Around the PIA Western Alliance States – Week of September 16, 2024

California — Commissioner Lara urges Governor Newsom to sign important consumer protections for Californians: Insurance Commissioner Ricardo Lara is urging Governor Gavin Newsom to sign seven important consumer protection bills he is sponsoring that focus on improving the health outcomes and public safety of Californians.

“Legislation plays an essential role in safeguarding consumer interests and closing the protection gaps left by Prop. 103. Throughout my tenure as Insurance Commissioner, I have pursued these measures relentlessly to ensure fairness, transparency, and protection for all Californians,” said Commissioner Lara. “As consumers and homeowners continue to face threats to our health, safety, and insurance availability, I am committed to using every tool at our disposal to meet these challenges head on. From expanding our expert staff, to holding public hearings and gathering vital stakeholder input on necessary regulatory changes, to issuing critical bulletins and pursuing key legislation — we are taking comprehensive action now.”

These Commissioner-sponsored bills to increase consumers’ health and safety protections include:

AB 2258, co-sponsored with APLA Health, Equality California, the Los Angeles LGBT Center, and the San Francisco AIDS Foundation and authored by Assemblymember Rick Chavez Zbur, would require health insurers and health plans to cover both recommended preventive care and health care that is covered under the federal Affordable Care Act’s preventive services mandate without out-of-pocket costs to consumers.

AB 2780, co-sponsored with the Coalition for Humane Immigrant Rights and authored by Assemblymember Tina McKinnor, would require commercial passenger transportation, prior to transporting 10 or more vulnerable passengers, to notify local authorities and follow basic requirements to ensure the safety of passengers at the point of disembarkation. This important piece of legislation would ensure California has the proper tools and support to welcome migrants in a humane manner and with the dignity and respect that migrants deserve.

AB 2872, authored by Assemblymember Lisa Calderon, would support the work of sworn officers at the California Department of Insurance who are the state’s leaders in preventing and stopping insurance fraud. This bill would help close the pay gap between the Department’s sworn fraud detectives and sworn officers in other state agencies, helping strengthen staff retention and enforcement efforts that protect public safety.

SB 729, co-sponsored with the Alliance for Fertility Preservation, the American Society for Reproductive Medicine, Equality California, Our Family Coalition, and RESOLVE: The National Infertility Association and authored by Senator Caroline Menjivar, would require disability insurance policies and large group health plans to provide coverage for fertility and infertility care, including in-vitro fertilization (IVF), and updates the definition of infertility to be inclusive of LGBTQ+ family planning experiences. 

SB 990, co-sponsored with Equality California and the California Legislative LGBTQ+ Caucus and authored by Senator Steve Padilla, updates the State Emergency Plan to include best practices for local government and non-governmental entities to equitably serve LGBTQ+ communities during an emergency or natural disaster. This responds to data showing that LGBTQ+ people are more likely to become homeless or face negative health impacts after a disaster.

Two other bills sponsored by Commissioner Lara address the historical injustice of the removal of Latino residents in the 1950s from the area that is now Dodger Stadium, and update important insurance laws:

AB 1950, authored by Assemblymember Wendy Carrillo, would create the Chavez Ravine Displaced Residents Task Force, subject to appropriation by the State Legislature, to evaluate the history of the residents, business owners, and landowners displaced from Chavez Ravine for the purpose of providing compensation to those displaced from 1950 to 1961. The nine-member task force would develop recommendations for the City and County of Los Angeles and the State Legislature on how to compensate the displaced residents, or their descendants.

SB 577, authored by Senator Melissa Hurtado, proposes amendments identified by the Department of Insurance that help clarify existing law, delete obsolete and superseded code sections, and create new laws agreed to between the Department and stakeholders.

Governor Newsom has already signed SB 263 (Chapter 2, Statutes of 2024), sponsored by Commissioner Lara and authored by Senator Bill Dodd, which helps California avoid federal preemption and creates additional consumer protections to ensure California’s insurance companies and licensed producers who sell annuities are following the highest standards of conduct.

A state lawmaker by training, Commissioner Lara sponsored 65 bills from 2019 to 2023 to address climate change, protect consumers, expand health access and reproductive care, preserve health protections, protect against fraud, and ensure public safety. With 44 bills signed into law, Commissioner Lara is considered the most successful legislative advocate to hold the position of Insurance Commissioner.

California — Statement from Insurance Commissioner Ricardo Lara on Senate Bill 966: Insurance Commissioner Ricardo Lara issued the following statement, urging Governor Newsom’s signature on SB 966, which reflects a shared commitment to making healthcare more affordable, accessible, and transparent for all Californians:

“Senate Bill 966 is a game-changer for California consumers. For too long, Pharmacy Benefit Managers (PBMs) have operated in the shadows, impacting drug prices and patient access with little oversight. SB 966 will bring much-needed transparency and accountability to this critical part of our healthcare system. I strongly urge Governor Newsom to sign this bill, which will help ensure that consumers—not corporate intermediaries—benefit from the savings PBMs negotiate with drug manufacturers.”

