BILL NUMBER: AB 2179	CHAPTERED
	BILL TEXT

	CHAPTER  797
	FILED WITH SECRETARY OF STATE  SEPTEMBER 22, 2002
	APPROVED BY GOVERNOR  SEPTEMBER 22, 2002
	PASSED THE ASSEMBLY  AUGUST 29, 2002
	PASSED THE SENATE  AUGUST 28, 2002
	AMENDED IN SENATE  AUGUST 26, 2002
	AMENDED IN SENATE  JUNE 26, 2002
	AMENDED IN SENATE  JUNE 12, 2002
	AMENDED IN ASSEMBLY  APRIL 17, 2002

INTRODUCED BY   Assembly Member Cohn

                        FEBRUARY 20, 2002

   An act to amend Sections 1342 and 1367 of, and to add Section
1367.03 to, the Health and Safety Code, and to amend Section 10133.5
of the Insurance Code, relating to health care coverage.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2179, Cohn.  Health care  coverage.
   Existing law, the Knox-Keene Health Care Service Plan Act of 1975,
provides for the licensure and regulation of health care service
plans by the Department of Managed Health Care.  The act requires
that the services provided by health care service plans be available
to enrollees at reasonable times and makes a violation of its
provisions a crime.  Existing law also provides for the regulation of
health insurers by the Insurance Commissioner.
   This bill would require the Department of Managed Health Care and
the commissioner to adopt, not later than January 1, 2004,
regulations to ensure access to needed health care services in a
timely manner.  The bill would require the department and the
commissioner to make specified reports to certain committees of the
Legislature on March 1, 2003, and March 1, 2004, regarding the
progress  towards the implementation of these requirements.  The bill
would also authorize the Director of the Department of Managed
Health Care to assess an administrative penalty against a plan in
specified circumstances for its failure to comply with requirements
concerning timely access to care.
   By placing additional requirements on health care service plans,
the violation of which is a crime, the bill would impose a
state-mandated local program.
  The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state.  Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  It is the intent of the Legislature to ensure that all
enrollees of health care service plans and health insurers have
timely access to health care.  The Legislature finds and declares
that timely access to health care is essential to safe and
appropriate health care and that lack of timely access to health care
may be an indicator of other systemic problems such as lack of
adequate provider panels, fiscal distress of a health care service
plan or a health care provider, or shifts in the health needs of a
covered population.  It is the further intent of the Legislature in
enacting this section that the department shall incorporate the
standards developed under this section in licensing, survey,
enforcement, and other processes intended to protect the consumer.
  SEC. 2.  Section 1342 of the Health and Safety Code is amended to
read:
   1342.  It is the intent and purpose of the Legislature to promote
the delivery and the quality of health and medical care to the people
of the State of California who enroll in, or subscribe for the
services rendered by, a health care service plan or specialized
health care service plan by accomplishing all of the following:
   (a) Ensuring the continued role of the professional as the
determiner of the patient's health needs which fosters the
traditional relationship of trust and confidence between the patient
and the professional.
   (b) Ensuring that subscribers and enrollees are educated and
informed of the benefits and services available in order to enable a
rational consumer choice in the marketplace.
   (c) Prosecuting malefactors who make fraudulent solicitations or
who use deceptive methods, misrepresentations, or practices which are
inimical to the general purpose of enabling a rational choice for
the consumer public.
   (d) Helping to ensure the best possible health care for the public
at the lowest possible cost by transferring the financial risk of
health care from patients to providers.
   (e) Promoting effective representation of the interests of
subscribers and enrollees.
   (f) Ensuring the financial stability thereof by means of proper
regulatory procedures.
   (g) Ensuring that subscribers and enrollees receive available and
accessible health and medical services rendered in a manner providing
continuity of care.
   (h) Ensuring that subscribers and enrollees have their grievances
expeditiously and thoroughly reviewed by the department.
  SEC. 3.  Section 1367 of the Health and Safety Code is amended to
read:
   1367.  Each health care service plan and, if applicable, each
specialized health care service plan shall meet the following
requirements:
   (a) All facilities located in this state including, but not
limited to, clinics, hospitals, and skilled nursing facilities to be
utilized by the plan shall be licensed by the State Department of
Health Services, where licensure is required by law.  Facilities not
located in this state shall conform to all licensing and other
requirements of the jurisdiction in which they are located.
   (b) All personnel employed by or under contract to the plan shall
be licensed or certified by their respective board or agency, where
licensure or certification is required by law.
   (c) All equipment required to be licensed or registered by law
shall be so licensed or registered and the operating personnel for
that equipment shall be licensed or certified as required by law.
   (d) The plan shall furnish services in a manner providing
continuity of care and ready referral of patients to other providers
