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.