BILL NUMBER: SB 56 ENROLLED
BILL TEXT
PASSED THE SENATE AUGUST 25, 2010
PASSED THE ASSEMBLY AUGUST 23, 2010
AMENDED IN ASSEMBLY AUGUST 17, 2010
AMENDED IN ASSEMBLY JUNE 3, 2010
AMENDED IN SENATE JANUARY 11, 2010
AMENDED IN SENATE MAY 5, 2009
AMENDED IN SENATE APRIL 2, 2009
INTRODUCED BY Senator Alquist
JANUARY 20, 2009
An act to amend Section 16809.4 of, and to add Article 2.82
(commencing with Section 14087.98) to Chapter 7 of Part 3 of Division
9 of, the Welfare and Institutions Code, relating to health plans.
LEGISLATIVE COUNSEL'S DIGEST
SB 56, Alquist. Health plans: joint ventures.
Existing law creates various health benefits programs, including
the Medi-Cal program, administered by the State Department of Health
Care Services, and the County Medical Services Program. Existing law,
the Knox-Keene Health Care Service Plan Act of 1975, administered by
the Department of Managed Health Care, provides for the licensure
and regulation of health care service plans.
This bill would authorize certain local initiative health plans,
county-organized health plans, and the County Medical Services
Program governing board to form joint ventures that consist of
contractual relationships to pool risk or share networks, or both, or
to provide for the joint or coordinated offering of health plans to
individuals and groups. The bill would require all joint ventures
established pursuant to the above provisions to meet all of the
requirements of the Knox-Keene Health Care Service Plan Act of 1975.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. (a) The Legislature finds and declares as follows:
(1) Due to the economic downturn, hundreds of thousands of
Californians are joining the ranks of the uninsured or are looking to
publicly financed programs for their health care coverage.
(2) Compared to persons with health care coverage, the uninsured
are less likely to have a regular source of care, are likely to delay
seeing a doctor, and are less likely to receive preventive health
care services.
(3) Based on recent data collected by the Kaiser Family
Foundation, health care costs continue to rise at a faster rate than
general inflation and average wage growth.
(4) The federal Patient Protection and Affordable Care Act (Public
Law 111-148), as signed by the President on March 23, 2010, contains
reforms that will give Californians better and more affordable
choices for how they get their health coverage.
(5) There is a continuing need for affordable health coverage
options for those with limited incomes and those who do not receive
health coverage through their employment or the employment of a
family member.
(6) Due to their structure and design, county local initiative
health plans and county-organized health systems have the potential
to offer affordable health coverage in the individual and group
markets.
(7) Joint ventures involving local initiative health plans and
county-organized health systems may be a particularly promising means
of providing affordable coverage in many regions of the state.
(b) In light of these findings, it is the intent of the
Legislature that representatives of local initiative health plans,
county-organized health systems, and consumer, labor, and provider
groups hold stakeholder discussions for the purposes of facilitating
establishment of affordable health coverage options in the individual
and group markets.
SEC. 2. Article 2.82 (commencing with Section 14087.98) is added
to Chapter 7 of Part 3 of Division 9 of the Welfare and Institutions
Code, to read:
Article 2.82. Health Plan Joint Ventures
14087.98. (a) Notwithstanding any other provision of law, a
health plan that is governed, owned, or operated by a county board of
supervisors, a county special commission, a county-organized health
system, or a county health authority that is authorized by Section
14018.7, 14087.31, 14087.35, 14087.36, 14087.38, Article 2.8
(commencing with Section 14087.5), Article 2.81 (commencing with
Section 14087.96), or Chapter 3 (commencing with Section 101675) of
Part 4 of Division 101 of the Health and Safety Code, or the County
Medical Services Program governing board pursuant to paragraph (3) of
subdivision (e) of Section 16809.4, may form joint ventures for the
joint or coordinated offering of health plans to individuals and
groups.
(b) For purposes of this section, the joint ventures may consist
of either of the following:
(1) Contractual relationships entered into in order to pool risk
or share networks, or both.
(2) Contractual relationships entered into in order to provide for
the joint offering or marketing of health plans to individuals and
groups.
(c) In forming joint ventures, participating health plans shall
seek to contract with designated public hospitals, county health
clinics, primary care clinics, and other traditional safety net
providers.
(d) If the County Medical Services Program governing board elects
to participate in a joint venture as described in this section, the
board may elect to contract with a third-party administrator to
provide health coverage under the joint venture.
(e) All joint ventures established pursuant to this section shall
meet all the requirements of the Knox-Keene Health Care Service Plan
Act of 1975 (Chapter 2.2 (commencing with Section 1340) of Division 2
of the Health and Safety Code).
