BILL NUMBER: SB 840 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Kuehl
(Principal coauthor: Senator Ortiz)
(Principal coauthors: Assembly Members Chan, Goldberg, and Leno)
(Coauthors: Senators Alquist, Chesbro, Escutia, Florez, Lowenthal,
Migden, Perata, and Romero)
(Coauthors: Assembly Members Berg, Evans, Hancock, Jones, Koretz,
Laird, Levine, Lieber, and Pavley)
FEBRUARY 22, 2005
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 840, as introduced, 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 Insurance System
to be administered by the newly created California Health Insurance
Agency under the control of an elected Health Insurance Commissioner.
The bill would make all California residents eligible for specified
health care benefits under the California Health Insurance 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 impose limits on deductibles or
copayments that the commissioner would be authorized to establish.
The bill would require the health care system to be operational
within 2 years of enactment, 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 Insurance System, which would then
assume responsibility for all benefits and services previously paid
for with those funds.
The bill would create a health insurance 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 Insurance System within the Attorney General's
office, which would have various oversight powers. The bill would
prohibit health care service plan contracts or health insurance
policies from being issued for services covered by the California
Health Insurance System. The bill would create the Health Insurance
Fund and the Payments Board to administer the finances of the
California Health Insurance System. The bill would prohibit payment
of shareholder dividends from system revenues by participating
private companies. 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, regional entities, federal
preemption, subrogation, collective bargaining agreements,
compensation of health care providers, conflict of interest, 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 INSURANCE RELIABILITY ACT
CHAPTER 1. GENERAL PROVISIONS
140000. There is hereby established in state government the
California Health Insurance System, which shall be administered by
the California Health Insurance Agency, an independent agency under
the control of the Health Insurance Commissioner.
140000.5. The California Health Insurance Agency shall be a
separate entity in state government and its decisions shall not be
subject to review by any other agency, including, but not limited to,
the Department of Finance, the Department of Personnel
Administration, the Department of General Services, and the Office of
Administrative Law, except as otherwise provided in Section 140307
with respect to that agency.
140001. This division shall be known as and may be cited as the
California Health Insurance Reliability Act.
140002. This division shall be liberally construed to accomplish
its purposes.
140003. The California Health Insurance Agency is hereby created
and designated as the single state agency with full power to
supervise every phase of the administration of the California Health
Insurance 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 Insurance Agency shall be comprised
of the following entities: (a) The Health Insurance 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 Insurance Fund.
140005. The Legislature finds and declares all of the following:
(a) Six million three hundred thousand Californians lacked health
insurance coverage at some time in 2003 and 3.5 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 is the
result of health care costs.
(h) California does not perform well on standard health outcome
measurements.
(i) Severe health access disparities exist by region, ethnicity,
income, and gender.
(j) Rural communities do not have reliable access to affordable
health insurance plans.
(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) Advances in medical technology are not available to all
Californians who need them.
(m) Health care providers express significant professional
dissatisfaction with the current health care systems, as do health
care consumers.
(n) Uncompensated hospital care totaled over $1 billion in 2000.
The burden for providing uncompensated care falls disproportionately
on 12 percent of hospitals in California.
(o) Emergency departments and trauma centers face growing
financial losses.
(p) Increasing patient volume and a decline in the number of
emergency rooms have made multiple hour waits for emergency care the
norm, and 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) Multiple quantitative analysis including two recent studies by
the independent economic consulting firm, Lewin Inc., indicate that
under a single payer health insurance system, California could afford
to cover all California residents at no new cost to the state while
providing on average savings to California consumers, businesses, and
state and local government.
(r) According to these reports 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 insurance 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
Insurance 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 Insurance 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 a health facility that
has served as part of the state's health care safety net for low
income and traditionally undeserved 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) or 1396d (l)(2) of Title 42 of the United States Code.
(4) A "rural health clinic" as defined under Section 1395x (aa)(2)
or 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.
(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
suvdivision (b) of Section 15432 of the 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, general practitioner, pediatrician, an
obstetrician/gynecologist, or a family nurse practitioner or
physician assistant practicing under supervision as defined in
California codes or essential community providers who employ primary
care providers.
(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 insurance system" means the California
Health Insurance 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) Except as otherwise provided in this section and in
Section 140109, the commissioner shall be elected by the people in
the same time, place and manner as the Governor and shall serve a
term of eight years. A person serving as commissioner may stand twice
for election to the position and may serve a total of 16 years. (b)
The commissioner may not be a state legislator or a member of the
United States Congress while holding the position of commissioner.
(c) The commissioner shall not have been employed in any capacity
by a for-profit insurance, pharmaceutical, or medical equipment
company that sells products to the California Health Insurance System
for a period of two years prior to election as commissioner.
(d) For two years after completing service in the California
Health Insurance System, the commissioner may not receive payments of
any kind from, or be employed in any capacity or act as a paid
consultant to, a for-profit insurance, pharmaceutical, or medical
equipment company that sells products to the California Health
Insurance System.
(e) 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 Section 5 of Article V of the California
Constitution.
(f) The commissioner is subject to impeachment pursuant to the
same process provided in Section 18 of Article IV of the California
Constitution.
(g) The compensation and benefits of the commissioner shall be
determined pursuant to the same process as provided in Section 8 of
Article III of the California Constitution.
(h) The commissioner shall be subject to Title 9 (commencing with
Section 81000) of the Government Code.
140101. (a) The commissioner shall be the chief officer of the
California Health Insurance Agency and shall administer all aspects
of the agency. (b) The commissioner shall be responsible for the
performance of all duties, the exercise of all power 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 related to health care, and shall enforce the execution of
those provisions and laws to promote their underlying aims and
purposes. These broad powers shall include, but are not limited to,
the power establish the California Health Insurance System budget and
to set rates, to establish California Health Insurance System goals,
standards and priorities, to hire and fire and fix the compensation
of agency personnel, make allocations to the health care regions and
promulgate generally binding regulations concerning any and all
matters related to the implementation of this division and its
purposes.
(c) The commissioner shall appoint the deputy health insurance
commissioner, the director of the Health Insurance Fund, the consumer
advocate, the chief medical officer, chief enforcement officer, the
director of planning, the director of the Partnerships for Health,
the regional health planning directors, the chief enforcement
counsel, 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.
(d) The personnel of the agency shall perform duties as assigned
to them by the commissioner. The commissioner shall designate certain
employees by the rule or order that are to take and subscribe to the
constitutional oath 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.
(e) The commissioner shall adopt a seal bearing the inscription:
"Commissioner, California Health Insurance Agency, State of
California." The seal shall be affixed to or imprinted on all orders
and certificate issued by him or her and other instruments as he or
she directs. All courts shall take notice of this seal.
(f) The administration of the agency shall be supported from the
Health Insurance Fund created pursuant to Section 140200.
(g) 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 commissioners
assistants, clerks or deputies to disclose any information withheld
from public inspection except among themselves or when the 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 derogate 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 and deputies.
(h) It is unlawful to 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.
(i) The commissioner shall avoid political activity that may
create the appearance of political bias or impropriety. Prohibited
activities shall include, but not be limited to, leadership of, or
employment by, a political party or a political organization; public
endorsement of a political candidate; contribution of more than five
hundred dollars ($500) to any one candidate in a calendar year or a
contribution in excess of an aggregate of one thousand dollars
($1,000) in a calendar year for all political parties or
organizations; and attempting to avoid compliance with this
prohibition by making contributions through a spouse or other family
member.
(j) The commissioner shall not 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 or a business partner or colleague has a
financial interest.
(k) 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.
(l) 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. The commissioner shall do all of the following: (a)
Oversee the establishment as part of the administration of the agency
all of the following:
(1) The Health Insurance Policy Board, pursuant to Section 140103.
(2) The Office of Consumer Advocacy, pursuant to Section 140105.
(3) The Office of Health Care Planning, pursuant to Section
140602.
(4) The Office of Health Care Quality pursuant to Section 140605.
(5) The Health Insurance Fund, pursuant to Section 410200.
(6) The Payments Board, pursuant to Section 140208.
(7) The Public Advisory Committee pursuant to Section 140104.
(b) Determine California Health Insurance System goals, standards,
guidelines, and priorities.
(c) Establish health care regions, pursuant to Section 140112.
(d) Ensure the delivery of, and equal access to, high quality care
for the population.
(e) Establish evidence-based standards to guide delivery of care
and ensure a smooth transition to delivery of care under statewide
standards.
(f) Implement policies to ensure that all Californians receive
culturally and linguistically sensitive care, pursuant to Section
140604, and develop mechanisms and incentives to achieve this purpose
and means to monitor the effectiveness of efforts to achieve this
purpose.
(g) Develop methods to measure and monitor the quality of care
provided to Californians and to make needed improvements.
(h) Develop methods to measure and monitor the performance of
health care providers and to make needed improvements.
(i) Establish a capital management plan for the California Health
Insurance System, including, but not limited to, a standardized
process and format for the development and submission of regional
operating and regional capital budget requests.
(j) Ensure the establishment of policies that support the public
health.
(k) Establish and maintain appropriate statewide and regional
health care databases.
(l) Establish a means to identify areas of medical practice where
standards of care do not exist and establish priorities and a
timetable for their development.
(m) Establish standards for mandatory reporting by health care
providers and penalties for failure to report.
(n) (Reserved)
(o) Establish a comprehensive budget that ensures adequate funding
to meet the health care needs of the population and the compensation
for providers for care provided pursuant to this division.
(p) Establish standards and criteria for allocation of operating
and capital funds from the Health Insurance Fund as described in
Chapter 3 (commencing with Section 140200).
(q) Establish standards and criteria for development and
submission of provider operating budget requests.
(r) Determine the level of funding be allocated to each health
care region.
(s) Annually assess projected revenues and expenditures pursuant
to assure financial solvency of the system.
(t) Institute necessary cost controls pursuant to Section 140203
to assure financial solvency of the system.
(u) Develop separate formulae for budget allocations and review
the formulae annually to ensure they address disparities in service
availability and health care outcomes and for sufficiency of rates,
fees and prices.
(v) Meet regularly with the chief medical officer, the consumer
advocate, the director of planning, the director of the payments
board, the director of the partnerships for health, the Technical
Advisory Committee, regional planning directors and regional medical
officers to review the impact of the agency and its policies on the
health of the population and on satisfaction with the California
Health Insurance System.
(w) Negotiate for or set rates, fees and prices involving any
aspect of the California Health Insurance System and establish
procedures thereto.
(x) Establish a capital management framework for the California
Health Insurance System pursuant to Section 140216 to ensure that the
needs for capital health care infrastructure are met, pursuant to
the goals of the system.
(y) Ensure a smooth transition to California Health Insurance
System oversight of capital health care planning.
(z) Establish an evidence-based formulary for all prescription
drugs and durable and nondurable medical equipment for use by the
California Health Insurance System.
(aa) Utilize the purchasing power of the state to negotiate price
discounts for prescription drugs and durable and nondurable medical
equipment for use by the California Health Insurance System.
(bb) Ensure that use of state purchasing power achieves the lowest
possible prices for the California Health Insurance System.
(cc) Create incentives and guidelines for research needed to meet
the goals of the system and disincentives for research that does not
achieve California Health Insurance System goals.
(dd) Implement eligibility standards for the system.
(ee) Provide support during the transition for training and job
placement for persons who are displaced from employment as a result
of the initiation of the new California Health Insurance System.
(ff) Establish an enrollment system that ensures all eligible
California residents, including those who travel frequently; those
who have disabilities that limit their mobility, hearing, or vision;
those who cannot read; and those who do not speak or write English
are aware of their right to health care and are formally enrolled.
(gg) Oversee the establishment of the system for resolution of
disputes pursuant to Sections 140608 and 140609.
(hh) Establish an electronic claims and payments system for the
California Health Insurance System, to which all claims shall be
filed and from which all payments shall be made, and implement, to
the extent permitted by federal law, standardized claims and
reporting methods.
(ii) Establish a system of secure electronic medical records that
comply with state and federal privacy laws and that are compatible
across the system.
(jj) Establish an electronic referral system that is accessible to
providers and to patients.
(kk) Establish guidelines for mandatory reporting by health care
providers.
(ll) Establish a Technology Advisory Committee to evaluate the
cost and effectiveness of new medical technology and make
recommendations for the inclusion of those technologies in the
benefit package.
(mm) (Reserved)
(nn) Ensure that consumers of health care have access to
information needed to support choice of physician.
(oo) Collaborate with the boards that license health facilities to
ensure that facility performance is monitored and that deficient
practices are recognized and corrected in a timely fashion and that
consumers and providers of health care have access to information
needed to support choice of facility.
