BILL ANALYSIS �
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 617
AUTHOR: Nazarian
AMENDED: April 15, 2013
HEARING DATE: July 3, 2013
CONSULTANT: Bain
SUBJECT : California Health Benefit Exchange: appeals.
SUMMARY : Establishes in state law proposed federal appeals
rights for health subsidy programs, such as coverage through the
California Health Benefit Exchange (Covered California).
Requires Covered California to enter into a contract with the
Department of Social Services to serve as the Covered California
appeals entity designated to hear appeals of eligibility or
enrollment determination or redetermination for persons in the
individual market. Requires the hearing process to be governed
by the Medi-Cal hearing process established in law, except as
otherwise required by this bill. Adopts federal options to
establish an informal resolution process, details the provisions
of that process, and designates the state entities to conduct
that process. Adopts the federal option to require state
entities to assist individuals with making an appeal request.
Existing federal law:
1.Requires, under the Patient Protection and Affordable Care Act
(ACA, 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 plans
(QHPs) available to qualified individuals and qualified
employers. Requires, if a state does not establish an
Exchange, the federal government to administer the Exchange.
Establishes requirements for the Exchange and for QHPs
participating in the Exchange, and defines who is eligible to
purchase coverage in the Exchange.
2.Allows, under the ACA and effective January 1, 2014, eligible
individual taxpayers, whose household income is between 100
and400 percent of the Federal Poverty Limit (FPL), an
advanceable and refundable premium tax credit (APTC) based on
the individual's income for coverage under a QHP offered in
the Exchange. Requires a reduction in cost-sharing for
individuals with incomes below 250 percent of the FPL, and a
Continued---
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lower maximum limit on out-of-pocket expenses for individuals
whose incomes are between 100 and 400 percent of the FPL.
Legal immigrants with household incomes less than 100 percent
of the FPL who are ineligible for Medicaid because of their
immigration status are also eligible for the APTC and the
cost-sharing reductions.
3.Requires, under the ACA, the federal Secretary of Health and
Human Services (HHS) to establish a system meeting specified
requirements under which residents of each state can apply for
enrollment, receive a determination of eligibility for
participation, and continue participation in, applicable state
health subsidy programs (such as the Exchange and Medicaid).
Requires this system to ensure that if an individual applying
to an Exchange is found through screening to be eligible for
medical assistance under Medicaid, or eligible for enrollment
under CHIP, the individual to be enrolled for assistance under
such plan or program.
Existing state law:
1.Establishes the California Health Benefit Exchange in state
government (Covered California), and specifies its duties and
authority of Covered California. Requires Covered California
be governed by a board that includes the Secretary of the
California Health and Human Services Agency (Agency) and four
members with specified expertise who are appointed by the
Governor and the Legislature.
2.Permit Covered California to adopt rules and regulations, as
necessary. Permits, until January 1, 2016, any necessary rules
and regulations to be adopted as emergency regulations.
3.Requires Covered California to establish an appeals process
for prospective and current enrollees of Covered California
that complies with all requirements of ACA concerning the role
of a state Exchange in facilitating federal appeals of
Exchange-related determinations.
4.Prohibits, in no event, the scope of those appeals from being
construed to be broader than the requirements of the ACA.
5.Permits Covered California, once the federal regulations
concerning appeals have been issued in final form by the
federal Secretary of the Department of Health and Human
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Services (HHS), to establish additional requirements related
to appeals, provided that the Covered California board
determines, prior to adoption, that any additional requirement
results in no cost to the General Fund and no increase in the
charge imposed on qualified health plans to fund Covered
California.
6.Prohibits Covered California from being required to provide an
appeal if the subject of the appeal is within the jurisdiction
of the Department of Managed Health Care (DMHC, or within the
jurisdiction of the Department of Insurance (CDI).
This bill:
1.Requires applicant or enrollee to have the right to appeal any
of the following:
a. Any action or inaction related to the
individual's eligibility for or enrollment in a state
health subsidy program, or for (APTC) and cost-sharing
reductions, or the amount of the APTC and level of
cost sharing, or eligibility for affordable plan
options;
b. An eligibility determination for an exemption
from the individual responsibility penalty (known as
the individual mandate); or,
c. A failure to provide timely notice of an
eligibility determination or redetermination or an
enrollment determination.
