BILL ANALYSIS SB 1169 Page 1 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. SB 1169 Page 2 FISCAL EFFECT : According to the Senate Appropriations Committee: 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 management. 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: SB 1169 Page 3 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. 3)MENTAL HEALTH PARITY AND ADDICTION EQUITY ACT . The Mental 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 employees. 4)RELATED LEGISLATION . AB 1600 (Beall) would require a health care service plan contract and health insurance policy issued, SB 1169 Page 4 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, 2012. 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 Governor. 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 conditions. 6)SUPPORT . The California Coalition for Mental Health (CCMH) SB 1169 Page 5 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 SB 1169 Page 6 submission and payment processes that will reduce clerical burdens on both providers and health insurance plans. REGISTERED SUPPORT / OPPOSITION : Support 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 Physicians California Hospital Association California Medical Association California Psychological Association Osteopathic Physicians and Surgeons of California Opposition 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) 319-2097