(pp) Establish a Health Insurance System Internet Web site that
provides information to the public about the California Health
Insurance System that includes, but is not limited to, information
that supports choice of provider and facilities, informs the public
about state and regional health insurance policy board meetings and
activities of the Partnerships for Health.
(qq) Procure funds, including loans, lease or purchase of
insurance for the system, its employees and agents.
(rr) Collaborate with state and local authorities, including
regional health directors, to plan for needed earthquake retrofits in
a manner that does not disrupt patient care.
(ss) Establish a process for the system to receive the concerns,
opinions, ideas, and recommendation of the public regarding all
aspects of the system.
(tt) Annually report to the Legislature and the Governor, on or
before October of each year and at other times pursuant to this
division, on the performance of the California Health Insurance
System, its fiscal condition and need for rate adjustments, consumer
copayments or consumer deductible payments, recommendations for
statutory changes, receipt of payments from the federal government,
whether current year goals and priorities are met, future goals, and
priorities, and major new technology or prescription drugs or other
circumstances that may affect the cost
of health care.
140103. (a)The commissioner shall establish a Health Insurance
Policy Board and shall serve as the president of the board. (b) The
board shall do all of the following:
(1) Establish health insurance system goals and priorities,
including research and capital investment priorities.
(2) Establish the scope of services to be provided to the
population.
(3) Determine when an increase in health insurance premiums or
when a change in the health insurance premium structure is needed.
(4) Establish guidelines for evaluating the performance of the
health insurance system, health care regions, and health care
providers.
(5) Establish guidelines for ensuring public input on health
insurance system policy, standards, and goals.
(c) The board shall consist of the following members:
(1) The commissioner.
(2) The deputy commissioner.
(3) The Health Insurance Fund Director.
(4) The consumer advocate.
(5) The chief medical officer.
(6) The Director of Health Care Planning.
(7) The Director of the Partnerships for Health.
(8) The Director of the Payments Board.
(9) The state public health officer.
(10) Two representatives from health care regional planning
boards.
(A) A regional representative shall serve a term of one year and
terms shall be rotated in order to allow every region to be
represented within a five-year period.
(B) A regional planning director shall appoint the regional
representative to serve on the board.
(d) It is unlawful for the board members or any of their
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.
140104. (a) The commissioner shall establish a public advisory
committee to advise the Health Insurance Policy Board on all matters
of health insurance system policy.(b) Members of the public advisory
committee shall include all of the following:
(1) 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, both of whom shall be primary care providers.
(2) One registered nurse, to be appointed by the Governor.
(3) One licensed vocational nurse, to be appointed by the Senate
Committee on Rules.
(4) One licensed allied health practitioner, to be appointed by
the Speaker of the Assembly.
(5) One mental health care provider, to be appointed by the Senate
Committee on Rules.
(6) One dentist, to be appointed by the Governor.
(7) One representative of private hospitals, to be appointed by
the Senate Committee on Rules.
(8) One representative of public hospitals, to be appointed by the
Governor.
(9) 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.
(10) One representative of organized labor, to be appointed by the
Speaker of the Assembly.
(11) One representative of essential community providers, to be
appointed by the Senate Committee on Rules.
(12) One union member, to be appointed by the Senate Committee on
Rules.
(13) One representative of small business, to be appointed by the
Governor.
(14) One representative of large business, to be appointed by the
Speaker of the Assembly.
(15) One pharmacist, to be appointed by the Speaker of the
Assembly.
(c) 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.
(d) 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.
(e) 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.
(f) Members of the advisory committee 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.
(g) The advisory committee 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, pursuant to the Bagley-Keene Open Meeting Act
(Article 9 (commencing with Section 11120) of Chapter 1 of Part 1 of
Division 3 of Title 2 of the Government Code).
(h) Appointed committee members shall have worked in the field
they represent on the committee for a period of at least two years
prior to being appointed to the committee.
(i) It is unlawful for the committee members or any of their
assistants, clerks, or deputies to use for personal benefit any
information that is filed with or obtained by the committee and that
is not generally available to the public.
140105. (a) (1) 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. (2) The office shall be
headed by a consumer advocate appointed by the commissioner.
(3) 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.
(b) The consumer advocate shall do all the following:
(1) Administer all aspects of the office of the consumer advocate.
(2) Assure that services of the consumer advocate are available to
all California residents.
(3) Serve on the Health Insurance Policy Board and participate in
the regional Partnership for Health.
(4) Oversee the establishment and maintenance of the grievance
process and independent medical review system pursuant to Sections
140608 and 140609.
(5) Participate in the grievance process and independent medical
review system on behalf of consumers pursuant to Sections 140608 and
140609.
(6) Receive, evaluate and respond to consumer complaints about the
health insurance system.
(7) Provide a means to receive recommendations from the public
about ways to improve the health insurance system and hold public
hearings at least once annually to receive recommendations from the
public.
(8) Develop educational and informational guides for consumers
describing their rights and responsibilities and informing them about
effective ways exercise their rights to secure health care services
and to participate in the health insurance system. The guides shall
be easy to read and understand, available in English and other
languages, including Braille and formats suitable for those with
hearing limitations, 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 and displayed in
provider offices and health care facilities.
(9) Establish a toll-free number to receive complaints regarding
the agency and its services. Those with hearing and speech
limitations may use the California Relay Service's toll-free
telephone numbers to contact the Office of Consumer Advocacy. The
agency Internet Web site shall have complaint forms and instructions
on their use.
(10) Report annually to the public, the commissioner, and the
Legislature about the consumer perspective on the performance of the
health insurance system, including recommendations for needed
improvements.
(c) Nothing in this division shall prohibit a consumer or class of
consumers or the consumer advocate from seeking relief through the
judicial system.
(d) 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.
(e) It is unlawful for the consumer advocate 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 agency and that is
not then generally available to the public.
140106. (a) There is within the Office of the Attorney General an
Office of the Inspector General for the California Health Insurance
System. The Inspector General shall be appointed by the Governor and
subject to Senate confirmation. (b) 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.
(c) 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.
(d) 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.
(e) The Inspector General shall arrange for the collection and
analysis of data needed to investigate the inappropriate utilization
of these products and services.
(f) 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.
(g) The Inspector General shall establish a telephone hotline for
anonymous reporting of allegations of failure to make health
insurance premium payments established by this division. The
Inspector General shall investigate information provided to the
hotline and shall report any findings of misconduct to the Attorney
General.
(h) The Inspector General shall annually report recommendations
for improvements to the system or the agency to the Governor and the
Legislature.
140107. The provisions of the Insurance Fraud Prevention Act
(Chapter 12 (commencing with Section 1871) of Part 2 of Division 1 of
the 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.
140108. (a) 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. (b) 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.
(c) (Reserved)
140109. (a) A transition commissioner of health insurance shall
be appointed by the Governor not less than 75 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, the nominee shall be
considered to have been confirmed and may take office, except that,
if the Senate is not in session at the time the Governor appoints the
transition commissioner of health insurance, the Senate shall take
up the confirmation of the nominee at the commencement of the next
legislative session. (b) The transition commissioner of health
insurance shall take office within 30 days of confirmation and shall
serve until a commissioner of health insurance is elected at the next
regularly scheduled election of the Governor. The transition
commissioner of health insurance may stand for election for
commissioner of health insurance for one term.
(c) 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.
(d) The transition commissioner shall not have been employed in
any capacity by a for-profit insurance, pharmaceutical or medical
equipment company that plans to sell products to the California
Health Insurance System for a period of two years prior to
appointment to his or her position.
(e) For two years after completing service in the California
Health Insurance System, the transition commissioner may not receive
payments of any kind from, or be employed in any capacity by or act
as a paid consultant to, a for-profit insurance, pharmaceutical or
medical equipment company that plans to sell products to the
California Health Insurance System.
(f) The transition commissioner shall avoid political activity
that may create the appearance of political bias or impropriety.
Prohibited activities shall include, but not be limited to,
leadership of, or employment by, a political party or a political
organization; public endorsement of a political candidate;
contribution of more than five hundred dollars to any one candidate
in a calendar year or a contribution in excess of an aggregate of one
thousand dollars ($1,000) in a calendar year for all political
parties or organizations; and attempting to avoid compliance with
this prohibition by making contributions through a spouse or other
family member.
(g) The transition commissioner shall not participate shall
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 or a
business partner or colleague has a financial interest.
140110. (a) The health insurance system shall be operational no
later than two years after the operative date of this division. (b)
The transition shall be funded from a loan from the General Fund and
from private sources identified by the commissioner.
(c) The transition commissioner shall attempt to recover moneys
held by California foundations created pursuant to Article 11
(commencing with Section 1399.70) of Chapter 2.2 of Division 2 that
were created pursuant to conversions of health plans from nonprofit
to for profit status. Moneys recovered from these sources shall be
used to fund the transition to the new health insurance system and,
to the extent possible, to provide insurance coverage during the
transition to uninsured Californians.
(d) The transition commissioner shall assess health plans and
insurers for care provided by the system in those cases in which a
person's health care coverage extends into the time period in which
the new system is operative.
(e) The transition commissioner shall implement means to assist
persons who are displaced from employment as a result of the
initiation of the new health insurance system, including the period
of time during which assistance shall be provided and possible
sources of funds to support retraining and job placement. That
support shall be provided for a period of five years from the date
that this division becomes operative.
140111. (a) The transition 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 transition commissioner.
(2) The consumer advocate.
(3) The chief medical officer.
(4) The Director of Health Care Planning.
(5) The Director of the Health Insurance 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.
(b) The transition advisory group shall advise the commissioner
on all aspects of the implementation of this division.
(c) 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 relating
to the delivery of the services 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.
(12) The Department of Insurance.
(d) 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.
140112. (a) The purpose of regionalization is to support local
planning and decisionmaking. (b) The commissioner or transition
commissioner shall establish up to 10 health insurance system regions
composed of geographically contiguous counties grouped on the basis
of the following considerations:
(1) Patterns of utilization.
(2) Health care resources, including workforce resources.
(3) Health needs of the population, including public health needs.
(4) Geography.
(5) Population and demographic characteristics.
(c) The commissioner or transitional commissioner shall appoint a
director for each region. Regional planning directors shall serve at
the will of the commissioner and may serve up to two eight year terms
to coincide with the terms of the commissioner.
(d) Each regional planning director shall appoint a regional
medical officer.
(e) Compensation for health system officers and appointees who are
exempt from the civil service shall be established by the California
Citizens Commission in accordance with Section 8 of Article III of
the California Constitution, and shall take into consideration
regional differences in the cost of living.
(f) The regional planning director and the regional medical
officer shall be subject to Title 9 (commencing with Section 81000)
of the Government Code and shall comply with the qualifications for
office described in Section ________.
140113. (a) Regional planning directors shall administer the
health insurance region and perform regional health care planning
pursuant to this division. The regional planning director shall be
responsible for all duties, the exercise of all powers and
jurisdiction, and the assumptions and discharge of all
responsibilities vested by law in the regional agency. The regional
planning director shall perform all duties imposed upon him or her by
this division and by other laws related to health care, and shall
enforce execution of those provisions and laws to promote their
underlying aims and purposes. (b) The regional planning director
shall reside in the region in which he or she serves.
(c) The regional planning director shall do all of the following:
(1) Establish and administer a regional office of the state
agency. Each regional office shall include, at minimum, an office of
each of the following: Consumer Advocacy, Health Care Quality, Health
Care Planning, and Partnerships for Health.
(2) Establish regional goals and priorities pursuant to standards,
goals, priorities, and guidelines established by the commissioner.
(3) Assure that regional administrative costs meet standards
established by the act.
(4) Seek innovative means to lower the costs of administration in
the region.
(5) Plan for the delivery of, and equal access to, high quality
and culturally and linguistically sensitive care that meets the needs
of all regional residents pursuant to standards established by the
commissioner.
(6) Seek innovative means to improve care quality.
(7) Appoint regional planning board members and serve as president
of the board.
(8) Implement policies established by the commissioner to provide
support to persons displaced from employment as a result of the
initiation of the new system.
(9) Make needed revenue sharing arrangements so that
regionalization in no way limits a patient's choice of provider.
(10) Implement procedures established by the commissioner for the
resolution of disputes.
(11) Implement processes established by the commissioner to permit
the public to share concerns, provide ideas, opinions, and
recommendations regarding all aspects of the system policy.
(12) Report regularly to the public and, at intervals determined
by the commissioner, and pursuant to this division, to the
commissioner, on the status of the regional health insurance system,
including evaluating access to care, quality of care delivered, and
provider performance and recommending needed improvements.
