BILL ANALYSIS                                                                                                                                                                                                    






                                 SENATE HEALTH
                               COMMITTEE ANALYSIS
                        Senator Elaine K. Alquist, Chair


          BILL NO:       SB 1169                                      
          S
          AUTHOR:        Lowenthal                                    
          B
          AMENDED:       As Introduced                               
          HEARING DATE:  April 14, 2010                               
          1
          CONSULTANT:                                                 
          1
          Tadeo/                                                      
          6              9                                           
                                     SUBJECT
                                         
           Health care coverage: claims: prior authorization: mental  
                                    health.

                                     SUMMARY  

          Requires health care service plans (health plans) and  
          health insurers to assign a tracking number to a claim or  
          provider request for authorization, provide acknowledgment  
          of its receipt and use the tracking number in subsequent  
          communication regarding the claim or request.  Clarifies  
          that any form of treatment or benefit limitation for mental  
          health care services be applied under the same terms and  
          conditions as other benefits under the plan or policy, as  
          per mental health parity. 

                             CHANGES TO EXISTING LAW  
          
          Existing federal law:
          Requires health plans and health insurers that offer mental  
          health coverage to cover mental illness and substance abuse  
          disorders on the same terms and conditions as other medical  
          conditions. 

          Existing state law:
          Provides for the regulation of health plans by the  
          Department of Managed Health Care (DMHC) and regulation of  
          health insurers by the California Department of Insurance  
          (CDI).  Requires full service health plans licensed by DMHC  
                                                         Continued---



          STAFF ANALYSIS OF SENATE BILL  1169 (Lowenthal)Page 2


          

          to provide basic health care services, as defined.   
          Requires health plans and health insurers to comply with  
          certain administrative requirements, premium requirements,  
          patient protection requirements, fiduciary and financial  
          requirements, provider access requirements, and to provide  
          certain mandated benefits to enrollees.

          Requires health plans and health insurers to reimburse  
          uncontested claims within 30 or 45 working days and  
          specifies that a claim is contested if the health plan or  
          health insurer has not received a completed claim and all  
          necessary information to determine payer liability.   
          Requires health insurers to acknowledge receipt of a claim  
          within fifteen days. 
          
          Requires health plans and health insurers to provide  
          coverage for the diagnosis and medically necessary  
          treatment of certain severe mental illnesses (SMI), as  
          defined, and of serious emotional disturbances (SED) of a  
          child, as defined, under the same terms and conditions  
          applied to other medical conditions.
          
          This bill:
          Requires health care service plans and health insurers to  
          assign a tracking number to a claim or provider request for  
          authorization and provide electronic or written  
          acknowledgment of its receipt to both the provider and the  
          enrollee.  In the case of a verbal request, a verbal  
          acknowledgement may be provided. 

          Requires the receipt of additional information that may be  
          needed to determine payer liability for a claim or portion  
          thereof to be acknowledged by the health plan and health  
          insurer within three days.  This acknowledgment is to  
          include the tracking number and is to be delivered  
          electronically unless the claimant has requested  
          acknowledgment be transmitted in writing. 

          Requires that any form of treatment or benefit limitation  
          for mental health care services be applied under the same  
          terms and conditions as other benefits, under the plan or  
          policy. 


                                  FISCAL IMPACT  





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          This bill has not been analyzed by a fiscal committee. 


                            BACKGROUND AND DISCUSSION
           
          The author argues that access issues continue to interfere  
          with achieving true parity a decade after mental health  
          parity was passed.  The author states that complicated  
          procedures interfere with patients' access to mental health  
          care and prevent insured consumers from obtaining mental  
          health care benefits.  The author contends that SB 1169  
          addresses the problem of lost, ignored and forgotten claims  
          and requests for authorization of service and also  
          clarifies mental health parity by specifically requiring  
          that treatment limitation or other action that may limit  
          the receipt of benefits be applied under the same terms and  
          conditions that apply to other benefits.  
          