at times as may be appropriate consistent with good professional
practice.
   (e) (1) All services shall be readily available at reasonable
times to each enrollee consistent with good professional practice.
To the extent feasible, the plan shall make all services readily
accessible to all enrollees consistent with Section 1367.03.
   (2) To the extent that telemedicine services are appropriately
provided through telemedicine, as defined in subdivision (a) of
Section 2290.5 of the Business and Professions Code, these services
shall be considered in determining compliance with Section 1300.67.2
of Title 28 of the California Code of Regulations.
   (f) The plan shall employ and utilize allied health manpower for
the furnishing of services to the extent permitted by law and
consistent with good medical practice.
   (g) The plan shall have the organizational and administrative
capacity to provide services to subscribers and enrollees.  The plan
shall be able to demonstrate to the department that medical decisions
are rendered by qualified medical providers, unhindered by fiscal
and administrative management.
   (h) (1) All contracts with subscribers and enrollees, including
group contracts, and all contracts with providers, and other persons
furnishing services, equipment, or facilities to or in connection
with the plan, shall be fair, reasonable, and consistent with the
objectives of this chapter.  All contracts with providers shall
contain provisions requiring a fast, fair, and cost-effective dispute
resolution mechanism under which providers may submit disputes to
the plan, and requiring the plan to inform its providers upon
contracting with the plan, or upon change to these provisions, of the
procedures for processing and resolving disputes, including the
location and telephone number where information regarding disputes
may be submitted.
   (2) Each health care service plan shall ensure that a dispute
resolution mechanism is accessible to noncontracting providers for
the purpose of resolving billing and claims disputes.
   (3) On and after January 1, 2002, each health care service plan
shall annually submit a report to the department regarding its
dispute resolution mechanism.  The report shall include information
on the number of providers who utilized the dispute resolution
mechanism and a summary of the disposition of those disputes.
   (i) Each health care service plan contract shall provide to
subscribers and enrollees all of the basic health care services
included in subdivision (b) of Section 1345, except that the director
may, for good cause, by rule or order exempt a plan contract or any
class of plan contracts from that requirement.  The director shall by
rule define the scope of each basic health care service which health
care service plans shall be required to provide as a minimum for
licensure under this chapter.  Nothing in this chapter shall prohibit
a health care service plan from charging subscribers or enrollees a
copayment or a deductible for a basic health care service or from
setting forth, by contract, limitations on maximum coverage of basic
health care services, provided that the copayments, deductibles, or
limitations are reported to, and held unobjectionable by, the
director and set forth to the subscriber or enrollee pursuant to the
disclosure provisions of Section 1363.
   (j) No health care service plan shall require registration under
the Controlled Substances Act of 1970 (21 U.S.C. Sec. 801 et seq.) as
a condition for participation by an optometrist certified to use
therapeutic pharmaceutical agents pursuant to Section 3041.3 of the
Business and Professions Code.
   Nothing in this section shall be construed to permit the director
to establish the rates charged subscribers and enrollees for
contractual health care services.
   The director's enforcement of Article 3.1 (commencing with Section
1357) shall not be deemed to establish the rates charged subscribers
and enrollees for contractual health care services.
   The obligation of the plan to comply with this section shall not
be waived when the plan delegates any services that it is required to
perform to its medical groups, independent practice associations, or
other contracting entities.
  SEC. 4.  Section 1367.03 is added to the Health and Safety Code, to
read:
   1367.03.  (a) Not later than January 1, 2004, the department shall
develop and adopt regulations to ensure that enrollees have access
to needed health care services in a timely manner.  In developing
these regulations, the department shall develop indicators of
timeliness of access to care and, in so doing, shall consider the
following as indicators of timeliness of access to care:
   (1) Waiting times for appointments with physicians, including
primary care and specialty physicians.
   (2) Timeliness of care in an episode of illness, including the
timeliness of referrals and obtaining other services, if needed.
   (3) Waiting time to speak to a physician, registered nurse, or
other qualified health professional acting within his or her scope of
practice who is trained to screen or triage an enrollee who may need
care.
   (b) In developing these standards for timeliness of access, the
department shall consider the following:
   (1) Clinical appropriateness.
   (2) The nature of the specialty.
   (3) The urgency of care.
   (4) The requirements of other provisions of law, including Section
1367.01 governing utilization review, that may affect timeliness of
access.
   (c) The department may adopt standards other than the time elapsed
between the time an enrollee seeks health care and obtains care.  If
