BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
SB 780 (Jackson) - Health care coverage.
Amended: May 8, 2013 Policy Vote: Health 7-2
Urgency: No Mandate: Yes
Hearing Date: January 23, 2014
Consultant: Brendan McCarthy
SUSPENSE FILE.
Bill Summary: SB 780 would require health plans and certain
health insurers to provide certain notices to consumers when
changes are made to a health care network. The bill would also
require health plans and certain health insurers to allow
consumers to continue to receive care from certain providers.
Fiscal Impact:
One-time costs of $210,000 for the revision of existing
regulations by the Department of Managed Health Care
(Managed Care Fund).
Minor ongoing costs for review of plan filings by the
Department of Managed Health Care (Managed Care Fund).
One-time costs of $100,000 for the adoption of regulations
by the Department of Insurance (Insurance Fund).
Ongoing costs of $50,000 for review of filings and
enforcement (Insurance Fund).
Background: Under current state law, health plans are regulated
by the Department of Managed Health Care while health insurers
are regulated by the Department of Insurance. Certain forms of
health care coverage commonly referred to as "preferred provider
organizations" may be regulated by either the Department of
Managed Health Care (referred to as a preferred provider
arrangement) or the Department of Insurance (referred to as an
alternative rates of payment). Under a preferred provider
organization, the health plan or health insurer contracts with
hospitals and provider groups to provide services to enrollees
at reduced costs to both the enrollee and the health plan or
health insurer. If an enrollee elects to receive services from a
SB 780 (Jackson)
Page 1
hospital or provider group that is not in the preferred provider
network, the enrollee is usually liable for increased cost
sharing.
Current law requires health plans to notify the Department of
Managed Health Care and enrollees when a contract between the
health plan and a health care provider has been terminated,
subject to specific conditions.
Under current law, health plans and health insurers are required
to provide for the completion of care from a terminated provider
(or a non-participating provider) for specified conditions (such
as a pregnancy or a serious chronic condition). These
requirements are referred to as continuity of care requirements.
Current law specifies the method for determining payments from a
health plan or a health insurer for services provided under
continuity of care requirements. The method of determining
payment is different for health plans and health insurers.
Proposed Law: SB 780 would require health plans and health
insurers that operate preferred provider networks to provide
certain notices to consumers when changes are made to a health
care network.
Specifically, the bill would:
Require preferred provider organizations regulated by the
Department of Insurance to submit a filing to the Department
for review, 75 days prior to the termination of a contract
with a provider group or hospital;
Require preferred provider organizations to submit a filing
with the Department of Insurance or the Department of
Managed Health Care regarding the termination of a provider
group that has provided service to more than 1,700 enrollees
in the prior year;
Authorize the Department of Insurance to set a different
threshold with respect to the prior requirement through
regulation;
Require preferred provider organizations to provide
specified notifications to enrollees upon the termination of
a contract with a provider group or hospital;
Authorize all enrollees to continue to receive services
that were previously authorized or scheduled for at least 60
days after a termination;
SB 780 (Jackson)
Page 2
Specify the method for determining payment for services
provided after a termination;
Require preferred provider organizations to submit
additional information to the Department of Insurance.
Related Legislation: AB 2152 (Eng, 2012) contained similar
requirements to this bill. That bill was vetoed by Governor
Brown.
Staff Comments: The only costs that may be incurred by a local
agency relate to crimes and infractions. Under the California
Constitution, such costs are not reimbursable by the state.