracting or 
plan-operated hospital which has a capacity to serve the entire dependent 
enroUee populafion based on normal utilization, and, if separate from 
such hospital, a contracting or plan-operated provider of all emergency 
health care services. 

(iii) Hospital Staff Privileges. In the case of a full-service plan, there 
is a complete network of contracting or plan-employed primary care 
physicians and specialists each of whom has admitting staff privileges 
with at least one contracting or plan-operated hospital equipped to pro- 
vide the range of basic health care services the plan has contracted to pro- 
vide. 

(iv) Ancillary Services. Ancillary laboratory, pharmacy and similar 
services and goods dispensed by order or prescription on the primary care 
provider are available from contracting or plan-operated providers at lo- 
cations (where enrollees are personally served) within a reasonable dis- 
tance from the primary care provider. 

1. Description of Service Area. As Exhibit H-1 , attach a narrative de- 
scripfion of the applicant's service area and the geographic area in which 
its enrollees (actual and/or projected) live and work and list all U.S. Post- 
al ZIP Code numbers included in the service areas. If the applicant has 
more than one service area, each service area should be separately de- 
scribed. To the extent possible, service areas should be delineated by po- 
litical or natural boundaries. (If applicant uses sub-service areas or re- 
gions within its service areas for the purpose of allocating the provision 



Page 33 



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§ 1300.51 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



of health care services by providers to enrollees, include that information 
in the description of the considerations which underlie the geographic 
distribution of the applicant's contracting and plan-operated providers.) 

2. Map of Service Area. As Exhibit H-2, attach a map or maps upon 
which the information specified below is indicated by the specified sys- 
tem of symbols. The map(s) employed should be of convenient size and 
of the largest scale sufficient to include the applicant's entire service area 
and the surrounding area in which the actual or projected enrollees live 
or work. The use of good-quality city street maps or the street and high- 
way maps available for various metropolitan areas, and regions of the 
state, such as are commonly available from automobile associations or 
retail service stations is preferred. The map or maps should show the fol- 
lowing information: 

a. Such geographic detail, including highways and major streets, as is 
generally portrayed on the kinds of maps referred to above. 

b. The boundaries of applicant's service area. 

c. The location of any contracting or plan-operated hospital and, if 
separate, each contracting or plan operated emergency health care facil- 
ity. Hospitals are to be designated by an "H" and emergency care facili- 
ties by an "E." 

d. The location of primary care providers, designated by a "T." For 
convenience, the primary care providers within any mile-square area 
may be considered as being at one location within that area. 

e. The location of all other contracting or plan-operated health care 
providers including the following: Dental, designated by a "D." Pharma- 
cy, designated by an "Rx." Laboratory, designated by an "L." Eye Care, 
designated by an "O." Specialists and ancillary health care providers, 
designated by an "S." 

f. The location of all subscriber groups which have submitted letters 
of intent or interest to join the applicant's plan designated by a "G." (See 
Item CC-3.) 

3. Index to Map. As Exhibit H-3, attach an index to the map or maps 
furnished as Exhibit H-2 which shows, for each symbol placed on the 
map for a hospital, emergency care facility, primary care provider or an- 
cillary provider, the following information: 

a. For each hospital, its total beds and the number of beds available to 
enrollees of the plan. 

b. For each symbol for primary care providers, the number of full-time 
equivalent primary care providers represented by that symbol. 

c. For each interested subscriber group, the name of the group and the 
projected number of enrollees from that group. 

I. Description of Health Care Arrangements. 

Note: Providers of Health Care Services. The information in this item is for the 
purpose of assessing the adequacy of the applicant's health care provider arrange- 
ments. 

If the service area of the plan and the distribution of its enrollees is so 
geographically limited that all plan health care providers are readily 
available and accessible to all enrollees, no geographic division of the 
provider information required in this part need be made. 

However, if applicant's service area is divided into separate provider 
networks for regions within the service area, the information required in 
this Item-1 must be furnished separately for each such region and provid- 
er network. 

1. Physicians Services. 

a. Individual Physicians. As Exhibit I-l-a list all individuals who pro- 
vide covered physician services as employees of the plan or, whether di- 
rectly or through an association or other entity, as contracting providers: 
For each physician, furnish the following information. 

(i) Name. 

(ii) License Number. 

(iii) Type of service as determined by board certification and eligibil- 
ity. Primary care physicians should be designated as general practice, pe- 
diatrics, obstetrics, gynecology and internal medicine. Specialists should 
be designated as allergy, anesthesiology, dermatology, cardiology and 
other internal medicine specialists, neonatology, neurology, oncology. 



ophthalmology, orthopedics, pathology, psychiatry, radiology, surger- 
ies, otolaryngology, urology, and other designated as appropriate. 

(iv) The plan-owed or contracting hospitals at which the physician has 
admitting staff privileges. 

(v) The professional address of the physician. 

(vi) The physician's relationship to the plan (employed by or contract- 
ing with the plan, or contracting through an IPA or one of the parties iden- 
tified in Item I-l-a. 

(vii) The percentage of the physician's time allocated to enrollees of 
the plan. 

(viii) The business hours of the physician's office (i.e., Monday 
through Friday 8-5, closed Wednesdays). 

b. Physician Associations. For all entities other than individuals or in- 
dependent practice associations who contract with applicant to provide 
physician services, and each plan-operated facility at which physician 
services are rendered by employees of the plan, as Exhibit I-l-b furnish 
the following information for each such contractor or facility: 

(i) The name of the contractor or facility. 

(ii) The street address of the contractor or facility at which the physi- 
cian services are rendered for the particular region or provider network. 

(iii) The type of entity (professional corporation, sole proprietor, part- 
nership, etc.). 

(iv) The number of physicians rendering services for the plan by rea- 
son of such contract or by employment at such facility, and the number 
of "full-time equivalent" physicians being provided to enrollees of the 
plan. 

2. Hospitals. Attach as Exhibit 1-2 a list of all hospitals which are oper- 
ated by or contract with the plan. Provide the following information for 
each hospital: 

a. Its legal name and any "dba" (fictitious name under which it does 
business). 

b. Its address. 

c. Its license number. 

d. Whether it is a member of the American Hospital Association, 
whether it is currently accredited by the Joint Commission on the Accred- 
itation of Hospitals, (JCAH) and the expiration date of its current accredi- 
tation. 

e. Its bed capacity and rate of occupancy. 

f. Its emergency room capabilities. 

g. A list and full description of all services available to enrollees. 
Applicant may use a JCAH form or the equivalent. 

h. Its relationship with applicant (owned by, contracdng provider, 
joint venture with applicant, etc.). 

3. All Other Providers of Health Care Services. Attach as Exhibit 1-3 
a list of all providers of health care service contracting with or owned by 
the applicant which are not included in the physician and hospital list- 
ings. For each such provider, furnish the following information: 

a. The legal name of the provider and any "dba." 

b. Its address. 

c. Its license number. 

d. The health care services it provides to enrollees of the plan (e.g., 
home health agencies, ambulance company, laboratory, pharmacy, 
skilled nursing facility, surgi-center, mental health, family planning, 
etc.). 

e. Its hours of operation and the provision made for after-hours ser- 
vice. 

f. An appropriate measure of the provider's capacity to provide health 
care service, the existing utilization of such services by other than enroll- 
ees of the plan and the projected use of the services by enrollees. 

g. The provider's relationship to the plan (owned by, contracting with, 
etc.). 

4. Calculation of Provider-Enrollee Ratios. As Exhibit 1-4, furnish a 
calculation of the adequacy of the applicant's provider arrangements for 
each region or provider network within applicant's service area. This 
should be based on the full range of the health care services covered by 



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$ 1300.51 



• 



ihe applicanl's full-service or specialized plan contracts, the extent to 
which contracting and planned-owned or employed providers are avail- 
able to provide such services, the enrollee population served by such pro- 
viders and the adequacy of the provider system in each category based 
on standard utilization data. Assumptions employed in such calculations 
should be stated, including the extent to which paraprofessionals and al- 
lied health personnel will be used by applicant or providers and the proto- 
cols and method of supervision of such personnel. 

.'S. Applicant's Standards of Accessibility. Attach as Exhibit 1-5 a de- 
tailed description of the applicant's standards with respect to the accessi- 
bility and its procedures for monitoring the accessibility of services. 
.Standards should be expressed in terms of the level of accessibility which 
the applicant has as its objective and the minimum level of accessibility 
below which corrective action will be taken. Cover each of the following: 

a. the availability of appointments for primary care and specialty ser- 
vices, 

b. the availability of after hours and emergency services, 

c. an assessment of probable patient waiting times for scheduled ap- 
pointments, 

d. the proximity of specialists, hospitals, etc. to sources of primary 
care, and 

e. a description of applicant's system for monitoring and evaluating 
accessibility. (Discuss applicant's system for monitoring problems that 
develop, including telephone inaccessibility, delayed appointment dates, 
wailing time for appointments, other barriers to accessibility, and any 
problems or dissatisfaction identified through complaints from contract- 
ing providers or grievances from subscribers or enrollees.) 

f. the contractual arrangements utilized by the applicant to assure the 
monitoring of accessibility and conformance to standards of accessibility 
by contracting providers. 

6. Referrals. Attach as Exhibit i-6 a detailed description of applicant's 
system of documentation of referrals to physicians or other health profes- 
sionals. Include: 

a. the provisions made for written documentation of the referral poli- 
cies and procedures, 

b. the procedures for following up on contracting and noncontracting 
referrals, including turnaround times, and 

c. applicant's arrangements for paying for services delivered by non- 
contracting providers. 

J. Internal Quality of Care Review System. 

Applicant is required to demonstrate that it has a system for the review 
of the quality of health care to identify, evaluate and remedy problems 
relating to access, continuity and quality of care, utilization and the cost 
of services. The following exhibits require a description and explanation 
of the system, including narrative, organization and process charts and 
review criteria. See Rule 1.^00.70. 

1. Organization and Operation. As Exhibit J-1. furnish a description 
of the basic stmcture, organization and authority of the apphcant's quali- 
ty of care review system, including: 

a. An organization chart showing the key persons, the committees and 
bodies responsible for the conduct of the review system, the provisions 
for support staff and the relationship of such persons, committees and bo- 
dies to the general organization of the plan. See Item J-^ below. 

b. A narrative explanation of the review system covering the matters 
depicted in the organization chart and the following: the key persons in- 
volved, their titles and their qualification; the extent and type of support 
staff; the areas of authority and responsibility of the key persons and the 
committees, if divided among persons and committees; the frequency of 
meetings of the committees and the portion of their time devoted to the 
review system by key persons. See Item J-4 below. 

2. Standards and Norms. Attach as Exhibit J-2 a description of the 
standards and norms of the system (including any measurement of devi- 
ation in their application), and indicate how these standards and norms 
will be communicated to providers. 



3. Operation of System. Attach as Exhibit J-.^ a description of the oper- 
ation of the review system, including the frequency and scope of audits. 
the utilization of the audit results and the procedures and methods for the 
enforcement of the standard and norms of the system. 

4. Administration of System by Providers. If portions of the review 
system are administered by contracting providers, by affiliates o\' the 
applicant or by other persons who are not officers or employees of the 
applicant, attach Exhibit J-4 identifying those portions of the system to- 
gether with the providers, affiliates or persons administering them on be- 
half of the applicant, and describe and furnish copies of the contractual 
provisions which assure the maintenance of the system to the standards 
of the applicant and those of the Act and the rules thereunder. 

.5. Monitoring of Provider Administration. Attach as Exhibit i-5. a de- 
scription of the contractual arrangements which will be employed to en- 
able the plan to monitor, and require, compliance with the quality of care 
review system, to the extend such system is administered by such con- 
tracting providers. 

K. Contracts with Providers. 

1 . Copies of Contracts. Attach as Exhibit K-l a copy of each contract 
made, or to be made, between applicant and each provider of health care 
services. If a contract shows the payment to be rendered a provider, delete 
such minimum portion of the contract as is neces.sary to prevent disclo- 
sure of such information, by blanking out or other suitable means. 

a. If standard form contracts are used, only a specimen of each type o\' 
form contract need be filed together with any variations to be used in the 
terms and provisions of such standard forms, other than in the amount of 
payments to providers. 

b. The contracts and other information submitted in this exhibit will 
be available for public inspection (see Section 13.5 1(d)). 

2. Compliance with Requirements. Attach as Exhibit K-2 a statement 
in tabular form for each provider contract, and for each standard form 
contract and its variations, if any, specifying the provisions of such con- 
tract which comply with the following provisions of the act and rules: 

Section 1379 

Rule 1300.67.1(a) and (c) 

Rule 1300.67.2(b), (c) and (f) 

Rule 1300.67.4(a)(9) and (10) 

Rule L300.67.8(a), (b), (c) and (d) 

Rule 1300.68 

Rule 1300.70 

Rule 1300.51, Item J-5 

3. Compensation of Health Care Providers. Attach as Exhibit K-3 one 
copy of the following provisions from each provider contract, or pro- 
posed provider contract, from which payment information was deleted 
in Exhibit K-l and clearly mark the extracts from each contract "confi- 
dential": 

a. The title page of the contract or other information sufficient to iden- 
tify the contract submitted as Exhibit K-l to which the extract relates and 
the providers who are parties. 

b. The effective date of the contract and its expiration date. 

c. The provisions describing the mechanism by which payments are 
to be rendered to the provider, including any risk sharing arrangement, 
cleariy identified by the name of the provider. 

d. The provider's signature on the execution page of the contract, with 
the name of the provider typed beneath the signature. 

ADMINISTRATION OF THE PLAN 

L. Organization Chart. 

Attach as Exhibit L an organization chart which shows the lines of re- 
sponsibility and authority in the administration of the applicant's busi- 
ness as a health care service plan. One chart should be limited to the appli- 
cant itself, showing its management and operational structure, including 
the names and titles of key positions and its board. If necessary, a second 
chart should show the total management structure of the business in all 



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areas, and including the i<ey positions and departments of the applicant 
and those in any affiliate and/or contracting provider of health care and/or 
administrative services, including but not limited to the particular man- 
agement functions required in the administration of a health care delivery 
system. The charts are to show the names of the corporations, partner- 
ships and other entities involved in such administration, their boards, 
committees, and key management positions involved, giving the names 
of the boards, committees and positions and the persons serving therein. 

M. Narrative Information. 

1. Attach as Exhibit M-1 a narrative explanation of the organization 
chart, including the responsibility and authority of each entity, board, 
committee and position and identifying the persons who serve on such 
boards and committees and in such positions. 

2. Attach as Exhibit M-2. a statement as to each individual who is a 
member of a board or committee or who occupies a position specified in 
Exhibit L and Exhibit M-1. covering the following: 

a. Name. 

b. Each position (e.g.. director, officer, committee member, key man- 
agement personnel and the managers of key departments) such person 
holds which is indicated in Exhibits L and M- 1 . whether with applicant, 
an affiliate or a contracting provider of health, administrative or other 
services. Also state the person's principal responsibilities and authority 
in each position, and the portion of the individual's time devoted to each 
principal function. 

c. A resume or similar description of such person's training and experi- 
ence during the preceding five years (or longer, if desired) which are rele- 
vant to the duties and responsibility in applicant's business as a health 
care service plan. 

N. Contracts for Administrative Services. 

1 . As Exhibit N-1, attach a copy of each contract which applicant has 
for administrative or management services, or consulting contracts, or 
which applicant intends to have for the Health Plan. 

2. As Exhibit N-2, describe applicant's administrative arrangements 
to monitor the proper performance of such contracts and the provisions 
which are included in them to protect applicant, its plan business and its 
enrollees and providers in the event there is a failure of performance or 
the contract is terminated. 

O. Attach as Exhibit O a statement describing how the Health Plan orga- 
nization will provide for separation of medical services from fiscal and 
administrative management to assure that medical decisions will not be 
unduly influenced by fiscal and administrative management. Describe 
what controls will be put into place to assure compliance with this re- 
quirement. Refer to appropriate items in Exhibit "J." Internal Quality of 
Care Review System. 

SUBSCRIBER CONTRACTS. DISCLOSURES. AND RELATIONS 

Note: In Items P and Q, the applicant is required to include as exhibits copies of 
the health care service contracts it will issue, including standard form contracts and 
any variations in the provisions of those forms. In addition, the applicant is re- 
quired to identify the particular provisions of these contracts which comply with 
the provisions of the Act and rules listed at the end of this note, or which vary from 
those provisions. The applicant is also required to explain its proposed variations 
(if any) from the Act or rules, giving the reasons and justifications for such vari- 
ances. 

The provisions of the Act and rules required to be covered in the infor- 
mation furnished pursuant to Items P and Q are the following: 
All Plan Contracts 
Section 1345 (definitions) 
Section 1362 (definitions) 

Section 1363 (only if used for evidence of coverage) 
Section 1365 
Section 1367.6 
Section 1367.8 
Section 1373 
Section 1373.4 
Rule 1300.45 (definitions) 
Rule 1 300.63(a) (only if used as evidence of coverage) 



Rule 1300.63.1 (only if used as evidence of coverage) 

Rule 1300.63.2 (only if used as evidence of coverage) 

Rule 1300.67.4 

Rule 1300.68(b) 

Group Contracts Only 

Section 1367.2 

Section 1367.3 

Section 1367.5 

Section 1367.7 

Section 1373.1 

Section 1373.2 

Section 1373.5 

Section 1373.6 

Section 1374 

Section 1374.10 

P. Group Health Care Service Plan Contracts. 

1. Copies of Contracts. Attach as Exhibit P-1 a copy of each group 
contract which is to be issued by applicant. With respect to contracts 
based on a standard form, only a specimen of each standard form need 
be submitted, accompanied by Exhibit P-2. 

2. Variations in Standard Form. Attach as Exhibit P-2, if applicant 
uses standard form group contracts, a schedule or explanation of the vari- 
ations which will be made in the terms and provisions of such contracts 
when issued. If no variations will be made, so state. 

3. Compliance with Requirements. Attach as Exhibit P-3 a schedule 
in tabular form for each group contract and each standard form group 
contract, identifying the particular provision of such contract which com- 
plies with each relevant provision of the Act and the rules listed in the 
preface note to this part, covering also any variations made in standard 
form contracts. As to any provision which varies from the applicable pro- 
vision of the Act or rules, identify such provision in Exhibit P-3 and fur- 
nish Exhibit P^. 

4. Variance with Requirements. As Exhibit P-4, attach a statement 
with respect to each variance which the applicant proposes to make from 
the Act or rules in its group contracts, indicating the reasons for the vari- 
ance and. if applicable, the circumstances under which the variance from 
the Act or rules is proposed to be used. 

Q. Individual Health Care Service Plan Contracts. 

1 . Copies of Contracts. Attach as Exhibit Q-1 a copy of each individu- 
al contract which is to be issued by applicant. With respect to contracts 
based on a standard form, only a specimen of each standard form need 
be submitted, accompanied by Exhibit Q-2. 

2. Variations in Standard Form. Attach as Exhibit Q-2, if applicant 
uses standard from individual contracts, a schedule or explanation of the 
variations which will be made in the terms and provisions of such con- 
tracts when issued. If no variations will be made from the standard form, 
so state. 

3. Compliance with Requirements. Attach as Exhibit Q-3 a schedule 
in tabular form for such individual contract and each standard form indi- 
vidual contract, identifying the particular provision of such contract 
which complies with each relevant provision of the Act and rules listed 
in the preface note to this part, covering also any variations to be made 
in standard form contracts. As to any provision which varies from the 
applicable provision of the Act or rules, identify such provision in Exhib- 
it Q-3 and furnish Exhibit Q-4. 

4. Variance from Requirements. As Exhibit Q-4, attach a statement 
with respect to each variance which the applicant proposes to make from 
the Act or rules in its individual plan contracts, indicating the reasons for 
the variance and, if apphcable, the circumstances under which the vari- 
ance from the Act or rules is proposed to be used. 

R. (Reserved for future use.) 

S. Disclosure Forms. 

1. Attach as Exhibit S-1 a copy of each disclosure form which appli- 
cant proposes to use, and identify by name and by exhibit number the 
contract or contracts in Exhibit P-1 or Q-1 with which the disclosure 



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form will be used. Illhe disclosure forms vary in text, format and arrange- 
ment in a manner which may make ii difficult to identify and compare 
alternatives and their effect upon the contract, include an explanation 
which indicates how such difficulties will be avoided. 

2. Attach as Exhibit S-2 a statement in tabular form for each disclosure 
form submitted as Exhibit S-1 above, identifying the section, paragraph, 
or page number of the disclosure form which shows compliance with 
each of the following sections of the Act or rules (following the paren- 
thetical instnictions set forth in the note immediately preceding Item P 
above, if there are multiple disclosure forms): 
Section 1345 (definitions) 
Section 1362 (definitions) 
Section I363(a)( 1 ) through (8) 
Section I363(a)(l0) 

Section 1378(g) (if disclosing group contract) 
Rule 130().67(a)(l) 
Rule 1300.63(b)( I ) through (14) 

T. Evidence ol" Coverage. 

1. Attach as Exhibit T-1 a copy of each evidence of coverage which 
applicant proposes to use. Each evidence of coverage should relate to one 
form of plan contract which must be identified by name and by exhibit 
number; however, an evidence of coverage for alternative plans or op- 
tions will be permitted if presented in a manner which clearly identifies 
the alternatives and their effect upon the contract and if the alternative 
contracts are clearly identified by name or exhibit number. 

2. Attach as Exhibit T-2 a statement in tabular form for each evidence 
of coverage submitted as Exhibit T-1 above, the section, paragraph, or 
page number of the evidence of coverage which shows compliance with 
each of the following sections of the Act or rules (following the paren- 
thetical instructions set forth in the note immediately preceding Item P 
above, if there are multiple evidences of coverage): 

Section 1345 (definitions) 
Section 1362 (definiuons) 
Rule 1300.63(a)(1) 
Rule 1300.63.1(b)(1) and (2) 
Rule 1300.62.2(b)(1) and (2) 
Rule 1300.63.2(c)(1) through (16) 
Rule 1300.69(i) 

U. Combined Evidence of Coverage and Disclosure Forms. 

Applicant may combine the evidence of coverage and disclosure form 
into one document if it complies with each of the requirements set forth 
in Rule 1300.63.2. 

1 . Attach as Exhibit U-1 a copy of each combined evidence of cover- 
age and disclosure form. Each combined evidence of coverage and dis- 
closure form should relate to one form of plan contract; however, a com- 
bined evidence of coverage and disclosure form offering alternative 
plans or options will be permitted if presented in a manner which clearly 
identifies the alternatives and their effect upon the contract. 

2. Attach as Exhibit U-2 a statement in tabular form for each combined 
evidence of coverage and disclosure form submitted as Exhibit U-l 
above, the section, paragraph or page number which shows compliance 
with each of the following sections of the Act or Rules (following the par- 
enthetical instructions set forth in the note immediately preceding Item 
P above, if there are multiple combined evidences of coverage and dis- 
closure forms): 

Section 1 345 (definitions) 
SecUon 1362 (definitions) 
Rule 1300.63.2(b)(1) and (2) 
Rule 1300.63.2(c)(1) through (27) 
Rule 1300.69(i) 

V. Advertising. 

Attach as Exhibit V a copy of any advertising which is subject to Sec- 
tion 1361 of the Act and which applicant proposes to use. With respect 
to each proposed advertisement indicate the contract(s) by name and by 
exhibit number(s) to which said advertisement relates and identify the 
segment of the public to which the advertisement is directed. 



W. Enrollee/Subscriber Grievance Procedures. 

1. Attach as Exhibit W-1 a copy of its written grievance procedure 
adopted or to be adopted by applicant to comply with all of the provisions 
of Section 1368 of the Act and Rules 13(X).68. 1300.85 and 1300.85.1. 

2. Attach as Exhibit W-2. copies of the compliant forms and the writ- 
ten explanation of its grievance procedure which the plan will make 
available to enrollees and subscribers. 

3. If the written procedure furnished as Exhibit W-1 does not identify 
the key personnel of applicant and provider organizations that will be re- 
sponsible for carrying out its grievance procedures and the review of its 
results, attach Exhibit W-3 giving the name and title of each such person 
and identifying their responsibility for carrying out the procedure. 

X. Public Policy Participation. 

1 . If applicant is in compliance with the requirements of the Federal 
Health Maintenance Organization Act of 1 973 and intends to rely on such 
compliance to satisfy the provisions of Section 1 369 of the Act. attach as 
Exhibit X-1 documentation necessary to validate compliance with the 
Health Maintenance Organization Act. 

2. Unless applicant has satisfied the provisions of Section 1369 of the 
Act in the manner indicated in Subsection X-1 , above, attach as Exhibit 
X-2 a description of applicant" s procedures to permit sub.scribers and en- 
rollees to participate in establishing the public policy of the plan, includ- 
ing at least the following: 

a. the composition of applicant's governing board. 

b. the composition of the standing committee established which shall 
participate in establishing the public policy of the plan as defined in Sec- 
tion 1369 of the Act. the frequency of said committee's meetings, the fre- 
quency of receipt by applicant's governing body of said committee's re- 
ports and recommendations, and the procedures established by the 
governing body for dealing with such reports and recommendations: 

c. the means by which subscribers and enrollees participating in estab- 
lished public policy will be given access to information and information 
regarding the specific nature and volume of complaints received by 
applicant and their disposition; 

d. specific identification by name and section or paragraph number of 
pertinent provisions of applicant's bylaws and/or other governing docu- 
ments (as submitted in response to Item F) which set forth the procedures 
for public policy participation for subscribers and enrollees; and 

e. the manner and frequency with which applicant will furnish to its 
subscribers and enrollees a description of its system for their participa- 
tion in establishing public policy and communicate material changes af- 
fecting public policy to subscribers and enrollees. 

MARKETING OF PLAN CONTRACTS 

Y. Marketing of Group Contracts. 

Attach as Exhibit Y a statement describing the methods by which 
applicant proposes to market group contracts, including the use of em- 
ployee or contracting solicitors or solicitor firms, their method or form 
of compensation and the methods by which applicant will obtain com- 
pliance with Rules 1300.59, 1300.61, 1300.76.2, and 1300.85.1. 

Z. Marketing of Individual Contracts. 

Attach as Exhibit Z a statement describing the methods by which 
applicant proposes to market individual plan contracts, including the u.se 
of employee or contracting solicitors or solicitor firms, their method or 
form of compensation and the methods by which applicant will obtain 
compliance with Rules 1300.59, 1300.61, 1300.76.2, and 1300.85.1. 

AA. Supervision of Marketing. 

Attach as Exhibit A A a statement setting forth applicant's internal ar- 
rangements to supervise the marketing of its plan contracts, including the 
name and title of each person who has primary management responsibil- 
ity for the employment and qualification of solicitors, advertising, con- 
tracts with solicitors and solicitor finns and for monitoring and supervis- 
ing compliance with contractual and regulatory provisions. 

BB. Solicitation Contracts. 

1 . Attach as Exhibit BB- 1 a list of all persons (other than any employee 
of the plan whose only compensation is by salary) soliciting or agreeing 



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to solicit the sale of plan contracts on behalf of the applicant. For each 
such person, identify by exhibit number that person's contract furnished 
pursuant to Item BB-2 and, if such contract does not show the rate of 
compensation to be paid, specify the person's rale of compensation. 

2. Attach as Exhibit BB-2, a copy of each contract or proposed con- 
tract between applicant and the persons named in Exhibit BB-1 for solic- 
iting the sale of or selling plan contracts on behalf of applicant. If a stan- 
dard form contract is used, furnish a specimen of the form, identify the 
provision and terms of the form which may be varied and include a copy 
of each variation. 

3. If the rate of compensation for any solicitor or for any plan contract 
exceeds 5 percent of the prepaid or periodic charge for the contract(s) on 
an annual basis, attach as Exhibit BB-3 a statement explaining and justi- 
fying the rate of compensation in each such case. 

CC. Group Contract Enrollment Projections. 

No'l'i;: All projections required by Items CC, DD, EE and HH are lo cover the peri- 
od commencing from its comjiiencement of operations as a licensed health care 
service plan until the applicant's financial statement projections under Item HH 
demonstrate that it has reached the break-even point (or for one year, whichever 
is longer) and for an additional period ofone year thereafter. For the initial period, 
all projections are to be on a monthly basis. For the additional year, all projections 
are to be on a quarterly basis. 

1. Projections. Attach as Exhibit CC-1 projections of applicant's en- 
rollments under group contracts for the periods specified in the above 
note. (Medi-Cal, Medicare, and Medicare supplemental programs are to 
be treated as individual contracts under Item DD below.) Exhibit CC-I 
is to contain the following information with respect to each anticipated 
group contract: 

a. The name of the group. 

b. The number of potential subscribers in the group. 

c. The locations within and around applicant's service area in which 
the potential subscribers and enrollees live and work. 

d. The estimated date (or period after licensing) for entry into the group 
contract. 

e. Identification of the plan contract anticipated with the group, by ref- 
erence to Exhibit P- 1 . If more than one type of group contract is expected 
with a group, each contract must be covered separately. 

f . The projected number of ( 1 ) subscribers and (2) enrollees (including 
subscribers), on a monthly basis for the initial period specified in the 
above note and quarterly for the following year. 

g. State whether the contract will be "community rated" or "experi- 
ence rated." 

h. Evaluation of the competition for each group. 

2. Substantiation of Projections. Attach as Exhibit CC-2 for each 
group contract specified in Exhibit CC-1 a description of the facts and 
assumptions used in connection with the information specified in that ex- 
hibit and include documentation of the source and validity of such facts 
and assumptions. 

3. Letters of Interest. Attach as Exhibit CC-3 letters of interest or in- 
tent from each group listed in Exhibit CC-1, on the letterhead of the 
group and signed by its representative. 

DD. Individual Contract Enrollment Projections. 

1. Projections. Attach as Exhibit DD-1 a projection of applicant's 
sales of individual contracts for the periods specified in the note in Item 
CC above. Programs involving Medi-Cal, Medicare and Medicare 
supplemental coverages are to be treated as individual contracts. The ex- 
hibit is to contain the following information as to each type of individual 
contract: 

a. A description (e.g., ethnic, demographic, economic, etc.) of each 
target population. 

b. The estimated number of persons in each target population. 

c. The distribution of the target population within and around appli- 
cant's service area. 

d. The projected number of ( 1 ) subscribers and (2) enrollees (including 
subscribers) expected to be obtained from each target population, on a 
monthly basis for the initial period and quarteriy for the following year. 



e. State whether the contract will be "community rated" or "experience 
rated." 

f. Evaluation of the competition within the target area. 

2. Substantiation of Projections. Attach as Exhibit DD-2 a statement 
of the facts and assumptions employed with respect to the information 
furnished for each contract and target population listed in Exhibit DD-1 
and furnish documentation, including reliable market surveys, validating 
the facts and assumptions. 

EE. Summary Enrollment Projections. 

Attach as Exhibit EE summary enrollment projections on a monthly 
basis for the initial period specified in the note to Item CC and on a quar- 
teriy basis for the following year. Such enrollment projections should re- 
flect the breakdown of enrollment by groups, individuals, Medi-Cal, 
Medicare, and others. 

FF. Prepaid and Periodic Charges. 

1. Determination of Prepaid Charges. Attach as Exhibit FF-1, a de- 
scription of the method used by applicant to determine the prepaid or pe- 
riodic charges fixed for individual and group contracts, including the 
method by which administrative and other indirect costs are allocated. 
Describe the facts and assumptions upon which such charges are based 
(e.g., contract mix, family size) and furnish supporting documentation to 
substantiate the validity of the facts and assumptions used. 

2. Schedule of Prepaid Charges. Attach as Exhibit FF-2-a complete 
schedule of the prepaid or periodic charges assessed subscribers under 
each group contract identified in response to Item P and attach as Exhibit 
FF-2-b a schedule of the prepaid or periodic charges assessed subscrib- 
ers under each individual contract identified in response to Item Q. 

3. Collection of Prepaid Charges. Attach as Exhibit FF-3 a description 
of the manner in which applicant will collect prepaid and periodic 
charges and copayments from subscribers and enrollees under its group 
and individual contracts. If prepaid or periodic charges will be paid by 
subscribers to an entity other than the plan, identify the entity and specify 
the measures used by the plan to safeguard and account for such funds 
(see Rules 1300.76.2, 1300.85 and 1300.85.1). 

HNANCIAL VIABILITY 

GG. Current Financial Viability, Including Tangible Net Equity. 

1 . Financial Statements. 

a. Attach as Exhibit GG-l-a the most recent audited financial state- 
ments of applicant, accompanied by a report, certificate, or opinion of an 
independent certified public accountant or independent public accoun- 
tant, together with all footnotes to said financial statements. 

b. If the financial statements attached as Exhibit GG-l-a are for a peri- 
od ended more than 60 days before the date of filing of this application, 
also attach as Exhibit GG-l-b financial statements prepared as of date 
no later than 60 days prior to the filing of this application consisting of 
at least a balance sheet, a statement of income and expenses, and any ac- 
companying footnotes; these more recent financial statements need not 
be audited, so long as they are prepared in accordance with generally ac- 
cepted accounting principles. 

2. Tangible Net Equity. Attach as Exhibit GG-2 a calculation of appli- 
cant's tangible net equity in accordance with Rule 1300.76, based on the 
most recent balance sheet submitted as Exhibit GG-l-a or b above. 

HH. Projected Financial Viability 

1. Attach as Exhibit HH-1, the following projected financial state- 
ments of the applicant reflecting actual and projected changes which 
have, or which are expected to occur between the date of its most recent 
financial statements furnished pursuant to Item GG and the date specified 
for the commencement of its operafions as a plan in Item E above. The 
projected financial statements must be prepared in accordance with gen- 
erally accepted accounting principles and on a basis consistent with the 
financial statements supplied in Item GG. 

a. Applicant" s projected balance sheet as of the start up date of the plan. 
(See Item E) 



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§ 1 300.5 1 



h. Applicant's projected statement of income and expenses covering 
the period between the date of the most recent financial statements fur- 
nished in hem GG and the date specified in Item E. 

c. A calculation ol" applicant's projected tangible net equity in accor- 
dance with Rule 1 300.76 as of the date specified in Item E and in accor- 
dance with its projected balance sheet. 

2. Attach as Exhibit HH-2, projected financial statements as of the 
close of each month during applicant's initial period of operations, as de- 
fined in the note to Item CC. and as of the close of each quarter for the 
following year, prepared on a consistent basis with the financial state- 
ments furnished for Item HH-I, including the following: 

a. Applicant's projected balance sheet as of the close of such month 
or quarter. 

b. Applicant's projected statement of income and expense for such 
month or quarter. 

c. Applicant's projected cash-How statement for such month or quar- 
ter. 

d. A calculation of applicant's tangible net equity pursuant to Rule 
1 300.76 as of such month or quarter. 

e. A calculation of applicant's administrative costs pursuant to Rule 
1300.78 for such month or quarter. 

3. Furnish the following information to substantiate the assumptions 
and conclusions upon which the projections required by Items HH-1 and 
HH-2 are based: 

a. Attach as Exhibit HH-3-a the complete results of feasibility studies 
obtained by applicant as normally required by conventional lending insti- 
tutions, including at least the following: legal, marketing/enrollment, 
providers and financial. 

b. Attach as Exhibit HH-3-b an actuarial report which includes at least 
the following information for all enrollees reflected in Exhibit EE as cov- 
ered by contracts which are community rated: 

(i) Utilization rates for each medical expense item reflected in appli- 
cant's income statements furnished pursuant to Item HH-2. expressed in 
terms of utilization units per member per month, including the methodol- 
ogy and source of data used to determine such rates. 

(ii) The cost per utilization unit for each medical expense item re- 
flected in the income statement, including the methodology and source 
of data used to determine such costs. 

(iii) The per member per month cost for each medical expense item. 

(i v) The methodology and source of data used to estimate copayments. 
coordination of benefits, and reinsurance recoveries, including the ex- 
pression of such items on a per member per month basis. 

(v) Inflation estimates used in the projections and the source utilized 
to determine such estimates. 

c. For each contract which is designated as experience rated (as sum- 
marized in Exhibit EE) attach as Exhibit HH-3-c an actuarial report for 
the contract which conforms to the requirements stated in Item HH-3-b. 

d. Attach as Exhibit HH-3-d a summary schedule which reflects the 
breakdown of the total revenue and expense included in the projected in- 
come statements in Exhibit HH-2-b by community rated contacts and 
experience rated contracts. 

e. As Exhibit HH-3-e the assumptions made by the applicant to deter- 
mine the time lag between the delivery by covered health care services 
and applicant's payment for those services. Also indicate all other as- 
sumptions made in preparing the projected cash flow statements in Item 
HH-2-C. 

f. Attach as Exhibit HH-3-f-i a detailed description of any measures 
taken or proposed to be taken by applicant to maintain compliance with 
the tangible net equity requirement under Rule 1 300.76 and the financial 
viability requirement under Rule 1 300.76. 1 in view of losses and expen- 
ditures prior to reaching a break-even point in its operations. This infor- 
mation should include a schedule setting forth the amounts of any addi- 
fional needed funding and the dates when such amounts will be infused 
into applicant. If such arrangements involve arrangements for additional 
capital . to subordinate or postpone the payment of accounts, notes or oth- 



er obligations of the plan or other agreements, cite the exhibit numbers 
of such agreements and identify their applicable provisions, if supplied 
elsewhere in the application, or if not otherwise furnished, attach copies 
of such agreements or proposed agreements, identifying the parties 
thereto and their relationship to the plan and its affiliates. 

If any funding is to be obtained from an enuty other than a national 
bank or a bank incorporated under the laws of this state, attach as Exhibit 
HH-3-f-ii a copy of such enfity's most recent annual audited and quar- 
terly unaudited financial statements. 

4. Reimbursements. Attach as Exhibit HH^ the following informa- 
tion regarding applicant's projected reimbursements: 

a. Monthly and quarterly projections as specified in the note to Item 
CC for each of the following (see instruction in Item 4-b): 

(i) Payments to reimburse noncontracting providers for covered 
health care services furnished to enrollees (see Section 1377(a)). 

(ii) Payments to reimburse enrollees for covered health care services 
furnished by noncontracting providers (see Section 1377(a)). 

(iii) Total reimbursements for services by noncontracting providers 
(I ) plus (2) (see Secfion 1377(a)). 

(iv) Fee-for-service payments to reimburse contracting providers for 
covered health care services. 

(V) Total reimbursements (3) plus (4). 

(vi) Total expenditures by applicant for covered health care .services. 

(vii) The ratio of total reimbursements to total health care expenditures 
(5) divided by (6). 

(viii) The ratio of reimbursements for services by noncontracting pro- 
viders to total expenditures (3) divided by (6). 

b. Describe and substantiate the facts and assumptions upon which the 
projections are based, including those for fee-for-service payments to 
contracting providers and document the source and validity of such as- 
sumptions. (Actuarial studies or comparable information should be fur- 
nished in response to these items.) 

c. If the rafio of total reimbursements to total expenditures in Item 4-a 
(viii) exceeds 10%, specify the measures by which applicant will comply 
with Section 1377(a) of the Act and Rules 1300.77 and 1300.77.3. If 
applicant will maintain reserves as specified in Section 1377(a)( 1 ) of the 
Act. specify the size of the reserve and the fiscal impact upon applicant 
arising from its maintenance. 

d. If the rafio of total reimbursements to total expenditures in Item 
4-a(vii) exceeds 1 0%, specify the measures by which applicant will com- 
ply with Section 1377(b) ofthe Act and Rules 1300.77.1. 1300.77.2 and 
1300.77.3. 

5. Administrative Costs. If applicant's administrative costs (as defined 
in Rule 1300.78) as projected for its initial period of operation (as speci- 
fied in the Note to Item CC and calculated pursuant to Item HH-2-e) ex- 
ceed 25% ofthe prepaid or periodic charges paid by or on behalf of sub- 
scribers, and if such administrative costs exceed 20% of such charges for 
the following year, attach as Exhibit HH-.'S a calculation ofthe percent- 
age of administrative costs to such charges for both such periods and fur- 
nish informafion which explains the necessity for the level of administra- 
tive costs projected and the manner in which applicant will reduce such 
costs to not more than 15% of such charges within five years after licen- 
sure. 

6. Provision for Extraordinary Losses. The following requirements re- 
quire an initial applicant to submit legible copies ofthe actual policies of 
insurance (including any riders or endorsements) or specimen copies of 
the policies of insurance which show all of the terms and condiUons of 
coverage, or with respect to those items expressly allowing for self-insu- 
rance, allow applicant to provide evidence of self-insurance at least as 
adequate as insurance coverage. 

a. Attach as Exhibit HH-6-a evidence of adequate insurance coverage 
or self-insurance to respond to claims for damages arising out of furnish- 
ing health care services (malpractice insurance). 



Page 39 



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§ 1300.51 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



b. Attach as Exhibit HH-6-b evidence ol' adequate insurance coverage 
or self-insurance to respond to claims for tort claims, other than with re- 
spect to claims for damages arising out of furnishing health care services. 

c. Attach as Exhibit HH-6-c evidence of adequate insurance coverage 
or self-insurance to protect applicant against losses of facilities upon 
which it has the risk of loss due to fire or other causes. Identify facilities 
covered by individual policies and indicate the basis upon which appli- 
cant believes that the insurance thereon is adequate. 

d. Attach as Exhibit HH-6-d, evidence of fidelity bond coverage for 
at least the amounts specified in Rule 1 300.76.3, in the form of a primary 
commercial blanket bond or a blanket position bond written by an insurer 
licensed by the California Insurance Commissioner, providing 30 days" 
notice to the Director of the Department of Managed Health Care prior 
to cancellation, and covering each officer, director, trustee, partner and 
employee of the plan, whether or not compensated. 

e. Attach as Exhibit HH-6-e evidence of adequate workmen's com- 
pensation insurance coverage against claims which may arise against 
applicant. 

II. Fiscal Arrangements. 

1. Maintenance of Financial Viability. Attach as Exhibit II- 1 a state- 
ment describing applicant's arrangements to comply with Section 
1375. Kb) of the Act and Rule 1300.75. 1(a)(2). If applicant will maintain 
insurance under these provisions, furnish a specimen of the policy, the 
name of the insurer and the premium cost to the policy. 

2. Capitation Payments to Providers. If applicant intends to pay some 
or all providers on a capitation basis, attach as Exhibit II-2 a statement 
indicating the percentage of contracting providers who will be compen- 
sated on that basis, a description of the method used to determine and ad- 
just the capitation rates, and substantiate by means of calculations or oth- 
er information that such capitation rates are adequate to reasonably 
assure the continuance of the applicant/provider relationship. 

3. Risk of Insolvency. Attach as Exhibit II-3 a description of the man- 
ner in which applicant will provide for each of the following in the event 
of applicant's insolvency: 

a. The continuance of benefits to enrollees for the duration of the con- 
tract period for which payment has been made. 

b. The continuance of benefits to enrollees until their discharge, for 
those enrollees confined in an in-patient health care facility on the date 
of insolvency. 

c. Payments to noncontracting providers for services rendered. 

4. Provider Claims. Attach as Exhibit II-4 a statement describing 
applicant's system for processing claims from contracting providers and 
noncontracting providers for payment, and from subscribers and enroll- 
ees for reimbursement, including, the rules defining applicant's obliga- 
tion to reimburse, the standards and procedures for applicant's claims 
processing system (including receipt, identification, handling, screen- 
ing, and payment of claims), the timetable for processing claims, proce- 
dures for monitoring the claims processing system, and procedures for 
reviewing the claims processing system in view of complaint from con- 
tracting or noncontracting providers or grievances from subscribers or 
enrollees. The records maintained regarding fee-for-service reimburse- 
ments must be in accordance with the provisions of Rule 1300.77.4. 

5. Other Business. If the applicant is or will engage in any business oth- 
er than as a health care service plan, attach as Exhibit II-5 a statement 
describing such other business, its relationship to applicant's business as 
a plan, and the anticipated financial risks and liabilities of such other 
business. If the financial statements and projections in Exhibits GG-l-a, 
GG-l-bb, HH-1 and HH-2 do not include such other business, explain. 

(e) Information Forms Required by Item F-1 of Subsection (d): 
(1) Corporation Information Form. 



STATE OF CALIFORNIA 

DHPARTMENT OF MANAGED HEALTH CARE 

CORPORATION INFORMATION FORM 

EXHIBIT F-1-a-iii 

To be used in response to Ilein F-1 -a of Form HP 1 300.51 . 

1. Name of Applicant (as in Item I -a): 



Full Name — First Middle and Last Names 
2. State of Incorporation: 



Date of Incorporation: 



Full Dale — Month. Day, Year 

4. Is applicant a nonprofit corporation? 

D Yes D No 

5. is applicant exempted from taxation as a nonprofit corporation? 

D Yes D No 

6. Names of principal officers, directors and shareholders: List (a) each person 
who is a director or principal officer or who performs similar functions or duties 
and (b) each person who holds of record or beneficially over 5% of the voting 
securities of applicant or over 5% of applicant's equity securities. If this is an 
amended exhibit, place an asterisk (*) before the names for whom a change in 
title, status or stock ownership is being reported and a double asterisk (**) be- 
fore the names of persons which are added to those furnished in the most recent 
previous filing. 

Full Name — First Middle and Last Names 

Title or 

Status: 

Relationship Beginning 
Date: 



Date — Month Day, Year 
Class of Equity or Security: 



Percentage 



Full Name — First Middle and Last Names 



Title or 

Status: 

Relationship Beginning 
Date: 



Date — Month Day, Year 



Percentage 



Class of Equity or 
Security: 



Full Name — First Middle and Last Names 



Title or 

Status: 

Relationship Beginning 
Date: 



Date — Month Day, Year 



Percentage 



Class of Equity or 
Security: 



Page 40 



Register 2004, No. 44; 10-29-2004 



Title 28 



The Department of Managed Health Care 



§ 1300.51 



7. 11 this is an anicnclcd exhibit, list below the names reported in the most reecni 
filing oi this exhibit whieh aie deleted by this amendment: 

(2) Partnership Inrormation Form. 

STATE OF CALIFORNIA 

DFFARTMHNT OF MANAGED HEALTH CARE 

PARTNERSHIP INFORMATION FORM 

EXHIBIT F-l-ii 

To be used in response to Item F-1-b of Form HP I3()0..SI . 
1. Name of Applieant (as in item 1-a): 



Pereentaye 



Full Name — First Middle and Last Names 



2. State of organization: 



Type of 
Partner: 



5. If this is an amended exhibit, list below the names reported in the most reeent 
filing of this exhibit which are deleted by this amendment: 

(3) Sole Proprietor Information Form. 

CALIFORNIA 
DEPARTMENT OF MANAGED HEALTH CARE 
SOLE PROPRIETORSHIP INFORMATION FORM 
EXHIBIT F-l-c 

To be used in response to Item F-l-c of Form HP 1300.51. 
I. Name of Applicant (as in Item I -a): 



,^. Dale of organization: 



Full Date — Month. Day, Year 

4. Names of Partners and Principal Management: List all general, limited and spe- 
cial partners and all persons who perform principal management functions. If 
this is an amended exhibit, place an asterisk (*) before the names of persons for 
whom a change in title, status or partnership interest is being reported and place 
a double asterisk ('=') before the names of persons which are added to those fur- 
nished in the most recent previous tiling. 



Full Name — First Middle and Last Names 



Title or 

Duties: 

Relationship Beginning 
Date: 



Date — Month Day, Year 



Full Name — First Middle and Last Names 



2. Residence Address: 



Street Address or P O Box Number 



Capital 




Contribution 


Title or 


Percentage 


Duties: 



City. Slate ZIP Code 

3. Names of persons performing principal management functions: List 
each person who occupies a principal management position or who 
performs principal management functions for the applicant. If this is 
an amended exhibit, place an asterisk (*) before the names of persons 
for whom a change in title or duties is being reported and place a 
double asterisk (**) before the names of persons which are being add- 
ed to those furnished in the most recent previous filing of this exhibit. 

Full Name — First Middle and Last Names 



Type of 
Partner: 



Title or 
Duties: 



Full Name — First Middle and Last Names 



Relationship Beginning 
Date: 



Date — Month Day, Year 



Capital 

Contribution 

Percentaee 



Type of 
Partner: 



Full Name — First Middle and Last Names 



Title or 

Duties: 

Relationship Beginning 
Date: 



Date — Month Day, Year 



Capital 
Contribution 



Relationship Beginning 

Date: 

Date — Month Day, Year 



Full Name — First Middle and Last Names 



Title or 

Duties: 

Relationship Beginning 
Date: 



Date — Month Day, Year 



Full Name — First Middle and Last Names 



Title or 

Duties: 

Relationship Beginning 
Date: 



Date — Month Day, Year 

4. If this is an amended exhibit, list below the names reported in the most recent 
filing of this exhibit which are deleted by this amendment: 



Page 41 



Register 2004, No. 44; 10-29-2004 



§ 1300.51.1 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



(4) Information Form for Miscellaneous Types of Enlities. 



CALIFORNIA 

DEPARTMENT OF MANAGED HEALTH CARE 

INFORMATION FORM FOR MISCELLANEOUS TYPES OF ENTITIES 

EXHIBIT F-l-d 



To be used in response to item F-l-d of Form HP 1 300.51 . 
1. Name of Applicant (as in Item 1-a): 



Full Name — First Middle and Last Names 

2. State of organization: 

3. Date of organization: 



Full Name — First Middle and Last Names 



Title or 

Duties: 

Relationship Beginning 
Date: 



Date — Month Day, Year 



Class 
Percentage 



Class of Equity or 
Security: 



6. If this is an amended exhibit, list below the names reported in the most recent 
filing of this exhibit which are deleted by this amendment: 



Full Date — Month Day, Year 
4. Form of Organization (describe briefly): 



, Names of Principal Officers and Beneficial Owners: List below the names of (a) 
each person who is a principal officer or trustee of the applicant or who per- 
forms principal management functions, and (b) each person who owns of re- 
cord or beneficially over 5% of any class of equity security of the applicant. If 
this is an amended exhibit, place an asterisk (*) before the name of each person 
for whom a change in title, status or interest is reported, and a double asterisk 
(**) before the name of persons which are added to those reported in the most 
recent previous filing. 



Full Name — First Middle and Last Names 



Title or 

Duties: 

Relationship Beginning 
Date: 



Date — Month Day, Year 



Class 
Percentage 



Class of Equity or 
Security: 



Full Name — First Middle and Last Names 



Title or 

Duties: 

Relationship Beginning 
Date: 



Date — Month Day, Year 



Class 
Percentage 



Class of Equity or 
Security: 



NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Sec- 
tions 1331, 1351.1, 1352, 1359, 1363, 1367, 1367.2, 1367.3, 1367.4, 1367.5, 
1367.6, 1367.7, 1367.8, 1367.9, 1367.15, 1368, 1369, 1370, 1370.1, 1373, 1373.1, 
1373.2. 1373.4. 1373.5, 1373.6. 1373.7, 1373.8, 1374, 1374.7, 1374.10. 1374.11, 
1374.12, 1375.1, 1376, 1378, 1386, 1399.62 and 1399.63, Health and Safety 
Code. 

History 

1 . Amendment of Item 23-C filed 12-20-77 as an emergency; effective upon fil- 
ing (Register 77, No. 52). 

2. Amendment filed 6-2-78; effective thirtieth day thereafter (Register 78, No. 
22). 

3. Amendment of Item 23 filed 1-12-83; effective thirtieth day thereafter (Regis- 
ter 83, No. 3). 

4. Amendment of Item 22-G filed 6-29-84; effective thirtieth day thereafter (Reg- 
ister 84, No. 26). 

5. Amendment filed 12-1 7-85; effective thirtieth day thereafter (Register 85, No. 
51). 

6. Change without regulatory effect amending subsection (c) filed 4^4-2000 pur- 
suant to section 100, title 1, California Code of Regulations (Register 2000, No. 
14). 

7. Change without regulatory effect amending subsections (c), (d)F.5., (d)HH.6.d., 
(e)(1), (e)(2), (e)(3) and (e)(4) filed 7-18-2000 pursuant to section 100, title 1, 
California Code of Regulations (Register 2000, No. 29). 

8. Change without regulatory effect amending subsection (d)HH.6.d., 
(e)(l)-(4)( forms), filed 11 -2 1-2002 pursuant to section 100, title 1, California 
Code of Regulations (Register 2002, No. 47). 

9. Amendment of subsection (c) filed 10-26-2004; operative 1 1-25-2004 (Regis- 
ter 2004, No. 44). 

§ 1 300.51 .1 . individual Information Slieet. 

An individual information sheet required pursuant to these rules shall 
be in the following form: 

CONFIDENTIAL 
See Note to Item 5 
DEPARTMENT OF MANAGED HEALTH CARE 
State of California 

INDIVIDUAL INFORMATION SHEET 

under the 

Knox-Keene Health Care Service Plan Act of 1975 

(California Health & Safety Code Sec. 1340 et. seq.) 

1 . Name of Applicant: File No. 



2. Exact full name of person completing this statement: 



First 
Physical Description: 

Sex Hair 

Birthdate: 



Middle 



Last 



_Eyes_ 



.Height. 



_Weight_ 



Birthplace :_ 



Social Security No. or 
Taxpayer Ident. No: _ 



NOTE: The inclusion of your social security number is not required but is vol- 
untary. It is solicited pursuant to Sections 1344 and 1351 ofthe Health and Safe - 



Page 42 



Register 2004, No. 44; 10-29-2004 



Title 28 



The Department of Managed Health Care 



H300.51.2 



ly Code. It may be used lo conduct a background investigation by the Depart- 
ment, the California Department of Justice Information Branch, or by other 
lederal, state or local law enforcement agencies. This form, including the social 
security number, will be held confidential, but is a public record and available 
to the public pursuant to the Public Records Act (Gov, Code Section 62.'S0). at 
the discretion of the Director. 
6. Residence Telephone: 7. Business Telephone: 

S. Cunent Residence Address: 

Number and Street City State Zip 

9. bmployment for the last 5 yeiu"s (list most recent first and include any employ- 
ment with a plan or any person or entity which is or was affiliated with a plan 
(Section 130().4.S(c)): 

From to Present Employer Name and Address Occupation and Duties 



NOTH: Attach separate schedule if space is not adequate. 
10. Business contacts, dealings and affiliations (see section 13()0.4.'S(c)(2)) with 
health care service plans during the last ,S years (but including, for example, 
such roles as director, stockholder, consultant, manager, provider and supplier, 
and such dealings as sales, leasing, and any contractual relationships) ( list most 
recent business contacts and dealings first): 
From to Present Plan Name and Address Relationship and Duties 



NOTE: Attach separate schedule if space is not adequate. 
1 1 . Have you ever had a certificate, license, permit registration or exemption is- 
sued pursuant lo the Business and Professions Code or Health and Safety Code 
denied, revoked or suspended or been otherwise subject to disciplinary action, 
while you were in the employ of the applicant, or while you had a contract with 
the applicant as a provider or otherwise? [ ] Yes [ ] No 

If "yes" state the date of the action and the administrafive body taking such ac- 
tion. 



12. Have you ever been convicted or pled nolo contendere to a misdemeanor in- 
volving moral turpitude or any felony, other than traffic violations? 

[ ] Yes [ I No 
If the answer is "yes" give details: 



13. Have you ever changed your name or ever been known by any name other than 
that herein listed? (Including a married person's prior surname, if any.) 

[ ]Yes [ INo 

If so, explain. Change in name through marriage or court order should also be 

listed. 

EXACT DATE OF EACH NAME CHANGE MUST BE LISTED. 



VERIFICATION 
I. the undersigned, state that I am the person named in the foregoing Individual 
Information Sheet, that I have read and signed said Individual Information Sheet 
and know the contents thereof, including all exhibits attached thereto; and that the 
statements made therein, including any exhibits attached thereto, are true. 
I certify/declare under penalty of perjury that the foregoing is true and correct. 
Executed at 



this 



City 
dav of 



Count v 



State 



(Signature of Declarant ) 



NOTE: If this form is signed outside California complete the verification before 
a notary public in the space provided below. 

State of 

County of 

Dated 

at 



(Signature of Affiant) 
Subscribed and swom to before me. 



Notary Public in and for said 
County and State 

NOTE: Authority cited: Section 1 344, Health and Safety Code. Reference: Section 
13.^1, Health and Safety Code. 

History 

1. Amendment filed 6-29-84: effective thirtieth day thereafter (Register 84. No. 
26). 

2. Amendment filed 12-17-85; effective thirtieth day thereafter (Register 8.S. No. 
51). 

3. Change without regulatory effect amending section filed 4-4-20(X) pursuant to 
section 100, title 1, California Code of Regulations (Register 2000, No. 14). 

4. Change without regulatory effect amending section filed 7-18-2000 pursuant 
tosecition 100, title 1, California Code of Regulations (Register 20(K), No. 29). 

5. Change without regulatory effect amending section filed 1 1-21-2(X)2 pursuant 
to section 100, title 1, California Code of Regulations (Register 2(X)2, No. 47). 

§ 1 300.51 .2. Consent to Service of Process. 

The consent to service of process required pursuant to these rules shall 
be in the following form: 

TO THE DIRECTOR OF THE DEPARTMENT OF 
MANAGED HEALTH CARE OF 
THE STATE OF CALIFORNIA 

CONSENT TO SERVICE OF PROCESS 
KNOW ALL MEN BY THESE PRESENTS: 

That the undersigned, , 



(a coiporation organized under the laws of the State of 
(a partnership) (an individual) (other 



) 



hereby irrevocably appoints the Director of the Department of Managed 
Health Care of the State of California, or his successor in office, to be his 
(its) attorney to receive service of any lawful process in any noncriminal 
suit, action or proceeding against him (it), or his (its) successor, executor, 
or administrator which arises under the Knox-Keene Health Care Ser- 
vice Plan Act of 1975 or any rule or order thereunder after this con.sent 
has been filed, with the same force and validity as if served personally 
on the undersigned. 

For the purpose of compliance with the Corporations Code of the State 
of California, notice of the service and a copy of the process should be 
sent by registered or certified mail to the undersigned at the following ad- 
dress: 



14. Have you ever engaged in business under a fictitious firm name either as an 
individual or in the partnership or corporate form? [ ] Yes [ ] No 
If the answer is "yes" set forth particulars: 



Name 



Street Address 



Page 42.1 



Register 2004, No. 44; 10-29-2004 



§ 1300.51.2 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



City 
Dated: 



State 



Zip Code Signature 



By_ 

Title 



Stale of California 

County of 

On 



before me, (here insert name and title of 
per- 



the officer, personally appeared 

sonally known to me (or proved to me on the basis of satisfactory evi- 
dence) to be the person(s) whose name(s) is/are subscribed to the within 
instrument and acknowledged to me that he/she/they executed the same 
in his/her/their authorized capacity(ies), and that by his/her/their signa- 
ture(s) on the instrument the person(s), or the entity upon behalf of which 
the person(s) acted, executed the instrument. 
WITNESS my hand and official seal. 



(Seal) 



Any certificate of acknowledgement taken in another state shall be 
sufficient in the State of California if it is taken in accordance with the 
laws of the place where the acknowledgement is made. 

NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Section 
1.351. Health and Safety Code and Section 11 89. Civil Code. 

History 

1. Amendment filed 6-2-78; effective thirtieth day thereafter (Register 78, No. 
22). 

2. Amendment filed 1-12-83; effective thirtieth day thereafter (Register 83, No. 
3). 

3. Change without regulatory effect amending section and Note filed 12-7-95 
pursuant to section 1 00, title 1 , California Code of Regulations ( Register 95, No. 
49). 

4. Change without regulatory effect amending section filed 4-4-2000 pursuant to 
section 100, title 1. California Code of Regulations (Register 2000, No. 14). 

5. Change without regulatory effect amending section filed 7-18-2000 pursuant 
to secfion 1 00. title 1 , California Code of Regulations (Register 2000, No. 29). 

6. Change without regulatory effect amending section filed 1 1-21-2002 pursuant 
to section 100, title 1 . California Code of Regulations (Register 2002, No. 47). 



[The next page is 43. 



Page 42.2 



Register 2004, No. 44; 10-29-2004 



Title 28 



The Department of Managed Health Care 



§1300.52.1 



§ 1 300.51 .3. Preparation and Amendment of Application 
for License As a Health Care Service Plan 
Under Section 1300.51. 

(a) General Instructions. 

(1) Type the information requested in the English language using 
black ribbon. 

(2) Complete each item on the application, and type "N/A" in the right 
hand margin for those items which are not applicable. 

