BILL ANALYSIS Ó SB 1410 Page 1 Date of Hearing: June 26, 2012 ASSEMBLY COMMITTEE ON HEALTH William W. Monning, Chair SB 1410 (Ed Hernandez) - As Amended: May 25, 2012 SENATE VOTE : 23-13 SUBJECT : Independent medical review. SUMMARY : Modifies the external Independent Medical Review (IMR) process established for individuals enrolled in health plan products licensed by the Department of Managed Health Care (DMHC) and insureds of health insurance policies licensed by the California Department of Insurance (CDI) by enhancing requirements of clinical reviewers, requesting additional patient demographic information, and including the names of health plan and health insurance companies in each department's public databases. Specifically, this bill : 1)Makes the existing IMR framework inoperative on the later of January 1, 2013, or the termination date of contracts in effect on January 1, 2013 between the DMHC or CDI and IMR organizations, and makes operative a framework revised according to this bill on January 1, 2013 or upon the termination date of a contract in effect on January 1, 2013. 2)Requires the notification from each department to the enrollee or insured regarding the disposition of the enrollee's or insured's grievance to include a section designed to collect information on the enrollee's ethnicity, race, and primary language spoken that includes both of the following: a) A statement of intent indicating that the information is used for statistics only, in order to ensure that all enrollees get the best care possible; and, b) A statement indicating that providing this information is optional and will not affect the IMR process in any way. 3)Modifies minimum requirements of medical professionals selected to review medical treatment decisions to require a clinician expert in the treatment of the enrollee's medical condition and knowledgeable about the proposed treatment through recent or current actual clinical experience treating patients with the same or similar medical conditions as the enrollee. SB 1410 Page 2 4)Maintains the name of the plan or insurer along with the director's IMR decision in a searchable database on the Website of each department, and requires the database to include: a) Enrollee or insured demographic profile information, including age and gender; b) The enrollee or insured diagnosis and disputed health care services; c) The name of the health care service plan or health insurer; d) Whether the IMR was for medically necessary services or for experimental or investigational therapies, as specified; e) Whether the IMR was standard or expedited; f) Length of time from the receipt by the IMR organization of the application for review and supporting documentation to the rendering of a determination by the IMR organization in writing; g) Length of time from receipt by each department of the IMR application to the issuance of the DMHC Director's or Insurance Commissioner's determination in writing to the parties that is binding on the health plan or health insurer; h) Credentials and qualifications of the reviewer or reviewers; i) The nature of specified criteria such as the peer-reviewed scientific and medical evidence regarding the effectiveness of the disputed service; j) The final result of the determination; aa) The year the determination was made; and, bb) A detailed case summary that includes the specific standards, criteria, and medical and scientific evidence, if any, that led to the case decision. 5)Requires the database to be accompanied by: a) The annual rate of IMR among the total enrolled or insured population; b) The annual rate of IMR review cases by health plan or health insurer; c) The number, type, and resolution of IMR cases by health plan or health insurer; and, d) The number, type, and resolution of IMR cases by ethnicity, race, and primary language spoken. SB 1410 Page 3 EXISTING LAW : 1)Licenses and regulates health plans through the DMHC and health insurers through the CDI. 2)Requires every health plan and disability insurer that covers hospital, medical, or surgical benefits to provide an external, independent review process to examine the plan's or insurer's coverage decisions regarding experimental or investigational therapies for individual enrollees or insureds who meet specified criteria. 3)Establishes in the DMHC and CDI the IMR System, and requires health plans and health insurers to provide enrollees and insureds with IMR whenever health care services have been denied, modified, or delayed by the plan, or by one of its contracting providers, or the insurer if the decision was based in whole or in part on a finding that the proposed health care services are not medically necessary. 4)Authorizes an enrollee or insured to apply for IMR when all of the following conditions are met: a) The provider has recommended a health care service as medically necessary or the enrollee or insured has received urgent care or emergency services that a provider determined was medically necessary, or the enrollee or insured has been seen by an in-plan provider for the diagnosis or treatment of the condition for which the enrollee seeks the IMR. Provides that the provider may be an out-of-plan provider, however the plan shall have no liability for payment except as specified; b) The disputed service has been denied, modified, or delayed because it was determined not medically necessary; and, c) The enrollee or insured has filed a grievance and the disputed decision is upheld or unresolved after 30 days. 5)Requires medical professionals selected by IMR organizations to review medical treatments to be physicians or other appropriate providers who meet minimum requirements, such as hold a nonrestricted license, and for physicians, hold a current certification by a recognized American medical specialty board in the area or areas appropriate to the condition or treatment under review. SB 1410 Page 4 6)Requires a medical professional selected to review medical treatment decisions to be a clinician knowledgeable in the treatment of the enrollee's or insured's medical condition, knowledgeable about the proposed treatment, and familiar with guidelines and protocols in the area of treatment under review. 