SB 966, authored by Senator Scott Wiener, would establish a licensing and regulatory framework for PBMs under the California Department of Insurance, bringing California in line with 29 other states that already regulate PBMs. The bill requires PBMs to transmit 100% of drug rebates to health plans and insurers, prohibits deceptive communications to patients, and bans the practice of steering patients toward PBM-owned pharmacies over independent in-network pharmacies.

Additionally, SB 966 enhances existing reporting requirements, mandating PBMs to annually report aggregated data on drug costs, rebates, and payments to the Department of Insurance. These measures aim to increase accountability, reduce unfair practices, and ensure that the savings PBMs obtain from drug manufacturers are passed on to consumers.

California — Commissioner Lara announces action to protect insurance coverage for Southern California wildfire survivors: Insurance Commissioner Ricardo Lara announced an impending action to protect communities affected by the Line Fire in San Bernardino County, the Bridge Fire in Los Angeles County and the Airport Fire in Orange and Riverside counties, following Governor Newsom’s emergency declarations. Under state law, once the fires’ perimeter are determined Commissioner Lara will issue a Bulletin identifying areas in the immediate vicinity of the fires that will be protected by a one-year protection from homeowners’ insurance non-renewal or cancellation due to wildfire risk. Commissioner Lara has protected insurance for approximately 4 million California households since 2019.

“Wildfires are devastating both financially and emotionally, even if you don’t suffer property damage,” said Insurance Commissioner Ricardo Lara, who is implementing a Sustainable Insurance Strategy to address California’s insurance crisis. “Keeping people covered in the aftermath of a wildfire emergency is essential as our long-term reforms take effect in the coming months. Insurance benefits can help people recover quickly and cover some of the additional costs if you have to evacuate from your home. Once these fires are brought under control, we will be on the ground assisting survivors in person, enforcing California’s strong consumer protection laws as people recover.”

Commissioner Lara reminds residents in Los Angeles, San Bernardino, Orange and Riverside counties who have been ordered to evacuate due to the wildfires that their homeowners or renters insurance may help with evacuation and relocation costs under Additional Living Expenses coverage, known as ALE. ALE coverage typically includes food and housing costs, furniture rental, relocation and storage, and extra transportation expenses, among other costs.

If you have any questions or need assistance, the California Department of Insurance is here to help. Please call: 1-800-927-4357 or visit www.insurance.ca.gov.

Many homeowners are unaware that they may have coverage under their homeowners and renters insurance policies to help them with evacuation and recovery expenses.

In 2020, Commissioner Lara sponsored a new law — SB 872 authored by Senator Bill Dodd — that requires insurance companies pay at least two weeks of ALE benefits to evacuees and provide an advance payment for no less than four months of ALE without an itemized inventory form, among other consumer protections. This important consumer protection law removes barriers for disaster survivors to get critical insurance benefits and streamlines wildfire recovery processes for homeowners who suffer from a loss.

Here are some additional tips for consumers:

Keep all receipts during your evacuation.

Policy provisions, including deductibles, vary by company, and residents should check with their insurance company or agent as soon as possible to confirm coverage, limits, and any other limitations and documentation requirements. Most renter’s policies also typically include ALE coverage.

Document the date, time and names of any insurance company employees you speak to regarding your coverage.

Consumers should make sure any insurance agent or public adjuster offering their services has a valid license by checking online with the Department of Insurance.

Download the Department’s Top 10 Tips for Wildfire Claimants (also available in Spanish), which includes information about claiming ALE benefits.

Public adjusters cannot solicit business for seven calendar days after the disaster.

Don't forget copies of insurance policies, important papers, and a photo or video inventory of your possessions. An inventory can be completed quickly and easily on your smart phone and safely stored in the Cloud.

Oregon — Oregon DFR to host Innovation Hub at OMSI on green finance: The Oregon Division of Financial Regulation (DFR) will be hosting an Innovation Hub on Oct. 28 from 8:30 a.m. to noon at the Oregon Museum of Science and Industry (OMSI) in Portland. This year’s theme is “Can innovative technologies make green finance better?”

The event will be hosted by Nicole Ferroux, a senior policy advisor at DFR and Innovation Hub liaison, and will include two panel discussions: Artificial Intelligence and Green Finance, and Blockchain and Green Finance. After the two panel discussions, DFR Administrator TK Keen will host a fireside chat with Washington State Department of Financial Institutions Director Charlie Clark. Their discussion will center on regulating the use of innovative technologies in green finance.