2.Requires an entity making an eligibility or enrollment
determination to provide notice of the appeals process at the
time of application and at the time of eligibility or
enrollment determination. And to issue a combined eligibility
notice that contains all of the following:
a. Information about each state health subsidy program for
which an individual or multiple family members of a household
have been determined to be eligible or ineligible and the
effective date of eligibility and enrollment;
b. Information regarding all of the bases of eligibility for
non-Modified Adjusted Gross Income (MAGI) Medi-Cal and the
benefits and services afforded to individuals eligible on those
bases, sufficient to enable the individual to make an informed
choice as to whether to appeal the eligibility determination or
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the date of enrollment;
c. An explanation that the applicant or enrollee may appeal any
action or inaction related to an individual's eligibility for
or enrollment in a state health subsidy program with which the
applicant or enrollee is dissatisfied by requesting a state
fair hearing consistent with this bill and the fair hearing
process in existing law;
d. Information on the applicant or enrollee's right to
represent himself or herself or to be represented by legal
counsel or an authorized representative; and,
e. An explanation of the circumstances under which the
applicant's or enrollee's eligibility must be maintained or
reinstated pending an appeal decision.
1.Requires Covered California to enter into a contract with the
Department of Social Services (DSS) to serve as the Covered
California appeals entity designated to hear appeals of
eligibility or enrollment determination or redetermination for
persons in the individual market. Requires the hearing process
to be governed by the Medi-Cal hearing process established in
law, except as otherwise required by this bill.
2.Requires DSS, acting as the appeals entity, to allow an
applicant or enrollee to request an appeal within 90 days of
the date of the notice of an eligibility or enrollment
determination, unless there is good cause.
3.Requires the appeals entity to establish and maintain a
process for an applicant or enrollee to request an expedited
appeals process where there is an immediate need for health
services because a standard appeal could seriously jeopardize
the appellant's life, health, or the ability to attain,
maintain, or regain maximum function.
4.Requires, if an expedited appeal is granted, the decision to
be issued within three working days or as soon as is required
by the appellant's condition. Requires, if an expedited appeal
is denied, the appeals entity to notify the appellant within
two days by telephone or commonly available electronic means,
to be followed by in writing. Requires, if an expedited appeal
is denied, the appeal to be handled through the standard
appeal process.
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5.Permits appeal requests to be submitted to the appeals entity
by telephone, by mail, in person, through the Internet,
through other commonly available electronic means, or by
facsimile.
6.Requires staff of Covered California, the county, or MRMIB to
assist the applicant or enrollee in making the appeal request.
7.Requires the appeals entity, upon receipt of an appeal, to
send timely acknowledgment to the appellant that the appeal
has been received. Requires the acknowledgment to include
information relating to the appellant's eligibility for
benefits while the appeal is pending, an explanation that APTC
while the appeal is pending are subject to reconciliation, an
explanation that the appellant may participate in informal
resolution, and information regarding how to initiate informal
resolution.
8.Requires the appeals entity, upon receipt of an appeal
request, to send, via secure electronic interface, timely
notice of the appeal to Covered California and the county and,
if related to the Access for Infants and Mothers or the
Healthy Families Program, to the Managed Risk Medical
Insurance Board (MRMIB).
9.Requires the entity that made the determination of eligibility
or enrollment being appealed, upon receipt of the notice of
appeal from the appeals entity, to transmit, either as a hard
copy or electronically, the appellant's eligibility and
enrollment records for use in the adjudication of the appeal
to the appeals entity.
10.Prohibits a member of the Covered California board, or an
employee of Covered California, a county, MRMIB, or the
appeals entity from limiting or interfering with an applicant
or enrollee's right to make an appeal or attempt to direct the
individual's decisions regarding the appeal.
11.Permits an applicant or enrollee to be represented by counsel
or designate an authorized representative to act on his or her
behalf, including, but not limited to, when making an appeal
request and participating in the informal resolution process.