SEC. 3. Section 16809.4 of the Welfare and Institutions Code is
amended to read:
16809.4. (a) Counties voluntarily participating in the County
Medical Services Program pursuant to Section 16809 may establish the
County Medical Services Program Governing Board pursuant to
procedures contained in this section. The governing board shall
govern the County Medical Services Program.
(b) The membership of the governing board shall be comprised of
all of the following:
(1) Three members who shall each be a member of a county board of
supervisors.
(2) Three members who shall be county administrative officers.
(3) Two members who shall be county welfare directors.
(4) Two members who shall be county health officials.
(5) One member who shall be the Secretary of California Health and
Human Services, or his or her designee, and who shall serve as an ex
officio, nonvoting member.
(c) The governing board may establish its own bylaws and operating
procedures.
(d) The voting membership of the governing board shall meet all of
the following requirements:
(1) All of the members shall hold office or employment in counties
that participate in the County Medical Services Program.
(A) The three county supervisor members shall be elected by the
boards of supervisors of the CMSP counties, with each county having
one vote and convened at the call of the chair of the governing
board.
(B) The three county administrative officers shall be elected by
the administrative officers of the CMSP counties convened at the call
of the chair of the governing board.
(C) The two county health officials shall be selected by the
health officials of the CMSP counties convened at the call of the
chair of the governing board.
(D) The two county welfare directors shall be elected by the
welfare directors of the CMSP counties convened at the call of the
chair of the governing board.
(2) Governing board members shall serve three-year terms.
(3) No two persons from the same county may serve as members of
the governing board at the same time.
(4) The governing board may elect a permanent chair.
(e) (1) The governing board is hereby established with the
following powers:
(A) Determine program eligibility and benefit levels.
(B) Establish reserves and participation fees.
(C) Establish procedures for the entry into, and disenrollment of
counties from the County Medical Services Program. Disenrollment
procedures shall be fair and equitable.
(D) Establish cost containment and case management procedures,
including, but not limited to, alternative methods for delivery of
care and alternative methods and rates from those used by the
department.
(E) Sue and be sued in the name of the governing board.
(F) Apportion jurisdictional risk to each county.
(G) Utilize procurement policies and procedures of any of the
participating counties as selected by the governing board.
(H) Make rules and regulations.
(I) Make and enter into contracts or stipulations of any nature
with a public agency or person for the purposes of governing or
administering the County Medical Services Program.
(J) Purchase supplies, equipment, materials, property, or
services.
(K) Appoint and employ staff to assist the governing board.
(L) Establish rules for its proceedings.
(M) Accept gifts, contributions, grants, or loans from any public
agency or person for the purposes of this program.
(N) Negotiate and set rates, charges, or fees with service
providers, including alternative methods of payment to those used by
the department.
(O) Establish methods of payment that are compatible with the
administrative requirements of the department's fiscal intermediary
during the term of any contract with the department for the
administration of the County Medical Services Program.
(P) Use generally accepted accounting procedures.
(Q) Develop and implement procedures and processes to monitor and
enforce the appropriate billing and payment of rates, charges, and
fees.
(R) Investigate and pursue repayment of fees billed and paid
through improper means, including, but not limited to, fraudulent
billing and collection practices by providers.
(S) Pursue third-party recoveries and estate recoveries for
services provided under the County Medical Services Program,
including the filing and perfecting of liens to secure reimbursement
for the reasonable value of benefits provided.
(T) Establish and maintain pilot projects to identify or test
alternative approaches for determining eligibility or for providing
or paying for services.
(U) Establish provisions for payment to participating counties for
making eligibility determinations, as determined by the governing
board.
(V) Develop and implement alternative products with varying levels
of eligibility criteria and benefits outside of the County Medical
Services Program for counties contracting with the governing board
for those products, provided that any such products shall be funded
separately from the County Medical Services Program and shall not
impair the financial stability of that program.
(2) The Legislature finds and declares that the amendment of
subparagraph (N) of paragraph (1) in 1995, and the addition of
subparagraphs (Q), (R), (S), (T), and (U) in 2006, are declaratory of
existing law.
(3) In addition to the powers set forth in paragraph (1), the
governing board shall have the power to develop and participate in
joint ventures as described in Section 14087.98, provided that the
joint ventures shall be funded separately from the County Medical
Services Program and shall not impair the financial stability of the
program.
(f) (1) The governing board shall be considered a "public entity"
for purposes of Division 3.6 (commencing with Section 810) of Title 1
of the Government Code, and a "local public entity" for purposes of
Part 3 (commencing with Section 900) of Division 3.6 of Title 1 of
the Government Code, but shall not be considered a "state agency" for
purposes of Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code and shall be exempt
from that chapter. No participating county shall have any liability
for civil judgments awarded against the County Medical Services
Program or the governing board. Nothing in this paragraph shall be
construed to expand the liability of the state with respect to the
County Medical Services Program beyond that set forth in Section
16809. Nothing in this paragraph shall be construed to relieve any
county of the obligation to provide health care to indigent persons
pursuant to Section 17000, or the obligation of any county to pay its
participation fees and share of apportioned and allocated risk.