the department chooses a standard other than the time elapsed
between the time an enrollee first seeks health care and obtains it,
the department shall demonstrate why that standard is more
appropriate. In developing these standards, the department shall
consider the nature of the plan network.
   (d) The department shall review and adopt standards, as needed,
concerning the availability of primary care physicians, specialty
physicians, hospital care, and other health care, so that consumers
have timely access to care.  In so doing, the department shall
consider the nature of physician practices, including individual and
group practices as well as the nature of the plan network.  The
department shall also consider various circumstances affecting the
delivery of care, including urgent care, care provided on the same
day, and requests for specific providers.  If the department finds
that health care service plans and health care providers have
difficulty meeting these standards, the department may make
recommendations to the Assembly Committee on Health and the Senate
Committee on Insurance of the Legislature pursuant to subdivision
(i).
   (e) In developing standards under subdivision (a), the department
shall consider requirements under federal law, requirements under
other state programs, standards adopted by other states, nationally
recognized accrediting organizations, and professional associations.
The department shall further consider the needs of rural areas,
specifically those in which health facilities are more than 30 miles
apart and any requirements imposed by the State Department of Health
Services on health care service plans that contract with the State
Department of Health Services to provide Medi-Cal managed care.
   (f) The department shall consult with the Clinical Advisory Panel
and shall seek public input from a wide range of interested parties
through the Advisory Committee on Managed Health Care.
   (g) (1) Contracts between health care service plans and health
care providers shall assure compliance with the standards developed
under this section.  These contracts shall require reporting by
health care providers to health care service plans and by health care
service plans to the department to ensure compliance with the
standards.
   (2) Health care service plans shall report annually to the
department on compliance with the standards in a manner specified by
the department.  The reported information shall allow consumers to
compare the performance of plans and their contracting providers in
complying with the standards, as well as changes in the compliance of
plans with these standards.
   (h) (1) When evaluating compliance with the standards, the
department shall focus more upon patterns of noncompliance rather
than isolated episodes of noncompliance.
   (2) The director may investigate and take enforcement action
against plans regarding noncompliance with the requirements of this
section.  Where substantial harm to an enrollee has occurred as a
result of plan noncompliance, the director may, by order, assess
administrative penalties subject to appropriate notice of, and the
opportunity for, a hearing in accordance with Section 1397.  The plan
may provide to the director, and the director may consider,
information regarding the plan's overall compliance with the
requirements of this section.  The administrative penalties shall not
be deemed an exclusive remedy available to the director.  These
penalties shall be paid to the State Managed Care Fund.  The director
shall periodically evaluate grievances to determine if any audit,
investigative, or enforcement actions should be undertaken by the
department.
   (3) The director may, after appropriate notice and opportunity for
hearing in accordance with Section 1397, by order, assess
administrative penalties if the director determines that a health
care service plan has knowingly committed, or has performed with a
frequency that indicates a general business practice, either of the
following:
   (A) Repeated failure to act promptly and reasonably to assure
timely access to care consistent with this chapter.
   (B) Repeated failure to act promptly and reasonably to require
contracting providers to assure timely access that the plan is
required to perform under this chapter and that have been delegated
by the plan to the contracting provider when the obligation of the
plan to the enrollee or subscriber is reasonably clear.
   (C) The administrative penalties available to the director
pursuant to this section are not exclusive, and may be sought and
employed in any combination with civil, criminal, and other
administrative remedies deemed warranted by the director to enforce
this chapter.
   (4) The administrative penalties authorized pursuant to this
section shall be paid to the State Managed Care Fund.
   (i) The department shall work with the patient advocate to assure
that the quality of care report card incorporates information
provided pursuant to subdivision (g) regarding the degree to which
health care service plans and health care providers comply with the
requirements for timely access to care.
   (j) The department shall report to the Assembly Committee on
Health and the Senate Committee on Insurance of the Legislature on
March 1, 2003, and on March 1, 2004, regarding the progress toward
the implementation of this section.
   (k) Every three years, the department shall review information
regarding compliance with the standards developed under this section
and shall make recommendations for changes that further protect
enrollees.
  SEC. 5.  Section 10133.5 of the Insurance Code is amended to read:

   10133.5.  (a) The commissioner shall, on or before January 1,
2004, promulgate regulations applicable to health insurers which
contract with providers for alternative rates pursuant to Section
10133 to ensure that insureds have the opportunity to access needed
health care services in a timely manner.
   (b) These regulations shall be designed to assure accessibility of
provider services in a timely manner to individuals comprising the
insured or contracted group, pursuant to benefits covered under the
policy or contract.  The regulations shall insure:
   1.  Adequacy of number and locations of institutional facilities
and professional providers, and consultants in relationship to the
size and location of the insured group and that the services offered
are available at reasonable times.
   2.  Adequacy of number of professional providers, and license
classifications of such providers, in relationship to the projected
demands for services covered under the group policy or plan.  The
department shall consider the nature of the specialty in determining
the adequacy of professional providers.
   3.  The policy or contract is not inconsistent with standards of
good health care and clinically appropriate care.
   4. All contracts including contracts with providers, and other
persons furnishing services, or facilities shall be fair and
reasonable.
   (c) In developing standards under subdivision (a), the department
shall also consider requirements under federal law; requirements
under other state programs and law, including utilization review; and
standards adopted by other states, national accrediting
organizations and professional associations.  The department shall
further consider the accessability to provider services in rural
areas.
   (d) In designing the regulations the commissioner shall consider
the regulations in Title 28, of the California Administrative Code of
Regulations, commencing with Section 1300.67.2, which are applicable
to Knox-Keene plans, and all other relevant guidelines in an effort
to accomplish maximum accessibility within a cost efficient system of
indemnification.  The department shall consult with the Department
of Managed Health Care concerning regulations developed by that
department pursuant to Section 1367.03 of the Health and Safety Code
and shall seek public input from a wide range of interested parties.

   (e) Health insurers that contract for alternative rates of payment
with providers shall report annually on complaints received by the
insurer regarding timely access to care.  The department shall review
these complaints and any complaints received by the department
regarding timeliness of care and shall make public this information.

   (f) The department shall report to the Assembly Committee on
Health and the Senate Committee on Insurance of the Legislature on
March 1, 2003, and on March 1, 2004, regarding the progress towards
the implementation of this section.
   (g) Every three years, the commissioner shall review the latest
version of the regulations adopted pursuant to subdivision (a) and
shall determine if the regulations should be updated to further the
intent of this section.
  SEC. 6.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.