BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                  SB 1410|
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                              UNFINISHED BUSINESS


          Bill No:  SB 1410
          Author:   Hernandez (D)
          Amended:  8/20/12
          Vote:     21

           
           SENATE HEALTH COMMITTEE  :  6-3, 4/11/12
          AYES:  Hernandez, Alquist, De León, DeSaulnier, Rubio, Wolk
          NOES:  Harman, Anderson, Blakeslee

           SENATE APPROPRIATIONS COMMITTEE  :  5-2, 5/24/12
          AYES:  Kehoe, Alquist, Lieu, Price, Steinberg
          NOES:  Walters, Dutton

           SENATE FLOOR  :  25-13, 5/30/12
          AYES:  Alquist, Calderon, Corbett, Correa, De León, 
            DeSaulnier, Evans, Hancock, Hernandez, Kehoe, Leno, Lieu, 
            Liu, Lowenthal, Negrete McLeod, Padilla, Pavley, Price, 
            Rubio, Simitian, Steinberg, Vargas, Wolk, Wright, Yee
          NOES:  Anderson, Berryhill, Blakeslee, Cannella, Dutton, 
            Emmerson, Fuller, Gaines, Harman, Huff, La Malfa, 
            Walters, Wyland
          NO VOTE RECORDED:  Runner, Strickland

           ASSEMBLY FLOOR  :  77-2, 8/27/12 - See last page for vote


           SUBJECT  :    Independent medical review

           SOURCE  :     Author


           DIGEST  :    This bill modifies the external Independent 
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          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 Department of Insurance 
          (DOI) by enhancing requirements of clinical reviewers, and 
          requesting additional patient demographic information.

           Assembly Amendments  makes the existing IMR framework 
          inoperative on July 1, 2015, and as of January 1, 2016, is 
          repealed, unless a later enacted statute deletes or extends 
          it.

           ANALYSIS  :    Existing law:

          1.Requires the licensing and regulation of health care 
            service plans (health plans) by the DMHC, and requires 
            the licensing and regulation of health insurers by DOI.

          2.Requires DMHC and DOI to establish an IMR system under 
            which an enrollee or insured must seek an external IMR 
            whenever health care services have been denied, modified, 
            or delayed by a health plan or insurer (collectively 
            "carriers") and the enrollee or insured has previously 
            filed a grievance that remains unresolved after 30 days.

          3.Requires medical professionals selected by an IMR 
            organization to review medical treatment decisions to 
            meet certain minimum requirements, including that he or 
            she be a clinician knowledgeable in the treatment of the 
            patient's medical condition, knowledgeable about the 
            proposed treatment, and familiar with guidelines and 
            protocols in the area of treatment under review.

          4.Requires DMHC and DOI to adopt the determination of an 
            IMR organization as binding on the health plan or 
            insurer.

          5.Requires the IMR decisions to be made freely available, 
            on request, to the public, and requires certain 
            information to be removed from the decision before it is 
            made available to the public, including the name of the 
            carrier.

          The bill makes the existing IMR framework inoperative on 

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          July 1, 2015, and as of January 1, 2016, is repealed, 
          unless a later enacted statute deletes or extends it, and 
          establishes a new framework revised as follows on July 1, 
          2015: 

          1.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 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

                 A statement indicating that providing this 
               information is optional and will not affect the IMR 
               process in any way. 

          1.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. 

          2.Specifies requirements for the database and that the 
            database be accompanied by: 

                 The annual rate of IMR among the total enrolled or 
               insured population; 

                 The annual rate of IMR review cases by health plan 
               or health insurer; 

                 The number, type, and resolution of IMR cases by 
               health plan or health insurer; and

                 The number, type, and resolution of IMR cases by 
               ethnicity, race, and primary language spoken. 


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           Background
           
           Types of IMR cases  .  California's IMR provides for 
          independent, external review of three main types of 
          disputed carrier decisions:  medical necessity, 
          urgent/emergency care, and experimental/investigational. 

          Medical necessity IMR cases occur when carriers deny, 
          modify, or delay requests for coverage of services in whole 
          or in part due to findings that the services are not 
          medically necessary.  Medical necessity decisions are 
          distinguished from coverage decisions, which are reviewed 
          directly by DMHC and DOI rather than through IMR.  Both 
          covered benefits and medical necessity are defined 
          contractually and vary among carriers.  According to 
          existing law, a medical necessity decision regarding a 
          disputed health care service relates to the practice of 
          medicine and is not a coverage decision, while a coverage 
          decision means the approval or denial of health care 
          services based on a finding that the provision of a health 
          care service is included or excluded as a covered benefit 
          under the terms of a health carrier contract.  Carriers 
          categorize their decisions as medical necessity or coverage 
          decisions, but DMHC and DOI have the final authority as to 
          how disputed decisions will be categorized and appealed. 

          Urgent or emergency care IMR cases are for services already 
          received, when a carrier decides that the services did not 
          require urgent care and that the patient should have known 
          that an emergency did not exist even if a provider deemed 
          the services to be medically necessary.