(13) Identify and prioritize regional health care needs and goals,
in collaboration with the regional medical officer, regional health
care providers, the regional planning board, and regional director of
partnerships for health.
(14) Identify and maintain an inventory of regional health care
assets.
(15) Establish and maintain regional health care databases.
(16) In collaboration with the regional medical officer, enforce
reporting requirements established by the California Health Insurance
System.
(17) Convene meetings of regional health care providers to
facilitate coordinated regional health care planning.
(18) Establish and implement a regional capital management plan
pursuant to the capital management plan established by the
commissioner for the system.
(19) Implement standards and formats standards and formats
established by the commissioner for the development and submission of
operating budget requests.
(20) Support regional providers in developing operating and
capital budget requests.
(21) Receive, evaluate, and prioritize provider operating and
capital budget requests pursuant to standards and criteria
established by the commissioner.
(22) Prepare a three-year regional budget request that meets the
health care needs of the region pursuant to this division, for
submission to the commissioner.
(23) Establish a comprehensive three-year regional health
insurance budget using funds allocated to the region by the
commissioner.
(24) Regularly assess projected revenues and expenditures to
ensure fiscal solvency of the regional health insurance system.
140114. (a) The regional medical officers shall do all of the
following: (1) Administer all aspects of the regional office of
health care quality.
(2) Serve as a member of the Regional Health Insurance Board.
(3) Support the delivery of high quality care to all residents of
the region pursuant to this division.
(4) Ensure a smooth transition to care delivery by regional
providers under evidence-based standards that guide clinical decision
making.
(5) Support the development and distribution of user-friendly
software for use by providers in order to support the delivery of
high quality care.
(6) In collaboration with the chief medical officer, evaluate
evidence-based standards of care in use at the time the California
Health Insurance System becomes operative.
(7) Assure the implementation of improvements needed so that all
standards of care used to guide clinical decision making in the
system.
(8) Assure the delivery of uniformly high standards of care to all
residents.
(9) In collaboration with the regional planning director, oversee
a regional effort to assure the establishment of community-based
networks of solo providers, small group practices, essential
community providers and providers of auxiliary California Health
Insurance System services that support providers in, and assure the
delivery of, comprehensive, coordinated care to patients.
(10) Assure the evaluation and measurement of the quality of care
delivered in the region, including assessment of the performance of
individual providers, pursuant to standards and methods established
by the chief medical officer.
(11) Provide feedback to and support and supervision of medical
providers needed to improve the quality of care they deliver.
(12) Assure the provision of information to assist consumers in
evaluating the performance of health care providers.
(13) Identify areas of medical practice where standards have not
been established and collaborate with the chief medical officer, to
establish priorities in developing needed standards.
(14) Collaborate with regional public health officers to establish
regional health policies that support the public health.
(15) Establish a regional program to monitor and decrease medical
errors and their causes pursuant to standards and methods established
by the chief medical officer.
(16) Support the development and implementation of innovative
means to provide high quality care and assist providers in securing
funds for innovative
demonstration projects that seek to improve care quality.
(17) Establish means to assess the impact of health insurance
system policies intended to assure the delivery of high quality care
and evidence-based standards.
(18) Collaborate with the chief medical officer and the director
of planning in the development and maintenance of regional health
care databases.
(19) Ensure the enforcement of health insurance system reporting
requirements.
(20) Support providers in developing regional budget requests.
(21) Collaborate with the regional planning director of the
partnerships for health to develop patient education on appropriate
utilization of health care services.
(22) Annually report to the public, the regional planning board
and the chief medical officer on the status of regional health care
programs, needed improvements and plans to implement and evaluate
delivery of care improvements.
140115. (a) Each region shall have a regional health insurance
board consisting of 13 members who shall be appointed by the regional
planning director. Members shall serve eight-year terms that
coincide with the term of the regional planning director and may be
reappointed for a second term. (b) Regional planning board members
shall have resided for a minimum of two years in the region in which
they serve prior to appointment to the board.
(c) Regional planning board members shall reside in the region
they serve while on the board.
(d) The board shall consist of the following members:
(1) The regional planning director, the regional medical officer
and the regional director of the Partnerships for Health and a public
health officer from one of the regional counties.
(2) When there is more than one county in a region, the public
health officer board position shall rotate among the public health
county officers on a timetable to be established by each regional
planning board.
(3) A representative from the office of consumer advocacy.
(4) One expert in health care financing.
(5) One expert in health care planning.
(6) Two members who are direct patient care providers in the
region.
(7) One member who represents ancillary health care workers in the
region.
(8) One member representing hospitals in the region.
(9) One member representing essential community providers in the
region.
(10) One member representing the public.
(e) The regional planning director shall serve as chair of the
board.
(f) The purpose of the regional planning boards is to advise and
make recommendations to the regional planning director on all aspects
of regional health policy.
(g) Meetings of the board shall be open to the public pursuant to
the Bagley-Keene Open Meeting Act (Article 9 (commencing with Section
11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of the
Government Code).
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 Insurance 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 Insurance Fund for the purpose of financing the
California Health Insurance System.
(c) All claims for health care services rendered shall be made to
the Health Insurance Fund through an electronic claims and payments
system; however, alternative provisions shall be made for providers
without electronic systems.
(d) All payments made for health care services shall be disbursed
from the Health Insurance Fund through an electronic claims and
payments system; however, alternative provisions shall be made for
providers without electronic systems.
(e) The director of the fund shall serve on the Health Insurance
Policy Board.
140201. (a) The Director of the Health Insurance Fund shall
establish the following accounts within the Health Insurance Fund:
(1) A system account to provide for all annual state expenditures for
health care.
(2) A reserve account.
(b) During the first five years of operation of the system, the
director shall maintain a reserve account that equals, at minimum,
____ 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 ___ percent of the system's
budget.
140203. (a) The Director of the Health Insurance Fund shall
immediately notify the commissioner when regional or statewide
revenue and expenditure trends indicate that expenditures appear to
exceed revenues. (b) If the commissioner determines that statewide
revenue trends indicate the need for statewide cost control measures,
the commissioner shall convene the Health Insurance Policy Board to
discuss the need for cost control measures and shall immediately
report to the public regarding the possible need for cost control
measures.
(c) Cost control measures include any or all of the following:
(1) Changes in the health insurance system or health facility
administration that improve efficiency.
(2) Changes in the delivery of health care services that improve
efficiency and care quality.
(3) Postponement of introduction of new benefits or benefit
improvements.
(4) Postponement of planned capital expenditures.
(5) Adjustment of health care provider budgets to correct for
inappropriate utilization, deficiencies in care quality or fraud,
pursuant to Chapter ___ (commencing with Section ___) and Chapter
____ (commencing with Section ___).
(6) Limitations on the reimbursement of California Health
Insurance System managers and upper level managers.
(7) Limitations on health provider reimbursement above a specified
amount of aggregate billing for employers other than the California
Health Insurance System administration, whose compensation is
determined by the payment board and who are not subject to state
civil service statutes.
(8) Limitations on aggregate reimbursements to manufacturers of
pharmaceutical and durable and nondurable medical equipment.
(9) Deferred funding of the reserve account.
(10) Imposition of copayments or deductible payments. Any
copayment or deductible payments imposed shall be subject to all of
the following requirements:
(A) No copayment or deductible may be established when prohibited
by federal law.
(B) All copayments and deductibles shall meet federal guidelines
for copayments and deductible payments that may lawfully be imposed
on persons with low income.
(C) The commissioner shall establish standards and procedures for
waiving copayments or deductible payments and a waiver card which
shall be issued to a patient or to a family to indicate the waiver.
Copayment and deductible waivers shall be reviewed annually by the
regional planning director.
(D) Waivers shall not affect the reimbursement of health care
providers.
(E) Any copayments or deductible payments established pursuant to
this section shall be transmitted to the Treasurer to be deposited to
the credit of the Health Insurance Fund.
(F) No copayments shall be established for preventive care as
determined by a patient's primary provider.
(G) Imposition of an eligibility waiting period if the
commissioner determines that large numbers of people are emigrating
to the state for the purpose of obtaining health care through the
California Health Insurance System.
(d) Nothing in this division shall be construed to diminish the
benefits that an individual has under a collective bargaining
agreement.
(e) 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.
(f) Cost control measures implemented by the commissioner and the
health insurance policy board shall remain in place in the state
until the commissioner and the Health Insurance Policy Board
determine that the cause of a revenue shortfall has been corrected.
(g) If the Health Insurance Policy Board determines that cost
control measures described in subdivision (c) will not be sufficient
to meet a revenue shortfall, the commissioner shall report to the
Legislature and to the public on the causes of the shortfall and the
reasons for the failure of cost controls and shall recommend measures
to correct the shortfall, including an increase in health insurance
system premium payments.
140204. (a) If the commissioner or a regional planning director
determines that regional revenue and expenditure trends indicate a
need for regional cost control measures, the regional planning
director shall convene the regional planning board to discuss the
possible need for cost control measures and to make a recommendation
about appropriate measures to control costs. These may include any of
the following: (1) Changes in health insurance system or health
facility administration that improve efficiency.
(2) Changes in the delivery of health services that improve
efficiency or care quality.
(3) Postponement of planned regional capital expenditures.
(4) Limitation on reimbursement of health care providers, upper
level managers, or pharmaceutical or medical equipment manufacturers
above a specified amount of aggregate billing.
(b) In the event a regional planning board is convened to
implement cost control measures, the commissioner shall participate
in the regional planning board meeting.
(c) The regional planning director, in consultation with the
commissioner, shall determine if cost control measures are warranted
and those measures that shall be implemented.
(d) Imposition of copayments or deductibles, postponement of new
benefits or benefit improvements, deferred funding of the reserve
account, establishment of eligibility waiting periods and increases
in health insurance premium payments may occur on a statewide basis
only and with the concurrence of the commissioner and the Health
Insurance Policy Board.
(e) If a regional planning director and regional planning board
are considering imposition of cost control measures, the regional
planning director shall immediately report to the residents of the
region regarding the possible need for cost control measures.
(f) Cost control measures shall remain in place in a region until
the regional planning director and the commissioner determine that
the cause of a revenue shortfall has been corrected.
140205. (a) 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 Insurance Fund shall be used to
implement this division until funds are available through the Budget
Act. (b) Notwithstanding any other provision of law and without
regard to fiscal year, if the annual 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 Insurance Fund for the purpose of making payments to health
care providers and to persons and businesses under contract with the
health insurance system or with health providers to provide services,
medical equipment, and pharmaceuticals to the California Health
Insurance System.
(2) Upon enactment of the Budget Act in any fiscal year to which
paragraph (1) applies, the Controller shall transfer all expenditures
and unexpected funds loaned to the Health Insurance Fund to the
appropriate Budget Act item.
(3) The amount of any loan made pursuant to paragraph (1) for
which moneys were expended from the Health Insurance Fund shall be
repaid by debiting the appropriate Budget Act item in accordance with
procedures prescribed by the Department of Finance.
140206. (a) The commissioner annually shall prepare a health
insurance system budget that includes all expenditures, specifies a
limit on total annual state expenditures, and establishes allocations
for each health care region that shall cover a three-year period and
that shall be disbursed on a quarterly basis. (b) The commissioner
shall limit the growth of spending on a statewide and on a regional
basis, by reference to average growth in state domestic product
across multiple years; population growth, actuarial demographics and
other demographic indicators; differences in regional costs of
living, advances in technology and their anticipated adoption into
the benefit plan; improvements in efficiency of administration and
care delivery, improvements in the quality of care and to projected
future state domestic product growth rates.
(c) The commissioner shall project health insurance system
revenues and expenditures for 3, 6, 9, and 12 years pursuant to
parameters prescribed in Section ___.
(d) The commissioner shall annually convene a Health Insurance
System Revenue and Expenditure Conference to discuss revenue and
expenditure projections and future health insurance system policy
directions and initiatives, including means to lower the cost of
administration. Participants shall include regional health directors
and medical officers, directors of the Health Insurance Fund and
Payments Board, the consumer advocate, state and regional directors
of the Partnerships for Health, and representatives of the health
insurance system facility upper level managers.
(e) The California Health Insurance System budget shall include
all of the following:
(1) Providers and managers budget.
(2) Capitated budgets.
(3) Noncapitated operating budgets.
(4) Capital investment budget.
(5) Purchasing budget.
(6) Research and innovation budget.
(7) Workforce training and development budget.
(8) Reserve account.
(9) System administration system.
