BILL ANALYSIS Ó SENATE HEALTH COMMITTEE ANALYSIS Senator Ed Hernandez, O.D., Chair BILL NO: AB 922 A AUTHOR: Monning B AMENDED: September 2, 2011 HEARING DATE: September 6, 2011 9 CONSULTANT: 2 Chan-Sawin 2 PURSUANT TO S.R. 29.10 SUBJECT Office of Patient Advocate SUMMARY Transfers the Department of Managed Health Care (DMHC) from the California Business, Transportation and Housing Agency (BTH) to the California Health and Human Services Agency (CHHS). Transfers the Office of the Patient Advocate (OPA) from DMHC to CHHS effective July 1, 2012. Revises OPA's current purpose and duties, and assigns new duties consistent with requirements of the Patient Protection and Affordable Care Act (PPACA). CHANGES TO EXISTING LAW Existing federal law: Requires, under PPACA (Public Law 111-148), as amended by the Health Care Education and Reconciliation Act of 2010 (Public Law 111-152), each state, by January 1, 2014, to establish an American Health Benefit Exchange that makes qualified health insurance products available to qualified Continued--- STAFF ANALYSIS OF ASSEMBLY BILL 922 (Monning) Page 2 individuals and qualified employers. If a state does not establish an Exchange, the federal government administers the Exchange. Requires the federal Secretary of Health and Human Services Agency to award grants to states to enable states (or the exchanges operating in such states) to establish, expand, or provide support for offices of health insurance consumer assistance or health insurance ombudsman programs. Establishes criteria for states to meet in order to receive a consumer assistance grant under the PPACA, and requires the ombudsman to perform certain activities, including assisting with the filing of complaints and appeals, educating consumers on their rights and responsibilities, assisting consumers with enrollment, and resolving problems in obtaining premium tax credits made available by PPACA. As a condition of receiving a federal ombudsman grant, an office of health insurance consumer assistance or ombudsman program is required to collect and report data to the Secretary of HHS on the types of problems and inquiries encountered by consumers. Existing state law: Provides for the regulation of health plans by DMHC under the Knox-Keene Health Care Service Plan Act of 1975 (Knox-Keene Act), and for the regulation of health insurers by the California Department of Insurance (CDI), under provisions of the Insurance Code (collectively referred to as regulators). Requires DMHC to establish and maintain a toll-free telephone number for the purpose of receiving complaints regarding health plans regulated by DMHC. Establishes OPA within DMHC to represent the interests of enrollees served by health plans regulated by DMHC and establishes, as the goal of OPA, to help enrollees secure health care services to which they are entitled under the laws administered by DMHC. Requires OPA to compile an annual publication, to be made available on DMHC's website, of a quality-of-care report card, including, but not limited to, health plans. Requires the Insurance Commissioner to establish a program STAFF ANALYSIS OF ASSEMBLY BILL 922 (Monning) Page 3 to investigate complaints, respond to inquiries, and to bring enforcement actions regarding health insurers. Requires the program to include, but not be limited to, a toll-free telephone number dedicated to the handling of complaints and inquiries, public service announcements to inform consumers of the toll-free telephone number, information as to how to register a complaint or make an inquiry to the CDI, and a simple, standardized complaint form designed to assure that complaints will be properly registered and tracked. Establishes the Medi-Cal program, which is administered by the State Department of Health Care Services (DHCS), under which qualified low-income individuals receive health care services. Authorizes DHCS, for purposes of the Medi-Cal Program, on a regional pilot project basis, to the extent authorized by law, to enter into contracts with one or more nonprofit organizations to perform the functions of the DHCS' Office of the Ombudsman. Establishes and specifies the duties and authority the California Health Benefit Exchange (Exchange) within state government in a manner that is consistent with PPACA. Establishes the Managed Care Fund and the Insurance Fund, for the purposes of funding the regulatory activities of DMHC and CDI, respectively. This bill: Transfers DMHC from BTH to CHHS effective January 1, 2012. Also transfers OPA from DMHC to CHHS effective July 1, 2012. Delays the operative date of provisions affecting insureds covered by CDI-regulated health insurers, and individuals who receive or are eligible for coverage under the Medi-Cal program, the Exchange, the Healthy Families Program, or any other county or state health care program until January 1, 2013. Further specifies that, for the period between July 1, 2012, and January 1, 2013, OPA will continue with any STAFF ANALYSIS OF ASSEMBLY BILL 922 (Monning) Page 