BILL NUMBER: SB 921 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JUNE 29, 2004
AMENDED IN ASSEMBLY JUNE 16, 2004
AMENDED IN ASSEMBLY JUNE 26, 2003
AMENDED IN SENATE JUNE 3, 2003
AMENDED IN SENATE MAY 14, 2003
AMENDED IN SENATE APRIL 21, 2003
INTRODUCED BY Senator Kuehl
(Principal coauthor: Assembly Member Goldberg)
(Coauthors: Senators Alarcon, Cedillo, Florez, Perata, Romero,
and Soto)
(Coauthors: Assembly Members Berg, Chan, Diaz, Hancock, Koretz,
Laird, Leno, Levine, Lieber, Longville, Lowenthal, Montanez, Pavley,
Ridley-Thomas, Salinas, Steinberg, Wiggins, and Yee)
FEBRUARY 21, 2003
An act to add Division 112 (commencing with Section 140000) to the
Health and Safety Code, relating to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
SB 921, as amended, Kuehl. Single payer health care coverage.
Existing law does not provide a system of universal health care
coverage for California residents. Existing law provides for the
creation of various programs to provide health care services to
persons who have limited incomes and meet various eligibility
requirements. These programs include the Healthy Families Program
administered by the Managed Risk Medical Insurance Board, and the
Medi-Cal program administered by the State Department of Health
Services. Existing law provides for the regulation of health care
service plans by the Department of Managed Health Care and health
insurers by the Department of Insurance.
This bill would establish the California Health Care System to be
administered by the newly created California Health Care Agency under
the control of an elected Health Care Commissioner. The bill would
make all California residents eligible for specified health care
benefits under the California Health Care System, which would, on a
single-payer basis, negotiate for or set fees for health care
services provided through the system and pay claims for those
services. The bill would prohibit deductibles or copayments during
the initial first 2 years of operation of the health care system, but
would authorize the commissioner to establish deductibles and
copayments thereafter. The bill would require the health care system
to be operational by January 1, 2006, and would enact various
transition provisions. The bill would require the commissioner to
seek all necessary waivers, exemptions, agreements, or legislation to
allow various existing federal, state, and local health care
payments to be paid to the California Health Care System, which would
then assume responsibility for all benefits and services previously
paid for with those funds.
The bill would create a Health Policy Board to establish policy on
medical issues and various other matters relating to the health care
system. The bill would create the Office of Consumer Advocacy
within the agency to represent the interests of health care consumers
relative to the health care system. The bill would create within the
agency the Office of Health Care Planning, to plan for the health
care needs of the population, and the Office of Health Care Quality,
headed by the chief medical officer, to support the delivery of high
quality care and promote provider and patient satisfaction. The
bill would create the Office of Inspector General for the California
Health Care System within the Attorney General's office, which would
have various oversight powers. The bill would extend the application
of certain insurance fraud laws to providers of services and
products under the health care system, thereby imposing a
state-mandated local program by revising the definition of a crime.
The bill would enact other related provisions relative to budgeting,
federal preemption, subrogation, collective bargaining agreements,
and associated matters.
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.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Division 112 (commencing with Section 140000) is added
to the Health and Safety Code, to read:
DIVISION 112. CALIFORNIA HEALTH CARE SYSTEM
CHAPTER 1. GENERAL PROVISIONS
140000. There is hereby established in state government the
California Health Care System, which shall be administered by the
California Health Care Agency, an independent agency under the
control of the Health Care Commissioner.
140001. This division shall be known as and may be cited as the
Health Care for All Californians Act.
140002. This division shall be liberally construed to accomplish
its purposes.
140003. The California Health Care Agency is hereby designated as
the single state agency with full power to supervise every phase of
the administration of the California Health Care System and to
receive grants-in-aid made by the United States government or by the
state in order to secure full compliance with the applicable
provisions of state and federal law.
140004. The California Health Care Agency shall be comprised of
the following entities:
(a) The Health Policy Board.
(b) The Office of Consumer Advocacy.
(c) The Office of Health Care Planning.
(d) The Office of Health Care Quality.
(e) The Health Care Fund.
140005. The Legislature finds and declares all of the following:
(a) More than 6 million Californians lacked health insurance
coverage at some time in 2003 and 3.6 million had no health insurance
coverage at any time.
(b) Since 2001, the number of uninsured Californians has risen
significantly.
(c) More than 10 million Californians have no coverage for
prescription drugs. Millions of Californians lacking prescription
drug coverage are otherwise insured.
(d) Efforts to control health care costs and growth of health care
spending have been unsuccessful.
(e) Employers, retirement funds, and unions that offer and
negotiate for health insurance and benefits and individuals who
purchase health insurance are experiencing substantial increases in
health care costs and decreases in health care benefits.
(f) Unstable and unaffordable rate increases have caused
significant economic hardship for California residents and their
employers.
(g) One in two personal bankruptcies in the United States are the
result of health care costs.
(h) California does not perform well on standard health outcome
measurements.
(i) Unacceptable health access disparities exist by region,
ethnicity, income, and gender.
(j) Eleven of California's rural counties have no health
maintenance organizations that provide coverage to the county on a
countywide basis and 21 rural counties no longer have a
Medicare+Choice HMO.
(k) More than 80 percent of all Medi-Cal and uninsured patient
visits to emergency facilities are for conditions that could have
been treated in a nonemergency setting.
(l) Emergency departments and trauma centers face growing
financial losses.
(m) Advances in medical technology are not available to all
Californians who need them.
(n) Health care providers express significant professional
dissatisfaction with the current health care systems, as do health
care consumers.
(o) The California Medical Association found in 2001 that, in
California, uncompensated health care totaled five hundred forty
million dollars ($540,000,000). Uncompensated health care has caused
60 emergency departments (15 percent of the departments in the
state) to close since 1990.
(p) The California Medical Association found in January of 2001
that increasing patient volume and a decline in the number of
emergency rooms have made multiple hour waits for emergency care the
norm, and that ambulance diversion is becoming a common method of
dealing with emergency department overcrowding. These developments
pose significant dangers for both insured and uninsured Californians.
(q) A quantitative analysis performed in 2002 by the independent
economic consulting firm, Lewin Inc., indicated that under a single
payer health insurance system, California could afford to cover all
California residents at no new cost to the state.
(r) According to the same report and numerous other studies, by
simplifying administration, achieving bulk purchase discounts on
pharmaceuticals, and reducing the use of emergency facilities for
primary care, California could divert billions of dollars toward
providing direct health care and improved quality and access.
140006. This division shall have all of the following purposes:
(a) To provide universal and affordable health care coverage for
all California residents.
(b) To provide California residents with an extensive benefit
package.
(c) To control health care costs and the growth of health care
spending.
(d) To achieve measurable improvement in health care outcomes.
(e) To prevent disease and disability and to maintain or improve
health and functionality.
(f) To increase health care provider, consumer, employee, and
employer satisfaction with the health care system.
(g) To implement policies, that strengthen and improve culturally
and linguistically sensitive care.
(h) To develop an integrated population-based health care database
to support health care planning.
140007. As used in this division, the following terms have the
following meanings:
(a) "Agency" means the California Health Care Agency.
(b) "Clinic" means an organized outpatient health facility that
provides direct medical, surgical, dental, optometric, or podiatric
advice, services, or treatment to patients who remain less than 24
hours, and that may also provide diagnostic or therapeutic services
to patients in the home as an incident to care provided at the clinic
facility, and includes those facilities defined under Sections 1200
and 1200.1 of the Health and Safety Code.
(c) "Commissioner" means the Health Care Commissioner.
(d) "Direct care provider" means any licensed health care
professional that provides health care services through direct
contact with the patient, either in person or using approved
telemedicine modalities as identified in Section 2290.5 of the
Business and Profession Code.
(e) "Essential community provider" means an integrated health
facility that has served as part of the state's health care safety
net for low income and traditionally underserved populations in
California and that is one of the following:
(1) A "community clinic" as defined under subparagraph (A) of
paragraph (1) of subdivision (a) of Section 1204 of the Health and
Safety Code.
(2) A "free clinic" as defined under subparagraph (B) of paragraph
(1) of subdivision (a) of Section 1204 of the Health and Safety
Code.
(3) A "federally qualified health center" as defined under Section
1395x (aa)(4) 1396d(l)(2) of Title 42
of the United States Code.
(4) A "rural health clinic" as defined under Section
1395x (aa)(2) 1396d(l)(1) of Title 42 of the
United States Code.
(5) Any clinic conducted, maintained, or operated by a federally
recognized Indian tribe or tribal organization, as defined in Section
1603 of Title 25 of the United States Code.
(6) Any clinic exempt from licensure under subdivision (h) of
Section 1206.
(7) Any other clinic deemed by the commissioner and Health
Policy Board to meet specified criteria conferring essential
community provider status.