(10) Regional budgets.
(f) In establishing budgets, the commissioner shall make
adjustments based on all of the following:
(1) Costs of transition to the new system.
(2) Projections regarding the health services anticipated to be
used by California residents.
(3) Differences in cost of living between the regions, including
the overhead costs of maintaining medical practices.
(4) Health risk of enrollees.
(5) Scope of services provided.
(6) Innovative programs that improve care quality, administrative
efficiency, and workplace safety.
(7) Unrecovered cost of providing care to persons who are not
members of the California Health Insurance System. The commissioner
shall seek to recover the costs of care provided to nonhealth
insurance system members.
(8) Costs of workforce training and development.
(9) Costs of correcting health outcome disparities and the unmet
needs of previously uninsured and underinsured enrollees.
(10) Relative usage of different health care providers.
(11) Needed improvements in access to care.
(12) Projected savings in administrative costs.
(13) Projected savings due to provision of primary and preventive
care to the population, including savings from decreases in
preventable emergency room visits and hospitalizations.
(14) Projected savings from improvements in care quality.
(15) Projected savings from decreases in medical errors.
(16) Projected savings from systemwide management of capital
expenditures.
(17) Cost of incentives and bonuses to support the delivery of
high quality care, including incentives and bonuses needed to recruit
and retain an adequate supply of needed providers and managers and
to attract providers to medically underserved areas.
(18) Costs of treating complex illnesses, including disease
management programs.
(19) Cost of implementing standards of care, care coordination,
electronic medical records, and other electronic initiatives.
(20) Costs of new technology.
(21) Technology research and development costs and costs related
to health insurance system use of new technologies.
(g) Moneys in the Reserve Account shall not be considered as
available revenues for the purposes of preparing the system budget.
140207. The commissioner shall annually establish the total funds
to be allocated for provider and manager compensation pursuant to
this section. In establishing the provider and manager budgets, the
commissioner shall allot sufficient funds to assure that California
can attract and retain those providers and managers needed to meet
the health needs of the population. In establishing provider and
manager budgets, the commissioner shall allocate funds for both
salaries and benefits to be provided to health insurance system
officers and upper level managers who are exempt from state civil
service statutes.
140208. (a) The commissioner shall establish the Payments Board
and shall appoint a director and members of the board.(b) The
Payments Board shall be composed of experts in health care finance
and insurance systems, a designated representative of the
commissioner, a designated representative the Health Insurance Fund
and a representative of the regional planning directors who shall
serve a two-year term. The position of regional representative shall
rotate among the directors of the regional planning boards.
(c) The purpose of the board is to establish and maintain a plan
for the compensation of all of the following pursuant to the manager
and provider budget established by the commissioner.
(1) Upper level managers in private health care facilities,
including hospitals, integrated health care systems, group medical
practices, and essential community facilities.
(2) Elected and appointed California health insurance system
managers and officers who are exempt from statutes governing civil
service employment.
(3) Health care providers including physicians, osteopathic
physicians, dentists, podiatrists, nurse practitioners, physician
assistants, chiropractors, acupuncturists, psychologists, social
workers, marriage, family and child counselors, and other
professional health care providers who are required by law to be
licensed to practice in California and who provide services pursuant
to the act.
(4) Health care providers licensed and accredited to provide
services in California may choose to be compensated for their
services either by the California Health Insurance System or by a
person to whom they provide services.
(5) Nothing in this division is intended to interfere with,
change, or affect the terms of compensation established under
contracts between unions and the health insurance system during
negotiations for the labor cost component of health insurance system
operating budget.
(6) Providers electing to be compensated by the California Health
Insurance System shall enter into a contract with the health
insurance system pursuant to provisions of this section.
(7) Providers electing to be compensated by persons to whom they
provide services, instead of by the California Health Insurance
System may establish charges for their services.
(d) No health care service plan contract or health insurance
policy, except the California State Insurance Plan, may be sold in
California for services provided by the California State Health
Insurance Plan.
(e) Health care providers licensed or accredited to provide
services in California, who choose to be compensated by the health
insurance system instead of by patients to whom they provide
services, may choose how they wish to be compensated under this
division, as fee-for-service providers or as salaried providers in
health care systems that provide comprehensive, coordinated services.
(f) Notwithstanding provisions of the Business and Professions
Code, nurse practitioners, physician assistants, and others who under
California law must be supervised by a physician, an osteopathic
physician, a dentist, or a podiatrist, may choose fee-for-service
compensation while under lawfully required supervision. However,
nothing in this section shall interfere with the right of a
supervising provider to enter into a contractual arrangement that
provides for salaried compensation for employees who must be
supervised under the law by a physician, an osteopathic physician, a
dentist, or a podiatrist.
(g) The compensation plan shall include all of the following:
(1) Actuarially sound payments for providers in the
fee-for-service sector and for providers working in health systems
where comprehensive and coordinated services are provided, including
the actuarial basis for them.
(2) Payment schedules which shall be in effect for three years.
(3) Bonus and incentive payments, including, but not limited to,
all the following:
(A) Bonus payments for providers and upper level managers who, in
providing services and managing facilities, practices and integrated
health systems, pursuant to this division, meet performance standards
and outcome goals established by the California Health Insurance
System.
(B) Incentive payments for providers and upper level managers who
provide services to the California Health Insurance System in areas
identified by the Office of Health Care Planning as medically
underserved.
(C) Incentive payments required to achieve the ratio of generalist
to specialist providers needed in order to meet the standards of
care and service needs of the population.
(D) Incentive payments required to recruit and retain nurse
practitioners and physician assistants in order to provide primary
and preventive care to the population.
(E) No bonus or incentive payment may be made in excess of the
total allocation for provider and manager incentive and bonus
reimbursement established by the commissioner in the health insurance
system budget.
(F) No incentive may adversely affect the care a patient receives
or the care a health provider recommends.
(h) Providers shall be paid for all services provided pursuant to
this division, including care provided to persons who are
subsequently determined to be ineligible for the California Health
Insurance System.
(i) Licensed providers who deliver services not covered under the
California Health Insurance System may establish rates for, and
charge patients for those services.
(j) Reimbursement to providers and managers may not exceed the
amount allocated by the commissioner to provider and manager annual
budgets.
140209. (a) Fee-for-service providers shall choose
representatives to negotiate reimbursement rates with the Payments
Board on their behalf. (b) The Payments Board shall establish a
uniform system of payments for all services provided pursuant to this
division.
(c) Payment schedules shall be available to providers in printed
and in electronic documents.
(d) Payment schedules shall be in effect for three years, at which
time payment schedules may be renegotiated. Payment adjustments may
be made at the discretion of the pay board to meet the goals of the
health insurance system.
(e) In establishing a uniform system of payments the Payments
Board shall collaborate with regional health directors and shall take
into consideration regional differences in the cost of living and
the need to recruit and retain skilled providers in the region.
(f) Fee-for-service providers shall submit claims electronically
to the Health Insurance Fund and shall be paid within ____ business
days for claims filed in compliance with procedures established by
the Health Insurance Fund. In the event that a properly filed claim
for eligible services is not paid within ____ business days, the
provider shall be paid interest on the claim at a rate of _____,
compounded daily.
140210. (a) Compensation for providers and upper level managers
employed by integrated health care systems, group medical practices
and essential community providers that provide comprehensive,
coordinated services shall be determined according to the following
guidelines:(b) Providers and upper level managers employed by systems
that provide comprehensive, coordinated health care services shall
be represented by their respective employers for the purposes of
negotiating reimbursement with the Payments Board.
(c) In negotiating reimbursement with systems providing
comprehensive, coordinated services, the Payments Board shall take
into consideration the need for comprehensive systems to have
flexibility in establishing provider and upper level manager
reimbursement.
(d) Payment schedules shall be in effect for three years. However,
payment adjustments may be made at the discretion of the payment
board to meet the goals of the health insurance system
(e) The Payments Board shall take into consideration regional
differences in the cost of living and the need to recruit and retain
skilled providers and upper level managers to the regions.
(f) The Payments Board shall establish a timetable for
reimbursement negotiations. In the event that an agreement on
reimbursement is not reached according to the timetable established
by the Payments Board, the Payments Board shall establish
reimbursement rates, which shall be binding.
(g) Reimbursement negotiations shall be conducted consistent with
the state action doctrine of the antitrust laws.
140211. (a) The Payments Board shall annually report to the
commissioner on the status of provider and upper level manager
reimbursement, including satisfaction with reimbursement levels and
the sufficiency of funds allocated by the commissioner for provider
and upper level manager reimbursement. The Payments Board shall
recommend needed adjustments in the allocation for provider payments.
(b) The Office of Health Care Quality shall annually report to the
commissioner on the impact of the bonus payments in improving quality
of care, health outcomes and management effectiveness. The Payments
Board shall recommend needed adjustments in bonus allocations.
(c) The Office of Health Care Planning shall annually report to
the commissioner on the impact of the incentive payments in
recruiting health professionals and upper level managers to
underserved areas, in establishing the needed ratio of generalist to
specialist providers and in attracting and retaining nurse
practitioners and physician assistants to the state and shall
recommend needed
adjustments.
140212. (a) The commissioner shall establish an allocation for
each region to fund regional operating budgets for a period of three
years. Allocations shall be disbursed to the regions on a quarterly
basis.(b) Integrated health care systems, essential community
providers and group medical practices that provide comprehensive,
coordinated services may choose to be reimbursed on the basis of a
capitated operating budget or a system operating budget that covers
all costs of providing health care services.
(c) Providers choosing to function on the basis of a capitated or
system operating budget shall submit three year operating budget
requests to the regional planning director, pursuant to standards and
guidelines established by the commissioner.
(1) Providers may include in their operating budget requests
reimbursement for ancillary health care or social services that were
previously funded by money now received and disbursed by the Health
Insurance Fund.
(2) No payment may be made from an operating or a capitated budget
for a capital expense except as stipulated in Section 140216.
(d) Regional planning directors shall negotiate operating budgets
with regional health care entities, which shall cover a period of
three years.
(e) Operating and capitated budgets shall include health care
workforce labor costs other than those described in Sections _____.
Where unions represent employees working in systems functioning under
operating or capitated budgets, unions shall represent those
employees in negotiations with the regional planning director for the
purpose of establishing their reimbursement.
140213. (a) Health systems and medical practices functioning
under operating and capitated budgets shall immediately report any
projected operating deficit to the regional planning director. The
regional planning director shall determine whether projected deficits
reflect appropriate increases in utilization, in which case the
director shall make an adjustment to the operating budget. If the
director determines that deficits are not justifiable, no adjustment
shall be made. (b) If a regional planning director determines that
adjustments to operating budgets will cause a regional revenue
shortfall and that cost control measures may be required, the
regional planning director shall report the possible revenue
shortfall to the commissioner and take actions required pursuant to
Section 140203.
140214. No payment may be made from a health system operating
budget or from a capitated budget to provide a shareholder dividend.
(a) The Inspector General shall monitor operating budgets to
determine whether an unlawful payment has been made pursuant to this
section.
(b) The commissioner shall establish and enforce penalties for
violations of this section.
(c) Penalty payments collected for violations of this section
shall be remitted to the Health Insurance Fund for use in the
California Health Insurance System.
(d) Nothing in this section is intended to prohibit payment of
shareholder dividends from non-California Health Insurance System
sources.
140215. (a) Margins generated by a facility operating under a
health system capitated budget or from an operating budget may be
retained and used to meet the health care needs of the population.(b)
No margin may be retained if that margin was generated through
inappropriate limitations on access to care or compromises in the
quality of care or in any way that adversely affected or is likely to
adversely affect the health of the persons receiving services from a
facility, integrated health care system, group medical practice or
essential community provider functioning under an operating or
capitated budget.
(1) The chief medical officer shall evaluate the source of margin
generation and report violations of this section to the commissioner.
(2) The commissioner shall establish and enforce penalties for
violations of this section.
(3) Penalty payments collected pursuant to violations of section
shall be remitted to the Health Insurance Fund for use in the
California Health Insurance System.
(c) Facilities operating under health system capitated and
operating budgets may raise and expend funds from sources other than
the California Health Insurance System including, but not limited to,
private or foundation donors and other non-California Health
Insurance System sources for purposes related to the goals of this
division and in accordance with provisions of this division.
140216. (a) During the transition the commissioner shall develop
a Capital Management Plan which shall govern all capital investments
and acquisitions undertaken in the California Health Insurance
System. The plan shall include a framework, standards, and guidelines
for all of the following:(1) Standards whereby the office of health
care planning shall oversee, assist in the implementation of, and
ensure that the provisions of the capital management plan are
enforced.