          State health care standards under the Knox-Keene Act of  
          1975
          California has two regulatory agencies, DMHC and CDI, which  
          have oversight over roughly 200 health care service plans  
          and health insurers, which collectively provide coverage  
          for 27 million people. DMHC enforces the provisions of the  
          Knox-Keene Health Care Service Plan Act, which sets rules  
          for mandatory basic services and other specific health care  
          benefits and services; financial stability; availability  
          and accessibility of providers; review of provider  
          contracts; cost sharing; on-site medical surveys, including  
          review of patient medical records; and consumer disclosure  
          and grievance requirements.  

          
          State mental health parity
          In 1999, the Legislature passed and the Governor signed AB  
          88 (Thomson), Chapter 534, Statutes of 1999, requiring  
          health plans and health insurers to provide coverage for  
          the diagnosis and medically necessary treatment of certain  
          types of severe mental illnesses (SMI) of a person of any  
          age, and of serious emotional disturbances (SED) of a  
          child, as defined, under the same terms and conditions  
          applied to other medical conditions. 

          Specifically, the statute defines SMI as including  
          schizophrenia, schizoaffective disorder, bipolar disorder,  
          major depressive disorders, panic disorder,  




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          obsessive-compulsive disorder, pervasive developmental  
          disorder or autism, anorexia nervosa, and bulimia nervosa.   
          The statute defines a child with an SED as one who has one  
          or more mental disorders identified in the most recent  
          edition of the Diagnostic and Statistical Manual of Mental  
          Disorders, other than a primary substance use disorder or  
          developmental disorder, which results in behavior that is  
          inappropriate to the child's age, according to expected  
          developmental norms.   

          For covered conditions, the mental health parity statute  
          requires benefits to include outpatient and inpatient  
          services, hospital services, and prescription drugs, if a  
          plan contract or insurance policy otherwise covers  
          prescription drugs, and requires terms for maximum lifetime  
          benefits, co-payments, and deductibles to be applied  
          equally to all benefits under a plan contract or insurance  
          policy.

          Existing regulations specify that, in addition to all basic  
          and other health care services required by the Knox-Keene  
          Act, mental health parity provides, at a minimum, for the  
          coverage of crisis intervention and stabilization,  
          psychiatric inpatient services, including voluntary  
          inpatient services, and services from licensed mental  
          health providers including, but not limited to,  
          psychiatrists and psychologists. The regulations also  
          require that a plan's referral system shall provide "timely  
          access and ready referral in a manner consistent with good  
          professional practice." 

          Since the parity law was passed, several reports have  
          evaluated the law's implementation. In March, 2005, the  
          Department of Mental Health issued its report, "Mental  
          Health Parity-Barriers and Recommendations," noting "there  
          are a number of barriers at the operational level that keep  
          California from achieving mental health parity. The largest  
          barrier to full implementation is lack of access. Confusion  
          remains about what parity actually means beyond the fiscal  
          and structural requirements. Covered diagnoses are clear,  
          but what array of services is covered for individuals with  
          these diagnoses, and for how long, remains inconsistent  
          from plan to plan.  It remains unclear what services are  
          the responsibility of health plans versus the  
          responsibility of public agencies and organizations." 





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          In March 2007, DMHC issued a report, "Mental Health Parity  
          in California; Mental Health Parity Focused Survey Project:  
          A Summary of Survey Findings and Observations," based on a  
          "focus survey" it had conducted in 2005 of seven large  
          health plans, covering 85 percent of the commercial managed  
          care population and representing all delivery models of  
          mental health services. DMHC found that the most common  
          problems were payment of emergency room claims, plans'  
          monitoring of access to after-hours services to ensure  
          timely response to enrollees', and plans' explanations in  
          letters denying treatment requests.  DMHC also found  
          significant concerns on the part of consumer and industry  
          stakeholders about perceived limitations on, and lack of  
          coordination of, care for children with autism and other  
          pervasive developmental disturbances.
          