(3) Number each exhibit as specified in the item to which the exhibit 
responds. If several exhibits are required under the same letter/number 
designation, add a sequential letter or roman numeral as indicated in the 
following example. Example: If Item Q-l calls for copies of the specified 
documents, an applicant employing three different documents would la- 
bel them as follows: Exhibit Q-l-a; Exhibit Q-l-b; Exhibit Q-l-c. 

(4) Arrange all exhibits in sequential order. Attach a "tab" to the right 
margin of the first page of each major exhibit or series of exhibits to facil- 
itate ready reference. 

(?) Submit originals only when requested. Otherwise, submit clearly 
legible mechanical reproductions. 

(6) Submit requested information as an exhibit if the space provided 
in the application form itself is insufficient. Use the procedure detailed 
in Item (3). above, to indicate the exhibit number. 

(7) Submit three complete copies of the original license application 
and each amendment submitted prior to licensure to the Department's 
Sacramento Office to the attention of the Health Plan Division Filing 
Clerk. 

(b) Amendment of an Application. 

( 1 ) An amendment to application either before or after issuance of a 
license must comply with Rule 1300.52. However, Rules 1300.52.1 and 
1300.52.2 apply only after an applicant has been licensed. 

(c) Updating Application Prior to Licensure. In addition to complying 
with Rule 1300.52, an amendment to a pending application shall comply 
with the following: 

( 1 ) Material changes (see Rule 1 300.45( 1 )) to information previously 
submitted in connection with an application (as amended to date) shall 
be submitted as an amendment to the license application immediately, 
except as provided in subsection (f) of Rule 1300.52. 

(2) Nonmaterial changes to the information previously submitted in 
connection with an application (as amended to date) may be accumulated 
and shall be submitted as an amendment to the license application month- 
ly or within 30 days (or other period requested by the Director) of each 
such change. 

(3) Financial statements and calculations of tangible net equity pre- 
viously submitted in connection with an application (as amended to date) 
shall be updated to an amendment to the license application which shall 
consist of quarterly financial statements (see Rule 1 300.84. 2a(l), (2), 
and (3)) and a calculation of applicant's tangible net equity as of the clos- 
ing date of such quarter, and shall be filed within 30 days after the close 
of each quarter of applicant's fiscal year. 

NOTE: Authority cited: Section 1344. Health and Safety Code. Reference: Sec- 
tions \?>5] and 1352, Health and Safety Code. 

History 

1 . New section tiled 12-1 7-85; effective thirtieth day thereafter (Register 85, No. 
51). 

2. Change without regulatory effect amending subsection (a)(7) filed 8-24-92; 
operative 9-23-92 (Register 92, No. 35). 

3. Change without regulatory effect amending subsection (a)(7) filed 4-4-2000 
pursuant to section 100, title 1, California Code of Regulations (Register 2000, 
No. 14). 

4. Change without regulatory effect amending subsection (c)(2) filed 7-1 8-2000 
pursuant to section 100. title 1, California Code of Regulations (Register 2000. 
No. 29). 



(a) The following portions of the application specified in Rule 1 300.5 1 
need not be amended after the issuance of a license: 

Item E Summary of Information in Application 

Item H-2 Map of Service Area. 

Item H-3 index to Map. 

item V Advertising. 

Item CC Group Contract Enrollment Projections. 

Item DD individual Contract Enrollment Projections. 

Item EE Summary of Enrollment Projections. 

Item GG Current Financial Visibility including Tangible Net Equity. 

item HH Projected Financial Viability. 

(b) The amendment must be accompanied by a copy of the Execution 
Page of the application, and all portions of lho.se pages must be com- 
pleted. 

(c) Attach to the Execution Page only those pages of the application 
and/or those exhibits which are changed by the amendment. 

(d) if a page of the application is amended, complete all items on that 
page and "redline" or otherwise clearly designate the changed item. 

(e) If an exhibit, other than a list required by Item 13A. I3Cor24Dof 
the old application form or Item 1-1 . 1-2 or 1-3 of the new application is 
being amended. 

( 1 ) Furnish the complete exhibit as amended, bearing the same number 
as the original exhibit, with the changed portions of the exhibit "redlined" 
or otherwise clearly designated, or 

(2) Furnish the pages of the exhibit which are amended, each page to 
be marked with the exhibit number and the page number of the exhibit, 
and with the changed portions "redlined" or otherwise clearly desig- 
nated, if this method of amendment is employed, the applicant shall refile 
the entire exhibit as amended whenever more than 10% of its pages have 
been amended or promptly upon the request of the Director. 

(f) A list furnished pursuant to items 1 3 A. 1 3C or 24D of the old appli- 
cation or Item I-l . i-2 or 1-3 of the new application need be amended 
only when 1 percent or more of the names contained in the list for a ser- 
vice area have been changed. When amended, the complete list (or the 
list for the service area) shall be furnished following the instructions for 
the particular item, with each added item "redlined" and the names of per- 
sons deleted from the list shown at the end under the heading "deletions." 
NOTE; Authority cited: Section 1344, Health and Safety Code. Reference: Sec- 
tions 1351, 1351.1. 1352, 1359, 1363. 1367. 1367.2, 1367.3. 1367.5, 1.^67.6. 
1367.7, 1367.8, 1367.9, 1367.15, 1368, 1369. 1370, 1370.1. 1373, 1373.1. 1373.2. 
1373.4, 1373,5, 1373.6, 1373.7. 1373.8, 1374. 1374.7, 1374.10, 1374.11, 
1 374. 1 2, 1 375. 1 , 1 376, 1 377, 1378,1 386, 1 399.52 and 1 .^99.63. Health and Safety 
Code. 

History 

1. Amendment filed 12-1 7-85: effective thirtieth day thereafter (Register 85, No. 
51). 

2. Change without regulatory effect amending first paragraph filed 8-24-92: op- 
erative 9-23-92 (Register 92, No. 35). 

3. Change without regulatory effect amending first paragraph filed 4^4-2(X)() pur- 
suant to section 1 00, title 1 , California Code of Regulations ( Register 2(X)(). No. 
14). 

4. Change without regulatory effect amending subsection (eK2) filed 7-]8-2(X)() 
pursuant to .section 100, title 1, California Code of Regulations (Register 2()(X), 
No. 29). 

§ 1 300.52.1 . Notice of Material Modification. 

A notice of material modification of its operations or of any plan con- 
tract pursuant to subdivision (b) of Section 1352 of the Act shall be filed 
as an amendment to the application as provided in Section 1300.52, and 
there shall be attached to such amendment, preceding the Execution 
Page, the following form: 

DEPARTMENT OF MANAGED HEALTH CARE 
STATE OF CALIFORNIA 



§ 1300.52. Amendments to Plan Application. 

An amendment to a plan application pursuant to subdivision (a) of 
Section 1352 of the Act shall be filed in the Department's Sacramento 
Office to the attention of the Health Plan Division Filing Clerk, upon the 
form contained in Section 1300.5 1 and shall include an original and two 
complete copies and comply with the following: 



NOTICE OF MATERIAL MODIFICATION 
Pursuant to 
Health and Safety Code Sec. 1352(b) 
1. Name of applicant: 



2. Department of Managed Health Care File Number: 

3. The fee for filing this application will be forwarded upon receipt of the billing 
therefore from the Director of the Department of Managed Health Care, pur- 



Page 43 



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§ 1300.52.2 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



suant to Health and Safety Code Section 1 352(d) or pursuant to Section 1 399.73 
if this application involves a conversion or restmcturing. 
4. Pursuant to Subdivision (b) of Section 1352 of the Health and Safety Code, 
applicant requests approval of the material modification of its plan and/or oper- 
ations, within the time specified below: 
(Check appropriate box) 

( ) Within the 20 business-day period provided in Section 1352(b). 
( ) Applicant extends the time for action upon this notice by the Director until 

( ) Applicant requests accelerated approval by the Director for the following 
reasons: 



5. Conversion or Restructuring. If this application involves a conversion or re- 
structuring, the applicant shall fully disclose information which describes the 
proposed transaction and demonstrates how the charitable trust requirements 
of Section 1 399.72(c) of the Act will be satisfied. In addition, the applicant shall 
submit a copy of all of its original and amended articles of incorporation and 
bylaws, and a report as described in Section 1 399.70(a) of the Act. If this appli- 
cation involves a restructuring, the applicant shall also submit a public benefit 
program as described in Section 1399.71(b) of the Act. 

6. Exempt Restructuring Transaction. If this applicaUon involves a transaction or 
transactions described in Section 1399.71(e)ofthe Act, the applicant shall fully 
disclose information which describes the transaction or transactions and dem- 
onstrates how the applicable conditions of exemption of Section 1 399.7 1 (e) of 
the Act will be satisfied. 

7. Nonprofit Mutual Benefit Health Care Service Plans. 

a. Assets subject to a charitable trust obligation. If this application involves a con- 

version or restructuring of a nonprofit mutual benefit health care service plan 
with any or all of its assets subject to a charitable trust obligation, the applicant 
shall submit information pursuant to Item 5 or Item 6 above and, if applicant 
believes that partial assets are subject to a charitable trust obligation, the appli- 
cant shall fully disclose informafion which: (i) describes why less than all of its 
assets are not subject to any charitable trust obligation, (ii) explains whether any 
charitable trust obligation terminated for any assets previously held subject to 
a charitable trust obligation, and (iii) demonstrates how every noncharitable 
trust obligation will be satisfied. 

b. Assets not subject to a charitable trust obligation. An applicant that is a nonprofit 
mutual benefit health care service plan must comply with Item 7. a. above un- 
less it has established that none of its assets are subject to a charitable trust obli- 
gation. If the applicant believes that this application involves a conversion or 
restructuring of a nonprofit mutual benefit health care service plan with no as- 
sets subject to any charitable trust obligation, the applicant shall submit a copy 
of all its original and amended articles of incorporation and bylaws and fully 
disclose information which: (i) describes the proposed transaction, (ii) de- 
scribes why all its assets are not subject to any charitable trust obligation, (iii) 
explains whether any charitable trust obligation terminated for any assets pre- 
viously held subject to a charitable trust obligation, and (iv) demonstrates how 
every noncharitable trust obligation will be satisfied. 

Date: 

Signature of Authorized Officer 



Title 
NOTE: Authority cited: Sections 1344 and 1399.74, Health and Safety Code. Ref- 
erence: Sections 1352, 1399.70, 1399.71, 1399.72, 1399.73, 1399.74 and 1399.75. 
Health and Safety Code. 

History 

1 . Amendment of form paragraph 3, new form paragraphs 5 and 6 and new Note 
filed 6-20-96 as an emergency; operative 6-20-96 (Register 96, No. 25). A 
Certificate of Compliance must be transmitted to OAL by 10-18-96 or emer- 
gency language will be repealed by operation of law on the following day. 

2. Amendment of form paragraph 3, new form paragraphs 5 and 6 and new Note 
refiled 10-15-96 as an emergency; operative 10-18-96 (Register 96, No. 42). 
A Certificate of Compliance must be transmitted to OAL by 2-12-97 or emer- 
gency language will be repealed by operation of law on the following day. 

3. Certificate of Compliance as to 1 0-1 5-96 order, including new form paragraphs 
7.-7 .b., transmitted to OAL 2-3-97 and filed 2-24-97 (Register 97, No. 9). 

4. Change without regulatory effect amending section filed 7-18-2000 pursuant 
to section 100, title 1, California Code of Regulations (Register 2000, No. 29). 



5. Change without regulatory effect amending section filed 1 1-21-2002 pursuant 
to section 100, title 1 , California Code of Regulations (Register 2002, No. 47). 

§ 1300.52.2. Change in Plan Personnel. 

Pursuant to subdivision (c) of Section 1 352 of the Act. a plan shall file 
an amendment to its applications in the forni required by Section 
1 300.52, when there are any of the following changes in personnel of the 
plan, of any management company of the plan, or of any parent company 
of such plan or inanagement company: 

(a) There is an addition or deletion of a director, trustee, principal offi- 
cer, general partner, general manager or principal management persons, 
or persons occupying similar positions or performing similar functions, 
or a substantial and material change in the duties of any such person. 

(b) There is the addition or deletion of a limited partner, shareholder 
or owner of an equity interest in the plan, whose interest exceeds 5 per- 
cent of the total partnership interests, shares or equity interests, or there 
is a change in the interest of any partner, shareholder or owner of an equi- 
ty interest exceeding 5 percent of the total partnership interests, shares or 
equity interests. 

(c) There is the addition or deletion of a principal creditor, as defined 
in Section 1300.45, a material change in the terms of the obligation to a 
principal creditor, a material increase or decrease in the amount due a 
principal creditor other than (except in the case of a demand obligation) 
by the normal terms of the obligation, or a default in the obligation to a 
principal creditor. 

§ 1300.52.3. Filings and Actions Relating to Charitable or 
Public Activities. 

(a) Amendments to a plan application or notices of material modifica- 
tions filed pursuant to Section 1352 or any other reports or filings under 
the Act shall not be deemed to be notices or requests for approval or rul- 
ing pursuant to Article 2, Part 1 1 . Division 2, Title 1 of the Coiporations 
Code or special reports pursuant to Section 1 300.84.7, nor shall any such 
notices or requests for approval or ruling or special reports be deemed to 
be amendments to a plan application or notices of material modifications 
of a plan or its operations pursuant to Section 1 352 or other reports or fil- 
ings under the Act. However, this section shall not prevent a plan from 
filing notices or requests pursuant to Article 2 (commencing with Section 
10820), Part 1 1, Division 2. Title 1 of the Corporafions Code and/or spe- 
cial reports pursuant to Section 1300.84.7 concurrently with materials 
being filed under Section 1352 and utilizing common exhibits, subject to 
the provisions of Section 13(X).824(c). 

(b) Orders and other actions of the Director pursuant to Section 1352 
or other provision of the Act, and the effects thereof, are limited to the 
effects contemplated under the Act and are of no effect or consequence 
in connection with any other law administered by the Director. Similarly, 
actions of the Director under any other law are of no effect or conse- 
quence in relation to SecUon 1352 or other provision of the Act. 
NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Section 
1352. Health and Safety Code. 

History 

1. New section filed 4-16-82; effective thirtieth dav thereafter (Register 82. No. 
16). 

2. Change without regulatory effect amending subsection (b) filed 7-1 8-2000 pur- 
suant to section 1 (X), title 1 , California Code of Regulations (Register 2000, No. 
29). 

§ 1300.52.4. Standards for Amendments and Notices of 
Material Modification. 

Notwithstanding anything to the contrary in Sections 1300.52, 
1300.52. 1 . 1300.52.2, and 1300.52.3, the following standards shall apply 
to amendments and notices of material modification to a plan license 
application once a health care service plan has been issued its license. 
These standards shall apply to full-service health care service plans and 
specialized health care service plans. 

(a) General Statement of Requirements. 

(i) If a plan makes a change that (A) constitutes an amendment to its 
plan license application and (B) is not listed in subsection (d) of this Sec- 
tion 1300.52.4, then the plan shall file an amendment with the Depart- 



Page 44 



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Title 28 



The Department of Managed Health Care 



§ 1300.59.1 



monl. lithe plan makes a eliange that is listed in subsection (d) of this Sec- 
tion 1300.52.4. then the plan shall Tile a notice of material modification 
with the Department. 

(ii) The plan shall include in any amendment or notice of material 
modification any document or other information specifically required by 
one of the items set forth in Section 1300.51, which is pertinent to the 
amendment or material modification. Other information may be required 
if it is determined by the Department to be necessary in order to make a 
finding under the Act that the amendment or material modification is in 
the public interest and consistent with the intent and purpose of the Act. 

(b) Specific Standards for Amendments. 

(i)(A) In the event of any change to one or more of the items specified 
in Section 1 35 1 of the Act. the plan shall file an amendment to its plan 
license application within 30 days after the plan implements that change, 
unless the change requires the filing of an amendment pursuant to clause 
(ii) of this subsection (b)ora notice of material modification pursuant to 
subsection (d) of this Section 1300.52.4. A change that is the subject of 
an amendment required to be filed pursuant to this subsection shall he- 
come effective on the dale implemented. 

(B) Notwithstanding the immediately subsection (b)(i)(A) of Section 
1300.52.4: (1) if the plan has not been continuously licensed under the 
Act for the preceding 1 8 months and has not had group contracts in effect 
at all times during that period, then, to the extent the amendment includes 
any new or modified plan contract, disclosure form, or evidence of cover- 
age, the change shall not be effective until 30 calendar days after the date 
the amendment was filed with the Department; and (II) to the extent the 
amendment includes any new or modified plan contract, disclosure form, 
or evidence of coverage that relates to an individuals health care service 
plan contract, the change shall not be effective until 30 calendar days af- 
ter the date the amendment was filed with the Department. 

(ii) In the event of any change described in Section 1352(c) of the Act, 
the plan shall file an amendment in accordance with the requirements of 
Section 1 300.52.2. A change that is the subject of an amendment required 
to be filed pursuant to this subsection (b)(ii) shall be effective on the date 
implemented. 

(c) Limited Enforcement or Disciplinary Action in Specified Circum- 
stances Regarding Amendments. 

If the Department does not provide objections to a plan with regard to 
an amendment within 30 days after the plan files the amendment, the De- 
partment may require the plan to make changes to comply with the Act 
and the rules adopted under the Act. The Department shall not take any 
disciplinary action or begin any other enforcement action against the plan 
with regard to the implementation of the changes described in the amend- 
ment, unless the material or any portion of the material was previously 
disapproved or otherwise objected to in writing by the Director or the 
plan knew or should have known that the material or any portion of the 
material violated any provision of the Act or the rules promulgated there- 
under. 

(d) Specific Standards for Notices of Material Modification. 

If a plan proposes to make any of the following changes, the plan shall 
file a notice of material modification with the Department. 

(i) An expansion, or a contracfion or reduction, of the plan's approved 
service area. 

(ii) The offering of a new health care service plan contract by the plan 
in any service area if the plan proposes to use a network of providers that 
is materially different from the network used for any other plan contract 
currently being offered by the plan. 

(iii) A merger, consolidation, acquisifion of a controlling interest, or 
sale of the plan or of all or substanfially all of the assets of the plan, direct- 
ly, or indirectly. 

(iv) The plan's inifial offering of a plan contract for small employers, 
which requires the filing of a nofice of material modification pursuant to 
Section 1357.15 of the Act. A subsequent change with regard to the 
plan's small employer plan contracts shall be filed as an amendment pur- 



suant to subsection (b) of this Section 1 300.52.4, unless the change other- 
wise would require the filing of a notice of material modification. 

(v) The plan's initial offering of a point-of-service contract, which re- 
quires the filing of a notice of material modification pursuant to Section 
1 374.69 of the Act. A subsequent change with regard to the plan's point- 
of-service plan contracts shall be filed as an amendment pursuant to sub- 
section (b) of this Section 1300.52.4 unless the change otherwise would 
require the filing of a notice of material modification. 

(vi) A change of plan name, which requires the filing of a notice of ma- 
terial modification pursuant to Section 1300.66. 

(vii) A change that would have a material effect on the plan or on its 
health care service plan operations. 

NOTE: Authority cited: Section 13.S1. Health and Safely Code. Reference: Sec- 
tions 1352 and 1352.1, Health and Safety Code. 

History 

1. New section filed 11-30-98; operative ll-.^()-98 pursuant to Government 
Code section II 343.4(d) (Register 98. No. 49). 

2. Change withoul regulatory effect amending subsection (c ) filed 7- 1 8-20(K) pur- 
suant to section 1 00. title 1 , California Code of Regulations ( Register 2(X)0. No. 
29). 



Article 4. Solicitors 

§ 1300.57. Solicitor Application. 

NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Sec- 
tions 13.^7 and 1358. Health and Safety Code. 

History 

1. Amendment filed 6-2-78; effective thirtieth day thereafter (Register 78. No. 
22). 

2. Repealer filed 1-12-83; effective thirtieth day thereafter (Register 83. No. 3). 

§ 1300.57.1 . Solicitor Firm Application by Person Not 
Licensed by Insurance Commissioner. 

NOTE: Authority cited: Section 1344. Health and Safety Code. Reference: .Section 
1357, Health and Safety Code. 

History 

1. Amendment filed4-27-79; effective thirtieth day thereafter (Register 79, No. 
17). 

2. Repealer filed 1-12-83; effective thirtieth day thereafter (Register 83. No. 3). 

§ 1300.57.2. Amendment to Solicitor Firm Application. 

History 

1. Repealer filed 1-12-83; effective thirtieth day thereafter (Register 83. No. 3). 

§ 1300.57.3. Fees Payable by Licensed Insurance Agents 
and Brokers. 

History 

1. Repealer filed 1-12-83: effective thirtieth day thereafter (Register 83. No. 3). 

§ 1300.57.4. Solicitor Financial Records Authorization. 

NOTE: Authority cited: Sections 1343 and 1344, Health and Safety Code. Refer- 
ence: Section 1357. Health and Safety Code. 

History 

1. New section filed 1 1-9-77 as an emergency; effective upon filing (Register 77. 
No. 46). 

2. Certificate of Compliance filed 2-6-78 (Register 78. No. 6). 

3. Repealer filed 1-12-83; effective thirtieth day thereafter (Register 83. No. 3). 

§ 1300.59. Plan Assurances Prior to Solicitation. 

Prior to allowing any person to engage in acts of solicitation on its be- 
half, each plan shall reasonably assure itself that such person has suffi- 
cient knowledge of its organization, procedures, plan contracts, and the 
provisions of the Act and these rules to do so lawfully. 
NOTE: Authority cited: Section 1 344. Health and Safety Code. Reference: Section 
13.59. Health and Safety Code. 

History 
l.Repealerand new section filed 1-12-83: effective thirtieth dav thereafter (Reg- 
ister 83. No. 3). 

§ 1300.59.1. Examination Fee. 

History 
1. Repealer filed 1-12-83; effective thirtieth day thereafter (Register 83. No. 3). 



Page 45 



Register 2002, No. 47; 11 - 22 - 2002 



§ 1300.59.2 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



§ 1300.59.2. Waiver of Examination Requirements. 

NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Section 
1359. Health and Safety Code. 

History 

1. Amendment filed 6-2-78; effective thirtieth day thereafter (Register 78, No. 

22). 

2, Repealer tiled 1-12-83; effective thirtieth day thereafter (Register 83. No. 3). 



Article 5. Advertising and Disclosure 

§ 1300.61. Filing of Advertising and Disclosure Forms. 

(a) Two copies of a proposed advertisement shall be filed. An adver- 
tisement is "filed'" within the meaning of Section 1361 of the Act when 
a true copy thereof, accurately showing the final appearance of the adver- 
tisement, is received. To minimize the expense of changes in advertising 
copy, it may be submitted in draft form for preliminary review subject to 
the later filing of a proof or final copy, and the later filing of a proof or 
final copy may be waived when the draft copy is presented in a manner 
reasonably representing the final appearance of the adverti.sement. The 
text of audio or audio/visual adverfising should indicate any directions 
for presentation, including voice qualifies and the juxtaposition of the vi- 
sual materials with the text. 

(b) The Director will not issue letters of nondisapproval of advertising. 
If the person submitting the advertisement requests an order shortening 
the 30-day waiting period under Secfion 1361 of the Act, such order will 
be issued when an appropriate showing of the need therefor is made. 
NOTE: Authority cited: Section 1 344, Health and Safety Code. Reference: Section 
1361, Health and Safety Code. 

History 
1. Change without regulatory effect amending subsection (b) and adding Note; 
filed 7-1 8-2000 pursuant to section 1 00, title I , California Code of Regulations 
(Register 2000, No. 29). 

§ 1 300.61 .1 . Exempt Advertising. 

History 
1. Repealer filed 1-12-83; effective thirtieth day thereafter (Register 83, No. 3). 

§ 1 300.61 .3. Deceptive Advertising. 

Without limitaUon upon the meaning of subdivision (a) of Section 
1352.1 and subdivisions (a) and (c) of Section 1361 ofthe Act, an adver- 
tisement or other consumer information is untrue, misleading or decep- 
tive if: 

(a) It represents that reimbursement is provided in full for the charge 
for services, unless the payment by the plan fully sausfies the liability to 
the provider. 

(b) It represents that reimbursement is provided for the customary 
charges for services, unless the actual experience ofthe plan is that there 
is no balance billed for covered services. 

(c) It represents that the plan, solicitor firm or solicitor or any provider 
or other person associated therewith is licensed or regulated by the De- 
partment of Managed Health Care or other governmental agency, unless 
such statement is required by law or regulation or unless such statement 
is accompanied by a satisfactory statement which counters any inference 
that such licensing or regulation is an assurance of financial soundness 
or the quality or extent of services. The phrase "a federally qualified 
health maintenance organization" and equivalent terms shall not be 
deemed deceptive advertising when used to refer to an organizafion 
which is so qualified under the Health Maintenance Organization Act of 
1973. The display, on a plan contract which supplements Medicare with 
hospital or medical coverage, of the particular emblem approved by the 
federal Department of Health and Human Services and indicating that 
such contract meets the certification requirements of 42 U.S.C. 1395ss 
and the regulations ofthe Health Care Financing Administration thereun- 
der, or, in lieu of such emblem, of such informaUon, if any, regarding cer- 
tification as may be approved in writing as to form and content by the Di- 
rector, shall not be deemed deceptive when ( I ) the Director has found that 
such contract complies with the provisions ofthe Act and these rules and 
by written notification has authorized the plan to so display such emblem 



or, in lieu of such emblem, such expressly approved information, if any. 
regarding certification and has not revoked such authorization, and (2) 
such contract, and any related disclosure form, evidence of coverage, 
printed material, and adverfising. contains no untrue information regard- 
ing the emblem and does not otherwise violate this subsection. 
NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Sec- 
tions 1352.1. 1360 and 1361. Health and Safety Code. 

History 

1 . New subsection (c) filed 6-2-78; effective thirtieth day thereafter (Register 78. 
No. 22). 

2. Amendment filed 8-12-82; effective thirtieth day thereafter (Register 82, No. 
33). 

3. Change without regulatory effect amending subsection (c) filed 7-1 8-2000 pur- 
suant to section 1 00, title 1 , California Code of Regulations (Register 2000, No. 
29). 

4. Change without regulatory effect amending subsection (c) filed 11-21-2002 
pursuant to section 100, title 1 . California Code of Regulations (Register 2002, 

No. 47). 

§1300.63. Disclosure Form. 

(a) The disclosure form required under subdivision (a) of Section 1 363 
of the Act shall conform to the following requirements. 

( 1 ) The text shall be printed in at least 10-point block type. Titles and 
captions shall be in at least 12-point to 15-point bold face type. 

(2) It shall be written in clear, concise, easily understood language. 

(3) It should relate to one form of plan contract; however, disclosure 
forms offering alternafive plans or options will be permitted if presented 
in a manner which clearly identifies the alternaUves and their effect upon 
the contract. 

(4) It shall be presented in an easily readable format. 

(b) The disclosure form shall be arranged and capfioned in the follow- 
ing manner, except as may otherwi.se be permitted by the Director. 

(1 ) The name of the plan and. if necessary, a designation of the plan 
contract described in the form. 

(2) The title ofthe form (e.g.. "disclosure form," "summary of contract 
provisions"). 

(3 ) A statement in at least 1 0-point bold face type to the effect that the 
disclosure form is a summary only and that the plan contract itself should 
be consulted to determine the governing contractual provisions. 

(4) A statement to the effect that a specimen copy ofthe plan contract 
will be furnished on request. 

(5) The capUon "Principal Benefits and Coverages." followed by a de- 
scription of such benefits and coverages. 

(6) The caption "Principal Exclusions and Limitafions on Benefits," 
followed by a descripfion ofthe principal exclusions, exceptions, reduc- 
Uons and limitafions that apply, and arranged in a uniform manner with 
the preceding section of the form. 

(7) The caption "Prepayments Fees" followed by a statement of the 
methods by which such premium may be paid; the full premium charge 
of the plan; and a statement ofthe authority to change the fees during the 
term of the contract. 

(8) The caption "Other Charges," followed by a description of each 
co-payment, co-insurance, or deductible requirement that may be in- 
curred by the member or the member's family in obtaining coverage un- 
der the plan. 

(9) The caption "Choice of Physicians and Providers." followed by a 
description of the nature, extent and circumstances under which choice 
is permitted. This secfion shall include, if applicable, a subcapfion "Li- 
ability of Subscriber or Enrollee for Payment" followed by a description 
ofthe financial liabifity which is, or may be. incurred by the subscriber, 
enrollee or a third party by reason of the exercise of such choice. 

(10) If applicable, the caption "Reimbursement Provisions." followed 
by a description of the circumstances under which reimbursements are 
made under the plan contract, the extent of reimbursement, and the meth- 
od of claim for reimbursement. 

(11) The capfion "Facilifies." followed by a statement of the principal 
facilifies available under the plan contract, including their location and 
a description of the services, provided. The hours of availability of both 
emergency and nonemergency services should be indicated, either spe- 



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Title 28 



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§ 1300.63.2 



• 



cifically or by general description. However, il the Director approves in 
advance, a plan may provide a telephone number from which informa- 
tion as to the identity and location of provider facilities defined in subsec- 
tion (i)(2) of Section 1 300.45 may be obtained, in lieu of listing such pro- 
vider facilities. 

( 1 2) The caption "Renewal Provisions." followed by a statement of the 
terms under which the plan contract may be renewed by the group or the 
plan member, including any reservation by the plan of any right to change 
premiums or other plan contract provisions. 

(1.^) In the case of group contracts, the caption "Individual Continua- 
tion of Benefits," followed by a statement of the terms and conditions un- 
der which subscribers and enrollees may remain in the plan, as provided 
pursuant to Subdivision (g) of Section 1373 of the Act. 

(14) The caption "Termination of Benefits." followed by a statement 
of the terms and conditions for cancellation or termination of benefits, in- 
cluding a statement as to when benefits shall cease in the event of non- 
payment of the prepaid or periodic charge and the effect of nonpayment 
upon a member who is hospitalized or undergoing treatment for an ongo- 
ing condition. 

(c) In the event the receipt of benefits or reimbursements to subscribers 
or enrollees under the plan contract is subject to significant delays, based 
upon the current experience of the plan, the disclosure form may be re- 
quired by the Director to disclose such facts. 

NoTE; Authority cited: Section 1 344, Health and Safety Code. Reference: Section 
1 .163, Health and Salety Code. 

History 

1 . Amendment filed 1-12-83; effective thirtieth dav thereafter (Resister 83. No. 

3). 

2. Change without regulatory effect amending subsections (b). (b)( 1 1 )and (c) tiled 
7-18-2000 pursuant to section 100, title 1, California Code of Regulations 
(Resrister2000. No. 29). 



§ 1 300.63.1 . Evidence of Coverage. 

(a) Each plan shall furnish to each individual sub.scriber. and make 
available to group contract holders for dissemination to all persons eligi- 
ble under the group contract, either an evidence of coverage or a copy of 
the plan contract, which shall conform to the requirements of this section. 
The Director may permit the evidence of coverage and the disclosure 
form prescribed by Section 1 300.63 to be presented in a single document 
if the purposes of each are fulfilled. 

(b) Except as may be otherwise permitted by the Director, the evidence 
of coverage shall conform to the requirements of subsection (a) of Sec- 
tion 1300.63 and the following requirements: 

(1) It shall be clearly entitled "Evidence of Coverage." 

(2) The portions of the text specifying ( 1 ) limitations, exclusions, ex- 
ceptions and reductions; (2) rights of cancellation; (3) restrictions on re- 
newal or reinstatement; (4) rights of the health plan to change benefits; 
(5) subsequent providers; and (6) liability of members in the event of 
nonpayment by the health plan, shall be in type not less than 2 points larg- 
er than the text relating to other provisions and in no event less than 12 
point type. 

(3) It shall be divided into sections, each of which shall have a title 
identifying the nature of the information contained therein. 

(4) The evidence of coverage when taken as a whole, with consider- 
ation being given to formal, typography and language, must constitute a 
fair disclosure of the provisions of the health plan. 

(c) The evidence of coverage shall contain at a minimum the following 
information: 

(1) The name of the health plan, the principal address from which it 
conducts its business and its telephone number. 

(2) The definitions for the words contained therein that have meanings 
other than those attributed to them by the public in general usage. 

(3) The manner in which the member can determine who is or may be 
entitled to benefits. 

(4) The time and date or occurrence upon which coverage takes effect 
including a specification of any applicable waiting periods. 



(5) The time and date or occurrence upon which coverage will lerini- 
nate. 

(6) The conditions upon which cancellation may be effected by the 
health plan or by the member, and a statement that a subscriber or enroll- 
ee who alleges that an enrollment or subscription has been cancelled or 
not renewed because of the enrollee's or subscriber's health status or re- 
quirements for health care services may request a review of cancellation 
by the Director. 

(7) The conditions for and any restrictions upon the member's right to 
renewal or reinstatement. 

(8) The amount of the periodic payment to be made by the member, 
the time by which the payment must be made, and the address at or to 
which the payment shall be made, except that a member under group cov- 
erage may be referred to the group contract holder for information re- 
garding any sums to be withheld from the member's salary or to be paid 
by the member to the employer or group contract holder. 

(9) A complete statement of all benefits and coverages and the related 
limitations, exclusions, exceptions, reductions, copaymenis, and deduc- 
tibles. 

( 10) A statement of any restriction on assignment of sums payable to 
the member by the health plan. 

(11) The exact procedure for obtaining benefits including the proce- 
dure for filing claims. The procedure for filing claims must stale the time 
by which the claim must be filed, the form in which it is to be filed and 
the address at or to which it shall be delivered or mailed. 

(12) Any procedures required to be followed by the member in the 
event any dispute arises under the contract, including any requirement for 
arbitration. 

( 1 3) The address and telephone number designated by the health plan 
to which complaints from members are to be directed, and a description 
of the plan's grievance procedure. 

( 14) A statement to the effect that, by statute, every contract between 
the health plan and a provider shall provide that in the event the health 
plan fails to pay the provider, the member shall not be liable to the provid- 
er for any sums owed by the health plan. 

( 1 5) A statement to the effect that in the event the health plan fails to 
pay a noncontracting provider, the member may be liable to the noncon- 
tracting provider for the cost of the services. 

(16) An appropriate statement to fulfill the requirement of Section 
1300.69(i)(l), unless the plan undertakes to mail such information annu- 
ally. 

( 1 7) A statement which shall be set forth in boldface type not less than 
2 points larger than the type required by subsection (b)(2): "This evi- 
dence of coverage constitutes only a summary of the health plan. The 
health plan contract must be consulted to determine the exact terms and 
conditions of coverage." 

Note. Authority cited: Section 1344, Health and Safety Code. Reference: Sec- 
tions 1343, 1360 and 1363. Health and Safety Code. 

History 

1 . Amendment of subsection (c)( 1 6) filed 6-2-78; effective thirtieth day thereafter 
(Register 78, No. 22). 

2. Amendment of subsection (c) filed 1-12-83; effective thirtieth day thereafter 
(Register 83, No. 3). 

3. Change without regulatory effect amending subsections (a), (b) and (c)(6) filed 
7-18-2000 pursuant to section 100, title 1, California Code of Regulations 
(Register 2000, No. 29). 

§ 1300.63.2. Combined Evidence of Coverage and 
Disclosure Form. 

Notwithstanding Sections 1300.63 and 1300.63.1 ofthese rules, a plan 
may combine the evidence of coverage and disclosure form into a single 
document if such plan complies with each of the following requirements: 

(a) Each plan shall furnish to each individual subscriber, and make 
available to group contract holders for dissemination to all persons eligi- 
ble under the group contract, either a single document consisting of a 
combined evidence of coverage and disclosure form or a copy of the plan 
contract, which shall conform to the requirements of this section. 



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§ 1300.63.3 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



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(b) Except as may be otherwise permitted by the Director, the com- 
bined evidence of coverage and disclosure form shall conform to the fol- 
lowing requirements: 

( 1 ) It shall be clearly entitled "Combined Evidence of Coverage and 
Disclosure Form." 

(2) The text shall be printed in at least ten point block type. Titles and 
captions shall be in at least twelve point to fifteen point boldface type. 

(3) It shall be written in clear, concise, easily understood language. 

(4) It should relate to one form of plan contract; however, combined 
evidence of coverage and di.sclosure forms offering alternative plans or 
options will be permitted if presented in a manner which clearly identifies 
the alternatives and their effect upon the contract. 

(5) It shall be presented in an easily readable format. 

(6) The combined evidence of coverage and disclosure form when tak- 
en as a whole, with consideration being given to format, typography and 
language, must constitute a fair disclosure of the provisions of the health 
plan. 

(c) The combined evidence of coverage and disclosure form shall con- 
tain at a minimum the following information: 

( 1 ) The name of the health plan, the principal address from which it 
conducts its business and its telephone number. 

(2) A statement that the specimen of the plan contract will be furnished 
on request. 

(3) The dellnitions for the words contained therein that have meanings 
other than those attributed to them by the public in general usage. 

(4) The manner in which the member can determine who is or may be 
entitled to benefits, except that a member under group coverage may be 
referred to the group contract holder for such information. 

(5) The time and date or occurrence upon which coverage takes effect 
including a specification of any applicable waiting periods. 

(6) The time and date or occurrence upon which coverage will termi- 
nate. 

(7) The conditions upon which cancellation may be effected by the 
health plan or by the member, and a statement that a subscriber or enroll- 
ee who alleges that an enrollment or subscription has been cancelled or 
not renewed because of the enrol lee's or subscriber's health status or re- 
quirements for health care services may request a review of cancellation 
by the Director. 

(8) The conditions for and any restrictions upon the member's right to 
renewal or reinstatement. 

(9) The caption "Prepayment Fees" followed by a statement of the 
methods by which such premium may be paid; the full premium charge 
of the plan; and a statement of the authority to change the fees during the 
term of the contract. 

(10) The amount of the periodic payment to be made by the member, 
the time by which the payment must be made, and the address at or to 
which the payment shall be made, except that a member under group cov- 
erage may be referred to the group contract holder for information re- 
garding any sums to be withheld from the member's salary or to be paid 
by the member to the employer or group contract holder. 

( 1 1 ) A complete statement of all benefits and coverages and the related 
limitations, exclusions, exceptions, reductions, copayments, and deduc- 
tibles. 

( 1 2) The caption "Other Charges," followed by a description of each 
copayment, coinsurance, or deductible requirement that may be incurred 
by the member or the member's family in obtaining coverage under the 
plan. 

( 1 3) A statement of any restriction on assignment of sums payable to 
the member by the health plan. 

(14) The exact procedure for obtaining benefits including the proce- 
dure for filing claims. The procedure for filing claims must state the time 
by which the claim must be filed, the form in which it is to be filed, and 
the address at or to which it shall be delivered or mailed. 

(15) Any procedures required to be followed by the member in the 
event any dispute arises under the contract, including any requirement for 
arbitration. 



(16) The address and telephone number designated by the health plan 
to which complaints from members are to be directed, and a description 
of the plan's grievance procedure. 

( 1 7) The caption "Choice of Physicians and Providers," followed by 
descripuon of the nature, extent and circumstances under which choice 
is permitted. This section shall include, if applicable, a subcaption "Li- 
ability of Subscriber or Enrollee for Payment" followed by a descripuon 
of the financial liability which is, or may be, incurred by the subscriber, 
enrollee or a third party by reason of the exercise of such choice. 

(18) A statement to the effect that, by statute, every contract between 
the health plan and a provider shall provide that in the event the health 
plan fails to pay the provider, the member shall not be liable to the provid- 
er for any sums owed by the health plan. 

(19) A statement to the effect that in the event the health plan fails to 
pay noncontracting providers, the member may be liable to the noncon- 
tracting provider for the cost of services. 

(20) If applicable, the capfion "Reimbursement Provisions," followed 
by a description of the circumstances under which reimbursements are 
made under the plan contract, the extent of reimbursement, and the meth- 
od of claim for reimbursement. 

(21) The caption "Renewal Provisions," followed by a statement of the 
terms under which the plan contract may be renewed by the group or the 
plan member, as appropriate, including any reservation by the plan of any 
right to change premiums or other plan contract provisions. 

(22) The caption "Facilities," followed by a statement of the principal 
facilities available under the plan contract, including their location and 
description of the services provided. The hours of availability of both 
emergency and non-emergency services should be indicated, either spe- 
cifically or by general description. However, if the Director approves in 
advance, a plan may provide a telephone number from which informa- 
tion as to the identity and location of the provider faciliUes defined in sub- 
section (i)(2) of Section 1300.45 of these rules may be obtained, in lieu 
of listing such provider facilities. 

(23) In the case of group contracts, the caption "Individual Continua- 
tion of Benefits," followed by a statement of the terms and conditions un- 
der which subscribers and enrollees may remain in the plan, as provided 
pursuant to subdivision (g) of Secfion 1373 of the Act. 

(24) The caption "Termination of Benefits," followed by a statement 
of the terms and condidons forcancellafion ortermination of benefits, in- 
cluding a statement as to when benefits shall cease in the event of non- 
payment of the prepaid or periodic charge and the effect of nonpayment 
upon a member who is hospitalized or undergoing treatment for an ongo- 
ing condiUon. 

(25) Any appropriate statement to fulfill the requirement of Section 
1 3(X).69(i)( 1 ) of these rules, unless the plan undertakes to mail such in- 
formation annually. 

(26) In the event that receipt of benefits or reimbursements to subscrib- 
ers or enrollees under the plan contract is subject to significant delays, 
based upon the current experience of the plan, the combined evidence of 
coverage and disclosure form may be required by the Director to disclose 
such facts. 

(27) A statement which shall be set forth in boldface type not less than 
two points larger than the type required by subsecfion (b)(2): "This com- 
bined evidence of coverage and disclosure form constitutes only a sum- 
mary of the health plan. The health plan contract must be consulted to de- 
termine the exact terms and conditions of coverage." 

NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Sec- 
tions 1345, 1360, 1363 and 1368, Health and Safety Code. 

History 

1 . New section filed 8-12-82; effective thirtieth day thereafter (Register 82, No. 
33). 

2. Change without regulatory effect amending subsections (b), (c)(7), (c)(22) and 
(c)(26) filed 7-1 8-2000 pursuant to section 1 00, title 1 , California Code of Reg- 
ulations (Register 2000, No. 29). 

§ 1300.63.3. Experimental Disclosure. 

Notwithstanding those provisions of Sections 1300.63, 1300.63.1, 
1300.63.2, and 13(X).67.4 which require the use of any particular type 



• 



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Title 28 



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§ 1300.65 



• 



si/c. boldface type, caption, siibcaption, heading, design, order, or for- 
mal, the Director by order may approve, for experimental use, reasonable 
alternatives to such requirements for a disclosure form, evidence of cov- 
erage, combined evidence of coverage and disclosure form, or plan con- 
tract upon the written request of a plan, for such period and under such 
conditions as the Director may specify, subject to each of the following 
conditions: 

(a) That the plan submits two draft copies of the document containing 
the proposed alternatives, one as proposed to be used and the other re- 
dlined to highlight the proposed changes, along with two copies of the 
related plan contract, at least 30 days prior to any use of the document, 
or such shorter period as the Director by order may allow. 

(b) Thai the plan demonstrates to the satisfaction ol' the Director that 
the document containing the proposed alternatives furthers the purposes 
of the Act, otherwise complies with the Act and the rules thereunder, and 
will provide to actual or potential subscribers or enrollees (as the case 
may be) unobjectionable information at least as clear, concise, accurate. 
easily understood, and easily readable as could otherwise be achieved. 

(c) That the plan submits a proof or final copy of the document at such 
time, not to exceed 30 days, prior to its initial use as may be specified by 
the Director. 

NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Section 
1.36.3. Health and Safety Code. 

H {.STORY 

1 . New section filed 1-12-83; effective thirtieth day thereafter (Register 83, No. 
3). 

2. Change without regulatory effect amending section filed 7-18-2000 pursuant 
to section 100, title 1, California Code of Regulations (Register 2000. No. 29). 

§ 1300.63.50. Medicare Supplement Additional Disclosure. 

NOTE: Authority cited: Section 1 344, Health and Safety Code. Reference: Section 

1363, Health and Safety Code. 

History 

1. New section filed 8-12-82; effective thirtieth day thereafter (Register 82, No. 

33). 

2. Repealer and new table, amendment ofsub.section(a)(5)(A)8., and new subsec- 
tion (a)(5)(A)9. filed 1 1-26-91; operative 12-26-91 (Register 92, No. 10). 

3. Change without regulatory effect repealing section filed 9-14-92 pursuant to 
section 100. title 1, California Code of Regulations (Register 92, No. 38). 

§ 1300.64.50. Medicare Supplement Application 
Information. 

NotE; Authority cited: Secuon 1 344, Health and Safety Code. Reference: Section 

1364, Health and Safety Code. 

History 

1 . New section filed 8-12-82; effective thirtieth day thereafter (Register 82, No. 
33). 

2. Amendment filed 1 1-26-91; operative 12-26-91 (Register 92, No. 10). 

3. Change without regulatory effect repealing section filed 9-14-92 pursuant to 
section 100, title 1 , California Code of Regulations (Register 92, No. 38). 

§ 1 300.64.51 . Medicare Supplement "Buyer's Guide." 

NOTE: Authority cited: Section 1 344, Health and Safety Code. Reference: Secfion 
1 364. Health and Safety Code. 

History 

1. New section filed 8-12-82; effective thirtieth day thereafter (Register 82, No. 
33). 

2. Amendment of subsections (a) and (b) filed 11-26-91; operafive 12-26-91 
(Register 92, No. 10). 

3. Change without regulatory effect repealing section filed 9-14-92 pursuant to 
section 100, title 1. California Code of Regulations (Register 92, No. 38). 

§ 1300.64.52. Standards for Marketing Medicare 
Supplement Contracts. 

NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Section 
1346, 1364 and 1367.15, Health and Safety Code; 42 U.S.C. 1395ss. 

History 

1. New section filed 1 1-26-91; operative 12-26-91 (Register 92, No. 10). 

2. Change without regulatory effect repealing section filed 9-14-92 pursuant to 
section 100, title 1, California Code of Regulations (Register 92, No. 38). 



§ 1300.64.53. Reporting of Multiple Coverage. 

NOTE: Authority cited: Section 1 344. Health and Safety Code. Reference: Section 
1367.15 and 1384(d)(i), Health and Safety Code; 42 U.S.C. 1.395ss. 

History 

1. New section filed 1 1-26-91; operative 12-26-91 (Register 92. No. 10). 

2. Change without regulatory effect repealing section filed 9-14-92 pursuant to 
section 100, title 1. California Code of Regulations (Register 92, No. 38). 

§ 1300.64.54. Replacement Contracts: Elimination of 
Waiting Periods. 

NOTE: Authority cited: Section 134^1. Health and Safely Code. Reference: Sec- 
tions 1367.15 and 1384(d)(i). Health and Safety Code; 42 U.S.C. 1395ss. 

History 

1 . New section filed 1-8-92; operative 1-1-92 (Register 92, No. 10). 

2. Change without regulatory effect repealing section filed 9-14-92 pursuant to 
secuon 100, title 1, California Code of Regulations (Register 92. No. 38). 

§ 1300.64.55. Permitted Compensation Arrangements for 
the Sale of Medicare Supplement Contracts. 

NOTE: Authority cited: Section 134^. Health and Safety Code. Reference: Sec- 
tions 1346(i), 1367(h) and 1367.15, Health and Safety Code; 42 U.S.C. l.'^9.5.ss. 

History 

1. New secfion filed 11-26-91; operative 12-26-91 (Register 92. No. 10). 

2. Change without regulatory effect repealing section filed 9-14-92 pursuant to 
section 100, title I, California Code of Regulations (Register 92, No. 38). 



Article 6. Appeals on Cancellation 

§ 1300.65. Cancellation of Enrollment. 

(a) For the purposes of subdivision (a)(3) of Section 136.'i of the Act, 
"good cause" means a cause for cancellation or failure to renew which 
the Director has not found to be objectionable by regulation. 

(b) In the event that the plan cancels or refuses to renew a plan contract, 
or a subscription or enrollment thereunder, the plan shall mail a notice of 
cancellation to the subscriber at the subscriber's address of record with 
the plan. However, in the event that the plan cancels or refuses to renew 
a group contract, the plan need not mail a notice of cancellation to each 
subscriber thereunder if: 

( 1 ) the plan contract requires the group contract holder to mail prompt- 
ly any such notice to each subscriber. 

(2) the plan mails or hand delivers a notice of cancellation to the group 
contract holder designated in the plan contract, and 

(3) the plan demonstrates that the group contract holder promptly 
mailed a legible, true copy of the notice of cancellation to each subscriber 
at the subscriber's current address and promptly provided proof of such 
mailing and the date thereof to the plan. Unless the plan contract other- 
wise provides, a notice of cancellation pursuant to subdivision (a)(2) of 
Section 1365 of the Act may be effective upon mailing to the sub.scriber, 
and a notice of cancellation pursuant to subdivision (a)(3) may be effec- 
tive 15 days after the notice is mailed to the subscriber. This subsection 
is not applicable to a loss of eligibility for Medi-Cal benefits. 

(c) A notice of cancellation inust be in writing and dated, and must 
state 

(1) the cause for cancellation, with specific reference to the clause of 
the plan contract giving rise to the right of cancellation, 

(2) that the cause for cancellation was not the enrollee's or subscriber's 
health status or requirements for health care services, 

(3) the time when the cancellation is effective in accordance with the 
provisions of subsection (b) or Medi-Cal requirements, as appropriate, 
and 

(4) that a subscriber or enrollee who alleges that an enrollment or sub- 
scription has been cancelled or not renewed because of the enrollee's or 
subscriber's health status or requirements for healthcare services may re- 
quest a review of cancellation by the Director. 

(d) A plan which refuses to renew a subscription or enrollment shall 
give notice to the person seeking such renewal substantially in the form 
and content required by subsection (c). except where nonrenewal or non- 
enrollment is based on avoidance of duplication of coverage where the 
subscriber or applicant has become eligible for Medi-Care benefits. 



Page 49 



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§ 1300.65.1 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



(e) The terms "cancellation" and "failure to renew," for the purposes 
of Section 1365 of the Act. do not include a voluntary termination by a 
subscriber or the termination of a plan contract which does not contain 
a renewal provision. 

NOTE: Authority cited: Section 1 344, Health and Safety Code. Reference: Section 
i 365, Health and Safety Code. 

History 

1. Amendment filed 1-12-83; effective thirtieth day thereafter (Register 83. No. 
3). 

2. Change without regulatory effect amending suhsection.s (a) and (c)(4) filed 
7-18-2()()() pursuant to section 100. title 1, California Code of Regulations 
(Register2()00, No. 29), 

§ 1300.65.1 . Cancellation Complaint Form. 

(a) A request that the Director review cancellation of, or refusal to re- 
new, an enrollment or subscription pursuant to subdivision (b) of Section 
136.5 of the Act shall be made in writing, signed by the subscriber or en- 
rollee or the legal representative of the subscriber or enrollee and it shall 
be in the following form (or in letter form containing the information spe- 
cified in the form below): 

DEPARTMENT OF MANAGED HEALTH CARE 
STATE OF CALIFORNIA 

TO: Health Plan Division Date: 

Department of Managed Care 
320 West 4th Street. Suite 7.50 
Los Angeles, CA 90013-1 105 

RE: COMPLAINT ON CANCELLATION OF. 
OR REFUSAL TO RENEW, HEALTH CARE 
SERVICE PLAN BENEFITS. 

The undersigned requests that the Director review the cancellation or refusal to re- 
new the subscription or enrollment for health plan benefits pursuant to Section 
1365 of the Knox-Keene Health Care Service Plan Act of 1975, as follows: 

1 . Name of person whose benefits were cancelled or not renewed: 

2. Name of subscriber, if different than "1" above: 

3. Name of plan: 

4. Subscriber or Enrollee Account or Identification Number: 

5. If applicable, the Group Identification Number: 



6. Date notice of cancellation or refusal to renew was received: 

7. Attach copies of: 

(a) The notice of cancellation or refusal to renew received from the plan. 

(b) Any correspondence with the plan regarding such cancellation or refusal to 
renew. 

8. State why such cancellation or refusal to renew is believed to be an improper 
action by the plan: 



9. Are you aware of the existence of any grounds for cancellation or refusal to 
renew under the terms of the agreement with the plan? 



10. Explain why you believe that the cause or causes for cancellation enumer- 
ated in the notice of cancellation received from the Plan are inadequate or untrue. 
Attach copies of any documents which are relevant to your explanation. 



1 1 . Does such cancellation or refusal to renew prevent or interfere with provid- 
ing medical care to any person currently in need of such care? 



12. Has the person named in item 1 above whose benefits were cancelled re- 
ceived any medical or health care since the cancellation? If so, what services have 
been received and how much did they cost? 



(b) Upon receipt of a complaint pursuant to subsection (b) of Section 
1 365 of the Act, the Director will immediately forward a copy of such 
complaint to the plan, together with a request that the plan furnish the Di- 
rector with 

( 1 ) a copy of the notice of cancellation or refusal to renew. 

(2) a copy of any correspondence relating thereto. 

(3) a statement of the reason for such cancellation or refusal to renew 
and 

(4) a response to the complainant's allegations pursuant to Item 9 of 
the complaint form in subsection (a). Such information shall be returned 
to the Director by the plan within 10 business days following its receipt 
of the Director's request. 

(c) Following examination of the information provided pursuant to 
subsection (a) and (b), the Director will notify the complainant and the 
plan of the determination of whether or not a proper complaint exists un- 
der the provisions of subdivision (b) of Section 1365 of the Act. 
NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Section 

1 365. Health and Safety Code. 

History 

1 . Amendment of subsecUon (a) filed 1-12-83; effective thirtieth day thereafter 
(Register 83. No. 3). 

2. Change without regulatory effect amending form filed 5-24-99 pursuant to sec- 
tion 100, title 1. California Code of Regulations (Register 99, No. 22). 

3. Change without regulatory effect amending section filed 7-18-2000 pursuant 
to section 100, title I , California Code of Regulations (Register 2000, No. 29). 

4. Change without regulatory effect amending subsection (a) filed 11-21-2002 
pursuant to section 1 00, title 1 , California Code of Regulations (Register 2002, 
No. 47). 

§1300.66. Deceptive Plan Names. 

(a) A change of plan name is a "material modification" of the plan 
within the meaning of subdivision (b) of Section 1352 of the Act. 

(b) A plan name will be considered deceptive if it suggests the quality 
of care furnished by the plan, or that full benefits are provided for health 
care or a specialized area of health care, or that the cost of benefits to 
members of the plan is lower than the cost of similar benefits purchased 
elsewhere, and in any such case the express or implied representation 
contained in the plan name is demonstrably untrue or is not supported by 
substantial evidence, at all times while such name is used by the plan. 
Nothing in this subsection limits or restricts the Director from a determi- 
nation that a plan or solicitor firm name is deceptive for reasons other 
than those stated herein. 

NOTE: Authority cited: Section 1 344. Health and Safety Code. Reference: Section 

1366. Health and Safety Code. 

History 
1. Change without regulatory effect amending subsecfion (b) and adding Note 
filed 7-1 8-2000 pursuant to section 100. fitle 1, California Code of Regulations 
(Register 2000. No. 29). 



Signature of Complainant 



Article 7. Standards 

§ 1300.67. Scope of Basic Health Care Services. 

The basic health care services required to be provided by a health care 
service plan to its enrollees shall include, where medically necessary, 
subject to any copayment, deductible, or limitation of which the Director 
may approve: 

(a) Physician services, which shall be provided by physicians licensed 
to practice medicine or osteopathy in accordance with applicable Califor- 
nia law. There shall also be provided consultation with and referral by 
physicians to other physicians. 

( 1 ) The plan may also include, when provided by the plan, consultation 
and referral (physician or, if permitted by law, patient initiated) to other 
health professionals who are defined as dentists, nurses, podiatrists, op- 
tometrists, physician's assistants, clinical psychologists, social workers, 
pharmacists, nutritionists, occupational therapists, physical therapists 
and other professionals engaged in the delivery of health services who 
are licensed to practice, are certified, or practice under authority of the 
plan, a medical group, or individual practice association or other author- 
ity authorized by applicable California law. 



• 



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Title 28 



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§ 1300.67.04 



• 



(h) Inpatient hospital services, which shall mean short-term general 
hospital services, including room with customary furnishings and equip- 
ment, meals (including special diets as medically necessary), general 
nursing care, use of operating room and related facilities, intensive care 
unit and services, daigs, medications, biologicals, anesthesia and oxygen 
services, diagnostic laboratory and x-ray services, special duly nursing 
as medically necessary, physical therapy, respiratory therapy, adminis- 
tration of blood and blood products, and other diagnostic, therapeutic and 
rehabilitative services as appropriate, and coordinated discharge plan- 
ning including the planning of such continuing care as may be necessary, 
both medically and as a means of preventing possible early rehospitaliza- 
tion. 

(c) Ambulatory care services, (outpatient hospital services) which 
shall include diagnostic and treatment services, physical therapy, speech 
therapy, occupational therapy services as appropriate, and those hospital 
services which can reasonably be provided on an ambulatory basis. Such 
services may be provided at a hospital, any other appropriate licensed fa- 
cility, or any appropriate facility which is not required by law to be li- 
censed, if the professionals delivering such services are licensed to prac- 
tice, are certified, or practice under the authority of the plan, a medical 
group, or individual practice association or other authority authorized by 
applicable California law. 

(d) Diagnostic laboratory services, diagnostic and therapeutic radio- 
logical services, and other diagnostic services, which shall include, but 
not be limited to. electrocardiography and electroencephalography. 

(e) Home health services, which shall include, where medically appro- 
priate, health services provided at the home of an enroUee as prescribed 
or directed by a physician or osteopath licensed to practice in California. 
Such home health services shall include diagnostic and treatment ser- 
vices which can reasonably be provided in the home, including nursing 
care, performed by a registered nurse, public health nurse, licensed voca- 
tional nurse or licensed home health aide. 

(1) Home health services may also include such rehabilitation, physi- 
cal, occupational or other therapy, as the physician shall determine to be 
medically appropriate. 

(f) Preventive health services (including services for the detection of 
asymptomatic diseases), which shall include, under a physician's super- 
vision. 

( 1 ) reasonable health appraisal examinations on a periodic basis; 

(2) a variety of voluntary family planning services; 

(3) prenatal care; 

(4) vision and hearing testing for persons through age 16; 

(5) immunizations for children in accordance with the recommenda- 
tions of the American Academy of Pediatrics and immunizations for 
adults as recommended by the U.S. Public Health Service; 

(6) venereal disease tests; 

(7) cytology examinations on a reasonable periodic basis; 

(8) effective health education services, including information regard- 
ing personal health behavior and health care, and recommendations re- 
garding the optimal use of health care services provided by the plan or 
health care organizations affiliated with the plan. 

(g)( 1 ) Emergency health care services which shall be available and ac- 
cessible to enrollees on a twenty-four hour a day, seven days a week, ba- 
sis within the health care service plan area. Emergency health care ser- 
vices shall include ambulance services for the area served by the plan to 
transport the enrollee to the nearest twenty-four hour emergency facility 
with physician coverage, designated by the Health Care Service Plan. 

(2) Coverage and payment for out-of-area emergencies or urgently 
needed services involving enrollees shall be provided on a reimburse- 
ment or fee-for-service basis and instructions to enrollees must be clear 
regarding procedures to be followed in securing such services or benefits. 
Emergency services defined in section 1317.1 include active labor. "Ur- 
gently needed services" are those services necessary to prevent serious 
deterioration of the health of an enrollee. resulting from an unforeseen 
illness, injury, or complication of an existing condition, including preg- 



nancy, for which treatment cannot be delayed until the enrollee returns 
to the plan's service area. "Urgently needed services" includes maternity 
services necessary to prevent serious deterioration of the health of the en- 
rollee or the enrollee" s fetus, based on the enrollee' s reasonable belief 
that she has a pregnancy-related condition for which treatment cannot be 
delayed until the enrollee returns to the plan's service area. 

(h) Hospice services as .set forih in Section 1300.68.2. 
Note-. Authority cited: Section 1344, Health and Safety Code. Reference: Sec- 
tions 1317,1. 1345 and 1367. Health and Safely Code. 

History 

1. Amendment of subsection (c) filed 1-12 83; elTeelive thirtieth day therealier 
(Register 83. No. 3). 

2. Change without regulatory effect amending introductory paragraph filed 
12-22-2000 pursuant to section 100. title 1. California Code of Regulations 
(Regisier2000, No. 51). 