(f) "Health care provider" means any professional person, medical
group, independent practice association, organization, health
facility, or other person or institution licensed or authorized by
the state to deliver or furnish health care services.
(g) "Health facility" means any facility, place, or building that
is organized, maintained, and operated for the diagnosis, care,
prevention, and treatment of human illness, physical or mental,
including convalescence and rehabilitation and including care during
and after pregnancy, or for any one or more of these purposes, for
one or more persons, and includes those facilities defined under
Section 15432(b) of the California Government Code.
(h) "Hospital" means all health facilities to which persons may be
admitted for a 24-hour stay or longer, as defined in Section 1250 of
the Health and Safety Code, with the exception of nursing, skilled
nursing, intermediate care, and congregate living health facilities.
(i) "Integrated health care delivery system" means a provider
organization that meets all of the following criteria:
(1) Is fully integrated operationally and clinically to provide a
broad range of health-care services, including preventative care,
prenatal and well-baby care, immunizations, screening diagnostics,
emergency services, hospital and medical services, surgical services,
and ancillary services.
(2) Is compensated using capitation or facility budgets, except
for copayments, for the provision of health care services.
(3) Provides health care services primarily directly through
direct care providers who are either employees or partners of the
organization, or through arrangements with direct care providers or
one or more groups of physicians, organized on a group practice or
individual practice basis.
(j) "Large employer" means a person, firm, proprietary or
nonprofit corporation, partnership, public agency, or association
that is actively engaged in business or service, that, on at
least 50 percent of its working days during the preceding
calendar year employed at least 50 employees, or, if the employer was
not in business during any part of the preceding calendar year,
employed at least 50 employees on at least 50 percent of its working
days during the preceding calendar quarter.
(k) "Primary care provider" means a direct care provider that is a
family physician, internist, pediatrician, an
obstetrician/gynecologist, or a family nurse practitioner or
physician assistant practicing under supervision as defined in
California codes.
(l) "Small employer" means a person, firm, proprietary
or nonprofit corporation, partnership, public agency, or association
that is actively engaged in business or service and that, on at least
50 percent of its working days during the preceding calendar year
employed at least two but no more than 49 employees, or, if the
employer was not in business during any part of the preceding
calendar year, employed at least two but no more than 40 eligible
employees on at least 50 percent of its working days during the
preceding calendar quarter.
(m) "System" or "health care system" means the California Health
Care System.
140008. The definitions contained in Section 140007 shall govern
the construction of this division, unless the context requires
otherwise.
CHAPTER 2. GOVERNANCE
140100. (a) The commissioner shall be the chief officer of the
agency and shall administer all aspects of the agency.
(b) Except as provided in subdivision (d), the commissioner shall
be elected by the people in the same time, place, and manner as the
Governor, and shall serve a term of four years.
(c) Should a vacancy occur during the term of office, legislative
confirmation shall be required for the position of the commissioner
in the same manner and procedure as that required by Section 5 of
Article V of the California Constitution.
(d) The first commissioner shall be appointed by the Governor not
less than 75 and no more than 100 days following the operative date
of this division, and shall be subject to confirmation by the Senate
within 30 days of nomination. If the Senate does not take up the
nomination within 30 days of nomination, the nominee shall be
considered to have been confirmed and may take office.
(e) Should the Senate, by a vote, fail to confirm the nominee, the
Governor shall appoint a new nominee, subject to the confirmation of
the Senate as provided in subdivision (d).
(f) If the commissioner is at any time unable to perform the
duties of the office, a deputy health commissioner shall perform
those duties for a period of up to 90 days.
(g) In the event of a vacancy, or inability of the commissioner to
perform the duties of office for a period of more than 90 days, an
acting commissioner shall be appointed by the Governor and confirmed
by the Senate for the balance of the commissioner's term pursuant to
the same process provided in subdivision (d).
(h) The commissioner is subject to impeachment pursuant to Section
18 of Article IV of the California Constitution.
(i) The compensation and benefits of the commissioner shall be
determined pursuant to the same process as that provided in Section 8
of Article III of the California Constitution.
(j) The commissioner shall be subject to Title 9 (commencing with
Section 81000) of the Government Code.
140101. (a) The commissioner shall be responsible for the
performance of all duties, the exercise of all powers and
jurisdiction, and the assumption and discharge of all
responsibilities vested by law in the agency. The commissioner shall
perform all duties imposed upon him or her by this division and
other laws related to health care, and shall enforce the execution of
those provisions and laws to promote their underlying aims and
purposes. These broad powers include, but are not limited to, the
power to set rates and to promulgate generally binding regulations
concerning any and all matters relating to the implementation of this
division and its purposes.
(b) The commissioner shall appoint the deputy health commissioner,
the Director of the Health Care Fund, the consumer advocate, the
chief medical officer, and the Director of Health Care Planning.
(c) In accordance with the laws governing the state civil service,
the commissioner shall employ and, with the approval of the
Department of Finance, fix the compensation of personnel as necessary
to properly discharge the duties imposed upon the commissioner by
law, including, but not limited to, a deputy commissioner, a public
information officer, a chief enforcement counsel, a Director of the
Health Care Fund, a chief medical officer, a consumer advocate, a
Director of the Office of Health Care Planning and legal counsel in
any action brought by or against the commissioner under or pursuant
to any provision of any law under the commissioner's jurisdiction, or
in which the commissioner joins or intervenes as to a matter within
the commissioner's jurisdiction, as a friend of the court or
otherwise, and stenographic reporters to take and transcribe the
testimony in any formal hearing or investigation before the
commissioner or before a person authorized by the commissioner. The
personnel of the agency shall perform duties as assigned to them by
the commissioner. The commissioner shall designate certain employees
by rule or order that are to take and subscribe to the
constitutional oath of office within 15 days after their
appointments, and to file that oath with the Secretary of State. The
commissioner shall also designate those employees that are to be
subject to Title 9 (commencing with Section 81000) of the Government
Code.
(d) The commissioner shall adopt a seal bearing the inscription:
"Commissioner, Health Care Agency, State of California." The seal
shall be affixed to or imprinted on all orders and certificates
issued by him or her and other instruments as he or she directs. All
courts shall take judicial notice of this seal.
(e) The administration of the agency shall be supported from the
Health Care Fund created pursuant to Section 140200.
(f) The commissioner, as a general rule, shall publish or make
available for public inspection any information filed with or
obtained by the agency, unless the commissioner finds that this
availability or publication is contrary to law. No provision of this
division authorizes the commissioner or any of the commissioner's
assistants, clerks, or deputies to disclose any information withheld
from public inspection except among themselves or when necessary or
appropriate in a proceeding or investigation under this division or
to other federal or state regulatory agencies. No provision of this
division either creates or derogates from any privilege that exists
at common law or otherwise when documentary or other evidence is
sought under a subpoena directed to the commissioner or any of his or
her assistants, clerks, or deputies.
(g) It is unlawful for the commissioner or any of his or her
assistants, clerks, or deputies to use for personal benefit any
information that is filed with or obtained by the commissioner and
that is not then generally available to the public.
(h) The commissioner, in pursuit of his or her duties, shall have
unlimited access to all nonconfidential and all nonprivileged
documents in the custody and control of the agency.
(i) The Attorney General shall render to the commissioner opinions
upon all questions of law, relating to the construction or
interpretation of any law under the commissioner's jurisdiction or
arising in the administration thereof, that may be submitted to the
Attorney General by the commissioner and upon the commissioner's
request shall act as the attorney for the commissioner in actions and
proceedings brought by or against the commissioner or under or
pursuant to any provision of any law under the commissioner's
jurisdiction.
140102. (a) The commissioner shall do all of the following:
(1) Establish as part of the administration of the agency all of
the following:
(A) A Health Policy Board, pursuant to Section 140103.
(B) An Office of Consumer Advocacy, pursuant to Section 140104.
(C) An Office of Health Care Planning, pursuant to Section 140601.
(D) An Office of Health Care Quality, pursuant to Section 140602.
(E) A Health Care Fund, pursuant to Section 140200.
(2) Implement statutory eligibility standards.
(3) Establish an enrollment system that will ensure that all
eligible California residents, including those who travel frequently,
those who cannot read, and those who do not speak English are aware
of their right to health care, and are formally enrolled.
(4) Establish a comprehensive budget that ensures adequate funding
to meet the health care needs of the population.
(5) Establish standards and criteria for allocation of operating
funds and funds from the Health Care Fund as described in Chapter 3
(commencing with Section 140200).
(6) Develop separate formulae for budget allocations and review
the formulae annually to ensure that they address disparities in
service availability and in health care outcomes and for sufficiency
of rates, fees and prices.
(7) Negotiate for or set, rates, fees and prices involving any
aspect of the health care system, and establish procedures thereto.
(8) Utilize the purchasing power of the state to negotiate price
discounts for prescription drug and durable and nondurable medical
equipment used by the California Health Care System.