          Federal mental health parity 
          The Mental Health Parity and Addiction Equity Act of 2008  
          (MHPAEA) requires group health insurance plans to cover  
          mental illness and substance abuse disorders on the same  
          terms and conditions as other illnesses and help to end  
          discrimination against those who seek treatment for mental  
          illness.  The federal Departments of Labor, Health and  
          Human Services, and the Treasury issued an interim final  
          rule and accompanying guidelines governing its  
          implementation on February 2, 2010, that includes a 90-day  
          public comment period that closes May 3, 2010.  The MHPAEA  
          does not mandate group health plans provide any mental  
          health coverage.  However, if a plan does offer mental  
          health
          coverage, then it requires equity in financial  
          requirements, such as deductibles, co-payments,  
          coinsurance, and out-of-pocket expenses; equity in  
          treatment limits, such as
          caps on the frequency or number of visits, limits on days  
          of coverage, or other similar limits on the scope and  
          duration of treatment; and, equality in out-of-network  
          coverage.  The MHPAEA applies to all group health plans for  
          plan years beginning after October 3, 2009, and exempts  
          small firms of 50 or fewer employees.
          
          Related bills
          AB 1600 (Beall) would require a health care service plan  
          contract and health insurance policy issued, amended, or  
          renewed on or after January 1, 2011, that provides  
          hospital, medical, or surgical coverage, to provide  




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          coverage for the diagnosis and medically necessary  
          treatment of a mental illness of a person of any age,  
          including a child, and would have defined mental illness as  
          a mental disorder as defined in the Diagnostic and  
          Statistical Manual IV.

          Prior federal legislation
          Mental Health Parity and Addiction Equity Act of 2008  
          requires health plans and insurers that offer mental health  
          coverage to cover mental illness and substance abuse  
          disorders on the same terms and conditions as other medical  
          conditions. 

          Mental Health Parity Act of 1996 requires that annual or  
          lifetime dollar limits on mental health benefits be no  
          lower than any such dollar limits for medical and surgical  
          benefits offered by a group health plan or health insurance  
          issuer offering coverage in connection with a group health  
          plan.

          Prior state legislation
          SB 296 (Lowenthal) Chapter 575, Statutes of 2009, requires  
          health care service plans and health insurers that provide  
          professional mental health services to issue identification  
          cards to all enrollees and insured containing specified  
          information by July 1, 2011, and provide specified  
          information relating to their policies and procedures on  
          their Internet websites by January 1, 2012.
          
          SB 1553 (Lowenthal) Chapter 722, Statutes of 2008, requires  
          the websites of health plans that provide coverage for  
          professional mental health services to include, but not be  
          limited to, providing information for subscribers,  
          enrollees, and providers on accessing mental health  
          services.
          AB 1887 (Beall) of 2008 would have required a health care  
          service plan contract and health insurance policy issued,  
          amended, or renewed on or after January 1, 2009, that  
          provides hospital, medical, or surgical coverage, to  
          provide coverage for the diagnosis and medically necessary  
          treatment of a mental illness of a person of any age,  
          including a child, and would have defined mental illness as  
          a mental disorder as defined in the Diagnostic and  
          Statistical Manual IV. This bill was vetoed by the  
          Governor.





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          AB 423 (Beall) of 2007 would have required a health care  
          service plan contract and health insurance policy issued,  
          amended, or renewed on or after January 1, 2008, that  
          provides hospital, medical, or surgical coverage, to  
          provide coverage for the diagnosis and medically necessary  
          treatment of a mental illness of a person of any age,  
          including a child, and would have defined mental illness as  
          a mental disorder as defined in the Diagnostic and  
          Statistical Manual IV. This bill was vetoed by the  
          Governor.
          
          AB 2179 (Cohn), Chapter 797, Statutes of 2002, requires  
          DMHC to develop and adopt regulations to ensure that  
          enrollees have access to needed health care services in a  
          timely manner.  Requires DMHC to develop indicators of  
          timeliness of access to care and specifies three indicators  
          for the department to consider.

          AB 88 (Thomson), Chapter 534, Statutes of 1999, requires  
          health plans and health insurers to provide coverage for  
          the diagnosis and medically necessary treatment of certain  
          severe mental illnesses, as defined, and of serious  
          emotional disturbances of a child, as defined, under the  
          same terms and conditions applied to other medical  
          conditions.