3. New subsection (h) filed 6-26-2001: operative 7-26-2(X)l (Register 2001, No, 
26). 

4. Redesignation and amendment of former subsection (g) as new subsections 
(g)(lH2) filed 9-16-2003; operative 10-16-2003 (Register 2003. No. 38). 

§ 1300.67.04. Language Assistance Programs. 

(a) Application. 

(1) Every health care service plan, including specialized health care 
service plans (plans), shall comply with the requirements of this section. 
The requirements of this section shall not apply to plan contracts for the 
provision of services to Medi-Cal enrollees or to contracts between plans 
and the federal government for the provision of services to Medicare en- 
rollees. 

(2) If a plan has both Medi-Cal and non-Medi-Cal lines of business, 
then the plan will be in compliance with the requirements of this section 
as to its non-Medi-Cal lines of business if: 

(A) The Medi-Cal standards for providing language assistance ser- 
vices, including standards for timeliness and proficiency of interpreters, 
are equivalent to or exceed the standards set forth in Section 1 367.04 of 
the Act and this section; 

(B) The plan applies the Medi-Cal standards for language assistance 
programs to the plan's non-Medi-Cal lines of business; and 

(C) The Department of Managed Health Care (Department) deter- 
mines, as described in Section 1367.04(h)(3) of the Act, that the plan is 
in compliance with the Medi-Cal standards. 

(3) A plan that seeks the Department's determination of compliance 
as provided in subsection (a)(2) shall request such determination as part 
of its filing pursuant to subsection (e)(2) and provide documentation suf- 
ficient to support and verify the request to the Department's satisfaction. 
The Department's determination pursuant to subsection (a)(2) shall ap- 
ply only to the enrollees in a plan's non-Medi-Cal lines of business to 
which the plan actually applies the plan's Medi-Cal program standards. 

(b) Definitions. 

( 1 ) Demographic profile means, at a minimum, identification of an en- 
rollee' s preferred spoken and written language, race and ethnicity. 

(2) Interpretation: the act of listening to something spoken or reading 
something written in one language (source language) and orally expres- 
sing it accurately and with appropriate cultural relevance into another 
language (target language). 

(3) Limited English Proficient or LEP Enrollee: an enrollee who has 
an inability or a limited ability to speak, read, write, or understand the 
English language at a level that permits that individual to interact effec- 
tively with health care providers or plan employees. 

(4) Point of Contact: an instance in which an enrollee accesses the ser- 
vices covered under the plan contract, including administrative and clini- 
cal services, and telephonic and in-penson contacts. 

(5) Threshold Language(s): the language(s) identified by a plan pur- 
suant to Secfion 1367.04(b)(1)(A) of the Act. 

(6) Translation: replacement of a written text from one language 
(source language) with an equivalent written text in another language 
(target language). 



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§ 1300.67.04 



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Title 28 



(7) Vital Documents: the following documents, when produced by the 
plan (plan-produced documents) including when the production or dis- 
tribution is delegated by a plan to a contracting health care service pro- 
vider or administrative services provider: 

(A) Applications; 

(B) Consent forms, including any form by which an enrollee autho- 
rizes or consents to any action by the plan; 

(C) Letters containing important information regarding eligibility and 
participation criteria; 

(D) Notices pertaining to the denial, reduction, modification, or ter- 
mination of services and benefits, and the right to file a grievance or ap- 
peal; 

( E) Notices advising LEP enrollees of the availability of free language 
assistance and other outreach materials that are provided to enrollees; 

(F) A plan's explanation of benefits or similar claim processing in- 
formation that is sent to an enrollee if the document requires a response 
from the enrollee; and 

(G) Subject to subsection (c)(2)(F)(ii), the enrollee disclosures re- 
quired by Section 1363(a)(1), (2) and (4) of the Act. 

(c) Language Assistance Program Requirements. 

Every plan shall develop and implement a language assistance pro- 
gram, which shall comply with the requirements and standards estab- 
lished by Section 1 367.04 of the Act and this section. The language assis- 
tance program shall be documented in written policies and procedures, 
and shall address, at a minimum, the following four elements: standards 
for enrollee assessment; standards for providing language assistance ser- 
vices; standards for staff training; and standards for compliance monitor- 
ing. 

(1) Enrollee Assessment. Every health care service plan and special- 
ized health care service plan shall assess its enrollee population to devel- 
op a demographic profile and to survey the linguistic needs of individual 
enrollees. In assessing its enrollee population each plan shall, at a mini- 
mum: 

(A) Develop a demographic profile of the plan's enrollee population 
for the purposes of calculating threshold languages and reporting to the 
Department pursuant to Section 1367.07 of the Act. All plans shall apply 
statistically valid methods for population analysis in developing the dem- 
ographic profile and plans may utilize a variety of methods for collecting 
demographic data for this purpose, including census data, client utiliza- 
tion data from third parties, data from community agencies and third 
party enrollment processes; 

(B) Survey its enrollees in a manner designed to identify the linguistic 
needs of each of the plan's enrollees, and record the information provided 
by a responding enrollee in the enrollee's file. Plans may utilize existing 
processes and methods to distribute the linguistic needs survey, includ- 
ing but not limited to, existing enrollment and renewal processes, sub- 
scriber newsletters, mailings and other communication processes. A plan 
may demonstrate compliance with the survey requirement by distribut- 
ing to all subscribers, including all individual subscribers under group 
contracts, a disclosure explaining, in English and in the plan's threshold 
languages, the availability of free language assistance services and how 
to inform the plan and relevant providers regarding the preferred spoken 
and written languages of the subscriber and other enrollees under the sub- 
scriber contract; and 

(C) Collect, summarize and document enrollee demographic profile 
data in a manner that enables the plan to maintain confidentiality of per- 
sonal information and to disclose the information to the Department on 
request for regulatory purposes and to contracting providers on request 
for lawful purposes, including language assistance purposes and health 
care quality improvement purposes. This section is not intended to limit 
or expand existing law regarding confidentiality of medical records. 

(2) Providing Language Assistance Services. Every plan shall develop 
language assistance program policies and procedures, which shall de- 
scribe, at a minimum, the information outlined below. 

(A) All points of contact where the need for language assistance may 
be reasonably anticipated. 



(B) The types of resources needed to provide effective language assis- 
tance to the plan's enrollees. 

(C) The plan's processes for informing enrollees of the availability of 
language assistance services at no charge to enrollees, and how to access 
language assistance services. At a minimum, these processes shall in- 
clude the following: 

(i) Processes to promote effecfive identification of LEP enrollee lan- 
guage assistance needs at points of contact, to ensure that LEP enrollees 
are informed at points of contact that interpretation services are available 
at no cost to the LEP enrollee, and to facilitate individual enrollee access 
to interpretation services at points of contact. 

(ii) Processes for including the notice required by Section 
1367.04(b)(l)(B)(v) with all vital documents, all enrollment materials 
and all correspondence, if any, from the plan confirming a new or re- 
newed enrollment. If documents are distributed in an LEP enrollee's pre- 
ferred written language the notice need not be included. 

(iii) Processes for including statements, in English and in threshold 
languages, about the availability of free language assistance services and 
how to access them, in or with brochures, newsletters, outreach and mar- 
keting materials and other materials that are routinely disseminated to the 
plan's enrollees. 

(D) Processes to ensure the plan's language assistance program con- 
forms with the requirements of section 1300.68(b)(3) and (7) of these 
regulations, including standards to ensure that LEP enrollees receive in- 
formation regarding their rights to file a grievance and seek an indepen- 
dent medical review in threshold languages and through oral interpreta- 
tion. 

(i) All plans shall ensure that grievance forms and procedures in 
threshold languages are made readily available to enrollees and to con- 
tracting providers for distribution to enrollees upon request. 

(ii) All plans shall inform contracting providers that informational no- 
tices explaining how enrollees may contact their plan, file a complaint 
with their plan, obtain assistance from the Department and seek an inde- 
pendent medical review are available in non-English languages through 
the Department's web site. The notice and translations can be obtained 
online at www.hmohelp.ca.gov for downloading and printing. In addi- 
tion, hard-copies may be requested by submitting a written request to: De- 
partment of Managed Health Care, Attention: HMO Help Notices, 980 
9th Street, Suite 500, Sacramento, CA 95814. 

(E) Processes to ensure that contracting providers are informed re- 
garding the plan's standards and mechanisms for providing language as- 
sistance services at no charge to enrollees, and to ensure that LEP lan- 
guage needs information collected by the plan is made available to 
contracting providers. 

(F) Processes and standards for providing translation services, includ- 
ing, but not limited to: 

(i) A list of the threshold languages idenfified by the plan; 

(ii) A list of the types of standardized and enrollee-specific vital docu- 
ments that must be translated and the applicable standards for making 
translated vital documents available to subscribers and enrollees. Plans 
need not translate subscriber contracts, evidences of coverage and other 
large disclosure forms and enrollee handbooks in their entirety, but may 
excerpt from large documents the disclosures specified at subsection 
(b)(7)(G) for translation in a format that permits cost-effective and time- 
ly production and distribution, so long as there is no loss of accuracy or 
meaning by doing so. A plan may demonstrate compliance regarding 
translation of the disclosures specified at subsection (b)(7)(G) if the plan 
provides a standardized matrix that lists the major categories of health 
care services covered under the plan's subscriber contracts, together with 
the corresponding copayments and coinsurance, and exclusions and li- 
mitafions, and disclosing any applicable deductibles and lifefime maxi- 
mums, using the same sequence as the uniform matrix described at Sec- 
tion 1363(b)(1) of the Act. 

(iii) A description of how the plan will provide or arrange for the provi- 
sion of translation of vital documents at no charge to enrollees in accor- 
dance with the requirements of Section 1 367.04 of the Act and this sec- 



• 



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8 1300.67.04 



lion. This subsection is not intended to proiiibit or discourage a plan from 
providing translation of vital documents into a greater number of lan- 
guages than the threshold languages; 

(iv) A requirement that non-English translations of vital documents 
must meet the same standards required for English language versions of 
those documents; and 

(v) A requirement that, with respect to vital documents that are not 
standardized, but which contain enrollee-specific information, a plan 
shall provide the English version together with the Department-ap- 
proved written notice of the availability of interpretation and translation 
services and. if a translation is requested, the plan shall provide the re- 
quested translation in accordance with the requirements of Section 
1.^67.04 of the Act and this section. 

(G) Processes and standards for providing individual enrollee access 
to interpretation services at points of contact at no charge, including, but 
not limited to: 

(i) A list of the non-English languages likely to be encountered among 
the plan's enrollees. 

(ii) A requirement that the plan shall provide LEP enrollees with inter- 
pretation services for information contained in plan-produced docu- 
ments. 

(iii) A requirement that qualified interpretation services be offered to 
LEP enrollees, at no cost to the enrollee, at all points of contact, including 
when an enrollee is accompanied by a family member or friend that can 
provide interpretation services. The offer of a qualified interpreter, and 
the enrollee' s refusal if interpretation services are declined, shall be doc- 
umented in the medical record or plan file, as applicable. 

(iv) When an enrollee needs interpretation services at a point of con- 
tact that occurs in a hospital, facility or provider office subject to federal 
or state law that requires the hospital, facility or provider office to provide 
interpretation services, the plan is not relieved of its obligation to comply 
with the requirements of Section 1367.04 of the Act or this section. Full 
service plans shall have reasonable processes in place to ensure that LEP 
enrollees can obtain the plan's assistance in arranging for the provision 
of timely interpretation services at all points of contact as defined at sub- 
section (b)(4). This subsection does not prohibit a plan from incorporat- 
ing into its language assistance program a contracting hospital's lan- 
guage assistance program if: the hospital's language assistance program 
provides access to interpretation services consistent with the require- 
ments of Section 1367.04 of the Act and this section; the plan monitors 
for deficiencies in delivery of interpretation services by the hospital; and 
the plan takes appropriate corrective acfion to address hospital deficien- 
cies in delivery of interpretation services to the plan's enrollees. This 
subsection is not intended to limit or expand any exisfing state or federal 
law. 

(v) A description of the arrangements the plan will make to provide or 
arrange for the provision of dmely interpretafion services at no charge to 
LEP enrollees at all points of contact where language assistance is need- 
ed. For purposes of this subsection "timely" means in a inanner appropri- 
ate for the situation in which language assistance is needed. Interpreta- 
tion services are not timely if delay results in the effective denial of the 
service, benefit, or right at issue. A plan's language assistance program 
shall specify quality assurance standards for timely delivery of language 
assistance services for emergency, urgent and routine health care ser- 
vices, and shall include standards for coordinating interpretation services 
with appointment scheduling. 

(vi) The range of interpretation services that will be provided to enroll- 
ees as appropriate for the particular point of contact. The range of ser- 
vices may include, but is not limited to: 

(aa) Arranging for the availability of bilingual plan or provider staff 
who are trained and competent in the skill of interpreting; 

(bb) Hiring staff interpreters who are trained and competent in the skill 
of interpreting; 

(cc) Contracting with an outside interpreter service for trained and 
competent interpreters; 



(dd) Arranging formally for the services of voluntary community in- 
terpreters who are trained and competent in the skill of interpreting; and 

(ee) Contracting for telephone, videoconferencing or other telecom- 
munications supported language interpretation services. 

(vii) As used in this section, "trained and competent in the skill of inter- 
preting," "qualified interpretation services" and "qualified interpreter" 
means that the interpreter meets the plan's proficiency standards estab- 
lished pursuant to subsection (c)(2)((H). 

(H) The plan's policies and standards for ensuring the proficiency of 
the individuals providing translation and interpretation services. A plan 
may develop and apply appropriate criteria for ensuring the proficiency 
of translation and interpretation services or may adopt certification by an 
association acceptable to the Department at the time of certification. A 
plan's language assistance proficiency standards shall require: 

(i) A documented and demonstrated proficiency in both English and 
the other language; 

(ii) A fundamental knowledge in both languages of health care ter- 
minology and concepts relevant to health care delivery systems; and 

(iii) Education and training in interprefing ethics, conduct and confi- 
dentiality. The Department will accept plan standards for interpreter eth- 
ics, conduct, and confidentiality that adopt and apply, in full, the stan- 
dards promulgated by the California Healthcare Interpreters Association 
or the National Council on Interpreting in Healthcare. 

(3) Staff training. 

Every plan shall implement a system to provide adequate training re- 
garding the plan's language assistance program to all plan staff who have 
routine contact with LEP enrollees. The training shall include instruction 
on: 

(A) Knowledge of the plan's policies and procedures for language as- 
sistance; 

(B) Working effectively with LEP enrollees; 

(C) Working effectively with interpreters in person and through video, 
telephone and other media, as may be applicable; and 

(D) Understanding the cultural diversity of the plan's enrollee popula- 
tion and sensitivity to cultural differences relevant to delivery of health 
care interpretation services. 

(4) Compliance Monitoring. 

(A) Every plan shall monitor its language assistance program, includ- 
ing delegated programs, and make modificadons as necessary to ensure 
compliance with Secfion 1367.04 of the Act and this section. 

(d) In reviewing a plan's proposed language assistance program, the 
Department will evaluate the totality of the plan's language assistance 
program to determine whether the program as a whole provides meaning- 
ful access for LEP enrollees, and may consider relevant operational and 
demographic factors, including but not limited to: 

( 1 ) Whether the plan is a full service plan or specialized health care ser- 
vice plan; 

(2) The nature of the points of contact; 

(3) The frequency with which particular languages are encountered; 

(4) The type of provider network and methods of health care service 
delivery; 

(5) The variations and character of a plan's service area; 

(6) The availability of translation and interpretation services and pro- 
fessionals; 

(7) The variations in cost of language assistance services and the im- 
pact on affordability of health care coverage; and 

(8) A plan's implementation of best practices and utilization of exist- 
ing and emerging technologies to increase access to language assistance 
services, such as video interpreting programs, language translation soft- 
ware, collaboraUng with other plans to share a pool of interpreters, and 
other methods and technologies. 

(9) Specialized dental, vision, chiropractic, acupuncture and em- 
ployee assistance program plans that demonstrate adequate availability 
and accessibility of qualified bilingual contracted providers and office 
staff to provide meaningful access to LEP enrollees, will be in com- 



Page 53 



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§ 1300.67.05 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



pliance with the requirements of subsection (c)(2)(G)(iii) and (v). For the 
purposes of this subsection, speciahzed dental, vision, chiropractic, acu- 
puncture and employee assistance program plans may demonstrate ade- 
quate availability and accessibility of competent and qualified bilingual 
providers and ofllce staff if: 

(A) The plan identifies within its provider directories those contract- 
ing providers who are themselves bilingual or who employ other bilin- 
gual providers and/or office staff, based on language capability disclo- 
sure forms signed by the bilingual providers and/or office staff, attesting 
to their fluency in languages other than English; 

(B) The plan requires all contracting providers to provide quarterly up- 
dates regarding any changes in the language capabilities of currently 
employed providers and/or office staff by submitting new language capa- 
bility disclosure forms, and the plan updates its provider directories ac- 
cordingly, and consistent with Section 1367.26 of the Act; and 

(C) The plan's quality assurance audits of contracting providers con- 
firm and document the accuracy of provider language capability disclo- 
sure forms and attestations. 

(e) Implementation. 

( 1 ) Within one year of the effective date of this section, every plan shall 
complete the initial enroUee assessment required by Section 1367.04 of 
the Act and this section. Every plan shall update its assessment of enroll- 
ee language needs and enrollee demographic profile at least once every 
three years following the initial assessment. 

(2) By July 1, 2008, every plan shall Hie, in accordance with Section 
1352 of the Act, an amendment to its quality assurance program provid- 
ing its written language assistance program policies and procedures, to- 
gether with information and documents sufficient to demonstrate com- 
pliance with the requirements and standards of Section 1367.04 of the 
Act and this section. The filing shall include the plan's Section 
1 367.04(b)( 1 )(B)(v) notices. All materials filed with the Department that 
contain documents in non-English languages shall include the following 
minimum supporting documentation: 

(i) The English version of each non-English document 
(ii) An attestation by the translator or, if applicable, by an authorized 
officer of the organization providing translator services, outlining the 
qualifications of the translator making the translation and affirming that 
the non-English translation is an accurate translation of the English ver- 
sion. 

(3) By January 1, 2009 every plan shall have established and imple- 
mented a language assistance program in compliance with the require- 
ments of Section 1367.04 of the Act and this section. 

(4) Every contract between a health care provider and a plan, including 
a specialized plan, that is issued, amended, delivered or renewed on or 
after January 1 , 2009, shall require compliance with the plan's language 
assistance program standards developed pursuant to Section 1367.04 of 
the Act and this section. 

(A) A plan shall retain financial responsibility for the implementation 
of the language assistance program required by Section 1367.04 of the 
Act and this section, except to the extent that delegated financial respon- 
sibility has been separately negotiated and specifically documented in 
written contracts. This subsection does not create an exception to Section 
1367 of the Act and delegation shall not constitute a waiver of the plan's 
obligation to provide language assistance services required by Section 
1367.04 of the Act and this section. 

(B) Delegation to contracting providers of any part of the plan's ob- 
ligation to provide language assistance services required by Section 
1 367.04 of the Act and this secdon constitutes a material change to a pro- 
vider contract subject to the requirements of Section 1375.7 of the Act. 

(0 The Department will periodically review plan compliance with the 
standards and requirements of Section 1 367.04 of the Act and this section 
by methods that may include, but are not limited to, the medical survey 
process, reviews of consumer grievances and complaints to the Depart- 
ment's HMO Help Center, and provider complaints submitted to the De- 
partment's provider complaint line. The Department may also periodi- 



cally request that plans submit information and data regarding enrollee 
language needs and demographic profile. 

NOTE: Authority cited: Sections 1 .144 and 1367.04. Health and Safety Code. Ref- 
erence; Sections 1259. 1342, 1.^63, 136.5.5. 1367. 1367.04, 1367.07. 1368. 
1368.01. 1370 and 1375.7, Health and Safety Code. 

History 
1. New section filed 1-24-2007; operative 2-23-2007 (Register 2007, No. 4). 

§ 1300.67.05. Acts of War Exclusions. 

(a) No health care service plan contract executed or amended on or af- 
ter the effective date of this regulation shall limit or exclude health care 
services ba.sed on a determination that the need for the health care service 
arose as a result of an Act of War. 

(1) The term "contract" includes but is not limited to health care ser- 
vice plan contracts with subscribers and health care service providers. 

(2) The term "Act of War" includes any act or conduct, or the preven- 
tion of an act or conduct, resulting from war, declared or undeclared, ter- 
rorism, or warlike action by any individual, government, military, sover- 
eign group, terrorist or other organizafion. 

(b) This regulafion does not preclude a health plan from coordinating 
coverage of benefits with other entities. 

(c) Nothing in this section shall prevent the Director from finding any 
exclusion or limitation of health care service or other services covered by 
the contract objectionable on grounds other than those set forth herein. 
NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Sec- 
tions 1.145 and 1367, Health and Safety Code. 

History 

1 . New section filed 2-14-2002 as an emergency; operative 2-14-2002 (Register 
2002. No. 7). A Certificate of Compliance must be transmitted to OAL by 
6-14-2002 or emergency language will be repealed by operation of law on the 
following day. 

2. Certificate of Compliance as to 2-14-2002 order, including amendment of sub- 
section (a), transmitted to OAL 6-6-2002 and filed 7-17-2002 (Register 2002, 
No. 29). 

3. Editorial correction of subsection (a) (Register 2002, No. 35). 

§ 1 300.67.1 . Continuity of Care. 

Within each service area of a plan, basic health care services shall be 
provided in a manner which provides continuity of care, including but not 
limited to: 

(a) The availability of primary care physicians, who will be responsi- 
ble for coordinating the provision of health care services to each enrollee; 

(b) The encouragement of each enrollee to select a primary physician; 

(c) The maintenance and ready availability of medical records, with 
sharing within the plan of all pertinent information relating to the health 
care of each enrollee; 

(d) The maintenance of staff, including health professionals, adminis- 
trative and other supporting staff, directly or through an adequate referral 
system, sufficient to assure that health care services will be provided on 
a timely and appropriate basis to enrollees; 

(e) An adequate system of documentation of referrals to physicians or 
other health professionals. The monitoring of the follow up of enrollees' 
health care documentation shall be the responsibility of the health care 
service plan and associated health professionals. 

NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Section 
1367, Health and Safety Code. 

History 
1. Amendment filed 1-12-83; effective thirtieth day thereafter (Register 83, No. 

3). 

§ 1 300.67.1 .3. Block Transfer Filings. 

(a) Definitions. As used in this secfion; 

(1) "Affected Enrollee" means enrollees of the plan who are assigned 
to a Terminated Provider Group or a Terminated Hospital. 

(2) "Alternate Hospital" means a hospital that will provide services to 
plan enrollees in place of a Terminated Hospital. 

(3) "Block Transfer" means a transfer or redirection of two thousand 
(2,000) or more enrollees by a plan from a Terminated Provider Group 
or Terminated Hospital to one or more contracting providers that takes 
place as a result of the terminaUon or non-renewal of a Provider Contract. 



Page 54 



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§ 1300.67.1.3 



(4) "Enrolloo Transfer Notice" means a written notice that is sent to 
enrollees who are assigned to a Terminated Provider group or Termi- 
nated Hospital. 

(5) "Provider Contract" means a contract between a plan and one or 
more health care providers, through which the plan arranges to provide 
health care services for its enrollees. 

(6) "Provider Group" means a medical group, an independent practice 
association, or any other similar organization providing services to en- 
rollees of a plan who are assigned to that provider group. 

(7) "Receiving Provider Group" means a provider group that will pro- 
vide services to Affected Enrollees in place of the current Provider 
Group. 

(8) "Terminated Hospital" means a general acute care hospital that 
will no longer maintain a Provider Contract with the plan following the 
termination or non-renewal of a Provider Contract. 

(9) "Terminated Provider" means either a Terminated Provider Group 
or a Terminated Hospital. 

( 10) "Terminated Provider Group" means a Provider Group that will 
no longer maintain a Provider Contract with the plan following the ter- 
mination or non-renewal of a Provider Contract. 

(b) For any proposed Block Transfer, a plan shall file with the Depart- 
ment a Block Transfer filing that includes, at minimum, all the items of 
information described in this subsection (b). The Block Transfer filing 
must be submitted to the Department at least seventy-five (75) days prior 
to the termination or non-renewal of any Provider Contract with a Termi- 
nated Provider Group or a Terminated Hospital. 

The Block Transfer filing must be submitted in an electronic format 
developed by the Department and made available at the Department's 
website at www.hmohelp.ca.gov and must include, at minimum, all of 
the following information as appropriate for the type of provider in- 
volved: 

( 1 ) A form of the written notice that the plan intends to send to Affected 
Enrollees. The Enrollee Transfer Notice must include: 

(A) The name of the Terminated Provider Group or Terminated Hospi- 
tal. The plan may also add the name of the assigned physician, where ap- 
propriate. 

(B) A brief explanation of why the transfer is necessary due to the ter- 
mination of the contract between the plan and the Terminated Provider. 

(C) The date of the pending contract termination and transfer. 

(D) An explanation to the Affected Enrollee outlining the Affected En- 
rollee's assignment to a new Provider Group, options for selecting a phy- 
sician within a new Provider Group, and applicable timeframes to make 
a new Provider Group selection. The explanation must include a notifica- 
tion to the Affected Enrollee that he or she may select a different network 
provider by contacting the plan as outlined in the plan's written continu- 
ity of care policy and evidence of coverage or disclosure form. 

(E) A statement that the plan will send the Affected Enrollee a new 
member information card with the name, address and telephone number 
of the Receiving Provider Group and assigned physician by a specified 
later date, which will occur prior to the date of the contract termination. 
Alternatively, the plan may notify the Affected Enrollee of the name, ad- 
dress and telephone number of the new Provider Group and assigned 
physician, or Alternate Hospital, to which the Affected Enrollee will be 
assigned in the absence of a selection made by the enrollee. 

(F) A statement that the Affected Enrollee may contact the plan's cus- 
tomer service department to request compledon of care for an ongoing 
course of treatment from a Terminated Provider. This statement may in- 
clude either a statement outlining the specific condiUons set forth in 
California Health and Safety Code section 1 373.96(c), or an explanation 
to the Affected Enrollee that his or her eligibility is conditioned upon cer- 
tain factors as outlined in the plan's written confinuity of care policy and 
evidence of coverage or disclosure form. 

(G) The telephone number through which the Affected Enrollee may 
contact the plan fora further explanation of his orherrights tocompletion 
of care, including the plan's written continuity of care policy; and a link 



that an Affected Enrollee may use to obtain of a downloadable copy of 
the policy from the plan's website. 

(H) A statement informing any enrollee of a point of service product 
that the Affected Enrollee may be required to pay a larger portion of costs 
if he or she continues to use his or her current providers, if applicable to 
the particular Block Transfer. 

(1) The following statement in at least 8-point font: 

"If you have been receiving care from a health care provider, you 
may have a right to keep your provider for a designated time period. 
Please contact your HMO's customer service department, and if 
you have further questions, you are encouraged to contact the De- 
partment of Managed Health Care, which protects HMO consum- 
ers, by telephone at its toll-free number 1-888-HMO-2219. or at 
a TDD number for the hearing impaired at 1 -877-688-989 1 . or on- 
line at www.hmohelp.ca.gov." 
The statement may be modified to include the health care service plan's 
name in place of the phrase "your HMO's." 

(J) The plan shall require all contracted providers to include the statu- 
tory language required by California Health and Safety Code section 
1373.65(f) in all communications to Affected Enrollees that concern the 
termination of a provider or a Block Transfer. 

(K) Compliance with all applicable language assistance statues and 
regulations, including Section 1367.04 and any regulations based upon 
Section 1367.04. 

(2) For a Terminated Hospital contract the plan shall also submit the 
following informafion: 

(A) A brief explanafion of the cause of the hospital redirecfion includ- 
ing whether the contract termination or non-renewal was initiated by the 
plan, the hospital, or by a contracting Provider Group. 

(B) A copy of the notice of termination sent or received by the plan. 

(C) If the contract termination will affect 50.000 or more enrollees. the 
relevant portions of the Provider Contract(s) that relate to continuity of 
care and transition of care. 

(D) Either of the following two opfions: 

1. a list of counties in which Affected Enrollees reside and the corre- 
sponding number of Affected Enrollees for each county, or 

2. a list of the zip codes in which Affected Enrollees reside and the cor- 
responding number of Affected Enrollees for each zip code. 

(E) The number of Affected Enrollees assigned to the Terminated 
Hospital, and the number to be reassigned to each Alternate Hospital, 
classified by type of product (for example, commercial. Medi-Cal, 
Healthy Families, etc.) 

(F) The number of Affected Enrollees within a 15-mile radius of the 
Terminated Hospital. 

(G) The date that the plan anticipates it will mail the Enrollee Transfer 
Notification. 

(H) The proposed date or dates of transfer of Affected Enrollees. If the 
plan intends to transfer Affected Enrollees on various dates, please ex- 
plain the reason for the different transfer dates. 

(I) If additional governmental departments or agencies require ap- 
proval of enrollee nofices regarding the transfer, provide copies of each 
proposed notice as well as an explanation of the status of each required 
approval. 

(J) The identity of the Terminated Hospital and Alternate Hospital in- 
cluding the contract renewal or termination date for each Alternate Hos- 
pital. 

(K) A listing identifying any services that are available at the Termi- 
nated Hospital that are not available at an Alternate Hospital. The plan 
must discuss the arrangements it has made to ensure that enrollees have 
an opportunity to receive those services. 

(L) Based upon the data made public on the Office of Statewide Health 
Planning and Development's website, for each of the proposed Alternate 
Hospitals, provide the available bed occupancy rate for the most recently 
completed calendar year. If the rate is at 80% or higher, please provide 



Page 54.1 



Register 2007, No. 4; 1 -26-2007 



§ 1300.67.1.3 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



justification as to the sufficiency of the Alternate Hospital's capacity to 
serve additional plan enrollees. 

(M) The number of bed days utilized by plan enrollees at the Termi- 
nated Hospital for the most recently completed calendar year. 

(N) An analysis showing the driving distance between the proposed 
Alternate Hospital and the Terminated Hospital. 

(0) Of the primary care providers to whom Affected enrollees are cur- 
rently assigned, the number and percentage of primary care providers 
with active admitting privileges at the Alternate Hospital(s) and the num- 
ber of Affected Enrollees assigned to these primary care providers and 
the number and percentage of primary care providers without active ad- 
mitting privileges at the Alternate Hospital(s) and the number of Affected 
Enrollees assigned to these primary care providers. 

(P) Explain the procedure by which an Affected Enrollee who is as- 
signed to a primary care provider who does not have active admitting 
privileges to the Alternate Hospital(s) will receive needed hospital care. 

(Q) Of the specialists available to Affected Enrollees with active ad- 
mitting privileges at the Terminated Hospital, the number and percentage 
with active admitting privileges at the Alternate Hospital(s). If any of 
these specialists will be unable to admit to the Alternate Hospital(s). dis- 
close the specialty involved, how many specialists of that specialty, if 
any, will still be available to admit the Alternate Hospital(s) and explain 
how Affected Enrollees will receive care for that specialty at a proposed 
Alternate Hospital if there are an insufficient number of remaining spe- 
cialists with active admitting privileges. 

(R) A disclosure of any anticipated increase in costs that will be in- 
curred by Affected Enrollees of the plan's point of service products re- 
sulting from termination of the current hospital's contract if they contin- 
ue to use the Terminated Provider. 

(S) Confirmation that the plan's continuity of care program, as filed 
with the Department, will be implemented for any Affected Enrollees. 

(3) For a Provider Group contract termination, the plan shall also sub- 
mit the following information: 

(A) A brief explanation of the cause or circumstances of the Provider 
Contract termination or non-renewal, including whether the contract ter- 
mination or non-renewal was initiated by the plan or the Provider Group. 
If the Provider Contract termination is due to a provider closure, specify 
whether the provider closure is due to a bankruptcy, an insolvency, a sale, 
ceasing business operations or the closure of a specific office site. 

(B) A copy of the notice of termination sent or received by the plan. 

(C) If the contract termination will affect 50,000 or more enrollees, the 
relevant portions of the Provider Contract(s) that relate to continuity of 
care and transition of care. 

(D) Either of the following two options: 

(i) a list of counties in which Affected Enrollees reside and the corre- 
sponding number of Affected Enrollees for each county, or 

(ii) a list of the zip codes in which Affected Enrollees reside and the 
corresponding number of Affected Enrollees for each zip code. 

(E) A listing, classified by type of product (for example, commercial, 
Medi-Cal. Healthy Families, etc.) that specifies the number of Affected 
Enrollees assigned to the Terminated Provider. 

(F) The date that the plan anticipates it will mail the Enrollee Transfer 
Notice. 

(G) The proposed date or dates of transfer. If the plan intends to trans- 
fer Affected Enrollees on various dates, please explain the reason for the 
different transfer dates. 

(H) The plan's estimate of the percentage of Affected Enrollees who 
will remain with the same primary care provider after the transfer to a Re- 
ceiving Provider Group. 

(1) If additional governmental departments or agencies require ap- 
proval of enrollee notices regarding the transfer, please provide copies 
of each proposed notice as well as an explanation of the status of each re- 
quired approval. 

(J) A matrix of proposed Receiving Provider Groups that includes the 
following information: 



1. the identity of the Receiving Provider Group(s). including its Risk 
Bearing Organization (RBO) number as assigned by the Department, 

2. the number of Affected Enrollees being transferred to each Receiv- 
ing Provider Group listed by type of product. If the plan gives the Af- 
fected Enrollees the choice of selecting a new provider, then the plan 
must provide the number of Affected Enrollees to be transferred to each 
receiving Provider Group by default if no selections are made by the Af- 
fected Enrollees. 

3. a listing of all hospitals to which Receiving Provider Groups refer 
Affected Enrollees. if different from the Terminated Provider Group. 

(K) Confirmation that the plan's continuity of care program, as filed 
with the Department, will be implemented for any Affected Enrollees. 

(c) Timing of Notice Requirements. For any termination or non-re- 
newal of a Provider Contract, a plan shall mail to all Affected Enrollees 
an Enrollee Transfer Notice that has been approved by the Department. 

( 1 ) The Enrollee Transfer Notice must be mailed to each Affected En- 
rollee at least sixty (60) days prior to the date of termination or non-re- 
newal. 

(d) Notice Mailing Requirements. The plan shall send an Enrollee 
Transfer Notice to Affected Enrollees as follows: 

(1) For Affected Enrollees enrollees who are Block Transferred from 
a Terminated Provider Group — the plan shall send the notice to all Af- 
fected Enrollees assigned to the Terminated Provider Group. 

(2) For Affected Enrollees who are block transferred from a Termi- 
nated Hospital — the plan shall send the notice to all Affected Enrollees 
who reside within 15 miles of the Terminated Hospital. 

(e) If, for any reason, a plan is unable to send all Enrollee Transfer No- 
tice required pursuant to subsection 1 300.67. 1 .3(c) of Title 28, California 
Code of Regulations, at least sixty (60) days prior to the termination or 
non-renewal of a Provider Contract, the plan shall submit to the Depart- 
ment an application for a waiver of the 60-day requirement. The applica- 
tion for waiver must include an explanation of the plan's reasons for be- 
ing unable to meet the 60-day notice requirement and its proposal to 
minimize any disruption that may be caused to Affected Enrollees by the 
reduced notice. A waiver application may be based upon the sudden clo- 
sure of a contracted provider, a notice-timing conflict with another juris- 
dictional agency, or other circumstances for which good-cause exists. If 
the Department does not approve or disapprove the waiver request within 
seven (7) days of its receipt of the request, the waiver will be deemed to 
have been approved by the Department. 

(f) If, after sending Enrollee Transfer Notices a plan reaches an agree- 
ment to renew or enter into a new Provider Contract or to not terminate 
their Provider Contract with a Terminated Provider to which the plan had 
assigned enrollees, then the plan shall promptly inform the Department 
and convey an additional enrollee notification, either by telephone or in 
writing, to each Affected Enrollee. TTie additional enrollee notification 
must include: 

( 1 ) A brief explanation of the fact that the plan has reached an agree- 
ment with the Affected Enrollee' s previously assigned provider. 

(2) An explanation to the enrollee regarding options for either return- 
ing to the previously assigned provider, keeping the newly assigned pro- 
vider, or select another participating provider from the plan's contracting 
provider list. 

(3) An explanation to the Affected Enrollee of the procedure by which 
the enrollee may contact the plan to express his or her desire to return to 
the previously assigned provider. 

(4) If the additional enrollee notice is given in writing, then the notice 
must include the following statement in at least 8-point font: 

"If you have any questions regarding this notice please contact 
[Plan Name] customer service department. If you have further con- 
cerns about your provider network, you are encouraged to contact 
the Department of Managed Health Care by telephone at its toll- 
free number 1-888-HMO-2219, or at TDD number for the hearing 
impaired at 1-877-688-9891, or online at www.hmohelp.ca.gov." 



Page 54.2 



Register 2007, No. 4; 1-26-2007 



Title 28 



The Department of Managed Health Care 



§ 1300.67.2.1 



• 



(5) Compliance with all applicable language assistance statutes and 
regulations, including Section 1367.04 and any regulations based upon 
Section 1367.04. 

No IE: Authority cited: Sections 1342, 1344 and 1346, Health and Safety Code. 
Reference: Sections 1367.04 and 1373.65, Health and Safety Code. 

History 
1. New .section tiled 8-22-200.5: operative 9-21-2005 (Register 2005. No. 34). 

§ 1 300.67.2. Accessibility of Services. 

Within each service area of a plan, basic health care services and spe- 
cialized health care services shall be readily available and accessible to 
each of the plan's enrollees; 

(a) The location of facilities providing the primary health care services 
of the plan shall be within reasonable proximity of the business or person- 
al residences of enrollees. and so located as to not result in unreasonable 
barriers to accessibility. 

(b) Hours o\' operation and provision for after-hour services shall be 
reasonable; 

(c) Emergency health care services shall be available and accessible 
within the .service area twenty-four hours a day, seven days a week; 

(d) The ratio of enrollees to staff, including health professionals, ad- 
ministrative and other supporting staff, directly or through referrals, shall 
be such as to reasonably assure that all services offered by the plan will 
be accessible to enrollees on an appropriate basis without delays detri- 
mental to the health of the enrollees. There shall be at least one full-time 
equivalent physician to each one thousand two hundred ( 1 ,200) enrollees 
and there shall be approximately one full-time equivalent primary care 
physician for each two thousand (2,000) enrollees, or an alternative 
mechanism shall be provided by the plan to demonstrate an adequate ra- 
tio of physicians to enrollees; 

(e) A plan shall provide accessibility to medically required specialists 
who are certified or eligible for certification by the appropriate specialty 
board, through staffing, contracting, or referral; 

(f) Each health care service plan shall have a documented system for 
monitoring and evaluating accessibility of care, including a system for 
addressing problems that develop, which shall include, but is not limited 
to, waiting time and appointments; 

(g) A section of the health education program shall be designated to 
inform enrollees regarding accessibility of service in accordance with the 
needs of such enrollees for such information regarding that plan or area. 

Subject to subsections (a) and (b) of this section, a plan may rely on 
the standards of accessibility set forth in Item H of Section 1300.51 and 
in Section 1300.67.2. 

§ 1 300.67.2.1 . Geographic Accessibility Standards. 

Subject to subsections (a) and (b) of this section, a plan may rely, for 
the purposes of satisfying the requirements for geographic accessibility, 
on the standards of accessibility set forth in Item H of Section 1300.5 1 
and in Section 1300.67.2. 

(a) If, given the facts and circumstances with regard to any portion of 
its service area, a plan's standards of accessibility adopted pursuant to 
Item H of Section 1300.51 and/or Section 1 300.67.2 are unreasonably re- 
strictive, or the service area is within a county with a population of 
500,000 or fewer, and is within a county that, as of January 1. 2002, has 
two or fewer full service health care service plans in the commercial mar- 
ket, the plan may propose alternative standards of accessibility for that 
portion of its service area. The plan shall do so by including such alterna- 
tive standards in writing in its plan license application or in a notice of 
material modification. The plan shall also include a description of the 
reasons justifying the less restrictive standards based on those facts and 
circumstances. If the Department rejects the plan's proposal, the Depart- 
ment shall inform the plan of the Department's reason for doing so. 

(b) If, in its review of apian license application or a notice of material 
modification, the Department believes the accessibihty standards set 
forth in Item H of Section 1300.51 and/or Section 1300.67.2 are insuffi- 
ciently prescribed or articulated or are inappropriate given the facts and 
circumstances with regard to a portion of a plan's service area, the De- 



partment shall inform the plan that the Department will not allow applica- 
tion of those standards to that portion of the plan's service area. The De- 
partment shall also inform the plan of the Department's reasons for 
rejecting the application of those standards. 

(c) The facts and circumstances to be included in a discussion o\' the 
reasons justifying the standards of accessibility proposed by the plan pur- 
suant to subsection (a) or (b) of this section shall include, to the extent 
relevant, but shall not necessarily be limited to the following: 

(1) whether the plan contract involved is a group health care service 
plan contract or an individual health care service plan contract; 

(2) whether the plan contract is a full-service health care service plan 
contract or a specialized health care service plan contract, and if the latter, 
whether emergency services need not be covered; 

(3) the uniqueness of the services to be offered; 

(4) whether the portion of the service area involved is urban or rural; 

(5) populafion density in the portion of the service area, including 
whether the service area is within a county with a population of 50(),(X)0 
or fewer; 

(6) whether, as of January 1, 2002, the county containing the service 
area had two or fewer full service health care service plans providing cov- 
erage to the entire county in the commercial market; 

(7) the distribution of enrollees in the portion of the service area; 

(8) the availability and distribution of primary care physicians; 

(9) the availability and distribution of other types of providers; 

(10) the existence of exclusive contracts in the provider community or 
other barriers to entry; 

(11) patterns of practice in the portion of the service area; 

(12) driving times; 

(13) waiting times for appointments; 

(14) whether the plan or any other health care service plan currently 
has significant operations in that portion of the service area; and 

(15) other standards of accessibility that the Director deems necessary 
or appropriate in the public interest and consistent with the intent and pur- 
pose of the Act as applied to specific facts or circumstances. 

(d) At least 30 days before a health care service plan files a notice of 
material modification of its license with the department in order to with- 
draw from a county with a population of 500,000 or fewer, the health care 
service plan shall hold a public meeting at a time and place reasonably 
calculated to facilitate attendance by affected enrollees in the county 
from which it intends to withdraw, and shall do all of the following: 

( 1 ) Provide notice announcing the public meeting at least 30 days prior 
to the public meeUng to all affected enrollees, health care providers with 
which it contracts, the members of the board of supervisors of the affected 
county, the members of the city councils of cities in the affected county, 
and the members of the Legislature who represent the affected county. 

(2) Provide nofice announcing the public meeting at least 1 5 days prior 
to the public meeting in a newspaper of general circulation within the af- 
fected county. 

(3) At the public meeting, allow testimony, which may be limited to 
a certain length of fime by the health care service plan, of all interested 
parties. 

(4) File with the department for review, no less than 30 days prior to 
the date of mailing or publication, the nofices required under subpara- 
graphs (1) and (2). 

(e) The department may require a health care service plan that has filed 
to withdraw from a portion of a county with a population of fewer than 
500.000 to hold a hearing for affected enrollees. 

(f) A representative of the department shall attend the public meeting 
described in this secfion. 

NOTE: Authority cited: Sections 1 344, ! 35 1 and 1 366. 1 , Health and Safety Code. 
Reference: Sections 1366.1, 1367 and 1367.2, Health and Safety Code. 

History 

1. New section filed 11-30-98; operative 11-30-98 pursuant to Government 
Code section 1 1 343.4(d) (Register 98, No. 49). 

2. Change without regulatory effect amending subsection (a) filed 4^1-2000 pur- 
suant to section 1 00, title 1 , California Code of Regulations (Register 2000, No. 
14). 

3. Change without regulatory effect amending subsection (c) filed 7- 1 8-2000 pur- 
suant to section 100, title 1, California Code ofRegulaUons (Register 2000, No. 

29). 



Page 54.3 



Register 2007, No. 4; 1 -26-2007 



§ 1300.67.3 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



4. Amendment of section heading, section and Notl filed 6-10-2004: operative 
7-10-2004 (Register 2004, No. 24). 

§ 1300.67.3. Standards for Plan Organization. 

(a) The organization of each plan shall provide the capability to furnish 
in a reasonable and efficient manner the health care services for which 
subscribers and enrollees have contracted. Such organization shall in- 
clude: 

( 1 ) separation of medical services from fiscal and administrative man- 
agement sufficient to assure the Director that medical decisions will not 
be unduly influenced by fiscal and administrative management, 

(2) staffing in medical and other health services, and in fiscal and ad- 
ministrative services sufficient to result in the effective conduct of the 
plan's business, and 

(3) written procedures for the conduct of the business of the plan, in- 
cluding the provision of health care services, so as to provide effective 
controls. 

NOTE: Authority cited: Section i 344, Health and Safety Code. Reference: Section 
1367, Health and Safety Code. 

History 

1. Amendment filed 1-12-83; effective thirtieth day thereafter (Register 83, No. 
?). 

2. Change without regulatory effect amending subsection (a)(1 ) filed 7-18-2000 
pursuant to section 100, title 1, California Code of Regulations (Register 2000, 
No. 29). 

§ 1300.67.4. Subscriber and Group Contracts. 

(a) All subscriber and group contracts and endorsements and amend- 
ments shall be printed legibly in not less than 8-point type and shall in- 
clude at least the following: 

(1) The information required to be included on disclosure forms by 
Section 1363(a) of the Code and 

(A) the information required to be included on disclosure forms by 
Section 1300.63 (except subsections (2), (3), (4) and (11) of subsection 
(b) thereoO, and required to be included on evidences of coverage by sub- 
sections (b)(2) and (c) (except subsection (16) thereof) of Section 
1300.63.1, or 

(B) if the plan complies with the provisions of Section 1300.63.2, the 
information required to be included on combined evidences of coverage 
and disclosure forms by Section 1300.63.2 (except subsections (1) and 
(4) of subsection (b) and subsections (2), (25), and (27) of subsection (c) 
thereoO. 

(2) Definitions of all terms contained in the contract. 

(A) Which are defined by the Act or Chapter 1 of Title 28 of the Cali- 
fornia Code of Regulations, 

(B) Which are any of the following: "pre-existing condition," "guar- 
anteed renewable," or "non-cancellable," or, 

(C) Which require definition in order to be understood by a reasonable 
person not possessing special knowledge of law, medicine, or plans; 

(D) Which specifically describes the eligibility of persons as subscrib- 
ers or enrollees. 

(3) Appropriate captions, in boldface type, for the following provi- 
sions: limitations, exclusions, exceptions, reductions, deductibles, co- 
payments and other provisions which may decrease or limit benefits to, 
or increase costs of, any subscriber or enroUee; 

(A) A benefit afforded by the contract shall not be subject to any limi- 
tation, exclusion, exception, reduction, deductible, or copayment which 
renders the benefit illusory. 

(4) In the same section describing any particular benefit(s). any provi- 
sions described in (3) above which are applicable only to any such partic- 
ular benefit(s); 

(5) Provisions relating to cancellation under an appropriate caption, in 
boldface type, which provisions shall include: 

(A) A statement of the bases for cancellation, which shall conform to 
Section 1365(a) of the Act and these rules; 

(B) A statement of the opportunity for review of certain cancellations 
by the Director as provided in Section 1365(b) of the Code; 

(C) A statement that, in the event of cancellation by either the plan (ex- 
cept in the case of fraud or deception in the use of services or facilities 



of the plan or knowingly permitting such fraud or deception by another) 
or the other party, the plan shall within 30 days return to the other part 
the pro rata portion of the money paid to plan which corresponds to any 
unexpired period for which payment had been received together with 
amounts due on claims, if any, less any amounts due the plan; 

(D) A statement of the time when a notice of cancellation becomes ef- 
fective; 

(E) A statement that receipt by the plan of the proper prepaid or period- 
ic payment after cancellation of the contract for nonpayment shall rein- 
state the contract as though it had never been cancelled if such payment 
is received on or before the due date of the succeeding prepaid or periodic 
payment, provided, however, that the contract may specify one or more 
of the following methods by which the plan may avoid such reinstate- 
ment: 

1 . In the notice of cancellation, the plan notifies the other party that if 
payment is not received within 15 days of issuance of the notice of can- 
cellation, a new application is required and the conditions under which 
a new contract will be issued or the original contract reinstated; or 

2. If such payment is received more than 15 days after issuance of the 
notice of cancellation, the plan refunds such payment within 20 business 
days; or 

3. If such payment is received more than 15 days after issuance of the 
notice of cancellation, the plan issues to the other party, within 20 busi- 
ness days of receipt of such payment, a new contract accompanied by 
written notice stating clearly those respects in which the new contract dif- 
fers from the cancelled contract in benefits, coverage or otherwise; 

(6) A provision prohibiting the plan from increasing the amount paid 
by the other party, except after a period of at least 30 days from and after 
the postage paid mailing to the other party at the other party's most cur- 
rent address of record with the plan; 

(7) A provision prohibiting the plan from decreasing in any manner the 
benefits stated in the contract, except after a period of at least 30 days 
from and after the postage paid mailing to the other party at the other 
party's most current address of record with the plan; 

(8) A provision requiring the plan to provide written notice within a 
reasonable time to the other party of any termination or breach of contract 
by, or inability to perform of, any contracting provider if the other party 
may be materially and adversely affected thereby; 

(9) A provision that (i) the plan is subject to the requirements of Chap- 
ter 2.2 of Division 2 of the Code and of Chapter 1 of Title 28 of the Cali- 
fornia Code of Regulations, and (ii) any provision required to be in the 
contract by either of the above shall bind the plan whether or not provided 
in the contract. 

( 1 0) A provision that, upon termination of a provider contract, the plan 
shall be liable for covered services rendered by such provider (other than 
for copayments as defined in subdivision (g) of Section 1345) to a sub- 
scriber or enrollee who retains eligibility under the applicable plan con- 
tract or by operation of law under the care of such provider at the time of 
such termination until the services being rendered to the subscriber or en- 
rollee by such provider are completed, unless the plan makes reasonable 
and medically appropriate provision for the assumption of such services 
by a contracting provider. 

( 1 1 ) In the case of a group contract, a reasonable provision requiring 
the group contract holder to mail promptly to each subscriber a legible, 
true copy of any notice of cancellaUon of the plan contract which may be 
received from the plan and to provide promptly to the plan proof of such 
mailing and the date thereof, if the plan wishes to obligate the group con- 
tract holder in connection with the obligauons imposed on the plan by 
Secuon 1300.65. 

(b) For the purposes of this section: 

(1 ) "Other party" means (i) in the case of a group contract, the group 
representative designated in the contract, and (ii) in the case of an individ- 
ual contract, the subscriber. 

(2) Any express or implied requirement of notice to the other party, in 
the context of a group contact, requires notice to the group representative 
designated in the contract and, with respect to material matters, to sub- 



• 



Page 54.4 



Register 2007, No. 4; 1-26-2007 



Title 28 



The Department of Managed Health Care 



§ 1300.67.13 



• 



scribers and enrollees under the group contract; however, a plan may ful- 
fill any obligation imposed by this section to notify subscribers and en- 
rollees under a group contract if it provides notice to the group 
representative designated in the contract, and the group contract requires 
the group representative to disseminate such notice to subscribers and en- 
rollees in the group by the next regular communication to the group but 
in no event later than 30 days after the receipt thereof. 

NOTl:; Authority cited: Section 1344. Health and Safety Code. Reference: Sec- 
tions 1367 and l"379. Health and Safety Code. 

History 

1 . New subsection (a)( 10) filed 6-2-78: effective thirtieth day thereafter (Register 

78. No. 22). 

2. Amendment of subsection (a)(5 ) filed 9-27-79; effective thirtieth day thereafter 
(Register79. No. 39). 

3. Amendment of subsection (a) filed 1-12-83; effective thirtieth day thereafter 
(Regi,ster83. No. 3). 

4. Amendment of subsections (a)(2)(A). (a)(6), (a)(7) and (a)(9) filed 12-26-91 ; 
operative 1-27-92 (Register 92. No. 12). 

5. Change without regulatory effect amending subsection (a)(.^)(B) filed 
7-18-2000 pursuant to section 100. title 1. California Code of Regulations 
(Register2000. No. 29). 

6. Change without regulatory effect ainending subsections (a)(2)(A) and (a)(9) 
filed 12-22-20(X) pursuant to section 100. title 1. California Code of Regula- 
tions (Register 2000. No. 51). 



§ 1300.67.8. Contracts with Providers. 

Written contracts must be executed between the plan and each provid- 
er of health care services which regularly furnishes services under the 
plan. All contracts with providers shall be subject to the following re- 
quirements: 

(a) A written contract shall be prepared or arranged in a manner which 
permits confidential treatment by the Director of payment rendered or to 
be rendered to the provider without concealment or misunderstanding of 
other terms and provisions of the contract. 

(b) The contract shall require that the provider maintain such records 
and provide such information to the plan or to the Director as may be nec- 
essary for compliance by the plan with the provisions of the Act and the 
rules thereunder, that such records will be retained by the provider for at 
least two years, and that such obligation is not terminated upon a termina- 
tion of the agreement, whether by rescission or otherwise. (See Section 
1300.75.1) 

(c) That the plan shall have access at reasonable times upon demand 
to the books, records and papers of the provider relating to the healthcare 
services provided to subscribers and enrollees, to the cost thereof, to pay- 
ments received by the provider from subscribers and enrollees of the plan 
(or from others on their behalf), and, unless the provider is compensated 
on a fee-for-service basis, to the financial condition of the provider. 

(d) The contract shall prohibit surcharges for covered services and 
shall provide that whenever the plan receives notice of any such sur- 
charge it shall take appropriate action. 

(e) The contract shall contain provisions complying with Section 1 379 
of the Act and requiring that, upon termination of the contract of the pro- 
vider for any cause, such provider shall comply with the provisions of 
subdivision (a)(10) of Section 1300.67.4. 

NOTE: Authority cited: Section 1344. Health and Safety Code. Reference: Sec- 
tions 1367, 1381 and 1385, Health and Safety Code. 

History 

1. Amendment filed 6-2-78; effective thirtieth day thereafter (Register 78, No. 

22). 

2. Amendment of subsection (b) filed 1-12-83; effective thirtieth day thereafter 
(Register 83, No. 3). 

3. Change without regulatory effect amending subsections (a)-(b) filed 
7-18-2000 pursuant to section 100, title 1, California Code of Regulations 
(Register2000, No. 29). 

4. New subsections (f)-(f)(^'') filed 10-20-2003; operative 1 1-19-2003 (Register 
2003. No, 43). 

5. Repealer of subsections (0-(f)(5) filed 1-24-2007; operative 2-23-2007 (Reg- 
ister 2007. No. 4). 



§ 1300.67.10. Discrimination Prohibited. 

Hlstory 
1. Repealer filed 12-26-91; operative 1-27-92 (Register 92. No. 12). 

§ 1 300.67.1 1 . Disclosure of Conflicts of Interest. 

(a) A plan shall not enter into any transaction with a person currently 
named in Item F of its application under Section I300..'S1 (or currently 
named pursuant to Items 7. 8. or 9 of that application as in effect prior to 
the effective date of Section 1300.5 1 .3) unless, prior thereto, each of the 
following conditions is met: 

( 1 ) The material facts concerning the transaction and the person's in- 
terest therein are disclosed to the governing body of the plan. 

(2) Tlie transaction is approved by a disinterested majority of the gov- 
erning body. 

(3) Such facts and such approval are made a part of the minutes of such 
governing body or. if no minutes are required of such governing body, 
otherwise retained as a record of the plan. 

(b) A plan shall promptly give written notice to the Director if a trans- 
action is entered into otherwise than in conformity with the terms of this 
section. 

(c) For the purposes of this section, "governing body" means the board 
of directors, all general partners, the sole proprietor, the board of trustees, 
and any other persons occupying a similar position or performing similar 
functions. 

NOTE: Authority cited: Section 134^1. Health and Safety Code. Reference: .Sec- 
tions 1351 and 1367(h). Health and Safety Code. 

History 

1 . Amendment of subsection (a) filed 12-17-85; effective thirtieth day thereafter 
(Register85. No. 51. 

2. Change without regulatory effect amending subsection (b) filed 7- 1 8-2(KX) pur- 
suant to section 1 00, title 1 , California Code of Regulations ( Register 2000, No. 
29). 

§ 1 300.67.1 2. Contracts with Solicitor Firms. 

A plan shall not permit a solicitor firm to solicit enrollments or sub- 
scriptions on its behalf except pursuant to a written contract which meets 
all of the following minimum requirements: 

(a) All funds received by the solicitor firm for the account of the plan 
shall at all times be segregated from the assets of the solicitor firm and 
shall be promptly deposited to a trust account in a state or federal bank 
authorized to do business in this state and insured by an appropriate fed- 
eral insuring agency. "Promptly deposited" means deposited no later 
than the business day following receipt by the solicitor firm. 

(b) All funds received by the solicitor firm for the account of the plan 
shall be transmitted to the plan, or to a person designated in the contract, 
net of actual commissions earned under the particular contract within (5) 
five business days after such funds are received by the solicitor firm. 

(c) The solicitor firm shall comply and shall cause its principal persons 
and employees to comply with all applicable provisions of the Act and 
the rules thereunder. 

(d) The solicitor firm shall promptly notify the plan of the institution 
of any disciplinary proceedings against it or against any of its principal 
persons or employees relating to any license issued to any such person 
by the California Insurance Commissioner. 

NOTE: Authority cited: Section 1344. Health and Safety Code. Reference: Section 
1 367. Health and Safety Code. 

History 

1. Amendment filed 12-20-77 as an emergency; effective upon filing (Register 

77, No. 52). 

2. Amendment filed 1-12-83; effective thirtieth day thereafter (Register 83, No. 

3). 

§ 1 300.67.1 3. Coordination of Benefits ("COB"). 

(a)( 1 ) This rule does not require the use of COB provisions in plan con- 
tracts. If a contract contains a COB provision, the provision must be con- 
sistent with the standard provision set forth in subdivision (b), as inter- 
preted by the "Instructions" set forth in that subdivision. COB 
provisions, or provisions for the reduction of benefits otherwise payable 
because of other coverage by whatever name designated, which are not 
consistent with the standard provision set forth in subdivision (b), may 



Page 54.5 



Register 2007, No. 4; 1-26-2007 



§ 1300.67.13 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



not be used, except that plans of coverage designed to be supplementary 
over the subscriber's or enrollee's underlying basic plan of coverage may 
provide that coverage shall be excess to that specific subscriber's or en- 
rollee's plan of basic coverage from whatever source provided. 

(2) A COB provision may not relieve a plan of a duty otherwise arising 
from a plan contract to deliver any health care service to any subscriber 
or enrollee because the subscriber or enrollee may be or is entitled to cov- 
erage for the service by any other plan or insurer. 

(3) A COB provision may not result in a delay in furnishing any rea- 
sonably necessary health care service to any subscriber or enrollee pur- 
suant to a plan contract. 

(b) Standard COB Provision: 

( 1 ) Benefits Subject to This Provision 

All of the benefits provided under this Plan contract are subject to this 
provision. 

Instructions 

When the contract provides both integrated Major Medical Expense 
Benefits and the Basic Benefits, but the COB provision applies to all or 
some of the benefits, use appropriate alternate wording such as: "Only 
the Major Medical Expense Benefits provided under this contract are 
subject to this provision." 

(2) Definitions 

(A) "Plan" means any plan providing benefits or services for or by rea- 
son of medical or dental care or treatment, which benefits or services are 
provided by (i) group, blanket or franchise insurance coverage, (ii) ser- 
vice plan contracts, group pracfice, individual practice and other prepay- 
ment coverage, (iii) any coverage under labor-management trusteed 
plans, union welfare plans, employer organization plans, or employee 
benefit organization plans, and (iv) any coverage under governmental 
programs, and any coverage required or provided by any statute. 

The term "Plan" shall be construed separately with respect to each 
policy, contract, or other arrangement for benefits or services and sepa- 
rately with respect to that portion of any such policy, contract, or other 
arrangement which reserves the right to take the benefits or services of 
other Plans into considerafion in determining its benefits and that portion 
which does not. 

(B) "This Plan" means that portion of this contract which provides the 
benefits that are subject to this provision. 