4 duties, responsibilities or activities in place as of July 1, 2011, in reference to those insureds and individuals. Specifies that the duties of the OPA include, but are not limited to: Developing, in consultation with DMHC, CDI, the Managed Risk Medical Insurance Board, DHCS, and Exchange, consumer educational and information guides, as specified. Compiling an annual quality of care report card, as specified. States that, because of the enactment of PPACA and the implementation of various reform provisions by January 1, 2014, the Legislature recognizes that it is appropriate to transfer and confer on OPA new responsibilities, including assisting consumers in obtaining coverage and health care through health coverage that is regulated by multiple regulators, as specified. Beginning January 1, 2013, makes the following additional changes to the duties to OPA: Receiving and responding to all inquiries, complaints and requests for assistance from individuals concerning health coverage available in California; Providing and assisting in the provision of, outreach and education about coverage options, as specified; Coordinating and working with other government and nongovernment patient assistance programs and health care ombudsman programs. Rendering assistance to, and advocating on behalf of, consumers with problems related to health care services, including care and service problems and claims or payment problems. Referring consumers to the appropriate regulator for filing complaints, grievances, or claims or payment problems. Directing OPA to provide assistance regarding coverage options if the consumer is not eligible for coverage, as specified. Requiring OPA to ensure that either OPA, or a state agency contracting with OPA, provides such services. Requiring OPA to operate a website, other social STAFF ANALYSIS OF ASSEMBLY BILL 922 (Monning) Page 5 media, and up-to-date communication systems to provide public information regarding consumer assistance programs. Beginning January 1, 2013, requires OPA to track and analyze data, as specified, on problems and complaints by, and questions from, consumers about health care coverage for the purpose of providing public information about problems faced and information needed by consumers in obtaining coverage and care. Requires DMHC, DHCS, CDI, MRMIB, the Exchange, and other public programs to provide OPA with aggregate data concerning consumer complaints and grievances. Removes the provision allowing OPA to access to records of CDI, and sunsets OPA's access of DMHC records on January 1, 2013. Requires OPA to collect and report data to the United States Secretary of Health and Human Services on complaints and consumer assistance as required to comply with requirements of the PPACA. Allows OPA to contract with community-based consumer assistance organizations to assist in any or all of certain specified duties of OPA, in accordance with existing state laws governing personal services contracts. Allows OPA to provide grants to such organizations for the provision of a portion of OPA's duties, as specified. Requires OPA to adopt standards for the organizations with which it contracts to ensure compliance with privacy and confidentiality laws, as specified. Also require OPA to conduct privacy trainings as necessary, and regularly verify that the organizations have measures in place to ensure compliance with this provision. Requires OPA to develop the following: A procedure for referring complaints and grievances to the appropriate regulator or coverage program for resolution by the relevant regulator or public program. A protocol or procedure for reporting to the appropriate regulator and health coverage program regarding complaints and grievances relevant to that agency that OPA received and was able to resolve STAFF ANALYSIS OF ASSEMBLY BILL 922 (Monning) Page 6 without further action or referral. Creates the OPA Trust Fund in the State Treasury, and upon appropriation by the Legislature, requires moneys in the fund to be made available for implementing the provisions of this bill. Requires funding for the actual and necessary expenses of the OPA to be provided, subject to appropriation by the Legislature, from the Managed Care Fund and the Insurance Fund, as specified. Permits, rather than requires, OPA to apply to the United States Secretary of Health and Human Services for a grant made available under the federal health reform law, and to the extent permitted by federal law, to seek federal funding for assisting beneficiaries of the Medi-Cal Program. Makes other technical and conforming changes. FISCAL IMPACT According to the Senate Appropriations Committee analysis: Fiscal Impact (in thousands) Major Provisions 2011-12 2012-13 2013-14 Fund OPA expansion Unknown, potentially in the hundredsSpecial* and shift of thousands of dollars OPA additional duties and likely in the millions of dollars annually Special* ongoing administration commencing January 1, 2013 DMHC data reporting $0 about $250 $500 Special** CDI