7)Requires after removing the names of the parties, including, but not limited to, the enrollee or insured, all medical providers, the plan or insurer, and any of the insurer's employees or contractors, the decisions of each director adopting a determination of an IMR organization to be made available by DMHC and CDI to the public upon request after considering applicable laws governing disclosure of public records, confidentiality, and personal privacy. 8)Requires, under the Patient Protection and Affordable Care Act (ACA), a group health plan and a health insurance issuer offering group or individual health insurance coverage to: a) Comply with the applicable state external review process for such plans and issuers that, at a minimum, includes the consumer protections set forth in the Uniform External Review Model Act promulgated by the National Association of Insurance Commissioners; or, b) Implement an effective external review process that meets minimum standards established by the Secretary of the federal Department of Health and Humans Services (HHS) (Secretary) if the applicable state has not established an external review process that meets specified requirements or if the plan is a self-insured plan that is not subject to state insurance regulation. 9)Authorizes the Secretary to deem the external review process of a group health plan or health insurance issuer, in operation as of the date of enactment of this section, to be in compliance with the ACA as determined appropriate by the Secretary. FISCAL EFFECT : According to the Senate Appropriations Committee: 1)One-time costs of about $100,000 and ongoing costs of about $100,000 annually to revise the existing database by the DMHC (Managed Care Fund). 2)One-time costs of about $460,000 and ongoing costs of about SB 1410 Page 5 $100,000 to revise the existing database system by the CDI (Insurance Fund). 3)Ongoing costs of about $200,000 per year to collect and analyze additional data by the CDI (Insurance Fund). 4)Ongoing costs of about $200,000 per year to collect and analyze additional data by the DMHC (Managed Care Fund). 5)Ongoing costs in the low hundreds of thousands for the operation of the IMR process due to increased standards for reviewer experience (Managed Care Fund and Insurance Fund). COMMENTS : 1)PURPOSE OF THIS BILL . According to the author this bill is based upon issues raised in a recent report and briefing on IMR that was sponsored by the California HealthCare Foundation (CHCF) which evaluated over 10 years of IMR cases in California. The author states that this bill strengthens the standard for IMR case reviewers, and by doing so, ensures that cases are reviewed by medical professionals with appropriate specialized knowledge and experience. Current law requires DMHC and CDI to make IMR decisions available to the public upon request. In addition to meeting this requirement, DMHC and CDI have made IMR decisions available on their Websites. However, IMR decisions are accompanied by incomplete information. For example, DMHC's Website includes case summaries while CDI's does not, and CDI but not DMHC makes available information on the year the IMR decision is made and the priority of the IMR case (standard or expedited). Other types of information such as the patient's health carrier are not available on either Website. These factors make it difficult to answer some important questions about how the IMR program is being used. Furthermore, since patient ethnicity, race, and primary language spoken are not collected, it is unclear how IMR is used by different communities. 2)CALIFORNIA IMR . IMR was initially established in California in the mid 1990's in response to high profile cases involving emerging expensive treatments that raised questions about health plan coverage decisions. In January of 1998, the Governor's Managed Health Care Improvement Task Force issued a series of recommendations to reform managed health care in California. One of these recommendations specifically pertained to "Independent Third Party Review." That SB 1410 Page 6 recommendation called for the "The state entity for regulation of managed care should be directed to establish and implement by January 1, 2000, an independent third-party review process that would provide consumers and health plans with an unbiased, expert-based review of grievances pertaining to delays, denials, or curtailment of care based on medical necessity, appropriateness, and all 'experimental-investigational treatments.'" The current California IMR process requires an enrollee or insured to attempt to resolve the dispute through an internal process before seeking the external IMR. The CHCF IMR report identified the following trends: In 56% of the IMRs, the appeal was requested for a female, while in 44% it was for a male. California's IMR cases increased by