(9) Ensure that use of state purchasing power achieves the lowest
possible prices for the California Health Care System.
(10) Ensure that price discounts achieved for the system
formularies are available to all California residents, health care
providers, wholesalers and retailers.
(11) Annually establish statewide health care goals for capital
expenditures established pursuant to Section 140210.
(12) Ensure a smooth transition to state oversight of capital
health care planning.
(13) Annually assess projected revenues and expenditures for
sufficiency pursuant to Chapter 3 (commencing with Section 140200).
(14) Establish or ensure the establishment of an electronic claims
and payments system for the health care system.
(15) Ensure the delivery of high quality care to the population,
pursuant to Chapter 6 (commencing with Section 140600).
(16) Determine health care system goals and priorities.
(17) Establish evidence-based standards of care for the health
care system and ensure a smooth transition to delivery of care under
statewide standards.
(18) Adopt a benefits package for consumers. The benefits package
shall meet or exceed the minimums required by law.
(19) Establish an evidence-based system formulary for all
prescription drugs and durable and nondurable medical equipment used
by the California Health Care System.
(20) Meet regularly with the chief medical officer, the consumer
advocate and the Director of Health Care Planning to review the
impact of the agency and its policies on the health of the population
and on satisfaction with the health care system.
(21) Implement policies to ensure that all Californians receive
culturally and linguistically sensitive care, pursuant to paragraph
(9) of subdivision (a) of Section 140601 and develop mechanisms and
incentives to achieve this purpose.
(22) Establish a Technology Advisory Committee, with the advice of
the chief medical officer and the director of health planning, that
will evaluate the cost and effectiveness of new medical technology.
(23) Develop methods, with the advice of the chief medical
officer, to monitor the quality of care provided to Californians and
to make needed improvements.
(24) Implement, to the extent permitted by federal law,
standardized claims and reporting methods.
(25) Procure funds, including loans, lease or purchase of
insurance for the system, its employees and agents.
(26) Collaborate with state and local authorities to plan for
needed earthquake retrofits in a manner that does not disrupt patient
care.
(b) The commissioner shall report annually to the Legislature and
the Governor, on or before October, and at other times pursuant to
this section, on the performance of the health care system, its
fiscal condition and need for rate adjustments, consumer copayments
or consumer deductible payments, recommendations for statutory
changes, receipt of payments form from
the federal government, whether current year goals and priorities are
met, future goals and priorities, and major new technology or
prescriptions prescription drugs of
other circumstances that may affect the cost of health care.
140103. (a) The commissioner shall establish a Health Policy
Board and shall be president of the board. The board shall consist
of the following members:
(1) The commissioner.
(2) The deputy commissioner.
(3) The Secretary of the Health and Welfare Agency.
(4) The Director of the Health Care Fund.
(5) The consumer advocate.
(6) The chief medical officer.
(7) The Director of Health Care Planning .
(8) Four physicians all of whom shall be board certified in their
field. The Senate Committee on Rules and the Governor shall each
appoint one member. The Speaker of the Assembly shall appoint two of
these members.
(9) One registered nurse, to be appointed by the Governor.
(10) One licensed vocational nurse, to be appointed by the Senate
Committee on Rules.
(11) One licensed allied health practitioner, to be appointed by
the Speaker of the Assembly.
(12) One mental health care provider, to be appointed by the
Senate Committee on Rules.
(13) One dentist, to be appointed by the Governor.
(14) One representative of private hospitals, to be appointed by
the Senate Committee on Rules.
(15) One representative of public hospitals, to be appointed by
the Governor.
(16) Four consumers of health care. The Governor shall appoint
two of these members, one of whom shall be a member of the disability
community. The Senate Committee on Rules shall appoint a member who
is 65 years of age or older. The Speaker of the Assembly shall
appoint the fourth member.
(17) One representative of organized labor, to be appointed by the
Speaker of the Assembly.
(18) One representative of essential community providers, to be
appointed by the Senate Committee on Rules.
(19) One union member, to be appointed by the Senate Committee on
Rules.
(20) One representative of small business, to be appointed by the
Governor.
(21) One representative of large business, to be appointed by the
Speaker of the Assembly.
(22) One pharmacist, to be appointed by the Speaker of the
Assembly.
(b) In making appointments pursuant to this section, the Governor,
the Senate Committee on Rules, and the Speaker of the Assembly shall
make good faith efforts to assure that their appointments, as a
whole, reflect, to the greatest extent feasible, the social and
geographic diversity of the state.
(c) Any member appointed by the Governor, the Senate Committee on
Rules, or the Speaker of the Assembly shall serve for a four-year
term. These members may be reappointed for succeeding four-year
terms.
(d) Vacancies that occur shall be filled within 30 days after the
occurrence of the vacancy, and shall be filled in the same manner in
which the vacating member was selected or appointed. The
commissioner shall notify the appropriate appointing authority of any
expected vacancies on the board.
(e) Members of the board shall serve without compensation, but
shall be reimbursed for actual and necessary expenses incurred in the
performance of their duties to the extent that reimbursement for
those expenses is not otherwise provided or payable by another public
agency or agencies, and shall receive _______ dollars ($____) for
each full day of attending meetings of the board. For purposes of
this section, "full day of attending a meeting" means presence at,
and participation in, not less than 75 percent of the total meeting
time of the board during any particular 24-hour period.
(f) The board shall meet at least six times a year in a place
convenient to the public. All meetings of the board shall be open to
the public.
(g) A majority of the membership of the board shall constitute a
quorum. Any action taken by the board under this division shall
require a quorum.
(h) The Health Policy Board shall do all of the following:
(1) Establish policy on medical issues, population-based public
health issues, research priorities, scope of services, expanding
access to care, and evaluation of the performance of the system.
(2) Evaluate proposals from the chief medical officer and the
Director of Health Care Planning for innovative approaches to health
promotion, disease and injury prevention, health education and
research, and health care delivery.
(3) Establish standards and criteria by which requests by health
facilities for capital improvements shall be evaluated.
(i) It is unlawful for the board or any of its assistants, clerks,
or deputies to use for personal benefit any information that
is filed with or obtained
by the board and that is not then generally available to the public.
(j) No member of the board shall make, participate in making, or
in any way attempt to use his or her official position to influence a
governmental decision in which he or she knows or has reason to know
that he or she, or a family member or a business partner or
colleague has a financial interest.
(k) Members of the board shall be subject to Title 9 (commencing
with Section 81000) of the Government Code.
140104. (a) There is within the agency an Office of Consumer
Advocacy to represent the interests of the consumers of health care.
The goal of the office shall be to help residents of the state
secure the health care services and benefits to which they are
entitled under the laws administered by the agency and to advocate on
behalf of and represent the interests of consumers in governance
bodies created by this division and in other forums.
(b) The office shall be headed by a consumer advocate appointed by
the commissioner.
(c) The consumer advocate shall establish an office in the City of
Sacramento and other offices throughout the state that shall provide
convenient access to residents.
(d) The duties of the consumer advocate shall be determined by the
commissioner, and shall include, but not be limited to, all of the
following:
(1) In collaboration with the chief medical officer and the
California Health System Counsel, developing standards and procedures
for resolving disputes with the agency.
(2) Developing educational and informational guides for consumers
describing their rights and responsibilities, and informing them
about effective ways to exercise their rights to secure health care
services. The guides shall be easy to read and understand, available
in English and other languages, and shall be made available to the
public by the agency, including access on the agency's Internet Web
site and through public outreach and educational programs.
(3) Establishing a toll-free telephone number to receive
complaints regarding the agency and its services. The hearing and
speech impaired may use the California Relay Service's toll-free
telephone numbers to contact the Office of Consumer Advocacy. The
agency's Internet Web site shall have complaint forms and
instructions online.
(4) Examining complaints and suggestions from the public.
(5) Recommending to the commissioner changes that improve quality
of care and patient satisfaction.
(6) Examining the extent to which individual health facilities
meet the needs of the community in which they are located.
(7) Receiving, investigating, and responding to complaints from
any source about any aspect of the system, referring the results of
investigations to the appropriate professional provider or facility
licensing boards or law enforcement agencies, as appropriate.
(8) Publishing an annual report to the public and the Legislature
containing a statewide evaluation of the agency from the consumer
perspective.
(9) Serving on the Health Policy Board and participating in the
Partnerships for Health that educate the public, health care
providers and health care workforce on health care issues.
(10) Holding public hearings, at least annually, throughout the
state concerning complaints and suggestions from the public.
(e) The consumer advocate, in pursuit of his or her duties, shall
have unlimited access to all nonconfidential and all nonprivileged
documents in the custody and control of the agency.
(f) Nothing in this division shall prohibit a consumer or class of
consumers or the consumer advocate from seeking relief through the
judicial system.
140106. There is within the Office of the Attorney General an
Office of Inspector General for the California Health Care System.