data reporting $0 $1,100 $550 Special*** DHCS, MRMIB, and Uknown, potentially significant General/**** Exchange data reporting commencing January 1, 2013Federal/ Special *Office of the Patient Advocate Trust Fund STAFF ANALYSIS OF ASSEMBLY BILL 922 (Monning) Page 7 **Managed Care Fund ***Insurance Fund ****MRMIB costs shared 35 percent General Fund; 65 percent federal funds; Medi-Cal costs shared 50 percent General Fund, 50 percent federal funds; Exchange costs paid from the California Health Trust Fund, to the extent federal financial participation is available. BACKGROUND AND DISCUSSION According to the author, California currently has a fragmented system for consumer assistance with health care coverage complaints. There are eight governmental entities and several private, non-profit entities that provide a number of services for assistance with public and private health care coverage. These services include advice on coverage options, education about how to navigate the system, assistance with complaints and grievances, assistance in choosing a health plan and finding a provider. These entities also respond to complaints about, among other things, eligibility, coverage of services, and timely access to providers. There has been extensive media coverage regarding PPACA. However, the provisions are complex and have varying effective dates. The author believes that it is imperative that Californians be provided with a single source of correct and current information. In addition to information about coverage options, California health care consumers need help when they have problems with their health coverage including care denials, coverage terminations and billing problems. Given California's diverse population, assistance needs to be provided in multiple languages. In the present fiscal crisis climate, there are no new state funds that could be used for this purpose. California must consolidate and coordinate existing consumer assistance programs and combine funding sources for more efficient use of funds. According to the author, AB 922 also transfers OPA from BTH to CHHS to better position California to receive federal grants and to provide for much needed clear and understandable consumer information and assistance by expanding and strengthening current programs operating at STAFF ANALYSIS OF ASSEMBLY BILL 922 (Monning) Page 8 the local level. Data about consumers' problems would be collected and compiled, allowing an important window into the types of health care problems Californians face. The bill also moves DMHC from BTH to CHHS. According to the author, CHHS is focused on consumers and implementation of PPACA (along with other aspects of healthcare delivery and regulation), rather than BTH, which has a different culture and focus, and has no expertise in federal health care and its requirements. In addition, the Secretary of CHHS should be responsible for overseeing the state's progress in implementation of federal health reform, including the provisions that impact DMHC. The author argues that PPACA implementation necessitates collaboration and a robust federal-state relationship that already exists in other areas under CHHS (Medi-Cal, CalWORKs, SNAP, etc.). Furthermore, since OPA's inception, OPA and DMHC have been intertwined, with much of OPA's focus being on the vast number of enrollees within DMHC's purview. The author believes that moving one alone may raise coordination issues, and that logistically, both should be moved. Patient assistance provisions in federal health reform On March 23, 2010, President Obama signed PPACA. It is estimated that 4.7 million California children and adults who were uninsured during some part of 2009 will be eligible for health coverage under PPACA. Among other provisions, the new law makes statutory changes affecting the regulation of and payment for certain types of private health insurance. The law also significantly expands health care coverage to currently uninsured individuals through public program expansions, a mandate to purchase coverage, a temporary high-risk pool program, and by requiring guaranteed issue of coverage. It is anticipated that millions of currently uninsured persons in California will obtain coverage under the provisions of PPACA. PPACA also contains provisions to provide funding for states to establish health insurance consumer assistance programs. In order to be eligible to receive a grant, states are required to designate an independent office of health insurance consumer assistance that, directly or in coordination with state health insurance regulators and consumer assistance organizations, receives and responds to inquiries and complaints concerning federal and state STAFF ANALYSIS OF ASSEMBLY BILL 922 (Monning) Page 9 health insurance requirements. DMHC, in partnership with the OPA, has been awarded $3.4 million to: Develop and promote a coordinated, consumer-friendly website and corresponding toll-free number that consumers can call with questions about health care