BILL ANALYSIS                                                                                                                                                                                                    

                                                                  SB 1169
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          Date of Hearing:   June 15, 2010

                            ASSEMBLY COMMITTEE ON HEALTH
                              William W. Monning, Chair
                 SB 1169 (Alan Lowenthal) - As Amended:  May 28, 2010

           SENATE VOTE  :   24-11
          SUBJECT  :   Health care coverage: claims: prior authorization:  
          mental health.

           SUMMARY  :   Requires carriers, upon receipt of a request by a  
          provider, to assign a tracking number to the request prior to,  
          retrospectively, or concurrent with the provision of health care  
          services and provide acknowledgment of receipt of the request to  
          the provider, as specified. Requires all communications  
          regarding the request to reference the tracking number.   
          Requires any form of treatment or benefit limitation for mental  
          health care services to be applied under the same terms as other  
          benefits under the plan or policy.

           EXISTING LAW  : 

          1)Provides for the regulation of health plans by the Department  
            of Managed Health Care (DMHC) under the Knox-Keene Health Care  
            Service Plan Act of 1975 (Knox-Keene) and regulation of health  
            insurers by the California Department of Insurance (CDI).  

          2)Requires carriers to have written policies and procedures  
            establishing the process by which the plans or insurers  
            prospectively, retrospectively, or concurrently review and  
            approve, modify, delay, or deny, based in whole or in part on  
            medical necessity, requests by providers of health care  
            services for enrollees or insureds.  Requires uncontested  
            claims to be reimbursed within 30 or 45 working days.   
            Specifies that a claim is contested if the carrier has not  
            received a completed claim and all information necessary to  
            determine payer liability.

          3)Requires coverage for the diagnosis and medically necessary  
            treatment of severe mental illnesses (SMI), as defined, of a  
            person of any age, and of serious emotional disturbances of a  
            child, to be provided under the same terms and conditions that  
            apply to other medical conditions. 


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           FISCAL EFFECT  :   According to the Senate Appropriations  
                            Fiscal Impact (in thousands)
           Major Provisions         2010-11      2011-12       2012-13     Fund
           DMHC regulations       up to $130 up to $170  ongoing   Special*
                                                       likely minor
          *Managed Care Fund

           COMMENTS :   

           1)PURPOSE OF THIS BILL  .  According to the author mental health  
            care providers frequently report being told by health plans  
            that no authorization or prior authorization requests have  
            been received despite the provider having submitted them.  In  
            the case of prior authorizations, and particularly in the case  
            of prior authorizations for hospitalizations, this often  
            results in denials of claims.  The author states that  
            assigning a unique identifier would allow providers to rebut  
            plan assertions that they have failed to receive documentation  
            establishing the filing of a claim or authorization request.   
            This would lead to payment on valid claims (instead of  
            denials); or more timely payments (instead of resubmissions  
            when allowed and associated time delays); and, more timely  
            delivery of services.  Furthermore, the author states that it  
            would reduce the risk that medically necessary services are  
            not provided. In other segments of the insurance industry  
            (automobile claims for instance) identifiers are assigned and  
            provided without exception at the onset of contact by the  
            person making the claim.  With regard to the mental health  
            parity provisions in this bill, the author states that  
            contrary to the language in existing law, mental health  
            providers report that the services they provide are subject to  
            much more stringent requirements for documentation, handling,  
            standards of review, frequency of review, and a much higher  
            degree of scrutiny, e.g., in the process of utilization  

           2)MENTAL HEALTH PARITY IN CALIFORNIA .  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 SMIs of a person of any age, and of  
            serious emotional disturbances of a child, as defined, under  
            the same terms and conditions applied to other medical  
            conditions.  Nine specific diagnoses are considered SMI:  


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            schizophrenia; schizoaffective disorder; bipolar disorder;  
            major depressive disorder; panic disorder; obsessive  
            compulsive disorder; pervasive developmental disorders or  
            autism; anorexia nervosa; and, bulimia nervosa.  For covered  
            conditions, health plans are required to eliminate benefit  
            limits and share-of-cost requirements that have traditionally  
            rendered mental health benefits less comprehensive than  
            physical health coverage.  Current law requires mental health  
            parity (MHP) benefits to include outpatient services,  
            inpatient hospital services, partial hospital services, and  
            prescription drugs, if the health plan contract includes  
            coverage for prescription drugs.  DMHC promulgated MHP  
            regulations that took effect in 2003 requiring MHP to provide  
            at least, in addition to all basic and other health care  
            services required by Knox-Keene, coverage for 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.  

            Health Parity and Addiction Equity Act of 2008 (MHPA), enacted  
            in October 2008, 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.  Pursuant to MHPA, the federal Departments of Labor,  
            Health and Human Services, and the Treasury issued an interim  
            final rule and accompanying guidelines governing  
            implementation of MHPA on February 2, 2010, that includes a  
            90-day public comment period that closed May 3, 2010.  The  
            MHPA 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 MHPA  
            applies to all group health plans for plan years beginning  
            after October 3, 2009, and exempts small firms of 50 or fewer  
           4)RELATED LEGISLATION  .  AB 1600 (Beall) would require a health  
            care service plan contract and health insurance policy issued,  


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            amended, or renewed on or after January 1, 2011, 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  
            defines mental illness as a mental disorder in the Diagnostic  
            and Statistical Manual IV.
          5)PRIOR LEGISLATION  .  

             a)   SB 296 (Alan 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 Web sites by January 1,  

             b)   SB 1553 (Alan Lowenthal) Chapter 722, Statutes of 2008,  
               requires the Web sites 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.

             c)   AB 1887 (Beall) of 2008 and AB 423 (Beall) of 2007  
               contained substantially similar provisions to those  
               contained in this year's AB 1600.  Both were vetoed by the  

             d)   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 DMHC to consider.

             e)   AB 88 requires health plans and health insurers to  
               provide coverage for the diagnosis and medically necessary  
               treatment of certain SMIs, as defined, and of serious  
               emotional disturbances of a child, as defined, under the  
               same terms and conditions applied to other medical  

           6)SUPPORT  .   The California Coalition for Mental Health (CCMH)  


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            states that mental health professionals experience 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.  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 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  
            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.  The California Hospital  
            Association asserts 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.  

           7)OPPOSITION  .  The California Association of Health Plans (CAHP)  
            states that this bill 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 contends that this bill 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) writes that  
            the administrative changes proposed by this 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 states  
            that federal health care reform establishes administrative  
            simplification processes aimed at standardized claims  


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            submission and payment processes that will reduce clerical  
            burdens on both providers and health insurance plans. 


          American Association of Marriage and Family Therapists - CA  
          Division (co-sponsor) 
          California Coalition for Mental Health (co-sponsor)
          California Psychiatric Association (co-sponsor)
          Mental Health Association in California (co-sponsor)
          California Academy of Family Physicians
          California Chapter of the American College of Emergency  
          California Hospital Association 
          California Medical Association 
          California Psychological Association
          Osteopathic Physicians and Surgeons of California

          America's Health Insurance Plans
          Anthem Blue Cross
          Association of California Life and Health Insurance Companies
          California Association of Health Plans
          One individual

           Analysis Prepared by  :    Melanie Moreno / HEALTH / (916)