The Inspector General shall be appointed by the Governor and subject
to Senate confirmation. The Inspector General shall be subject to
the direction of the Attorney General.
140107. (a) The Inspector General shall have broad powers to
investigate, audit and review the financial and business records of
individuals, public and private agencies and institutions, and
private corporations that provide services or products to the system,
the costs of which are reimbursed by the system. The Inspector
General shall investigate allegations of misconduct on the part of an
employee or appointee of the agency and on the part of any health
care provider of services that are reimbursed by the system and shall
report any findings of misconduct to the Attorney General. The
Inspector General shall investigate patterns of medical practice that
may indicate fraud and abuse related to over or under utilization or
other inappropriate utilization of medical products and services.
(b) The Inspector General shall arrange for the collection and
analysis of data needed to investigate the inappropriate utilization
of these products and services. The Inspector General shall conduct
additional reviews or investigations of financial and business
records when requested by the Governor or by any Member of the
Legislature and shall report findings of the review or investigation
to the Governor and the Legislature.
(c) The Inspector General shall annually report recommendations
for improvements to the system or the agency to the Governor and the
Legislature.
140108. The provisions of the Insurance Fraud Prevention Act
(Chapter 12 (commencing with Section 1871), Part 2, Division 1,
Insurance Code), and the provisions of Article 6 (commencing with
Section 650) of Chapter 1 of Division 2 of the Business and
Professions Code, shall be applicable to health care providers who
receive payments for services through the system under this division.
140109. Nothing contained in this division is intended to repeal
any legislation or regulation governing the professional conduct of
any person licensed by the State of California or any legislation
governing the licensure of any facility licensed by the State of
California. All federal legislation and regulations governing
referral fees and fee-splitting, including, but not limited to,
Sections 1320a-7b and 1395nn of Title 42 of the United States Code
shall be applicable to all health care providers of services
reimbursed under this division, whether or not the health care
provider is paid with funds coming from the federal government.
140110. (a) The health care system shall be operational no later
than January 1, 2006.
(b) The commissioner shall appoint a transition advisory group to
assist with the transition to the system. The transition advisory
group shall include, but not be limited to, the following members:
(1) The commissioner.
(2) The consumer advocate.
(3) The chief medical officer.
(4) The Director of Health Care Planning.
(5) The Director of the Health Care Fund.
(6) Experts in health care financing and health care
administration.
(7) Direct care providers.
(8) Representatives of retirement boards.
(9) Employer and employee representatives.
(10) Hospital, essential community provider, and long-term care
facility representatives.
(11) Representatives from state departments and regulatory bodies
that shall or may relinquish some or all parts of their delivery of
health service to the system.
(12) Representatives of counties.
(13) Consumers of health care.
(c) The transition advisory group shall advise the commissioner on
all aspects of the implementation of this division.
(d) The transition advisory group shall make recommendations to
the commissioner, the Governor, and the Legislature on how to
integrate health care delivery services and responsibilities of the
following departments and agencies into the system:
(1) The State Department of Health Services.
(2) The Department of Managed Health Care.
(3) The Department of Aging.
(4) The Department of Developmental Services.
(5) The Health and Welfare Data Center.
(6) The Department of Mental Health.
(7) The Department of Alcohol and Drugs.
(8) The Department of Rehabilitation.
(9) The Emergency Medical Services Authority.
(10) The Managed Risk Medical Insurance Board.
(11) The Office of Statewide Health Planning and Development.
(e) The transition advisory group shall investigate the
feasibility and costs of including the delivery of health care
aspects of the following into the system:
(1) Workers' compensation.
(2) State disability insurance.
(3) Long-term care.
(f) The transition advisory group shall recommend potential
sources of funds for persons who are displaced from jobs in the
transition to the new health care system.
(g) The transition advisory group shall report its findings to the
commissioner, the Governor, and the Legislature. The transition to
the system shall not adversely affect publicly funded programs
currently providing health care services.
(h) The transition shall be funded from a loan from the General
Fund and from private sources identified by the commissioner.
CHAPTER 3. FUNDING
Article 1. General Provisions
140200. (a) In order to support the agency effectively in the
administration of this division, there is hereby established in the
State Treasury the Health Care Fund. The fund shall be administered
by a director, appointed by the commissioner.
(b) All moneys collected, received, and transferred pursuant to
this division shall be transmitted to the State Treasury to be
deposited to the credit of the Health Care Fund for the purpose of
financing the California Health Care System.
(c) All claims for health care services rendered shall be made to
the Health Care Fund.
(d) All payments made for health care service shall be disbursed
from the Health Care Fund.
(e) The director shall sit on the Health Policy Board.
140201. (a) The Director of the Health Care Fund shall establish
the following accounts within the Health Care Fund:
(1) A system account to provide for all annual state expenditures
for the health care system.
(2) A reserve account.
(b) During the first five years of the operation of the system,
the director shall maintain a reserve account that equals, at
minimum, 5 percent of the system's budget. After five years of the
system's operation, the director, at the request of the commissioner,
may reduce the minimum reserve requirement to 3 percent of the
system's budget.
(c) The Director of the Health Care Fund shall immediately notify
the commissioner when annual costs appear to exceed annual revenues.
The commissioner shall determine the cause of excessive costs and
implement cost control measures.
(d) In the event cost control measures are not sufficient to
assure adequate funding, the commissioner shall recommend additional
measures to the Legislature to assure sufficient funding, pursuant to
Section 140216.
(e) If, on June 30 of any year, the Budget Act for the fiscal year
beginning on July 1 has not been enacted, all moneys in the reserve
account of the Health Care Fund shall be used to implement this
division until funds are available through the Budget Act.
(f) Notwithstanding any other provision of law and without regard
to fiscal year, if the annual State Budget is not enacted by June 30
of any fiscal year preceding the fiscal year to which the budget
would apply and if the commissioner determines that funds in the
reserve account are depleted, the following shall occur:
(1) The Controller shall annually transfer from the General Fund,
in the form of one or more loans, an amount not to exceed a
cumulative total of ____ dollars ($____) in any fiscal year, to the
Health Care Fund for the purpose of making payments to health care
providers.
(2) Upon enactment of the annual Budget Act in any fiscal year to
which paragraph (1) applies, the Controller shall transfer all
expenditures and unexpended funds loaned to the Health Care Fund to
the appropriate Budget Act item.
(3) The amount of any loan made pursuant to subdivision (a) for
which moneys were expended from the Health Care Fund shall be repaid
by debiting the appropriate Budget Act item in accordance with the
procedure prescribed by the Department of Finance.
140202. (a) The commissioner shall annually prepare a
comprehensive health system budget that includes all expenditures and
shall specify a limit on total annual state expenditures.
(1) The commissioner shall limit growth of health care spending in
the system budget by reference to the average growth in state gross
domestic product across multiple years; population growth; changes in
actuarial demographics and other demographic indicators; advances in
technology and changes in technology utilization; and to projected
future growth rates.
(2) The commissioner shall annually assess projected revenues and
expenditures for the next 12 months and for the subsequent four years
in anticipation of projected changes in Gross State Product,
population growth, technology advances, actuarial assessments,
technologic advances, and other factors that impact spending.
(A) When revenue and expenditure trends indicate a possible
funding shortfall, the commissioner shall implement cost control
measures pursuant to Section 140216.
(B) When revenue and expenditure trends indicate that cost control
measures will not be sufficient to meet the shortfall, the
commissioner shall notify the Legislature and shall recommend a plan,
including a possible increase in the rate of health taxation, to
correct the projected shortfall.
(3) Within two years of initiation of system operations, the
commissioner shall limit administrative costs to 5 percent, shall
annually evaluate methods to reduce administrative costs, and shall
report the results of the evaluation to the Legislature.
(b) The health system budget shall include all of the following:
(1) Health care provider budgets for each of the following
principal mechanisms of reimbursement:
(A) Fee-for-service.
(B) Capitated systems.
(C) Systems functioning under operating budgets.
(D) Health facilities functioning under operating budgets.
(2) Capital investment budget.
(3) Purchasing budget.
(4) Research and innovation budget.
(5) Workforce development budget.
(c) In establishing budgets the commissioner shall make
adjustments based on:
(1) Health risk of enrollees.
(2) Scope of services provided, including primary, secondary, and
tertiary care and services provided by medical teaching
facilities .
(3) Proposed innovative programs that improve quality, workplace
safety, and consumer, health care provider, and employee
satisfaction.
(4) Costs of providing care for nonmembers.
(5) Need to correct health outcome disparities and the unmet needs
of previously underinsured or uninsured enrollees.
(6) Relative usage of different health care provider types.
(7) Anticipated increases in expenditures due to improved access.
(8) Projected savings in administrative costs under a single payer
system.
(9) Projected savings in prescription drugs and durable and
nondurable medical equipment under a single buyer.
(10) Projected savings due to provision of primary and preventive
care to the population under universal coverage.
(11) Potential savings from decreases in inappropriate use of
emergency rooms.