coverage, and to receive assistance with the filing of complaints and appeals. Conduct a statewide media campaign to educate consumers about their rights and responsibilities, and to provide assistance with enrollment in group health plans or health insurance coverage. Evaluate the effectiveness of the initiatives, and track and quantify consumer problems and inquiries, for reporting to state and federal policymakers. Implementation of the PPACA will lead to millions more Californians enrolled in coverage, including expansions of public programs. Consumers will also have expanded choices of coverage and different options to use, should they lose a source of job-based coverage, have a child, divorce, or have an increase in income. All of these changes will affect eligibility, making it all the more necessary to establish one entity to help them with their health coverage. California's current system of consumer assistance California has a number of entities that provide services for assistance with public and private health care coverage, including: Government Entities: HMO HelpLine, Medi-Cal Managed Care (MCMC) Ombudsman, CDI Consumer Hotline (applies to all types of insurance) Department of Labor, the Employee Benefits Security Administration (EBSA), 1-800-Medicare, county welfare offices, the OPA, and the Exchange (forthcoming); Nonprofit Entities: Health Consumer Alliance (HCA), Health Insurance Counseling and Advocacy Program (HICAP), and Certified Application Assistors (CAAs). These services include advice on coverage options, education about how to navigate the system, assistance with complaints and grievances, and assistance in choosing a carrier and finding a provider. These entities also respond to complaints about, among other things, STAFF ANALYSIS OF ASSEMBLY BILL 922 (Monning) Page 10 eligibility, coverage of services, and timely access to providers. Community-based consumer assistance programs There are a number of community-based organizations in California that provide assistance to health care consumers. The HCA helps low-income Californians in 13 counties. Each health consumer center runs a hotline to assist consumers by telephone and provides in-person visits as well as outstationed services in hospitals, courts, or farm fields. Consumers can also email an office for assistance. The HCA helps consumers regardless of their type of coverage. HICAP provides free and objective information and counseling about Medicare. Volunteer counselors help Medicare beneficiaries understand their rights and health care options. HICAP also offers free educational presentations to groups of Medicare beneficiaries, their families and/or providers on a variety of Medicare and other health insurance-related topics. CAAs help families complete and submit the joint HFP/Medi-Cal application. These community-based entities play a crucial role in providing information to thousands of Californians (primarily low income, many with LEP) about health coverage options and helping them to get enrolled and properly use their insurance coverage. CAAs are trained and certified by MRMIB to help Californians understand their coverage options and enroll in health coverage. CAAs are often bilingual, come from the communities they serve, and can be employed by Federally Qualified Health Centers, Rural Health Centers, regional nonprofit organizations, and schools, etc. Throughout California, these entities have developed strong and trusting relationships within their communities and are valued by local families needing information about health coverage. Related legislation SB 615 (Calderon) requires, on and after January 1, 2013, solicitors and solicitor firms, and principal persons engaged in the supervision of solicitation for health care service plan contracts to complete specified training, and requires the Insurance Commissioner's (Commissioner) STAFF ANALYSIS OF ASSEMBLY BILL 922 (Monning) Page 11 curriculum board to make recommendations to the Commissioner for the instruction of accident and health agents about the requirements imposed by PPACA. Pending hearing in Assembly Health Committee. AB 736 (Calderon), among other things, would have authorized a person licensed to transact accident and health insurance to be an agent, a broker, or both, and would have removed the restriction that a life licensee only be a life agent. Held on suspense in Assembly Appropriations Committee. Prior legislation SB 900 (Alquist), Chapter 659, Statutes of 2010, establishes the California Health Benefit Exchange as an independent public entity within state government. Requires the Exchange to be governed by a board composed of the Secretary of California Health and Human Services, or his or her designee, and four other members appointed by the Governor and the Legislature who meet specified criteria. AB 1602 (J. Perez), Chapter 655, Statutes of 2010, specifies the powers and duties of the Exchange relative to determining eligibility for enrollment in the Exchange and arranging for