(2) Assessment and prioritization of short- and long-term
California Health Insurance System capital needs on statewide and
regional bases.
(3) Assessment of capital assets and capital health care shortages
on a regional and statewide basis.
(4) Development by the commissioner of a health insurance system
capital budget that supports health insurance system goals,
priorities and performance standards and meets the health needs of
the population.
(5) Development, as part of the California Health Insurance System
capital budget, of regional capital allocations that shall cover a
period of three years.
(6) Exploration and evaluation of, and support for, noninvestment
means to meet health care needs, including, but not limited to,
improvements in administrative efficiency, care quality, and
innovative service delivery, use, adaptation or refurbishment of
existing land and property and identification of publicly owned land
or property that may be available to the California Health Insurance
System and that may meet a capital need.
(7) Development of capital inventories on a regional basis,
including the condition, utilization capacity, maintenance plan and
costs, deferred maintenance of existing capital inventory and excess
capital capacity.
(8) A process whereby those intending to make capital investments
or acquisitions shall prepare a business case for making the
investment or acquisition, including the full life-cycle costs of the
project or acquisition, an environmental impact report that meets
existing state standards, and a demonstration of how the investment
or acquisition meets the health needs of the population it is
intended to serve. Acquisitions include the acquisition of land,
operational property, or administrative office space.
(9) Standards and a process whereby the regional planning
directors shall evaluate, accept, reject, or modify a business plan
for a capital investment or acquisition. Decisions of a regional
planning director may be appealed through a dispute resolution
process established by the commissioner.
(10) Standards for binding project contracts between the Health
Insurance System and the party developing a capital project or making
a capital acquisition that shall govern all terms and conditions of
capital investments and acquisitions, including terms and conditions
for Health Insurance System grants, loans, lines of credit, and lease
purchase arrangements.
(11) A process and standards whereby the Health Insurance Fund
shall negotiate terms and conditions of the California Health
Insurance System leans, grants, lines of credit and lease purchase
arrangements for capital investments and acquisitions. Terms and
conditions negotiated by the Health Insurance Fund shall be included
in project contracts.
(12) A plan for the commissioner and for the regional planning
directors to issue requests for proposals and to oversee a process of
competitive bidding for the development of capital projects that
meet the needs of the California Health Insurance System.
(13) Responses to requests for proposals and competitive bids
shall include a description of how a project meets the service needs
of the region and addresses the environmental impact report and shall
include the full life-cycle costs of a capital asset.
(14) Requests for proposals shall address how intellectual
property will be handled and shall include conflict-of-interest
guidelines.
(15) A process and standards for periodic revisions in the Capital
Management Plan, including annual meetings in each region to discuss
the plan and make recommendations for improvements in the plan.
(16) Standards for determining when a violation of these
provisions shall be referred to the Attorney General for
investigation and possible prosecution of the violation.
(b) No registered lobbyist shall participate in or in any way
attempt to influence the request for proposals or competitive bid
process.
(c) Development of performance standards and a process to monitor
and measure performance of those making capital health care
investments and acquisitions, including those making capital
investments pursuant to a state competitive bidding process.
(d) A process for earned autonomy from state capital investment
oversight for those who demonstrate the ability to manage capital
investment and capital assets effectively in accordance with
California Health Insurance System standards, and standards for loss
of earned autonomy when capital management is ineffective.
(e) Terms and conditions of capital project oversight by the
California Health Insurance System shall be based on the performance
history of the project developer. Providers may earn autonomy from
oversight if they demonstrate effective capital planning and project
management, pursuant to the goals and guidelines established by the
commissioner. Providers who do not demonstrate such proficiency shall
remain subject to oversight by the regional planning director or
shall lose autonomy from oversight.
(f) In general, no capital investment may be made from an
operating budget. However, guidelines shall be established for the
types and levels of small capital investments that may be undertaken
from an operating budget without the approval of the regional
planning director.
(g) Any capital investments required for compliance with federal,
state, or local regulatory requirements or quality assurance
standards shall be exempt from paragraph (2) of subdivision (c) of
Section 140212.
140217. (a) Regional planning directors shall develop a regional
capital development plan pursuant to the California Health Insurance
System capital management plan established by the commissioner. In
developing the regional capital development plan, the regional
planning director shall do all of the following:(1) Implement the
standards and requirements of the capital management plan established
by the commissioner.
(2) Develop and annually update a regional budget request that
covers a period of three years.
(3) Assist regional providers to develop capital budget requests
pursuant to the California Health Insurance System capital management
plan established by the commissioner.
(4) Receive and evaluate capital budget requests from regional
providers.
(5) Establish ranking criteria to assess competing demands for
capital.
(6) Participate in planning for needed earthquake retrofits.
However, the cost of mandatory earthquake retrofits of health care
facilities shall not be the responsibility of the California Health
Insurance System.
(7) Conduct ongoing project evaluation to assure that terms and
conditions of project funding are met.
(b) Services provided as a result of capital investments or
acquisitions that do not meet the terms of the regional capital
development plan and the capital management plan developed by the
commissioner shall not be reimbursed by the California Health
Insurance System.
140218. (a) Assets financed by state grants, loans and lines of
credit and lease purchase arrangements, shall be owned, operated and
maintained by the recipient of the grant, loan, line of credit or
lease purchase arrangements, according to terms established at the
time of issuance of the grant, loan or line of credit, or lease
purchase arrangement.(b) Assets financed under long-term leases with
the California Health Insurance System shall be transferred to public
ownership at the end of the lease.
(c) Assets financed by private capital or donations are owned,
operated and maintained by the borrower or donor recipient.
140219. The health regions must make financial information
available to the public when the California Health Insurance System
contribution to a capital project is greater than fifty million
dollars ($50,000,000). Information shall include the purpose of the
project or acquisition, its relation to California Health Insurance
System goals, the project budget and the timetable for completion,
and performance standards and benchmarks.
140220. (a) The commissioner shall establish a budget for the
purchase of prescription drugs and durable and nondurable medical
equipment for the health insurance 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.
(c) The commissioner shall make discounted prices available to all
California residents, health care providers, prescription drug and
medical equipment wholesalers and retailers of products approved for
use in and included in the benefit package of the California Health
Insurance System.
140221. (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, the consumer advocates,
the Partnerships for Health, the Technical Advisory Committee, and
others as required by the commissioner. (b) The research and
innovation budget shall support the goals and standards of the
California Health Insurance System.
140222. (a) The commissioner shall establish a budget to support
the training, development and continuing education of health care
providers and the health care workforce needed to meet the health
care needs of the population and the goals and standards of the
health insurance system. (b) For the first five years of the
operation of the California Health Insurance System, ____ percent of
the Workforce Development and Training Budget shall be expended for
the retraining and job placement of persons who have been displaced
from employment as a result of the transition to the new health
insurance system.
(c) The commissioner shall establish guidelines for giving special
consideration for employment to persons who have been displaced as a
result of the transition to the new health insurance system.
140223. (a) The commissioner shall establish a Reserve Budget
pursuant to this section. The Reserve Budget shall contain no less
than _____ percent of the California Health Insurance System Budget.
(b) The Reserve Budget may be used only for purposes set forth in
this division.
140224. (a) The commissioner shall establish a budget that covers
all costs of administering the California Health Insurance System.
(b) Administrative costs on a systemwide basis shall be limited to
____ percent of system costs within five years of completing the
transition to the California Health Insurance System.
(c) Administrative costs on a systemwide basis shall be limited to
____ percent of system costs within 10 years of completing the
transition to the California Health Insurance System.
(d) The commissioner shall ensure that the percentage of the
budget allocated to support system administration stays within the
allowable limits and shall continually seek means to lower system
administrative cost.
(e) The commissioner shall report to the public, the regional
planning directors and others attending the annual Health Insurance
System Revenue and Expenditures Conference pursuant to Section 140205
on the costs of administering the system and the regions and shall
make recommendations for lowering administrative costs and receive
recommendations for lowering administrative costs.
Article 2. Revenues.
140230. (Reserved)
Article 3. Governmental Payments
140240. (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 Insurance 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 California Health Insurance 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 California
Health Insurance System.
140241. 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 Insurance Fund or that the
transfer is delayed beyond the date on which initial benefits are
provided under the system.
140242. 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 Insurance 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.
140243. If, and to the extent that, federal law and regulations
allow the transfer of Medi-Cal funding to the system, the
commissioner shall pay from the Health Insurance 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.
140244. In the event and to the extent that the commissioner
obtains authorization to incorporate Medicare revenues into the
Health Insurance 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 of law or regulations 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 California Health Insurance 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 California Health Insurance
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 Insurance 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 California Health Insurance 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 California Health
Insurance 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.
140308. The California Health Insurance 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 Insurance 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 Insurance 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 Insurance 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 140503. 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 Insurance 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 Insurance 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 California Health
Insurance System. (b) No health care provider whose license or
accreditation is suspended or revoked may be a participating health
care provider.
(c) (1) (Reserved)
(2) 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. The licensing or
accrediting agency shall report to the Chief Medical Officer at
intervals established by the Chief Medical Officer, on the status of
providers who are on probation, on measures undertaken to assist
providers to return to practice and to resolve complaints made by
patients.
(d) Health care providers may accept eligible persons for care
according to the provider's ability to provide services needed by the
applicant and according to the number of patients a provider can
treat without compromising safety and care quality. A provider may
accept patients in the order of time of application.
(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 Sec. 129000) of Division 3 of
Title 2 of the Government Code).
(f) Choice of provider:
(1) Persons eligible for health care services under this division
may choose a primary care provider.
(A) Primary care providers include family practitioners, general
practitioners, internists and pediatricians, nurse practitioners and
physician assistants practicing under supervision as defined in
California codes and Doctors of Osteopathy licensed to practice as
general doctors.
(B) Women may choose an obstetrician-gynecologist, in addition to
a primary provider.
(2) Persons who choose to enroll with integrated health care
systems, group medical practices or essential community providers
that offer comprehensive services, shall retain membership for at
least one year after an initial three month evaluation period during
which time they may withdraw for any reason.
(A) The three-month period shall commence on the date when an
enrollee first sees a primary provider.
(B) Persons who want to withdraw after the initial three-month
period shall request a withdrawal pursuant to dispute resolution
procedures established by the commissioner and may request assistance
from the consumer advocate in the dispute process. The dispute shall
be resolved in a timely fashion and shall have no adverse effect on
the care a patient receives.
(3) Persons needing to change primary providers because of health
care needs that their primary provider cannot meet may change primary
providers at any time.
140601. (a) Primary care providers shall coordinate the care a
patient receives or shall ensure that a patient's care is
coordinated. (b) (1) Patients shall have a referral from their
primary care provider, or from an emergency provider rendering care
to them in the emergency room or other accredited emergency setting,
or from a provider treating a patient for an emergency condition in
any setting, or from their obstetrician/gynecologist, to see a
physician or nonphysician specialist whose services are covered by
this division, unless the patient agrees to assume the costs of care,
in which case a referral is not needed. A referral shall not be
required to see a dentist.
(2) Referrals shall be based on the medical needs of the patient
and on guidelines which shall be established by the chief medical
officer to support clinical decisionmaking.
(3) Referrals shall not be restricted or provided solely because
of financial considerations. The chief medical officer shall monitor
referral patterns and intervene as necessary to assure that referrals
are neither restricted nor provided solely because of financial
considerations.
(4) Patients established with a specialist before the system is
implemented do not need a referral to continue seeing the specialist
or their designee.
(5) Where referral systems are in place prior to the initiation of
the system, the chief medical officer shall review the referral
systems to assure that they meet health insurance system standards
for care quality and shall assure needed changes are implemented so
that all Californians receive the same standards of care quality.
(6) A specialist may serve as the primary provider if the patient
and the provider agree to this arrangement and if the provider agrees
to coordinate the patient's care or to ensure that the care the
patient receives is coordinated.
(7) The commissioner shall establish or ensure the establishment
of a computerized referral registry to facilitate the referral
process and to allow a specialist and a patient to easily determine
whether a referral has been made pursuant to this division.
(8) A patient may appeal the denial of a referral through the
dispute resolution procedures established by the commissioner and may
request the assistance of the consumer advocate during the dispute
resolution process.
140602. (a) The purpose of the Office of Health Care Planning is
to plan for the short and long term health needs of the population
pursuant to the health care and finance standards established by the
commissioner and by this division. (b) The office shall be headed by
a planning director appointed by the commissioner. The director shall
serve pursuant to provisions of Section ____.