12.Requires an appellant to have the opportunity for informal
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resolution, prior to a hearing, that conforms to the following
requirements:
a. Requires a representative of the Exchange, the county, or
MRMIB to contact the appellant and offer to discuss the
determination with the appellant, if he or she agrees;
b. Requires the appellant's right to a hearing to be preserved
if the appellant is dissatisfied with the outcome of the
informal resolution process;
c. Permits the appellant or the authorized representative to
withdraw the hearing request voluntarily or agree to a
conditional withdrawal that list the agreed-upon conditions
that the appellant and Covered California, the county, or MRMIB
must meet;
d. Prohibits the appellant from being to provide duplicative
information or documentation that he or she previously provided
during the application, redetermination, or informal resolution
processes if the appeal advances to a hearing;
e. Prohibits the informal resolution process from delaying the
timeline for a hearing;
f. Requires the informal resolution process to be voluntary;
g. Prohibits an appellant's participation nor non-participation
in the informal resolution process from affecting the right to
a hearing;
h. Permits the appellant, for eligibility or enrollment
determinations for state health subsidy programs based on
modified adjusted gross income (MAGI), to initiate the informal
resolution process with the entity that made the determination.
Requires all of the following to apply to that process:
i. Requires Covered California to conduct informal
resolution involving issues related only to Covered
California, including, but not limited to, exemption from
the individual responsibility penalty, offers of
affordable employer coverage, special enrollment periods,
and eligibility for affordable plan options;
ii. Requires counties to conduct informal resolution
involving issues related to non-MAGI Medi-Cal; and,
iii. Requires MRMIB to conduct informal resolution
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involving issues related only to the Access for Infants
and Mothers Program or the Healthy Families Program.
i. Requires the staff involved in the informal resolution
process to try to resolve the issue through a review of case
documents, in person or through electronic means as desired by
the appellant, and to give the appellant the opportunity to
review case documents, verify the accuracy of submitted
documents, and submit updated information or provide further
explanation of previously submitted documents; and,
j. Requires the informal resolution process set forth by in a
specified section of DSS' Manual of Policies and Procedures to
be used for the informal resolution.
1.Requires a position statement to be electronically available
at least two working days before the hearing on the appeal.
2.Requires the appeals entity to send written notice,
electronically or in hard copy, to the appellant of the date,
time, and location of the hearing no later than 15 days prior
to the date of the hearing. Requires the appeals entity, if
the date, time, and location of the hearing are prohibitive of
participation by the appellant, to make reasonable efforts to
set a reasonable, mutually convenient date, time, and
location.
3.Requires the notice to include the right of the appellant to
request that the hearing be held via telephone or video
conference and include instructions for submitting the request
on the notice, by telephone or through other commonly
available electronic means.
4.Requires the format of the hearing to be in person, unless the
appellant requests the hearing be held telephonically or via
video conference.
5.Requires the hearing to be an evidentiary hearing where the
appellant may present evidence, bring witnesses, establish all
relevant facts and circumstances, and question or refute any
testimony or evidence, including, but not limited to, the
opportunity to confront and cross-examine adverse witnesses,
if any.
6.Requires the hearing to be conducted by one or more impartial
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officials who have not been directly involved in the
eligibility or enrollment determination or any prior appeal
decision in the same matter.
7.Requires the appellant to have the opportunity to review his
or her appeal record, case file, and all documents to be used
by the appeals entity at the hearing, at a reasonable time
before the date of the hearing as well as during the hearing.
8.Requires cases and evidence to be reviewed de novo by the
appeals entity.
9.Requires decisions to be made within 90 days from the date the
appeal is filed and to be based exclusively on the application
of the applicable laws and eligibility and enrollment rules to
the information used to make the eligibility or enrollment
decision, as well as any other information provided by the
appellant during the course of the appeal. Requires the
content of the decision of appeal to include a decision with a
plain language description of the effect of the decision on
the appellant's eligibility or enrollment, a summary of the
facts relevant to the appeal, an identification of the legal
basis for the decision, and the effective date of the
decision, which may be retroactive.
10.Requires, upon adjudication of the appeal, the appeals entity
to transmit the decision of appeal to the entity that made the
eligibility or enrollment determination via a secure
electronic interface.
11.Permits, if an appellant disagrees with the decision of the
appeals entity, he or she to make an appeal request regarding
issues relating to Covered California to the federal
Department of Health and Human Services (DHHS) within 30 days
of the notice of decision.
12.Permits an appellant to also seek judicial review to the
extent provided by law. Prohibits appeals to HHS from being a
prerequisite for seeking judicial review.
13.Prohibits this bill from limiting or reducing an appellant's
rights to notice, hearing, and appeal under Medi-Cal, county
indigent programs, or any other public programs.