(12) Projected savings from decreases in medical errors under
standards of care, mandatory reporting, and health care provider
accountability.
(13) Appropriate reimbursement incentives to ensure that the
health care system has an adequate supply of health care providers.
(14) Appropriate reimbursement incentives for the provision of
high quality care that improves health, functionality, and quality of
life.
(15) Appropriate reimbursement incentives for health care
providers who deliver services in medically underserved areas.
(16) Appropriate reimbursement incentives to promote a sufficient
supply of health care providers to meet the health care needs of the
population.
(17) Appropriate reimbursement incentives to promote an
appropriate ratio of generalist to specialist providers, as
determined by the commissioner with the advice of the chief medical
officer and the director of planning, to meet the health care needs
of the population.
(18) No incentive may adversely affect the care a patient receives
or the care a health care provider recommends.
(d) Moneys in the Reserve Account shall not be considered as
available revenues for purposes of preparing the system budget.
140204. (a) Health care providers licensed or accredited to
provide care in California may choose how they wish to be
compensated.
(b) Health care provider budgets shall be adjusted annually to
account for changes in utilization, covered services, and other
factors that affect the costs of delivering care.
140205. (a) The budget for fee-for-service health care providers
shall be divided among categories of licensed health care providers,
in order to establish a total annual budget for each category at the
rates negotiated or set by the commissioner. Each of these category
budgets shall be sufficient to cover all included services
anticipated to be required by eligible individuals choosing
fee-for-service care.
(b) The commissioner shall negotiate fee-for-service reimbursement
rates pursuant to Section 140215.2. In the event negotiations are
not concluded in a timely manner, the commissioner shall establish
reimbursement rates.
140206. (a) Operating budgets for health facilities shall include
all operating expenses.
(b) The commissioner shall negotiate operating budgets.
(c) Health facilities that choose to function under a
comprehensive operating budget shall provide annual operating budget
requests to the commissioner.
(d) Essential community providers that select facility operating
budgets as their method of reimbursement shall include in their
annual operating budget request any ancillary health care or social
services which were previously funded through moneys subsumed into
the Health Care Fund.
140207. (a) The commissioner shall negotiate capitation rates
with health care providers choosing this form of reimbursement.
(b) Capitation rates shall be sufficient to cover the cost of care
for all enrolled individuals.
(c) Capitation rates shall be negotiated pursuant to Section
140215.
140208. (a) Operating budgets for integrated health care systems,
including group practices that function as integrated health care
systems and provide a full range of health care services, shall
include all system operating expenses.
(b) Budgets shall include the labor costs of providing care.
(c) The commissioner shall negotiate rates for integrated health
care systems.
(d) Integrated health care systems choosing to function under an
operating budget shall annually submit operating budget requests to
the commissioner.
(e) Essential Community Providers that qualify as integrated
health care systems shall include in their annual operating budget
request any ancillary health care or social services that were
previously funded through moneys subsumed into the Health Care Fund.
140209. Health care providers functioning under capitated or
operating budgets shall immediately report any projected operating
deficits to the commissioner. The commissioner shall determine
whether the projected deficits reflect appropriate increases in
health care needs, in which case the commissioner shall adjust the
budget appropriately. If the commissioner determines that deficits
are not justifiable, no adjustment shall be made.
140210. (a) The commissioner shall annually determine a capital
investment threshold level below which approval for a capital
investment shall not be required. However, notice of plans for
capital investments falling below the threshold must be provided to
the commissioner three months in advance. Capital investments above
the threshold require approval of the commissioner prior to
initiation.
(b) For purposes of determining the cost of a capital investment,
the costs of studies, surveys, design plans, and working drawing
specifications or other activities essential to planning and
execution of capital investment, or capital investment that changes
the bed capacity of a facility or adds a new service or license
category, shall be included.
(c) When a health facility or individual acting on behalf of a
facility, or any other purchaser, obtains by lease or comparable
arrangement, any facility or part thereof, or any equipment for a
facility, it shall be considered to be a capital expenditure for
purposes of this section.
(d) No health care provider may make a series of capital
investments in a single year or over a period of years for the
purpose of avoiding the need to seek approval for a capital project.
(e) No capital investment may be undertaken using funds from a
health care provider operating budget.
(f) The cost of mandatory earthquake retrofits to health
facilities shall not be the responsibility of the health care system.
However, the commissioner and the director of planning shall
coordinate retrofitting with other facility capital investments.
(g) If a facility makes a capital investment above the specified
threshold without prior approval of the commissioner, there shall be
no reimbursement from the health care system for services provided in
the buildings or with the equipment or from any aspect of an
unapproved capital investment.
(h) Health care providers may submit requests for approval of a
capital project at the time they submit operating or capitated budget
requests or at other times determined by the commissioner.
(i) Capital investment priorities shall reflect the need to
correct health care disparities and the unmet needs of underserved
regions and populations.
140211. (a) The commissioner shall establish a budget for the
purchase of prescription drugs and durable and nondurable medical
equipment for the health care system.
(b) The commissioner shall use the purchasing power of the state
to obtain the lowest possible prices for prescription drugs and
durable and nondurable medical equipment and shall make discounted
prices available to all California residents, health care providers,
wholesalers, and retails retailers of
these products for use in the California health care system.
140212. (a) The commissioner shall establish a budget to support
research and innovation that has been recommended by the chief
medical officer, the director of planning, and the consumer advocate.
(b) The research and innovation budget shall support the goals and
priorities of the health care system.
(c) Research and innovation includes, but is not limited to,
methods of improving administrative efficiency, the quality of care
delivered to Californians, communication among health care providers,
and the education of patients.
40213. (a) The commissioner shall establish a budget to support
the development and training of a health system workforce that is
sufficient to meet the health care needs of the population.
(b) The commissioner shall give special consideration for training
to workers who have been displaced from employment due to the
inception of the system.
140214. (a) Reimbursement methods shall include fee-for-service
and capitation.
(b) Reimbursement rates shall be established prior to initiation
of health system operations.
(c) An electronic claims and payment system shall be operational
prior to initiation of health system operations.
(d) No health care provider may charge or receive payments for
covered services except those provided by the health care system.
(e) Licensed health care providers who deliver services not
covered by this division may establish rates for, and charge patients
for, those services.
(f) The commissioner shall establish a system of health care
provider reimbursement that ensures:
(1) Timely payments through a structure that is efficient to
administer and that eliminates unnecessary administrative costs.
(2) Reimbursement to health care providers for all covered health
care services they provide, including care provided to persons who
are subsequently determined to be ineligible for the California
health care system.
(3) Receipt of payment by health care providers within ____
business days of receipt of a claim by the Health Care Fund that has
been properly filed according to procedures established by the
commissioner and accrual of interest at a rate of ____ percent
compounded daily for properly filed claims for covered services from
an eligible claimant paid later than ____ business days of receipt by
the Health Care Fund.
(4) Actuarially sound reimbursement rates.
(5) Specification in reimbursement contracts of health care
provider payment rates, and the actuarial basis for computation of
those rates.
140215. Reimbursement rates for health care providers employed in
integrated health care systems, essential community providers and
group medical practices that function as integrated health care
systems shall be determined by negotiations between health care
providers and their employers.
140215.1. (a) Reimbursement rates for health care providers
choosing fee-for-service reimbursements shall be negotiated on a
class basis with the commissioner. Representatives of health care
providers shall be democratically selected by the represented health
care providers or health care provider networks.
(b) It is the intent of this division that the negotiations
provided for be conducted in a manner that is consistent with the
state action immunity doctrine, which establishes immunity from
federal and state antitrust laws for conduct taken or supervised by a
state.
(c) A contract negotiated pursuant to this section shall be
subject to a confirmation process.
(d) Upon negotiation of a contract, the parties, or upon
successful mediation, the mediator, or if the parties agree to
arbitration, the arbitrator, shall file a copy of the contract with
the Office of the Attorney General and a statement of the reasons and
submitted evidence for review. After an independent review, the
Attorney General shall confirm, modify, or vacate the contract.
140216. (a) The commissioner shall implement cost controls
pursuant to Section 140201.
(b) No cost control measure shall limit access to care that is
needed on an emergency basis or that is determined by a patient's
health care provider to be medically appropriate for a patient's
condition.
(c) Mandatory cost control measures shall include, but not be
limited to, some or all of the following:
(1) Postponement of introduction of new benefits or benefit
improvements.
(2) Postponement of new capital investment.
(3) Adjustment of health care provider budgets to correct for
inappropriate health care provider utilization.
(4) Limitations on health care provider reimbursement above a
specified amount of aggregate billing.
(5) Deferred funding of the Reserve Account.
(6) Establishment of a limit on aggregate reimbursements to
manufacturers of pharmaceutical manufacturers and durable and
nondurable medical equipment.
(7) Imposition of copayments or deductible payments pursuant to
provisions of Section 140504.