“We are always looking for ways to encourage innovation in Oregon, particularly green finance innovations that help us combat climate change,” Keen said. “Our Innovation Hub has allowed us to keep numerous conversations with stakeholders on green finance and green innovations going, and the OMSI event is another avenue for engagement on this important topic.”

The first panel includes Jon Down, professor at the University of Portland and founder of Gen AI Corp.; Josh Cole, business operations lead at Modernist Financial; and Kirsten Anderson, deputy administrator at the Oregon Division of Financial Regulation.

The second panel includes Alex Murray, assistant professor of management and director of the Intelligent Futures Lab at the University of Oregon; Mike Zajko, co-founder of Lattice Capital; and Brooke Pollack, founder and managing partner at Hutt Capital.

What does this year’s theme, “Can innovative technologies make green finance better?” really mean?

“Green finance, which includes any financial product or service created to encourage the development of a more sustainable economy, has come under some deserved scrutiny in recent years,” Ferroux said. “Greenwashing scandals, questions regarding the longevity of the financial outcomes associated with these products, and a variety of regulatory issues have raised the question of whether green finance will continue to grow or will shrink away as a fad. This year’s event explores whether innovative technologies – namely artificial intelligence and blockchain technology – can help industry and regulators overcome these challenges to move this sector forward.”

You can register for the event online. The event is free and refreshments available. The event is limited to the first 150 registrants. Check-in begins at 8 a.m. on Oct. 28.

For more information about the event and to read bios of each speaker, visit the DFR website. OMSI is located at 1945 SE Water Ave. in Portland.

Oregon — Workers’ compensation pure premium rate to drop for 12th-straight year: In 2025, Oregon employers, on average, will pay less for workers’ compensation coverage, the Oregon Department of Consumer and Business Services (DCBS) announced today. The decline in costs marks 12 years of average decreases in the pure premium rate – the base rate insurers use to determine how much employers must pay for medical costs and lost wages.

Underpinning the cost decreases is the success of Oregon’s workers’ compensation system, which includes programs to control costs, maintain good worker benefits, ensure employers carry insurance for their workers, resolve disputes, and improve workplace safety and health.

The numbers illustrate positive, long-term trends, including:

• Employers, on average, would pay 91 cents per $100 of payroll for workers’ compensation costs in 2025, down from 93 cents in 2024, under a proposal by DCBS. That figure is referred to as loaded pure premium and covers workers’ compensation claims costs, assessments, and insurer profit and expenses.
• The pure premium rate would drop by an average 3.2 percent under the proposal. In fact, the pure premium will have declined by 48 percent from 2016 to 2025.

The reduction in costs is due to an improvement in loss experience in Oregon, according to the National Council on Compensation Insurance (NCCI). NCCI is the U.S. rate-setting organization whose recommendation DCBS reviews as part of its annual public process to decide rates.

Employers’ total cost for workers’ compensation insurance includes the pure premium and insurer profit and expenses, plus the premium assessment. Employers also pay at least half of the Workers’ Benefit Fund assessment, which is a cents-per-hour-worked rate.

The decrease in the pure premium of 3.2 percent is an average, so an individual employer may see a larger or smaller decrease, no change, or even an increase, depending on the employer’s own industry, claims experience, and payroll. Also, the pure premium does not consider the varying expenses and profit of insurers or individual policyholders’ experience modification, if eligible.

The stability of Oregon’s workers’ compensation system helps sustain the trend in lower costs. The system includes the Workers’ Compensation Division; Oregon OSHA; the Workers’ Compensation Board, which resolves disputes over the state’s workers’ compensation and workplace safety laws; the Ombuds Office for Oregon Workers, an independent advocate for workers on workers’ compensation and workplace safety and health; and the Small Business Ombudsman, an independent advocate for small business owners on workers’ compensation.

The premium assessment funds those successful programs.

The premium assessment, which is a percentage of the workers’ compensation insurance premium employers pay, is added to the premium. It would remain at 9.8 percent in 2025, the same as 2024, under the DCBS proposal. In fact, 2025 would mark the fourth straight year the premium assessment remained at 9.8 percent.

“In light of rising costs everywhere, we are glad to provide employers and workers some relief through our proposed decisions today and the continued strength of our workers’ compensation system,” said Andrew Stolfi, DCBS director and insurance commissioner. “Working to prevent injuries, provide comprehensive benefits to injured workers, and keep costs low for employers is imperative for us to maintain a healthy and robust system.”

Meanwhile, the Workers’ Benefit Fund assessment funds return-to-work programs, provides increased benefits over time for workers who are permanently and totally disabled, and gives benefits to families of workers who die from workplace injuries or diseases.

The fund’s revenue comes from a cents-per-hour-worked assessment. The assessment would remain at 2.0 cents per hour worked in 2025. It is the lowest rate since the inception of the cents-per-hour assessment in 1996.