(C) "Allowable Expense" means any necessary, reasonable, and cus- 
tomary item of expense at least a portion of which is covered under at 
least one of the Plans covering the person for whom claim is made. When 
a Plan provides benefits in the form of services rather than cash pay- 
ments, the reasonable cash value of each service rendered shall be 
deemed to be both an Allowable Expense and a benefit paid. 

(D) "Claim Determinafion Period" means a calendar year. 

Instructions 

The definition of a "Plan" within the COB provision of group contracts 
enumerates the types of coverage which the Plan may consider in deter- 
mining whether other coverage exists with respect to a specific claim. 
The definition: 



1 . May not include individual or family policies, or individual or fami- 
ly subscriber contracts, except as otherwise provided in this special in- 
struction. 

2. May include all group policies, group subscriber contracts, selected 
group disability insurance contracts issued pursuant to section 10270.97 
of the Insurance Code and blanket insurance contracts, except blanket in- 
surance contracts issued pursuant to section 10270.2(b) or (e) which con- 
tain nonduphcation of benefits or excess policy provisions. 

3. May not include any entitlements to Medi-Cal benefits under chap- 
ter 7 (commencing with secfion 14000) or chapter 8 (commencing with 
section 14500) of part 3 of division 9 of the Welfare and Institutions 
Code, or benefits under the California Crippled Children Services pro- 
gram under section 10020 of the Welfare and Insdtutions Code or any 
other coverage provided for or required by law when, by law. its benefits 
are excess to any private insurance or other non-governmental program. 

4. May not include the medical payment benefits customarily included 
in the traditional automobile contracts. 

5. May include "Medicare" or any other similar governmental benefits 
so long as it does not expand the definition of "Allowable Expenses" be- 
yond the hospital, medical and surgical benefits as may be provided by 
the government program and so long as such benefits are not by law ex- 
cess to this Plan. 

(3) Effect on Benefits 

(A) This provision shall apply in determining the benefits as to a per- 
son covered under this Plan for any Claim Determination Period if, for 
the Allowable Expenses incurred as to such person during such period, 
the sum of: 

(i) the value of the benefits that would be provided by this Plan in the 
absence of this provision, and 

(ii) the benefits that would be payable under all other plans in the ab- 
sence therein of provisions of similar purpose to this provision would ex- 
ceed such Allowable Expenses. 

(B) As to any Claim Determination Period to which this provision is 
applicable, the benefits that would be provided under this Plan in the ab- 
sence of this provision for the Allowable Expenses incurred as to such 
person during such Claim Determination Period shall be reduced to the 
extent necessary so that the sum of such reduced benefits and all the bene- 
fits payable for such Allowable Expenses under all other Plans, except 
as provided in paragraph (3)C., shall not exceed the total of such Allow- 
able Expenses. Benefits payable under another Plan include the benefits 
that would have been payable had claim been made therefor. 

(C)If 

(i) another Plan which is involved in paragraph (3)B. and which con- 
tains a provision coordinafing its benefits with those of this Plan would, 
according to its rules, determine its benefits after the benefits of this Plan 
have been determined, and 

(ii) the rules set forth in paragraph (4) would require this Plan to deter- 
mine its benefits before such other Plan, then the benefits of such other 
Plan will be ignored for the purposes of determining the benefits under 
this Plan. 

(4) For the purposes of paragraph (3), use the first of the following 
rules establishing the order of determinafion which applies: 



• 



[The next page is 55.] 



Page 54.6 



Register 2007, No. 4; 1 -26-2007 



Title 28 



The Department of Managed Health Care 



§ 1300.67.13 



• 



(A) The benefits of a Plan which covers the person on whose expenses 
claim is based other than as a dependent shall be determined before the 
benefits of a Plan which covers such person as a dependent, except that, 
if the person is also a Medicare beneficiary and as a result of the rules es- 
tablished by Title XVIII of the Social Security Act (42 USC 1 395 et seq.) 
and implementing regulations. Medicare is (i) secondary to the Plan cov- 
ering the person as a dependent and (ii) primary to the Plan covering the 
person as other than a dependent (e.g., a retired employee), then the bene- 
fits of the Plan covering the person as a dependent are determined before 
those of the Plan covering that person as other than a dependent. 

(B) Except for cases of a person for whom claim is made as a depen- 
dent child whose parents are separated or divorced, the benefits of a Plan 
which covers the person on whose expenses clai m is based as a dependent 
oi' a person whose date of birth, excluding year of birth, occurs earlier in 
a calendar year, shall be determined before the benefits of a Plan which 
covers such person as a dependent of a person whose date of birth, ex- 
cluding year of birth, occurs later in a calendar year. If either Plan does 
not have the provisions of this subparagraph regarding dependents, 
which results either in each Plan determining its benefits before the other 
or in each Plan determining its benefits after the other, the provisions of 
this subparagraph shall not apply, and the rule set forth in the Plan which 
does not have the provisions of this subparagraph shall determine the or- 
der of the benefits. 

(C) Except as provided in subparagraph (E), in the case of a person for 
whom claim is made as a dependent child whose parents are separated 
or divorced and the parent with custody of the child has not remarried, 
the benefits of a Plan which covers the child as a dependent of the parent 
with custody of the child will be determined before the benefits of a Plan 
which covers the child as a dependent of the parent without custody. 

(D) Except as provided in subparagraph (E), in the case of a person for 
whom claim is made as a dependent child whose parents are divorced and 
the parent with custody of the child has remarried, the benefits of a Plan 
which covers the child as a dependent of the parent with custody shall be 
determined before the benefits of a Plan which covers that child as a de- 
pendent of the stepparent, and the benefits of a Plan which covers that 
child as a dependent of the stepparent will be determined before the bene- 
fits of a Plan which covers that child as a dependent of the parent without 
custody. 

(E) In the case of a person for whom claim is made as a dependent child 
whose parents are separated or divorced, where there is a court decree 
which would otherwise establish financial responsibility for the medical, 
dental or other health care expenses with respect to the child, then, not- 
withstanding subparagraphs (C) and (D). the benefits of a Plan which 
covers the child as a dependent of the parent with such financial responsi- 
bility shall be determined before the benefits of any other Plan which 
covers the child as a dependent child. 

(F) Except as provided in subparagraph (G), the benefits of a Plan cov- 
ering the person for whose expenses claim is based as a laid-off or retired 
employee, or dependent of such person, shall be determined after the 
benefits of any other Plan covering such person as an employee, other 
than a laid-off or retired employee, or dependent of such person; 

(G) If either Plan does not have a provision regarding laid-off or re- 
tired employees, which results in each Plan determining its benefits after 
the other, then the rule under subparagraph (F) shall not apply; 

(H) If a person whose coverage is provided under a right of continua- 
tion pursuant to federal or state law also is covered under another Plan, 
the following shall be the order of benefit determination: 

( 1 ) First, the benefits of a Plan covering the person as an employee, 
member, or subscriber, or as that person's dependent; 

(2) Second, the benefits under continuation coverage. If the other Plan 
does not have the rules described above, and if. as a result, the Plans do 
not agree on the order of benefits, the rule under this subparagraph is ig- 
nored. 

(1) When subparagraphs (A) through (H) do not establish an order of 
benefit determination, the benefits of a Plan which has covered the per- 



son on whose expenses claim is based for the longer period of time shall 
be determined before the benefits of a Plan which has covered such per- 
son the shorter period of time. 

(5) When this provision operates to reduce the total amount of benefits 
otherwise payable as to a person covered under this Plan during any 
Claim Determination Period, each benefit that would be payable in the 
absence of this provision shall be reduced proportionately, and such re- 
duced amount shall be charged against any applicable benefit limit of this 
Plan. 

Instructions 

1 . When a claim under a Plan with a COB provision involves another 
Plan which also has a COB provision, the carriers involved shall u.se the 
above rules to decide the order in which the benefits payable under the 
respective Plans will be determined. 

2. In determining the length of time an individual has been covered un- 
der a given Plan, two successive Plans of a given group shall be deemed 
to be one continuous Plan so long as the claimant concerned was eligible 
for coverage within 24 hours after the prior Plan terminated. Thus, nei- 
ther a change in the amount or scope of benefits provided by a Plan, a 
change in the carrier insuring the Plan, nor a change from one type of Plan 
to another (e.g., single employer to multiple employer Plan, or vice versa, 
or single employer to a Taft-Hartley Welfare Plan) would constitute the 
start of a new Plan for purposes of this instniction. 

3. If a claimant's effective date of coverage under a given Plan is sub- 
sequent to the date the carrier first contracted to provide the Plan for the 
group concerned (employer, union, association, etc.). then, in the ab- 
sence of specific information to the contrary, the carrier shall assume, for 
purposes of this instruction, that the claimant's length of time covered 
under that Plan shall be measured from claimant's effecfive date cover- 
age. If a claimant's effective date of coverage under a given Plan is the 
same as the date the carrier first contracted to provide the Plan for the 
group concerned, then the carrier shall require the group concerned to 
furnish the date the claimant first became covered under the earliest of 
any prior Plans the group may have had. If such date is not readily avail- 
able, the date the claimant first became a member of the group shall be 
used as the date from which to determine the length of fime his coverage 
under that Plan has been in force. 

4. It is recognized that there may be existing group plans containing 
provisions under which the coverage is declared to be "excess" to all oth- 
er coverages, or other COB provisions not consistent with this rule. In 
such cases, plans are urged to use the following claims administration 
procedures: A group plan should pay first if it would be primary under 
the COB order of benefits determination. In those cases where a group 
plan would normally be considered secondary, the plan should make ev- 
ery effort to coordinate in a secondary position with benefits available 
through any such "excess" plans. The plan should try to secure the neces- 
sary information from the "excess" plan. 

(6) Right to Receive and Release Necessary Information. For the pur- 
pose of determining the applicability of and implementing the terms of 
this provision of this Plan or any provision of similar purpose of any other 
Plan, the Plan may release to or obtain from any insurance company or 
other organization or person any information, with respect to any person, 
which the Plan deems to be necessary for such purposes. Any person 
claiming benefits under this Plan shall furnish such information as may 
be necessary to implement this provision. 

(7) Facility of Payment. Whenever payments which should have been 
made under this Plan in accordance with this provision have been made 
under any other Plans, the Plan shall have the right, exercisable alone and 
in its sole discrefion, to pay over to any organizations making such other 
payments any amounts it shall determine to be warranted in order to satis- 
fy the intent of this provision, and amounts so paid shall be deemed to be 
benefits paid under this Plan and, to the extent of such payments, the Plan 
shall be fully discharged from liability under this Plan. 



Page 55 



Register 2006, No. 26; 6-30-2006 



§ 1300.67.24 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



(8) Right of Recovery. Whenever payments have been made by this 
Phm with respect to Allowable Expenses in a total amount, at any time, 
in excess of the maximum amount of payment necessary at that time to 
satisfy the intent of this provision, the Plan shall have the right to recover 
such payments, to the extent of such excess, from one or more of the fol- 
lowing, as the Plan shall determine: any persons to or for or with respect 
to whom such payments were made, any insurers, service plans or any 
other organizations. 

(c) Contracts in force on the effective date of this rule which contain 
an "excess" clause, "anti-duplication" provision, or any other provision 
by whatever name designated under which benefits would be reduced be- 
cause of other existing coverages, shall be brought into compliance with 
this rule by the later of the next anniversary or renewal date of the group 
policy or contract, or the expiration of the applicable collectively bar- 
gained contract pursuant to which they are written, if any. 

NOTE; Authority cited: Section 1 344. Health and Safety Code. Reference: Section 
10270.98, Insurance Code. 

History 

1. New section filed 5-9-80; effective thirtieth day thereafter (Register 80, No. 
19). 

2. Repealer of former COB regulation section 1300.67.13 and adoption of new 
COB regulation section 1 300.67. 1 3 filed 3-9-87; effective upon filing pursuant 
to Government Code section 1 1346.2(d). Regulation approved for consistency 
with CCR, title 10, sections 2232.50 through 2232.59, as required by Insurance 
Code section 10270.98 (Register 87, No. 11). 

3. Editorial correction of prinfing error restoring correct wording of subsection (8) 
of Instructions (Register 91 , No. 33). 

4. Amendment of subsections (b)(4)-(b)(4)(E), new subsections 
(b)(4)(F)-(bK4)(H)(2), subsection relettering, and amendment of newly desig- 
nated subsection (b)(4)(I) filed 8-6-93; operative 9-7-93 (Register 93. No. 32). 

5. Editorial correction of printing error in History 2 (Register 93, No. 32). 

§ 1300.67.24. Outpatient Prescription Drug Copayments, 
Coinsurance, Deductibles, Limitations and 
Exclusions. 

(a) Every health care service plan that provides coverage for outpatient 
prescription drug benefits shall provide coverage for all medically neces- 
sary outpatient prescription drugs except as described in this section, sub- 
ject to the requirements of Health and Safety Code section 1342.7(g). 

(1) Outpatient prescription drugs are self-administered drugs ap- 
proved by the Federal Food and Drug Administration for sale to the pub- 
lic through retail or mail-order pharmacies that require prescriptions and 
are not provided for use on an inpatient basis. For purposes of this section 
"inpatient basis" has the meaning indicated in Section 1300.67(b), and 
"self-administered" means those drugs that need not be administered in 
a clinical setting or by a licensed health care provider. 

(2) Coverage for outpatient prescription drugs shall also include cov- 
erage for disposable devices that are medically necessary for the admin- 
istration of a covered outpatient prescription drug, such as spacers and 
inhalers for the administration of aerosol outpatient prescription drugs, 
and syringes for self-injectible outpatient prescription drugs that are not 
dispensed in pre-filled syringes. For purposes of this section, the term 
"disposable" includes devices that may be used more than once before 
disposal. This section does not create an obligation for a plan to provide 
coverage for a durable medical equipment benefit. 

(b) Standards for outpatient prescription drug benefit plans 

( 1 ) A prescription drug benefit offered by a plan shall comply with the 
requirements of the Knox-Keene Act and the regulations promulgated 
by the Director of the Department of Managed Health Care, including but 
not limited to Sections 1342, 1343.5, 1342.7, 1363, 1363.01, 1363.03, 
1363.5, 1367(e), 1367(g), 1367(h), 1367.01, 1367.20, 1367.21, 1367.22 
and 1367.24 of the Act and Section 1300.67.4(a)(3)(A) of these rules. 

(2) All clinical aspects of a plan's prescription drug benefit shall be de- 
veloped by qualified medical and pharmacy professionals in accordance 
with good professional practice. The plan shall establish and document 
an internal process for ongoing review by qualified medical and pharma- 
cy professionals of the clinical aspects of the prescription drug benefit, 
including review of limitaUons and exclusions, and the safety, efficacy, 
and utilization of outpatient prescription drugs. 



(3) Plans seeking to establish limitations or exclusions on outpatient 
prescription drug benefits shall do so consistent with up-to-date evi- 
dence-based outcoines and current published, peer-reviewed medical 
and pharmaceutical literature. 

(4) A plan that provides coverage for prescription drugs through a mail 
order pharmacy shall have written policies and procedures documenting 
that the plan's mail order arrangements are in compliance with the re- 
quirements of the Act and this section, and applicable California and fed- 
eral laws regarding pharmacists and pharmacy services. The mail order 
pharinacy process shall conform effectively and efficiently with a plan's 
processes for prior authorization for coverage of medically necessary 
drugs as required by the Act, and shall include standards for fimely deliv- 
ery and a contingency mechanism for providing the drug if a mail order 
provider fails to meet the delivery standards. 

(5) In reviewing copayments, coinsurance, deductibles, limitations, or 
exclusions for compliance with Section 1367(e) and (h) of the Act, and 
Section 1300.67.4(a)(3)(A) of these rules, the Department's approval or 
disapproval may be based upon all relevant factors, including but not lim- 
ited to: 

(A) The type and number of enrollees affected; 

(B) The clinical efficacy of the drug(s) proposed to be limited or ex- 
cluded; 

(C) The availability of therapeufic equivalents or other drugs medical- 
ly necessary for treatment of health conditions; 

(D) The specific health plan products to which the copayment, coinsu- 
rance, deductible, limitafion, or exclusion will apply; 

(E) The duration of the limitation or exclusion; 

(F) The rationale for the copayment, coinsurance, deducuble, limita- 
tion or exclusion; 

(G) The projected effect of the copayment, coinsurance, deductible, 
limitation, or exclusion on the affordability and accessibility of cover- 
age; 

(H) The projected comparative clinical effect, including any potential 
risk of adverse health outcomes, based upon utilization data and review 
of peer-reviewed professional literature; 

(I) The overall copayment structure of the product, including whether 
the copayment, coinsurance, or deductible contributes to the overall out- 
of-pocket maximum for the product; 

(J) Information regarding similar copayments, coinsurance levels, de- 
ductibles, limitations, or exclusions previously approved by the Depart- 
ment; 

(K) Evidence-based clinical studies and professional literature; 

(L) The description of the copayment, coinsurance, deductible, limita- 
tion or exclusion as compared to other benefits and products in the mar- 
ketplace; 

(M) Any other historical, statistical, or other information that the sub- 
mitting plan considers pertinent to the request for approval of the copay- 
ments, coinsurance level, deducnbles, limitation, or exclusion. 

(c) Copayments, Coinsurance and Deductibles 

(1 ) A plan's prescription drug benefit shall provide that if the pharma- 
cy's retail price for a prescription drug is less than the applicable copay- 
ment amount, the enrollee shall not be required to pay any more than the 
retail price. 

(2) Proposed copayment structures or ranges, coinsurance, or deduc- 
tibles submitted to the Director for approval shall be based upon a meth- 
odology that is fully described and documented, and that complies with 
the standards set forth in this Section. A plan may use actual cost data on 
prescription drugs or, for contracted services or products, nationally rec- 
ognized data sources used by the plan in developing the contract rates. 

(3) A copayment or percentage coinsurance shall not exceed 50 per- 
cent of the cost to the plan as described in subsecfion (c)(5) and (6). A 
percentage coinsurance shall meet one of the following additional re- 
quirements: 

(A) Have a maximum dollar amount cap on the percentage coinsu- 
rance that will be charged for an individual prescription; 



Page 56 



Register 2006, No. 26; 6-30-2006 



Title 28 



The Department of Managed Health Care 



§ 1300.67.24 



(B) Apply lowards an annual oul-ol-pocket maximum for the prod- 
uci; or 

(C) Apply towards an annual out-ot-pocket maximum for the pre- 
scription drug benefit. 

(4) In addition to compliance with this subsection (c). copayments and 
coinsurances shall comply with the standards identified at subsection (b), 
including that they shall be reasonable so as to allow access to medically 
necessary outpatient prescription drugs, and the Department's deter- 
mination may be based on all relevant factors as provided in subsection 
(b)(5). 

(5) The "cost to the plan" means the actual cost incurred by the plan 
or its contracting provider to acquire and dispense a covered outpatient 
prescription drug, without subtracting or otherwise considering any co- 
payment or coinsurance amount to be paid by enrollees. The cost to the 
plan may include average cost calculations as described in this section, 
and shall include all discounts and other prospective cost and pricing ar- 
rangements, as applicable. Plans shall account for any rebates and other 
retrospective cost and pricing arrangements for outpatient prescription 
drugs by verifying that the rebates and other retrospective cost and pric- 
ing arrangements for outpatient prescription drugs are applied by the plan 
to reduce costs for the plan's subscribers. 

(6) Compliance with the requirement not to exceed 50 percent of the 
actual cost to the plan may be met by various methods including the three 
methods described below. A plan may propose a different method, which 
shall be filed with the Department prior to implementation by the plan 
and supported by information and documentation sufficient to satisfy the 
Department as to the validity of the calculation methodology. 

(A) Average Cost in Each Tier. This copayment represents the average 
plan cost per drug in a tier and is calculated in the following manner: 

1 . The copayment is for one tier in a multi-tier prescription drug bene- 
fit. (EXAMPLE: the Name Brand tier.) 

2. Add together the plan's cost for all the drugs in that tier. (EXAM- 
PLE: the Name Brand fier covers X drug which costs the plan $50 per pre- 
scription, Y daig which costs $100 per prescription, and Z drug which 
costs the plan $75 per prescription-added together for a total cost of 
$225.) 

3. Divide the cost determined according to 2 above by the total number 
of drugs in that same tier. (EXAMPLE: there are 3 drugs in the Name 
Brand tier which cost the plan $225. $225/3 = $75.) 

4. The copayment may not exceed 50 percent of the average cost of 
drugs in the tier to which it applies. (EXAMPLE: 50% of $75 = $37.50. 
The copayment for the Name Brand tier may not exceed $37.50.) 

(B) Weighted Average Cost in Each Tier. This copayment is the same 
as the average per tier except that the prescriptions actually covered by 
the plan are used in the calculation. 

1. The copayment is for one tier in a multi-tier prescription benefit. 
(EXAMPLE: the Name Brand tier.) 

2. Calculate the number of prescriptions for drugs in that tier actually 
covered by the plan. (EXAMPLE: the plan covered the cost of 10 pre- 
scriptions in the Name Brand tier.) 

3. Add together the cost for all the drugs covered in 2 above. (EXAM- 
PLE: the plan covered three prescriptions for X drug (3 x $50= $150), 
three for Y drug (3 x $ 1 00 = $300) and four for Z drug (4 x $75 = $300). 
$ 1 50 -I- $300 -I- $300 = $750 total cost for prescriptions in that tier covered 
by the plan.) 

4. Divide the total cost determined according to 3 above by the number 
of prescriptions from step 2. (EXAMPLE: $750/10 = $75.) 

5. The copayment may not exceed 50 percent of the weighted average 
cost of drugs in the tier to which it applies. (EXAMPLE: 50% of $75 = 
$37.50. The copayment for the Name Brand tier may not exceed $37.50.) 

(C) Weighted Average Cost Across All Tiers. This copayment is the 
same as the weighted average per tier except that there is one copayment 
calculated using the number of prescriptions for all tiers covered by the 
plan. 

1. The copayment is for all tiers in a multi-tier prescription benefit. 
(EXAMPLE: the Name Brand tier and the Generic tier.) 



2. Calculate the number of prescriptions for drugs in that tier actually 
covered by the plan. (EXAMPLE: Ten prescriptions under the Name 
Brand tier (three for X drug, three for Y drug and four for Z drug, ten pre- 
scriptions under the Generic tier (three for drug A, three for drug B and 
four for Drug C for a total of twenty drugs.) 

3. Add together the cost for all the drugs covered in 2 above. (EXAM- 
PLE: the ten Name Brand drugs cost $750 (from previous example) plus 
the Generic drugs, three for A dmg (3 x $5 = $ 1 5), three for B drug (3 x 
$10 = $30) and four for C dmg (4 x $15 = $60) (Generic total = $105) 
($750 + $105 = $855 cost for all the drugs covered in the Name Brand 
and Generic tiers.) 

4. Divide the total cost across tiers determined according to 3 above 
by the number of prescriptions from step 2. (EXAMPLE: $855/20 = 
$42.75) 

5. The copayment may not exceed 50 percent of the weighted average 
cost of drugs in all the tiers in the prescription drug benefit to which it 
applies. (EXAMPLE: 507o of $42.75 = $2 1 .38. The copayment for all ti- 
ers may not exceed $21.38.) 

(d) Limitations 

Plans that provide coverage for outpatient prescription drug benefits 
may apply the following limitations: 

(1) A plan may impose prior authorization requirements on prescrip- 
tion dmg benefits, consistent with the requirements of the Act and regula- 
tions. 

(2) When there is more than one drug that is appropriate for the treat- 
ment of a medical condition, a plan may require step therapy. A plan that 
requires step therapy shall have an expeditious process in place to autho- 
rize excepfions to step therapy when medically necessary and to conform 
effectively and efficiently with continuity of care requirements of the Act 
and regulations. In circumstances where an enrollee is changing plans, 
the new plan may not require the enrollee to repeat step therapy when that 
enrollee is already being treated for a medical condition by a prescription 
drug provided that the drug is appropriately prescribed and is considered 
safe and effective for the enrollee's condition. Nothing in this section 
shall preclude the new plan from imposing a prior authorization require- 
ment pursuant to Section 1367.24 for the continued coverage of a pre- 
scription drug prescribed pursuant to step therapy imposed by the former 
plan, or preclude the prescribing provider from prescribing another drug 
covered by the new plan that is medically appropriate for the enrollee. For 
purposes of this section, "step therapy" means a type of protocol that 
specifies the sequence in which different prescription drugs for a given 
medical condition and medically appropriate for a particular patient are 
to be prescribed. 

(3) A plan shall provide coverage for the medically necessary dosage 
and quantity of the drug prescribed for the treatment of a medical condi- 
tion consistent with professionally recognized standards of practice. 

(A) Apian may limittheamountof the drug dispensed at any onetime 
to a 30-day supply or, if the treatment is for less than 30 days, for the med- 
ically necessary amount of the drug. 

(B) A plan may impose a requirement that maintenance drugs be dis- 
pensed in a two months or greater supply. 

(C) A plan may establish a mandatory mail order process for mainte- 
nance drugs when dispensed in a three months supply or greater quanti- 
ties, but shall not impose any fees or costs for mandatory mail order pre- 
scriptions other than the applicable copayment or coinsurance. A plan 
shall not require an enrollee to fill a prescription by mail if the prescribed 
drug is not available to be filled in that manner. 

(D) For purposes of this section, "maintenance drugs" means those 
outpatient prescription dmgs that are prescribed for the enrollee on a con- 
tinual basis to treat a chronic condition. 

(4) Plans may require enrollees who are prescribed drugs for smoking 
cessation to be enrolled in or to have completed a smoking cessation pro- 
gram, if covered by the plan prior to or concurrent with receiving the pre- 
scription drug. 

(5) Other limitations that the Department may approve pursuant to 
Section 1342.7 of the Act and this section. 



Page 57 



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§ 1300.67.50 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



(e) Exclusions 

Plans that provide coverage for outpatient prescription drug benefits 
are not required to provide coverage for prescription drugs that meet the 
Ibllowing conditions: 

( 1 ) When prescribed for cosmetic purposes. For purposes of this sec- 
tion "cosmetic" means drugs solely prescribed for the purpose of altering 
or affecting normal stnictures of the body to improve appearance rather 
than function. 

(2) When prescribed solely for the treatment of hair loss, sexual dys- 
function, athletic performance, cosmetic purposes, anti-aging for cos- 
metic purposes, and mental performance. Drugs for mental performance 
shall not be excluded from coverage when they are used to treat diag- 
nosed mental illness or medical conditions affecting memory, including, 
but not limited to, treatment of the conditions or symptoms of dementia 
or Alzheimer's disease. 

(3) When prescribed solely for the purposes of losing weight, except 
when medically necessary for the treatment of morbid obesity. Plans may 
require enrollees who are prescribed drugs for morbid obesity to be en- 
rolled in a comprehensive weight loss program, if covered by the plan, 
for a reasonable period of time prior to or concurrent with receiving the 
prescription drug. 

(4) When prescribed solely for the purpose of shortening the duration 
of the common cold. 

(5) Drugs that are available over the counter. A plan shall not exclude 
coverage of an entire class of prescription drugs when one drug within 
that class becomes available over the counter. A plan that seeks to ex- 
clude coverage for an entire class of drugs when more than one drug with- 
in that class become available over the counter, shall first file a notice of 
material modification and obtain the Department's prior approval in ac- 
cordance with Section 1342.7 of the Act and this regulation. 

(6) Replacement of lost or stolen drugs. 

(7) Drugs when prescribed by non-contracting providers for non-cov- 
ered procedures and which are not authorized by a plan or a plan provider 
except when coverage is otherwise required in the context of emergency 
services. 

(8) Other categories of prescription drugs approved by the Department 
pursuant to Section 1342.7 of the Act and this section. 

(0 Oversight of Plan and Provider Compliance 

A plan shall have written policies and procedures for its outpatient pre- 
scription drug benefits, and quality assurance systems in place for the 
early identification and swift correction of problems in the accessibility 
and availability of outpatient prescription drug benefits. A contract be- 
tween a health care service plan and a prescription drug benefit provider 
shall include provisions, terms and conditions sufficient to ensure that the 
standards and requirements of this regulation are met. 

(g) Implementation 

(1) Any exclusion or limitation on a prescription drug benefit that is 
not described at subsections (d) or (e) may not be applied to any plan's 
prescription drug benefit unless a plan has filed a notice of material modi- 
fication with the Department and received approval by Order to apply the 
exclusion or limitation. The Order of approval may be issued subject to 
specified terms and conditions, or for specified periods, as the Depart- 
ment may determine are necessary and appropriate. Following issuance 
of an Order approving an exclusion or limitation, any other licensed plan 
may apply the same exclusion or limitation to its prescription drug bene- 
fit if it files an amendment with the Department not less than 30 days prior 
to implementation of the exclusion or limitation, and represents that it is 
exactly the same as that previously approved by Order, provides specific 
reference to the Order number and date issued, and addresses any speci- 
fied terms and conditions upon such Order, as applicable. 

(2) A plan may meet the material modification filing requirements of 
subsection (g)(1) with respect to exclusions and limitafions contained in 
contracts issued, renewed or amended on or before January 1 , 2007. by 
filing within six months of the effective date of this regulation a report 
disclosing and describing all such exclusions and limitafions on prescrip- 



tion drug benefits covered under all subscriber contracts subject to the re- 
quirements of Section 1 342.7 of the Act. The Department will provide 
an expeditious review of the exclusions and limitations disclosed in the 
report. 

NOTE: Authority cited: Sections 1 342.7. 1 344 and 1346, Health and Safety Code. 
Reference: Sections 1342, 1342.7, l.'^43.5, 1363, 1363.01, 1363.03. 1363..^. 1367. 
1367.01, 1367.215, 1367.24, 1367.25, 1367.45. 1367.51. 1374.72 and 1375.1. 
Health and Safely Code; see also SB 842. ch.791. Stats. 2002. 

History 

1 . New section filed 1 1-3-2000 as an emergency; operative 1 1-3-2000 (Register 
2000. No. 44). A Certificate of Compliance must be transmitted to OAL by 
3-5-200! or emergency language will be repealed by operation of law on the 
Following day. 

2. Certificate of Compliance as to 1 1 -3-2000 order transmitted to OAL 3-5-200 1 
and filed 4-16-2001 (Register 2001, No. 16). 

3. Amendment of section heading and repealer and new section and Note filed 
6-26-2006; operative 7-26-2006 (Register 2006, No. 26). 

§ 1300.67.50. Certain Medicare Supplement Contracts: 
Presumption of Unfairness. 

NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Sec- 
tions 1367 and 1384(d), Health and Safety Code. 

History 

1 . New section filed 8-12-82; effective thirtieth day thereafter (Register 82, No. 
33). 

2. Amendment of subsecfions (a) and (c), ntiw subsection (d)(4), renumbering with 
amendment to subsections (d)(5) and (d)(6) and amendment of Note filed 
11-26-91; operative 12-26-91 (Register 92, No. 10). 

3. Change without regulatory effect repealing secfion filed 9-14-92 pursuant to 
section 100. title 1, California Code of Regulations (Register 92, No. 38). 

§ 1300.67.51. Medicare Supplement Contract Provisions. 

NOTE: Authority cited: Section 1 344, Health and Safety Code. Reference: Section 
1367, Health and Safety Code. 

History 

1. New section filed 8-12-82; effective thirtieth day thereafter (Register 82, No. 
33). 

2. Amendment of subsecfions (a), (b)( 1 ), (b)( 10)( A), (b)( 1 0)(N), (c)(2), (c)(4)-(6), 
(d)(2) and new (d)(3.1)-(vii) filed ll-26-91;operanve 12-26-91 (Register92, 
No. 10). 

3. Change without regulatory effect repealing section filed 9-14-92 pursuant to 
section 100, fitle 1, California Code of Regulafions (Register 92, No. 38). 

§ 1300.67.52. Medicare Supplement Additional Benefit 
Requirements. 

NOTE: Authority cited: Sections 1344, 1367 and 1367. 15, Health and Safety Code. 
Reference: Secfions 1344, 1367 and 1367.15, Health and Safety Code. 

History 

1 . New section filed 8-1 2-82; effective thirtieth day thereafter (Register 82, No. 

2. New subsection (b) and subsecfion renumbering, repealer of subsection (e) and 
new subsecfions (f)-(h) filed 1-8-92; operative 1-1-92 (Register 92, No. 12). 

3. Change without regulatory effect repealing section filed 9-14-92 pursuant to 
section 100, title 1, California Code of Regulations (Register 92, No. 38). 

§ 1300.67.53. Medicare Supplement Minimum Aggregate 
Benefits. 

NOTE: Authority cited: Secfion 1344, Health and Safety Code. Reference: Section 
1367, Health and Safety Code. 

History 

1 . New section filed 8-12-82; effective thirtieth day thereafter (Register 82, No. 
33). 

2. Amendment of subsecfions (a), (c), (d), new subsection (e) and relettering filed 
1 1-26-91 ;operafive 12-26-91 (Register 92, No. 10). 

3. Change without regulatory effect repealing section filed 9-14-92 pursuant to 
section 100, fitle 1, California Code of Regulafions (Register 92, No. 38). 

§ 1300.67.55. Medicare Supplement Reporting 
Requirements. 

NOTE: Authority cited: Secfion 1344, Health and Safety Code. Reference: Sec- 
tions 1346(c), 1352.1 and 1367.15, Health and Safety Code; 42 U.S.C. 
1395u(h)(3)(B) and 42 U.S.C. 1395ss. 

History 

1. New section filed 11-26-91; operafive 12-26-91 (Register 92, No. 10). 

2. Change without regulatory effect repealing section filed 9-14-92 pursuant to 
section 100, title 1, California Code of Regulations (Register 92, No. 38). 



Page 58 



Register 2006, No. 26; 6-30-2006 



Title 28 



The Department of Managed Health Care 



§ 1300.68 



§ 1300.67.56. Transitional Requirements for the 

Conversion of Medicare Supplement Contracts 
to Conform to Medicare Program Revisions. 

NOTE: Authority cited: Section 1344. Health and Safety Code. Reference: Sec- 
tions 1346(c) and 1367.15. Health and Safety Code: 42 U.S.C. 1.395ss. 

History 

1. New section tiled 1 1-26-91; operative 12-26-91 (Register 92. No. 10). 

2. Change without regulatory effect repealing section filed 9-14-92 pursuant to 
.section 100. title I .California Code of Regulations (Register 92, No. 38). 

§ 1300.67.57. Format For Notices of Changes in Coverage. 

NOTh: Authority cited: Section 1 344. Health and Safety Code. Reference: Section 
1367.1.5. Health and Safety Code; 42 U.S.C. 139.Sss. 

History 

1. New .section filed 1 1-26-91; operative 12-26-91 (Register 92. No. 10). 

2. Change without regulatory effect repealing section filed 9-14-92 pursuant to 
section 100. title 1 . California Code of Regulations (Register 92, No. 38). 

§ 1300.67.58. Participating Physician or Supplier Claims 
Form Requirement. (Compliance with Section 
4081 of the Omnibus Budget Reconciliation 
Act of 1987) 

NOTE: Authority cited: Section 1.M4. Health and Safety Code. Reference: Sec- 
tions 1.367(h)and 1367.15. Health and Safety Code; 42 U.S.C. 1395u(h)(3)(B)and 
42 U.S.C. 1395SS. 

Hi. STORY 

1. New section filed 1 1-26-91; operative 12-26-91 (Register 92. No. 10). 

2. Change without regulatory effect repealing section filed 9-14-92 pursuant to 
section 100, title I, California Code of Regulations (Register 92, No. 38). 

§ 1300.67.59. Format for Reporting Loss Ratio Experience. 

No IE; Authority cited: Section 1 344, Health and Safety Code. Reference: Sec- 
tions 1.367.15 and 1384(d), Health and Safety Code; 42 U.S.C. 1395ss. 

History 

1. New section filed 1 1-26^-91; operative 12-26-91 (Register 92, No. 10). 

2. Change without regulatory effect repealing section filed 9-14-92 pursuant to 
section 100, title 1, California Code of Regulations (Register 92, No. 38). 

Article 8. Self-Policing Procedures 

§ 1300.67.60. Standing Referral to HIV/AIDS Specialist. 
[Renumbered] 

NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Sec- 
tions 1.344 and 1374.16, Health and Safety Code. 

History 

1. New section filed 12-17-2002; operative 1-16-2003 (Register 2002, No. 51). 

2. Renumbering of former section 1300.67.60 to new secfion 1300.74.16 filed 
1-10-2008; operative 2-9-2008 (Register 2008, No. 2). 

§ 1300.68. Grievance System. 

Every health care service plan shall establish a grievance systein pur- 
suant to the requirements of Section 1368 of the Act. 

(a) The grievance system shall be established in writing and provide 
for procedures that will receive, review and resolve grievances within 30 
calendar days of receipt by the plan, or any provider or entity with dele- 
gated authority to administer and resolve the plan's grievance system. 
The following definitions shall apply with respect to the regulations relat- 
ing to grievance systems: 

(1) "Grievance" means a written or oral expression of dissatisfaction 
regarding the plan and/or provider, including quality of care concerns, 
and shall include a complaint, dispute, request for reconsideration or ap- 
peal made by an enrollee or the enrollee's representative. Where the plan 
is unable to distinguish between a grievance and an inquiry, it shall be 
considered a grievance. 

(2) "'Complaint" is the same as "grievance." 

(3) "Complainant" is the same as "grievant," and means the person 
who filed the grievance including the enrollee, a representative desig- 
nated by the enrollee. or other individual with authority to act on behalf 
of the enrollee. 

(4) "Resolved" means that the grievance has reached a final conclu- 
sion with respect to the enrollee's submitted grievance, and there are no 



pending enrollee appeals within the plan's grievance system, including 
entities with delegated authority. 

(A) If the plan has multiple internal levels of grievance resolution or 
appeal, all levels must be completed within 30 calendar days of the plan's 
receipt of the grievance. 

(B) Grievances that are not resolved within 30 calendar days, or griev- 
ances referred to the Department's coinplaint or independent medical re- 
view systetn. shall be reported as "pending" grievances pursuant to sub- 
section (f) below. Grievances referred to external review proces.ses, such 
as reviews of Medicare Managed Care determinations pursuant to 42 
C.F.R. Part 422, or the Medi-Cal Fair Hearing process, shall also be re- 
ported pursuant to subsection (0 until the review and any required action 
by the plan resulting from the review is completed. 

(b) The plan's grievance system shall include the following: 

( 1 ) An officer of the plan shall be designated as having primary re- 
sponsibility for the plan's grievance system whether administered direct- 
ly by the plan ordelegated to anotherentity. The officer shall continuous- 
ly review the operation of the grievance system to identify any emergent 
patterns of grievances. The system shall include the reporting procedures 
in order to improve plan policies and procedures. 

(2) Each plan's obligation for notifying subscribers and enrollees 
about the plan's grievance system shall include information on the plan's 
procedures for filing and resolving grievances, and the telephone number 
and address for presenting a grievance. The notice shall also include in- 
formation regarding the Department's review process, the independent 
medical review system, and the Department's toll-free telephone num- 
ber and website address. 

(3) The grievance system shall address the linguistic and cultural 
needs of its enrollee population as well as the needs of enrollees with dis- 
abilities. The system shall ensure all enrollees have access to and can ful- 
ly participate in the grievance system by providing assistance for those 
with limited English proficiency or with a visual or other communicative 
impairment. Such assistance shall include, but is not limited to. transla- 
tions of grievance procedures, forms, and plan responses to grievances, 
as well as access to interpreters, telephone relay systems and other de- 
vices that aid disabled individuals to communicate. Plans shall develop 
and file with the Department a policy describing how they ensure that 
their grievance system complies with this subsection within 90 days of 
the effective date of this regulation. 

(4) The plan shall maintain a toll-free number, or a local telephone 
number in each service area, for the filing of grievances. 

(5) A written record shall be made for each grievance received by the 
plan, including the date received, the plan representative recording the 
grievance, a summary or other document describing the grievance, and 
its disposition. The written record of grievances shall be reviewed peri- 
odically by the governing body of the plan, the public policy body created 
pursuant to section 1 .300.69, and by an officer of the plan or his designee. 
This review shall be thoroughly documented. 

(6) The plan grievance system shall ensure that assistance in filing 
grievances shall be provided at each location where grievances may be 
submitted. A "patient advocate" or ombudsperson may be used. 

(7) Grievance forms and a description of the grievance procedure shall 
be readily available at each facility of the plan, on the plan's website, and 
from each contracting provider's office or facility. Grievance forms shall 
be provided promptly upon request. 

(8) The plan shall assure that there is no discrimination against an en- 
rollee or subscriber (including cancellation of the contract) on the 
grounds that the complainant filed a grievance. 

(9) The grievance system shall allow enrollees to file grievances for 
at least 1 80 calendar days following any incident or action that is the sub- 
ject of the enrollee's dissatisfaction. 

(c) Through periodic medical surveys under Section 1380 of the Act. 
the Department shall periodically review the plan's grievance system, in- 
cluding the records of grievances received by the plan, and assess the ef- 
fectiveness of the plan policies and actions taken in response to griev- 
ances. 



Page 58.1 



Register 2008, No. 2; 1 - 11 -2008 



§ 1300.68 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



(d) The plan shall respond to grievances as follows: 

(1) A grievance system shall provide for a written acknowledgment 
within five (3) calendar days of receipt, except as noted in subsection 
(d)(8). The acknowledgment will advise the complainant that the griev- 
ance has been received, the date of receipt, and provide the name of the 
plan representative, telephone number and address of the plan represen- 
tative who may be contacted about the grievance. 

(2) The grievance system shall provide for a prompt review of griev- 
ances by the management or supervisory staff responsible for the ser- 
vices or operations which are the subject of the grievance. 

(3) The plan's resolution, containing a written response to the griev- 
ance shall be sent to the complainant within thirty (30) calendar days of 
receipt, except as noted in subsection (d)(8). The written response shall 
contain a clear and concise explanation of the plan's decision. Nothing 
in this regulation requires a plan to disclose information to the grievant 
thai is otherwise confidential or privileged by law. 

(4) For grievances involving delay, modification or denial of services 
based on a determination in whole or in part that the service is not medi- 
cally necessary, the plan shall include in its written response, the reasons 
for its determination. The response shall clearly state the criteria, clinical 
guidelines or medical policies used in reaching the determination. The 
plan's response shall also advise the enrollee that the determination may 
be considered by the Department's independent medical review system. 
The response shall include an application for independent medical re- 
view and instructions, including the Department's toll-free telephone 
number for further information and an envelope addressed to the Depart- 
ment of Managed Health Care, HMO Help Center. 980 Ninth Street, 5th 
Roor. Sacramento. CA 95814. 

(5) Plan responses to grievances involving a determination that the re- 
quested service is not a covered benefit shall specify the provision in the 
contract, evidence of coverage or member handbook that excludes the 
service. The response shall either identify the document and page where 
the provision is found, direct the grievant to the applicable section of the 
contract containing the provision, or provide a copy of the provision and 
explain in clear concise language how the exclusion applied to the specif- 
ic health care service or benefit requested by the enrollee. In addition to 
the notice set forth at Section 1368.02(b) of the Act, the response shall 
also include a notice that if the enrollee believes the decision was denied 
on the grounds that it was not medically necessary, the Department 
should be contacted to determine whether the decision is eligible for an 
independent medical review. 

(6) Copies of grievances and responses shall be maintained by the Plan 
for five years, and shall include a copy of all medical records, documents, 
evidence of coverage and other relevant information upon which the plan 
relied in reaching its decision. 

(7) The Department's telephone number, the California Relay Ser- 
vice's telephone numbers, the plan's telephone number and the Depart- 
ment's Internet address shall be displayed in all of the plan's acknowl- 
edgments and responses to grievances in 1 2-point boldface type with the 
statement contained in subsection (b) of Section 1368.02 of the Act. 

(8) Grievances received over the telephone that are not coverage dis- 
putes, disputed health care services involving medical necessity or ex- 
perimental or investigational treatment, and that are resolved by the close 
of the next business day, are exempt from the requirement to send a writ- 
ten acknowledgment and response. The plan shall maintain a log of all 
such grievances containing the date of the call, the name of the complain- 
ant, member identification number, nature of the grievance, nature of res- 
olution, and the plan representative's name who took the call and re- 
solved the grievance. The information contained in this log shall be 
periodically reviewed by the plan as set forth in subsection (b). 

(e) The plan's grievance system shall track and monitor grievances re- 
ceived by the plan, or any entity with delegated authority to receive or 
respond to grievances. The system shall: 

( 1 ) Monitor the number of grievances received and resolved; whether 
the grievance was resolved in favor of the enrollee or plan; and the num- 
ber of grievances pending over 30 calendar days. The system shall track 



grievances under categories of Commercial. Medicare and Medi-Cal/ 
other contracts. The system shall indicate whether an enrollee grievance 
is pending at: ( 1 ) the plan's internal grievance system; (2) the Depart- 
ment's consumer complaint process; (3) the Department's Independent 
Medical Review system; (4) an action filed or before a trial or appellate 
court; or (5) other dispute resolution process. Additionally, the system 
shall indicate whether an enrollee grievance has been submitted to: ( 1 ) 
the Medicare review and appeal system; (2) the Medi-Cal fair hearing 
process; or (3) arbitration. 

(2) The system shall be able to indicate the total number of grievances 
received, pending and resolved in favor of the enrollee at all levels of 
grievance review and to describe the issue or issues raised in grievances 
as (1) coverage disputes. (2) disputes involving medical necessity. (3) 
complaints about the quality of care and (4) complaints about access to 
care (including complaints about the waiting time for appointments), and 
(5) complaints about the quality of service, and (6) other issues. 

(f) Quarterly Reports 

( 1 ) All plans shall submit a quarteriy report to the Department describ- 
ing grievances that were or are pending and unresolved for 30 days or 
more. The report shall be prepared for the quarters ending March 31st. 
June 30th, September 30th and December 3 1 st of each calendar year. The 
report shall also contain the number of grievances referred to external re- 
view proces.ses, such as reconsiderations of Medicare Managed Care de- 
terminations pursuant to 42 C.F.R. Part 422. the Medi-Cal fair hearing 
process, the Department's complaint or Independent Medical Review 
system, or other external dispute resolution systems, known to the plan 
as of the last day of each quarter. 

(2) The quarterly report shall include: 

(A) The licensee's name, quarter and date of the report; 

(B) The total number of grievances filed by enrollees that were or are 
pending and unresolved for more than 30 calendar days at any time dur- 
ing the quarter under the categories of Commercial, Medicare, and 
Medi-Cal/other products offered by the plan; 

(C) A brief explanation of why the grievance was not resolved in 30 
days, and indicate whether the grievance was or is pending at: (1) the 
plan's internal grievance system; (2) the Department's consumer com- 
plaint process; (3) the Department's Independent Medical Review sys- 
tem; (4) court; or (5) other dispute resolution processes. Alternatively, 
the plan shall indicate whether the grievance was or is submitted to: (1) 
the Medicare review and appeal system; (2) the Medi-Cal fair hearing 
process; or (3) arbitration. 

(D) The nature of the unresolved grievances as (1) coverage disputes; 
(2) disputes involving medical necessity; (3) complaints about the quali- 
ty of care; (4) complaints about access to care (including complaints 
about the waiting time for appointments); (5) complaints about the quali- 
ty of service; and (6) other issues. All issues reasonably described in the 
grievance shall be separately categorized. 

(E) The quarterly report shall not contain personal or confidential in- 
formation with respect to any enrollee. 

(3) The quarterly report shall be verified by an officer authorized to act 
on behalf of the plan. The report shall be submitted in writing or through 
electronic filing to the Department's Sacramento Office to the attention 
of the Filing Clerk no later than 30 days after each quarter. The quarteriy 
report shall not be filed as an amendment to the plan application. 

(4) The quarterly report shall be filed in the format specified in subsec- 
tion (i). 

(g) An enrollee may submit a grievance to the Department. The De- 
partment shall notify the plan, and within five (5) calendar days after noti- 
fication, the plan shall provide the following information to the Depart- 
ment: 

(1 ) A written response to the issues raised by the grievance. 

(2) A copy of the plan's original response sent to the enrollee regarding 
the grievance. 

(3) A complete and legible copy of all medical records related to the 
grievance. The plan shall inform the Department if medical records were 
not used by the plan in resolving the grievance. 



Page 58.2 



Register 2008, No. 2; 1-11-2008 



Title 28 



The Department of Managed Health Care 



§ 130().68 



(4) A copy o(" the cover page and all relevant pages of the enroUee's 
Evidence of Coverage (EOC), with the specific applicable sections un- 
derlined. If the plan relied solely on the EOC. the plan shall notify the De- 
partment of that fact. 

(5) All other information used by the plan or relevant to the resolution 
of the grievance. 

(6) The Department may request additional information or medical re- 
cords from the plan. Within five (5) calendar days of receipt of the De- 
partment's request, the plan shall forward information and records that 
are maintained by the plan or any contracting provider. If requested in- 
formation cannot be timely forwarded to the Department, the plan's re- 
sponse will describe the actions being taken to obtain the information or 
records and when receipt is expected. 



(h) Nothing in this section shall preclude an enroUee from seeking as- 
sistance directly from the Department in cases involving an imminent or 
serious threat to the health of the enrollee or where the Department deter- 
mines an earlier review is warranted. In such cases, the Department may 
require the plan and contracting providers to expedite the delivery of in- 
formation. 

The Department may consider the failure of a plan to timely provide 
the requested information as evidence in favor of the enrollee's position 
in the Department's review of grievances submitted under subsection (b) 
of Section 1368 of the Act. 

(i) 



[The next page is 59.] 



Page 58.3 



Register 2008, No. 2; 1 - U - 2008 



Title 28 



The Department of Managed Health Care 



§ 1300.68 



• 



STATE OF CALIFORNIA 
DEPARTMENT OF MANAGED HEALTH CARE 

QUARTERLY REPORT OF 

PENDING AND UNRESOLVED GRIEVANCES 

PURSUANT TO HEALTH AND SAFETY CODE SECTION 1368(c) 



Name of Licensed Health Plan (as appearing on license): 



DMHC Plan File No.: 



Report for 



^Quarter 200 . 



Categories of Grievances Included in this Report: (Check and list current enrollment) 

D Coiiuiicrciai □ Medicare D Medi-Cal D Healthy Families 

Under Medicare and Medi-Cal law. Medicare enroUees and Medi-Cal enrollees each have separate avenues that are not available to other enroll- 
ees. Therefore, grievances pending and unresolved may reflect enrollees pursuing their Medicare or Medi-Cal appeal rights. 

I. Total Number of Grievances Unresolved Within 30 Days During the Quarter 

Note: These include all grievances received by the plan or any entity to which the plan has delegated grievance resolution. 



Total 



Comin 



Medi- 
care 



Medi- 
Cal 



A. Total number of grievances pending or 
submitted over 30 days at the beginning of 
the quarter 



B. Total number of additional grievances 
which exceeded the 30 days timeframe for 
resolution during this quarter 



• 



C. Total number of grievances that were 
unresolved within 30 days at any time 
during quarter (A + B) 



D. Total number of grievances pending 
or submitted over 30 days at the end of 
the quarter 



II. Commercial Members 

Number of Commercial Member Grievances Unresolved Within 30 Days During the Quarter by Type of Grievance 

Total, all Disputes Involving Access to Care 

Reason Why Pending grievance Coverage Medical Quality (including 



Over 30 Days 

1. Pending in Plan's Internal Grievance System 



types 



Disputes 



Necessity 



of Care 



appointments) 



Quality of 
Ser\ice 



2. Pending in Department's consumer complaint 
process 



3. Pending in Department's Independent Medical 
Review system 



4. Submitted to Arbitration 



5. Pending in Court 



6. Pending, other dispute resolution 



Total 



III. Medicare Members (complete if Medicare + Choice products provided by Plan) 



Page 59 



Register 2002, No. 46; 11-15-2002 



Total all 




Disputes lnv(>lvini> 




Access to Care 




grievance 


Coverai^e 


Medical 


Quality' 


(including 


Quality of 


types 


Disputes 


Necessity 


of Care 


appointments) 


Seiyice 



§ 1300.68.01 BARCLAYS CALIFORNIA CODE OF REGULATIONS Title 28 

Number of Medicare Member Grievances Unresolved Within 30 Days During the Quarter by Type of Grievance 

Reason Wliv Pending 
Over 30 Days 

1. Pending in Plan's Internal Grievance System 

2. Submitted to Medicare Appeals System 

3. Pending in Department's consumer complaint 
process 

4. Pending in Depanment's Independent Medical 
Review system 

5. Submitted to Arbitration 

6. Pending in Court 

7. Pending other dispute resolution 
Total 

IV. Medi-Cal Members (Complete if Medi-Cal Managed Care products offered by Plan) 

Number of Medi-Cal Member Grievances Unresolved Within 30 Days During the Quarter by Type of Grievance 

Total, all Disputes Involving Access to Care 

Reason Why Pending grievance Coverage Medical Quality (including Quality of 

Over JO Days types Disputes Necessity of Care appointments) Service 

1. Pending in Plan's Internal Grievance System 

2. Submitted to Medi-Cal fair hearing process 

3. Pending in Department's consumer complaint 
process 

4. Pending in Department's Independent Medical 
Review system 

5. Submitted to Arbitration 

6. Pending in Court 

7. Pending, other dispute resolution 
Total 

VERinCATION 

I, the undersigned, have read and signed this report and know the contents thereof, and verify that, to the best of my knowledge and belief, the informa- 
tion included in this report is true. 

BY: 



(Signature of Individual Authorized to Sign on Behalf of Plan) 
(Typed Name, Title, Phone) 



NOTE: Authority cited: Section 1 344, Health and Safety Code. Reference: Section 8. Certificate of Compliance as to 8-14-2000 order (Regulatory Action No. 

1368, Health and Safety Code. 00-0807-OlE) transmitted to OAL 1 1-29-2000 and filed I-10-200I (Register 

History 2001, No. 2). 

, ^. .,. , cc , J- u .• /^\ /t\ A I \ (-1 A 9. Certificate of Compliance as to 8-14-2000 order (Regulatory Action No. 

1 . Change without regulatory effect amending subsections (d), (f) and (g) filed oo_0807-02E), including amendments, transmitted to OAL 1 1-29-2000 and 
2-23-96 pursuant to section 1 00, title 1, California Code of Regulanons (Regis- ^^j^^ i_i0-2001 (Register 2001 No '>) 

o c^-^^'-'^"' ^^' • f u .• / WD • . r,-7 NT im 10. Repealerand new section filed 11-12-2002; operative 12-12-2002 (Register 

2. Editonal correction of subsection (e) (Register 97, No. 19). 200"^ No 46) 

3. Amendment of section and new Note filed 9-1 8-98; operative 10-18-98 (Reg- 
ister 98, No. 38). 

4. Amendment filed 5-30-2000 as an emergency; operative 5-30-2000 (Register 

n°^' ^^P- ^ ^^^"'fi'^f' ^ «f Compliance must be transmitted to OAL by § ^ 300.68.01 . Expedited Review of Grievances. 

9-27-2000 or emergency language will be repealed by operation of law on the , ^^ , , ,V- , . • • • , r . 

following day ^^> Every plan shall include in its gnevance system, procedures tor the 

5. Amendment filed 8-14-2000 (Regulatory Acuon No. 00-0807-OIE) as an expedited review of grievances involving an imminent and serious threat 
emergency; operative 8-14-2000 (Register 2000, Na 33). A Certificate of ^^ j^g ^^^^^^ ^f (^e enrollee, including, but not limited to, severe pain, po- 
Comphance must be transmitted to OAL by 12-12-2000 or emergency Ian- ... r.,r ,• , • . j-, x- • /.. • ^x 
guage will be repealed by operadon of law on the following day. tential loss of life, limb or major bodily function ( urgent gnevances ). 

6. Amendment filed 8-14-2000 (Regulatory Action No. 0O-0807-02E) as an At a minimum, plan procedures for urgent grievances shall include: 
emergency; operafive 8-14-2000 (Register 2000, No. 33). A Certificate of (j) immediate notification to the complainant of the right to contact 
Compliance must be transmitted to OAL by 12-12-2000 or emergency Ian- ,, t^, ..^ . j- »u • t-u i u n j» •. 
guage will be repealed by operadon of law on the following day. the Department regarding the gnevance. The plan shall expedite its re- 

7. Editorial correction of History 5 and History 6 (Register 2001, No. 2). view of the grievance when the complainant, an authorized representa- 

Page 60 Register 2002, No. 46; 11 - 15 - 2002 



• 



Title 28 



The Department of Managed Health Care 



§ 1300.68.2 



live, or treating physician provides notice to the plan. Notice need not be 
in writing, but may be accomplished by a documented telephone call. 

(2) A written statement to the Department and the complainant on the 
disposition or pending status of the urgent grievance within three (3) cal- 
endar days of receipt of the grievance by the Plan. 

(3) Consideration by the plan of the enrollee's medical condition when 
determining the response time. 

(4) No requirement that the enroUee participate in the plan's grievance 
process prior to applying to the Department for review of the urgent 
grievance. 

(b) Each plan's grievance system shall allow for the Department to 
contact the plan regarding urgent grievances 24 hours a day. 7 days a 
week. During normal work hours, the plan shall respond to the Depart- 
ment within 30 minutes after initial contact from the Department. During 
non-work hours, the plan shall respond to the Department within 1 hour 
after initial contact from the Department. 

( 1 ) The system established by the plan shall provide for the availability 
of a plan representative with authority on the plan's behalf to resolve ur- 
gent grievances and authorize the provision of health care services cov- 
ered under the enrollee's plan contract in a medically appropriate and 
timely manner. Such authority shall include making financial decisions 
for expenditure of funds on behalf of the plan without first having to ob- 
tain approval from supervisors or other superiors within the plan. Noth- 
ing in this subsection shall restrict the plan representative from consult- 
ing with other plan staff on urgent grievances. 

(2) Plans shall provide the Department with the following information 
concerning urgent grievances: 

(A) A description of the system established by the plan to resolve ur- 
gent grievances. The description shall include the system's provisions 
for scheduling qualified plan representatives, including back-up plan 
representatives as necessary, to be available twenty-four (24) hours a 
day, seven days a week to respond to Department contacts regarding ur- 
gent grievances. Provisions for scheduling shall include the names and 
titles of those plan representatives who will be available under the sys- 
tem, their telephone numbers, and, as applicable, pager numbers, answer 
service numbers, voice-mail numbers, e-mail addresses, or other means 
for contact. 

(B) A description of how the Department may access the grievance 
system established by the plan. 

(3) If the plan revises the system established pursuant to subsection 
(b), the plan shall notify the Department at least thirty (30) days in ad- 
vance of implementing the revisions. 

(c) The plan shall notify the Department before changing or modifying 
any benefit or services that relates to the urgent grievance submitted to 
the Department pursuant to subsection (b)(l )(A) of section 1368 of the 
Act if the enrollee or the enrollee's representative objects to the change 
or modification. 

NOTE: Authority cited: Section 1.^44, Health and Safety Code; Reference: Sec- 
tions 1368 and l.%8.01, Health and Safety Code. 

History 

1 . New section filed 5-30-2000 as an emergency; operative 5-30-2000 (Register 

2000, No. 22). A Certificate of Compliance must be transmitted to OAL by 
9-27-2000 or emergency language will be repealed by operation of law on the 
following day. 

2. Repealer filed 8-14-2000 (Regulatory Action No. 00-0807-OlE) as an emer- 
gency; operative 8-14-2000 (Register 2000, No. 33). A Certificate of Com- 
pliance must be transmitted to OAL by 12-12-2000 or emergency language 
will be repealed by operation of law on the following day. 

3. New section filed 8-14-2000 (Regulatory Action No. 00-0807-02E) as an 
emergency; operative 8-14-2000 (Register 2000, No. 33). A Certificate of 
Compliance must be transmitted to OAL by 12-12-2000 or emergency lan- 
guage will be repealed by operation of law on the following day. 

4. Editorial correction of History 2 and Hi.story 3 (Register 2001, No. 2). 

5. Certificate of Compliance as to 8-14-2000 order (Regulatory Action No. 
00-0807-0 IE) transmitted to OAL 1 1 -29-2000 and filed 1 -1 0-200 1 (Register 

2001, No. 2). 

6. Certificate of Compliance as to 8-14-2000 order (Regulatory Action No. 
00-0807-02E), including amendment, transmitted to OAL 1 1-29-2000 and 
filed 1-10-2001 (Register 2001, No. 2). 