14.Requires, for appeals of redetermination of APTC or
cost-sharing reductions, upon receipt of notice from the
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appeals entity that it has received an appeal, the entity that
made the redetermination to continue to consider the applicant
or enrollee eligible for the same level of APTC or
costing-sharing reductions while the appeal is pending in
accordance with the level of eligibility immediately before
the redetermination being appealed.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1.Major costs, in the tens of millions of dollars, for the DSS
State Hearings Division to modify current appeals system and
increase staff. Actual costs are dependent on caseload with an
assumption of a 2.5 percent appeal rate. Potentially
significant costs for the Department of Health Care Services
(DHCS), MRMIB, and Covered California to coordinate with DSS.
2.Potential General Fund (GF) offsets from federal grant funding
for Covered California (through the end of 2014), health plan
fees, and federal matching funds for Medi-Cal and AIM
programs.
PRIOR VOTES :
Assembly Health: 13- 6
Assembly Appropriations: 12- 5
Assembly Floor: 54- 24
COMMENTS :
1.Author's statement. According to the author, AB 617 complements
recent ACA legislation in California by establishing an equitable
notice and a "no wrong door" appeals procedure for both Medi-Cal
and Exchange eligibility determinations. AB 617 implements a
statewide approach on appeals to facilitate the process and to
seamlessly enroll consumers in health programs. This bill ensures
that no matter where a consumer decides to apply for coverage that
there is defined process in place as to next steps, should they
need to appeal a decision.
2.Federal regulations. Proposed federal regulations issued in
January 2013 establish minimum federal requirements and state
policy options for appeals of eligibility determinations for
participation in exchanges and insurance affordability programs
(such as Medi-Cal and coverage in the Exchange with an APTC). For
example, federal regulations require that an applicant or enrollee
has the right to appeal:
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a. An eligibility determination, including an initial
determination of eligibility (including for an APTC and
cost-sharing reduction);
b. A redetermination of eligibility, including the amount
of the APTC and level of cost-sharing reduction;
c. An eligibility determination from the individual
responsibility requirement (commonly known as the individual
mandate); or,
d. A failure by the Exchange to provide timely notice of an
eligibility determination.
Federal regulations require that appeals be accepted by telephone,
mail, in person (if capable) or via the internet, and must be
submitted within 90 days of the date of the notice of eligibility
determination. Federal regulations also establish requirements for
eligibility pending an appeal, expedited appeals, and appeal
decisions. States are given options in implementing the appeals.
These options include which entity may conduct the appeals (the
Exchange, the federal HHS, after exhausting state-based appeals),
whether the Exchange and the appeals entity is allowed to assist
applicants/enrollees in making an appeals request, and whether the
Exchange provides an informal resolution process prior to a
hearing.
1.Prior legislation.
a. SB 900 (Alquist), Chapter 659, Statutes of 2010,
establishes Covered California as an independent public
entity within state government, and requires Covered
California to be governed by a board composed of the
Secretary of California Health and Human Services Agency,
or his or her designee, and four other members appointed by
the Governor and the Legislature who meet specified
criteria.
b. AB 1602 (John A. P�rez), Chapter 655, Statutes of 2010,
specifies the powers and duties of Covered California
relative to determining eligibility for enrollment in the
Covered California and arranging for coverage under QHPs.
2.Support. Western Center on Law and Poverty (WCLP), sponsor of
this bill, writes in support that the ACA requires a new
seamless and coordinated eligibility and enrollment system for
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Medi-Cal, the Exchange, and AIM. DHCS and the Exchange are
working to realize this vision, including overseeing the
building of an online application for health coverage programs
as well as providing for in-person, phone, and mail
application venues. Just as the application processes must be
coordinated, federal law also requires that notices and
appeals for the Exchange, "MAGI Medi-Cal," and AIM be
coordinated. WCLP argues that legislation is needed to specify
notice and appeals procedures. WCLP further states that while
Covered California is working on eligibility and enrollment
regulations, WCLP feels something as important as due process
rights belong in statute. Moreover, because the appeals
process for the new combined application affects both Medi-Cal
and AIM, in addition to the Exchange, that Medi-Cal and AIM
notices and appeals should not be governed by Exchange
regulations.
