BILL ANALYSIS                                                                                                                                                                                                    

                                                                  SB 1169
                                                                  Page  1

          SB 1169 (Alan Lowenthal)
          As Amended May 28, 2010
          Majority vote 

           SENATE VOTE  :24-11  
           HEALTH              12-5        APPROPRIATIONS      12-5        
          |Ayes:|Monning, Ammiano, Carter, |Ayes:|Fuentes, Bradford,        |
          |     |          De La Torre, De |     |Charles Calderon, Coto,   |
          |     |Leon, Eng, Hayashi,       |     |Davis, De Leon, Gatto,    |
          |     |Hernandez, Jones, Bonnie  |     |Hall, Skinner, Solorio,   |
          |     |Lowenthal, V. Manuel      |     |Torlakson, Torrico        |
          |     |Perez, Salas              |     |                          |
          |     |                          |     |                          |
          |Nays:|Fletcher, Conway, Smyth,  |Nays:|Conway, Harkey, Miller,   |
          |     |        Audra Strickland, |     |Nielsen, Norby            |
          |     |Nestande                  |     |                          |
          |     |                          |     |                          |
           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.

           FISCAL EFFECT  :   According to the Assembly Appropriations  

          1)Unknown, likely absorbable workload to the California  
            Department of Managed Health Care (DMHC) to continue oversight  
            of health plan reimbursement practices. Minor absorbable  
            workload to the California Department of Insurance (CDI) to  
            continue oversight of health insurers. 

          2)Federal health reform, the Patient Protection and Affordable  
            Care Act (PL-111-148) includes provisions which may reduce the  


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            impact of the requirements of this bill over the next several  
            years. The federal reform changes include several provisions  
            related to administrative streamlining and standardization. 

           COMMENTS  :  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.  

          In 1999, the Legislature passed and the Governor signed AB 88  
          (Thomson), Chapter 534, Statutes of 1999, requiring health plans  
          and insurers to provide coverage for the diagnosis and medically  
          necessary treatment of certain serious mental illnesses (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: 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  


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          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 under existing  
          law, coverage for crisis intervention and stabilization,  
          psychiatric inpatient services, including voluntary inpatient  
          services, and services from licensed mental health providers,  
          including psychiatrists and psychologists.  

          The Mental Health Parity and Addiction Equity Act of 2008 (MHPA)  
          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  
          Related legislation.  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 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.
           Prior legislation.  SB 296 (Alan Lowenthal) Chapter 575,  
          Statutes of 2009, requires health care service plans and health  


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          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.  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.  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.  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.  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.

          The California Coalition for Mental Health (CCMH) 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  


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          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.  

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

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

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