7. Repealer and new section filed 1 1-12-2002; operative 12-12-2002 (Register 

2002, No. 46). 



§1300.68.2. Hospice Services. 

(a) For purposes of this section, the following definitions shall apply: 

( 1 ) "Bereavement services" means those services available to the sur- 
viving family members for a period of at least one year after the death of 
the enrollee. These services shall include an assessment of the needs of 
the bereaved family and the development of a care plan that meets these 
needs, both prior to, and following the death of the enrollee. 

(2) "Hospice service" or "hospice program" means a specialized form 
of interdisciplinary health care that is designed to provide palliative care, 
alleviate the physical, emotional, social and spiritual discomforts of an 
enrollee who is experiencing the last phases of life due to the existence 
of a terminal disease, to provide supportive care to the pritiiary care giver 
and the family of the hospice patient, and which meets all of the following 
criteria; 

(A) Considers the enrollee and the enrollee's family, in addition to the 
enrollee, as the unit of care. 

(B) Utilizes an interdisciplinary team to assess the physical, medical, 
psychological, social and spiritual needs of the enrollee and the enroll- 
ee's family. 

(C) Requires the interdisciplinary team to develop an overall plan of 
care and to provide coordinated care which emphasizes supportive .ser- 
vices, including, but not limited to. home care, pain control, and short- 
term inpatient services. Short-term inpatient services are intended to en- 
sure both continuity of care and appropriateness of services for those 
enrollees who cannot be managed at home because of acute complica- 
tions or the temporary absence of a capable primary caregiver. 

(D) Provides for the palliative medical treatment of pain and other 
symptoms associated with a terminal disease, but does not provide for ef- 
forts to cure the disease. 

(E) Provides for bereavement services following the enrollee's death 
to assist the family to cope with social and emotional needs associated 
with the death of the enrollee. 

(F) Actively utilizes volunteers in the delivery of hospice services. 

(G) To the extent appropriate based on the medical needs of the enroll- 
ee, provides services in the enrollee's home or primary place of resi- 
dence. 

(3) "Hospice" or "Hospice Agency" means an entity which provides 
hospice services to terminally ill persons and holds a license, currently 
in effect, as a hospice pursuant to Health and Safety Code section 1 747 
or a home health agency with federal medicare certification pursuant to 
Health and Safety Code sections 1726 and 1747.1. 

(4) "Home health aide services" means those services providing for 
the personal care of the terminally ill patient and the performance of re- 
lated ta.sks in the patient's home in accordance with the plan of care in 
order to increase the level of comfort and to maintain personal hygiene 
and a safe, healthy environment for the patient. Home health aide ser- 
vices shall be provided by a person who is certified by the state Depart- 
ment of Health Services as a hoine health aide pursuant to Chapter 8 of 
Division 2 (Section 1725 el seq.) of the Health and Safety Code. 

(5) "Homemaker services" means services that assist in the mainte- 
nance of a safe and healthy environment and services to enable the enroll- 
ee to carry out the treatment plan. 

(6) "Interdisciplinary team" means the hospice care team that in- 
cludes, but is not limited to, the enrollee and the patient's family, a physi- 
cian and surgeon, a registered nurse, a social worker, a volunteer, and a 
spiritual caregiver. 

(7) "Medical direction" means those services provided by a licen.sed 
physician and surgeon who is charged with the responsibility of acting 
as a consultant to the interdisciplinary team, a consultant to the enrollee's 
attending physician and surgeon, as requested, with regard to pain and 
symptom management, and liaison with physicians and surgeons in the 
community. For purposes of this section, the person providing these ser- 
vices shall be referred to as the "medical director." 

(8) "Plan of care" means a written plan developed by the attending 
physician and surgeon, the medical director or physician and surgeon de- 
signee, and the interdisciplinary team that addresses the needs of an en- 



Page 61 



Register 2002, No. 46; 11-15-2002 



§ 1300.69 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



rollee and family admitted to the hospice program. The hospice shall re- 
tain overall responsibility for the development and maintenance of the 
plan of care and quality of services delivered. However, nothing in this 
section shall be construed to limit a health care service plan's obligations 
with respect to its QA program as required under Section 1300.70. 

(9) "Skilled nursing services" means nursing services provided by or 
under the supervision of a registered nurse under a plan of care developed 
by the interdisciplinary team and the enrollee's physician and surgeon to 
an enrollee and his or her family that pertain to the palliative, supportive 
services required by an enrollee with a terminal illness. Skilled nursing 
services include, but are not limited to, enrollee assessment, evaluation 
and case management of the medical nursing needs of the enrollee, the 
performance of prescribed medical treatment for pain and symptom con- 
trol, the provision of emotional support to both the enrollee and his or her 
family, and the instruction of caregivers in providing personal care to the 
enrollee. Skilled nursing services shall provide for the continuity of ser- 
vices for the enrollee and his or her family. Skilled nursing service shall 
be available on a 24— hour on-call basis. 

(10) "Social service/counseling services" means those counseling and 
spiritual services that assist the enrollee and his or her family to minimize 
stresses and problems that arise from social, economic, psychological, or 
spiritual needs by utilizing appropriate community resources, and maxi- 
mize positive aspects and opportunities for growth. 

(11) "Terminal disease" or "terminal illness" means a medical condi- 
tion resulting in a prognosis of life of one year or less, if the disease fol- 
lows its natural course. This definition is not intended to limit the ability 
of health plans and hospices to develop and utilize comprehensive, evi- 
dence-based medical and psychosocial criteria or "best practice" guide- 
lines for hospice referrals that are not dependent upon an estimated time 
of death, that are predictive of the need and appropriateness of palliative 
care and that are consistent with standards among palliative care profes- 
sionals. 

(12) "Volunteer services" means those service provided by trained 
hospice volunteers who have agreed to provide service under the direc- 
tion of a hospice staff member who has been designated by the hospice 
to provide direction to hospice volunteers. Hospice volunteers may be 
used to provide support and companionship to the enrollee and his or her 
family during the remaining days of the enrollee' s life and to the surviv- 
ing family following the enrollee' s death. 

(b) Hospice services provided pursuant to the requirements of Section 
1368.2 shall comply with the following requirements: 

(1) Only an entity licensed pursuant to the California Hospice Licen- 
sure Act of 1990, (Health and Safety Code Section 1745, et seq.) or a li- 
censed home health agency with federal medicare certification (Health 
and Safety Code sections 1 726 and 1 747. 1 ) may provide hospice services 
to plan enrollees, except that an entity licensed as a hospice may arrange 
to provide hospice services required to be provided pursuant to this sec- 
tion with appropriately licensed individuals or entities. 

(2) Plans are required to provide to enrollees with a "terminal illness", 
through their contractual arrangements with hospices, the following ser- 
vices, at a minimum, when the enrollee qualifies for and chooses hospice 
care: 

(A) Interdisciplinary team care with development and maintenance of 
an appropriate plan of care. 

(B) Skilled nursing services, certified home health aide services and 
homemaker services under the supervision of a qualified registered 
nurse. 

(C) Bereavement Services. 

(D) Social services/counseling services with medical social services 
provided by a quahfied social worker. Dietary counseling, by a qualified 
provider, shall also be provided when needed. 

(E) Medical direction with the medical director being also responsible 
for meeting the general medical needs of the enrollees to the extent that 
these needs are not met by the attending physician. 

(F) Volunteer services. 

(G) Short-term inpatient care arrangements. 



(H) The following shall be provided to the extent reasonable and nec- 
essary for the palliation and management of terminal illness and related 
conditions: pharmaceuticals, medical equipment and supplies. 

(1) Physical therapy, occupational therapy, and speech-language 
pathology services for purposes of symptom control, or to enable the en- 
rollee to maintain activities of daily living and basic functional skills. 

(c) Covered services are to be made available on a 24 hour basis to the 
extent necessary to meet the needs of individuals for care that is reason- 
able and necessary for the palliation and management of terminal illness 
and related conditions. 

(d) Special Coverage Requirements. 

(1) Periods of Crisis: 

Nursing care services must be covered on a continuous basis for as 
much as 24 hours a day during periods of crisis as necessary to maintain 
an enrollee at home. Hospitalization must be covered pursuant to 
1300.68.2(b)(2)(G), when the interdisciplinary team makes the deter- 
mination that inpatient skilled nursing care is required at a level that can- 
not be provided in the home. Either homemaker or home health aide ser- 
vices or both may be covered on a 24 hour continuous basis during 
periods of crisis but the care provided during these periods must be pre- 
dominantly nursing care. A period of crisis is a period in which the enroll- 
ee requires continuous care to achieve palliation or management of acute 
medical symptoms. 

(2) Respite Care: 

Respite care is short-term inpatient care provided to the enrollee only 
when necessary to relieve the family members or other persons caring for 
the enrollee. Coverage of respite care may be limited to an occasional ba- 
sis and to no more than five consecutive days at a time. 

(e) Every plan shall include notice of the coverage specified in subdi- 
visions (b). (c) and (d) in the plan's evidence of coverage and disclosure 
form on or after January 1, 2002. 

(f) All contracts between plans and hospices must be in accordance 
with all federal and state hospice licensure requirements. 

NOTE: Authority cited: Section 1344, Health and Safety Code. Reference cited: 
Section 1 368.2, Health and Safety Code. 

History 

1. New section filed 6-26-2001; operative 7-26-200! (Register 2001, No. 26). 

§ 1300.69. Public Policy Participation by Subscribers. 

Unless a plan complies with the requirements of the Health Mainte- 
nance Organization Act of 1973 in affording subscribers and enrollees 
procedures to participate in establishing the public policy of the plan, as 
defined in Section 1369 of the Act, it shall comply with each of the fol- 
lowing requirements: 

(a) If the plan is a corporation, either: 

( 1 ) At least one-third of its governing board shall be subscribers and/ 
or enrollees, or 

(2) There shall be established a standing committee which shall be re- 
sponsible for participating in establishing public policy of the plan as de- 
fined in Section 1369 of the Act, and whose recommendations and re- 
ports are regularly and timely reported to the governing board. The 
governing board shall act upon such recommendations and such acuon 
shall be recorded in the board's minutes. The membership of the standing 
committee shall comply with each of the following: 

(A) At least 51% of the members shall be subscribers and/or enrollees, 

(B) At least one member shall be a member of the governing board of 
the plan, and 

(C) At least one member shall be a provider. 

(b) If the plan is a partnership, trust or unincorporated association, 
there shall be established a standing committee of the governing body or 
executive committee of the plan, which committee shall be responsible 
for participation in establishing public policy of the plan as defined in 
Section 1 369 of the Act and whose recommendations and reports are reg- 
ularly and timely reported to the governing body or executive committee 
of the plan. The governing body or executive committee of the plan shall 
act upon such recommendations and such action shall be recorded in its 



Page 62 



Register 2002, No. 46; 1 1 - 15 - 2002 



Title 28 



The Department of Managed Health Care 



§ 1300.70 



niiniiies. The membership of the standing committee shall comply with 
each of the following: 

( 1 ) At least 3 1 '^k of the members shall be subscribers and/or enrollees, 

(2) At least one member shall also be a member of the governing body 
or executive committee of the plan, and 

(3) At least one member shall be a provider. 

(c) If the plan is a sole proprietorship, it shall establish a standing com- 
mittee which shall be responsible for participation in establishing public 
policy of the plan as defined in Section 1 369 of the Act and whose recom- 
mendations are reported regularly and timely to the sole proprietor. The 
sole proprietor shall act upon such recommendations and such action 
shall be recorded. The membership of the standing committee shall com- 
ply with each of the following: 

( 1 ) At least 5 1 % of the members shall be subscribers and/or enrollees, 

(2) The sole proprietor shall be a member, and 
(.3) At least one provider shall be a member. 

(d) Those individuals who fulfill the requirements stated in this section 
for subscriber and/or enrollee membership upon the governing body or 
standing committee shall be persons who are not employees of the plan, 
providers of health care services, subcontractors to the plan or group con- 
tract brokers, or persons financially interested in the plan. 

(e) Advisory committees do not meet the requirements of subsections 
(a), (b)or(c). 

(f) Enrollees and subscribers participating in establishing public 
policy shall have access to information available from the plan regarding 
public policy, including financial information and information about the 
specific nature and volume of complaints received by the plan and their 
disposition. 

(g) In connection with the .selection of enrollee and sub.scriber mem- 
bers of any governing board or standing committee, the plan shall gener- 
ally consider the makeup of its enrollee and subscriber population, in- 
cluding but not limited to factors such as ethnic extraction, demography, 
occupation and geography as well as identifiable and individual group 
participation. Any such selection or election of enrollee or subscriber 
members shall be conducted on a fair and reasonable basis. This subsec- 
tion does not require the plan to maintain supporting statistical data. 

(h) The public policy participation procedure shall be incorporated 
into the bylaws or other governing documents of the plan. The terms of 
subscriber and enrollee members of the public policy making body shall 
be of reasonable length and overlap so as to provide continuity and expe- 
rience in representation. A standing committee shall meet at least quar- 
terly. 

(i) The plan shall (1) in each evidence of coverage or combined evi- 
dence of coverage and disclosure form, or at least annually by other 
means, furnish to its sub.scribers and enrollees a description of its system 
for their participation in establishing public policy, and (2) communicate 
material changes affecting public policy to subscribers and enrollees. 
NOTl-;: Authority cited: Section 1 344, Health and Safety Code. Reference: Section 
1 369. Health and Safety Code. 

History 
1. Amendment of subsection (i) filed 1-12-83; effective thiitieth day thereafter 

(Register83, No. 3). 

§ 1300.70. Health Care Service Plan Quality Assurance 
Program. 

(a) Intent and Regulatory Purpose. 

( 1 ) The QA program must be directed by providers and must document 
that the quality of care provided is being reviewed, that problems are be- 
ing identified, that effective action is taken to improve care where defi- 
ciencies are identified, and that follow-up is planned where indicated. 

(2) This section is not intended to set forth a prescriptive approach to 
QA methodology. This section is intended to afford each plan flexibility 
in meeting Act quality of care requirements. 

(3) A plan's QA program must address service elements, including ac- 
cessibility, availability, and continuity of care. A plan's QA program 
must also monitor whether the provision and utilization of services meets 
professionally recognized standards of practice. 



(4) The Department's assessment of a plan's QA program will focus 
on: 

(.A) the scope of QA activities within the organization; 

(B) the structure of the program itself and its relationship to the plan's 
administrative structure: 

(C) the operation of the QA program; and 

(D) the level of activity of the program and its effectiveness in identify- 
ing and correcting deficiencies in care. 

(b) Quality Assurance Program Structure and Requirements. 

( 1 ) Program Structure. 

To meet the requirements of the Act which require plans to continu- 
ously review the quality of care provided, each plan's quality assurance 
program shall be designed to ensure that: 

(A) a level of care which meets professionally recognized standards 
of practice is being delivered to all enrollees; 

(B) quality of care problems are identified and corrected for all provid- 
er entities; 

(C) physicians (or in the case of specialized plans, dentists, optome- 
trists, p.sychologi.sts or other appropriate licensed professionals) who 
provide care to the plan's enrollees are an integral part of the QA pro- 
gram; 

(D) appropriate care which is consistent with professionally recog- 
nized standards of practice is not withheld or delayed for any reason, in- 
cluding a potential financial gain and/or incentive to the plan providers, 
and/or others; and 

(E) the plan does not exert economic pressure to cause institutions to 
grant privileges to health care providers that would not otherwise be 
granted, nor to pressure health care providers or institutions to render 
care beyond the scope of their training or experience. 

(2) Program Requirements. 

In order to meet these obligations each plan's QA program shall meet 
all of the following requirements: 

(A) There must be a written QA plan describing the goals and objec- 
tives of the program and organization arrangements, including staffing, 
the methodology for on-going monitoring and evaluation of health ser- 
vices, the scope of the program, and required levels of activity. 

(B) Written documents shall delineate QA authority, function and re- 
sponsibility, and provide evidence that the plan has established quality 
assurance activities and that the plan's governing body has approved the 
QA Program. To the extent that a plan's QA responsibilities are dele- 
gated within the plan or to a contracting provider, the plan documents 
shall provide evidence of an oversight mechanism for ensuring that dele- 
gated QA functions are adequately performed. 

(C) The plan's governing body, its QA committee, if any. and any inter- 
nal or contracting providers to whom QA responsibilities have been dele- 
gated, shall each meet on a quarterly basis, or more frequently if problems 
have been identified, to oversee their respective QA program responsibili- 
ties. Any delegated entity must maintain records of its QA activities and 
actions, and report to the plan on an appropriate basis and to the plan's 
governing body on a regularly scheduled basis, at least quarterly, which 
reports shall include findings and actions taken as a result of the QA pro- 
gram. The plan is responsible for establishing a program to monitor and 
evaluate the care provided by each contracting provider group to ensure 
that the care provided meets professionally recognized standards of prac- 
tice. Reports to the plan's governing body shall be sufficiently detailed 
to include findings and actions taken as a result of the QA program 
and to identify those internal or contracting provider components which 
the QA program has identified as presenting significant or chronic quali- 
ty of care issues. 

(D) Implementation of the QA program shall be supervised by a desig- 
nated physician(s), or in the case of specialized plans, a designated den- 
tist(s), optometrist(s). psychologist(s) or other licensed professional pro- 
vider, as appropriate. 

(E) Physician, dentist, optometrist, psychologist or other appropriate 
licensed professional participation in QA activity must be adequate to 
monitor the full scope of clinical services rendered, resolve problems and 



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§ 1300.70.4 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



ensure that corrective action is tai«:en when indicated. An appropriate 
range of specialist providers shall also be involved. 

(F) There must be administrative and clinical staff support with suffi- 
cient knowledge and experience to assist in carrying out their assigned 
QA activities for the plan and delegated entities. 

(G) Medical groups or other provider entities may have active quality 
assurance programs which the plan may use. In all instances, however, 
the plan must retain responsibility for reviewing the overall quality of 
care delivered to plan enrol lees. 

If QA activities are delegated to a participating provider to ensure that 
each provider has the capability to perform effective quality assurance 
activities, the plan must do the following: 

( 1 ) Inform each provider of the plan's QA program, of the scope of that 
provider's QA responsibilities, and how it will be monitored by the plan. 

(2) Ascertain that each provider to which QA responsibilities have 
been delegated has an in-place mechanism to fulfill its responsibilities, 
including administrative capacity, technical expertise and budgetary re- 
sources. 

(3) Have ongoing oversight procedures in place to ensure that provid- 
ers are fulfilling all delegated QA responsibilities. 

(4) Require that standards for evaluating that enroUees receive health 
care consistent with professionally recognized standards of practice are 
included in the provider's QA program, and be assured of the entity's 
continued adherence to these standards. 

(5) Ensure that for each provider the quality assurance/utilization re- 
view mechanism will encompass provider referral and specialist care 
patterns of practice, including an assessment of timely access to special- 
ists, ancillary support services, and appropriate preventive health ser- 
vices based on reasonable standards established by the plan and/or dele- 
gated providers. 

(6) Ensure that health services include appropriate preventive health 
care measures consistent with professionally recognized standards of 
practice. There should be screening for conditions when professionally 
recognized standards of practice indicate that screening should be done. 

(H) A plan that has capitation or risk-sharing contracts must: 

1. Ensure that each contracting provider has the administrative and fi- 
nancial capacity to meet its contractual obligations; the plan shall have 
systems in place to monitor QA functions. 

2. Have a mechanism to detect and correct under-service by an at-risk 
provider (as determined by its patient mix), including possible under uti- 
lization of specialist services and preventive health care services. 

(I) Inpatient Care. 

1 . A plan must have a mechanism to oversee the quality of care pro- 
vided in an inpatient setting to its enrollees which monitors that: 

a. providers utilize equipment and facilities appropriate to the care; 
and 

b. if hospital services are fully capitated that appropriate referral pro- 
cedures are in place and utilized for services not customarily provided at 
that hospital. 

2. The plan may delegate inpatient QA functions to hospitals, and may 
rely on the hospital's existing QA system to perform QA functions. If a 
plan does delegate QA responsibilities to a hospital, the plan must ascer- 
tain that the hospital's quality assurance procedure will specifically re- 
view hospital services provided to the plan's enrollees, and will review 
services provided by plan physicians within the hospital in the same man- 
ner as other physician services are reviewed. 

(c) In addition to the internal quality of care review system, a plan shall 
design and implement reasonable procedures for continuously reviewing 
the performance of health care personnel, and the utilization of services 
and facilities, and cost. The reasonableness of the procedures and the 
adequacy of the implementation thereof shall be demonstrated to the to 
the Department. 

NOTE: Authority cited: Sections 1344 and 1370, Health and Safety Code. Refer- 
ence: Section 1370, Health and Safety Code. 

History 
1. Amendment filed 12-20-90; operative 1-19-91 (Register 91, No. 6). 



2. Editorial conection of printing error (Register 91 , No. 1 7). 

§ 1300.70.4. Independent Medical Reviews Experimental 
and Investigational Therapies. 

(a) Enrollees of a health care service plan may request an independent 
medical review pursuant to sections 1370.4, 1374.30 through 1374.34 of 
the Act and section 1 300.74.30 of title 28 when the plan has denied a ther- 
apy or medical service that would otherwise be covered based on the 
plan's determination that the therapy or medical service is experimental 
or investigational. This eligibility also applies to Medicare enrollees to 
the extent it does not conflict with federal law. 

(b) At the time ofthe plan's denial of coverage for experimental or in- 
vestigational therapy, or denial of urgent care or emergency services, as 
defined in section 1300.67(g)(2). the plan shall notify the enrollee ofthe 
ability to seek independent medical review. 

( 1 ) The notification must include, at a minimum, information on the 
independent medical review process, an applicaUon and envelope ad- 
dressed to the Department, the physician certification form and the De- 
partment's toll-free information number. 

(2) Pursuant to Health and Safety Code section 1 368.03(a), the Depart- 
ment does not require that an enrollee participate in the plan's grievance 
system prior to seeking independent medical review. 

(c) Included with the enrollee' s applicafion to the Department for inde- 
pendent medical review shall be a copy ofthe plan or contracted provid- 
er's written denial of the therapy or medical service based on the deter- 
mination that the therapy or service is experimental or investigational. 

(d) A certification from the enrollee' s treating physician shall be in- 
cluded with the application for independent medical review. The physi- 
cian's certification shall be on a form from the Department enfitled, 
"Physician Certification Experimental/ Investigational Denials" 
(DMHC/IMR 110-1 1/27/00), or contain all of the following informa- 
fion: 

(1 ) The enrollee has a condition as defined in Health and Safety Code 
section 1370.4(a)(1): 

(2) Background informafion including the name ofthe enrollee and the 
health plan; the physician's name, specialty, board certification, address, 
telephone, and fax number; whether the physician is contracted with the 
plan; the enrollee' s medical condifion; and the specific drug, device, pro- 
cedure, or other therapy recommended or requested for the enrollee' s 
medical condition. 

(3) For non-contracting physicians, the certification shall also include 
the following: 

(A) The physician's license, board-certification or board eligibility to 
practice in the area appropriate to treat the enrollee' s condition; and, 

(B) Reference to, or copies of, two documents from the medical or 
scientific literature, specified in section 1370.4(d) ofthe Act. 

(4) The following statement and physician's signature: "I certify that 
the requested therapy is likely to be more beneficial than any standard 
therapy. The information provided herein is true and correct;" 

(5) Where expedited review is requested the certification shall include 
a statement that imminent and serious threat to the health of the enrollee 
exists pursuant to Health and Safety Code secfion 1374.31, or the pro- 
posed therapy would be significantly less effective if not promptly initi- 
ated; and 

(6) Attachments, including any addifional references or copies of med- 
ical and/or scientific literature considered relevant to the requested thera- 
py and any other information relevant to the request. 

(e) Incomplete applications will not be referred to an independent 
medical review organization. However, the Department may waive this 
requirement in exceptional or compelling circumstances where the need 
for a prompt determination precludes obtaining all information in writ- 
ing. In cases accepted for an urgent review, the enrollee' s physician must 
certify in writing, at a minimum, that the enrollee has a life-threatening 
or seriously debilitating condition, as defined in Health and Safety Code 
section 1370.4(a), that the requested therapy is likely to be more benefi- 
cial to the enrollee than any available standard therapy and describe the 



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§ 1300.71 



medical and scientific evidence relied upon in making the recommenda- 
tion. 

NOTh: Authorilv ciled: Section 1 344. Health and Safety Code. Reference: Section 
1.370.4. Health and Safely Code. 

History 

1. New section filed 1 1-12-2002: operative 1 2-1 2-2002 (Register 2002. No. 46). 

2. Amendment of sub.seelions (a) and (b) Hied 6-17-2005: operative 7-17-200.S 
(Register2()0.'S, No. 24). 

§ 1 300.71 . Claims Settlement Practices. 

(a) Definitions. 

( 1 ) "Automatically" means the payment of the interest due to the pro- 
vider within five (5) working days of the payment of the claim without 
the need for any reminder or request by the provider. 

(A) Ifthe interest payment is not sent in the same envelope as the claim 
payment, the plan or the plan's capitated provider shall identify the spe- 
cific claim or claims for which the interest payment is made, include a 
statement setting forth the method for calculating the interest on each 
claim and document the specific interest payment made for each claim. 

(B) in the event that the interest due on an individual late claim pay- 
ment is less than $2.00 at the time that the claim is paid, a plan or plan's 
capitated provider that pays claitns (hereinafter referred to as "the plan's 
capitated provider") may pay the interest on that claim along with interest 
on other such claims within ten ( 10) calendar days ofthe close of the cal- 
endar month in which the claim was paid, provided the plan or the plan's 
capitated provider includes with the interest payment a statement identi- 
fying the specific claims for which the interest is paid, setting forth the 
method for calculating interest on each claim and documenting the spe- 
cific interest payment made for each claim. 

(2) "Complete claim" means a claim or portion thereof, if separable, 
including attachments and supplemental information or documentation, 
which provides: "reasonably relevant information" as defined by section 
(a)( 10), "information necessary to determine payer liability" as defined 
in section (a)(l I and: 

(A) For emergency services and care provider claims as defined by 
section I371.35(j): 

(i) the information specified in section 1371.35(c) ofthe Health and 
Safety Code; and 

(ii) any state-designated data requirements included in statutes or reg- 
ulations. 

(B) For institutional providers: 

(i) the completed UB 92 data set or its successor format adopted by the 
National Uniform Billing Committee (NUBC), submitted on the desig- 
nated paper or electronic format as adopted by the NUBC; 

(ii) entries stated as mandatory by NUBC and required by federal stat- 
ute and regulations; and 

(iii) any state-designated data requirements included in statutes or 
regulations. 

(C) For dentists and other professionals providing dental services: 
(i) the form and data set approved by the American Dental Associa- 
tion; 

(ii) Current Dental Terminology (CDT) codes and modifiers; and 
(iii) any state-designated data requirements included in statutes or 
regulations. 

(D) For physicians and other professional providers: 

(i) the Centers for Medicare and Medicaid Services (CMS) Form 1 500 
or its successor adopted by the National Uniform Claim Committee 
(NUCC) submitted on the designated paper or electronic format; 

(ii) Current Procedural Terminology (CPT) codes and modifiers and 
International Classification of Diseases (1CD-9CM) codes; 

(iii) entries stated as mandatory by NUCC and required by federal stat- 
ute and regulations; and 

(iv) any state-designated data requirements included in statutes or reg- 
ulations. 

(E) For pharmacists: 

(i) a universal claim form and data set approved by the National Coun- 
cil on Prescription Drug Programs; and 



(ii) any state-designated data requirements included in statutes or reg- 
ulations. 

(F) For providers not otherwise specified in these regulations: 

(i) A properly completed paper or electronic billing instrument sub- 
mitted in accordance with the plan's or the plan's capitated provider's 
reasonable specifications; and 

(ii) any state-designated data requirements included in statutes or reg- 
ulations. 

(3) "Reimbursement of a Claim" means: 

(A) For contracted providers with a written contract, including in-net- 
work point-of-service (POS) and preferred provider organizations 
(PPO): the agreed upon contract rate; 

(B) For contracted providers without a written contract and non-con- 
tracted providers.except those providing services described in paragraph 
(C) below: the payment of the reasonable and customary value for the 
health care services rendered based upon statistically credible informa- 
tion that is updated at least annually and takes into consideration:( 1 ) the 
provider's training, qualifications, and length of time in practice; (ii) the 
nature ofthe services provided; (iii) the fees usually charged by the pro- 
vider; (iv) prevailing provider rates charged in the general geographic 
area in which the services were rendered; (v) other aspects of the eco- 
nomics ofthe medical provider's practice that are relevant; and (vi) any 
unusual circumstances in the case; and 

(C) For non-emergency services provided by non-contracted provid- 
ers to PPO and POS enrollees: the amount set forth in the enrollee's Evi- 
dence of Coverage. 

(4) "Date of contest," "date of denial" or "date of notice" means the 
date of postmark or electronic mark accurately setting forth the date when 
the contest, denial or notice was electronically transmitted or deposited 
in the U.S. Mail or another mail or delivery service, correctly addressed 
to the claimant's office or other address of record with proper postage 
prepaid. This definition shall not affect the presumpfion of receipt of mail 
set forth in Evidence Code Section 641 . 

(5) "Date of payment" means the date of postmark or electronic mark 
accurately setting forth the date when the payment was electronically 
transmitted or deposited in the U.S. Mail or another mail or delivery ser- 
vice, correctly addressed to the claimant's office or other address of re- 
cord. To the extent that a postmark or electronic mark is unavailable to 
confirm the date of payment, the Department may consider, when audit- 
ing claims payment compliance, the date the check is printed and the date 
the check is presented for payment. This definition shall not affect the 
presumption of receipt of mail set forth in Evidence Code Section 641. 

(6) "Date of receipt" means the working day when a claim, by physical 
or electronic means, is first delivered to either the plan's specified claims 
payment office, post office box, or designated claims processor or to the 
plan's capitated provider for that claim. This definition shall not affect 
the presumpfion of receipt of mail set forth in Evidence Code section 64 1 . 
In the situafion where a claim is .sent to the incorrect party, the "date of 
receipt" shall be the working day when the claim, by physical or electron- 
ic means, is first delivered to the correct party responsible for adjudicat- 
ing the claim. 

(7) "Date of Service," for the purposes of evaluating claims submis- 
sion and payment requirements under these regulations, means: 

(A) For outpatient services and all emergency services and care: the 
date upon which the provider delivered separately billable health care 
services to the enrollee. 

(B) For inpaUent services: the date upon which the enrollee was dis- 
charged from the inpatient facility. However, a plan and a plan's capi- 
tated provider, at a minimum, shall accept separately billable claims for 
inpatient services on at least a bi-weekly basis. 

(8) A "demonstrable and unjust payment pattern" or "unfair payment 
pattern" means any pracfice, policy or procedure that results in repeated 
delays in the adjudicafion and correct reimbursement of provider claims. 

The following practices, policies and proceduresmay constitute a ba- 
sis for a finding that the plan or the plan's capitated provider has engaged 



Page 64.1 



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§ 1300.71 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



in a "demonstrable and unjust payment pattern" as set forth in section 
(s)(4): 

(A) The imposition of a Claims Filing Deadline inconsistent with sec- 
tion (b)( I ) in three (3) or more claims over the course of any three-month 
period: 

(B) The failure to forward at least 95% of misdirected claims consis- 
tent with sections (b)(2)(A) and (B) over the course of any three-month 
period: 

(C) The failure to accept a late claim consistent with section (b)(4) at 
least 95% of the time for the affected claims over the course of any three- 
month period: 

(D) The failure to request reimbursement of an overpayment of a claim 
consistent with the provisions of sections (b)(5) and (d)(3), (4), (5) and 
(6) at least 95% of the time for the affected claims over the course of any 
three-month period; 

(E) The failure to acknowledge the receipt of at least 95% of claims 
consistent with section (c) over the course of any three-month period: 

(F) The failure to provide a provider with an accurate and clear written 
explanation of the specific reasons for denying, adjusting or contesting 
a claim consistent with section (d)( 1 ) at least 95% of the time for the af- 
fected claims over the course of any three-month period; 

(G) The inclusion of contract provisions in a provider contract that re- 
quires the provider to submit medical records that are not reasonably rele- 
vant, as defined by section (a)( 10), for the adjudication of a claim on three 
(3) or more occasions over the course of any three month period; 

(H) The failure to establish, upon the Department's written request, 
that requests for medical records more frequently than in three percent 
(3%) of the claims submitted to a plan or a plan's capitated provider by 
all providers over any 1 2-month period was reasonably necessary to de- 
termine payor liability for those claims consistent with the section (a)(2). 
The calculation of the 3% threshold and the limitation on requests for 
medical records shall not apply to claims involving emergency or unau- 
thorized services or where the plan establishes reasonable grounds for 
suspecting possible fraud, misrepresentation or unfair billing practices; 

(I) The failure to establish, upon the Department' s written request, that 
requests for medical records more frequently than in twenty percent 
(20%) of the emergency services and care professional provider claims 
submitted to the plan's or the plan's capitated providers for emergency 
room service and care over any 12-month period was reasonably neces- 
sary to determine payor liability for those claims consistent with section 
(a)(2). The calculation of the 20% threshold and the limitation on re- 
quests for medical records shall not apply to claims where the plan dem- 
onstrates reasonable grounds for suspecting possible fraud, misrepresen- 
tation or unfair billing practices; 

(J) The failure to include the mandated contractual provisions enumer- 
ated in section (e) in three (3) or more of its contracts with either claims 
processing organizations and/or with plan's capitated providers over the 
course of any three-month period; 

(K) The failure to reimburse at least 95% of complete claims with the 
correct payment including the automatic payment of all interest and pen- 
alties due and owing over the course of any three-month period; 

(L) The failure to contest or deny a claim, or portion thereof, within the 
timeframes of section (h) and sections 1 37 1 or 1 37 1 .35 of the Act at least 
95% of the time for the affected claims over the course of any three- 
month period; 

(M) The failure to provide the Information for Contracting Providers 
and the Fee Schedule and Other Required Information disclosures re- 
quired by sections (/) and (o) to three (3) or more contracted providers 
over the course of any three-month period; 

(N) The failure to provide three (3) or more contracted providers the 
required notice for Modifications to the Information for Contracting Pro- 
viders and to the Fee Schedule and Other Required Information consis- 
tent with section (m) over the course of any three month period; 

(O) Requiring or allowing any provider to waive any protections or to 
assume any obligation of the plan inconsistent with section (p) on three 
(3) or more occasions over the course of any three month period; 

(P) The failure to provide the required Notice to Provider of Dispute 



Resolution Mechanism(s) consistent with section 1300.71.38(b) at least 
95% of the time for the affected claims over the course of any three- 
month period; 

(Q) The imposition of a provider dispute filing deadline inconsistent 
with section 1 300.7 1 .38(d) in three (3) or more affected claims over the 
course of any three-month period; 

(R) The failure to acknowledge the receipt of at least 95% of the pro- 
vider disputes it receives consistent with section 1 300.7 1 .38(e) over the 
course of any three-month period; 

(S) The failure to comply with the Time Period for Resolution and 
Written Determination enumerated in section 1300.71 .38(f) at least 95% 
of the time over the course of any three-month period; and 

(T) An attempt to rescind or modify an authorization for health care 
services after the provider renders the service in good faith and pursuant 
to the authorization, inconsistent with section 1371.8, on three (3) or 
more occasions over the course of any three-month period. 

(9) "Health Maintenance Organization" or "HMO" means a full ser- 
vice health care service plan that maintains a line of business that meets 
the criteria of Section 1373.IO(b)(l)-(3). 

(10) "Reasonably relevant information" means the minimum amount 
of itemized, accurate and material information generated by or in the pos- 
session of the provider related to the billed services that enables a claims 
adjudicator with appropriate training, experience, and competence in 
timely and accurate claims processing to determine the nature, cost, if ap- 
plicable, and extent of the plan's or the plan's capitated provider's liabil- 
ity, if any, and to comply with any governmental information require- 
ments. 

(11) "Information necessary to determine payer liability" means the 
minimum amount of material information in the possession of third par- 
ties related to a provider's billed services that is required by a claims adju- 
dicator or other individuals with appropriate training, experience, and 
competence in timely and accurate claims processing to determine the 
nature, cost, if applicable, and extent of the plan's or the plan's capitated 
provider's liability, if any, and to comply with any governmental in- 
formation requirements. 

(12) "Plan" for the purposes of this section means a licensed health 
care service plan and its contracted claims processing organization. 

(13) "Working days" means Monday through Friday, excluding rec- 
ognized federal holidays. 

(b) Claim Filing Deadline. 

(1 ) Neither the plan nor the plan's capitated provider that pays claims 
shall impose a deadline for the receipt of a claim that is less than 90 days 
for contracted providers and 180 days for non-contracted providers after 
the date of service, except as required by any state or federal law or regu- 
lation. If a plan or a plan's capitated provider is not the primary payer un- 
der coordination of benefits, the plan or the plan's capitated provider 
shall not impose a deadline for submitting supplemental or coordination 
of benefits claims to any secondary payer that is less than 90 days from 
the date of payment or date of contest, denial or notice from the primary 
payer. 

(2) If a claim is sent to a plan that has contracted with a capitated pro- 
vider that is responsible for adjudicating the claim, then the plan shall do 
the following: 

(A) For a provider claim involving emergency service and care, the 
plan shall forward the claim to the appropriate capitated provider within 
ten (10) working days of receipt of the claim that was incorrectly sent to 
the plan. 

(B) For a provider claim that does not involve emergency service or 
care: (i) if the provider that filed the claim is contracted with the plan's 
capitated provider, the plan within ten (10) working days of the receipt 
of the claim shall either: (1) send the claimant a notice of denial, with 
instructions to bill the capitated provider or (2) forward the claim to the 
appropriate capitated provider; (ii) in all other cases, the plan within ten 
( 1 0) working days of the receipt of the claim incorrectly sent to the plan 
shall forward the claim to the appropriate capitated provider. 

(3) If a claim is sent to the plan's capitated provider and the plan is re- 
sponsible for adjudicating the claim, the plan's capitated provider shall 



Page 64.2 



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Title 28 



The Department of Managed Health Care 



§ 1300.71 



forward the claim lo the plan within ten (10) working days of the receipt 
of the claim incorrectly sent to the plan's capitated provider. 

(4) A plan or a plan's capitated provider that denies a claim because 
it was filed beyond the claim filing deadline, shall, upon provider's sub- 
mission of a provider dispute pursuant to section 1300.71.38 and the 
demonstration of good cause for the delay, accept, and adjudicate the 
claim according to Health and Safety Code section 137 J or 1371.35. 
which ever is applicable, and these regulations. 

(5) A plan or a plan's capitated provider shall not request reimburse- 
ment for the overpayment of a claim, including requests made pursuant 
to Health and Safety Code Section 1371.1, unless the plan or the plan's 
capitated provider sends a written request for reimbursement to the pro- 
vider within 365 days of the Date of Payment on the over paid claim. The 
written notice shall include the information specified in section (d)(3). 
The 365-day time limit shall not apply if the overpayment was caused 
in whole or in part by fraud or misrepresentation on the part of the provid- 
er. 

(c) Acknowledgement of Claims. The plan and the plan's capitated 
provider shall identify and acknowledge the receipt of each claim, wheth- 
er or not complete, and disclose the recorded date of receipt as defined 
by section 1 300.7 1 (a)(6) in the same manner as the claim was submitted 
or provide an electronic means, by phone, website, or another mutually 
agreeable accessible method of notification, by which the provider may 
readily confirm the plan's or the plan's capitated provider's receipt of the 
claim and the recorded date of receipt as defined by 1300.71(a)(6) as fol- 
lows: 

( 1 ) In the case of an electronic claim, identification and acknowledge- 
ment shall be provided within two (2) working days of the date of receipt 
of the claim by the office designated to receive the claim, or 

(2) In the case of a paper claim, identification and acknowledgement 
shall be provided within fifteen (15) working days of the date of receipt 
of the claim by the office designated to receive the claim. 

(A) If a claimant submits a claim to a plan or a plan' s capitated provider 
using a claims clearinghouse, the plan's or the plan's capitated provider's 
identification and acknowledgement to the clearinghouse within the 
timeframes set forth in subparagraphs ( 1 ) or (2), above, whichever is ap- 
plicable, shall constitute compliance with this section. 

(d) Denying, Adjusting or Contesting a Claim and Reimbursement for 
the Overpayment of Claims. 

(1 ) A plan or a plan' s capitated provider shall not improperly deny, ad- 
just, or contest a claim. For each claim that is either denied, adjusted or 
contested, the plan or the plan's capitated provider shall provide an accu- 
rate and clear written explanation of the specific reasons for the action 
taken within the timeframes specified in secfions (g) and (h). 

(2) In the event that the plan or the plan's capitated provider requests 
reasonably relevant information from a provider in addition to informa- 
tion that the provider submits with a claim, the plan or plan's capitated 
provider shall provide a clear, accurate and written explanation of the 
necessity for the request. If the plan or the plan's capitated provider sub- 
sequently denies the claim based on the provider's failure to provide the 
requested medical records or other information, any dispute arising from 
the denial of such claim shall be handled as a provider dispute pursuant 
to Section 1300.71.38 of title 28. 

(3) If a plan or a plan's capitated provider determines that it has over- 
paid a claim, it shall notify the provider in writing through a separate no- 
tice clearly identifying the claim, the name of the patient, the date of ser- 
vice and including a clear explanation of the basis upon which the plan 
or the plan's capitated provider believes the amount paid on the claim 
was in excess of the amount due, including interest and penalties on the 
claim. 

(4) I f the provider contests the plan ' s or the plan' s capitated provider' s 
notice of reimbursement of the overpayment of a claim, the provider, 
within 30 working days of the receipt of the notice of overpayment of a 
claim, shall send written notice to the plan or the plan's capitated provider 
stating the basis upon which the provider believes that the claim was not 
over paid. The plan or the plan's capitated provider shall receive and pro- 



cess the contested notice of overpayment of a claim as a provider dispute 
pursuant to Secfion 1300.71.38 of title 28. 

(5) If the provider does not contest the plan's or the plan's capitated 
provider's notice of reimbursement of the overpayment of a claim, the 
provider shall reimburse the plan or the plan's capitated provider within 
30 working days of the receipt by the provider ol the notice of overpay- 
ment of a claim. 

(6) A plan oraplan'scapitatedprovidermay only offset an uncontest- 
ed notice of reimbursement of the overpayment of a claim against a pro- 
vider's current claim submission when: (i) the provider fails to reimburse 
the plan or the plan's capitated provider within the timeframe of section 
(5) above and (ii) the provider has entered into a written contract specifi- 
cally authorizing the plan or the plan's capitated provider to offset an un- 
contested notice of overpayment of a claim from the contracted provid- 
er's current claim submissions. In the event that an overpayment of a 
claim or claims is offset against a provider's current claim or claims pur- 
suant to this section, the plan or the plan's capitated provider shall pro- 
vide the provider a detailed written explanation identifying the specific 
overpayment or payments that have been offset against the specific cur- 
rent claim or claims. 

(e) Contracts for Claims Payment. A plan may contract with a claims 
processing organization for ministerial claims processing services or 
contract with capitated providers that pay claims, ("plan's capitated pro- 
vider") subject to the following conditions: 

( 1 ) The plan's contract with a claims processing organizafion or a capi- 
tated provider shall obligate the claims processing organization or the 
capitated provider to accept and adjudicate claims for health care ser- 
vices provided to plan enrollees in accordance with the provisions of sec- 
tions 1371, 1371.1, 1371.2. 1371.22. 1371.35. 1371.36, 1371.37. 
1 37 1 .38, 1 37 1 .4, and 1 37 1 .8 of the Health and Safety Code and sections 
1300.71, 1300.71.38, 1300.71.4, and 1300.77.4 of title 28. 

(2) The plan's contract with the capitated provider shall require that 
the capitated provider establish and maintain a fair, fast and cost-effec- 
tive dispute resolution mechanism to process and resolve provider dis- 
putes in accordance with the provisions of sections 1371, 1371.1, 1371.2, 
1371.22,1371.35,1371.36, 1371.37, 1371.38, 1371.4, and 137 1.8 of the 
Health and Safety Code and secfions 1300.71, 1300.71.38, 1300.71.4, 
and 1300.77.4 of fitle 28, unless the plan assumes this function. 

(3) The plan' s contract with a claims processing organization or a capi- 
tated provider shall require: 

(i) the claims processing organizafion and the capitated provider to 
submit a Quarterly Claims Payment Performance Report ("Quarterly 
Claims Report") to the plan within thirty (30) days of the close of each 
calendar quarter. The Quarterly Claims Report shall, at a minimum, dis- 
close the claims processing organization's or the capitated provider's 
compliance status with secfions 1371, 1371.], 1371.2, 1371.22, 1371.35, 
1371.36, 1371.37, 1371.4,and 1371.8of the Health and Safety Code and 
sections 1300.71, 1300.71.38, 1300.71.4, and 1300.77.4 of fitle 28; 

(ii) the capitated provider to include in its Quarteriy Claims Report a 
tabulated record of each provider dispute it received, categorized by date 
of receipt, and including the idenfificafion of the provider, type of dis- 
pute, disposifion, and working days to resolufion, as to each provider dis- 
pute received. Each individual dispute contained in a provider's bundled 
notice of provider dispute shall be reported separately to the plan; and 

(iii) that each Quarteriy Claims Report be signed by and include the 
written verification of a principal officer, as defined by section 
1300.45(o), of the claims processing organization or the capitated pro- 
vider, stafing that the report is true and correct to the best knowledge and 
belief of the principal officer. 

(4) The plan's contract with a capitated provider shall require the capi- 
tated provider to make available to the plan and the Department all re- 
cords, notes and documents regarding its provider dispute resolution 
mechanism(s) and the resolufion of its provider disputes. 

(5) The plan' s contract with a capitated provider shall provide that any 
provider that submits a claim dispute to the plan's capitated provider's 
dispute resolufion mechanism(s) involving an issue of medical necessity 



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§ 1300.71 



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Title 28 



or utilization review siiall have an unconditional right of appeal for that 
claim dispute to the plan's dispute resolution process forade novo review 
and resolution for a period of 60 working days from the capitated provid- 
er's Date of Determination, pursuant to the provisions of section 
1300.71.38(a)(4) of title 28. 

(6) The plan's contract with a claims processing organization or the 
capitated provider shall include provisions authorizing the plan to as- 
sume responsibility for the processing and timely reimbursement of pro- 
vider claims in the event that the claims processing organization or the 
capitated provider fails to timely and accurately reimburse its claims (in- 
cluding the payment of interest and penalties). The plan's obligation to 
assume responsibility for the processing and timely reimbursement of a 
capitated provider's provider claims may be altered to the extent that the 
capitated provider has established an approved corrective action plan 
consistent with section 1375.4(b)(4) of the Health and Safety Code. 

(7) The plan's contract with the capitated provider shall include provi- 
sions authorizing a plan to assume responsibility for the administration 
of the capitated provider's dispute resolution mechanism(s) and for the 
timely resolution of provider disputes in the event that the capitated pro- 
vider fails lo timely resolve its provider disputes including the issuance 
of a written decision. 

(8) The plan' s contract with a claims processing organization or a capi- 
tated provider shall not relieve the plan of its obligations to comply with 
sections 1371, 1371.1, 1371.2, 1371.22, 1371.35, 1371.36, 1371.37, 
1371.4, and 1371.8 of the Health and Safety Code and sections 1300.71, 
1300.71.38, 1300.71.4, and 1300.77.4 of title 28. 

(f) Disclosures. 

(1) A plan or a plan's capitated provider, with the agreement of the 
contracted provider, may utilize alternate transmission methods to deliv- 
er any disclosure required by this regulation so long as the contracted pro- 
vider can readily determine and verify that the required disclosures have 
been transmitted or are accessible and the transmission method complies 
with all applicable state and federal laws and regulations. 

(2) To the extent that the Health Insurance Portability and Account- 
ability Act of 1996, as amended, limits the plan's or the plan's capitated 
provider's ability to electronically transmit any required disclosures un- 
der this regulation, the plan or the plan's capitated provider shall supple- 
ment its electronic transmission with a paper communication that satis- 
fies the disclosure requirements. 

(g) Time for Reimbursement. A plan and a plan's capitated provider 
shall reimburse each complete claim, or portion thereof, whether in state 
or out of state, as soon as practical, but no later than thirty (30) working 
days after the date of receipt of the complete claim by the plan or the 
plan's capitated provider, or if the plan is a health maintenance organiza- 
tion, 45 working days after the date of receipt of the complete claim by 
the plan or the plan's capitated provider, unless the complete claim or 
portion thereof is contested or denied, as provided in subdivision (h). 

(1) To the extent that a full service health care service plan that meets 
the definition of an HMO as set forth in paragraph 1300.71(a)(9) also 
maintains a PPO or POS line of business, the plan shall reimburse all 
claims relating to or arising out of non-HMO lines of business within 
thirty (30) working days. 

(2) If a specialized health care service plan contracts with a plan that 
is a health maintenance organization to deliver, furnish or otherwise ar- 
range for or provide health care services for that plan's enrollees, the spe- 
cialized plan shall reimburse complete claims received for those services 
within thirty (30) working days. 

(3) If a non-contracted provider disputes the appropriateness of a 
plan's or a plan's capitated provider's computation of the reasonable and 
customary value, determined in accordance with section (a)(3)(B), for 
the health care services rendered by the non-contracted provider, the 
plan or the plan's capitated provider shall receive and process the non- 
contracted provider's dispute as a provider dispute in accordance with 
section 1300.71.38. 

(4) Every plan contract with a provider shall include a provision stat- 
ing that except for applicable co-payments and deductibles, a provider 



shall not invoice or balance bill a plan's enrollee for the difference be- 
tween the provider's billed charges and the reimbursement paid by the 
plan or the plan's capitated provider for any covered benefit. 

(h) Time for Contesting or Denying Claims. A plan and a plan's capi- 
tated provider may contest or deny a claim, or portion thereof, by notify- 
ing the provider, in writing, that the claim is contested or denied, within 
thirty (30) working days after the date of receipt of the claim by the plan 
and the plan's capitated provider, or if the plan is a health maintenance 
organization. 45 working days after the date of receipt of the claim by the 
plan or the plan's capitated provider. 

( 1 ) To the extent that a full service health care service plan that meets 
the definition of an HMO as set forth in paragraph 1300.71(a)(9) also 
maintains a PPO or POS line of business, the plan shall contest or deny 
claims relating to or arising out of non-HMO lines of business within 
thirty (30) working days. 

(2) If a specialized health care service plan contracts with a plan that 
is a health maintenance organization to deliver, furnish or otherwise ar- 
range for or provide health care services for that plan's enrollees, the spe- 
cialized plan shall contest or denied claims received for those services 
within thirty (30) working days. 

(3) A request for information necessary to determine payer liability 
from a third party shall not extend the Time for Reimbursement or the 
Time for Contesting or Denying Claims as set forth in sections (g) and 
(h) of this regulation. Incomplete claims and claims for which "informa- 
tion necessary to determine payer liability" that has been requested, 
which are held or pended awaiting receipt of additional information shall 
be either contested or denied in writing within the timeframes set forth 
in this section. The denial or contest shall identify the individual or entity 
that was requested to submit information, the specific documents re- 
quested and the reason(s) why the information is necessary to determine 
payer liability 

(i) Interest on the Late Payment of Claims. 

( 1 ) Late payment on a complete claim for emergency services and 
care, which is neither contested nor denied, shall automatically include 
the greater of $ 1 5 for each 1 2-month period or portion thereof on a non- 
prorated basis, or interest at the rate of 15 percent per annum for the peri- 
od of time that the payment is late. 

(2) Late payments on all other complete claims shall automatically in- 
clude interest at the rate of 15 percent per annum for the period of time 
that the payment is late. 

(j) Penalty for Failure to Automatically Include the Interest Due on a 
Late Claim Payment as set forth in section (i). A plan or a plan's capitated 
provider that fails to automatically include the interest due on a late claim 
payment shall pay the provider $10 for that late claim in addition to any 
amounts due pursuant to section (i). 

(k) Late Notice or Frivolous Requests. If a plan or a plan's capitated 
provider fails to provide the claimant with written notice that a claim has 
been contested or denied within the allowable time period prescribed in 
section (h), or requests information from the provider that is not reason- 
ably relevant or requests information from a third party that is in excess 
of the information necessary to determine payor liability as defined in 
section (a)( 11), but ultimately pays the claim in whole or in part, the com- 
putation of interest or imposition of penalty pursuant to sections (i) and 
(j) shall begin with the first calendar day after the expiration of the Time 
for Reimbursement as defined in section (g). 

(/) Information for Contracting Providers. On or before January 1, 
2004, (unless the plan and/or the plan's capitated provider confirms in 
writing that current information is in the contracted provider's posses- 
sion), initially upon contracting and in addition, upon the contracted pro- 
vider's written request, the plan and the plan's capitated provider shall 
disclose to its contracting providers the following information in a paper 
or electronic format, which may include a website containing this in- 
formation, or another mutually agreeable accessible format: 

(1) Directions (including the mailing address, email address and fac- 
simile number) for the electronic transmission (if available), physical de- 
livery and mailing of claims, all claim submission requirements includ- 



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§ 1300.71 



ing a list of commonly required attachmenls. siipplemenial information 
and documentation consistent with section (a)(l()), instructions lor con- 
firming the plan's or the plan's capitated provider's receipt of claims con- 
sistent with section (c), and a phone number for claims inquiries and fil- 
ing information; 

(2) The identity of the office responsible for receiving and resolving 
provider disputes; 

(3) Directions (including the mailing address, email address and fac- 
simile number) for the electronic transmission (if available), physical de- 
livery, and mailing of provider disputes and all claim dispute require- 
ments, the timeframe for the plan's and the plan's capitated provider's 
acknowledgement of the receipt of a provider dispute and a phone num- 
ber for provider dispute inquiries and filing information; and 

(4) Directions for filing substantially similar multiple claims disputes 
and other billing or contractual disputes in batches as a single provider 
dispute that includes a numbering scheme identifying each dispute con- 
tained in the bundled notice. 

(m) Modifications to the Information for Contracting Providers and to 
the Fee Schedules and Other Required Information. A plan and a plan's 
capitated provider shall provide a minimum of 45 days prior written no- 
tice before instituting any changes, amendments or modifications in the 
disclosures made pursuant to paragraphs (/) and (o). 

(n) Notice to the Department. Within 7 calendar days of a Department 
request, the plan and the plan's capitated providers shall provide a pro 
forma copy of the plan's and the plan's capitated provider's "Information 
to Contracting Providers" and "Modification to the Information for Con- 
tracting Providers." 

(0) Fee Schedules and Other Required Information. On or before Janu- 
ary 1, 2004. (unless the plan and/or the plan's capitated provider con- 
firms in writing that current information is in the contracted provider's 
possession), initially upon contracting, annually thereafter on or before 
the contract anniversary date, and in addition upon the contracted provid- 
er's written request, the plan and the plan's capitated provider shall dis- 
close to contracting providers the following information in an electronic 
format: 

( 1 ) The complete fee schedule for the contracting provider consistent 
with the disclosures specified in section 1300.75.4.1(b); and 

(2) The detailed payment policies and rules and non-standard coding 
methodologies used to adjudicate claims, which shall, unless otherwise 
prohibited by state law: 

(A) when available, be consistent with Current Procedural Terminolo- 
gy (CPT), and standards accepted by nationally recognized medical soci- 
eties and organizations, federal regulatory bodies and major credential- 
ing organizations; 

(B) clearly and accurately state what is covered by any global payment 
provisions for both professional and institutional services, any global 
payment provisions for all services necessary as part of a course of treat- 
ment in an institutional setting, and any other global arrangements such 
as per diem hospital payments, and 

(C) at a minimum, clearly and accurately state the policies regarding 
the following: (i) consolidation of multiple services or charges, and pay- 
ment adjustments due to coding changes, (ii) reimbursement for multiple 
procedures, (iii) reimbursement for assistant surgeons, (iv) reimburse- 
ment for the administration of immunizations and injectable medica- 
tions, and (v) recognition of CPT modifiers. 

The information disclosures required by this section shall be in suffi- 
cient detail and in an understandable format that does not disclose propri- 
etary trade secret information or violate copyright law or patented pro- 
cesses, so that a reasonable person with sufficient training, experience 
and competence in claims processing can determine the payment to be 
made according to the terms of the contract. 

A plan or a plan's capitated provider may disclose the Fee Schedules 
and Other Required Information mandated by this section through the 
use of a website so Jong as the plan or the plan's capitated provider pro- 
vides written notice to the contracted provider at least 45 days prior to im- 



plementing a website transmission format or posting any changes to the 
information on the website. 

(p) Waiver Prohibited. The plan and the plan's capitated provider shall 
not require or allow a provider to waive any right conferred upon the pro- 
vider or any obligation imposed upon the plan by sections 1371, 1371.1, 
1371.2. 1371.22^1371.35. 1371.36. 1371.37, 1371.4, and 1371.8 of the 
Health and Safety Code and sections 1300.71. 1300.71.38, 1300.71.4, 
and 1300.77.4 of title 28, relating to claims processing or payment. Any 
contractual provision or other agreement purporting to constitute, create 
or result in such a waiver is null and void. 

(q) Required Reports. 

( 1 ) Within 60 days of the close of each calendar quarter, the plan shall 
disclose to the Department in a single combined document: (A) any 
emerging patterns of claims payment deficiencies; (B) whether any of its 
claims processing organizations or capitated providers failed to timely 
and accurately reimburse 95'7r of its claims (including the payment of in- 
terest and penalties) consistent with sections 1371, 1371.1, 1371.2, 
1371.22, 1371.35. 1371.36, 1371.37, 1371.4, and 1371.8 of the Health 
and Safety Code and secfions 1300.71, 1300.71.38, I3(X).7I.4, and 
1 300.77.4 of title 28; and (C) the corrective action that has been undertak- 
en over the preceding two quarters. The first report from the plan shall 
be due within 45 days after the close of the calendar quarter that ends 1 20 
days after the effective date of these regulations. 

(2) Within 15 days of the close of each calendar year, beginning with 
the 2004 calendar year, the plan shall submit to the Director, as part of 
the Annual Plan Claims Payment and Dispute Resolution Mechanism 
Report as specified in section 1 367(h) of the Health and Safety Code and 
section 1 300.7 1.38(k) of title 28, in an electronic format (to be supplied 
by the Department), information disclosing the claims payment com- 
pliance status of the plan and each of its claims processing organizations 
and capitated providers with each of sections 1371, 1371.1, 1371.2, 
1371.22, 1371.35, 1371.36, 1371.37, 1371.4, and 1371.8 of the Health 
and Safety Code and sections 1300.71, 1300.71.38, 1300.71.4. and 
1300.77.4 of title 28. The Annual Plan Claims Payment and Dispute Res- 
olufion Mechanism Report for 2(X)4 shall include claims payment and 
dispute resolution data received from October 1, 2003 through Septem- 
ber 30, 2004. Each subsequent Annual Plan Claims Payment and Dispute 
Resolution Mechanism Report shall include claims payment and dispute 
resoludon data received for the last calendar quarter of the year preceding 
the reporting year and the first three calendar quarters for the reporting 
year. 

(A) The claims payment compliance status porfion of the Annual Plan 
Claims Payment and Dispute Resolution Mechanism Report shall; (i) be 
based upon the plan's claims processing organizafion's and the plan's 
capitated provider's Quarterly Claims Payment Performance Reports 
submitted to the plan and upon the audits and other compliance processes 
of the plan consistent with section 1 300.7 1.38(m) and (ii) include a de- 
tailed, informative statement: (1) disclosing any established or docu- 
mented patterns of claims payment deficiencies, (2) outlining the correc- 
tive action that has been undertaken, and (3) explaining how that 
information has been used to imf)rove the plan's administrative capacity, 
plan-provider relafions, claim payment procedures, quality assurance 
system (process) and quality of patient care (results). The information 
provided pursuant to this section shall be submitted with the Annual Plan 
Claims Payment and Dispute Resolution Mechanism Report and may be 
accompanied by a cover letter requesting confidential treatment pursuant 
tosecfion 1007 of utle 28. 

(r) Confidentiality. 

The claims payment compliance status portion of the plan's Annual 
Plan Claims Payment and Dispute Resolution Mechanism Report and the 
Quarterty disclosures pursuant to section (q)( 1 ) to the Department shall 
be public information except for information disclosed pursuant to sec- 
tion (q)(2)(A)(ii), that the Director, pursuant to a plan's written request, 
determines should be maintained on a confidential basis. 