          Experimental or investigational IMR cases occur when 
          carriers deny coverage of services for patients on the 
          basis that the disputed service is considered experimental 
          or investigational by the carrier. In order for a patient 
          to have access to IMR under these circumstances:

           The patient must have a life-threatening or seriously 
            debilitating condition; 

           The patient's physician must certify that the patient has 
            a condition for which standard services have not been 
            effective or medically appropriate, or for which there is 

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            no more beneficial standard service covered by the plan 
            than the one proposed; 

           The patient's physician must have recommended or the 
            patient or physician must have requested a service which, 
            based on medical and scientific evidence, is likely to be 
            more beneficial than services that are standardly 
            available;

           The carrier must have denied coverage of the service; and

           The service would be a covered benefit except for the 
            carrier's decision that it is experimental or 
            investigational.

           Prior Legislation
           
          AB 55 (Migden), Chapter 533, Statutes of 1999, created the 
          IMR system and requires every health carrier to provide 
          those receiving coverage from these products with an 
          opportunity to seek an IMR whenever health care services 
          have been denied, modified, or delayed in cases where a 
          carrier deems the services to be medically unnecessary.

          SB 189 (Schiff), Chapter 542, Statutes of 1999, established 
          an IMR process for experimental or investigational 
          therapies; requires the contracting of impartial, 
          independent, accredited entities for the purposes of the 
          IMR process; and amends the internal grievance processes of 
          carriers.

           FISCAL EFFECT :    Appropriation:  No   Fiscal Com.:  Yes   
          Local:  No

          According to the Senate Appropriations Committee:

           One-time costs of about $100,000 and ongoing costs of 
            about $100,000 to revise the existing database by the 
            Department of Managed Health Care (Managed Care Fund).

           One-time costs of about $460,000 and ongoing costs of 
            about $100,000 to revise the existing database system by 
            the Department of Insurance (Insurance Fund).


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           Ongoing costs of about $200,000 per year to collect and 
            analyze additional data by the Department of Insurance 
            (Insurance Fund).

           Ongoing costs of about $200,000 per year to collect and 
            analyze additional data by the Department of Managed 
            Health Care (Managed Care Fund).

           Ongoing costs in the low hundreds of thousands for the 
            operation of the independent medical review process due 
            to increased standards for reviewer experience (Managed 
            Care Fund and Insurance Fund).

           SUPPORT  :   (Verified  8/28/12)

          BayBio
          BIOCOM
          California Healthcare Institute
          California Orthopaedic Association
          California Pan-Ethnic Health Network
          California Psychiatric Association
          Neuropathy Action Foundation

           ARGUMENTS IN SUPPORT  :    The California Pan-Ethnic Health 
          Network writes in support of this bill and its requirement 
          for DMHC and DOI to collaborate on a more complete and 
          standardized database of IMR cases, arguing that the bill 
          will allow for more effective program use and oversight by 
          consumers, carriers, regulators, and policymakers by 
          facilitating stronger assessments of IMR use and better 
          outcomes for all Californians including communities of 
          color.  The California Psychiatric Association (CPA) writes 
          that by increasing the standards for clinicians to 
          participate as reviewers, this bill continues the quest for 
          quality in the delivery of managed health care services, 
          and for helping safeguard the rights of patients to have 
          access to the very best, most appropriate medical care.  
          The CPA additionally recommends that a reviewer should be a 
          physician who is board certified or qualified to be 
          board-eligible in the medical specialty which is the 
          predominant field within which a particular treatment 
          expertise is bestowed.  The Neuropathy Action Foundation 
          writes that this bill is especially important because it 
          strengthens the minimum standard for reviewers to 

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          participate in an IMR case.  The California Healthcare 
          Institute argues in support of the bill that by requiring 
          IMR to be conducted by a clinician with expertise in the 
          enrollee's medical condition, This bill ensures that 
          patients receive the most appropriate treatment when 
          coverage is initially denied.  BIOCOM writes that this bill 
          would significantly strengthen IMR by ensuring that 
          reviewers are well versed in both the condition in question 
          and current treatment options, thus providing a vital check 
          to ensure that consumers have access to quality medical 
          care. 
          

           ASSEMBLY FLOOR :  77-2, 8/27/12
          AYES:  Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, 
            Bill Berryhill, Block, Blumenfield, Bonilla, Bradford, 
            Brownley, Buchanan, Butler, Charles Calderon, Campos, 
            Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson, 
            Eng, Feuer, Fletcher, Fong, Fuentes, Beth Gaines, 
            Galgiani, Garrick, Gatto, Gordon, Gorell, Grove, Hagman, 
            Halderman, Hall, Harkey, Hayashi, Roger Hernández, Hill, 
            Huber, Hueso, Huffman, Jeffries, Jones, Knight, Lara, 
            Logue, Bonnie Lowenthal, Ma, Mansoor, Mendoza, Miller, 
            Mitchell, Monning, Nestande, Nielsen, Norby, Olsen, Pan, 
            Perea, V. Manuel Pérez, Portantino, Silva, Skinner, 
            Smyth, Solorio, Swanson, Torres, Valadao, Wagner, 
            Wieckowski, Williams, Yamada, John A. Pérez
          NOES:  Donnelly, Morrell
          NO VOTE RECORDED:  Furutani


          CTW:n   8/28/12   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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