coverage under qualified health plans. Requires the Exchange to provide health plan products in all five of the federal benefit levels (platinum, gold, silver, bronze and catastrophic). Requires health plans participating in the Exchange to sell at least one product in all five benefit levels in the Exchange, and to sell their Exchange products outside of the Exchange. Requires health plans that do not participate in the Exchange to sell at least one standardized product designated by the Exchange in each of the four levels of coverage, if the Exchange elects to standardize products. AB 2787 (Monning) of 2010 would have established the Office of the California Health Ombudsman, governed by a chief executive officer known as the California Health Ombudsman, and would have required the Ombudsman to educate consumers on their health care coverage rights and responsibilities, assist consumers with enrollment in health care coverage, STAFF ANALYSIS OF ASSEMBLY BILL 922 (Monning) Page 12 and resolve problems with obtaining federal premium tax credits. Held on suspense in the Senate Appropriations Committee. AB 51 (Dymally) of 2006 would have required the OPA to include in its annual health plan report card information on quality of care and access provided by Medicare prescription drug plans. Failed passage out of Assembly Appropriations Committee. AB 2170 (Chan) of 2006 was substantively similar to AB 51 (Dymally). Vetoed. AB 78 (Gallegos), Chapter 525, Statutes of 1999, establishes the DMHC and transfers the regulation of health care service plans (health plans) from the Department of Corporations (DOC) to DMHC. Arguments in support Health Access California (HAC), a cosponsor of this bill, writes that enactment of federal health reform means that virtually every Californian will have access to quality, affordable health care. Existing programs, including the HMOHelp Line, have done much of what is contemplated in this bill, but not all. HAC contends a state-level ombudsman who serves as the first line of triage for consumer complaints, while leaving the respective regulators and sources of coverage the responsibility for resolving specific complaints and grievances, is necessary. HAC asserts that this bill will result in a robust response to grievances and complaints about the health care system. Western Center on Law & Poverty (WCLP), also a cosponsor, writes that uninsured persons have different needs than those who are consistently covered. This includes people who primarily speak a language other than English, those who have never navigated a health insurance plan, and those who have never consistently seen a health care provider. For all those reasons, WCLP states that Californians need a centralized hub when dealing with questions or problems with their coverage. WCLP argues that AB 922 leverages existing consumer assistance programs by allowing OPA to contract with community based organizations that already provide consumer assistance services, many of which are STAFF ANALYSIS OF ASSEMBLY BILL 922 (Monning) Page 13 experts in public programs, while ensuring that the most qualified organizations can assist consumers in community-based settings in a linguistically and culturally appropriate manner. WCLP asserts that this "hub-and-spokes" approach has been effective in states like New York, which allows one nonprofit organization to coordinate with other community organizations to assist health consumers. Consumers Union argues that AB 922 positions California to maximize federal funds for ombudsman and consumer navigation services, which is critically important to have in place well in advance of the mandate for individual coverage that takes effect in 2014. The American Federation of State, County and Municipal Employees states that this bill would greatly facilitate California's ability to comply and cope with federal health reform, and that the state cannot offer its residents adequate assistance in this matter currently. The 100% Campaign, PICO California and the California Coverage & Health Initiatives state there is no one single place for families to obtain clear and concise information and support. This bill not only builds toward future implementation of PPACA, it provides a needed network to reach out to hundreds of thousands of children who are currently uninsured but eligible for California's public program coverage. The California Optometric Association writes in support, stating that OPA will provide a "one-stop-shop" that consolidates the existing fragmented system into one office to provide clear, concise and up-to-date information to consumers. The California Chiropractic Association (CCA) believes that it is essential to provide consumers support in making coverage choices and for consumer coverage complaints. By operating as an independent state entity, CCA believes that OPA will synthesize a fragmented health care information coverage, outreach and complaint system. Arguments in opposition The California Association of Health Plans (CAHP) opposes AB 922 on the grounds that California already has consumer advocacy programs under each regulator that are funded by the industry through assessments and taxes that cost the industry and its consumers millions of dollars. CAHP states that this new entity does not provide any order to STAFF ANALYSIS OF ASSEMBLY BILL 922 (Monning) Page 14 the myriad of assistance programs currently available to consumers, and instead adds a new layer of government bureaucracy designed largely to forward calls back to the regulator. CAHP supports consolidation of existing consumer related functions, and argues that consolidation could lead to more uniformity and clarity for consumers. The Association of California Life and Health Insurance Companies (ACLHIC) concurs with CAHP, and argues that AB 922 has the potential to increase the cost of health care by increasing the fees imposed on carriers. ACLHIC points out that the industry currently funds consumer assistance programs at DMHC, OPA and CDI, and existing law requires carriers to include their respective regulator's consumer complaint number on claims forms, as well as other written notices that go out to enrollees and insureds. ACLHIC also asserts that there is no real evidence supporting the concept of adding an additional independent office for consumer assistance. The California Right to Life Committee (CRLC), Inc. writes that AB 922 advances the PPACA when there are serious challenges to its constitutionality, and that it would be better public policy not to depend on federal tax dollars under these circumstances. CRLC also contends that this bill "is another attempt to promote family planning and abortion services to low-income persons and non-English speaking populations". PRIOR ACTIONS Assembly Health: 12- 6 Assembly Appropriations:12- 5 Assembly Floor: 51- 27 Senate Appropriations:6- 3 COMMENTS 1. Recent amendments. Recent floor amendments make the following significant changes to AB 922: a. Transfer DMHC from BTH to CHHS. b. Remove a number of provisions including the requirement that interpreters for limited-English STAFF ANALYSIS OF ASSEMBLY BILL 922 (Monning) Page 15 proficiency callers be provided on the telephone hotline and the provision allowing OPA to revoke the contract of any organization with which it contracts to provide patient assistance for violations of specified standards. c. Make other technical and conforming changes in the revision and recasting of OPA duties. 2. Location of DMHC. According to the 2001 California HealthCare Foundation report, Making Sense of Managed Care Regulation in California, regulation of Knox-Keene licensed health plans was originally established under the Department of Corporations, which then became BTH. In 1999, with the passage of AB 78 (Gallegos), DMHC was established under BTH for the regulation of Knox-Keene licensed health plans. According to the author of AB 78, the intent of the legislation is to establish a regulator dedicated to consumer protection and quality of care. Arguably, this could be achieved by locating DMHC under BTH or any other agency, such as CHHS. CHHS, with its health expertise, is arguably better suited for coordination of health reform related requirements. A concern could be raised that this has the effect of putting the regulation of health plan and reimbursement to health plans (through health plan purchasers such as DHCS) under the same agency. POSITIONS Prior version: Support: Health Access California (cosponsor) Western Center on Law and Poverty (cosponsor) 100% Campaign American Federation of State, County and Municipal Employees, AFL-CIO Asian Pacific American Legal Center California Association of Marriage and Family Therapists California Children's Health Initiatives California Chiropractic Association California Coalition for Mental Health California Coverage & Health Initiatives California Family Resource Association California Immigrant Policy Center STAFF ANALYSIS OF ASSEMBLY BILL 922 (Monning) Page 16 California Optometric Association California Pan-Ethnic Health Network California Rural Legal Assistance Foundation Children NOW Children's Defense Fund-California Children's Health Initiatives of Greater Los Angeles Children's Partnership Congress of California Seniors Consumers Union First 5 Association of California Having Our Say Health Consumer Center Inland Empire United Way Maternal and Child Health Access Mental Health Association in California National Alliance on Mental Illness California National Association of Social Workers - California Chapter National Health Law Program Neighborhood Legal Services of Los Angeles County PICO California Santa Clara Board of Supervisors SEIU California The 100% Campaign Unitarian Universalist Legislative Ministry Action Network, CA United Way of California Youth Law Center Oppose:Association of California Life and Health Insurance Companies California Right to Life Committee, Inc. California Association of Health Plans Insurance Commissioner (unless amended) -- END --