(c) The director shall do all the following:
(1) Administer all aspects of the Office of Health Care Planning.
(2) Serve on the Health Insurance Policy Board.
(3) Establish performance criteria in measurable terms for health
care goals in consultation with the chief medical officer, the
regional health officers and directors and others with experience in
health care outcomes measurement and evaluation.
(4) Evaluate the performance criteria.
(5) Assist the health care regions to develop operating and
capital requests pursuant to health care and finance guidelines
established by the commissioner and by this division. In assisting
regions, the director shall do all of the following:
(A) Identify medically undeserved areas and health service
shortages.
(B) Identify disparities in health outcomes.
(C) Support establishment of comprehensive health care databases
using uniform methodology that is compatible between the regions and
between the regions and the state health insurance agency.
(D) Provide information to support effective regional planning.
(E) Provide information to support interregional planning,
including planning for access to specialized centers that perform a
high volume of procedures for conditions requiring highly specialized
treatments, including emergency and trauma and other interregional
access to needed care, and planning for coordinated interregional
capital investment.
(F) Provide information for, and participate in, earthquake
retrofit planning.
(G) Evaluate regional budget requests and make recommendations to
the commissioner about regional revenue allocations.
(1) Estimate the health care workforce required to meet the health
needs of the population pursuant to the standards and goals
established by the commissioner, the costs of providing the needed
workforce, and, in collaboration with regional planners, educational
institutions, the Governor and the Legislature, develop short and
long term plans to meet those needs, including a plan to finance
needed training.
(2) Estimate the number and types of health facilities required to
meet the short and long term health needs of the population and the
projected costs of needed facilities. In collaboration with the
commissioner, regional planning directors and health officers, the
chief medical officer, the Governor and the Legislature, develop
plans to finance and build needed facilities.
140603. The Director of the Office of Health Care Planning shall
establish the following electronic initiatives: (a) Establish
integrated statewide health care databases to support health care
planning and determine which databases which should be established on
a statewide basis and which should be established on a regional
basis.
(b) Assure that databases have uniform methodology and formats
that are compatible between regions and between the regions and the
state insurance agency.
(c) Establish mandatory database reporting requirements and
penalties for noncompliance. Monitor the effectiveness of reporting
and make needed improvements.
(d) Establish electronic, online, scheduling systems for use in
the health insurance system.
(e) Establish electronic provider patient communication systems
that allow for e-visits, for use in the health insurance system.
(f) Establish electronic systems that allow standard of care
guidelines, including disease management programs to be embedded in a
patient's electronic medical records.
(g) Establish electronic systems that give information to
providers about community-based patient care resources.
(h) Collaborate with the chief medical officer and regional
medical officers to assure the development of software systems that
link clinical guidelines to individual patient conditions, and guide
clinicians through diagnosis and treatment algorithms based on
evidence-based research and best medical practices.
(i) Collaborate with the chief medical officer and regional
medical officers to assure the development of software systems that
offer providers access to guidelines that are appropriate for their
specialty and that include current information on prevention and
treatment of disease.
(j) In collaboration with the Partnerships for Health and regional
health officers, establish Web-based patient-centered information
systems that assist people to promote health and provide information
on health conditions and recent developments in treatment.
(k) Establish electronic systems and other means to provide
patients with easily understandable information about the performance
of health care providers. This shall include, but not be limited to,
information about the experience that providers have in the field or
fields in which they deliver care, the number of years they have
practiced in their field and, in the case of medical and surgical
procedures, the number of procedures they have performed in their
area or areas of specialization.
(l) Establish electronic systems that facilitate provider
continuing medical education that meets licensure requirements.
(m) Establish means for anonymous reporting of suspected medical
errors.
(n) Recommend to the commissioner means to link health care
research with the goals and priorities of the health insurance
system.
140604. (a) The Director of the Office of Health Care Planning
shall establish standards for culturally and linguistically competent
care, which shall include, but not be limited to, all of the
following: (1) State Department of Health Services and the Department
of Managed Care guidelines for culturally and linguistically
sensitive care.
(2) Medi-Cal Managed Care Division (MMCD) Policy Letters 99-01 to
99-04 and MMCD All Plan Letter 99005 by the Cultural and Linguistic.
(3) Subchapter 5 of the Civil Rights Act of 1964 (42 U.S.C. Sec.
2000d).
(4) 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).
(5) 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).
(b) The director shall annually evaluate the effectiveness of
standards for culturally and linguistically competent care and make
recommendations to the commissioner, the consumer advocate and the
chief medical officer for needed improvements.
(c) The director shall pursue available federal financial
participation for the provision of a language services program that
supports health insurance system goals.
140605. (a) Within the agency, the commissioner shall establish
the Office of Health Care Quality. (b) The office shall be headed by
the chief medical officer who shall serve pursuant to provisions of
Section ______ regarding qualifications for appointed health
insurance system officers.
(c) The purpose of the Office of Health Care Quality is the
following:
(1) Support the delivery of high quality, coordinated health care
services that enhance health, prevent illness, disease and
disability, slow the progression of chronic diseases and improve
personal health management.
(2) Promote efficient care delivery.
(3) Establish processes for measuring, monitoring and evaluating
the quality of care delivered in the health insurance system,
including the performance of individual providers.
(4) Establish means to make changes needed to improve care
quality, including innovative programs that improve quality.
(5) Promote patient, provider and employer satisfaction with the
health insurance system.
(6) Assist regional planning directors and medical officers in the
development and evaluation of regional budget requests.
140606. (a) In supporting the goals of the Office of Health Care
Quality, the chief medical officer shall do all of the following: (1)
Administer all aspects of the office.
(2) Serve on the Health Insurance Policy Board.
(3) Collaborate with regional medical officers, directors, health
care providers, and consumers, the director of planning, the consumer
advocate and Partnership for Health directors to develop
community-based networks of solo providers, small group practices,
essential community providers and providers of patient care support
services in order to offer comprehensive, multidisciplinary,
coordinated services to patients.
(4) Establish evidence-based standards of care for the health
insurance system which shall serve as guidelines to support providers
in the delivery of high quality care. Standards shall be based on
the best evidence available at the time and shall be continually
updated. Standards are intended to support the clinical judgment of
individual providers, not to replace it and to support clinical
decisions based on the needs of individual patients.
(b) In establishing standards, the chief medical officer shall do
all of the following:
(1) Draw on existing standards established by California health
care institutions, on peer-created standards, and on standards
developed by others institutions that have had a positive impact on
care quality, such as the Centers for Disease Control and the Agency
for Health Care Quality and Research.
(2) Collaborate with regional medical officers in establishing
regional goals, priorities and a timetable for implementation of
standards of care.
(3) Assure a process for patients to provide their views on
standards of care to the consumer advocate who shall report those
views to the chief medical officer.
(4) Collaborate with the director of planning and regional medical
officers to support the development of computer software systems
that link clinical guidelines to individual patient conditions, guide
clinicians through diagnosis and treatment algorithms based on
evidence-based research and best medical practices, offer access to
guidelines appropriate to each medical specialty and offer current
information on disease prevention and treatment and that support
continuing medical education.
(5) Where referral systems for access to specialty care are in
place prior to the initiation of the health insurance system, the
chief medical officer shall review the referral systems to assure
that they meet health insurance system standards for care quality and
shall assure that needed changes are implemented so that all
Californians receive the same standards of care quality.
(c) In collaboration with the director of planning and regional
medical officer, the chief medical officer shall implement means to
measure and monitor the quality of care delivered in the health
insurance system. Monitoring systems shall include, but shall not be
limited to, peer and patient performance reviews.
(d) The chief medical officer shall establish means to support
individual providers and health systems in correcting quality of care
problems, including timeframes for making needed improvements and
means to evaluate the effectiveness of interventions.
(e) In collaboration with regional medical officers and directors
and the director of planning, the chief medical officer shall
establish means to identify medical errors and their causes and
develop plans to prevent them.
(f) The chief medical officer shall convene an annual statewide
conference to discuss medical errors that occurred during the year,
their causes, means to prevent errors, and the effectiveness of
efforts to decrease errors.
(g) The chief medical officer shall recommend to the
commissioner an evidence-based benefits package for the health
insurance system, including priorities for needed benefit
improvements. In making recommendations, the chief medical officer
shall do all of the following:
(1) Identify safe and effective treatments.
(2) Evaluate and draw on existing benefit packages.
(3) Receive comments and recommendations from health care
providers about benefits that meet the needs of their patients.
(4) Receive comments and recommendations made directly by patients
or indirectly through the consumer advocate.
(5) Identify and recommend to the commissioner and the Health
Insurance Policy Board innovative approaches to health promotion,
disease and injury prevention, education, research and care delivery
for possible inclusion in the benefit package.
(6) Identify complementary and alternative modalities that have
been shown by the National Institutes of Health, Division of
Complementary and Alternative Medicine to be safe and effective for
possible inclusion as covered benefits.
(7) Recommend to the commissioner and update as appropriate, an
evidence-based pharmaceutical and durable and nondurable medical
equipment formularies. In establishing the formularies the chief
medical officer shall establish a Pharmacy and Therapeutics Committee
composed of pharmacy and medical health care providers,
representatives of health facilities and organizations have system
formularies in place at the time the system is implemented and other
experts that shall do all the following:
(8) Identify safe and effective pharmaceutical agents for use in
the California Health Insurance System.
(9) Draw on existing standards and formularies.
(10) Identify experimental drugs and drug treatment protocols for
possible inclusion in the formulary.
(11) Review formularies in a timely fashion to ensure that safe
and effective drugs are available and that unsafe drugs are removed
from use.
(12) Assure the timely dissemination of information needed to
prescribe safely and effectively to all California providers.
(13) Establish standards and criteria and a process for providers
to seek authorization for prescribing pharmaceutical agents and
durable and nondurable medical equipment that are not included in the
system formulary. No standard or criteria shall impose an undue
administrative burden on patients, health care providers, including
pharmacies and pharmacists, and none shall delay care a patient
needs.
(14) Develop standards and criteria and a process for providers to
request authorization for services and treatments, including
experimental treatments that are not included in the system benefit
package.
(A) Where such processes are in place when the health insurance
system is initiated, the chief medical officer shall review the
systems to assure that they meet health insurance system standards
for care quality and shall assure that needed changes are implemented
so that all Californians receive the same standards of care quality.
(B) No standard or criteria shall impose an undue administrative
burden on a provider or a patient and none shall delay the care a
patient needs.
(15) In collaboration with the director of planning, regional
planning directors and regional medical officers, identify
appropriate ratios of general medical providers to specialty medical
providers on a regional basis that meet the health care needs of the
population and the goals of the health insurance system.
(16) Recommend to the commissioner and to the Payment Board,
financial and non-financial incentives and other means to achieve
recommended provider ratios.
(17) Collaborate with the director of planning and regional
medical officers and consumer advocates in development of electronic
initiatives, pursuant to Section 140603.
(18) Collaborate with the commissioner, the regional health
officers, the directors of the Payments Board and the Health
Insurance Fund to formulate a provider reimbursement model that
promotes the delivery of coordinated, high quality health services in
all sectors of the health insurance system and creates financial and
other incentives for the delivery of high quality care.
(19) Establish or assure the establishment of continuing medical
education programs about advances in the delivery of high quality of
care.
(20) Convene an annual statewide quality of care conference to
discuss problems with care quality and to make recommendations for
changes needed to improve care quality. Participants shall include
regional medical directors, health care providers, providers,
patients, policy experts, experts in quality of care measurement and
others.
(21) Annually report to the commissioner, the Health Insurance
Policy Board and the public on the quality of care delivered in the
health insurance system, including improvements that have been made
and problems that have been identified during the year, goals for
care improvement in the coming year and plans to meet these goals.
(h) No person working within the agency, or on a pharmacy and
therapeutics committee or serving as a consultant to the agency or a
pharmacy and therapeutics committee, may receive fees or remuneration
of any kind from a pharmaceutical company.
140607. (a) The consumer advocate, in collaboration with the
chief medical officer, the regional consumer advocates, medical
officers, and directors, shall establish a program in the state
health insurance agency and in each region called the "Partnerships
for Health". (b) The purpose of the Partnerships for Health is to
improve health through community health initiatives, to support the
development of innovative means to improve care quality, to promote
efficient care delivery, and to educate of the public about the
following:
(1) Personal maintenance of health.
(2) Prevention of disease.
(3) Improvement in communication between patients and providers.
(4) Improving quality of care.
(c) The consumer shall work with the community and health care
providers in proposing Partnerships for Health projects and in
developing project budget requests that shall be included in the
regional budget request to the commissioner.