(s) Review and Enforcement. 



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§ 1300.71.38 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



(1) The Department may review the plan's and the plan's capitated 
provider's claims processing system through periodic medical surveys 
and financial examinations under sections 1380, 1381 or 1382 of the 
Health and Safety Code, and when appropriate, through the investigation 
of complaints of demonstrate and unjust payment patterns. 

(2) Failure of a plan to comply with the requirements of sections 1 37 1 . 
1371.1. 1371.2, 1371.22, 1371.35, 1371.36, 1371.37. 1371.4. and 
1 37 1 .8 of the Health and Safety Code and sections 1 300.7 1 . 1 300.7 1.38. 
1 300.7 1 .4. and 1 300.77.4 of title 28 may constitute a basis for disciplin- 
ary action against the plan. The civil, criminal, and administrative reme- 
dies available to the Director under the Health and Safety Code and this 
regulation are not exclusive, and may be sought and employed in any 
combination deemed advisable by the Director to enforce the provisions 
of this regulation. 

(3) Violations of the Health and Safety Code and this regulation are 
subject to enforcement action whether or not remediated, although a 
plan's identification and self-initiated remediation of deficiencies may 
be considered in determining the appropriate penalty. 

(4) In making a determination that a plan' s or a plan' s capitated provid- 
er' s practice, policy or procedure constitutes a "demonstrable and unjust 
payment pattern" or "unfair payment pattern," the Director shall consider 
the documentation or justification for the implementation of the practice, 
policy or procedure and may consider the aggregate amount of money in- 
volved in the plan's or the plan's capitated provider's action or inaction; 
the number of claims adjudicated by the plan or plan's capitated provider 
during the time period in question, legitimate industry practices, whether 
there is evidence that the provider had engaged in an unfair billing prac- 
tice, the potential impact of the payment practices on the delivery of 
health care or on provider practices; the plan' s or the plan' s capitated pro- 
vider's intentions or knowledge of the violation(s); the speed and effec- 
tiveness of appropriate remedial measures implemented to ameliorate 
harm to providers or patients, or to preclude future violations; and any 
previous related or similar enforcement actions involving the plan or the 
plan's capitated provider. 

(5) Within 30 days of receipt of notice that the Department is investi- 
gating whether the plan's or the plan's capitated provider's practice, 
policy or procedure constitutes a demonstrable and unjust payment pat- 
tern, the plan may submit a written response documenting that the prac- 
tice, policy or procedure was a necessary and reasonable claims settle- 
ment practice and consistent with sections 1371, 1371.3.5 and 1371.37 of 
the Health and Safety Code and these regulations; 

(6) In addition to the penalties that may be assessed pursuant to section 
(s)(2), a plan determined to be engaged in a Demonstrable and Unjust 
Payment Pattern may be subject to any combination of the following 
additional penalties: 

(A) The imposition of an additional monetary penalty to reflect the se- 
rious nature of the demonstrable and unjust payment pattern; 

(B) The imposition, for a period of up to three (3) years, of a require- 
ment that the plan reimburse complete and accurate claims in a shorter 
time period than the time period prescribed in section (g) of this regula- 
tion and sections 1371 and 1371.35 of the Health and Safety Code; and 

(C) The appointment of a claims monitor or conservator to supervise 
the plan's claim payment activities to insure timely compliance with 
claims payment obligations. 

The plan shall be responsible for the payment of all costs incurred by 
the Department in any administrative and judicial actions, including the 
cost to monitor the plan's and the plan's capitated provider's compliance. 

(t) Compliance. Plans and the plans' capitated providers shall be fully 
compliant with these regulations on or before January 1, 2004. 
NOTE: Authority cited: Sections 1344. 1371.38, 1371.1 and 1371.8, Health and 
Safety Code. Reference: Sections 1367, 1370 and 1371.38, Health and Safety 
Code. 

History 

1. New section filed 7-24-2003; operative 8-23-2003 (Register 2003, No. 30). 
For prior history of title 10, section 1300.71, see Register 80, No. 19. 



§ 1 300.71 .38. Fast, Fair and Cost-Effective Dispute 
Resolution Mechanism. 

All health care service plans and their capitated providers that pay 
claims (plan's capitated provider) shall establish a fast, fair and cost-ef- 
fective dispute resolution mechanism to process and resolve contracted 
and non-contracted provider disputes. The plan and the plan's capitated 
provider may maintain separate dispute resolution mechanisms for con- 
tracted and non-contracted provider disputes and separate dispute reso- 
lution mechanisms for claims and other types of billing and contract dis- 
putes, provided that each mechanism complies with sections 1367(h). 
1371. 1371.1. 1371.2. 1371.22. 1371.35. 1371.36, 1371.37, 1371.4, and 
1371.8 of the Health and Safety Code and sections 1300.71. 1300.71.38. 
1300.71.4. and 1300.77.4 of title 28. Arbitration shall not be deemed a 
provider dispute or a provider dispute resolution mechanism for the pur- 
poses of this section. 

(a) Definitions: 

( 1 ) "Contracted Provider Dispute" means a contracted provider's writ- 
ten notice to the plan or the plan's capitated provider challenging, appeal- 
ing or requesting reconsideration of a claim (or a bundled group of sub- 
stantially similar multiple claims that are individually numbered) that has 
been denied, adjusted or contested or seeking resolution of a billing de- 
termination or other contract dispute (or a bundled group of substantially 
similar multiple billing or other contractual disputes that are individually 
numbered) or disputing a request for reimbursement of an overpayment 
of a claim that contains, at a minimum, the following information: the 
provider's name; the provider's identification number; contact informa- 
tion; and: 

(A) If the dispute concerns a claim or a request for reimbursement of 
an overpayment of a claim, a clear identification of the disputed item, the 
date of service and a clear explanation of the basis upon which the provid- 
er believes the payment amount, request for additional information, re- 
quest for reimbursement for the overpayment of a claim, contest, denial, 
adjustment or other action is incorrect; 

(B) If the dispute is not about a claim, a clear explanation of the issue 
and the provider's position thereon; and 

(C) If the dispute involves an enrollee or group of enrollees: the name 
and identification number(s) of the enrollee or enrollees, a clear explana- 
fion of the disputed item, including the date of service and the provider's 
position thereon. 

(2) "Non-Contracted Provider Dispute" means a non-contracted pro- 
vider's written notice to the plan or the plan's capitated provider chal- 
lenging, appealing or requesting reconsideration of a claim (or a bundled 
group of substantially similar claims that are individually numbered) that 
has been denied, adjusted or contested or disputing a request for reim- 
bursement of an overpayment of a claim that contains, at a minimum, the 
following information: the provider's name, the provider's identification 
number, contact information and: 

(A) If the dispute concerns a claim or a request for reimbursement of 
an overpayment of a claim, a clear identification of the disputed item, in- 
cluding the date of service, and a clear explanation of the basis upon 
which the provider believes the payment amount, request for additional 
information, contest, denial, request for reimbursement of an overpay- 
ment of a claim or other action is incorrect. 

(B) If the dispute involves an enrollee or group of enrollees, the name 
and identification number(s) of the enrollee or enrollees, a clear explana- 
fion of the disputed item, including the date of service and the provider's 
position thereon. 

(3) "Date of receipt" means the working day when the provider dispute 
or amended provider dispute, by physical or electronic means, is first de- 
livered to the plan's or the plan's capitated provider's designated dispute 
resolution office or post office box. This definition shall not affect the 
presumption of receipt of mail set forth in Evidence Code section 641. 

(4) "Date of Determination" means the date of postmark or electronic 
mark on the written provider dispute determination or amended provider 



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§ 1300.71.38 



• 



dispule determination that is delivered, by physical or electronic means, 
to the claimant's office or other address of record. To the extent that a 
postmark or electronic mark is unavailable to confirm the Date of Deter- 
mination, the Department may consider, when auditing the plan's or the 
plan's capitated provider's provider dispute mechanism, the date the 
check is printed for any monies determined to be due and owing the pro- 
vider and date the check is presented for payment. This definition shall 
not affect the presumption of receipt of mail set forth in Evidence Code 
section 641. 

(5) ""Plan" for the purposes of this section means a licensed health care 
service plan and its contracted claims processing organization(s). 

(b) Notice to Provider of Dispuie Resolution Mechanism(s). Whenev- 
er the plan or the plan's capitated provider contests, adjusts or denies a 
claim, it shall inform the provider of the availability of the provider dis- 
pute resolution mechanism and the procedures for obtaining forms and 
instructions, including the mailing address, for filing a provider dispute. 

(c) Submission of ProviderDisputes. The plan and the plan's capitated 
provider shall establish written procedures for the submission, receipt, 
processing and resolution of contracted and non-contracted provider dis- 
putes that, at a minimum, provide that: 

( 1 ) Provider disputes be submitted utilizing the same number assigned 
to the original claim; thereafter the plan or the plan's capitated provider 
shall process and track the provider dispute in a manner that allows the 
plan, the plan's capitated provider, the provider and the Department to 
link the provider dispute with the number assigned to the original claim. 

(2) Contracted ProviderDisputes be submitted in a manner consistent 
with procedures disclosed in sections I. ^00.7J (/)(!) -(4). 

(3) Non-contracted Provider Disputes be submitted in a manner con- 
sistent with the directions for obtaining forms and instructions for filing 
a provider dispute attached to the plan' s or the plan" s capitated provider' s 
notice that the subject claim has been denied, adjusted or contested or 
pursuant to the directions for filing Non-contracted Provider Disputes 
contained on the plan's or the plan's capitated provider's website. 

(4) The plan shall resolve any provider dispute submitted on behalf of 
an enrollee or a group of enrollees treated by the provider in the plan's 
consumer grievance process and not in the plan's or the plan's capitated 
provider's dispute resolution mechanism. The plan may verify theenroll- 
ee's authorization to proceed with the grievance prior to submitting the 
complaint to the plan's consumer grievance process. When a provider 
submits a dispute on behalf of an enrollee or a group of enrollees, the pro- 
vider shall be deemed to be joining with or assisting the enrollee within 
the meaning of section 1368 of the Health and Safety Code. 

(d) Time Period for Submission. 

( 1 ) Neither the plan nor the plan's capitated provider that pays claims, 
except as required by any state or federal law or regulation, shall impose 
a deadline for the receipt of a provider dispute for an individual claim, 
billing dispule or other contractual dispute that is less than 365 days of 
plan's or the plan's capitated provider's action or, in the case of inaction, 
that is less than 365 days after the Time for Contesting or Denying Claims 
has expired. If the dispute relates to a demonstrable and unfair payment 
pattern by the plan or the plan's capitated provider, neither the plan nor 
the plan's capitated provider shall impose a deadline for the receipt of a 
dispute that is less than 365 days from the plan's or the plan's capitated 
provider's most recent action or in the case of inaction that is less than 
365 days after the most recent Time for Contesting or Denying Claims 
has expired. 

(2) The plan or the plan's capitated provider may return any provider 
dispute lacking the information enumerated in either section (a)(1) or 
(a)(2), if the information is in the possession of the provider and is not 
readily accessible to the plan or the plan's capitated provider. Along with 
any returned provider dispute, the plan or the plan's capitated provider 
shall clearly identify in writing the missing information necessary to re- 
solve the dispute consistent with sections 1 300.7 l(a)( 10) and (11) and 
1 3(X).7 1 (d)( J ). (2) and (3). Except in situation where the claim documen- 
tation has been returned to the provider, no plan or a plan's capitated pro- 
vider shall request the provider to resubmit claim information or support- 



ing documentation that the provider previously submitted to the plan or 
the plan's capitated provider as part of the claims adjudication process. 
(3) A provider may submit an amended provider dispute within thirty 
(30) working days of the date of receipt of a returned provider dispute set- 
ting forth the missing information. 

(e) Time Period for Acknowledgment. A plan or a plan' s capitated pro- 
vider shall enter into its dispute resolution mechanism sy.siem(s) each 
provider dispute submission (whether or not complete), and shall identi- 
fy and acknowledge the receipt of each provider dispute: 

( 1 ) In the case of an electronic provider dispute, the acknowledgement 
shall be provided within two (2) working days of the date of receipt of 
the electronic provider dispute by the office designated to receive provid- 
er disputes, or 

(2) In the case of a paper provider dispute, the acknowledgement shall 
be provided within fifteen (15) working days of the date of receipt of the 
paper provider dispute by the office designated to receive provider dis- 
putes. 

(f) Time Period for Resolution and Written Determination. The plan 
or the plan's capitated provider shall resolve each provider dispute or 
amended provider dispute, consistent with applicable state and federal 
law and the provisions of sections 1371. 1371.1, 1371.2, 1371.22, 
1371.35, 1371.37, 1 37 1.4 and 1371.8of the Health and Safety Code and 
section 1300.71. 1300.71.38. 1300.7 1.4 and 1 300.77.4 of title 28, and is- 
sue a written determination stating the pertinent facts and explaining the 
reasons for its determination within 45 working days after the date of re- 
ceipt of the provider dispute or the amended provider dispute. 

Copies of provider disputes and determinations, including all notes, 
documents and other information upon which the plan or the plan's capi- 
tated provider relied to reach its decision, and all reports and related in- 
formation shall be retained for at least the period specified in section 
1300.85.1 of title 28. 

(g) Past Due Payments. If the provider dispute or amended provider 
dispute involves a claim and is determined in whole or in part in favor of 
the provider, the plan or the plan's capitated provider shall pay any out- 
standing monies determined to be due, and all interest and penalties re- 
quired under sections 1371 and 1371.35 of the Health and Safety Code 
and section 1300.71 of title 28, within five (5) working days of the is- 
suance of the Written Determination. Accrual of interest and penalties for 
the payment of these resolved provider disputes shall commence on the 
day following the expiration of "Time for Reimbursement" as forth in 
section 1300.71(g). 

(h) Designation of Plan Officer. The plan and the plan's capitated pro- 
vider shall each designate a principal officer, as defined by section 
1 300.45(o) of title 28. to be primarily responsible for the maintenance of 
their respective provider dispute resolution mechanism(s), for the review 
of its operations and for noting any emerging patterns of provider dis- 
putes to improve administrative capacity, plan-provider relations, claim 
payment procedures and patient care. The designated principal officer 
shall be responsible for preparing, the reports and disclosures as specified 
in sections 1300.71(e)(3) and (q) and 1300.71. 38(k) of title 28. 

(i) No Discrimination. The plan or the plan's capitated provider shall 
not discriminate or retaliate against a provider (including but not limited 
to the cancellation of the provider's contract) because the provider filed 
a contracted provider dispute or a non-contracted provider dispute. 

(j) Dispute Resolution Costs. A provider dispute received under this 
section shall be received, handled and resolved by the plan and the plan's 
capitated provider without charge to the provider. Notwithstanding the 
foregoing, the plan and the plan's capitated provider shall have no obliga- 
tion to reimburse a provider for any costs incurred in connection with uti- 
lizing the provider dispute resolution mechanism. 

(k) Required Reports. Beginning with the 2004 calendar year and for 
each subsequent year, the plan shall submit to the Department no more 
than fifteen (15) days after the close of the calendar year, an "Annual Plan 
Claims Payment and Dispute Resolution Mechanism Report," described 
in part in Section 1 300.7 l(q) of this regulation, on an electronic form to 
be supplied by the Department Managed Health Care pursuant to section 



Page 64.7 



Register 2003, No. 30; 7-25-2003 



§ 1300.71.4 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



1300.41.8 of title 28 containing the following, which shall be reported 
based upon the date of receipt of the provider dispute or amended provid- 
er dispute: 

( 1 ) Information on the number and types of providers using the dispute 
resolution mechanism; 

(2) A summary of the disposition of all provider disputes, which shall 
include an informative description of the types, terms and resolution. 
Disputes contained in a bundled submission shall be reported separately 
as individual disputes. Information may be submitted in an aggregate for- 
mal so long as all data entries are appropriately footnoted to provide full 
and fair disclosure; and 

(3) A detailed, informative statement disclosing any emerging or es- 
tablished patterns of provider disputes and how that information has been 
used to improve the plan's administrative capacity, plan-provider rela- 
tions, claim payment procedures, quality assurance system (process) and 
quality of patient care (results) and how the information has been used 
in the development of appropriate corrective action plans. The informa- 
tion provided pursuant to this paragraph shall be submitted with, but sep- 
arately from the other portions of the Annual Plan Claims Payment and 
Dispute Resolution Mechanism Report and may be accompanied by a 
cover letter requesting confidential treatment pursuant section 1007 of 
title 28. 

(4) The first report shall be due on or before January 15, 2005. 
(/) Confidentiality. 

( 1 ) The plan's Annual Plan Claims Payment and Dispute Resolution 
Mechanism Report to the Department regarding its dispute resolution 
mechanism shall be public information except for information disclosed 
pursuant to section (k)(3) above, that the Director, pursuant to a plan's 
written request, determines should be maintained on a confidential basis. 

(2) The plan's quarterly disclosures pursuant to section 1300.71(q)(l ) 
shall be public information except for the information relating to the 
plan's corrective action strategies that the Director, pursuant to a plan's 
written request, determines should be maintained on a confidential basis. 

(m) Review and Enforcement. 

(1) The Department shall review the plan's and the plan's capitated 
provider's provider dispute resolution mechanism(s). including the re- 
cords of provider disputes filed with the plan and remedial action taken 
pursuant to section 13(X).71.38(m)(3). through medical surveys and fi- 
nancial examinations under sections 1380. 1381 or 1382 of the Health 
and Safety Code, and when appropriate, through the investigation of 
complaints of unfair provider dispute resolution mechanism(s). 

(2) The failure of a plan to comply with the requirements of this regula- 
tion shall be a basis for disciplinary action against the plan. The civil, 
criminal, and administrative remedies available to the Director under the 
Health and Safety Code and this regulation are not exclusive, and may 
be sought and employed in any combination deemed advisable by the Di- 
rector to enforce the provisions of this regulation. 

(3) Violations of the Act and this regulation are subject to enforcement 
action whether or not remediated, although a plan's self-identification 
and self-initiated remediation of violations or deficiencies may be con- 
sidered in determining the appropriate penalty. 

NOTE: Authority cited: Sections 1 344 and 1 37 1 .38, Health and Safety Code. Ref- 
erence: Sections 1367, 1371 and 1371.38, Health and Safety Code. 

History 
1. New section filed 7-24-2003; operative 8-23-2003 (Register 2003, No. 30). 

§ 1300.71.4. Emergency Medical Condition and 

Post-Stabilization Responsibilities for 
Medically Necessary Health Care Services. 

The following rules set forth emergency medical condition and post- 
stabilization responsibilities for medically necessary health care services 
after stabilization of an emergency medical condifion and until an enroU- 
ee can be discharged or transferred. These rules do not apply to a special- 
ized health care service plan contract that does not provide for medically 
necessary health care services following stabilization of an emergency 
condition. 



(a) Prior to stabilization of an enrollee's emergency medical condition, 
or during periods of destabilization (after stabilization of an enrollee's 
emergency medical condition) when an enroUee requires immediate 
medically necessary health care services, a health care service plan shall 
pay for all medically necessary health care services rendered to an enroll- 
ee. 

(b) In the case when an enrollee is stabilized but the health care provid- 
er believes that the enrollee requires additional medically necessary 
health care services and may not be discharged safely, the following ap- 
plies: 

( 1 ) A health care service plan shall approve or disapprove a health care 
provider's request for authorization to provide necessary post-stabiliza- 
tion medical care within one half hour of the request. 

(2) If a health care service plan fails to approve or disapprove a health 
care provider" s request for authorization to provide necessary post-stabi- 
lization medical care within one half-hour of the request, the necessary 
post-stabilization medical care shall be deemed authorized. Notwith- 
standing the foregoing sentence, the health care service plan shall have 
the authority to disapprove payment for (A) the delivery of such neces- 
sary post-stabilization medical care or (B) the continuation of the deliv- 
ery of such care; provided, that the health care service plan notifies the 
provider prior to the commencement of the delivery of such care or dur- 
ing the continuation of the delivery of such care (in which case, the plan 
shall not be obligated to pay for the continuation of such care from and 
after the time it provides such notice to the provider, subject to the re- 
maining provisions of this paragraph) and in both cases the disruption of 
such care (taking into account the time necessary to effect the enrollee's 
transfer or discharge) does not have an adverse impact upon the efficacy 
of such care or the enrollee's medical condition. 

(3) Notwithstanding the provisions of subsection (b) of this rule, a 
health care service plan shall pay for all medically necessary health care 
services provided to an enrollee which are necessary to maintain the en- 
rollee's stabilized condition up to the time that the health care service 
plan effectuates the enrollee's transfer or the enrollee is discharged. 

(c) In the case where a plan denies the request for authorization of 
post-stabilization medical care and elects to transfer an enrollee to anoth- 
er health care provider, the following applies: 

( 1 ) When a health care service plan responds to a health care provid- 
er's request for post-stabilization medical care authorization by inform- 
ing the provider of the plan's decision to transfer the enrollee to another 
health care provider, the plan shall effectuate the transfer of the enrollee 
as soon as possible. 

(2) A health care service plan shall pay for all medically necessary 
health care services provided to an enrollee to maintain the enrollee's sta- 
bilized condition up to the time that the health care service plan effectu- 
ates the enrollee's transfer. 

(d) All requests for authorizations, and all responses to such requests 
for authorizations, of post-stabilization medically necessary health care 
services shall be fully documented. All provision of medically necessary 
health care services shall be fully documented. Documentafion shall in- 
clude, but not be limited to, the date and time of the request, the name of 
the health care provider making the request, and the name of the plan rep- 
resentative responding to the request. 

NOTE: Authority cited: Sections 1344 and 1371.4(g) and (h). Health and Safety 
Code. Reference: Sections 1317.1 and 1371.4, Health and Safety Code. 

History 

1 . New section filed 5-9-95 as an emergency; operative 5-9-95 (Register 95, No. 
19). A Certificate of Compliance must be transmitted to OAL by 9-6-95 or 
emergency language will be repealed by operation of law on the following day. 

2. New section refiled 9-5-95 as an emergency; operative 9-6-95 (Register 95, 
No. 36). A Certificate of Compliance must be transmitted to OAL by 1-4-96 
or emergency language will be repealed by operation of law on the following 
day. 

3. New section refiled 12-19-95 as an emergency; operative 1^-96 (Register 95, 
No. 51). A Certificate of Compliance must be transmitted to OAL by 4-17-96 
or emergency language will be repealed by operation of law on the following 

day. 

4. Certificate of Compliance, including amendment of section and Note, trans- 
mitted to OAL 3-7-96 and filed 4-1 1-96 (Register 96, No. 15). 



• 



• 



Page 64.8 



Register 2003, No. 30; 7-25-2003 



Title 28 



The Department of Managed Health Care 



§ 1300.74.16 



.'^. Hdiiorial correction of first paragraph and subsections (b)(2), (c) and (c)(1) 
(Register%, No. 23). 

6. Editorial correction of first paragraph (Register 99. No. 26). 

7. Amendment filed 6-24-99 as an emergency; operative 6-24-99 (Register 99, 
No. 26). A Certificate of Compliance must be transmitted to OAL by 10-22-99 
or emergency language will be repealed by operation of law on the following 
day. 

H. Certificate of Compliance as to 6-24-99 order transmitted to OAL 9-30-99 and 
filed 1 1-8-99 (Register 99. No. 46). 

§ 1300.73.21. Arbitration and Settlement Agreements. 

(a) All health care service plans (plans) shall ensure that all arbitration 
decisions involving the plan and a current or former enroUee shall be pro- 
vided to the Department as follows: 

( J ) Within thirty (30) days of receiving a written arbitration decision, 
the plan shall provide a copy of the complete arbitration decision to the 
Department. The complete arbitration decision shall have no part of the 
decision altered or redacted. The complete arbitration decision shall indi- 
cate the prevailing party, the amount and other relevant terms of any 
award, and the reasons for the decision. 

(2) On a quarterly basis, plans shall provide the Department with re- 
dacted copies of all written arbitration decisions. The plan shall be re- 
sponsible for redacting the written arbitration decisions ensuring that the 
names of the enrol lee, the plan, witnesses, attorneys, providers, plan em- 
ployees and health facilities have been removed from the decision. The 
redacted arbitration decisions will be available for public inspection on 
the Department's web page (www.dmhc.ca.gov). 

(b) Every written arbitration decision, and every written settlement 
agreement resolving any dispute between a plan and a current or former 
enrollee shall contain the following language in bold, twelve (12) point 
type: 

Nothing in this arbitration decision (or settlement agreement) prohib- 
its or restricts the enrollee from discussing or reporting the underlying 
facts, results, terms and conditions of this decision (or settlement agree- 
ment) to the Department of Managed Health Care. 

(c) All health care service contracts containing an arbitration clause; 
all arbitration agreements and decisions; and all settlement agreements 
resolving any dispute between a plan and a current or former enrollee, 
shall contain no language that expressly or impliedly prohibits the enroll- 
ee from discussing or reporting the underlying facts, outcome, results or 
decision with the Department. 

(d) For purposes of this section, a "settlement agreement" shall be 
broadly construed to include any writing resolving a dispute between a 
plan and a current or former enrollee wherein the nature of the dispute 
relates to services, benefits, treatment or other rights and obligations 
created pursuant to the enrollee and plan's contract for health care cover- 
age, and includes settlements reached in, but not limited to, a mediation, 
arbitration, or other alternative dispute resolution process, or any civil 
lawsuit. 

NOTE; Authority Cited: Sections 1344. 1346 and 1373.21, Health and Safety 
Code. Reference: Sections 1373.19 and 1373.20, Health and Safety Code. 

History 
1 . New section filed 8-19-2002; operative 9-18-2002 (Register 2002, No. 34). 

§ 1 300.74.1 6. Standing Referral to HIV/AIDS Specialist. 

(a) The definitions and requirements of this section are applicable only 
to standing referrals made pursuant to Section 1374.16 of the Act. Noth- 
ing in this section requires an enrollee to transfer to a different primary 
care provider or limits referral authorizations that are not subject to Sec- 
tion 1374.16of the Act. 

(b) For the purposes of this section "AIDS" means Acquired Immuno- 
deficiency Syndrome. 

(c) For the purposes of this section "category 1 continuing medical 
education" means: 

(1) For physicians, continuing medical education courses recognized 
as qualifying for category 1 credit by the Medical Board of California; 

(2) For nurse practitioners, continuing education contact hours recog- 
nized by the California Board of Registered Nursing; 



(3) For physician assistants, continuing education units approved by 
the American Association of Physician Assistants or those described in 
either subsection (c)(1) or (c)(2), above. 

(d) For the purposes of this section "HIV" means the Human Immuno- 
deficiency Virus. 

(e) For the purposes of this section an "HIV/AIDS specialist" means 
a physician who holds a valid, unrevoked and unsuspended certificate to 
practice inedicine in the state of California who meets any one of the fol- 
lowing four criteria: 

( 1 ) Is credentialed as an "HIV Specialist" by the American Academy 
of HIV Medicine; or 

(2) Is board certified, or has earned a Certificate of Added Qualifica- 
tion, in the field of HIV medicine granted by a member board of the 
American Board of Medical Specialties, should a member board of that 
organization establish board certification, or a Certificate of Added 
Qualification, in the field of HIV medicine; or 

(3) Is board certified in the field of infectious diseases by a member 
board of the American Board of Medical Specialties and meets the fol- 
lowing qualificadons: 

(A) In the immediately preceding 12 months has clinically managed 
medical care to a minimum of 25 patients who are infected with HIV; and 

(B) In the immediately preceding 12 months has successfully com- 
pleted a minimum of 15 hours of category 1 continuing medical educa- 
tion in the prevenUon of HIV infection, combined with diagnosis, treat- 
ment, or both, of HIV-infected patients, including a minimum of 5 hours 
related to antiretroviral therapy per year; or 

(4) Meets the following qualifications: 

(A) In the immediately preceding 24 months has clinically managed 
medical care to a minimum of 20 pafients who are infected with HIV; and 

(B) Has completed any of the following: 

1 . In the immediately preceding 1 2 months has obtained board certifi- 
cation or recertificafion in the field of infecfious diseases from a member 
board of the American Board of Medical Specialties; or 

2. In the immediately preceding 12 months has successfully com- 
pleted a minimum of 30 hours of category 1 continuing medical educa- 
tion in the prevention of HIV infection, combined with diagnosis, treat- 
ment, or both, of HIV-infected patients; or 

3. In the immediately preceding 12 months has successfully com- 
pleted a minimum of 15 hours of category 1 continuing medical educa- 
tion in the prevention of HIV infection, combined with diagnosis, treat- 
ment, or both, of HIV-infected patients and has successfully completed 
the HIV Medicine Competency Maintenance Examination administered 
by the American Academy of HIV medicine. 

(f) When authorizing a standing referral to a specialist pursuant to Sec- 
tion 1374.16(a) of the Act for the purpose of the diagnosis or treatment 
of a condition requiring care by a physician with a specialized knowledge 
of HIV medicine, a health care service plan must refer the enrollee to an 
HIV/AIDS specialist. When authorizing a standing referral to a specialist 
for purposes of having that specialist coordinate the enrollee' s health 
care pursuant to Section 1374.16(b) of the Act for an enrollee who is in- 
fected with HIV, a health care service plan must refer the enrollee to an 
HIV/ AIDS specialist. The HIV/AIDS specialist may utilize the services 
of a nurse practitioner or physician assistant if: 

(1) The nurse practitioner or physician assistant is under the supervi- 
sion of an HIV/ AIDS specialist; and 

(2) The nurse pracfifioner or physician assistant meets the qualifica- 
tions specified in subsecfion (e)(4); and 

(3) The nurse practitioner or physician assistant and that provider' s su- 
pervising HIV/AIDS specialist have the capacity to see an additional pa- 
fient. 

(g) Subsection (f) does not require a health care service plan to refer 
an enrollee to any provider who is not employed by or under contract with 
the health care service plan to provide health care services to its enrollees, 
unless there is no HIV/AIDS specialist, or appropriately qualified nurse 
pracfifioner or physician assistant under the supervision of an HIV/AIDS 
specialist, within the plan' s network appropriate to provide care to the en- 



Page 64.9 



Register 2008, No. 2; 1 -11-2008 



§ 1300.74.30 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



roUee. as determined by the primary care physician in consuUation with 
the plan medical director. 

Note: Authority cited: Section 1344, Health and Safety Code. Reference: Sec- 
tions 1344 and 1374.16, Health and Safety Code. 

History 
1 . Renumbering of former section 1 300.67.60 to new .section 1 300.74. 1 6, includ- 
ing repealer of subsections (h)-(i), filed 1-10-2008; operative 2-9-2008 (Reg- 
ister 2008, No. 2). 

§ 1300.74.30. Independent Medical Review System. 

(a) Plan enrollees may request independent medical review pursuant 
to this regulation for decisions that are eligible for independent medical 
review under Article 5.55 and section 1 370.4 of the Act. The independent 
medical review process shall resolve decisions that deny, modify, or 
delay health care services, that deny reimbursement for urgent or emer- 
gency services or that involve experimental or investigational therapies. 
Specialized plans shall provide for independent medical reviews under 
this section if a covered service relates to the practice of medicine or is 
provided pursuant to a contract with a health plan providing medical, sur- 
gical and hospital services. The Department shall be the final arbiter 
when there is a question as to whether a dispute over a health care service 
is eligible for independent medical review, and whether extraordinary 
and compelling circumstances exist that waive the requirement that the 
enrollee first participate in the plan's grievance system. 

(b) An enrollee may apply for an independent medical review under 
the conditions specified in Section 1374.30(j) of the Act. The Depart- 
ment may waive the requirement that the enrollee participate in the plan's 
grievance process if the Department determines that extraordinary and 
compeUing circumstances exist, which include, but are not limited to, se- 
rious pain, the potential loss of Hfe, limb or major bodily function, or the 
immediate, and serious deterioration of the health of the enrollee. 

(c) In cases involving a claim for out of plan emergency or urgent ser- 
vices that a provider determined were medically necessary, the indepen- 
dent medical review shall determine whether the services were emergen- 
cy or urgent services necessary to screen and stabiUze the enrollee' s 
condition. For purposes of this section "emergency services" are services 
for emergency medical conditions as defined in section 1300.71 .4 of title 
28, and "urgent services" are all services, except emergency services, 
where the enrollee has obtained the services without prior authorization 
from the plan, or from a contracting provider. 

(d) Applications for independent medical review shall be submitted on 
a one-page form entitled Independent Medical Review Application 
(DMHC IMR 1 1/00), which is incorporated by reference, and shall be 
provided by the Department. The form shall contain a signed release 
from the enrollee, or a person authorized pursuant to law to act on behalf 
of the enrollee, authorizing release of medical and treatment information. 
Additionally, the enrollee may provide any relevant material or docu- 
mentation with the application including, but not limited to: 

( 1 ) A copy of the adverse determination by the plan or contracting pro- 
vider notifying the enrollee that the request for health care services was 
denied, delayed or modified, in whole or in part, based on the determina- 
tion that the service was not medically necessary; 

(2) Medical records, statements from the enrollee' s provider or other 
documents establishing that the dispute is eligible for review; 

(3) A copy of the grievance requesting the health care service or bene- 
fit filed with the plan or any entity with delegated authority to resolve 
grievances, and the response to the grievance, if any; 

(4) If expedited review is requested for a decision eligible for indepen- 
dent medical review pursuant to Article 5.55 of the Act, the application 
shall include, a certification from the enrollee' s physician or provider in- 
dicating that an imminent and serious threat to the health of the enrollee 
exists. If expedited review is requested for a decision eligible for inde- 
pendent medical review pursuant to section 1370.4 of the Act, the ap- 
plication shall include a certification from the enrollee' s physician that 
the proposed therapy would be significantly less effective if not promptly 
initiated. 



(e) If additional information is needed to complete an application or 
to determine the enrollee' s eligibility for independent medical review, 
the Department shall advise the enrollee or the enroUee's representative, 
the enrollee's provider, the enrollee's health care plan or the enrollee's 
attending physician, as appropriate, by the most efficient means avail- 
able. 

(0 The Department shall evaluate complaints received under subsec- 
tion (b) of Section 1368 of the Act and applications submitted under this 
regulation and determine whether the enrollee is eligible for an indepen- 
dent medical review. The Department's determination will consider all 
information provided to the Department, the enrollee's medical condi- 
tion and the disputed health care service. If the Department determines 
that the case should not be referred to independent medical review, the 
request shall be considered a coniplaint under subsection (b) of Section 
1 368 and sections 1 300.68 and 1 300.68.01 . The enrollee or the enrollee's 
representative, health plan and any involved provider shall be advised of 
the Department's determination. 

( 1 ) The request for independent medical review shall be filed with the 
Department within six months of the plan's written response to the en- 
rollee's grievance. The six-month period does not begin to run until the 
enrollee, or the enrollee's representative, has been properly notified in 
writing of the plan's resolution of the grievance. Applications will not be 
rejected as untimely solely because the enrollee, the enrollee's provider, 
or the plan failed to submit supporting documentation. Requests for ex- 
tensions or late applications shall be approved if a timely submission was 
reasonably impaired by inadequate notice of the independent medical re- 
view process or by the applicant's medical circumstances. 

(2) An application will not be eligible for independent medical review 
if the enrollee's complaint has previously been submitted and reviewed 
by the Department. Exceptions may be approved if the application for in- 
dependent medical review includes medical records and a statement from 
the enrollee's physician or provider demonstrating significant changes 
in the enrollee's medical condition or in medical therapies available have 
occurred since the Department's disposition of the complaint. 

(3) Enrollees of Medi-Cal health care service plans are eligible for an 
independent medical review if the enrollee has not presented the disputed 
health care service for resolution by the Medi-Cal fair hearing process. 
Reviews shall be conducted in accordance with the statutes and regula- 
tions of the Medi-Cal program. 

(4) This regulation applies to Medicare enrollees, to the extent the reg- 
ulation does not conflict with federal law, including 42 USCS 
§ 1395w-26(2004). 

(g) Except for Medi-Cal enrollees, and Medicare enrollees exempted 
by federal law, as described at subsection (f)(4), the independent medical 
review system established pursuant to this section shall be the exclusive 
independent medical review process offered to enrollees for disputes in- 
volving the medical necessity of covered health care services. Nothing 
in this section shall preclude a health plan from offering other indepen- 
dent review processes for disputes that do not involve medical necessity. 

(h) When the Department finds that a plan fails to advise an enrollee 
of the availability of independent medical review as required under 
Health and Safety Code section 1374.30(1), or engages in a practice of 
mischaracterizing determinations substantially based on medical neces- 
sity as coverage decisions, or otherwise interferes with the rights of en- 
rollees to obtain independent medical review, the Department shall im- 
pose administrative penalties on the plan in accordance with the Act. 

(i) The director shall notify the enrollee and the enrollee's health care 
plan if an application for independent medical review has been accepted 
within seven (7) calendar days of receipt of a completed application for 
a routine request and within 48 hours of receipt of a completed applica- 
tion for an expedited review. The notification shall identify the indepen- 
dent medical review organization, whether the review shall be conducted ^|||^ 
on an expedited or routine basis and other information deemed necessary ^^H 
by the Department. The director shall also transmit to the enrollee's ^^^ 
health care plan a copy of the enrollee's signed release of medical and 



Page 64.10 



Register 2008, No. 2; 1-11-2008 



Title 28 



The Department of Managed Health Care 



§ 1300.74.72 



treatment information and copies of all other materials submitted with the 
enrollee's application. 

0) Following receipt of the Department's notification that an applica- 
tion for independent medical review has been assigned to an independent 
medical review organization, the plan shall provide the organization with 
all information that was considered in relation to the disputed health care 
service, the enrollee's grievance and the plan's determination. The plan 
shall forward all information to the medical review organization within 
three (3) business days for a regular review and within one (1) calendar 
day in the case of an expedited review. 

{ I ) Unless otherwise advised in the notification or by the assigned re- 
view organization, the plan shall submit a complete set of the materials 
described below for the independent review organization. 

(A) A copy of all correspondence from and received by the plan con- 
cerning the disputed health care service, including but not limited to, any 
enroUee grievance relating to the requested service; 

(B) A complete and legible copy of all medical records and other in- 
formation used by the plan in making its decision regarding the disputed 
health care service. An additional copy of medical records shall be sub- 
mitted for each reviewer. 

(C) A copy of the cover page of the evidence of coverage and complete 
pages with the referenced sections highlighted or underlined sections, if 
the evidence of coverage was referenced in the plan's resolution of the 
enrollee's grievance; 

(D) The plan's response to any additional issues raised in the enroll- 
ee's application for independent medical review. 

(2) The plan shall promptly provide the enrollee with an annotated list 
of all documents submitted to the independent medical review organiza- 
tion, together with information on how copies may be requested. 

(k) Plans shall be responsible for providing additional information as 
follows: 

( 1 ) Any medical records or other relevant matters not available at the 
time of the Department's initial notification, or that result from the enroll- 
ee's on-going medical care or treatment for the medical condition or dis- 
ease under review. Such matters shall be forwarded as soon as possible 
upon receipt by the health plan, not to exceed five (5) business days in 
routine cases or one (1 ) calendar day in expedited cases. 

(2) Additional medical records or other information requested by the 
IMR organization shall be sent within five (5) business days in routine 
cases or one (1) calendar day in expedited cases. In expedited reviews, 
the health care plan shall immediately notify the enrollee and the enroll- 
ee's health care provider by telephone or facsimile to identify and request 
the necessary information, followed by written notification, when the re- 
quest involves materials not in the possession of the plan or its contract- 
ing providers. 

(/) Each assigned reviewer shall issue a separate written analysis of the 
case, explaining the determination made, using plain English where pos- 
sible. The analysis shall describe how the determination relates to the en- 
rollee's medical condition and history, relevant medical records and oth- 
er documents considered, and references to the specific medical and 
scientific evidence listed in Sections 1 370.4(d) or 1374.33(b) of the Act, 
as applicable. For requests made pursuant to Article 5.55 of the Act, re- 
viewers shall determine whether the disputed service is medically neces- 
sary for the enrollee. For requests made pursuant to section 1 370.4 of the 
Act, the reviewers shall determine whether the requested therapy is likely 
to be more beneficial for the enrollee then other available standard thera- 
pies, and whether the plan shall provide the requested therapy. Reviews 
based on section 1300.70.4 of these regulations shall also reference the 
medical and scientific evidence considered in assessing whether the re- 
quested health care service is likely to be more beneficial than other 
available standard therapies. The analysis may also discuss the risks and 
benefits considered by the reviewer in considering proposed and stan- 
dard treatments. 

(m) The Department, the enrollee, or his/her representative may with- 
draw a case from the independent review system at any time. The plan 



may seek withdrawal of the case from the review system by providing the 
disputed health care service, subject to the concurrence of the enrollee. 
NOTE; Authority cited: Section 1344, Health and Safety Code. Keterence: Sec- 
tions 13704, 1374.30 and 1374.33, Health and Safety Code. 

History 

1. New section filed 2-18-2003; operative 3-20-2003 (Register 2(X)3, No. X). 

2. New subsection (0(4) and amendment of subsection (g) filed 7-2S~2()().'>: op- 
erative 8-24-2003 (Register 2005. No. 30). 

§1300.74.72. Mental Health Parity. 

(a) The mental health services required for the diagnosis, and treat- 
ment of conditions set forth in Health and Safety Code section 1374.72 
shall include, when medically necessary, all health care services required 
under the Act including, but not limited to, basic health care services 
within the meaning of Health and Safety Code sections 1345(b) and 
1367(i), and section 1300.67 of Title 28. These basic health care services 
shall, at a minimum, include crisis intervention and stabilization, psy- 
chiatric inpatient hospital services, including voluntary psychiatric inpa- 
tient services, and services from licensed mental health providers includ- 
ing, but not limited to, psychiatrists and psychologists. 

(b) A plan shall provide coverage for the diagnosis and medically nec- 
essary treatment of conditions set forth in Health and Safety Code section 
1374.72 through health care providers within the meaning of Health and 
Safety Code section 1345(i) who are: 

(1) acting within the scope of their licensure, and 

(2) acting within their scope of competence, established by education, 
training and experience, to diagnose, and treat conditions set forth in 
Health and Safety Code section 1374.72. 

(c) A diagnosis within the meaning of Health and Safety Code section 
1374.72 shall be made in accordance with professionally recognized 
diagnostic criteria including, but not limited to, the diagnostic criteria set 
forth in the Diagnostic and Statistical Manual for Mental Disorders — IV 
— Text Revision (June 2000). 

(d) A preliminary or initial diagnosis made by a primary care physi- 
cian, mental health provider or pediatrician meeting the requirements of 
subsection (b) above, that an enrollee has one or more of the conditions 
set forth in Health and Safety Code section 1374.72. shall constitute the 
diagnosis for the length of time necessary to make a final diagnosis, 
whether or not the final diagnosis confirms the preliminary or initial diag- 
nosis. 

(e) "Pervasive Developmental Disorders" shall include Autistic Dis- 
order, Rett's Disorder, Childhood Disintegrative Disorder, Asperger's 
Disorder and Pervasive Developmental Disorder Not Otherwise Speci- 
fied (including Atypical Aufism), in accordance with the Diagnostic and 
Statistical Manual for Mental Disorders — IV — Text Revision (June 
2000). 

(f) A plan's referral system shall provide enrollees umely access and 
ready referral, in a manner consistent with good professional practice, to 
mental health services for the purpose of diagnosis and medically neces- 
sary treatment of conditions set forth in Health and Safety Code section 
1374.72 and for related health care services as appropriate upon referral 
from a primary care physician, mental health provider or pediatrician 
meefing the requirements of subsection (b) above. 

(g) If a plan contracts with a specialized health care service plan for 
the purpose of providing Health and Safety Code secfion 1374.72 ser- 
vices, the following requirements shall apply: 

(1 ) the specialized health care service plan shall maintain a telephone 
number that an enrollee may call during normal business hours to obtain 
information about benefits, providers, coverage and any other relevant 
information concerning an enrollee's mental health services; 

(2) if the plan issues identification cards to enrollees, the identification 
cards shall include the telephone number required to be maintained 
above and a brief statement indicating that enrollees may call the tele- 
phone number for assistance about mental health services and coverage; 

(3) the plan shall monitor the continuity and coordination of care that 
enrollees receive, and take action, when necessary, to assure continuity 



Page 64.11 



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§ 1300.75 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



and coordination of care, in a manner consistent witii professionally rec- 
ognized evidence-based standards of practice, across the health care net- 
work; 

(4) the plan shall monitor, as often as necessary, but not less frequently 
than once every year, the collaboration between medical and mental 
health providers including, but not limited to, the following: 

(A) exchange of information, 

(B) appropriate diagnosis, treatment and referral, and 

(C) access to treatment and follow-up for enroUees with co-existing 
medical and mental health disorders; 

(5) the plan shall retain full responsibility for assuring continuity and 
coordination of care, in accordance with the requirements of this subsec- 
tion, notwithstanding that, by contract, it has obligated a specialized 
health care service plan to perform some or all of these activities. 

(h) Nothing in this section shall be construed to mandate coverage of 
services that are not medically necessary or preclude a plan from per- 
forming utihzation review in accordance with the Act. 

(i) A plan shall include in its Evidence of Coverage or Combined Evi- 
dence of Coverage and Disclosure Form a list of mental conditions re- 
quired to be covered pursuant to Health and Safety Code section 1 374.72. 
NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Sec- 
lions 1345, 1367 and 1374.72, Health and Safety Code. 

History 
1 . New section filed 9-23-2003; operative 10-23-2003 (Register 2003, No. 39). 



Article 9. Financial Responsibility 

§ 1300.75. Agreements with Subsequent Providers. 

NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Stats. 
1978, Ch. 285. 

History 
1 . Repealer filed 9-27-79; effective thirtieth day thereafter (Register 79. No. 39). 

§ 1300.75.1. Fiscal Soundness, Insurance, and Other 
Arrangements. 

(a) A plan shall demonstrate fiscal soundness and assumption of full 
financial risk as follows: 

( 1 ) Demonstrate through its history of operations and through projec- 
tions (which shall be supported by a statement as to the facts and assump- 
tions upon which they are based) that the plan's arrangements for health 
care services and the schedule of its rates and charges are financially 
sound, and provide for the achievement and maintenance of a positive 
cash flow, including provisions for retirement of existing and proposed 
indebtedness. 

(2) Demonstrate that its working capital is adequate, including provi- 
sions for contingencies. 

(3) Demonstrate an approach to the risk of insolvency which allows 
for the continuation of benefits for the duration of the contract period for 
which payment has been made, the continuation of benefits to subscrib- 
ers and enroUees who are confined on the date of insolvency in an in-pa- 
tient facility until their discharge, and payments to unaffiliated providers 
for services rendered. 

(b) As a part of its program pursuant to subsection (a), a plan may ob- 
tain insurance or make other arrangements: 

( 1) For the cost of providing to any member covered health care ser- 
vices the aggregate value of which exceeds $5,000 in any year; 

(2) For the cost of covered health care services provided to its members 
other than through the plan because medical necessity required their pro- 
vision before they could be secured through the plan; and 

(3) For not more than 90 percent of the amount by which its costs for 
any of its fiscal years exceed 1 15 percent of its income for such fiscal 
year. 

(c) In passing upon a plan's showing pursuant to this secfion. the Di- 
rector will consider all relevant factors, including but not limited to: 

(1) The method of compensating providers and the terms of provider 
contracts, especially as to the obligations of providers to subscribers and 
enroUees in the event of plan insolvency. 



(2) The methods by which the plan controls and monitors the utiliza- 
tion of health care services. 

(3) The administrative expenses (actual and projected) of the plan and 
especially as to new or expanding plans, the fiscal soundness of its pro- 
gram to acquire and service an expanded subscriber populafion. 
NOTE: Authority cited: Section 1.344, Health and Safety Code. Reference: Section 
1375.1, Health and Safety Code. 

History 

1 . Repealer and new section filed 9-27-79; effective thirtieth day thereafter (Reg- 
ister 79, No. 39). 

2. Amendment filed 12-8-82; effective thirtieth day thereafter (Reeister 82, No. 
50). 

3. Change without regulatory effect amending subsection (c) filed 7-1 8-2000 pur- 
suant to section 100, title I , California Code of Regulations (Register 2000, No. 
29). 

§ 1300.75.2. Plan As Subsequent Provider. 

NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Stats. 
1978, Ch. 285. 

History 

1 . Repealer filed 9-27-79: effective thirtieth day thereafter (Register 79, No. 39). 

§ 1300.75.3. Subsequent Provider Exemption. 

Note: Authority cited: Section 1344, Health and Safety Code. Reference: Stats. 
1978, Ch. 285. 

History 
1. Repealer filed 9-27-79; effective thirtieth day thereafter (Register 79, No. 39). 



RISK-BEARING ORGANIZATIONS 

§1300.75.4. Definitions. 

As used in these Solvency Regulafions: 

(a) "External party" means the Department of Managed Health Care 
or its designated agent, which may be contracted or appointed to fulfill 
the functions stated in these Solvency Regulations. Whenever these Sol- 
vency Regulations reference the Department of Managed Health Care 
that reference means the Department of Managed Health Care (Depart- 
ment) or its designated agent. 

(b) "Organizafion" means a risk-bearing organizauon as defined in 
Health and Safety Code Secfion 1375.4(g). 

(c) "Plan" means full-service health care service plan, as defined by 
Health and Safety Code secfion 1345(f). 

(d) "Risk arrangement" is defined to include both "risk-sharing ar- 
rangement" and "risk-shifting arrangement," which are defined as fol- 
lows: 

(1) "Risk-sharing arrangement" means any compensafion arrange- 
ment between an organization and a plan under which the organizafion 
shares the risk of financial gain or loss with the plan. 

(2) "Risk-shifting arrangement" means a contractual arrangement be- 
tween an organization and a plan under which the plan pays the organiza- 
fion on a fixed, periodic or capitated basis, and the financial risk for the 
cost of services provided pursuant to the contractual arrangement is as- 
sumed by the organization. 

(e) "Solvency Regulafions" means secfions 1300.75.4 through 
1 300.75.4.8 of TiUe 28 of the California Code of Regulafions. 

(f) "Cash-to-claims ratio" is an organizafion' s cash, readily available 
marketable securities and receivables, excluding all risk pool, risk-shar- 
ing, incentive payment program and pay-for-performance receivables, 
reasonably anficipated to be collected within 60 days divided by the orga- 
nizafion's unpaid claims (claims payable and incurred but not reported 
[IBNR] claims) liability. 

(g) "Correcfive acfion plan" (CAP) means a plan reflected in a docu- 
ment containing requirements for correcting and monitoring an orga- 
nization's efforts to correct any financial solvency deficiencies in the 
Grading Criteria or other financial or other claims payment deficiencies, 
determined through the Department' s review or audit process, indicating 
that the organization may lack the capacity to meets its contractual ob- 
ligations consistent with the requirements of section 
1300.70(b)(2)(H)(l) of Title 28, California Code of Regulations. 



Page 64.12 



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Title 28 



The Department of Managed Health Care 



§ 1300.75.4.1 



• 



(h) "Grading Criteria" means the four grading/reviewing criteria spe- 
cified in Health and Safety Code sections 1375.4(b)(l)(A)(i), (ii). (iii), 
and (iv) and the cash-to-claims ratio as defined in subsection (f) above. 

(i) "In a manner that does not adversely affect the integrity of the con- 
tract negotiation process" means the disclosure of an organization's fi- 
nancial data submissions in a format that does not impair the organiza- 
tion's ability to negotiate its contracts for the delivery of health care 
services or does not allow a contracting party to calculate: (1) an orga- 
nization's precise profit/loss margins on any line of business, or (2) the 
rates that the organization has negotiated with any contracting entity or 
vendor during a prior accounting period. 

NOTE: Authority cited: Sections 1 344 and 1 37.'S.4, Health and Safety Code. Refer- 
ence: Section 1375.4, Health and Safety Code. 

History 

1 . New section filed 3-22-2001 as an emergency; operative 3-22-2001 (Register 
2001. No. 12). A Certificate of Compliance must be transmitted to OAL by 
7-20-2001 or emergency language will be repealed by operation of law on the 
following day. 

2. Certificate of Compliance as to 3-22-2001 order, including amendment of sub- 
section (d)(1). transmitted to OAL 7-20-2001 and filed 8-31-2001 (Register 
2001. No. 35). 

3. Amendment of first paragraph and subsections (a)-(e) and new subsections 
(f)-(i) filed 8-10-2005; operative 9-9-2005 (Register 2005, No. 32). 

4. Change without regulatory effect amending subsection (i) filed 12-14-2005 
pursuant to section 100, title 1 , California Code of Regulations (Register 2005, 
No. 50). 

§ 1300.75.4.1. Risk Arrangement Disclosure. 

(a) Every contract involving a risk arrangement between a plan and an 
organization shall require the plan to do all of the following: 

(1) Disclose through electronic transmission (or in writing, if agree- 
able to both the organization and the plan) to the organization, on a 
monthly basis, beginning with the month of May, 2001, within 10 calen- 
dar days of the beginning of each report month, the following informa- 
tion for each enrollee assigned to the organization: member identification 
number, name, birth date, gender, address (including zip code), plan con- 
tract selected, employer group identification, the identity of any other 
third party coverage, if known to the health plan, enrollment/disenrol- 
Iment dates, medical group/IPA number, provider effective date, type of 
change to coverage, co-payment, deductible, the amount of capitation to 
be paid per enrollee per month, and the primary care physician when the 
selection of a primary care physician is required by the plan. 

(2) Disclose through electronic transmission (or in writing, if agree- 
able to both the organization and the plan) to the organization, on a 
monthly basis, beginning with the month of May, 2001, within 10 calen- 
dar days of the beginning of each report month, the names, member iden- 
tification numbers, and total numbers of enroUees added or terminated 
under each benefit plan contract served by the organization. 



(3) If the information provided in paragraphs ( 1 ) and (2) is provided 
in more than one report, the plan will disclose through electronic trans- 
mission (or in writing, if agreeable to both the organization and the plan) 
to the organization, on a quarteriy basis, within 45 calendar days of the 
close of each quarter, a reconciliation of the variances between the in- 
formation provided in paragraphs (1) and (2) above. Beginning no later 
than January J , 2002. if the inforination in paragraphs ( I ) and (2) is pro- 
vided in more than one report, all reports shall be processed as of the same 
date. 

(4) On or before October 1 , 20O1 , and annually thereafter on the con- 
tract anniversary date, disclose to the organization, for the purpose of as- 
sisting the organization to be informed regarding the financial risk as- 
sumed under the contract, the following information for each and every 
type of risk arrangement (Medicare-i-Choice, Medi-Cal, traditional com- 
mercial. Point of Service, small group, and individual plans) under the 
contract: 

(A) a matrix of responsibility for medical expenses (physician, institu- 
tional, ancillary, and pharmacy) which will be allocated to the organiza- 
tion, facility, or the plan under the risk arrangement; 

(B) expected/projected utilization rates and unit costs for each major 
expense service group (inpatient, outpatient, primary care physician, 
specialist, pharmacy, home health, durable medical equipment (DME), 
ambulance and other), the source of the data and the actuarial methods 
employed in determining the utilization rates and unit costs by benefit 
plan type for the type of risk arrangement; and 

(C) all factors used to adjust payments or risk-sharing targets, includ- 
ing but not limited to the following: age, sex. localized geographic area, 
family size, experience rated, and benefit plan design, including copay- 
ment/deductible levels. 

(5) Beginning with the first quarter of calendar year 2001, disclose 
through electronic transmission (or in writing, if agreeable to both the or- 
ganization and the plan) to the organization, on a quarteriy basis, within 
45 calendar days of the close of each quarter, a detailed description of 
each and every amount (including expenses and income) that is sufficient 
to allow verification of the amounts allocated to the organization and to 
the plan under each and every risk-sharing arrangement. Where applica- 
ble, the following information, at a minimum, shall be provided: 1. the 
total number of member months; 2. the total budget allocation for the 
member months; 3. the total expenses paid during the period; 4. a descrip- 
tion of the incurred but not reported (IBNR) claims methodology used for 
incurred expenses during the period; and 5. a description of each and ev- 
ery amount of expense allocated to the risk arrangement by member iden- 
tification number, date of service, description of service by claim codes, 
net payment and date of payment. 



[The next page is 65.] 



Page 64.13 



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Title 28 



The Department of Managed Health Care 



§ 1300.75.4.2 



(6) For all risk-sharing arrangements, provide the organization with 
a preliminary payment report consistent with the requirements of para- 
graph (5) no later than 1 50 days and payment no later than 1 80 days after 
the close of the organization's contract year, or the contract termination 
date, whichever occurs first. 

(b) In addition to the disclosures required by subsection (a) of this reg- 
ulation, every contract involving a risk-sharing arrangement between a 
plan and an organization shall require the plan to disclose, on or before 
October 1, 2001, and annually thereafter on the contract anniversary 
date, the amount of payment for each and every service to be provided 
under the contract, including any fee schedules or other factors or units 
used in determining the fees for each and every service. To the extent that 
reimbursement is made pursuant to a specified fee schedule, the contract 
shall incorporate that fee schedule by reference, and further specify the 
Medicare RBRVS yearif RBRVS is the methodology used for fee sched- 
ule development. For any proprietary fee schedule, the contract must in- 
clude sufficient detail that payment amounts related to that fee schedule 
can be accurately predicted. 

(c) In addition to the disclosures required by subsection (a) of this reg- 
ulation, every contract involving a risk-shifting arrangement between a 
plan and an organization shall require the plan to disclose, on or before 
October 1, 2001, and annually thereafter on the contract anniversary 
date, in the case of capitated payment, the amount to be paid per enrollee 
per month. For any deductions that the plan may take from any capitation 
payment, details sufficient to allow the organization to verify the accura- 
cy and appropriateness of the deduction shall be provided. 

NOTE: Authority cited: Sections 1344 and 1375.4, Health and Safety Code. Refer- 
ence: Section 1375.4, Health and Safety Code. 

History 

1 . New section filed 3-22-2001 as an emergency; operative 3-22-2001 (Register 
2001, No. 12). A Certificate of Compliance must be transmitted to OAL by 
7-20-2001 or emergency language will be repealed by operation of law on the 
following day. 

2. Certificate of Compliance as to 3-22-2001 order, including amendment sec- 
tion, transmitted to OAL 7-20-2001 and filed 8-31-2001 (Register 2001. No. 
35). 

§ 1300.75.4.2. Organization Information. 

Every contract involving a risk arrangement between a plan and an or- 
ganization shall require the organization to do the following: 

(a) Beginning January 1 , 2006 maintain at all times a minimum "cash- 
to-claims ratio," as defined in section 1 300.75.4(f), of 0.60 that shall be 
increased according to the following schedule: 

( 1 ) Beginning on July 1 , 2006 the minimum cash-to-claims ratio shall 
be 0.65; and 

(2) Beginning on January 1, 2007 and thereafter the minimum cash- 
to-claims ratio shall be 0.75. 

(b) Quarterly Financial Survey. For each quarter beginning on or after 
July 1 , 2005 submit to the Department, not more than forty-five (45) days 
after the close of each quarter of the fiscal year, a quarterly financial sur- 
vey report in an electronic format to be supplied by the Department of 
Managed Health Care (Department) pursuant to section 1300.41.8 of 
Title 28. California Code of Regulations, containing all of the following: 

(1) For organizations serving at least 10,000 covered lives under all 
risk arrangements as of December 31 of the preceding calendar year: 

(A) Financial survey report (including a balance sheet, an income 
statement, and a statement of cash flows), or in the case of a nonprofit en- 
tity comparable financial statements and supporting schedule informa- 
tion (including but not limited to, aging of receivable information), re- 
flecting the results of operations for the immediately preceding quarter, 
prepared in accordance with generally accepted accounting principles 
(GAAP) and the identification of the individual or office in the organiza- 
tion designated to receive public inquiries. Financial survey reports of an 
organization required pursuant to these rules shall be on a combining ba- 
sis with an affiliate, if the organization or such affiliate is legally or finan- 
cially responsible for the payment of the organization's claims. Any affil- 
iated entity included in this report shall be separately identified reported 
in a combining schedule format. For the purposes of this section, an orga- 



nization's use: 1. of a "sponsoring organization" arrangement to reduce 
its liabilities for the purposes of calculating tangible net equity and work- 
ing capital or 2. an affiliated entity to provide claims processing services 
shall not be construed to automatically create a legal or financial obliga- 
tion to pay the claims liability for the health care services for enrollees. 