(8) Imposition of an eligibility waiting period in the event of
substantial influx of individuals into the state for the purpose of
obtaining health care through the system.
Article 2. Revenues
140217. It is the intent of the Legislature to dedicate revenue
from the following sources for deposit in the Health Care Fund:
(a) A personal income tax for health care on earned and unearned
income.
(b) An employer payroll tax.
(c) A self-employed business tax.
(a) A payroll tax to be paid by employers and employees.
(b) A self-employed earnings tax.
(c) A tax on nonwage income.
Article 3. Governmental Payments
140218. (a) (1) The commissioner shall seek all necessary
waivers, exemptions, agreements, or legislation, so that all current
federal payments to the state for health care be paid directly to the
California Health Care System, which shall then assume
responsibility for all benefits and services previously paid for by
the federal government with those funds.
(2) In obtaining the waivers, exemptions, agreements, or
legislation, the commissioner shall seek from the federal government
a contribution for health care services in California that shall not
decrease in relation to the contribution to other states as a result
of the waivers, exemptions, agreements, or legislation.
(b) (1) The commissioner shall seek all necessary waivers,
exemptions, agreements, or legislation, so that all current state
payments for health care shall be paid directly to the system, which
shall then assume responsibility for all benefits and services
previously paid for by state government with those funds.
(2) In obtaining the waivers, exemptions, agreements, or
legislation, the commissioner shall seek from the Legislature a
contribution for health care services that shall not decrease in
relation to state government expenditures for health care services in
the year that this division was enacted, except that it may be
corrected for change in state gross domestic product, the size and
age of population, and the number of residents living below the
federal poverty level.
(c) The commissioner shall establish formulas for equitable
contributions to the health care system from all California counties
and other local government agencies.
(d) The commissioner shall seek all necessary waivers, exemptions,
agreements, or legislation, so that all county or other local
government agency payments shall be paid directly to the health care
system.
140219. The system's responsibility for providing care shall be
secondary to existing federal, state, or local governmental programs
for health care services to the extent that funding for these
programs are not transferred to the Health Care Fund or that the
transfer is delayed beyond the date on which initial benefits are
provided under the system.
140220. In order to minimize the administrative burden of
maintaining eligibility records for programs transferred to the
system, the commissioner shall strive to reach an agreement with
federal, state, and local governments in which their contributions to
the Health Care Fund shall be fixed to the rate of change of the
state gross domestic product, the size and age of population, and the
number of residents living below the federal poverty level.
140221. If, and to the extent that, federal law and regulations
allows allow the transfer of Medi-Cal
funding to the system, the commissioner shall pay from the Health
Care Fund all premiums, deductible payments, and coinsurance for
qualified Medicare beneficiaries who are receiving benefits pursuant
to Chapter 3 (commencing with Section 12000) of Part 3 of Division 9
of the Welfare and Institutions Code.
140222. In the event and to the extent that the commissioner
obtains authorization to incorporate Medicare revenues into the
Health Care Fund, Medicare Part B payments that previously were made
by individuals or the commissioner shall be paid
by the system for all individuals eligible for both the system and
the Medicare program.
Article 4. Federal Preemption
140300. (a) The commissioner shall pursue all reasonable means to
secure a repeal or a waiver of any provision of federal law that
preempts any provision of this division.
(b) In the event that a repeal or a waiver cannot be secured, the
commissioner shall exercise his or her powers to promulgate rules and
regulations, or seek conforming state legislation, consistent with
federal law, in an effort to best fulfill the purposes of this
division.
140301. (a) To the extent permitted by federal law, an employee
entitled to health or related benefits under a contract or plan that,
under federal law, preempts provisions of this division, shall first
seek benefits under that contract or plan before receiving benefits
from the system under this division.
(b) No benefits shall be denied under the system created by this
division unless the employee has failed to take reasonable steps to
secure like benefits from the contract or plan, if those benefits are
available.
(c) Nothing in this section shall preclude a person from receiving
benefits from the system under this division that are superior to
benefits available to the person under an existing contract or plan.
(d) Nothing in this division is intended, nor shall this division
be construed, to discourage recourse to contracts or plans that are
protected by federal law.
(e) To the extent permitted by federal law, a health care provider
shall first seek payment from the contract or plan, before
submitting bills to the health care system.
Article 5. Subrogation
140302. (a) It is the intent of this division to establish a
single public payer for all health care in the State of California.
However, until such time as the role of all other payers for health
care have been terminated, health care costs shall be collected from
collateral sources whenever medical services provided to an
individual are, or may be, covered services under a policy of
insurance, health care service plan, or other collateral source
available to that individual, or for which the individual has a right
of action for compensation to the extent permitted by law.
(b) As used in this article, collateral source includes all of the
following:
(1) Insurance policies written by insurers, including the medical
components of automobile, homeowners, and other forms of insurance.
(2) Health care service plans and pension plans.
(3) Employers.
(4) Employee benefit contracts.
(5) Government benefit programs.
(6) A judgment for damages for personal injury.
(7) Any third party who is or may be liable to an individual for
health care services or costs.
(c) "Collateral source" does not include either of the following:
(1) A contract or plan that is subject to federal preemption.
(2) Any governmental unit, agency, or service, to the extent that
subrogation is prohibited by law. An entity described in subdivision
(b) is not excluded from the obligations imposed by this article by
virtue of a contract or relationship with a governmental unit,
agency, or service.
(d) The commissioner shall attempt to negotiate waivers, seek
federal legislation, or make other arrangements to incorporate
collateral sources in California into the health care system.
140303. Whenever an individual receives health care services
under the system and he or she is entitled to coverage,
reimbursement, indemnity, or other compensation from a collateral
source, he or she shall notify the health care provider and provide
information identifying the collateral source, the nature and extent
of coverage or entitlement, and other relevant information. The
health care provider shall forward this information to the
commissioner. The individual entitled to coverage, reimbursement,
indemnity, or other compensation from a collateral source shall
provide additional information as requested by the commissioner.
140304. (a) The system shall seek reimbursement from the
collateral source for services provided to the individual, and may
institute appropriate action, including suit, to recover the
reimbursement. Upon demand, the collateral source shall pay to the
Health Care Fund the sums it would have paid or expended on behalf of
the individual for the health care services provided by the system.
(b) In addition to any other right to recovery provided in this
article, the commissioner shall have the same right to recover the
reasonable value of benefits from a collateral source as provided to
the Director of Health Services by Article 3.5 (commencing with
Section 14124.70) of Chapter 7 of Part 3 of Division 9 of the Welfare
and Institutions Code, in the manner so provided.
140305. (a) If a collateral source is exempt from subrogation or
the obligation to reimburse the system as provided in this article,
the commissioner may require that an individual who is entitled to
medical services from the source first seek those services from that
source before seeking those services from the system.
(b) To the extent permitted by federal law, contractual retiree
health benefits provided by employers shall be subject to the same
subrogation as other contracts, allowing the health care system to
recover the cost of services provided to individuals covered by the
retiree benefits, unless and until arrangements are made to transfer
the revenues of the benefits directly to the health care system.
140306. (a) Default, underpayment, or late payment of any tax or
other obligation imposed by this division shall result in the
remedies and penalties provided by law, except as provided in this
section.
(b) Eligibility for benefits under Chapter 4 (commencing with
Section 140400) shall not be impaired by any default, underpayment,
or late payment of any tax or other obligation imposed by this
chapter.
140307. The agency and the commissioner shall be exempt from the
regulatory oversight and review procedures empowered to the Office of
Administrative Law pursuant to Chapter 3.5 (commencing with Section
11340) of Division 3 of Title 2 of the Government Code. Actions
taken by the agency, including, but not limited to, the negotiating
or setting of rates, fees, or prices, and the promulgation of any and
all regulations, shall be exempt from any review by the Office of
Administrative Law, except for Sections 11344.1, 11344.2, 11344.3,
and 11344.6 of the Government Code, addressing the publication of
regulations.
140307. The California Health Care Agency shall adopt regulations
to implement the provisions of this division. The regulations may
initially be adopted as emergency regulations in accordance with the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code),
but those emergency regulations shall be in effect only from the
effective date of this division until the conclusion of the
transition period.
CHAPTER 4. ELIGIBILITY
140400. All California residents shall be eligible for the
California Health Care System. Residency shall be based upon
physical presence in the state with the intent to reside. The
commissioner shall establish standards and a simplified procedure to
demonstrate proof of residency.
140401. The commissioner shall establish a procedure to enroll
eligible residents and provide each eligible individual with
identification that can be used by health care providers to determine
eligibility for services.
140402. (a) It is the intent of the Legislature for the
California Health Care System to provide health care coverage to
California residents who are temporarily out of the state. The
commissioner shall determine eligibility standards for residents
temporarily out of state for longer than 90 days who intend to return
and reside in California and for nonresidents temporarily employed
in California.
