BILL NUMBER: AB 1496	CHAPTERED  09/29/03

	CHAPTER  579
	FILED WITH SECRETARY OF STATE  SEPTEMBER 29, 2003
	APPROVED BY GOVERNOR  SEPTEMBER 28, 2003
	PASSED THE SENATE  AUGUST 25, 2003
	PASSED THE ASSEMBLY  MAY 8, 2003

INTRODUCED BY   Assembly Member Montanez

                        FEBRUARY 21, 2003

   An act to amend Section 1374.34 of the Health and Safety Code,
relating to health care.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1496, Montanez.  Health care.
   Existing law, the Knox-Keene Health Care Service Plan Act of 1975,
provides for the licensure and regulation of health care service
plans by the Department of Managed Health Care.  Existing law
requires a health care service plan to establish an independent
review process to examine coverage decisions, and requires the
Director of the Department of Managed Health Care to require a plan
to reimburse an enrollee for reasonable costs of urgent care or
emergency services obtained outside of the plan provider network if
the enrollee's decision related thereto was made prior to completing
the plan grievance process or seeking an independent medical review
but was reasonable, a subsequent independent medical review
determines the services that were medically necessary, and the
services were a covered benefit under the plan contract.
   This bill would revise the reimbursement requirement so that the
director must require reimbursement if the urgent care or emergency
services are determined to be medically necessary, the services were
a covered benefit, and either the enrollee's decision to secure the
services was reasonable or the plan does not require or provide prior
authorization for the services.


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


  SECTION 1.  Section 1374.34 of the Health and Safety Code is
amended to read:
   1374.34.  (a) Upon receiving the decision adopted by the director
pursuant to Section 1374.33 that a disputed health care service is
medically necessary, the plan shall promptly implement the decision.
In the case of reimbursement for services already rendered, the plan
shall reimburse the provider or enrollee, whichever applies, within
five working days.  In the case of services not yet rendered, the
plan shall authorize the services within five working days of receipt
of the written decision from the director, or sooner if appropriate
for the nature of the enrollee's medical condition, and shall inform
the enrollee and provider of the authorization in accordance with the
requirements of paragraph (3) of subdivision (h) of Section 1367.01.

   (b) A plan shall not engage in any conduct that has the effect of
prolonging the independent review process.  The engaging in that
conduct or the failure of the plan to promptly implement the decision
is a violation of this chapter and, in addition to any other fines,
penalties, and other remedies available to the director under this
chapter, the plan shall be subject to an administrative penalty of
not less than five thousand dollars ($5,000) for each day that the
decision is not implemented.  Administrative penalties shall be
deposited in the State Managed Care Fund.
   (c) The director shall require the plan to promptly reimburse the
enrollee for any reasonable costs associated with those services when
the director finds that the disputed health care services were a
covered benefit under the terms and conditions of the health care
service plan contract, and the services are found by the independent
medical review organization to have been medically necessary pursuant
to Section 1374.33, and either the enrollee's decision to secure the
services outside of the plan provider network was reasonable under
the emergency or urgent medical circumstances, or the health care
service plan contract does not require or provide prior authorization
before the health care services are provided to the enrollee.
   (d) In addition to requiring plan compliance regarding
subdivisions (a), (b), and (c) the director shall review individual
cases submitted for independent medical review to determine whether
any enforcement actions, including penalties, may be appropriate.  In
particular, where substantial harm, as defined in Section 3428 of
the Civil Code, to an enrollee has already occurred because of the
decision of a plan, or one of its contracting providers, to delay,
deny, or modify covered health care services that an independent
medical review determines to be medically necessary pursuant to
Section 1374.33, the director shall impose penalties.
   (e) Pursuant to Section 1368.04, the director shall perform an
annual audit of independent medical review cases for the dual
purposes of education and the opportunity to determine if any
investigative or enforcement actions should be undertaken by the
department, particularly if a plan repeatedly fails to act promptly
and reasonably to resolve grievances associated with a delay, denial,
or modification of medically necessary health care services when the
obligation of the plan to provide those health care services to
enrollees or subscribers is reasonably clear.