Disability Rights California, Health Access, the 100% Campaign,
California Advocates for Nursing Home Reform, and the
Coalition of California Welfare Rights Organizations also
write in support of this bill, stating the coordinated notices
are important to avoid confusion. These entities also support
the use of the same fair hearing process as currently used for
Medi-Cal, the provisions of this bill allowing an informal
resolution, expedited appeals, and the ability to retain
coverage pending an appeal.
3.Amendments. This bill requires amendments to prevent
"chaptering out" the provisions of SB X1 3 (Hernandez), which
is scheduled to go to the Governor before the summer recess.
4.Policy issues.
a. Statute versus regulation. This bill places in state law
the proposed federal appeals requirements and federal
policy options. Covered California has proposed draft
regulations on this topic for discussion and adoption at
its scheduled August 2013 board meeting. This bill contains
provisions that adopt state policy options authorized under
the proposed federal regulations, and propose different
requirement than the proposed state regulations, such as:
i. Requiring the appeals entity to accept
applications in person (versus being required to do
so if it is capable of receiving appeals, as the
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Exchange and federal regulations propose);
ii. Requiring assistance with an appeal
(rather than authorizing the Exchange and the
appeals entity to assist with an appeal, as the
Exchange and federal regulations propose);
iii. Permitting an appellant more than 90 days
to submit an appeal if there is good cause (the
proposed Exchange and proposed federal regulations
require appeals be filed within 90 days of the date
of notice of the eligibility determination);
iv. Designating DSS as the appeals entity
(federal regulations permit states to designate an
appeals entity and the Exchange's proposed
regulations do not designate a specific entity as
the appeals entity);
v. Detailing the requirements of the
optional informal resolution process including
modeling it on the current Medi-Cal process,
designating the entities handling the informal
resolution process, such as counties, the Exchange
or MRMIB, and requiring the staff to attempt to
resolve the issues (the proposed regulations adopt
the federal option for an informal resolution
process, but the proposed Exchange regulations
"reserve" the Exchange informal resolution process
requirements, meaning they will be detailed later);
vi. Requiring the Exchange, county or MRMIB
to contact an individual who has filed an appeal to
discuss the determination, if the individual agrees.
vii. Allowing individuals to appeal based on
"inaction" related to the individual's eligibility
for or enrollment in a state health subsidy program,
APTC or cost-sharing reductions (examples of
"inaction" could include failure to meet timelines,
failure to act on an application, or failure to act
on a request for assistance"); (the Exchange's
proposed regulation and proposed federal regulations
address action related to eligibility, but not
inaction);
viii. Requiring a position statement from the
state two days prior to a hearing, and requiring the
hearing to be in person or telephonically or via
video if the appellant requests (the Exchange and
proposed federal proposed regulations do not contain
this provision);
ix. Prescribing the information that must be
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included in the federally required combined
eligibility notice;
x. Do not contain provisions regarding
appeals involving the Small Business Health Options
Program (SHOP); (the proposed regulations require
appeals on whether an employer provides minimum
essential coverage or coverage that is not
affordable be directed to federal DHHS)
The policy rationale for including the individual
market provisions in state law and not deferring to
the regulatory process is to ensure that individuals
seeking an appeal have their due process
requirements protected and that administrative
actions are coordinated among the state entities
involved in health subsidy programs where
determinations affect a person's eligibility for
Medi-Cal versus an APTC and the amount of an APTC.
b. Notice of appeal. This bill requires an entity making an
eligibility or enrollment determination to provide notice
of the appeals process at the time of application and at
the time of eligibility or enrollment determination. Staff
recommends this information also be provided during the
individual's redetermination as an individual's eligibility
for APTC, the amount of APTC or Medi-Cal may change at
redetermination.
c. Clarifying amendment. This bill contains provisions
regarding the appeal and the informal resolution process.
Staff recommends these provisions be placed in separate
code sections to distinguish between the appeal and
informational resolution process provisions.
SUPPORT AND OPPOSITION :
Support: Western Center on Law and Poverty (sponsor)
American Cancer Society Cancer Action Network
California Coverage and Health Initiatives
California Pan-Ethnic Health Network
Children Now
Children's Defense Fund - California
Children's Partnership
Disability Rights California
Health Access California
PICO California
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United Ways of California
100% Campaign
National Health Law Program
Oppose: None received.
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