(b) Coverage for emergency care obtained out of state shall be at
prevailing local rates. Coverage for nonemergency care obtained out
of state shall be according to rates and conditions established by
the commissioner. The commissioner may require that a resident be
transported back to California when prolonged treatment of an
emergency condition is necessary.
140403. Visitors to California shall be billed for all services
received under the system. The commissioner may establish
intergovernmental arrangements with other states and countries to
provide reciprocal coverage for temporary visitors.
140404. All persons eligible for health benefits from California
employers but who are working in another jurisdiction shall be
eligible for health benefits under this division providing that they
make payments equivalent to the payments they would be required to
make if they were residing in California.
140405. Unmarried, unemancipated minors shall be deemed to have
the residency of their parent or guardian. If a minor's parents are
deceased and a legal guardian has not been appointed, or if a minor
has been emancipated by court order, the minor may establish his or
her own residency.
140406. (a) An individual shall be presumed to be eligible if he
or she arrives at a health facility and is unconscious, comatose, or
otherwise unable, because of his or her physical or mental condition,
to document eligibility or to act in his or her own behalf, or if
the patient is a minor, the patient shall be presumed to be eligible,
and the health facility shall provide care as if the patient were
eligible.
(b) Any individual shall be presumed to be eligible when brought
to a health facility pursuant to any provision of Section 5150 of the
Welfare and Institutions Code.
(c) Any individual involuntarily committed to an acute psychiatric
facility or to a hospital with psychiatric beds pursuant to any
provision of Section 5150 of the Welfare and Institutions Code,
providing for involuntary commitment, shall be presumed eligible.
(d) All health facilities subject to state and federal provisions
governing emergency medical treatment shall continue to comply with
those provisions.
CHAPTER 5. BENEFITS
140500. Any eligible individual may choose to receive services
under the California Health Care System from any willing professional
health care provider participating in the system. No health care
provider may refuse to care for a patient solely on any basis that is
specified in the prohibition of employment discrimination contained
in the Fair Employment and Housing Act beginning with Section 12940
of the Government Code.
140501. Covered benefits in this chapter shall include all
medical care determined to be medically appropriate by the consumer's
health care provider, but are subject to limitations set forth in
Section Sections 140503 and 140504.
Covered benefits include, but are not limited to, all of the
following:
(a) Inpatient and outpatient health facility services.
(b) Inpatient and outpatient professional health care provider
services by licensed health care professionals.
(c) Diagnostic imaging, laboratory services, and other diagnostic
and evaluative services.
(d) Durable medical equipment, appliances, and assistive
technology, including prosthetics, eyeglasses, and hearing aids and
their repair.
(e) Rehabilitative care.
(f) Emergency transportation and necessary transportation for
health care services for disabled and indigent persons.
(g) Language interpretation and translation for health care
services, including sign language for those unable to speak, or hear,
or who are language impaired, and braille translation or other
services for those with no or low vision.
(h) Child and adult immunizations and preventive care.
(i) Health education.
(j) Hospice care.
(k) Home health care.
(l) Prescription drugs that are listed on the system formulary.
Nonformulary prescription drugs may be included where standards and
criteria established by the commissioner are met.
(m) Mental and behavioral health care.
(n) Dental care.
(o) Podiatric care.
(p) Chiropractic care.
(q) Acupuncture.
(r) Blood and blood products.
(s) Emergency care services.
(t) Vision care.
(u) Adult day care.
(v) Case management and coordination to ensure services necessary
to enable a person to remain safely in the least restrictive setting.
(w) Substance abuse treatment.
(x) Care of up to 100 days in a skilled nursing facility following
hospitalization.
(y) Dialysis.
(z) Benefits offered by a bona fide church, sect, denomination, or
organization whose principles include healing entirely by prayer or
spiritual means provided by a duly authorized and accredited
practitioner or nurse of that bona fide church, sect, denomination,
or organization.
140502. The commissioner may expand benefits beyond the minimum
benefits described in this chapter when expansion meets the intent of
this division and when there are sufficient funds to cover the
expansion.
140503. The following health care services shall be excluded from
coverage by the system:
(a) Health care services determined to have no medical indication
by the commissioner and the chief medical officer.
(b) Surgery, dermatology, orthodontia, prescription drugs, and
other procedures primarily for cosmetic purposes, unless required to
correct a congenital defect, restore or correct a part of the body
that has been altered as a result of injury, disease, or surgery, or
determined to be medically necessary by a qualified, licensed health
care provider in the system.
(c) Private rooms in inpatient health facilities where
appropriate nonprivate rooms are available , unless determined
to be medically necessary by a qualified, licensed health care
provider in the system.
(d) Services of a professional health care provider or facility
that is not licensed or accredited by the state except for
approved services provided to a California resident who is
temporarily out of the state .
140504. (a) The commissioner shall institute no deductible
payments or copayments other than for specialist visits that are
unreferred by the primary care provider pursuant to subdivision (g)
of Section 140600 during the initial two years of the systems
operation. The commissioner and the Health Policy Board shall review
this policy annually, beginning in the third year of operation, and
determine whether deductible payments or copayments should be
established.
(b) Patients shall incur a copayment charge for unreferred
specialist visits, the amount of which shall be established by the
commissioner.
(c) If the commissioner establishes copayments consistent with
subdivision (a), they shall be limited to two hundred fifty dollars
($250) per person per year and five hundred dollars ($500) per family
per year. Copayments for unreferred specialist visits shall not be
subject to this limit.
(d) If the commissioner establishes deductible payments consistent
with subdivision (a), they shall be limited to two hundred fifty
dollars ($250) per person per year and five hundred dollars ($500)
per family per year.
(e) No copayments or deductible payments may be established for
preventive care as determined by a patient's primary care provider.
(f) No copayments or deductible payments may be established when
prohibited by federal law.
(g) The commissioner shall establish standards and procedures for
waiving copayments or deductible payments. Waivers of copayments or
deductible payments shall not affect the reimbursement of health care
providers.
(h) Any copayments established pursuant to this section and
collected by health care providers shall be transmitted to the
Treasurer to be deposited to the credit of the Health Care Fund.
(i) Nothing in this division shall be construed to diminish the
benefits that an individual has under a collective bargaining
agreement.
(j) Nothing in this division shall preclude employees from
receiving benefits available to them under a collective bargaining
agreement or other employee-employer agreement that are superior to
benefits under this division.
CHAPTER 6. DELIVERY OF CARE
140600. (a) All health care providers licensed or accredited to
practice in California may participate in the Health Care System.
(b) No health care provider whose license or accreditation is
suspended or revoked may be a participating health care provider.
(c) If a health care provider is on probation, the licensing or
the accrediting agency shall monitor the health care provider in
question, pursuant to applicable California law.
(d) Health care providers may accept eligible persons for care in
the order of time of application and by the health care provider's
ability to provide services needed by the applicant.
(e) A health care provider shall not refuse to care for a patient
solely on any basis that is specified in the prohibition of
employment discrimination contained in the Fair Employment and
Housing Act (Part 2.8 (commencing with Section 12900), Division 3,
Title 2, Government Code).
(f) Choice of primary care provider.
(1) Persons eligible for health care services under this division
may choose a primary care provider.
(2) Persons who choose to enroll in an integrated health care
system, a group medical practice, or with an essential community
provider shall retain membership for at least one year after an
initial three-month evaluation period during which time they may
withdraw for any reason. Persons who want to withdraw after an
initial three-month period may appeal to the consumer advocate who
may authorize early disenrollment.
(3) Persons needing to change primary care providers because of
unanticipated health care needs that their primary care provider
cannot meet may change primary care providers at any time.
(4) Primary care providers include family physicians, internists,
pediatricians, obstetrician/gynecologists
obstetricians/gynecologists , and family nurse practitioners
and physician assistants practicing under supervision as defined in
California codes.
(5) Primary health care providers shall coordinate the care their
patients receive.
(g) (1) Patients must have a referral from their primary care
provider to see a specialist without paying a copayment.
(2) Patients will incur a copayment charge for unreferred
specialist visits, the amount of which will be established by the
commissioner.
(3) A referral shall not be required to see a dentist.
(4) Referrals shall be based on the medical needs of a patient and
on the system standards of care and shall not be restricted solely
because of financial considerations.
(5) Patients established with a specialist before the act is
implemented do not need a referral to continue seeing the specialist.
(6) Patients may choose a specialist as a primary care provider if
the specialist agrees to serve in that capacity. A specialist who
agrees to serve as a primary care provider shall coordinate the care
that a patient receives.
(7) Emergency health care providers may make referrals to a
specialist when a patient is treated in the emergency room or by any
health care provider seeing a patient for an emergency condition. No
copayments may be charged for these specialist referrals.
(8) Specialists receiving requests for appointments from new
patients shall be given the ability to determine through the use of a
statewide computerized referral registry whether the patient's
primary care provider has referred the patient.