(d) In developing educational programs, the Partnerships for
Health shall collaborate with educators in the region.
(e) Partnerships for Health shall support the coordination of
California Health Insurance System and public health system programs.
140608. (a) The consumer advocate shall do all of the following:
(1) Establish and maintain a grievance system approved by the health
care commissioner under which enrollees may submit their grievances
to the system. The system shall provide reasonable procedures in
accordance with state regulations that shall ensure adequate
consideration of enrollee grievances and rectification when
appropriate.
(2) Inform enrollees upon enrollment in the system and annually
thereafter of the procedure for processing and resolving grievances.
The information shall include the location and telephone number where
grievances may be submitted.
(3) Provide printed and electronic access for enrollees who wish
to register grievances. The forms used by the system shall be
approved by the commissioner in advance as to format.
(4) (A) Provide for a written acknowledgment within five calendar
days of the receipt of a grievance, except as noted in subparagraph
(B). The acknowledgment shall advise the complainant of the
following:
(i) That the grievance has been received.
(ii) The date of receipt.
(iii) The name of the system representative and the telephone
number and address of the system representative who may be contacted
about the grievance.
(B) Grievances received by telephone, by facsimile, by e-mail, or
online through the system's Web site that are not coverage disputes,
disputed health care services involving medical necessity, or
experimental or investigational treatment and that are resolved by
the next business day following receipt are exempt from the
requirements of subparagraph (A) and paragraph (5). The consumer
advocate shall maintain a log of all these grievances. The log shall
be periodically reviewed by the consumer advocate and shall include
the following information for each complaint:
(i) The date of the call.
(ii) The name of the complainant.
(iii) The complainant's system identification number.
(iv) The nature of the grievance.
(v) The nature of the resolution.
(vi) The name of the system representative who took the call and
resolved the grievance.
(5) Provide enrollees with written responses to grievances, with a
clear and concise explanation of the reasons for the system's
response. For grievances involving the delay, denial, or modification
of health care services, the system response shall describe the
criteria used and the clinical reasons for its decision, including
all criteria and clinical reasons related to medical necessity. If
the system, or one of its contracting providers, issues a decision
delaying, denying, or modifying health care services to an enrollee
based in whole or in part on a finding that the proposed health care
services are not a covered benefit in the system that applies to the
enrollee, the decision shall clearly specify the system provisions
that exclude that coverage.
(6) Keep in its files all copies of grievances, and the responses
thereto, for a period of five years.
(7) Establish and maintain a Web site that shall provide an
online form that enrollees can use to file with a grievance, as
described in paragraph (3) of subdivision (b), online.
(b) (1) The commissioner may require enrollees and subscribers to
participate in a plan's grievance process for up to 30 days before
pursuing a grievance through the commissioner or the independent
medical review system. However, the commissioner may not impose this
waiting period for expedited review cases covered by subdivision (b)
of Section 1368.01 or in any other case where the commissioner
determines that an earlier review is warranted.
(2) In any case determined by the consumer advocate to be a case
involving an imminent and serious threat to the health of the
patient, including, but not limited to, severe pain, the potential
loss of life, limb, or major bodily function, or in any other case
where the consumer advocate determines that an earlier review is
warranted, an enrollee shall not be required to complete the
grievance process or to participate in the process for at least 30
days before submitting a grievance to the independent medical review
system established pursuant to Section 140609.
(3) Notwithstanding subparagraphs (1) and (2), the consumer
advocate may refer any grievance that does not pertain to compliance
with this act to the federal Health Care Financing Administration, or
any other appropriate local, state, and federal governmental entity
for investigation and resolution.
(4) If the enrollee is a minor, or is incompetent or
incapacitated, the parent, guardian, conservator, relative, or other
designee of the enrollee, as appropriate, may submit the grievance to
the consumer advocate as a designated agent of the enrollee.
Further, a provider may join with, or otherwise assist, an enrollee,
or the agent, to submit the grievance to the consumer advocate. In
addition, following submission of the grievance to the consumer
advocate, the enrollee, or the agent, may authorize the provider to
assist, including advocating on behalf of the enrollee. For purposes
of this section, a "relative" includes the parent, stepparent,
spouse, domestic partner, adult son or daughter, grandparent,
brother, sister, uncle, or aunt of the enrollee.
(5) The consumer advocate shall review the written documents
submitted with the enrollee's request for review. The consumer
advocate may ask for additional information, and may hold an informal
meeting with the involved parties, including providers who have
joined in submitting the grievance or who are otherwise assisting or
advocating on behalf of the enrollee. If after reviewing the record,
the consumer advocate concludes that the grievance, in whole or in
part, is eligible for review under the independent medical review
system established pursuant to Section 140609, the consumer advocate
shall immediately notify the enrollee of that option and shall, if
requested orally or in writing, assist the enrollee in participating
in the independent medical review system.
(6) The consumer advocate shall send a written notice of the final
disposition of the grievance, and the reasons therefore, to the
enrollee, to any provider that has joined with or is otherwise
assisting the enrollee, and to the health care commissioner, within
30 calendar days of receipt of the request for review unless the
consumer advocate, in his or her discretion, determines that
additional time is reasonably necessary to fully and fairly evaluate
the relevant grievance. In any case not eligible for the independent
medical review system established pursuant to Section 140609, the
consumer advocate's written notice shall include, at a minimum, the
following:
(A) A summary of findings and the reasons why the consumer
advocate found the system to be, or not to be, in compliance with any
applicable laws, regulations, or orders of the commissioner.
(B) A discussion of the consumer advocate's contact with any
medical provider, or any other independent expert relied on by the
consumer advocate, along with a summary of the views and
qualifications of that provider or expert.
(C) If the enrollee's grievance is sustained in whole or in part,
information about any corrective action taken.
(7) In any consumer advocate review of a grievance involving a
disputed health care service, as defined in subdivision (b) of
Section 140609, that is not eligible for the independent medical
review system established pursuant to Section 140609, in which the
consumer advocate finds that the system has delayed, denied, or
modified health care services that are medically necessary, based on
the specific medical circumstances of the enrollee, and those
services are a covered benefit under the terms and conditions of the
health care service system contract, the consumer advocate's written
notice shall order the system to promptly offer and provide those
health care services to the enrollee.
(A) The consumer advocate's order shall be binding on the system.
(8) Distribution of the written notice shall not be deemed a
waiver of any exemption or privilege under existing law, including,
but not limited to, Section 6254.5 of the Government Code, for any
information in connection with and including the written notice, nor
shall any person employed or in any way retained by the consumer
advocate be required to testify as to that information or notice.
(9) The consumer advocate shall establish and maintain a system of
aging of grievances that are pending and unresolved for 30 days or
more that shall include a brief explanation of the reasons each
grievance is pending and unresolved for 30 days or more.
(c) Subject to subparagraph (3) of subdivision (b), the grievance
or resolution procedures authorized by this section shall be in
addition to any other procedures that may be available to any person,
and failure to pursue, exhaust, or engage in the procedures
described in this section shall not preclude the use of any other
remedy provided by law.
(d) Nothing in this section shall be construed to allow the
submission to the consumer advocate of any provider grievance under
this section. However, as part of a provider's duty to advocate for
medically appropriate health care for his or her patients pursuant to
Sections 510 and 2056 of the Business and Professions Code, nothing
in this subdivision shall be construed to prohibit a provider from
contacting and informing the consumer advocate about any concerns he
or she has regarding compliance with or enforcement of this chapter.
140609. (a) The consumer advocate shall establish the Independent
Medical Review System to act as an independent, external medical
review process for the health care system to provide timely
examinations of disputed health care services as defined in this
section and coverage decisions as defined in this section regarding
experimental and investigational therapies to ensure the system
provides efficient, appropriate, high quality health care, and that
the health care system is responsive to patient disputes. (b) For the
purposes of this chapter, "disputed health care service" means any
health care service eligible for coverage and payment under the
benefits package of the health care system that has been denied,
modified, or delayed by a decision of the system, or by one of its
contracting providers, in whole or in part due to a finding that the
service is not medically necessary. A decision regarding a disputed
health care service relates to the practice of medicine and is not a
coverage decision. If the system, or one of its contracting
providers, issues a decision denying, modifying, or delaying health
care services, based in whole or in part on a finding that the
proposed health care services are not a covered benefit under the
system, the statement of decision shall clearly specify the
provisions of the system that exclude coverage.
(c) For the purposes of this chapter, "coverage decision" means
the approval or denial of the health care system, or by one of its
contracting entities, substantially based on a finding that the
provision of a particular service is included or excluded as a
covered benefit under the terms and conditions of the health care
system. A "coverage decision" does not encompass a plan or
contracting provider decision regarding a disputed health care
service.
(d) Coverage decisions regarding experimental or investigational
therapies for individual enrollees who meet all of the following
criteria are eligible for review by the Independent Medical Review
System:
(1) (A) The enrollee has a life-threatening or seriously
debilitating condition.
(B) For purposes of this section, "life-threatening" means either
or both of the following:
(i) Diseases or conditions where the likelihood of death is high
unless the course of the disease is interrupted.
(ii) Diseases or conditions with potentially fatal outcomes, where
the end point of clinical intervention is survival.
(C) For purposes of this section, "seriously debilitating" means
diseases or conditions that cause major irreversible morbidity.
(2) The enrollee's physician certifies that the enrollee has a
condition, as defined in paragraph (1), for which standard therapies
have not been effective in improving the condition of the enrollee,
for which standard therapies would not be medically appropriate for
the enrollee, or for which there is no more beneficial standard
therapy covered by the system than the therapy proposed pursuant to
paragraph (3).
(3) Either (A) the enrollee's physician, who is under contract
with or employed by the system, has recommended a drug, device,
procedure or other therapy that the physician certifies in writing is
likely to be more beneficial to the enrollee than any available
standard therapies, or (B) the enrollee, or the enrollee's physician
who is a licensed, board-certified or board-eligible physician
qualified to practice in the area of practice appropriate to treat
the enrollee's condition, has requested a therapy that, based on two
documents from the medical and scientific evidence, as defined in
____, is likely to be more beneficial for the enrollee than any
available standard therapy. The physician certification pursuant to
this subdivision shall include a statement of the evidence relied
upon by the physician in certifying his or her recommendation.
Nothing in this subdivision shall be construed to require the system
to pay for the services of a nonparticipating physician provided
pursuant to this subdivision, that are not otherwise covered pursuant
to system benefits package.
(4) The enrollee has been denied coverage by the system for a
drug, device, procedure, or other therapy recommended or requested
pursuant to paragraph (3).
(5) The specific drug, device, procedure, or other therapy
recommended pursuant to paragraph (3) would be a covered service,
except for the system's determination that the therapy is
experimental or investigational.
(e) (1) All patient grievances involving a disputed health care
service are eligible for review under the Independent Medical Review
System if the requirements of this article are met. If the consumer
advocate finds that a patient grievance involving a disputed health
care service does not meet the requirements of this article for
review under the Independent Medical Review System, the patient
request for review shall be treated as a request for the consumer
advocate to review the grievance pursuant to Section 140608. All
other patient grievances, including grievances involving coverage
decisions, remain eligible for review by the consumer advocate
pursuant to subdivision (b) of Section 1368.
(2) In any case in which a patient or provider asserts that a
decision to deny, modify, or delay health care services was based, in
whole or in part, on consideration of medical appropriateness, the
consumer advocate shall have the final authority to determine whether
the grievance is more properly resolved pursuant to an independent
medical review as provided under this article or pursuant to Section
______.
(3) The consumer advocate shall be the final arbiter when there is
a question as to whether a patient grievance is a disputed health
care service or a coverage decision. The consumer advocate shall
establish a process to complete an initial screening of a patient
grievance. If there appears to be any medical appropriateness issue,
the grievance shall be resolved pursuant to an independent medical
review as provided under this article or pursuant to Section
________.
(f) For purposes of this article, a patient may designate an agent
to act on his or her behalf, as described in paragraph (4) of
subdivision (b). The provider may join with or otherwise assist the
patient in seeking an independent medical review, and may advocate on
behalf of the patient.
(g) The independent medical review process authorized by this
article is in addition to any other procedures or remedies that may
be available.
(h) The office of the consumer advocate shall prominently display
in every relevant informational brochure, on copies of health care
system procedures for resolving grievances, on letters of denials
issued by either the health care system or its contracting providers,
on the grievance forms, and on all written responses to grievances,
information concerning the right of a patient to request an
independent medical review in cases where the patient believes that
health care services have been improperly denied, modified, or
delayed by the health care system, or by one of its contracting
providers.