The decrease in the pure premium will be effective Jan. 1, 2025, but employers will see the changes when they renew their policies in 2025.

Oregon’s workers’ compensation premium rates have ranked low nationally for many years. Oregon had the 10th least expensive rates in 2022, according to a nationally recognized biennial study conducted by DCBS.

The public hearings for the workers’ compensation assessment and the Workers’ Benefit Fund assessment are Thursday, Sept. 19, at 3 p.m. and 4 p.m., respectively.

Written testimony will be accepted through 5 p.m. Thursday, Sept. 26, 2024, by the Director's Office of the Department of Consumer and Business Services, 350 Winter St. NE, P.O. Box 14480, Salem, OR 97309-0405.

The following cost chart summarizes the changes: https://www.oregon.gov/DCBS/reports/cost/Documents/wc-summary.pdf

More information about Oregon workers’ compensation costs is at https://www.oregon.gov/DCBS/cost/Pages/index.aspx

The loaded pure premium includes insurer costs, known as expense loading factors. Historic figures are adjusted to reflect the 2024 mix of employment and payroll.

Washington — Prior authorization modernization prepublication draft posted: We have released a prepublication draft for the prior authorization rule, R 2024-03. The rule establishes new prior authorization timelines and requirements for health care services and prescription drugs.

The comment period for this prepublication draft begins on September 16 and closes on September 30, 2024. Pelase send comments to rulescoordinator@oic.wa.gov.

For more information, including the text of the publication draft, please visit the Prior authorization modernization and substance use disorder treatment (R 2024-03) webpage. 

Washington — Average 10.7% rate increase approved for 2025 individual health insurance market: The Office of the Insurance Commissioner (OIC) announced today that 11 health insurers have been approved to sell in Washington's 2025 Exchange health insurance market.

The approved average rate increase of 10.7% is lower than the 11.3% average increase requested.

"I know this rate increase will hit hard for many people, especially at a time when other expenses are up," said Insurance Commissioner Mike Kreidler. "A key driver behind these rates is the increase in services used and the cost to deliver that care. Addressing the underlying costs of health care will require some difficult choices, but consumers and our health care system cannot afford to wait. Our recent report delivered to the state Legislature last month details the impact several policy strategies can have on health care and insurance costs. I'm hopeful the Legislature will use this data to work toward meaningful, concrete changes in our health care system. These costs will not decrease if we don't act now."

Washington — Kreidler fines LifeWise, Evolent $225,000 for illegal claim denials: Washington state Insurance Commissioner Mike Kreidler fined LifeWise Health Plan of Washington and Evolent Health LLC a total of $225,000 for incorrectly processing, and automatically denying, health insurance claims based on the patient’s gender.

Kreidler fined LifeWise $150,000 and fined Evolent — LifeWise’s health care benefit manager — $75,000 in orders filed on Sept. 12, 2024. Health care benefit managers are third-party professionals or entities who act as intermediaries between insurers, providers and patients, often making determinations on whether services are covered or not by the patient’s plan.

“Carelessness from health insurers and their benefit managers can cause significant stress and harm to their enrollees,” Kreidler said. “Our state laws are designed to hold insurance companies accountable for their mistakes and their representatives’ mistakes.”

A patient filed a claim for covered reproductive health services with LifeWise in March of 2022 and received a denial a week later, with LifeWise telling the patient that the procedure was not typical for their gender and that additional medical records would be needed to reprocess the claim.

The provider’s office contacted LifeWise about the claim and got the same response, and the patient contacted LifeWise twice more in November of the same year — to no avail — before contacting the Office of the Insurance Commissioner.

Four days after the patient filed a complaint with the OIC, LifeWise informed the patient their claim would be reprocessed and paid.

“A patient shouldn’t need to spend the better part of a year asking their insurance plan to correct an error,” Kreidler said. “Providing them with an explanation that breaks Washington state law is unacceptable.”

The OIC requested LifeWise review its similar claim denials from the two previous years and found 40 claims (27 unique claims and 13 resubmitted claims) had been improperly denied due to gender-specific coding, with a total billed amount of $318,781.83. The total allowed amount for the 27 unique claims was $17,821.29. The impacted claims were reprocessed and paid.

Thirty-one of those 40 claims were denied by Evolent, which was acting on behalf of LifeWise.

The original patient filed another complaint against LifeWise in January of 2023 alleging another denial due to their gender not aligning with the gender-related procedure codes. LifeWise corrected that claim that same month.

State law bars health plans from issuing automatic denials — or denying or limiting coverage — for reproductive health care services that are ordinarily, or exclusively, available to individuals of one gender if the patient is of a different gender. Health plans are also legally responsible for the activities of their health care benefit managers.