(B) A statement as to what percentage of completed claims the orga- 
nization has timely reimbursed, contested, or denied during the quarter 
in accordance with the requirements of Health and .Safety Code sections 
1371. and 1371.35, section 1300.71 ofTitle 28 of the California Code of 
Regulations, and any other applicable state and federal laws and regula- 
tions. If less than 95% of all complete claims have been reimbursed, con- 
tested or denied on a timely basis, the statement shall be accompanied by 
a report that describes the reasons why the claims adjudication process 
is not meeting the requirements of applicable law. any action taken to cor- 
rect the deficiency, and any results of that action. This claims payment 
report is for the purpose of monitoring the financial solvency of the orga- 
nization and is not intended to change or alter existing state and federal 
laws and regulations relating to claims payment settlement practices and 
timeliness. 

(C) A statement as to whether or not: 1. the organization has estimated 
and documented, on a monthly basis, its liability for IBNR claims, pur- 
suant to a method specified in section 1 300.77.2, and 2. the estimates are 
the basis for the quarterly financial survey report submitted under these 
Solvency Regulations. If the estimated and documented liability has not 
met the requirements of section 1300.77.2 in any way, a statement shall 
be included in the quarterly financial survey report that describes in detail 
the following with respect to each deficiency: the nature of the deficien- 
cy, the reasons for the deficiency, the action taken to correct the deficien- 
cy, and the results of that action. An organization failing: a. to estimate 
and document, on a monthly basis, its liability for IBNR claims or b. to 
maintain its books and records on an accrual accounting basis shall be 
deemed to have failed to maintain, at all times, positive tangible net equi- 
ty (TNE) and positive working capital as set forth in subsection (D) be- 
low. 

(D)l. A statement as to whether or not the organization has at all times 
during the quarter maintained positive TNE, as defined in section 
1300.76(e) of Title 28 California Code of Regulations; and has at all 
times during the quarter maintained positive working capital, calculated 
in a manner consistent with GAAP. If either the required TNE or the re- 
quired working capital has not been maintained at all times, a statement 
shall be included in the quarterly financial survey report that describes 
in detail the following, with respect to each deficiency: the nature of the 
deficiency, the reasons for the deficiency, any action taken to correct the 
deficiency, and any results of that action. 

2. The organization may reduce its liabilities or increase its cash for 
purposes of calculating its TNE, working capital and cash-to-claims ra- 
tio in a manner allowed by Health and Safety Code section 
1375.4(b)(1)(B) so long as the sponsoring organization has filed with the 
Department: a. its audited annual financial statements within 120 days of 
the end of the sponsoring organization's fiscal year and b. a copy of the 
written guarantee meeting the requirements of Health and Safety Code 
section 1375.4(b)(1)(B). For purposes of Health and Safety Code section 
1375.4(b)(1)(B), a sponsoring organization shall have a TNE of at least 
twice the total of all amounts that it has guaranteed to all persons and enti- 
ties, or a lesser amount in situations where the organization can demon- 
strate to the Director's satisfaction and written approval that a lesser 
amount of TNE is sufficient. If an organization has a sponsoring orga- 
nization, the organization shall provide information to the Department 
demonstrating the capacity of the sponsoring organization to guarantee 
the organization's debts, as well as the nature and scope of the guarantee 
provided, consistent with Health and Safety Code section 
1375.4(b)(1)(B). 

(E) For the quarter beginning on or after January 1 , 2006, a statement 
as to whether or not the organization has, at all times during the quarter, 
maintained a cash-to-claims ratio as required in section (a), calculated 
in a manner consistent with GAAP. If the required cash-to-claims ratio 



Page 65 



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§ 1300.75.4.2 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



has not been maintained at all times, a statement shall be included in the 
quarterly financial survey report that describes in detail the following 
with respect to the deficiency: the nature of the deficiency, the reasons 
for the deficiency, any action taken to correct the deficiency, and any re- 
sults of that action. 

(2) For organizations serving less than 10,000 covered lives under all 
risk arrangements as of December 31 of the preceding calendar year: 

(A) The disclosure statement(s) set forth in sections (b)( 1 )(B), (C), (D) 
and (E) above. 

(B) In the event an organization serving less than 1 0,000 covered lives 
under all risk arrangements: 1. fails to satisfactorily demonstrate its com- 
pliance with the Grading Criteria; 2. experiences an event that materially 
alters the organization's ability to remain compliant with the Grading 
Criteria; 3. is found, by the external party's review or audit activities, to 
potentially lack sufficient financial capacity to continue to accept finan- 
cial risk for the delivery of health care services consistent with the re- 
quirements of section 1300.70(b)(2)(H)(l); or 4. is found, through the 
Department' s HMO Help Center, medical audits and surveys, or any oth- 
er source, to be delaying referrals, authorizations, or access to basic 
health care services based on financial considerations, the organization 
shall, within 30 calendar days of the Department's written request, begin 
submitting complete quarterly financial survey reports pursuant to sec- 
tion 1300J5.4.2(b)(l). 

(c) Annual Financial Survey. 

( 1 ) Regardless of the number of covered lives served under all risk ar- 
rangements, submit to the Department, not more than one hundred fifty 
(150) days after the close of the organization's fiscal year beginning on 
or after January 1 , 2005, and not more than one hundred fifty ( 1 50) days 
after the close of each of the organization's subsequent fiscal years, an 
annual financial survey report in an electronic format to be supplied by 
the Department pursuant to section 1300.41 .8 of Title 28 California Code 
of Regulations, based upon the organization's annual audited financial 
statement prepared in accordance with generally accepted auditing stan- 
dards, and containing all of the following: 

(2) Annual financial survey report, based upon the organization's 
annual audited financial statements (including at least a balance sheet, an 
income statement, a statement of cash flows, and footnote disclosures), 
or in the case of a nonprofit entity, comparable financial statements, and 
supporting schedule information, (including, but not limited, to aging of 
receivable information and debt maturity information), for the immedi- 
ately preceding fiscal year, prepared by the independent certified public 
accountant in accordance with GAAP. 

(3) Financial survey reports of an organizafion required pursuant to 
these Solvency Regulations shall be on a combining basis with an affili- 
ate if the organization or such affiliate is legally or financially responsible 
for the payment of the organization's claims. Any affiliated enfity in- 
cluded in the report shall be separately identified. For the purposes of this 
section, an organizafion's use of: (A) a "sponsoring organization" ar- 
rangement to reduce its liabilities for the purposes of calculating TNE 
and working capital or (B) an affiliated entity to provide claims proces- 
sing services shall not be construed to automatically create a legal or fi- 
nancial obligation to pay claims liability for health care services for en- 
rollees. 

1 . When combined financial statements are required by this regula- 
tion, the independent accountant's report or opinion must address all the 
entities included in the combined financial statements. If the accoun- 
tant's report or opinion makes reference to the fact that another auditor 
performed a part of the examination, the organizafion shall also file the 
report or opinion issued by the other auditor. 

2. For purposes of determining the independence of the certified pub- 
lic accountant, the regulations of the California State Board of Accoun- 
tancy (Division 1, sections 1 through 99.2, Title 16, California Code of 
Regulafions), shall apply. 

(4) The opinion of the independent certified public accountant indicat- 
ing: (A) whether the organization's annual audited financial statements 
present fairly, in all material respects, the financial position of the orga- 



nization, and whether the financial statements were prepared in accor- 
dance with GAAP. If the opinion is qualified in any way, the survey re- 
port shall include an explanation regarding the nature of the quahfication. 

(5) A statement as to whether or not the organization has estimated and 
documented, on a monthly basis, its liability for IBNR claims, pursuant 
to a method specified in secfion 1300.77.2, and that these esfimates are 
the basis for the financial survey reports submitted under these Solvency 
Regulations. If the estimated and documented liability has not met the re- 
quirements of section 1300.77.2, a statement shall he included in the 
annual financial survey report that describes in detail the following with 
respect to each deficiency: the nature of the deficiency, the reasons for 
the deficiency, the action taken to correct the deficiency, and the results 
of that action. An organization failing: (A) to estimate and document, on 
a monthly basis, its liability for IBNR claims, or (B) to maintain its books 
and records on an accrual accounfing basis, shall be deemed to have 
failed to maintain, at all fimes, positive TNE and positive working capital 
as set forth in subsection (6)(A) below. 

(6)(A) A statement as to whether or not the organization has, at all 
times during the year, maintained posifive TNE, as defined in secfion 
1300.76(e); and has, at all fimes during the year, maintained posifive 
working capital, calculated in a manner consistent with GAAP. If either 
the required TNE or the required working capital has not been maintained 
at all fimes, a statement shall be included in the annual financial survey 
report that describes in detail the following with respect to each deficien- 
cy: the nature of the deficiency, the reasons for the deficiency, any action 
taken to correct the deficiency, and any results of that acfion. 

(B) The organization may reduce its liabilities for purposes of calculat- 
ing its TNE and working capital in a manner allowed by Health and Safe- 
ty Code secfion 1375.4(b)(1)(B), so long as the sponsoring organizafion 
has filed, with the Department: 1 . its audited annual financial statements 
within 120 days of the end of the sponsoring organizafion's fiscal year 
and 2. a copy of the written guarantee meeting the requirements of Health 
and Safety Code section 1375.4(b)(1)(B). For purposes of Health and 
Safety Code section 1375.4(b)(1)(B), a sponsoring organization shall 
have a TNE of at least twice the total of all amounts that it has guaranteed 
to all persons and enfities, or a lesser amount in situafions where the orga- 
nizafion can demonstrate to the Director's satisfaction and written ap- 
proval that a lesser amount of TNE is sufficient. If an organizafion has 
a sponsoring organization, the organization shall provide information to 
the Department demonstrafing the capacity of the sponsoring organiza- 
tion to guarantee the organizafion's debts as well as the nature and scope 
of the guarantee provided consistent with Health and Safety Code section 
1375.4(b)(1)(B). 

(7) For the fiscal year beginning on or after January 1, 2006, a state- 
ment as to whether or not the organizafion has at all times during the year 
maintained a cash-to-claims rafio as required in section (a), calculated 
in a manner consistent with GAAP. If the required cash-to-claims ratio 
has not been maintained at all times, a statement shall be included in the 
quarterly financial survey report that describes in detail the following 
with respect to the deficiency: the nature of the deficiency, the reasons 
for the deficiency, any action taken to correct the deficiency, and any re- 
sults of that acfion. 

(8) A statement as to whether the organization maintains reinsurance 
and/or professional stof>-loss coverage. 

(9) The annual financial survey report shall include, as an attachment, 
a copy of the complete annual audited financial statement, including 
footnotes and the certificate or opinion of the independent certified pub- 
lic accountant. 

(d) Statement of Organizafion Survey. Submit to the external party, a 
"Statement of Organization," in an electronic format, prepared by the 
Department, to be filed along with the annual financial survey report, 
which shall include the following information, as of December 3 1 of each 
calendar year prior to the filing: 

(1) Name and address of the organization; 

(2) A financial and public contact person, with fifie, address, telephone 
number, fax number, and e-mail address; 



Page 66 



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§ 1300.75.4.4 



(3) A list of all health plans with which the organization maintains risk 
arrangements; 

(4) Whether the organization is an Independent Practice Association 
(IPA), Medical Group, Foundation, other entity, or some combination 
thereof. If the organization is a foundation, identify each and every medi- 
cal group within the foundation, and whether any of those medical groups 
independently qualifies as a risk-bearing organization as defined in 
Health and Safety Code section 1375.4(g); 

(5) Whether the organization is a professional corporation, partner- 
ship, not-for-profit corporation, sole proprietor, or other form of busi- 
ness; 

(6) The name, business address and principal officer of each of the or- 
ganization's affiliates as defined in Title 28, California Code of Regula- 
tions, section 1300.45(c)(1) and (2); 

(7) Whether the organization is partially or wholly owned by a hospital 
or hospital system; 

(8) A matrix listing all major categories of medical care offered by the 
organization, including, but not limited to, anesthesiology, cardiology, 
orthopedics, ophthalmology, oncology, obstetrics/gynecology and radi- 
ology. 

(A) Next to each listed category in the matrix, a disclosure of the pri- 
mary compensation model (salary, fee-for-service, capitation, other) 
used by the organization to compensate the majority of providers of that 
category of care; 

(9) An approximation of the number of enrollees served by the orga- 
nization under a risk arrangement, pursuant to a list of ranges developed 
by the Department; 

(10) Any Management Services Organization (MSO) that the orga- 
nization contracts with for administrative services; 

(11) The total number of contracted physicians in employment and/or 
contractual arrangements with the organization; 

(12) Disclosure of the organization's primary service area (excluding 
out-of-area tertiary facilities and providers) by California county or 
counties; 

(13) The identification of the organization's address, telephone num- 
ber and website link, if available, where providers may access written in- 
formation and instructions for filing of provider disputes with the orga- 
nization's Dispute Resolution Mechanism consistent with requirements 
of section 1 300.7 1 .38 of Title 28, California Code of Regulations; and, 

( 14) Provide any other information that the Director deems reasonable 
and necessary, as permitted by law, to understand the operational struc- 
ture and finances of the organization. 

(e) Submit a written verification for each report made under subsec- 
tions (b), (c), and (d) of this section stating that the report is true and cor- 
rect to the best knowledge and belief of a principal officer of the organiza- 
tion, and signed by a principal officer, as defined by section 1300.45(o) 
of Title 28, California Code of Regulations. 

(f) Notify the Department and each contracting health plan no later 
than five (5) business days after discovering that the organization has ex- 
perienced any event that materially alters its financial situation or threat- 
ens its solvency. 

(g) Permit the Department to make any examination that it deems rea- 
sonable and necessary to implement Health and Safety Code section 
1375.4, and provide to the Department, upon request, any books or re- 
cords deemed relevant or useful to implementing this section for inspec- 
tion and copying, as permitted by law. 

NOTE: Authority cited: Sections 1344 and 1 375.4, Health and Safety Code. Refer- 
ence: Section 1375.4, Health and Safety Code. 

History 
1. New section filed 8-10-2005; operative 9-9-2005 (Register 2005, No. 32). For 
prior history, see Register 2002, No. 28. 

§1300.75.4.3. Plan Reporting. 

(a) Plan Quarterly Survey. Every plan that contracts with an organiza- 
tion shall, by May 1 5, 2001 , and not more than forty-five (45) days after 
the close of each subsequent calendar quarter, submit a quarterly survey 
report in an electronic format to the Director listing all its contracting or- 



ganizations, including their names, addresses, contact persons, telephone 
numbers, and number of enrollees assigned to the organization as of the 
last day of the quarter being reported. 

(b) Plan Annual Survey. Along with the quarterly report due May 15. 
2001, and for the report due by May 15 of each subsequent year (i.e.. an 
annual reporting period), every plan shall submit an annual survey report 
in an electronic format to the Director, containing the following informa- 
tion, as of December 3 1 of the prior calendar year, for each organization 
with which the plan has a risk arrangement: 

( 1 ) For the plan's commercial. Medicare-i-Choice. and Medi-Cal prod- 
uct lines, the report shall disclose, in a separate matrix for each product 
line, the allocation of risk between the plan, the organization, and the fa- 
cility by major expense category. For each of the plan's commercial. 
Medicare-i-Choice, and Medi-Cal product lines, the report shall disclose 
the number of covered lives and the counties primarily served by the or- 
ganization. 

(2) The report shall disclose whether the plan provides stop-loss insur- 
ance to the organization, and if so, the nature of any and all stop-loss ar- 
rangements. 

(c) Each quarterly and annual survey report and matrix submitted to 
the Department shall include a written verification stating that the plan 
has complied with all the risk arrangement disclosure requirements of 
section 1300.75.4.1 and that the survey report or matrix is true and cor- 
rect to the best knowledge and belief of a principal officer of the plan, and 
signed by a principal officer, as defined by regulation 1 300.45(o) of Title 
28 of the California Code of Regulations. 

(d) Upon request, the plan shall provide any additional information 
that the Director may from time to time require to understand the type, 
amount, or appropriateness, of the financial risk assumed by the plan's 
contracUng organizations. 

(e) Every plan that contracts with an organization shall have adequate 
procedures in place to ensure that the plan notifies the Department of 
Managed Health Care or its designated agent no later than five (5) busi- 
ness days from discovering that any of its contracUng organizations ex- 
perienced any event which materially alters the organization's financial 
situation, or threatens its solvency. 

NOTE: Authority cited: Sections 1344 and 1 375.4, Health and Safety Code. Refer- 
ence: Section 1375.4, Health and Safety Code. 

History 

1. New section filed 3-22-2001 as an emergency; operative 3-22-2001 (Register 
2001, No. 12). A Certificate of Compliance must be transmitted to OAL by 
7-20-2001 or emergency language will be repealed by operation of law on the 
following day. 

2. Certificate of Compliance as to 3-22-2001 order, including amendment sec- 
tion, transmitted to OAL 7-20-2001 and filed 8-31-2001 (Register 2(X)I , No. 
35). 

§1300.75.4.4. Confidentiality. 

(a) Financial and other records produced, disclosed or otherwise made 
available by an organization pursuant to Health and Safety Code section 
1375.4, and to these Solvency Regulafions shall be received and main- 
tained on a confidential basis and protected from public disclosure, un- 
less the Director makes a specific finding that the information can be re- 
leased in a manner that does not adversely affect the integrity of the 
contract negoUation process; except that the organization's annual au- 
dited financial statement as required by secdon 1300.75.4.2(c) shall be 
permanently maintained on a confidential basis. 

(b) The Director has determined that the disclosure of the following 
informaUon in the format provided below will not adversely affect the in- 
tegrity of an organization's contract negotiation process and, therefore, 
will be made available to the public as follows: 

(1) Within 120 days following each reporting period due date, the De- 
partment of Managed Health Care (Department) will make the following 
information available, on its website, for public inspection: 

(A) A list of all provider organizations currently identified as risk- 
bearing organizafions; 

(B) A list of all risk-bearing organizations that have submitted sub- 
stantially complete financial survey forms, if required, and whether the 



Page 66.1 



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§ 1300.75.4.5 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



risk-bearing organization's submission reflects that the organization has 
met or not met each of the Grading Criteria, as follows: 

1 . The designation of "met" to be assigned for each Grading Criteria 
met by the organization; 

2. The designation of "not met" to be assigned for each Grading Crite- 
ria not met by the organization; 

3. The disclosure of whether the organization has implemented and is 
compliant with a final CAP designed to remedy any deficiencies reported 
in the Grading Criteria; 

4. The relative working capital of each organization, consistent with 
section 1 300.75.4(h), presented as a ratio of current assets divided by cur- 
rent liabilities; 

5. The relative tangible net equity (TNE) of each organization, consis- 
tent with section 1300.75.4(h). presented as a ratio of tangible net assets 
divided by total liabilities; 

6. Claims payment timeliness in a percentage format, consistent with 
section 1300. 75.4. (h), reflecting the amount of claims that the organiza- 
tion is paying on a timely basis; and, 

7. To the extent feasible, each financial item described in paragraphs 
1 . through 5. shall be presented for both the current and the four previous 
reporting periods, following the effective date of these regulations. 

(C) A list of all "non-compliant" organizations that fail to substantial- 
ly comply with the reporting obligations, including the submission of the 
financial survey reports specified in section 1300.75.4.2 of Title 28, 
California Code of Regulations; and 

(D) All information contained in the Statement of Organization of a 
risk-bearing organization, except responses to sections 
1300.75.4.2(d)(8)(A), (d)(14) and financial documentation provided 
pursuant to section 1300.75.4.2 (d)(4); and 

(E) Comparative, aggregated data on all organizations, and informa- 
tion that enables consumers to assess an organization's relative financial 
viability in a format that does not identify any individual organizations 
and consistent with section 1300.75.4.4 of Title 28, California Code of 
Regulations. 

(c) Information received and maintained on a confidential basis pur- 
suant to this section may be disclosed by the Director under the following 
circumstances: 

(1) To other local, state or federal regulatory or law-enforcement 
agencies in accordance with the law; 

(2) When necessary or appropriate in any proceeding or investigation 
conducted by the Department to enforce the provisions of the Knox- 
Keene Act; 

(3) In the event that an organization publicly questions or challenges 
the Department's decision to approve or disapprove an organization's 
proposed CAP submitted in accordance with section 1300.75.4.8 of Title 
28 of the California Code of Regulations, the Department may release the 
relevant portions of the organization's financial information to explain 
the Department's decision; and, 

(4) Upon a determination by the Director, pursuant to Health and Safe- 
ty Code section 1375.4(b)(7), that the justification for the confidential 
treatment no longer exists, provided that the information that is disclosed 
is at least two (2) years old. 

NOTE: Authority cited: Sections 1344 and 1375.4, Health and Safety Code. Refer- 
ence: Section 1375.4, Health and Safety Code. 

History 
1 . New section filed 8-10-2005; operative 9-9-2005 (Register 2005, No. 32). For 
prior history, see Register 2002, No. 28. 

§1300.75.4.5. Plan Compliance. 

(a) Every plan that maintains a risk arrangement with an organization 
shall have adequate procedures in place to ensure: 

(1) That plan personnel review all reports and financial information 
made available pursuant to Health and Safety Code section 1375.4 and 
these Solvency Regulations as part of the plan's responsibility to evalu- 
ate and ensure the financial viability of its arrangements consistent with 
section 1300.70(b)(2)(H)(l) of Title 28, California Code of Regulations; 



(2) That appropriate action(s) are taken following the Department's 
written notification to an organization's contracting health plan(s) that: 

(A) The organization has failed to substantially comply with the re- 
porting obligations specified in section 1300.75.4.2 of Title 28, Califor- 
nia Code of Regulations, by failing to file a required periodic financial 
and organizational information disclosure, including the filing of an 
annual financial survey report based upon an audited financial statement 
prepared in accordance with generally accepted accounting principles 
(GAAP), or by failing to include significant portions of information on 
a required periodic financial organizational information disclosure; 

(B) The organization has refused to permit the activities of the Depart- 
ment as specified in Health and Safety Code section 1375.4 or in these 
Solvency Regulations; or. 

(C) The organization has failed to substantially comply with the re- 
quirements of a final CAP for a period of more than 90 days, as deter- 
mined by the Department. 

(3) Appropriate action shall include, but is not limited lo, a prohibition 
on the assignment or addition of any additional enrollees to the risk ar- 
rangement with that organization without the prior written approval of 
the Director. The prohibition on assignments of additional enrollees to 
an organization pursuant to subsection (2) shall not apply to dependents 
of enrollees who are already under the risk-arrangement with the orga- 
nization or to enrollees who selected the organization during an open en- 
rollment or other selection period that was prior to the effecfive date of 
the prohibition on the assignment of additional enrollees. The prohibition 
on the assignment of additional enrollees shall take effect thirty (30) days 
after the date of Department' s notification to the organization' s contract- 
ing plan(s), and shall remain in effect until the Department nofifies the 
organization's contracting health plan in wrifing that the organization's 
non-compliance has been remedied. 

(4) That the plan complies with the correcfive action process and coop- 
erates in the implementation of a final CAP, including, but not limited to, 
implementing contingency plans for continuous delivery of health care 
services to plan enrollees served by the organization. 

(5) That the plan shall advise the Department and the organization in 
writing within five (5) days of becoming aware: 1. that a contracting or- 
ganization is not in compliance with the requirements of a final CAP, or 
2. that an organization's conduct may cause the plan to be subject to disci- 
phnary action pursuant to Health and Safety Code section 1386. 

(6) That if a plan proposes to transfer plan enrollees receiving care 
from an organization that is compliant with a final CAP to alternative pro- 
viders and the reassignment is based, in part, on the organization's failure 
to meet one or more of the Grading Criteria, the plan shall, prior to trans- 
ferring enrollees from that organization, file with the Department a Block 
Transfer Filing pursuant to Health and Safety Code section 1373.65. In 
addition to all other criteria for reviewing block transfers, the Director 
may disapprove, postpone or suspend the plan's proposed transfer of en- 
rollees if the department reasonably determines: 

(A) That the proposed reassignment of enrollees will likely cause the 
organization's failure or result in the organization ceasing operations 
within three (3) months; 

(B) That the organization has the financial and administrative capacity 
to provide timely access to care through an adequate network of qualified 
health care providers; and 

(C) That the organization is not denying or delaying basic health care 
services or continuity of care for the plan' s enrollees assigned to the orga- 
nization. 

(7) Notwithstanding subsection (6) of this section, nothing in these 
reguladons shall Hmit or impair 1. the Director's authority, consistent 
with Health and Safety Code sections 1367, 1373.65 (b) and 1391.5. to 
require a plan to reassign or transfer plan enrollees to alternate providers 
or organizations on an expedited basis to avoid imminent harm to enroll- 
ees; 2. an enrollee's right to self-select a new provider; or 3. the plan's 
ability to transfer individual enrollees assigned to a provider who termi- 
nates his/her relationship with the organization to ensure that the enrollee 
receives appropriate continuity of care. 



Page 66.2 



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Title 28 



The Department of Managed Health Care 



§ 1300.75.4.8 



(h) Every contraci involving a risk arrangement between a plan and an 
organization shall provide that an organization's failure to substantially 
comply with the contractual requirements required by these Solvency 
Regulations shall constitute a material breach of the risk arrangement 
contract. A plan shall not request or accept a waiver of any the contractual 
requirements set forth in these Solvency Regulations. 

(c) Within .^0 days of notification pursuant to section 
l3()0.75.4.3(a)(2)(C)ofTitle 28. California Code of Regulations, apian 
shall submit to the Department a specific Provider Transition Plan for the 
deficient organization which provides for the continuity of care for plan 
enrollees served by the organization. 

(d) Any failure of a plan to comply with the requirements of Health and 
Safety Code section 1 375.4 and these Solvency Regulations shall consti- 
tute grounds for disciplinary action against the plan pursuant to Health 
and Safely Code section 1386. 

(e) The Director may seek and employ any combination of remedies 
and enforcement procedures provided under the Knox-Keene Act to en- 
force Health and Safety Code section 1375.4 and these Solvency Regula- 
tions. 

NoTE: Authority cited: .Sections 1 344 and 1 375.4, Health and Safety Code. Refer- 
ence: Section 1375.4, Health and Safety Code. 

History 

1 . New section filed 3-22-2001 as an emergency; operative 3-22-2(X)l (Register 
2001, No. 12). A Certificate of Compliance must be transmitted to OAL by 
7-20-2001 or emergency language will be repealed by operation of law on the 
following day. 

2. Certificate of Compliance as to 3-22-2001 order transmitted to OAL 
7-20-2001 and filed 8-31-2001 (Register 2001, No. 35). 

3. Repealer and new section filed 8-10-2005: operative 9-9-2005 (Register 2005. 

No. 32). 

§1300.75.4.6. Department Costs. 

The Department's costs incurred in the administration of Health and 
Safety Code Sections 1 347. 1 5 and 1 375.4 shall come from amounts paid 
by plans, except specialized plans, pursuant to Health and Safety Code 
Section 1356. 

NOTE: Authority cited: Sections 1344 and 1375.4, Health and Safety Code. Refer- 
ence: Sections 1347.15, 1356 and 1375.4, Health and Safety Code. 

History 
i . New section filed 3-22-2001 as an emergency; operative 3-22-2001 (Register 

2001, No. 12). A Certificate of Compliance must be transmitted to OAL by 

7-20-2001 or emergency language will be repealed by operation of law on the 

following day. 

2. Certificate of Compliance as to 3-22-2001 order transmitted to OAL 
7-20-2001 and filed 8-31-2001 (Register 2001, No. 35). 

§ 1300.75.4.7. Organization Evaluation. 

(a) Every contract involving a risk arrangement between a plan and an 
organization shall: 

( 1 ) Require the organization to comply with the Department of Man- 
aged Health Care's review and audit process, in determining the orga- 
nization's satisfaction of the Grading Criteria; and 

(2) Permit the Department to perform any of the following activities 
in conjunction with the plan's oversight process: 

(A) Obtain and evaluate supplemental financial information pertain- 
ing to the organization when: 1. the organization fails to satisfactorily 
demonstrate its compliance with the Grading Criteria; 2. the organization 
experiences an event that materially alters its ability to remain compliant 
with the Grading Criteria; 3. the external party's review or audit process 
indicates that the organization may have insufficient financial capacity 
to continue to accept financial risk for the delivery of health care services 
consistent with the requirements of sections 13(X).70(b)(2)(H)(l) of Title 
28, California Code of Regulations; or 4. the Department receives in- 
formation from complaints submitted to the HMO Help Center, health 
plan reporting, medical audits and surveys or any other source that indi- 
cates the organization may be delaying referrals or authorizations or fail- 
ing to meet access standards for basic health care services based on finan- 
cial considerations. 



NOTE: Authority cited: Sections 1 344 and 1 375.4. Health and Safety Code, kctcr- 
ence: Section 1375.4. Health and Safety Code. 

History 
1. New section filed 8-10-2005; operative 9-9-2005 (Register 2005. No. 32). 



§1300.75.4.8. Corrective Action. 

Every contract involving a risk arrangement between a plan and an or- 
ganization shall require the plan and the organization to comply with a 
process, set forth in this regulation and administered by the Department, 
for the development and implementation of Corrective Action Plans 
(CAPS). 

(a) Unless the organization has proactively demon.strated to the De- 
partment's written satisfaction that necessary and prudent capital invest- 
ments has or may cause a temporary deficiency in its TNE, working capi- 
tal or cash-to-claims ratios and that it has implemented an appropriate 
business plan that will correct the deficiency within a reasonable time pe- 
riod without causing a deficiency in its claim payment timeliness, begin- 
ning with the financial survey submission filed for the third quarter of 
calendar year 2005, organizations reporting deficiencies in any o\' the 
Grading Criteria shall simultaneously submit a self-initiated CAP pro- 
posal, in an electronic format developed by the Department, to the De- 
partment and every plan with which the organization maintains a contract 
involving a risk arrangement that meets the following requirements: 

(1) Identifies the Grading Criteria that the organization has failed to 
meet; 

(2) Identifies the amount by which the organization has failed to meet 
the Grading Criteria; 

(3) Identifies all plans with which the organization has contracts in- 
volving a risk arrangement, including the identification of the name, title, 
telephone and facsimile numbers, and postal and e-mail addresses for the 
person responsible at each contracfing health plan for monitoring com- 
pliance with the final CAP; 

(4) Describes the specific actions the organization has taken or will 
take to correct any deficiency identified in subsections (1 ) and (2) of this 
section. This descripfion should include any written representations 
made by contracting health plans to assist the organizafion in the imple- 
mentafion of its CAP. The actions shall be appropriate and reasonable in 
scope and breadth depending upon the nature and degree of the deficien- 
cy, and acceptable to the Department; 

(5) Describes the timeframe for completing the corrective action and 
specifies a schedule for submitting progress reports to the Department 
and the organization's contracting health plans. Except in situations 
where the organization can demonstrate to the Department's satisfaction 
and written approval that an extended period of time is necessary and ap- 
propriate to correct the deficiency, that: 

(A) Timetables specified in the self-initiated CAP for correcting 
working capital deficiencies shall not exceed 12 months; 

(B) Timetables specified in the self-initiated CAP for correcting tangi- 
ble net equity (TNE) deficiencies shall not exceed 12 months; 

(C) Timetables specified in the self-initiated CAP for incurred but not 
reported (IBNR) deficiencies shall not exceed three (3) months; 

(D) Timetables specified in the self-initiated CAP for correcting 
claims timeliness deficiencies shall not exceed six (6) months; 

(E) Timetables specified in the self-initiated CAP for correcting cash- 
to-claims ratio deficiencies shall not exceed twelve (12) months. 

(6) Identifies the name, title, telephone and facsimile numbers, and 
postal and e-mail addresses for the person responsible at the organization 
for ensuring compliance with the final CAP: and 

(7) Describe: 

(A) the organization's patient record retention and storage policies; 

(B) the procedures and the steps the organization will take to ensure 
that patient medical records are appropriately stored and maintained; and 

(C) the procedures and the steps the organization will take to ensure 
that patient medical records will be readily available and transferable to 
patients in the event the organization ceases operations or the organiza- 
tion fails to meet its obligations set forth in the final CAP. At a minimum. 



Page 66.3 



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§ 1300.76 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



an organization's patient medical records policies and procedures shall 
be consistent with existing laws relating to the responsibilities for the 
preservation and maintenance of medical records and the protection of 
the confidentiality of medical information. 

( b) To the extent possible, the self-initiated CAP proposal shall be set 
forth in a single document that addresses the concerns of all plans with 
which the organization maintains a contract that includes a risk arrange- 
ment. 

(c) Unless, within 15 days of the receipt of an organization's self-initi- 
ated CAP proposal, a contracting health plan provides written notice to 
the Department and the risk-bearing organization stating the reason for 
its objections and recommendations for revisions, the self-initiated CAP 
shall be considered a final CAP, subject to the Department's approval 
process as set forth in sections (g) and (h) below. 

(d) In the event that a contracting health plan files a written objection 
with the Department and the risk-bearing organization, the organization 
shall within twenty (20) days: (I) implement all corrective action strate- 
gies contained in its self-initiated CAP proposal that were not objected 
to by a contracting health plan; and (2) submit to each of its contracting 
health plans and the Department a revised CAP proposal that addresses 
the concerns raised by the objecting contracting health plan(s). To the ex- 
tent possible, the revised CAP proposal shall be prepared as a single doc- 
ument that addresses the concerns of all plans with which the organiza- 
tion maintains a contract that includes a risk arrangement. 

(e) Each contracting health plan shall have ten (10) days to submit to 
the organization and the Department its objections and recommended re- 
visions, in an electronic format prepared by the Department, to the self- 
initiated revised CAP proposal. 

(f) Within fifteen ( 1 5) days of receipt of any contracting health plans' 
objections and recommended revisions to the revised CAP proposal, the 
Department shall schedule a meeting ("CAP Settlement Conference") 
with the organization and all of its contracting health plans to discuss and 
reconcile the differences. 

(g) Within seven (7) days of the CAP Settlement Conference, the orga- 
nization shall submit a final self-initiated CAP proposal to all of its con- 
tracting health plans and the Department. 

(h) Within ten (10) days of receipt of the organization's final self-initi- 
ated CAP proposal, the external party shall submit its recommendation 
to the Department to approve, disapprove or modify the organization's 
final self-initiated CAP proposal. 

(i) Within ten (10) days of receipt of the external party's recommenda- 
tion, the Department shall approve, disapprove or modify the organiza- 
tion's final self-initiated CAP proposal, which shall then become the fi- 
nal CAP. If the Department does not act upon the recommendations of 
the external party within ten (10) days, the external party's recommenda- 
tion shall be deemed approved. 

(j) A final CAP shall remain in effect until the organization demon- 
strates compliance with the requirements of the CAP, or the CAP expires 
in accordance with its own terms. 

(k) In addition to the CAP requirements specified in subsecfion (a) 
above, the Department may direct an organization to initiate a CAP 
whenever its determines that an organization has experienced an event 
that materially alters its ability to remain compHant with the Grading Cri- 
teria or when the Department's review process indicates that the orga- 
nization may lack sufficient financial capacity to meet its contractual ob- 
ligations consistent with the requirements of section 
1300.70(b)(2)(ll)(l) of Title 28 of the California Code of Regulations. 

(/) CAP Reporting: 

(1) Each periodic progress report prepared pursuant to a final CAP 
shall be submitted to the Department and all plans with which the orga- 
nization has a contract involving a risk arrangement, and shall include a 
written verification stating that the periodic progress report is true and 
correct to the best knowledge and belief of a principal officer of the orga- 
nization, as defined by section 1300.45(o) of Title 28 California Code of 
Regulations. 



(2) In addition to the quarterly progress reports specified in a CAP. ev- 
ery contract involving a risk arrangement between a plan and an orga- 
nization shall require that: 

(A) the organization advise the plan and the Department in writing 
within five (5) days if the organizafion experiences an event that materi- 
ally alters the organization's ability to remain compliant with the require- 
ments of a final CAP; and 

(B) the organization, upon the Department's request, provides addi- 
tional documentation to the Department and its contracting plans to dem- 
onstrate the organization's progress towards fulfilling the requirements 
of a CAP. 

(3) Non-disclosure of CAP documentation and supporting work pa- 
pers: 

(A) All draft, preliminary and final CAPs and all CAP compliance re- 
ports required by a final CAP, including supporting documentation and 
supplemental financial information, submitted to the Department shall 
be received and maintained on a confidential basis and shall not be dis- 
closed, except for the information outlined in section 1300.75.4.4(c)(3) 
to any party other than the organization and, as necessary, to its contract- 
ing health plans that are participaUng in the CAP. 

NOTE; Authority cited: Sections 1344 and 1375.4, Health and Safety Code. Refer- 
ence: Section 1.175.4. Health and Safety Code. 

History 
1 . New section filed 8-10-2005; operative 9-9-2005 (Register 2005, No. 32). 

§ 1300.76. Plan Tangible Net Equity Requirement. 

(a) Except as provided in subsection (b) or (c), each plan licensed pur- 
suant to the provisions of the Act shall, at al fimes, have and maintain a 
tangible net equity at least equal to the greater of: 

(1) $1 million; or 

(2) the sum of two percent of the first $150 million of annualized pre- 
mium revenues plus one percent of annuaUzed premium revenues in ex- 
cess of $150 million; or 

(3) an amount equal to the sum of: 

(A) eight percent of the first $ 1 50 million of annualized health care ex- 
penditures except those paid on a capitated basis or managed hospital 
payment basis; plus 

(B) four percent of the annualized health care expenditures, except 
those paid on a capitated basis or managed hospital payment basis, which 
are in excess of $150 million; plus 

(C) four percent of annualized hospital expenditures paid on a man- 
aged hospital payment basis. 

(b) Except as provided in subsection(c), each plan licensed pursuant 
to the provisions of the Act and which only offers specialized health care 
service contracts shall, at all fimes, have and maintain a tangible net equi- 
ty at least equal to the greater of: 

(1) $50,000; or 

(2) the sum of two percent of the first $7,500,000 of annualized pre- 
mium revenues plus one percent of annualized premium revenues in ex- 
cess of $7,500,000; or 

(3) an amount equal to the sum of 

(A) eight percent of the first $7,500,000 of annualized health care ex- 
penditures, except those paid on a capitated or managed hospital pay- 
ment basis; plus 

(B) four percent of the annualized health care expenditures, except 
those paid on a capitated basis or managed hospital payment basis, which 
are in excess of $7,500,000; plus 

(C) four percent of annualized hospital expenditures paid on a man- 
aged hospital payment basis. 

(c) Each plan licensed pursuant to the provisions of the Act prior to the 
effective date of this secfion must maintain a minimum tangible net equi- 
ty of 

( 1 ) 20 percent of the amount required by subsection (a) or (b), as appli- 
cable within 6 months of the effecUve date of this section. 

(2) 36 percent of the amount required by subsection (a) or (b), as appli- 
cable within 12 months of the effecUve date of this secfion. 



Page 66.4 



Register 2005, No. 32; 8-12-2005 



Title 28 



The Department of Managed Health Care 



§ 1300.76.3 



(3) 52 pcrceni of the amount required by subsection (a) or (b). as appli- 
cable within 18 months of the effective dale of this subsection. 

(4) 68 percent of the amount required in subsection (a) or (b), as appli- 
cable within 24 months of the effective date of this section. 

(5) 84 percent of the amount required in subsection (a) or (b). as appli- 
cable within 30 months of the effective dale of this section. 

(6) 100 percent of the amount required in subsection (a) or (b). as 
applicable within 36 months of the effective date of this section. 

(d) The Director may extend the time periods noted in subsection (c) 
if the Director determines that such extension is in the best interests of 
the plan and its enrollees and if it will not cause the plan to operated in 
a manner that may be hazardous to its enrollees. 

(e) For the purpose of this section "net equity" means the excess of to- 
tal assets over total liabilities, excluding liabilities which have been sub- 
ordinated in a manner acceptable to the Director. "Tangible net equity" 
means net equity reduced by the value assigned to intangible assets in- 
cluding, but not limited to, goodwill; going concern value; organizational 
expense; starting-up costs; obligations of officers, directors, owners, or 
affiliates which are not fully secured, except short-term obligations of af- 
filiates for goods or services arising in the normal course of business 
which are payable on the same terms as equivalent transactions with non- 
affiliates and which are not past due; long tenn prepayments of deferred 
charges, and nonreturnable deposits. An obligation is fully secured for 
the purposes of this subsection if it is secured by tangible collateral, other 
than by securities of the plan or an affiliate, with an equity of at least 1 10 
percent o\' the amount owing. 

(f) For the purpose of this section, '"capitated basis" means fixed per 
member per month payment or percentage of premium payment wherein 
the provider assumes the full risk for the cost of contracted services with- 
out regard to the type, value or frequency of services provided. For pur- 
poses of this definition, capitated basis includes the cost associated with 
operating staff model facilities. 

(g) For the purpose of this section, "managed hospital payment basis" 
means agreements wherein the financial risk is primarily related to the 
degree of utilization rather than to the cost of services. 

NOTE: Authority cited: Section 1 344, Health and Safety Code. Reference: Section 
1 376. Health and Safety Code. 

History 

1. Amendment of subsections (b) and (c) filed 4-27-79; effective thirtieth day 
thereafter (Register 79, No. 17). 

2. Amendment of subsection (a), new subsections (b). (c),(d), (f) and (g), renum- 
bering of former subsection (b) and repealer of former subsection (c) filed 
12-14-90; operative 12-31-91 (Register 91. No. 6). 

3. Editorial correction of printing error (Register 91, No. 17). 

4. Change without regulatory effect amending subsections (d)-(e) filed 
7-18-2000 pursuant to section 100, title 1, California Code of Regulations 
(Regi,sler2000. No. 29). 

§1300.76.1. Deposits. 

(a) Except as provided in subsection (b) or (c), each plan licensed pur- 
.suant to the provisions of the Act shall deposit with the Director or at the 
discretion of the Director with any bank authorized to do business in this 
state and insured by the Federal Deposit Insurance Corporation, or sav- 
ings and loan association doing business in this state and insured by the 
Savings Association Insurance Fund, an amount which at all times shall 
have a value of not less than $300,000, except for plans which only offer 
specialized health care service contracts, which shall deposit an amount 
which at all times shall have a value of not less than $50,000. Cash, in- 
vestment certificates, accounts, or any combination of these shall be as- 
signed to the Director, upon those terms as the Director may prescribed, 
until released by the Director. 

(b) Each plan licensed pursuant to the provisions of the Act prior to the 
effective date of this section, except any plan which only offers special- 
ized health care services contracts, shall make a deposit of 50 percent of 
the amount required by subsection (a) within 12 months of the effective 
date of this section and 100 percent of the amount required by subsection 
(a) within 24 months of the effective date of this section. 



(c) Each plan licensed pursuant to the provisions of the Act prior to the 
effective date of this section which only offers specialized health care 
service contracts shall make a deposit of 40 percent of the amount re- 
quired by subsection (a) within 1 2 months of the effective date of this sec- 
tion, 70 percent of the amount required by subsection (a) within 24 
months ofthe effective date of this section and lOOpercent of the amount 
required by subsection (a) within 36 months ofthe effective date of this 
section. 

(d) The Director may extend the time periods noted in subsection (c) 
if the Director determines that such extension is in the best interests of 
the plan and its enrollees and if it will not cause the plan to be operated 
in a manner that may be hazardous to its enrollees. 

(e) The deposit required by subsection (a) shall be an allowable asset 
ofthe plan in the determination of tangible net equity and all income from 
the deposit shall be an asset of the plan. 

(0 A plan that has made a deposit pursuant to subsection (a) may with- 
draw that deposit or any part thereof, after making a substitute deposit of 
cash, investment certificates, accounts or any combination of these. Any 
substitute deposit shall be approved by the Director before being depos- 
ited or substituted. 

(g) Tlie deposits shall be used to protect the interests ofthe plan's en- 
rollees and to assure continuation of health care services to enrollees of 
a plan whenever the Director has brought actions pursuant to sections 
1 386, 1 392, 1 393 or 1 394. 1 . The Director may use the deposit for admin- 
istrative costs directly attributable to a conservatorship, receivership or 
liquidation. 

NOTE: Authority cited: Section 1.^44, Health & Safety Code. Reference: Section 
1376, Health & Safety Code. 

History 

1. New section filed 12-14-90; operative 12-31-90 (Register 91. No. 6). 

2. Editorial correction of prinnng error (Register 91 , No. 1 7). 

3. Change without regulatory effect amending section filed 7-18-2000 pursuant 
to section 100, title 1, California Code of Regulations (Register 2(XK), No. 29). 

§ 1300.76.2. Solicitor Firm Financial Requirement. 

(a) Each solicitor firm which handles funds of plans, subscribers, or 
other persons contracting with plans, shall at all times maintain a tangible 
net worth at least equal to 20 percent of such firm's aggregate indebted- 
ness or $10,000, whichever is greater, and shall maintain liquid net as.sets 
of at least $5,000 in excess of it current liabilities. 

(b) A solicitor firm which accepts only funds in the form of checks 
payable to plans, subscribers or other persons contracting with plans and 
forwards such checks to the payee by the close of the business day fol- 
lowing receipt thereof does not "handle funds" within the meaning of this 
section. 

NotE: Authority cited: Section 1 344, Health and Safety Code. Reference: Section 
1376, Health and Safety Code. 

History 
1. Editorial correction adding NOTE filed 12-8-82 (Register 82, No. 50). 

§1300.76.3. Fidelity Bond. 

(a) Each plan shall at all times maintain a fidelity bond covering each 
officer, director, trustee, partner and employee ofthe plan, whether or not 
they are compensated. The fidelity bond may be either a primary com- 
mercial blanket bond or a blanket position bond written by an insurer li- 
censed by the California Insurance Director, and it shall provide for 30 
days' notice to the Director prior to cancellation. The fidelity bond shall 
provide at least the minimum coverage for the plan determined by the fol- 
lowing schedule: 

Annual Minimum 

Gross Income Coverage 

Up to $100,000 $10,000 

100,000 to $300,000 20,000 

300,000 to 500,000 30,000 

500,000 to 750,000 50,000 

750,000 to 1.000,000 75,000 

1,000,000 to 2,000,000 100,000 



[The next page is 67. 

Page 66.5 



Register 2005, No. 32; 8-12-2005 



Title 28 



The Department of Managed Health Care 



§ 1300.77.2 



Annual Minimum 

dross Income Coverage 

2.()()0.()()0 10 4.()00.00() 200.000 

4.000.000 to 6.000.000 400.000 

6.000.000 to 10.000,000 600,000 

10.000.(X)0 to 20.000.000 1.000.000 

20.000.000 and over 2,000.000 

(b) The fidelity bond required pursuant to subsection (a) may contain 
a provision for a deductible ainount from any loss which, except for such 
deductible provision, would be recoverable from the insurer. A deduct- 
ible provision shall not be in excess of 10 percent of the required mini- 
nium bond coverage, but in no event shall the deductible amount be in 
excess of $100,000. 

N{/rb: Aiiihoril veiled: Section i. ^44, Health and Safety Code. Reference: Section 
1.^76, Health and Safety Code, 

HlsrORY 

1 . Hdilorial correction adding NOTh filed 12-8-82 (Register 82, No. 50). 

2. Change without regulatory effect amending subsection (a) filed 7-1 8-2000 pur- 
suant to section 1 00. title 1 . California Code of Resulations (Register 2000. No. 
29). 

§ 1300.76.4. Prohibited Financial Practices. 

(a) No solicitor shall maintain, and no plan or solicitor firm shall per- 
mit a solicitor in its employ to maintain, an account with a financial insti- 
tution for funds of the plan, solicitor firm, subscribers or group represen- 
tatives, except an account which is in the name of and under the control 
of the plan or solicitor firm. 

(b) No solicitor shall receive funds on behalf of a plan or solicitor firm, 
and no plan or solicitor firm shall permit a solicitor in its employ to re- 
ceive funds on behalf of the plan or solicitor firm, but this section shall 
not prohibit a solicitor from receiving only funds in the form of checks 
payable to the plan or solicitor firm if such solicitor deposits such checks 
to an account of the plan or solicitor firm by the close of the business day 
following receipt thereof or forwards such checks to the plan or solicitor 
firm by the close of the business day following receipt thereof. 

NoTE: Authority cited: Section 1 344, Health and Safety Code. Reference: Section 
1.376, Health and Safety Code. 

History 

1 . New .section filed 1 1-9-77 as an emergency; effective upon filintr (Register 77, 
No. 46). 

2. Certificate of Compliance filed 2-6-78 (Register 78, No. 6). 

3. Amendment filed 12-8-82; effective thirtieth day thereafter (Register 82, No. 
50). 

4. Amendment of NOTE filed 1-12-83; effective thirtieth day thereafter (Register 

83. No. 3). 

§1300.77. Reimbursements. 

(a) "Adequate insurance" for reimbursement for the purposes of sub- 
division (a)(2) of Section 1377 of the Act means a performance bond or 
insurance policy issued by an insurer licensed by the California Insur- 
ance Director, in an amount equal to at least the amount of cash, or cash 
equivalents, required to be maintained pursuant to subdivision (a)(1) of 
Section 1 377 of the Act. The bond or insurance policy shall be payable 
to a corporate trustee for the benefit of noncontracting providers, sub- 
scribers and enrollees whose claims are unpaid upon the plan ceasing to 
do business because of insolvency or upon the plan being adjudged bank- 
rupt. 

(b) For the purposes of subdivision (a) of Section 1377 of the Act, 
"equivalents" to cash include only the following, provided that the in- 
vestment in any one issuer of securities (other than securities issued or 
fully gtiaranteed or insured by the United States Government or any 
agency thereof) does not exceed 5% of the amount required pursuant to 
such subdivision: 

(1) Shares listed on the New York Stock Exchange, the American 
Stock Exchange, the Pacific Stock Exchange or the O.T.C. Margin List, 
which shall be valued at 90 percent of their market value. 

(2) Securities issued or guaranteed by the United States Government 
or any agency thereof, which shall be valued at the percentages of their 
market value specified below: 



(A) less than 3 years to maturity \()(W< 

(B) 3 or more years to maturity 987^ 

(3) Obligations of any state or political subdivision or 
instmmentality thereof which are rated A or better by 
Moody's Investors Service or A or better by Standard & Poor's, 
which shall be valued at the percentages of their market value 
specified below: 

(A) less than 5 years to maturity 987^ 

(B) 5 or more years to maturity 9y/( 

(4) Certificates of deposit or other evidence of deposit in, or accep- 
tance of, a bank insured by the F.D.l.C. or certificates of deposit or share 
accounts of a savings and loan association insured by the F.S.L.l.C. 
which shall be valued at their book value. 

(5) Promissory notes or other evidences of indebtedness having a ma- 
turity date within nine months of issuance, exclusive of days of grace, or 
any renewal thereof which is likewise limited, and which are rated P2 or 
better by Moody's Investors Service and A2 or better by Standard & 
Poor's, which shall be valued at their market value. 

(6) Nonconvertible debt securities having a fixed maturity which are 
rated A or better by Moody ' s Investors Service or A or better by Standard 
& Poor's, which shall be valued at the percentages of their market value 
specified below: 

(A) less than 2 years to maturity — 100'?J> 

(B) 2 years but less than 5 years to maturity — 98'7f 

(C) 5 or more years to maturity — 95%. 

(c) The Director may waive the "haircut" requirements set forth in sub- 
section (b) subject to the condition that the plan establish and maintain 
a securities valuation reserve fund consisting of cash or equivalents in an 
amount not less than 10 percent of the total amount of "cash and equiva- 
lents" required under Section 1 377 which is not otherwise maintained in 
ca.sh, or such other amount as the Director may require. 
NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Section 
1377, Health and Safety Code. 

History 

1. Amendment of subsection (b) filed 6-2-78; effective thirtieth day thereafter 
(Register 78, No. 22). 

2. New subsection (e) filed 1 2-8-82; effective thirtieth day thereafter (Recister 82. 
No. .50). 

3. Amendment filed 7-21-86; effective thirtieth day thereafter (Register 86. No. 
30). 

4. Change without regulatory effect amending subsection (c) filed 7-1 8-20(X) pur- 
suant to section 1 00, title 1 . California Code of Regulations (Register 2000. No. 
29). 

§ 1300.77.1. Estimated Liability for Reimbursements. 

A plan subject to subdivision (b) of Section 1377 shall estimate its li- 
ability for incurred and unreported claims and record such estimate as an 
accrual in its books and records at least monthly. 

NOTE: Authority cited: Section 134^k Health and Safety Code. Reference: Sec- 
lions 1375.1, 1376 and 1377. Heahh and Safety Code. 

History 
1. Amendment filed 12-8-82; effective thirtieth day thereafter (Register 82. No. 

.50). 

§ 1300.77.2. Calculation of Estimated Liability for 
Reimbursements. 

(a) Each plan subject to subdivision (b) of Section 1377 shall calculate 
the estimate of incurred and unreported claims pursuant to a method held 
unobjectionable by the Director. Such method may include a lag study 
as defined and illustrated in subsection (c), an actuarial estimate as de- 
fined in subsection (d), or other reasonable method of estimating incurred 
and unreported claims. The amount required by Section 1300.77. 1 to be 
accrued in the plan's books and records must equal the estimated total of 
all claims incurred but not yet received as of the end of the month as cal- 
culated in working papers, schedules or reports prepared in support of the 
unobjectionable lag study, actuarial estimate, or other method of estimat- 
ing incurred and unreported claiins. 

(b) Working papers which support the incurred and unreported claims 
calculation shall be maintained as part of the records of the plan. Lag 
study working papers shall include a detailed allocation of all claims re- 
ceived each month to the various months in which the services were per- 



Page67 



Register 2002, No. 33; 8- 16-2002 



§ 1300.77.3 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



formed. Actuarial estimate woricing papers must detail all underlying as- 
sumptions and calculations in establishing the actuarial rate. Any other 
method used to determine the amount of incurred and unreported claims 
must be supported by adequate working papers, schedules or reports 
which detail all aspects of the incurred and unreported calculation. 

(c) A "lag study" is a schedule which analyzes historical claims infor- 
mation on an ongoing basis to determine the length of time lag between 
the date of service and the date a claim is submitted to the plan for pay- 
ment. Such a study distributes all claims received each month in which 
the services were performed. An example of a lag study containing the 
minimum information necessary to be held unobjectionable by the Direc- 
tor is as follows: 

ABC HEALTH PLAN OF CALIFORNIA 

SCHEDULE TO CALCULATE HISTORIC PERCENTAGE 

OF INCURRED BUT UNREPORTED CLAIMS FOR PRIOR 

MONTHLY PERIODS WHICH HAVE BEEN FULLY OR 

SUBSTANTIALLY REPORTED 

JULY 31, 19X2 

MONTH CLAIM RECEIVED 



COMPUTATION OF INCURRED 
BUT UNREPORTED CLAIMS AS OF JULY 31 















Totals for 


Same 












Months of 


Month 


2nd 


3rd 


4lli 


5th 


6th 7th 


Senice 


Month of Service: 














Oct. 19X1 $150 


$500 


$200 


$100 


$50 




$1,000 


Nov. 19X1 220 


500 


240 


110 


30 




1.110 


Dec. 19X1 1.50 


600 


300 


100 


75 


$25 


1,2.50 


Jan. 19X2 210 


750 


375 


105 


60 




1,500 


Feb. 19X2 230 


670 


290 


85 


100 


75 


1.450 


Totals $960 ! 


R3.020 : 


$1,405 


$500 


$315 


$100 


$6,300 


Percentages: 














Monthly 15% 


48% 


22% 


8% 


5% 


2%- 




Cumulative 15% 


63% 


85% 


93% 


98% 


100% 





Explanatory notes: 

1 . The above represents the first schedule that is prepared to determine the incurred 
and unreported claims for any month following February. 

2. The schedule allocates claims as they are received to the month in which the ser- 
vice was performed. For example, in October, the plan received $ 150 of claims 
which had service dates in October (same month). Because this schedule begins 
in October, the $150 amount would be the only entry which the plan would be 
able to make in October. In November, the plan received $220 in claims which 
had service dates in November (same month), and $500 of claims which had ser- 
vice dates in October (second month). In December, the plan received $1 50 of 
claims which had service dates in December (same month), $500 of claims 
which had service dates in November (second month), and $200 in claims which 
had service dates in October (third month). 

3. The schedule indicates that $6,300 in claims were received which had service 
dates of October through February. Of this amount, $960 was received during 
the month of service (same month), $3,020 in the following (second) month, 
$1,405 in the third month, $500 in the fourth month, etc. By converting these 
amounts to percentages of the total claims, the schedule indicates that on the av- 
erage, 15% ($960 -H $6,300 =) of all claims incurred during any month are re- 
ceived in the same month, 48% are received in the following (second) month, 
for a cumulative total of 63% (15% -i- 48% =) of all claims incurring during any 
month being received in the same and second months. By employing these cu- 
mulative percentages, the amount incurred but unreported claims can be esti- 
mated as of July 31 , after the claims information for the current but incomplete 
monthly periods is analyzed, as illustrated in the following schedule: 

ABC HEALTH PLAN OF CALIFORNIA 

SCHEDULE TO ESTIMATE THE AMOUNT OF INCURRED 

BUT UNREPORTED CLAIMS FOR THE CURRENT BUT 

INCOMPLETE MONTHLY PERIODS WHICH HAVE NOT BEEN 

FULLY OR SUBSTANTIALLY REPORTED 

JULY 31, 19X2 

MONTH CLAIM RECEIVED 





Totals for 


Same 


Months of 


Month 2nd 3rd 4th 5th 6th 7th 


Serx'ice 


Month of Service: 




Mar., 19X2 $225 $720 $300 $120 $50 


$1,415 


April. 19X2 250 700 330 110 


1.390 


Mav, 19X2 240 750 350 


1,.340 


June, 19X2 250 775 


1.025 


July, 19X2 270 


270 


Total Claims received for period March 1 through July 31 


$5,440 



(A) 


(B) 


(C) 

Claims received as 

of July 31 as a 


(D) 


(E) 




Total claims 


cumulative 


Total 


Incurred 


Moitlh 


received for each 


percentages 


claims to 


But unre- 


of 


inoiith ofsen'ice 


of total claims 


he received 


ported 


Seirice 


as of July 3 J 


to be received 


(B-C) 


(D-B) 


July 


$270 (i) 


15% 


$1,800 


$1,5.30 


June 


1,025 (ii) 


63% 


1.625 


600 


May 


1..340 (iii) 


85%' 


1.575 


235 


April 


390 (iv) 


93% 


1,495 


105 


March 


1.415 (V) 


98% 


1.440 


25 


February 


1,450 (vi) 


100% 


1,4.50 






Total incurred but unreported claims as of July 31 $2.495 

Explanatory notes: 

(i) Represents July claims received in July, 
(ii) Represents June claims received in June and July, 
(iii) Represents May claims received in May, June and July. 
(iv)Represents April claims received in April, May, June and July. 
(V) Represents March claims received in March, April. May, June and July. 
(vi) Represents February claims received in February, March, April, May, June 
and July. 

(d) An "actuarial estimate" is a calculation of incurred and unreported 
claims which is based on adequate and reasonable assumptions with re- 
spect to risk factors and trends which have been found to be applicable 
to the plan, such as utilization patterns of the plan's enrollees, the average 
benefit which will be payable, the enrollment mix in terms of age and sex 
of enrollees and geographic location, actual plan contract experience, and 
any other factors reasonably believed to affect the amount of incurred and 
unreported claims. Actuarial estimates must be supported by an actuarial 
certification, consisting of a signed declaration of any actuary who is a 
member in good standing of the American Academy of Actuaries in 
which such actuary states that the assumptions used in calculating the in- 
curred and unreported claims are appropriate and reasonable. If the plan 
employs an actuarial study to estimate the amount of the incurred and un- 
reported claims, it must compare the actual claims amounts to those esti- 
mated, and make adjustments at least quarterly whenever a 5% difference 
from actual experience is noted. 

(e) A plan may employ any other unobjectionable alternative method 
of estimating the amount of incurred and unreported claims other than the 
"lag study" or "actuarial estimate," so long as such alternative method ac- 
curately estimates incurred and unreported claims. For example, a plan 
may receive daily reports of actual hospital admissions and referrals, 
thereby permitting the plan to compare these reports to the actual in- 
voices and calculate the estimated amount due hospitals for the enrollees 
whose claims had not been received by the plan at that time. 