age, peaking in the 41 to 60 year old age bracket. Just over half of all IMR cases involved one of four diagnosis categories: orthopedics, neurology, mental health, or cancer. The specific treatments and services varied but most commonly fell into four categories: surgery, pharmacy, diagnostic imaging, and durable medical equipment. Forty-six percent of IMR cases in 2010 were overturned in favor of the enrollee/insured. The review found that IMR cases clustered around situations where best treatment practices for a particular disease are unsettled in the medical community. The study revealed that there is: inconsistent IMR case resolution for similar cases, lack of clarity and transparency regarding the basis for decisions made by IMR reviewers, and evidence that the qualifications and training of IMR reviewers may be poorly matched to the cases they review. The report suggests requiring data to be public and include sufficient detail regarding criteria used by reviewers such as scientific data to decide the cases, include more demographic data, and encourage the regulators to jointly monitor and validate the consistency of the IMR review decisions. 3) ACA REQUIREMENTS . The ACA establishes requirements for internal and external appeals of coverage determinations and claims, including for self-insured plans not subject to state regulation. State IMR programs must meet federal requirements. The ACA requirements are similar to California's IMR and as such, California is one of 23 states notified by federal HHS that it meets the minimum requirements. According to the CHCF report, California's IMR is governed by more stringent rules than those established by SB 1410 Page 7 the ACA. However, California can improve some requirements such as requiring IMR reviewers be "expert" in the treatment of the covered person's relevant medical condition and "knowledgeable about the recommended health care service or treatment through recent or current actual clinical experience treating patients with the same or similar medical conditions." 4)SUPPORT . Proponents of this bill agree that increasing standards of the IMR process by requiring expert reviewers knowledgeable about the proposed treatment through actual and recent experience and expanding transparency of information will enhance the quality of medical care for Californians in managed care. Many also write in support of a provision that was contained in a previous version of this bill regarding a common database that would be shared between the two departments. Proponents emphasize the consistency in decisions that the common database would bring. The California Podiatric Medical Association supports this bill but requests that Doctors of Podiatric Medicine be specifically included in this bill. The California Psychiatric Association supports this bill but suggestions further clarification that an expert reviewer should be board certified or qualified to be board eligible in the medical specialty which is the predominant field of treatment (e.g., a psychiatrist as opposed to an internal medicine specialist for treatment of a psychiatric disorder). 5)SUPPORT IF AMENDED . The California Association of Health Plans (CAHP) would support this bill if it is amended to exclude the name of the health plan associated with specific IMR cases. CAHP believes including the plan name without any meaningful context can be misleading to consumers. 6)PREVIOUS LEGISLATION . a) AB 1663 (Friedman and Knowles), Chapter 979, Statutes of 1995, requires health plans and disability insurers to establish an independent external review process to examine coverage decisions for experimental or investigational treatments. Requires independent review entities to be accredited by a private, nonprofit accrediting organization. Requires the accrediting organization to develop and apply standards that ensure the independence of independent review entities. SB 1410 Page 8 b) AB 55 (Migden), Chapter 533, Statutes of 1999, establishes in the Department of Corporations (prior to DMHC) for health plans and the CDI an IMR system, and clarifies that an enrollee may apply to the IMR process when any one of the following three conditions has occurred rather than all three: i) The enrollee's provider has recommended a health care service as medically necessary; ii) The enrollee has received urgent care or emergency services that a provider determined was medically necessary; or, iii) The enrollee has been seen by an in-plan provider for the diagnosis or treatment of the medical condition for which the enrollee seeks independent review. c) SB 189 (Schiff), Chapter 542, Statutes of 1999, establishes a reasonable external, independent review process to examine coverage decisions regarding experimental or investigational therapies for individual enrollees or insureds with life-threatening or seriously debilitating conditions. REGISTERED SUPPORT / OPPOSITION : Support BayBio BIOCOM California Academy of Physician Assistants California Chiropractic Association California Healthcare Institute California Optometric Association California Pan-Ethnic Health Network California Podiatric Medical Association California Psychiatric Association California Psychological Association California Urological Association Consumers Union Health Access California Medical Oncology Association of Southern California Neuropathy Action Foundation SB 1410 Page 9 Osteopathic Physicians & Surgeons of California Opposition None on file. Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097