(2) Before initiating any proceeding to challenge rates of
payment, charges, or fees set by the governing board, to seek
reimbursement or release of any funds from the County Medical
Services Program, or to challenge any other action by the governing
board, any prospective claimant shall first notify the governing
board, in writing, of the nature and basis of the challenge and the
amount claimed. The governing board shall consider the matter within
60 days after receiving the notice and shall promptly thereafter
provide written notice of the governing board's decision. If the
governing board contracts with the department for administration of
the program in accordance with Section 16809, this paragraph shall
have no application to provider audit appeals conducted pursuant to
Article 1.5 (commencing with Section 51016) of Chapter 3 of Division
3 of Title 22 of the California Code of Regulations and shall apply
to all claims not reviewed pursuant to Section 51003 or 51015 of
Title 22 of the California Code of Regulations.
(3) All regulations adopted by the governing board shall clearly
specify by reference the statute, court decision, or other provision
of law that the governing board is seeking to implement, interpret,
or make specific by adopting, amending, or repealing the regulation.
(4) No regulation adopted by the governing board is valid and
effective unless the regulation meets the standards of necessity,
authority, clarity, consistency, and nonduplication, as defined in
paragraph (5).
(5) The following definitions govern the interpretation of this
subdivision:
(A) "Necessity" means the record of the regulatory proceeding that
demonstrates by substantial evidence the need for the regulation.
For purposes of this standard, evidence includes, but is not limited
to, facts, studies, and expert opinion.
(B) "Authority" means the provision of law that permits or
obligates the CMSP Governing Board to adopt, amend, or repeal a
regulation.
(C) "Clarity" means that the regulation is written or displayed so
that the meaning of the regulation can be easily understood by those
persons directly affected by it.
(D) "Consistency" means being in harmony with, and not in conflict
with, or contradictory to, existing statutes, court decisions, or
other provisions of law.
(E) "Nonduplication" means that a regulation does not serve the
same purpose as a state or federal statute or another regulation.
This standard requires that the governing board identify any state or
federal statute or regulation that is overlapped or duplicated by
the proposed regulation and justify any overlap or duplication. This
standard is not intended to prohibit the governing board from
printing relevant portions of enabling legislation in regulations
when the duplication is necessary to satisfy the clarity standard in
subparagraph (C). This standard is intended to prevent the
indiscriminate incorporation of statutory language in a regulation.
(g) The requirements of the Ralph M. Brown Act (Chapter 9
(commencing with Section 54950) of Part 1 of Division 2 of Title 5 of
the Government Code) shall apply to the meetings of the governing
board, including meetings held pursuant to subdivision (i), except
the board may meet in closed session to consider and take action on
matters pertaining to contracts and contract negotiations with
providers of health care services.
(h) (1) The governing board shall comply with the following
procedures for public meetings held to eliminate or reduce the level
of services, restrict eligibility for services, or adopt regulations:
(A) Provide prior public notice of those meetings.
(B) Provide that notice not less than 30 days prior to those
meetings.
(C) Publish that notice in a newspaper of general circulation in
each participating CMSP county.
(D) Include in the notice, at a minimum, the amount and type of
each proposed change, the expected savings, and the number of persons
affected.
(E) Either hold those meetings in the county seats of at least
four regionally distributed CMSP participating counties, or,
alternatively, hold two meetings in Sacramento County.
(2) For meetings held outside Sacramento County, the requirements
for public meetings pursuant to this subdivision to eliminate or
reduce the level of services, or to restrict the eligibility for
services or hear testimony regarding regulations to implement any of
these service charges, are satisfied if at least three voting members
of the governing board hold the meetings as required and report the
testimony from those meetings to the full governing board at its next
regular meeting. No action shall be taken at any meeting held
outside Sacramento County pursuant to this paragraph.
(i) Records of the County Medical Services Program and of the
governing board that relate to rates of payment or to the board's
negotiations with providers of health care services or to the
governing board's deliberative processes regarding either shall not
be subject to disclosure pursuant to the Public Records Act (Chapter
5 (commencing with Section 6250) of Division 7 of Title 1 of the
Government Code).
(j) The following definitions shall govern the construction of
this part, unless the context requires otherwise:
(1) "CMSP" or "program" means the County Medical Services Program,
which is the program by which health care services are provided to
eligible persons in those counties electing to participate in the
CMSP pursuant to Section 16809.
(2) "CMSP county" means a county that has elected to participate
pursuant to Section 16809 in the CMSP.
(3) "Governing Board" means the County Medical Services Program
Governing Board established pursuant to this section.