(9) In cases where a referral is denied by a primary care
provider, a patient may appeal the denial to the consumer advocate.
(10) During the transition, the commissioner, with the advice of
the chief medical officer, shall determine whether there shall be a
policy under which patients must have a referral in order to see
nonphysician specialists.
140601. (a) The Director of the Office of Health Care Planning
shall plan for the health care needs of the population. In planning
for the health needs of the population the director shall do all the
following:
(1) Annually develop, in consultation with the chief medical
officer and the consumer advocate, a comprehensive and equitable plan
to meet the health care needs of the population.
(2) Establish performance criteria in measurable terms for the
goals and priorities of the health care system established by the
commissioner.
(3) Identify medically underserved areas and health service
shortages and recommend to the commissioner means to assure that all
residents have access to needed services.
(4) Identify disparities in health outcomes and recommend to the
commissioner means to eliminate disparities and improve population
health.
(5) Collaborate with the chief medical officer, with state and
with local agencies that provide health services and with the
consumer advocate in planning for the health needs of the population.
(6) Develop integrated statewide population-based health care
databases to support health care planning. In establishing databases
the director shall do all the following:
(A) Establish reporting priorities and guidelines.
(B) Monitor the effectiveness of reporting and initiate
needed improvements.
(C) Establish mandatory reporting requirements and penalties for
noncompliance.
(D) Establish standards and criteria for anonymous reporting of
medical errors.
(E) Establish standards and criteria to maintain the security of
state databases.
(7) Estimate of the health care workforce required to meet the
health needs of the population and develop 5, 10, 15, and 20 year
plans to meet those workforce needs.
(8) Estimate the number and types of health facilities required to
meet the health needs of the population and develop 5, 10 and 20
year plans to meet those needs.
(9) Recommend improvements to the commissioner to assure the
delivery of culturally and linguistically competent care.
(10) Establish standards for the delivery of culturally and
linguistically competent care. Standards shall include, but shall
not be limited to:
(A) The State Department of Health Services and the Department of
Managed Health Care guidelines for culturally competent and
linguistically sensitive care.
(B) Medi-Cal Managed Care Division (MMCD) Policy Letters 99-01 to
99-04 and MMCD All Plan Letter 99005 by the Cultural and Linguistic.
(C) Subchapter 5 of the Civil Rights Act of 1964 (42 U.S.C. Sec.
2000d).
(D) The United States Department of Health and Human Services'
Office of Civil Rights; Title VI of the Civil Rights Act of 1964;
Policy Guidance on Prohibition Against National Origin Discrimination
as It Affects Persons with Limited English Proficiency (February 1,
2002).
(E) The United States Department of Health and Human Services'
Office of Minority Health; National Standards on Culturally and
Linguistically Appropriate Services (CLAS) in Health Care--Final
Report (December 22, 2000).
(11) Plan for system capital health care needs. In planning for
system capital needs the director shall do all of the following:
(A) Identify capital health care needs on a statewide, regional,
and local basis and recommend to the commissioner priorities for
annual and for long-term capital investment, including projections
for 5, 10 and 20 years.
(B) Collaborate with cities and counties to coordinate capital
health planning and investment.
(C) Collaborate with California health care institutions and
integrated health care systems to reconcile their internal capital
development needs with those of the health care system.
(D) Collaborate with state and local authorities and health care
institutions to plan for needed earthquake retrofits.
(E) Plan for equitable access for the population to specialized
regional centers that perform a high volume of procedures for
conditions requiring highly specialized treatments, including
emergency and trauma care.
(F) Evaluate the effectiveness of statewide capital planning and
recommend needed improvements.
(12) Recommend to the commissioner means to link state and private
research to the goals and priorities of the health care system.
(b) The director shall serve on the Health Policy Board.
140602. (a) The chief medical officer, as Director of the Office
of Health Care Quality, shall support the delivery of high quality
care, as defined under this act, and shall promote health care
provider and patient satisfaction.
(b) The chief medical officer shall serve on the Health Policy
Board.
140603. The chief medical officer shall recommend annually to the
commissioner and the planning director evidence-based standards of
care for the health care system. In making recommendations the chief
medical officer shall do all of the following:
(1) Draw on existing standards established by California
institutions and other institutions, such as the Centers for Disease
Control, the Agency for Health Care Quality and Research, and others
engaged in establishing and evaluating standards of care.
(2) Collaborate with California health care institutions and other
institutions and with local, state, and federal agencies engaged in
establishing and evaluating standards of care.
(3) Constitute peer groups of practitioners to review and
recommend standards of care in their fields of expertise.
(4) Constitute peer groups of practitioners to recommend means to
improve care coordination.
(5) Consult with all classes of health care providers to determine
the best means to implement standards.
(6) Collaborate with the consumer advocate and consumers of care
to obtain recommendations on standards of care.
(7) Identify improvements in computer hardware infrastructure and
software needed to support user-friendly dissemination of standards
of care to all California health care providers.
(8) Identify areas where standards of care have not been
established and set priorities for identifying or developing
standards.
140604. (a) The chief medical officer shall recommend
semiannually to the commissioner and the planning director an
evidence-based pharmaceutical formulary for the health care system.
In recommending the formulary the chief medical officer shall
establish a Pharmacy and Therapeutics Committee composed of pharmacy
and medical health care providers and representatives of California
health care institutions that use system pharmaceutical formularies
and other identified experts to do the following:
(1) Identify safe and effective pharmaceutical agents for use in
California.
(2) Draw on existing standards and formularies.
(3) Identify experimental drugs and drug treatment protocols for
possible inclusion in the formulary.
(4) Review formulary standards monthly to ensure that safe and
effective drugs are available and that unsafe drugs are removed from
use in a timely fashion.
(5) Recommend to the commissioner standards and criteria and a
process for approval for the use of pharmaceutical agents not
included in the system formulary. No standard or criteria shall
impose an undue administrative burden on patients, health care
providers, pharmacies, or pharmacists and none shall delay care that
a patient needs.
(b) No person working within the agency or serving as a consultant
to the agency may receive any fees or remuneration from a
pharmaceutical company.
140605. The chief medical officer shall recommend annually to the
commissioner an evidence-based durable and nondurable medical
equipment formulary for the health care system. In recommending the
formulary, the chief medical officer shall follow the general
guidelines and processes enumerated in Section 140405.
140606. (a) The chief medical officer shall recommend annually to
the commissioner evidence-based benefits for the health care system
and priorities for needed benefit improvements. In making
recommendations the chief medical officer shall do all of the
following:
(1) Identify safe and effective treatments for use in the system.
(2) Evaluate and draw on existing benefit packages.
(3) Collaborate with health care providers about benefits that
meet the needs of their patients.
(4) Collaborate with the consumer advocate and with consumers
about benefits that meet the needs of patients.
(5) Recommend to the commissioner innovative approaches to health
promotion, disease and injury prevention, education, research and
health care delivery.
(6) Identify complementary and alternative modalities that have
been shown by the National Institutes of Health to be safe and
effective for possible inclusion as a covered benefit.
(7) Recommend to the commissioner standards, criteria, and a
process for approval of services not included in the system benefit
package. No standard or criteria shall impose an undue
administrative burden on health care providers or patients and none
shall delay the care a patient needs.
140607. (a) The commissioner shall develop or ensure the
development of a system of electronic medical records for the health
care system, with the advice of the chief medical officer and the
Director of Health Care Planning.
(b) The commissioner shall develop or ensure the development of an
electronic referral system, with the advice of the chief medical
officer and the Director of Health Care Planning.
(c) The commissioner shall establish or ensure the establishment
of an electronic claims and payments system for the health care
system.
(d) Electronic health records, referral, and claims and
reimbursement systems shall be accessible to health care providers
throughout the state in all practice settings, shall include means to
protect patient, health care provider and institution privacy, shall
place no undue administrative burden on a health care provider or a
patient, and shall not delay care a patient needs.
(e) Electronic health records, referrals, claims, and
reimbursement systems shall be compatible with all health care
institutions in the state and shall accommodate software developed
under the auspices of the health care system.
140609. (a) The chief medical officer, in collaboration with the
planning director, shall recommend, and update as necessary, an
appropriate ratio of general medical practitioners to specialty
medical practitioners to meet the health needs of the population and
the goals of the California Health Care System.
(b) The chief medical officer shall recommend to the commissioner
financial and nonfinancial incentives and other means to achieve the
recommended ratios.
(c) The chief medical officer shall monitor the effectiveness of
efforts to achieve the desired ratios and recommend needed
improvements.
140610. (a) The chief medical officer, in collaboration with the
consumer advocate and the planning director shall develop a statewide
program called "Partnerships For Health" to educate the public,
health care providers, and the health care workforce about:
(1) Personal maintenance of health.
(2) Prevention of disease.
(3) Improving communication between patients and health care
providers.
(4) Improving quality of care.
SEC. 2. 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.