BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 1410
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          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.








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          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.









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           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.









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          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 








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            $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 








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            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 








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            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.









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             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








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          Osteopathic Physicians & Surgeons of California
           
            Opposition 
           
          None on file.

           Analysis Prepared by  :    Teri Boughton / HEALTH / (916) 319-2097