          Arguments in support.  
          According to the California Coalition for Mental Health  
          (CCMH), sponsor of SB 1169, all of the various mental  
          health professionals experience regular problems with  
          paperwork submitted to health plans and insurers for  
          authorizations or claims becoming lost, delayed, forgotten  
          or otherwise untraceable, leading to extraordinary claims  
          on their time and resources to resubmit those claims or  
          authorization requests.  CCMH argues that this affects both  
          clinicians and patients with delays in treatment and  
          reimbursement of treatment, and worse, denials of  
          authorizations and treatment.  CCMH contends that  
          notwithstanding current law, these administrative and/or  
          clerical process interactions between providers and plans  
          or insurers continue to be unnecessarily problematic and  
          that SB 1169 is a modest attempt to fix this problem.  

          The California Medical Association states that this bill  
          will improve the process of health plans and health insurer  
          reviews, make it more difficult for plans and insurers to  




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          deny claims based on technicalities never relayed to the  
          requesting provider and ensure prompt and fair resolution  
          and payment of health insurance claims.

          The Mental Health Association in California, co-sponsor of  
          SB 1169, contends that by assigning a tracking number and  
          letting the provider and enrollee know the request is  
          tracked will improve access, and notes as an example, that  
          tracking numbers are used successfully to track packages by  
          UPS and FedEx worldwide. 
          The California Hospital Association adds that the bill  
          addresses the problem of different, more stringent  
          standards for non-qualitative treatment limitations such as  
          utilization review being applied to mental illness than to  
          physical illnesses by clarifying parity language to make it  
          clear that any form of treatment limitation or action is  
          subject to parity requirements. 

          Arguments in opposition
          The California Association of Health Plans (CAHP) states  
          that SB 1169 would impose unnecessary administrative costs  
          and create complicated, new notifications at a time when  
          health care costs are already making it difficult for  
          Californians to secure health insurance, and that state law  
          and regulations already require a complicated set of  
          timelines and notifications that health plans must meet in  
          handling claims.  CAHP adds that SB 1169 also amends the  
          state's mental health parity law in a manner that has  
          unclear implications for coverage, since current law  
          already requires health plans to provide parity for covered  
          mental health services.  

          America's Health Insurance Plans (AHIP) argues that the  
          administrative changes proposed by SB 1169 will duplicate  
          existing requirements for patient-provider communication,  
          burdening physicians and confusing consumers, and result in  
          additional unnecessary administrative burdens that increase  
          costs for health care providers and health plans.  AHIP  
          adds that the recent federal health care reform legislation  
          will establish administrative simplification processes  
          aimed at standardized claims submission and payment  
          processes that will reduce clerical burdens on both  
          providers and health insurance plans. 
          

                                     COMMENTS




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           1.Removing existing mental health parity language not  
            necessary.
          It is the author's intent to clarify mental health parity,  
          clarifying parity language to make it clear that any form  
          of treatment limitation or action is subject to parity  
          requirements.  Removing existing language requiring parity  
          in the terms and conditions of coverage is not necessary.  
          
               Suggested amendments:
               
               Page 13, line 35 through page 14, line 2:
           
               (c)  The terms and conditions applied to the benefits  
               required
               by this section that shall be applied equally to all  
               benefits under
               the plan contract include   Any  any form of treatment  
               limitation or other
               action by a plan that may limit the receipt of  
               benefits required by
               this section  .   These treatment limitations or actions   
                These shall  include, but are not be limited to, the  
               use of any of the following:

            Page 27, lines 4-11:
            
               (c)  The terms and conditions applied to the benefits  
               required
               by this section that shall be applied equally to all  
               benefits under
               the insurance policy include   Any  any form of treatment  
               limitation or other
               action by an insurer that may limit the receipt of  
               benefits required by
               this section  .   These treatment limitations or actions   
                These shall  include, but are not be limited to, the  
               use of any of the following:

                                    POSITIONS  


          Support:   California Coalition for Mental Health (sponsor)
                 California Association of Marriage and Family  
          Therapists (co-sponsor) 
                 California Psychiatric Association (co-sponsor)




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                 Mental Health Association in California (co-sponsor)
                 California Chapter of the American College of  
          Emergency Physicians
                 California Hospital Association 
                 California Medical Association 

          
          Oppose:  America's Health Insurance Plans
                 Association of California Life and Health Insurance  
          Companies
                 California Association of Health Plans

                                   -- END --