(i) A patient may apply to the consumer advocate for an
independent medical review when all of the following conditions are
met:
(1) (A) The patient's health care provider has recommended a
health care service as medically appropriate.
(B) The patient has received urgent care or emergency services
that a provider determined was medically appropriate.
(C) The patient, in accordance with Section 1370.4 of the Health
and Safety Code, seeks coverage for experimental or investigational
therapies.
(D) The patient, in the absence of a provider recommendation
under subparagraph (A) or the receipt of urgent care or emergency
services by a provider under subparagraph (B), has been seen by an
system provider for the diagnosis or treatment of the medical
condition for which the patient seeks independent review. The health
care system shall expedite access to a system provider upon request
of a patient. The system provider need not recommend the disputed
health care service as a condition for the patient to be eligible for
an independent review. For purposes of this article, the patient's
provider may be an out-of-system provider. However, the health care
system shall have no liability for payment of services provided by an
out-of-system provider, except as provided pursuant to subdivision
(c) of Section 1374.34.
(2) The disputed health care service has been denied, modified, or
delayed by the health care system, or by one of its contracting
providers, based in whole or in part on a decision that the health
care service is not medically appropriate.
(3) The patient has filed a grievance with the consumer advocate
and the disputed decision is upheld or the grievance remains
unresolved after 30 days. The patient shall not be required to
participate in the health care system's grievance process for more
than 30 days. In the case of a grievance that requires expedited
review pursuant to Section 1368.01, the patient shall not be required
to participate in the health care system's grievance process for
more than three days.
(j) A patient may apply to the consumer advocate for an
independent medical review of a decision to deny, modify, or delay
health care services, based in whole or in part on a finding that the
disputed health care services are not medically appropriate, within
six months of any of the qualifying periods or events under
subdivision (j). The consumer advocate may extend the application
deadline beyond six months if the circumstances of a case warrant the
extension.
(k) The patient shall pay no application or processing fees of any
kind.
(l) As part of its notification to the patient regarding a
disposition of the patient's grievance that denies, modifies, or
delays health care services, the health care system shall follow
notification requirements set out in subdivision (m) of the Health
and Safety Code.
(m) Upon notice from the consumer advocate that the patient has
applied for an independent medical review, the health care system or
its contracting providers shall provide to the independent medical
review organization designated by the consumer advocate a copy of all
of the following documents within three business days of the health
care system's receipt of the consumer advocate's notice of a request
by an patient for an independent review:
(1) (A) A copy of all of the patient's medical records in the
possession of the health care system or its contracting providers
relevant to each of the following:
(i) The patient's medical condition.
(ii) The health care services being provided by the health care
system and its contracting providers for the condition.
(iii) The disputed health care services requested by the patient
for the condition.
(B) Any newly developed or discovered relevant medical records in
the possession of the health care system or its contracting providers
after the initial documents are provided to the independent medical
review organization shall be forwarded immediately to the independent
medical review organization. The system shall concurrently provide a
copy of medical records required by this subparagraph to the patient
or the patient's provider, if authorized by the patient, unless the
offer of medical records is declined or otherwise prohibited by law.
The confidentiality of all medical record information shall be
maintained pursuant to applicable state and federal laws.
(2) A copy of all information provided to the patient by the
system and any of its contracting providers concerning health care
system and provider decisions regarding the patient's condition and
care, and a copy of any materials the patient or the patient's
provider submitted to the health care system and to the health care
system's contracting providers in support of the patient's request
for disputed health care services. This documentation shall include
the written response to the patient's grievance, required by
paragraph (4) of subdivision (a) of Section 1368. The
confidentiality of any patient medical information shall be
maintained pursuant to applicable state and federal laws.
(3) A copy of any other relevant documents or information used by
the health care system or its contracting providers in determining
whether disputed health care services should have been provided, and
any statements by the system and its contracting providers explaining
the reasons for the decision to deny, modify, or delay disputed
health care services on the basis of medical necessity. The system
shall concurrently provide a copy of documents required by this
paragraph, except for any information found by the consumer advocate
to be legally privileged information, to the patient and the patient'
s provider. The consumer advocate and the independent review
organization shall maintain the confidentiality of any information
found by the consumer advocate to be the proprietary information of
the health care system.
140610. (a) If there is an imminent and serious threat to the
health of the patient, as specified in subdivision (c) of Section
1374.33, all necessary information and documents shall be delivered
to an independent medical review organization within 24 hours of
approval of the request for review. In reviewing a request for
review, the consumer advocate may waive the requirement that the
patient follow the system's grievance process in extraordinary and
compelling cases, where the consumer advocate finds that the patient
has acted reasonably. (b) The consumer advocate shall expeditiously
review requests and immediately notify the patient in writing as to
whether the request for an independent medical review has been
approved, in whole or in part, and, if not approved, the reasons
therefore. The health care system shall promptly issue a
notification to the patient, after submitting all of the required
material to the independent medical review organization that includes
an annotated list of documents submitted and offer the patient the
opportunity to request copies of those documents from the health care
system. The consumer advocate shall promptly approve patient
requests whenever the health care system has agreed that the case is
eligible for an independent medical review. The consumer advocate
shall not refer coverage decisions for independent review. To the
extent a patient request for independent review is not approved by
the consumer advocate, the patient request shall be treated as an
immediate request for the consumer advocate to review the grievance
pursuant to subdivision (b) of Section 1368.
(c) An independent medical review organization, specified in
Section 1374.32 of the Health and Safety Code, shall conduct the
review in accordance with Section 1374.33 and any regulations or
orders of the consumer advocate adopted pursuant thereto. The
organization's review shall be limited to an examination of the
medical necessity of the disputed health care services and shall not
include any consideration of coverage decisions or other contractual
issues.
(d) The consumer advocate shall contract with one or more
independent medical review organizations in the state to conduct
reviews for purposes of this article. The independent medical review
organizations shall be independent of the health care system. The
consumer advocate may establish additional requirements, including
conflict-of-interest standards, consistent with the purposes of this
article, that an organization shall be required to meet in order to
qualify for participation in the Independent Medical Review System
and to assist the consumer advocate in carrying out its
responsibilities.
(e) The independent medical review organizations and the medical
professionals retained to conduct reviews shall be deemed to be
medical consultants for purposes of Section 43.98 of the Civil Code.
(f) The independent medical review organization, any experts it
designates to conduct a review, or any officer, consumer advocate, or
employee of the independent medical review organization shall not
have any material professional, familial, or financial affiliation,
as determined by the consumer advocate, with any of the following:
(1) The health care system.
(2) Any officer, consumer advocate, or employee of the health care
system.
(3) A physician, the physician's medical group, or the independent
practice association involved in the health care service in dispute.
(4) The facility or institution at which either the proposed
health care service, or the alternative service, if any, recommended
by the health care system, would be provided.
(5) The development or manufacture of the principal drug, device,
procedure, or other therapy proposed by the patient whose treatment
is under review, or the alternative therapy, if any, recommended by
the health care system.
(6) The patient or the patient's immediate family.
(g) In order to contract with the consumer advocate for purposes
of this article, an independent medical review organization shall
meet all of the requirements pursuant to subdivision (d) of Section
1374.32 of the Health and Safety Code.
140611. (a) Upon receipt of information and documents related to
a case, the medical professional reviewer or reviewers selected to
conduct the review by the independent medical review organization
shall promptly review all pertinent medical records of the patient,
provider reports, as well as any other information submitted to the
organization as authorized by the consumer advocate or requested from
any of the parties to the dispute by the reviewers. If reviewers
request information from any of the parties, a copy of the request
and the response shall be provided to all of the parties. The
reviewer or reviewers shall also review relevant information related
to the criteria set forth in subdivision (b). (b) Following its
review, the reviewer or reviewers shall determine whether the
disputed health care service was medically appropriate based on the
specific medical needs of the patient and any of the following:
(1) Peer-reviewed scientific and medical evidence regarding the
effectiveness of the disputed service.
(2) Nationally recognized professional standards.
(3) Expert opinion.
(4) Generally accepted standards of medical practice.
(5) Treatments likely to provide a benefit to a patient for
conditions for which other treatments are not clinically efficacious.
(c) The organization shall complete its review and make its
determination in writing, and in layperson's terms to the maximum
extent practicable, within 30 days of the receipt of the application
for review and supporting documentation, or within less time as
prescribed by the consumer advocate. If the disputed health care
service has not been provided and the patient's provider or the
consumer advocate certifies in writing that an imminent and serious
threat to the health of the patient may exist, including, but not
limited to, serious pain, the potential loss of life, limb, or major
bodily function, or the immediate and serious deterioration of the
health of the patient, the analyses and determinations of the
reviewers shall be expedited and rendered within three days of the
receipt of the information. Subject to the approval of the consumer
advocate, the deadlines for analyses and determinations involving
both regular and expedited reviews may be extended by the consumer
advocate for up to three days in extraordinary circumstances or for
good cause.
(d) The medical professionals' analyses and determinations shall
state whether the disputed health care service is medically
appropriate. Each analysis shall cite the patient's medical
condition, the relevant documents in the record, and the relevant
findings associated with the provisions of subdivision (b) to support
the determination. If more than one medical professional reviews the
case, the recommendation of the majority shall prevail. If the
medical professionals reviewing the case are evenly split as to
whether the disputed health care service should be provided, the
decision shall be in favor of providing the service.
(e) The independent medical review organization shall provide the
consumer advocate, the health care system, the patient, and the
patient's provider with the analyses and determinations of the
medical professionals reviewing the case, and a description of the
qualifications of the medical professionals. The independent medical
review organization shall keep the names of the reviewers
confidential in all communications with entities or individuals
outside the independent medical review organization, except in cases
where the reviewer is called to testify and in response to court
orders. If more than one medical professional reviewed the case and
the result was differing determinations, the independent medical
review organization shall provide each of the separate reviewer's
analyses and determinations.
(f) The consumer advocate shall immediately adopt the
determination of the independent medical review organization, and
shall promptly issue a written decision to the parties that shall be
binding on the health care system.
(g) After removing the names of the parties, including, but not
limited to, the patient, all medical providers, the health care
system, and any of the insurer's employees or contractors, consumer
advocate decisions adopting a determination of an independent medical
review organization shall be made available by the consumer advocate
to the public upon request, at the consumer advocate's cost and
after considering applicable laws governing disclosure of public
records, confidentiality, and personal privacy.
140612. (a) Upon receiving the decision adopted by the consumer
advocate pursuant to subdivision (e) of Section 140609 that a
disputed health care service is medically appropriate, the health
care system shall promptly implement the decision. In the case of
reimbursement for services already rendered, the health care system
shall reimburse the provider or patient, whichever applies, within
five working days. In the case of services not yet rendered, the
health care system shall authorize the services within five working
days of receipt of the written decision from the consumer advocate,
or sooner if appropriate for the nature of the patient's medical
condition, and shall inform the patient and provider of the
authorization in accordance with the requirements of paragraph (3) of
subdivision (h) of Section 1367.01. (b) The health care system shall
not engage in any conduct that has the effect of prolonging the
independent review process.
(c) The consumer advocate shall require the health care system to
promptly reimburse the patient for any reasonable costs associated
with those services when the consumer advocate finds that the
disputed health care services were a covered benefit pursuant to this
division, and the services are found by the independent medical
review organization to have been medically appropriate pursuant to
Section 1374.33, and either the patient's decision to secure the
services outside of the health care system provider network was
reasonable under the emergency or urgent medical circumstances, or
health care system does not require or provide prior authorization
before the health care services are provided to the patient.
(d) In addition to requiring system compliance regarding
subdivisions (a), (b), and (c) the consumer advocate 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 patient has already occurred
because of the decision of the health care system, or one of its
contracting providers, to delay, deny, or modify covered health care
services that an independent medical review determines to be
medically appropriate pursuant to Section 1374.33, the consumer
advocate shall impose penalties.
(e) Pursuant to Section 1368.04, the consumer advocate 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
consumer advocate, particularly if the health care system repeatedly
fails to act promptly and reasonably to resolve grievances associated
with a delay, denial, or modification of medically appropriate
health care services when the obligation of the health care system to
provide those health care services to patients or subscribers is
reasonably clear.
140613. (a) The consumer advocate shall utilize a competitive
bidding process and use any other information on program costs
reasonable to establish a per-case reimbursement schedule to pay the
costs of independent medical review organization reviews, which may
vary depending on the type of medical condition under review and on
other relevant factors. (b) The costs of the independent medical
review system for enrollees shall be borne by the health care system.
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.