BILL ANALYSIS Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair 1169 (Lowenthal) Hearing Date: 5/10/2010 Amended: 4/26/2010 Consultant: Katie Johnson Policy Vote: Health 7-2 _________________________________________________________________ ____ BILL SUMMARY: SB 1169 would require health care service plans and health insurers to assign a tracking number to a claim or a provider request for authorization, provide acknowledgment of its receipt, and use the tracking number in subsequent communications. The bill would also clarify that any form of treatment or benefit limitation for mental health care services be applied under the same terms as other benefits under the plan or policy. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2010-11 2011-12 2012-13 Fund DMHC regulations up to $130 up to $170ongoingSpecial* unknown, likely minor Increased premiums to indeterminate, potentially General/** CalPERS, Medi-Cal, and more than $50 Federal/ Healthy Families Special *Managed Care Fund **CalPERS: 55 percent General Funds, 45 percent special and other funds **Medi-Cal: 38 percent General Funds, 62 percent federal funds until December 31, 2010. 50 percent General Funds, 50 percent federal funds thereafter. **Healthy Families: 35 percent General Funds, 65 percent federal funds. _________________________________________________________________ ____ STAFF COMMENTS: This bill meets the criteria for referral to the Suspense File. Mental Health Services Existing law requires that the terms and conditions applied to mental health benefits be applied equally to all benefits under the health plan or policy including maximum lifetime benefits, copayments and coinsurance, and individual and family deductibles. Although existing law currently provides for the diagnosis and treatment of severe mental illness and severe emotional disturbances of a child under the same terms and conditions applied to other medical conditions, this bill would clarify the requirement further. This bill would clarify that any form of treatment or benefit limitation for mental health care services would be applied under the same terms as other benefits under the health plan or policy. Treatment or benefit limitations or actions include maximum lifetime benefits, copayments and coinsurance, and individual and family deductibles. If the Department of Managed Health Care (DMHC) needed to update the existing regulations on mental health parity, staff could cost up to $130,000 in FY 2010-2011 Page 2 SB 1169 (Lowenthal) and up to $170,000 in FY 2011-2012 in special funds. Ongoing costs would likely be minor. Any fiscal impact on the California Department of Insurance (CDI) would be minor and absorbable. Tracking Claims and Treatment Authorization Requests This bill would require health care service plans and health insurers, collectively carriers, to assign a tracking number to claims and provider requests for treatment authorization, provide acknowledgment of receipt, and use the tracking number in subsequent communications. This bill would also require that, if a claim is contested on the basis that the carrier has not received all necessary information to complete it, carriers would be required within three working days of receipt of any of the additional information to provide acknowledgment of receipt. This bill would provide that all communications of acknowledgment of receipt of claims, requests for treatment authorization, and additional claims information be communicated via email unless the claimant or provider requests that receipts be sent in writing. Existing law provides that claims be processed within 30 working days for insurers and health plans and within 45 working days if the health plan is a managed care organization and that treatment authorizations be approved in a timely fashion not to exceed five business days unless the request is retroactive or urgent and for the claimant, beneficiary, and provider to be notified upon completion. It does not require carriers to acknowledge the receipt of a claim or a treatment authorization request or to assign a tracking number. Since carriers likely utilize computerized claims systems, it is possible that they would already assign tracking numbers to claims. It is unknown how many carriers currently track claims. Additionally, it is unknown if carriers assign tracking numbers to treatment authorization requests or whether or not they send a receipt of claims or treatment authorization requests to enrollees and providers. Carriers would likely need to invest in software changes, updates, or augmentations in order to 1) track claims, 2) track treatment authorization requests, and 3) have the ability to notify enrollees and providers of the receipt of claims and treatment authorization requests in order to comply with this bill. While the cost to each plan would be unknown, it could be significant enough to necessitate an increase in premiums for private carriers and carriers that contract with the California Public Employees Retirement System (CalPERS), Medi-Cal, and the Healthy Families Program. Plans that contract with the Medi-Cal Managed Care Program and the Healthy Families Program submit annual cost reports. These updates could necessitate an increase in the capitated rates paid by the state to the plans to provide services to Medi-Cal and Healthy Families beneficiaries and subscribers. If state costs increased, public funds would pay for the costs for CalPERS, Medi-Cal, and Healthy Families respectively as follows: 55 percent General Funds, 45 percent special and other funds; 38 percent General Funds, 62 percent federal funds until December 31, 2010, 50 percent General Funds, 50 percent federal funds thereafter; 35 percent General Funds, 65 percent federal funds. Any costs to state programs are indeterminate at this time.