NoTE; Authority cited: Section 1344, Health and Safety Code. Reference: Sec- 
tions 1375.1, 1376 and 1377, Health and Safety Code. 

History 

1. New section filed 3-3-83; effective thirtieth day thereafter (Register 83, No. 
10). 

2. Change without regulatory effect amending subsections (a) and (c) filed 
7-18-2000 pursuant to section 100, title 1, California Code of Regulations 
(Register 2000, No. 29). 

§ 1300.77.3. Report on Reimbursements Exceeding Ten 
Percent. 

(a) Every plan which reimburses providers of health care services or 
subscribers and enrollees in the manner described in subdivision (a) or 
(b) of Section 1377 of the Act shall make and maintain as part of its re- 
cords a computation for each calendar month and calendar quarter of re- 
imbursements made, classified as provided in Section 1377, and showing 
the percentage of each class of reimbursements made to total expendi- 
tures for health care services during such month or quarter. 

(b) When a report is required by subdivision (a) of Section 1 377 of the 
Act. such report shall be filed with the Director no later than 30 business 
days after the close of the calendar quarter. 

(c) When a report is required by subdivision (b) of Section 1377 of the 
Act, such report shall be filed with the Director no later than 30 business 



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Title 28 



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§ 1300.80 



days after the close of the calendar month during which actual reimburse- 
ments made, or the amount estimated for incurred and unreported claims, 
exceeds 10 percent of its total expenditures for health care services. 
Note-. Authorilv cited: Section i 344, Health and Safety Code. Reference: Section 
1.177. Health and Safety Code. 

History 

1. Editorial correction adding NOTE filed 12-8-82 (Register 82, No. 50). 

2. Change without regulatory effect amending subsections (b) and (c) filed 
7-18-2000 pursuant to section 100, title 1, California Code of Regulations 
(Register 2000. No. 29). 

§ 1300.77.4. Reimbursements on a Fee-for-Services 
Basis: Determination of Status of Claims. 

Every plan shall institute procedures whereby all claim forms received 
by the plan from providers of health care services for reimbursement on 
a fee-for-service basis and from subscribers and enrollees for reimburse- 
ment are maintained and accounted for in a manner which permits the de- 
termination of the date of receipt of any claim, the status of any claim, the 
dollar amount of unpaid claims at any time, and rapid retrieval of any 
claim. Although any categories for status-determination held unobjec- 
tionable by the Director may be used, for the purposes of this section, the 
following status-determination categories, as a group, shall be presump- 
tively reasonable: 

(1) to be processed. 

(2) processed, waiting for payment, 

(3) pending, waiting for approval for payment or denial, 

(4) pending, waiting for additional information, 

(5) denied. 

(6) paid. and. if appropriate, 

(7) other. These procedures shall involve the use of either a claims log, 
claims numbering system, electronic data processing records, and/or any 
other method held unobjectionable by the Director. 

NOTE: Authority cited: Section 1344. Health and Safety Code. Reference: Sec- 
tions 1375.1, 1376 and 1377, Health and Safety Code. 

History 

1. New section Hied 3-3-83; effective thirtieth day thereafter (Register 83, No. 
10). 

2. Change without regulatory effect amending first paragraph and subsection (7) 
filed 7- 1 8-2000 pursuant to section 100, title J , California Code of Regulations 
(Register 2000, No. 29). 

§ 1300.78. Administrative Costs. 

(a) For the purposes of Section 1378 of the Act. "administrative costs" 
include only those costs which arise out of the operation of the plan as 
such, excluding direct and overhead costs incurred in the furnishing of 
health care services which would be ordinarily incurred in the provision 
of such services whether or not through a plan. Administrative costs in- 
clude the following: 

(1) Salaries, bonuses and benefits paid or incurred with respect to the 
officers, directors, partners, trustees or other principal management of 
the Plan, less to the extent that such persons also are providers of health 
care services, the minimum reasonable cost of obtaining such services 
from others. 

(2) The cost of soliciting and enrolling subscribers and enrollees, in- 
cluding the solicitation of group contracts, and including any indirect 
costs of enrollment borne on behalf of the plan by the holder of a group 
contract. 

(3) The cost of receiving, processing and paying claims of providers 
of health care services and of claims for reimbursement by subscribers 
and enrollees, excluding the actual amount paid on such claims. 

(4) Legal and accounting fees and expenses. 

(5) The premium on the fidelity and surety bonds, and any insurance 
maintained pursuant to Section 1377, and any insurance or other expense 
incurred for the purposes of complying with Section 1375 of the Act. 
Malpractice insurance is not included within this subsection. 

(6) All costs associated with the establishment and maintenance of 
agreements with providers of health care services, excluding the cost of 
reviewing quality and utilization of such services, and the cost of review- 
ing utilization of health care services on a referral basis. 



(7) The direct or pro rata portion of all expenses incurred in the opera- 
tion of the plan which are not essential to the actual provision of health 
care services to subscribers and enrollees, including but not limited to of- 
fice supplies and equipment, clerical services, interest expense, insur- 
ance, dues and subscriptions, licenses (other than licenses for medical fa- 
cilities, equipment or personnel), utilities, telephone, travel, rent, repairs 
and maintenance, depreciation of facilities and equipment, and charita- 
ble or other contributions. 

(b) The administrative cost incurred by a plan, directly, as herein de- 
fined, shall be reasonable and necessary, taking into consideration such 
factors as the plan's stage of development and other considerations. If the 
administrative costs ofan established plan exceed 15 percent, or if the ad- 
ministrative costs of a plan in the development phase exceed 25 percent, 
during any period of the revenue obtained by the plan froin subscribers 
and enrollees, or paid to the plan on their behalf, the plan shall demon- 
strate to the Director, if called upon to do so, that its administrative costs 
are not excessive administrative costs within the meaning of Section 
1 378 and are justified under the circumstances and/or that it has instituted 
procedures to reduce administrative costs which are proving effective. 
An established plan is a plan which has been in operation for a period of 
five years or more. For the purposes of Section 1378 of the Act. money 
borrowed will be deemed to be money derived from revenue obtained 
from subscribers and enrollees to the extent that such revenue is exposed 
to liability for repayment of such borrowings or that repayment is antici- 
pated from such revenues and '"money not derived from" such revenues 
includes only net assets arising independently of the operafion of the plan 
and not traceable on a historical basis to such revenues, whether as net 
profit or otherwise. 

NOTE: Authority cited: Section 1344. Health and Safety Code. Reference: Section 
1378, Health and Safety Code. 

History 

1. Editorial correction adding NOTE filed 12-8-82 (Register 82, No. 50). 

2. Change without regulatory effect amending subsection (b) filed 7-1 8-2(XX) pur- 
suant to section 1 00, title 1 , California Code of Regulations (Register 2000. No. 
29). 



Article 10. Medical Surveys 

§ 1300.80. Medical Survey Procedure. 

(a) Unless the Director in his discretion determines that advance notice 
will render the survey less useful, a plan will be nofified approximately 
four weeks in advance of the date for commencement of an onsite medi- 
cal survey. The Director may, without prior nofice. conduct inspections 
of plan facilities or other elements of a medical survey, either in conjunc- 
fion with the medical survey or as part ofan unannounced in.spection pro- 
gram. 

(b) The onsite medical survey of a plan shall include, but not be limited 
to, the following procedures to the extent considered necessary based 
upon prior experience with the plan and in accordance with the proce- 
dures and standards developed by the Department. 

(1) Review of the procedures for obtaining health services including, 
but not limited to, the scope of basic health care services. 

(A) The availability and adequacy of facilifies for telephone commu- 
nication with health personnel, emergency care facilities, out-of-the- 
area coverage, referral procedures, and medical encounters. 

(B) The means of advising enrollees of the procedures to obtain care, 
including the hours of operafion, location and nature of facilities, types 
of care, telephone and other arrangements for appointment setting. 

(C) The availability of qualified personnel at each facility referred to 
in Section 1368(b) to receive and handle inquiries concerning care, plan 
contracts, and grievances. 

(2) Review of the design and implementation of procedures for re- 
viewing and regulating utilization of services and facilities. 

(3) Review of the design and implementation of procedures to review 
and control costs. 

(4) Review of the design, implementafion and effectiveness of the in- 
ternal quality of care review systems, including review of medical re- 



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§ 1300.80.10 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



cords and medical records systems. A review of medical records and 
medical records systems may include, but is not limited to, determining 
whether: 

( A) The entries estaWish the diagnosis stated, including an appropriate 
history and physical findings; 

(B) The therapies noted reflect an awareness of current therapies; 

(C) The important diagnoses are summarized or highlighted; (Impor- 
tant are those conditions that have a bearing on future clinical manage- 
ment.) 

(D) Drug allergies and idiosyncratic medical problems are conspicu- 
ously noted; 

(E) Pathology, laboratory and other reports are recorded; 

(F) The health professional responsible for each entry is identifiable; 

(G) Any necessary consultation and progress notes are evidenced as 
indicated; 

(H) The maintenance of an appropriate system for coordination and 
availability of the medical records of theenrollee, including out-patient, 
in-patient and referral services and significant telephone consultations. 

(5) Review of the overall performance of the plan in providing health 
care benefits, by consideration of the following: 

(A) The numbers and quahfications of health professional and other 
personnel; 

(B) The provision of, incentives for, and participation in, continuing 
education for health personnel and the provision for access to current 
medical literature; 

(C) The adequacy of all physical facilities, including lighting, cleanli- 
ness, maintenance, equipment, furnishings, and convenience to enroll- 
ees, plan personnel and visitors; 

(D) The practice of health professionals and allied personnel in a func- 
tionally integrated manner, including the extent of shared responsibility 
for patient care and coordinated use of equipment, medical records and 
other facilities and services; 

(E) The appropriate functioning of health professionals and other 
health personnel, including specialists, consultants and referrals; 

(F) Nursing practices, including reasonable supervision; 

(G) Written nondiscriminatory personnel practices which attract and 
retain qualified health professionals and other personnel; 

(H) The adequacy and utilization of pathology and other laboratory fa- 
cilities, including the quality , efficiency and appropriateness of laborato- 
ry procedures and records and quality control procedures; 

(I) X-ray and radiological services, including staffing, utilization, 
equipment, and the promptness of interpretation of X-ray films by a qu- 
alified physician; 

(J) The handling and adequacy of medical record systems, including 
filing procedures, provisions for maintenance of confidentiality, the effi- 
ciency of procedures for retrieval and transmittal, and the utilization of 
sampling techniques for medical records audits and quality of care re- 
view; 

(K) The adequacy, including convenience and readiness of availabil- 
ity to enrollees, of all provided services; 

(L) The organization of the plan and its mechanisms for furnishing 
health care services, including the supervision of health professionals 
and other personnel; 

(M) The extent to which individual medical decisions by qualified 
medical personnel are unduly constrained by fiscal or administrative per- 
sonnel, policies or considerations; 

(N) The adequacy of staffing, including medical speciaUies. 

(6) Review of the overall performance of the plan in meefing the health 
needs of enrollees. 

(A) Accessibility of facilities and services, based upon location of fa- 
cilities, hours of operation, waiting periods for services and appoint- 
ments, including elective services, the availability of parking and trans- 
portation; 

(B) Continuity of care, including the ability of enrollees to select a pri- 
mary care physician, staffing in medical specialties or arrangements 



therefor; the referral system (including instmctions, monitoring and 
follow-up); the maintenance and ready availability of medical records; 
and the availability of health educafion to enrollees; 

(C) The grievance procedure required by Secdon 1368 of the Act, in- 
cluding the availability to enrollees and subscribers of grievance proce- 
dure information, the time required for and the adequacy of the response 
to grievances and the ufilizafion of grievance information by plan man- 
agement. 

(7) In considering the above and in pursuit of the survey objectives, the 
survey team may perform any or all of the following procedures: 

(A) Private interviews and group conferences with enrollees, physi- 
cians and other health professionals, and members of its administrative 
staff including, but not limited to, its principal management persons. 

(B) Examination of any records, books, reports and papers of the plan 
and of any management company, provider or subcontractor providing 
health care or other services to the plan including, but not limited to, the 
minutes of medical staff meetings, peer review, and quality of care re- 
view records, duty rosters of medical personnel, surgical logs, appoint- 
ment records, the written procedures for the internal operation of the 
plan, and contracts and correspondence with enrollees and with provid- 
ers of health care services and of other services to the plan, and such addi- 
tional documentation the Director may specifically direct the surveyors 
to examine. 

(C) Physical examinaUon of facilities, including equipment. 

(D) Investigation of grievances or complaints from enrollees or from 
the general public. 

NOTE: Authority cited: Section 1 344, Health and Safety Code. Reference: Section 
1380, Health and Safety Code. 

History 

1 . Amendment of subsection (b)(7)(D) filed 12-8-82; effective thirtieth day there- 
after (Register 82, No. 50). 

2. Change without regulatory effect amending subsections (a) and (b)(7)(B) filed 
7-18-2(X)0 pursuant to section 100, title 1, California Code of Regulations 
(Register 2000, No. 29). 

§ 1300.80.10. Medical Survey: Report of Correction of 
Deficiencies. 

Prior to or immediately upon the expirafion of the 30-day period fol- 
lowing notice to a plan of a deficiency as provided in subdivision (h) of 
Section 1380 of the Act, the plan shall file a written statement with the 
Director identifying the deficiency and describing the action taken to cor- 
rect the deficiency and the results of such action. The report shall be 
signed by a principal officer of the plan. 

Where such deficiencies may be reasonably adjudged to require long- 
term corrective action or to be of a nature which may be reasonably ex- 
pected to require a period longer than 30 days to remedy, in some in- 
stances evidence that the plan has initiated remedial action and is on the 
way to achieving acceptable levels of compliance may be submitted. 
NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Section 

1380, Health and Safety Code. 

History 

1. Amendment filed 12-8-8; effective thirtieth day thereafter (Register 82, No. 
50). 

2. Change without regulatory effect amending section filed 7-18-2000 pursuant 
to section 1 00, title 1 , California Code of Regulations (Register 2000, No. 29). 

Article 11. Examinations 

§ 1300.81 . Removal of Books and Records from State. 

The books and records of a plan, management company, solicitor firm, 
and any provider or subcontractor providing health care or other services 
to a plan, management company, or solicitor firm shall not be removed 
from this state without the prior consent of the Director. 
NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Section 

1381, Health and Safety Code. 

History 
1 . Amendment filed 12-8-82; effective thirtieth day thereafter (Register 82, No. 
50). 



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Title 28 



The Department of Managed Health Care 



§ 1300.84.05 



2. Change without regulatory effect amending section filed 7-18-2000 pursuant 
to section 1 00. title"] . California Code o) Regulations (Register 2000. No. 29). 

§1300.82. Examination Procedure. 

Regular and additional or nonroutine examinations conducted by the 
Department pursuant to Section 1382 will ordinarily be commenced on 
an unannounced basis. To the extent feasible, deficiencies noted will be 
called to the attention of the responsible officers of the company under 
examination during the course of the exatnination. and in that event the 
company should take the corrective action indicated. When deemed ap- 
propriate, the company will be advised by letter of the deficiencies noted 
upon the examination. If the deficiency letter requires a report from the 
company, such report must be furnished within 1 5 days or such addition- 
al time as may be allowed. 

NOTE: Authority cited: Section I .^44, Health and Safety Code, Reference: Section 
1382, Health and Safety Code. 

History 

1. Amendment filed 12-8-82; effective thirtieth day thereafter (Register 82, No. 
50). 

§ 1300.82.1. Additional or Nonroutine Examinations and 
Surveys. 

(a) An examination or survey is additional or nonroutine for good 
cause for the purposes of Section 1382(b) when the reason for such ex- 
amination or survey is any of the following: 

(1 ) The plan's noncompliance with written instructions from the De- 
partment; 

(2) The plan has violated, or the Director has reason to believe that the 
plan has violated, any of the provisions of Sections 1352, 1370, 1375.1, 
1376, 1384 and 1385 of the Act and Sections 1300.76, 1300.80.10, 
1300.81, 1300.82(a), 1300.84.2 and 1300.84.3 of these regulations. 

(3) The plan has committed, or the Director has reason to believe that 
the plan has committed, any of the acts or omissions enumerated in Sec- 
tion 1386of the Act. 

(4) The Director deems such additional or nonroutine examination or 
survey necessary to verify representations made to this Department by 
a plan in response to a deficiency letter. 

(b) Each situation giving rise to an additional or nonroutine examina- 
tion or survey shall be evaluated on a case-by-case basis as to the seri- 
ousness of the violation, or lack of timely or adequate response by the 
plan to the Department's request to correct the violation. The plan shall 
be notified in writing of the provisions of the Act or regulations which 
have been, or may have been, violated and which therefore caused such 
additional or nonroutine examination or survey to be performed. The ex- 
pense of such examinations and surveys shall be charged to the plan be- 
ing examined or surveyed in accordance with Section 1382(b). 
NOTE: Authority cited: Section 1344. Health and Safety Code. Reference: Sec- 
tions 1352, 1370, 1375.1, 1376, 1380, 1382, 1384, 1385 and 1386, Health and 
Safety Code. 

History 

1. New secuon filed 3-3-83; effective thirtieth day thereafter (Register 83, No. 
10). 

2. Change without regulatory effect amending subsections (a)(2)-(4) filed 
7-18-2000 pursuant to section 100, title 1, California Code of Regulations 
(Register 2000, No. 29). 



Article 12. Reports 



§1300.83. Annual Report. 

NotE: Authority cited: Secfion 1344, Health and Safety Code. Reference: Stats. 
1979, Ch. 1083. 

History 

1 . Repealer filed 5-9-80; effective thirtieth day thereafter (Register 80, No. 19). 

§1300.84. Financial Statements. 

(a) Whenever pursuant to these rules or pursuant to an order or request 
of the Director pursuant to the Act a financial statement or other report 
is required to be audited or be accompanied by the opinion of a certified 
public accountant or public accountant, such accountant shall be inde- 



pendent of the licensee, determined in accordance with section 602.02 of 
Financial Reporting Release Number I issued by the Securities and Ex- 
change Commission. 

(b) The financial statements required under subsections (a), (b) and (c) 
of Section 1 384 of the Act shall be audited by an independent accountant 
in accordance with section 1300.45(e). 

(c) Except as provided in subsection (d), financial statements of a plan 
required pursuant to these rules must be on a combining basis with an af- 
filiate, if the plan or such affiliate is substantially dependent upon the oth- 
er for the provision of health care, management or other services. An af- 
filiate will normally be required to be combined, regardless of its form 
of organization, if the following conditions exist: 

( 1 ) The affiliate controls, is controlled by, or is under common control 
with, the plan, either directly or indirectly (see subsections (c) and (d) of 
section 1300.45), and 

(2) The plan or the affiliate is substantially dependent, either directly 
or indirectly, upon the other for services or revenue. 

(d) Upon written request of a plan, the Director may waive the require- 
ment that an affiliate be combined in financial statements required pur- 
suant to these mies. Normally, a waiver will be granted only when 

(1) the affiliate is not directly engaged in the delivery of health care 
services or 

(2) the affiliate is operating under an authority granted by a govern- 
mental agency pursuant to which the affiliate is required to submit peri- 
odic financial reports in a form prescribed by such governmental agency 
that cannot practicably be reformatted into the form prescribed by these 
rules (such as an insurance company). 

(e) When combined financial statements are required by this section, 
the independent accountant's report or opinion must cover all the entities 
included in the combined financial statements. If the accountant's report 
or opinion makes reference to the fact that a part of the examination was 
performed by another auditor, the plan shall also file the individual finan- 
cial statements and report or opinion issued by the other auditor. 

(0 Plans which have subsidiaries that are required to be consolidated 
under generally accepted accounting principles must present either 

(1) consolidating financial statements, or 

(2) consolidating schedules for the balance sheet and statement of op- 
erations, which in either case must show the plan separate from the other 
entities included in the consolidated balances. 

(g) This secfion shall not apply to a plan which is a public entity or po- 
litical subdivision. 

(h) All filings of financial statements required pursuant to these rules 
must include an original and one copy. 

NoTE: Authority cited: Section 1344, Health and Safety Code. Reference: Section 
1384, Health and Safety Code. 

History 

1. Amendment filed 5-9-80; effective thirtieth day thereafter (Register 80, No. 
19). 

2. Amendment filed 7-3-84; effective thirtieth day thereafter (Register 84. No. 
27). 

3. Amendment of subsecfion (e) and new subsection (h) filed 7-21-86; effective 
thirtieth day thereafter (Register 86, No. 30). 

4. Amendment of subsection (a) filed 12-14-90; operative 12-31-90 (Register 
91, No. 6). 

5. Change without regulatory effect amending subsections (a) and (d) filed 
7-18-2000 pursuant to secfion 100, title 1, California Code of Regulations 
(Register 2000, No. 29). 

§ 1300.84.05. Change of Independent Accountant. 

Whenever the financial statements required pursuant to subdivisions 
(a), (b) or (c) of Secfion 1384 are to be reported upon or certified by an 
accountant other than the accountant certifying the plan's most recent fil- 
ing, the plan must furnish the Director with a separate letter stating 
whether in the eighteen (18) months preceding the engagement of the 
new accountants there was any disagreement with the former accoun- 
tants on any matter of accounting principles or pracfices, financial state- 
ment disclosure or auditing procedures, which such disagreement if not 
resolved to the satisfacfion of the former accountants would have caused 
him to make reference to the subject matter of such disagreement in his 



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§ 1300.84.06 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



opinion or report. This letter must be verified by a principal officer of the 
plan. The plan shall also request the former accountants to furnish them 
with a letter addressed to the Director stating whether he agrees with the 
statements contained in the letter of the plan and, if not, stating the re- 
spects in which he does not agree. The notification by the plan along with 
the former accountant's letter, if necessary, must be furnished to the Di- 
rector within 45 days of the engagement of the new accountants. 
NOTE: Authority cited: Section 1344. Health and Safety Code. Reference: Sec- 
tions 134.S and 1384. Health and Safety Code. 

History 

1. New section filed 6-2-78; effective thirtieth day thereafter (Register 78. No. 
22). 

2. Change without regulatory effect amending section filed 7-14-99 pursuant to 
section 100, title 1, California Code of Regulations (Register 99. No. 29). 

3. Change without regulatory effect amending section filed 7-18-2000 pursuant 
to .section 100, title I, California Code of Regulations (Register 2000. No. 29). 

§ 1300.84.06. Plan Annual Report. 

The annual report required of a plan pursuant to subdivision (c) of sec- 
tion 1384 of the Act shall include or be accompanied by the following 
information for the period covered by the report, except as otherwise spe- 
cified: 

(a) The "Health Maintenance Organization Financial Report of Af- 
fairs and Conditions Form" as adopted by the National Association of In- 
surance Commissioners commonly known as the "HMO Annual Report- 
ing Form" and the "Orange Blank" published by the Brandon Insurance 
Service Company. The "HMO Annual Reporting Form," revised 1989, 
is incorporated by reference. 

(b) Sufficient and appropriate supplemental information to provide 
adequate disclosure of at least the following: 

(1) An explanation of the method of calculating the provision for in- 
curred and unreported claims. 

(2) Accounts and notes receivable from officers, directors, owners or 
affiliates, including the name of the debtor, nature of the relationship, na- 
ture of the receivable and its terms. 

(3) Donated materials or services received by the plan for the period 
of the financial statements and the donor's name and affiliation with the 
plan, together with an explanation of the method used in determining the 
valuation of such materials or services. 

(4) Forgiven debt or obligations during the period of the financial 
statements, including the creditor's name and affiliation with the plan 
and a summary of how the obligation arose. 

(5) A calculation of the plan's tangible net equity in accordance with 
section 1300.76 of these rules. Such calculation shall include disclosure 
of the following information used to determine the required amount of 
tangible net equity pursuant to section 1300.76(a) and (b): 

(A) Revenues 

1 . Two percent of the first $ 1 50 million, or $7.5 million for specialized 
plans, of annualized premium revenues; 

2. One percent of annualized premium revenues in excess of $150 mil- 
lion, or $7.5 million for specialized plans; 

3. Sum of 1. and 2. above. 

(B) Healthcare Expenditures 

1. Eight percent of the first $150 million, or $7,500,00 for specialized 
plans of annualized health care expenditures except those paid on a capi- 
tated basis or managed hospital payment basis. 

2. Four percent of the annualized health care expenditures, except 
those paid on a capitated basis or managed hospital payment basis, which 
are in excess of $150 million, or $7,500,000 for specialized plans; 

3. Four percent of annualized hospital expenditures paid on a managed 
hospital payment basis. 

4. Sum of 1., 2. and 3. above. 

(6) The percentage of administrative costs to revenue obtained from 
subscribers and enrollees. 

(7) The amount of health care expenses incurred during the six month 
period immediately preceding the date of the report which were or will 
be paid to noncontracting providers or directly reimbursed to subscribers 
and enrollees. 



(8) Total costs for health care services for the immediately preceding 
six months. 

(9) If the amount of health care expenses incurred during the six month 
period immediately preceding the date of the report which were or will 
be paid to noncontracting providers or directly reimbursed to subscribers 
and enrollees exceeds 10% of the total costs for health care services for 
the immediately preceding six months, the following information, deter- 
mined as of the date of the report, shall be provided: 

(A) Amount of all claims for noncontracting provider services re- 
ceived for reimbursement but not yet processed. 

(B) Amount of all claims for noncontracting provider services denied 
for reimbursement during the previous 60 days. 

(C) Amount of all claims for noncontracting provider services ap- 
proved for reimbursement but not yet paid. 

(D) An estimate of the amount of claims for noncontracting provider 
services incurred, but not reported. 

(E) A calculation of compUance with section 1377(a) as determined 
in accordance with such section. 

Note. Authority cited: Sections 1344 and 1384, Health and Safety Code. Refer- 
ence: Section 1384, Health and Safety Code. 

History 

1 . New section fried 5-9-80; effective thirtieth day thereafter (Register 80, No. 
19). 

2. Amendment filed 7-21-86; effective thirtieth day thereafter (Register 86, No. 
30). 

3. Amendment filed 12-14-90; operative 12-31-90 (Register 91, No. 6). 
§ 1 300.84.1 . Verification of Reports. 

NOTE: Authority cited: Sections 1344 and 1384, Health and Safety Code. 

History 

1. Repealer filed 7-21-86; effective thirtieth day thereafter (Register 86, No. 30). 

§ 1300.84.2. Quarterly Financial Reports. 

Within 45 days after the close of each quarter of its fiscal year, each 
licensed plan shall file with the Director its report consisting of the fol- 
lowing information: 

(a) Financial statements (which need not be certified) prepared in ac- 
cordance with generally accepted accounting principles, prepared on a 
basis consistent with the certified financial report furnished by the plan 
pursuant to Section 1384(c) of the Act. unless the plan receives the writ- 
ten approval of the Director to vary from that basis and the variance is 
adequately noted in its report under this section. The financial statements 
shall include the following statements, reports and schedules contained 
in the "HMO Annual Reporting Form" identified in Section 
1300.84.06(a) of these rules for the period covered by the report: 

(1) First page: "Statement"; 

(2) Report #1-Part A: Balance Sheet Assets; 

(3) Report #1-Part B: Balance Sheet Liabilities and Net Worth; 

(4) Report #2: Statement of Revenue and Expenses; 

(5) Report #3: Statement of Financial Position and Net Worth; 

(6) Report #4: Enrollment and Utilization Table; and 

(7) Section I of Schedule F: Unpaid Claims Analysis. 

(b) The information required pursuant to Section 1300.84.06(b) of 
these rules for the period covered by the report, except as otherwise speci- 
fied. 

NOTE: Authority cited: Sections 1344 and 1384, Health and Safety Code. Refer- 
ence: Section 1384, Health and Safety Code. 

History 

1. Amendment filed 5-9-80; effective thirtieth day thereafter (Register 80, No. 
19). 

2. Amendment filed 7-21-86; effective thirtieth day thereafter (Register 86, No. 
30). 

3. Change without regulatory effect amending first paragraph and subsection (a) 
filed 7-18-2000 pursuant to section 100, title 1, California Code of Regulations 
(Register 2000, No. 29). 

§ 1300.84.3. Monthly Financial Reports. 

(a) Each plan shall maintain internal procedures which provide one or 
more of its principal officers on at least a monthly basis with the informa- 
tion necessary for the report required pursuant to this section. 



Page 72 



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§ 1300.84.5 



(b) Each plan shall report to the Director the increase during any calen- 
dar quarter of the amount owed by the plan to providers for health care 
services, if the amount of such increase exceeds 10 percent of the amount 
owed at the close of the previous quarter. In the event the amount owed 
to a provider is disputed, the amount claimed as due by the provider shall 
control for the purposes of this section. This report shall be filed within 
30 days after the close of the quarter for which the report is made. 

(c) Each plan shall promptly advise the Director of any extraordinary 
loss, or of any claim whether or not admitted by the plan or a contingent 
claim, which 

( 1 ) renders the plan unable to meet its obligations as they become due, 
or 

(2) reduces (or would reduce) the tangible net equity of the plan below 
the amount required by section 1300.76 of these rules. 

(d) Each plan shall, upon the occurrence of any of the events specified 
below, file a report with the Director within 30 days of the close of the 
month for which such condition is noted, and each month thereafter until 
notified by the Director to discontinue such reports. Each such report 
shall consist of a balance sheet and statement of operations of the plan, 
which need not be certified, a calculation of tangible net equity in accor- 
dance with section 1300.76 of these rules, and the verification required 
by subsection (e) of this rule. Such financial statements must be prepared 
on a basis consistent with the financial statements furnished by the plan 
pursuant to section 1300.84.2 of these rules. The events the occurrence 
of which shall require reporting under this section are the following: 

( 1 ) The tangible net equity of the plan, individually or on a combined 
basis with affiliates (Rule 1300.84(c)), is less than the following: 

(A) 200% of the minimum tangible net equity required by section 
1300.76(c)(1); 

(B) 155% of the minimum tangible net equity required by section 
1300.76(c)(2); 

(C) 148% of the minimum tangible net equity required by section 
1300.76(c)(3); 

(D) 137% of the minimum tangible net equity required by section 
1300.76(c)(4); 

(E) 136% of the minimum tangible net equity required by section 
1300.76(c)(5); 

(F) 130% of the minimum tangible net equity required by section 
1300.76(c)(6); 

(G) 130% of the minimum tangible net equity required by section 
1300.76(a) or (b), as specified. 

(2) The statement of operations of the plan, individually or on a com- 
bined basis with affiliates (Rule 1300.84(c)), reflects a loss during any 
month the amount of which exceeds the difference between the tangible 
net equity of the plan (or the combined entity) as of the end of such month 
and the minimum net equity required by Section 1300.76 of these rules. 

(3) The plan has not been licensed for twelve (12) months. 

(e) Each report required to be furnished by a plan pursuant to subsec- 
tion (d) of this rule shall be verified by a principal officer of the plan as 
follows: 

I certify (or declare) under penalty of perjury under the laws of the 
State of California that 1 have read this report and know the contents 
thereof, and that the statements therein are true and correct. 
Executed at , on 



(Place) 



(Date) 



(Signature) 

NOTE: Authority cited: Sections 1344 and 1384, Health and Safety Code. Refer- 
ence: Section 1384, Health and Safety Code. 

HtSTORY 

1. Amendment of subsection (d) filed 6-2-78; effective thirtieth day thereafter 
(Register 78, No. 22). 

2. Amendment of subsection (d) filed 7-3-84; effective thirtieth day thereafter 
(Register 84. No. 27). 

3. Amendment filed 7-21-86; effective thirtieth day thereafter (Register 86, No. 
30). 

4. Change without regulatory effect of subsection (d) (Register 86, No. 38). 



.S. Amendment of subsection (d) filed 12-14-90: operative 12-31-90 (Kesiister 
91. No. 6). 

6. Change without regulatory effect amending subsection (e) filed 4-4-2000 pur- 
suant lo section 1 00, title 1 , California Code of Regulations ( Register 2000. No. 
14). 

7. Change without regulatory effect amending subsections (b). (c) and (d) filed 
7-18-2000 pursuant to section 100, title 1, California Code of Reculations 
(Register2000, No. 29). 

§ 1300.84.4. Financial Reports by Solicitor Firms. 

NOTE: Authority cited: Section 1 344.. Health and Safety Code. Reference: Section 
1384. Health and Safely Code. 

History 

1. Amendment filed 1-12-83; effective thirtieth day thereafter (Register 83. No. 
3). 

2. Repealer filed 7-.V84; effective thirtieth day thereafter (Register 84. No. 27). 

§ 1 300.84.5. Public Entity Plans. 

(a) A plan which is a public entity or political subdivision shall be sub- 
ject to the provisions of this section. 

(1) Financial statements of a plan which is a public entity or political 
subdivision, including financial statements or reports of specific funds or 
groups of accounts where health plan activity is recorded, which are re- 
quired to be submitted pursuant to Section 1351(h) or 1384(c) of the Act 
or by rule, order or request of the Director, shall be accompanied either 
by an opinion of a certified public accountant or public accountant or by 
a report of a government audit organization. 

(2) For the purposes of Sections 1351 and 1384, governmental audit- 
ing standards are defined to include the standards set forth in this item. 
Every audit which results in the opinion or report referred to in Item ( I ) 
of this subsecfion shall be conducted in accordance with the governmen- 
tal auditing standards indicated below: 

(A) General Standards: 

(i) The auditors assigned to perform the audit must collectively pos- 
sess adequate professional proficiency for the tasks required. 

(ii) In all matters relafing to the audit work, the audit organization and 
the individual auditors, whether government or public, must be free from 
personal or external impairments to independence, must be organizaUon- 
ally independent, and shall maintain an independent attitude and appear- 
ance. 

(iii) Due professional care is to be used in conducfing the audit and in 
preparing related reports. 

(B) Standards of Field Work: 

(i) The work is to be adequately planned and assistants, if any, are to 
be properly supervised. 

(ii) There is to be a proper study and evaluation of the existing internal 
control as a basis for reliance thereon and for the determination of the re- 
sultant extent of the tests to which auditing procedures are to be re- 
stricted. 

(iii) Sufficient competent evidential matter is to be obtained through 
inspection, observation, inquiries, and confirmations to afford a reason- 
able basis for an opinion regarding the financial statements under exami- 
nation. 

(C) Standards of Reporting: 

(i) The report shall state whether the financial statements are presented 
in accordance with generally accepted accounting principles. 

(ii) The report shall state whether such principles have been consis- 
tently observed in the current period in relation to the preceding period. 

(iii) Informafive disclosures in the financial statement are to be re- 
garded as reasonably adequate unless otherwise stated in the report. 

(iv) The report shall either contain an expression of opinion regarding 
the financial statements, taken as a whole, or an assertion to the effect that 
an opinion cannot be expressed. When an overall opinion cannot be ex- 
pressed, the reasons therefor should be stated. In all cases where an audi- 
tor's name is associated with financial statements, the report should con- 
tain a clear-cut indicafion of the character of the auditor's examination, 
if any, and the degree of responsibility he is taking. 

(D) Additional Standards and Requirements on Examination and 
Evaluafion for Government Financial and Compliance Audits. 



Page 73 



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§ 1300.84.6 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



(i) Planning shall include consideration of the requirements of all lev- 
els of government. 

(ii) A review is to be made of compliance with applicable laws and reg- 
ulations. 

(iii) A written record of the auditors' work shall be retained in the form 
of working papers. 

(iv) Auditors shall be alert to situations or transactions that could be 
indicative of fraud, abuse, and illegal expenditures and acts and if such 
evidence exists, extend audit steps and procedures to identify the effect 
on the entity's financial statements. 

(E) Additional Standards and Requirements on Reporting for Govern- 
ment Financial and Compliance Audits. 

(i) Written audit reports are to be submitted to the appropriate officials 
of the organization audited and to the appropriate officials of the organi- 
zations requiring or arranging for the audits unless legal restrictions or 
ethical considerations prevent it. Copies of the reports should also be sent 
to other officials who may be responsible for taking action and to others 
authorized to receive such reports. Unless restricted by law or regula- 
tions, copies should be made available for public inspection. 

(ii) A statement in the auditors' report that the examination was made 
in accordance with generally accepted government auditing standards 
for financial and compliance audits will be acceptable language to indi- 
cate that the audit was made in accordance with these standards. 

(iii) Either the auditors' report on the entity's financial statements or 
a separate report shall contain a statement of positive assurance on those 
items of compliance tested and negative assurance on those items not 
tested. It shall also include material instances of noncompliance and in- 
stances or indications of fraud, abuse, or illegal acts found during or in 
connection with the audit. 

(iv) The auditors shall report on their study and evaluation of internal 
accounting controls made as part of the financial and compliance audit. 
They shall identify as a minimum: (a) the entity's significant internal ac- 
counting controls, (b) the controls identified that were evaluated, (c) the 
controls identified that were not evaluated (the auditor may satisfy this 
requirement by identifying any significant classes of transacUons and re- 
lated assets not included in the study and evaluation), and (d) the material 



weaknesses identified as a result of the evaluafion. 

(v) Either the auditors' report on the entity's financial statements or a 
separate report shall contain any other material deficiency findings iden- 
tified during the audit not covered in (ii) above. 

(vi) If certain informafion is prohibited from general disclosure, the re- 
port shall state the nature of the information omitted and the requirement 
that makes the omission necessary. 

(3) Financial statements, including reports of specific funds or groups 
of accounts, which are to be submitted pursuant to this secfion must be 
previously approved as to form by the Director. When all health plan ac- 
tivity has been separately controlled and accounted for in an Enterprise 
Fund, the financial statements or reports of such funds are presumptively 
approved as to form for purposes of this subsecfion. 

(b) A plan which is a public enfity or political subdivision shall be 
granted a total or partial exemption from Sections 1300.84.06 and 
1300.84.2 upon proper application therefor, when and to the extent that 

( 1 ) the Director determines that such plan has demonstrated that the 
informafion set forth in Secfions 1300.84.06 and 1300.84.2 is neither 
available to the plan nor necessary for its internal management and can- 
not be produced without significant cost to the plan, and 

(2) such plan undertakes to furnish alternative informafion which the 
Director finds to be reasonable and adequate in view of the circumstances 
of the plan. 

NoTE: Authority cited: Section 1344, Health and Safety Code. Reference: Sec- 
tions 1345, 1351, 1384 and 1385, Health and Safety Code. 

History 

1. New section filed 5-9-80; effective thirtieth day thereafter (Register 80, No. 
19). 

2. Amendment filed 7-3-84; effective thirtieth day thereafter (Register 84, No. 
27). 

3. Change without regulatory effect amending subsections (a)(1), (a)(3) and 
(b)(l )-(2) filed 7-18-2000 pursuant to section 100, title 1, California Code of 
Regulations (Register 2000, No. 29). 

§ 1300.84.6. Plan Annual Enrollee Report. 

(a) On or before May 15th of each year, each licensed plan shall file 
a report in the following form and containing the information specified 
therein: 



Page 74 



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Title 28 



The Department of Managed Health Care 



ij 13(M).84.6 



Stale o1" California 
Deparinient q\' Managed Care 



Depl. of Managed Care 
File Number 



REPORT OF ENROLLMENT IN PLAN 

Knox-Keene Health Care Service Plan Act 



Name olPlan: 



2. Name, mailing address, and telephone number oiPlan official to whom communications concerning this report 
should be addressed: 

( ) 



Name 



Phone No. — Include area code 



Mailinti Address 



City. Slate and ZIP Code 

3. For the purposes of Section 1356(b) of the Knox-Keene Health Care Service Plan Act, the Plan reports that. 
as of March 3 1 of the year in which this report is made, its records reflected the following enrollments, in accor- 
dance with the definitions contained in Section 1345, Health and Safety Code: 

Number of subscribers 

Number of enrollees 



(Note: As required by Section 1356(b), if the number of enrollees is estimated, the method used for determining 
the estimated enrollment must be disclosed.) 

4. Execution: I certify under penalty of perjury that the above statement is true. 
Executed at on 



City and Stale 



Dale 



Signature 



Print or Type Name of Declarant 



Position with Plan 



NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Sec- 
tions 1356, 1384 and 1385, Health and Safety Code. 

History 
1. New section filed 5-9-80; effective thirtieth day thereafter (Register 80, No. 
19). 



2. Change without regulatory effect amending section filed 1-23-91 pursuant to 
section 100, title 1, California Code of Regulations (Register 92. No. 10). 

3. Change without regulatory effect amending subsection (a) filed 7- 1 8-2000 pur- 
suant to section 1 00, title 1 , California Code of Regulations (Register 2(XX), No. 
29). 



Page 75 



Register 2004, No. 46; 11 - 12-2004 



§ 1300.84.7 



BARCLAYS CALIFORNIA CODE OF REGULATIONS 



Title 28 



§ 1300.84.7. Special Reports Relating to Charitable or 
Public Activities. 

(a) Any plan whose purposes involve any charitable or public pur- 
poses shall provide a special report to the Director upon filing with the 
Attorney General any notice, request, or other materials pursuant to any 
law administered by the Attorney General and relating to matters which 
will or may have any financial effect on or implications for the plan. Such 
special report shall include the information provided to the Attorney 
General together with representations as to whether the transactions, ac- 
tions, or other facts set forth in the materials submitted to the Attorney 
General will or may have any deleterious effect on the financial condition 
of the plan. 

(b) Any plan whose purposes involved any charitable or public pur- 
poses shall provide a special report to the Director upon engaging in any 
transaction to which the corporation is a party and in which one or more 
of its directors has a material financial interest, if such transaction will 
or may have any material financial effect on or implications for the plan. 
Such special report shall specifically describe the transaction and shall 
contain representations as to whether the transaction will or may have 
any deleterious effect on the financial condition or operations of the plan. 

(c) Any filing pursuant to this section may be combined with any ap- 
propriate filings pursuant to Article 2. Part 1 1 , Division 2. Title 1 of the 
Corporations Code and may utilize common exhibits, subject to the pro- 
visions of Section 1300.824(c). 

NOTE: Authority cited: Section 1.^4, Health and Safety Code, Reference: Section 
1384. Health and Safety Code. 

History 

1. New section filed 4-16-82; effective thirtieth day thereafter (Register 82, No. 
16). 

2. Change without regulatory effect amending subsections (a) and (b) filed 
7-18-2000 pursuant to section 100, title 1. California Code of Regulations 
(Register 2000, No. 29). 



Article 13. Books and Records 

§ 1300.85. Books and Records. 

(a) Each plan, solicitor firm, and solicitor shall keep and maintain their 
books of account and other records on a current basis. 

(b) Each plan shall make or cause to be made and retain books and re- 
cords which accurately reflect: 

(1) The names and last known addresses of all subscribers to the plan. 

(2) All contracts required to be submitted to the Department and all 
other contracts entered into by the plan. 

(3) All requests made to the plan for payment of moneys for health care 
services, the date of such requests, and the dispositions thereof. 

(4) A current list of the names and addresses of all individuals 
employed by it as a solicitor. 

(5) A current list of the names and addresses of all solicitor firms with 
which it contracts. 

(6) A current list of the names and addresses of all of the plan's offi- 
cers, directors, principle shareholders, general managers, and other prin- 
ciple persons. 

(7) The amount of any commissions paid to persons who obtain mem- 
bers for plans and the manner in which said commissions are determined. 

(c) Each solicitor firm shall make and retain books and records which 
include a current list of the names and addresses of its partners, if any. 
and all of its employees who make act as solicitors. 

NOTE: Authority cited: Section 1344, Health and Safety Code. Reference: Section 
1385, Health and Safety Code. 

History 
I. Amendment filed 1-12-83; effective thirtieth day thereafter (Register 83, No. 
3). 



§ 1 300.85.1 . Retention of Books and Records. 

Every plan and solicitor firm shall preserve for a period of not less than 
five years, the last two years of which shall be in an easily accessible 
place at the offices of the plan or solicitor firm, the books of account and 
other records required under the provisions of, and for the purpose of the 
Act. After such books and records have been preserved for two years, 
they may be warehoused or stored, or microfilmed, subject to their avail- 
ability to the Director within not more than 5 days after request therefore. 

NOTF: Authority cited: Section 1344, Health and Safety Code. Reference: Section 
1385, Health and Safety Code. 

History 
1. Change without regulatory effect amending section and adding NOTL filed 

7-18-2000 pursuant to section 100. title 1, California Code of Regulations 

(Register2000, No. 29). 



Article 14. Miscellaneous Provisions 

§ 1300.86. Assessment of Administrative Penalties. 

(a) When assessing administrative penaUies against a health plan the 
Director shall determine the appropriate amount of the penalty for each 
violation of the Act based upon one or more of the factors set forth in sub- 
section (b). 

(b) The factors referred to in subsection (a) include, but are not limited 
to the following: 

(1) The nature, scope, and gravity of the violation; 

(2) The good or bad faith of the plan; 

(3) The plan's history of violations; 

(4) The willfulness of the violation; 

(5) The nature and extent to which the plan cooperated with the De- 
partment's investigadon; 

(6) The nature and extent to which the plan aggravated or mitigated 
any injury or damage caused by the violation; 

(7) The nature and extent to which the plan has taken corrective action 
to ensure the violation will not recur; 

(8) The financial status of the plan; 

(9) The financial cost of the health care service that was denied, 
delayed, or modified; 

(10) Whether the violation is an isolated incident; and/or 

(11) The amount of the penalty necessary to deter similar violations 

in the future. 

NOTE: Authority cited: Sections 1341, 1344 and 1386, Health and Safety Code. 
Reference: Section 1386, Health and Safety Code. 

History 
1. New section filed 1 1-8-2004; operative 12-8-2004 (Register 2004, No. 46). 

§1300.87. Civil Penalties. 

For purposes of section 1387 of the Health and Safety Code: 

(a) A violation that is ongoing and continuous is subject to a civil pen- 
alty not to exceed two thousand five hundred dollars ($2,500) for each 
day that the violation continues. 

(b) Each enrollee harmed by a violation of the Act consUtutes a sepa- 
rate and distinct violation subject to a civil penalty not to exceed two 
thousand five hundred dollars ($2,500). 

NOTE: Authority cited: Sections 1344 and 1387, Health and Safety Code. Refer- 
ence: Section 1387. Health and Safety Code; and Section 1 1425.50, Government 
Code. 

History 

1. New section filed 9-18-2003; operative 9-18-2003 pursuant to Government 
Code section 1 1343.4 (Register 2003, No. 38). 

§ 1300.89. Petition for Restoration. 

(a) The fee for the filing of a petition for restoration shall be $100 for*" 
a solicitor, $250 for a solicitor firm, and $500 for a plan. 

(b) A petition for restoration shall be made upon the following form: 



Page 76 



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Title 28 



The Department of Managed Health Care 



§ 1300.89 



(OlTicial Use Only) 



Fee Paid $_ 



Receipt No._ 



DEPARTMENT OF MANAGED CARE 

File No. 

(Insert Tile number of 
previous tilings before the 
Department, if any.) 
FILING FEE: Solicitor: $100 

Solicitor firm: $250 

Plan: $500 
Not refundable except pursuant to 
Section 250.15. Title 10. Califonnia 
Code of Regulations. 



EXECUTION PAGE 

DEPARTMENT OF MANAGED HEALTH CARE 
STATE OF CALIFORNIA 

PETITION FOR RESTORATION 

UNDER THE 

KNOX-KEENE HEALTH CARE SERVICE PLAN ACT OF 1975 

INDICATE TYPE OF FILING BY CHECKING ONE OF THE FOLLOWING: 
D ORIGINAL PETITION FOR SOLICITOR 
D ORIGINAL PETITION FOR SOLICITOR FIRM 
n ORIGINAL PETITION FOR PLAN 
D AMENDMENT TO PETITION FOR SOLICITOR 
D AMENDMENT TO PETITION FOR SOLICITOR FIRM 
D AMENDMENT TO PETITION FOR PLAN 
D SUBSEQUENT PETITION 

Date first petitioned for restoration 

Date of any subsequent petitions 

1 . Name of petitioner (Complete name as appearing on articles of incorporation, partnership agreement, etc.) 



2. Address of principle office of petitioner. 

(Number and Street) (City) 



(State) 



(Zip Code) 



3. Address of principle office of petitioner in the State of California. 

(Number and Street) (City) (State) 



(Zip Code) 



4. Name and address of person to whom communications should be addressed concerning this petition. 



5. Within 20 days of a request from the Director, the petitioner shall furnish additional information as the Direc- 
tor may require pursuant to subsection (c) of this section. 



EXECUTION 
The undersigned, duly authorized by the petitioner, has signed this petition on the petitioner's behalf. 
By: 



(Petitioner) 



Title: 



Page 77 



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§ 1300.89 BARCLAYS CALIFORNIA CODE OF REGULATIONS Title 28 

I certify under penalty of perjury that I have read this petition and the exhibits and attachments and know the con- 
tents, and that the statements are true. 

Executed at on , 

(City) (State) 



(Signature of Declarant) 
(If executed other than in a state which permits verifications under penalty of perjury, attach a verification executed 
and sworn to before a Notary Public.) 

6. Name and address of officer or partner of petitioner who is to receive compliance and informational communica- 
tions from the Department and who is responsible for disseminating the same within the petitioner's organization. 

7. Set forth the grounds upon which the license, employment, or activity was suspended, revoked, or barred. Attach 
a copy of the decision, administrative record, and order suspending, revoking or barring petitioner. 

8. Set forth the basis upon which petitioner believes that restoration is warranted. 

9. Set forth the steps which petitioner has taken to prevent a recurrence of the grounds referred to in item 7, above, 
and any other information which petitioner believes to be relevant. 

1 0. If the petitioner is a plan, is its application on file with the Department current without the need for any amend- 
ment? 

D Yes D No 

If "'no," state the day on which petitioner will comply with subsection (c) of this section. 

1 1 . If the petitioner is a plan, attach as exhibits all current reports, information, and statements which are required 
to be filed under the Act or rules but which have not been filed to date. 

12. If the petitioner is a solicitor firm, describe the organization of petitioner, identify its principle persons, and 
describe the manner in which it proposes to act as a solicitor firm. 

13. If the petitioner is a solicitor firm, attach financial statements as required: 

A. If petitioner is subject to the tangible net worth requirement of Section 1300.76.2, Title 28, Calif. Code of 
Regulations, attach a copy of petitioner' s financial statement consisting of at least a balance sheet and statement 
reporting the results of operations for the petitioner, prepared as of a date within 30 days of the filing of this peti- 
tion. Such financial statement need not be certified, but if not certified, also attach as an exhibit certified financial 
statements of the petitioner as of the close of its last fiscal year. 

B. If petitioner is exempted from Section 1 300.76.2, attach a statement to that effect and attach a copy of petition- 
er' s financial statement, which need not be certified, consisting of at least a balance sheet and statement reporting 
the results of operations for the petitioner, prepared as of a date within 30 days of the filing of this petition. 

C. If petitioner accepts no funds, in the form of checks or otherwise, of plans, subscribers or other persons con- 
tracting with plans (exclusive of petitioner's compensation for its solicitation activities), attach a statement to that 
effect, and do not include financial statements of the petitioner as an exhibit to the petition. 

1 4. If petitioner has applied for restoration previously and been denied, attach copies of all prior petitions, adminis- 
trative records, and decisions on those petitions. 



Page 78 Register2002,No. si; 12-20-2002 



Title 28 



The Department of Managed Health Care 



§ 1300.99 



(c) if the petilion provided in subsection (b) is filed by a plan, the plan 
shall nie an amendment to its application on file with the Department 
which will bring that application current, or. it" its application is current 
without the need for any amendment, it shall so allege. 

(d) The Director may require additional information and/or undertak- 
ings as a condition of granting a petilion for restoration. This requested 
material will be used to determine whether the petitioner, if restored, 
would engage in business in full compliance with the objectives and pro- 
visions of the Act and the applicable regulations. The Director, in eva- 
luating the rehabilitation of the petitioner and his or her eligibility for a 
license or status as a solicitor, shall consider the following criteria: 

( 1 ) The nature and severity of the act(s) or offense(s). 

(2) The administrative record applicable to the disciplinary proceed- 
ings. 

(3) The time that has elapsed since commission of the act(s) or of- 
fense! s). 

(4) Whether the petitioner has complied with any terms of parole, 
probation, restitution or any other sanctions imposed against him or her. 

(5) If applicable, evidence of expungement proceedings pursuant to 



Section 1 203.4 of the Penal Code. 

(6) Evidence, if any, of rehabilitation submitted by the petitioner. 

(7) Any other information or material that the Director deems to be ap- 
propriate and relevant. 

NOTE: Authority cited; Section 1 344. Health and Safety Code. Reference: Section 
1 389, Health and Safety Code. 

History 

1. New section tiled 1-12-83; etTective thirtieth day thereafter (Register 83. No. 
3). 

2. Change without regulatory effect amending section filed 7-18-2()(K) pursuant 
to section 100. title 1. California Code of Regulations (Register 2(XX). No. 29). 

3. Change without regulatory elTect updating title reference on sample execution 
page filed 12-22-2000 pursuant to sectionlOO, title 1 . California Code of Regu- 
lations (Register 2000, No. 5 1 ). 

4. Change without regulatory effect amending suhseetion (h) filed 1 1-21-2002 
pursuant to section 100, title 1. California Code of Regulations (Register 2002. 
No. 47). 

5. Amendment filed 12-16-2002; operative l-l.S-2003 (Register 2002. No. .SI ). 

§ 1300.99. Application to Surrender License. 

An application to surrender a license as a health plan shall be filed with 
the Director, in the following form: 



Page 79 



Register 2002, No. 5 1 ; 1 2 - 20 - 2002 



§ 1300.99 BARCLAYS CALIFORNIA CODE OF REGULATIONS Title 28 

DEPARTMENT OF MANAGED HEALTH CARE 
STATE OF CALIFORNIA 

APPLICATION FOR SURRENDER OF LICENSE 

PURSUANT TO 
SECTION 1399, HEALTH AND SAFETY CODE 

Date of Application Dopt. of Manased Care 
File No. 



1. Name of Licensee (as appearing in license) 



2. Person to be contacted regarding this application. 
Name 



Address 



Telephone Number 



3. Reason for Surrender of License (explain briefly): 

4. Date upon which licensee proposes to terminate business: 



If the dale is subject to contingencies or will be determined hereafter, explain briefly below: 
5. Complete the following: 

a. Attach a copy of the balance sheet and a statement of income and expense for the plan, prepared as of 
a date within 30 days of the filing of this application. Such financial statements need not be certified. 

b. State whether the licensee is required to file certain reports pursuant to Section 1384 of the 
Knox-Keene Health Care Service Plan Act of 1975. 

If so, state the date by which the licensee will forward such reports to the Director: 



Section I3(X).85.1. of the rules pursuant to the Knox-Keene Health Care Service Plan Act of 1975 
requires that the books and records of a plan be preserved for a period of five years. 
State the name and address of the custodian of the plan's books and records and the address at which 
such records will be located: 

Custodian: 



Location: 



d. Describe in an attachment hereto the licensee's plans for the termination of its business as a health care 
service plan or specialized health care service plan, including the following information: 

1. The provision for payment of any amounts due to subscribers and enrollees and the aggregate 
amount owed thereto. 

2. The provision for payment of any amounts due to providers of health care services, the aggregate 
owed thereto and a schedule showing the persons to whom such amounts are owed, the amount due 
each such person, and the date such liability first became due and payable. 

3. The final date for payment of periodic payments by or on behalf of subscribers for health care 
services, and the final date which the plan will be obligated to furnish health care services by reason 
of such payments. 

Page 80 Register 2002, No. 51; 12-20-2002 



Title 28 



The Department of Managed Health Care 



ij 13(M).826 



4. If an insurer assumes obligations as to the plans subscribers and enrollecs, attach a detailed state- 
ment of the plan for the assumption of business by the subsequent provider or insurer, including the 
provision being made for notice to subscribers and enrollecs, group representatives and providers 
of health care services who contract with the plan. 

5. If the plan or any provider of health care services to the plan holds medical records as to any 
subscriber or enrollee, indicate the disposition to be made of such records, including the provision 
made for its subsequent availability to persons providing health care services to such subscribers 
and enrollecs. 

e. Is the plan's application pursuant to Section 1351 of the Knox-Keene Health Care Service Plan Act of 
1975 current. reHectint: all matters which require an amendment to such application pursuant to Rules 
1300.52. 1300.52.1 or^ 1300.52.2? 

Yes □ No □ 

If "no" attach an amendment(s) to such application in conformance with such rules 

f. Is the plan currently involved in any civil or administrative proceeding? 

Yes □ No □ 

If "yes" furnish lull details, including the court or administrative action before which such matter is 
pending. 

6. The licensee has duly caused this application to be signed on its behalf by the undersigned, thereun- 
to duly authorized. 



(Licensee) 



By 



Title 



I certify under penalty of perjury that I have read this application and the attachments hereto and know the 
contents thereof, and that the statements therein are true. 



Executed at 



on 



Signature of Declarant 

If executed in a jurisdiction which does not permit verification under penalty of perjury, attach a verification 
executed and sworn to before a notary public. 



NOTE: Authority cited: Section 1 344. Health and Safety Code. Reference: Section 
1399, Health and Safety Code. 

History 

1. Amendment filed 1-12-83: effective thirtieth day thereafter (Register 83, No. 
3). 

2. Amendment filed 7-3-84; effective thirtieth dav thereafter (Register 84, No. 
27). 

3. Change without regulatory effect amending subsection (e) filed 4-4-2000 pur- 
suant to section 100. title 1, California Code ofReeulations (Register 2000, No. 
14). 

4. Change without regulatory effect amending section filed 7-18-2000 pursuant 
to section 100, title 1 . California Code of Regulations (Register 2000, No. 29). 

5. Change without regulatory effect amending section filed 1 1-21-2002 pursuant 
to section 100, title 1, California Code of Regulations (Register 2002, No. 47). 

§ 1300.99.7. Application for Conversion or Restructuring. 

An application for conversion or restructuring pursuant to Article 1 1 
(commencing with Section 1399.70) of the Act shall be filed as a Notice 
of Material Modification pursuant to Rule 1300.52.1. 
NOTE; Authority cited: Sections 1344 and 1 399.74, Health and Safety Code. Ref- 
erence: Sections 1352, 1399.70, 1399.71, 1399.72, 1399.73, 1399.74 and 1399.75, 
Health and Safety Code. 

History 

1 . New section filed 6-20-96 as an emergency; operative 6-20-96 (Register 96, 
No. 25). ACertificateofCompliancemust be transmitted to OAL by 10-18-96 
or emergency language will be repealed by operation of law on the following 
day. 

2. New section refiled 10-1.5-96 as an emergency; operative 10-18-96 (Register 
96, No. 42). A Certificate of Compliance must be transmitted to OAL by 
2- 1 2-97 or emergency language will be repealed by operation of law on the fol- 
lowing day. 



3. Certificate of Compliance as to 1 0-1 5-96 order transmitted to OAL 2-3-97 and 
filed 2-24-97 (Register 97, No. 9). 

Article 15. Charitable or Public Activities 

§ 1300.824. Requirements Relating to Charitable or Public 
Activity Filings. 

NOTE: Authority cited: Sections 10824 and 10826. Corporations Code. Refer- 
ence: Sections 7238, 10824 and 10826, Corporations Code. 

History 

1. New Article 15 (Secfions 1300.824-1300.826, not consecutive) filed 4-16-82; 
effective thirtieth day thereafter (Register 82, No. 16). 

2. Change without regulatory effect repealing Section 1300.824 pursuant to Sec- 
tion 100, Title 1, California Code of Regulations filed 1-22-90 (Register 90. 
No. 11), 

§ 1300.824.1 . Notices and Requests for Approval of 
Certain Transactions. 

Note; Authority cited: Section 10824, Corporations Code. Reference: Section 
10824, Corporations Code. 

History 
1 . Change without regulatory effect repealing Section 1300.824. 1 pursuant to .Sec- 
tion 100, Title 1. California Code of Regulations filed 1-22-90 (register 90. No. 
11). 

§ 1300.826. Request for Ruling on Proposed Action or 
Article Amendment. 

Note; Authority cited: Section 10824, Corporations Code. Reference; Section 
10826, Corporations Code. 



Page 81 



Register 2002, No. 47; 1 1 - 22 - 2002 



§ 1300.826 BARCLAYS CALIFORNIA CODE OF REGULATIONS Title 28 

History 
1 . Change without regulatory effect repcalins: Section 1300.826 pursuant to Sec- 
tion 100. Title I.California Code ot'Reeulations filed l-22-90(reeister90,No. 
11). 



Page 82 Register 2002, No. 47; 11-22-2002