AB 2578 Summary

• Requires health care service plans and health insurers to obtain Department of Managed Health Care or Department of Insurance approval before implementing rate increases (premiums, copayments, coinsurance, deductibles, and other charges) effective on or after January 1, 2012.

• Excludes Medicare supplement, dental-only, and vision-only contracts or policies from the rate approval requirement.

• Establishes a 60-day automatic approval process for rate applications unless the department holds a hearing, which can be initiated by consumer request or department determination.

• Requires applicants to submit detailed financial information including rate of return, overhead ratios, executive compensation, shareholder dividends, and line-item medical and nonmedical expense reports.

• Creates Health Rate Approval Funds in both departments, funded by fees charged to applicants, and authorizes consumer advocacy groups to intervene in rate proceedings and recover reasonable advocacy fees and costs from the rate applicant.