Amended in Assembly August 4, 2014

Amended in Assembly July 1, 2014

Amended in Senate April 9, 2014

Senate BillNo. 964


Introduced by Senator Hernandez

February 10, 2014


An act to amend Section 1367.03 of, to addbegin delete Sections 1380.4, 1380.5,1380.6, and 1380.7end deletebegin insert Section 1367.035end insert to, and to repealbegin insert and addend insert Section 1380.3 of, the Health and Safety Code, and tobegin insert amend Section 14456 of, and toend insert add Section 14456.3begin delete toend deletebegin insert to,end insert the Welfare and Institutions Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

SB 964, as amended, Hernandez. Health care coverage.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975 (Knox-Keene Act), provides for the licensure and regulation of health care service plans by the Department of Managed Health Carebegin insert (DMHC)end insert and makes a willful violation of the act a crime. Existing law requiresbegin delete the departmentend deletebegin insert DMHCend insert to adopt standards for timeliness of access to care and requires that contracts between health care service plans and providers ensure compliance with those standards. Existing law requires health care service plans to annually report tobegin delete the departmentend deletebegin insert DMHCend insert on compliance with those standards in a manner specified bybegin delete the departmentend deletebegin insert DMHCend insert. Under existing law, every 3 years,begin delete the departmentend deletebegin insert DMHCend insert is required to review information regarding compliance with those standards and make recommendations for changes that further protect enrollees.

This bill wouldbegin delete instead require the department to conduct that review annually. The bill would also require health care service plans, in making reports to the department on compliance with the timeliness standards, to use standardized survey methodology if developed by the departmentend deletebegin insert authorize DMHC to develop standardized methodologies to be used by plans in making the reports on compliance with the timeliness standards, as specified, and would make the development and adoption of those methodologies exempt from the Administrative Procedure Act until January 1, 2020. The bill would require DMHC to annually review information regarding compliance with the timeliness standards and to post its findings from the reviews, and any waivers or alternative standards approved by DMHC, on its Internet Web site. The bill would also require a health care service plan to annually, commencing March 1, 2015, submit data regarding network adequacy to DMHC, as specified, and would require DMHC to review that data for compliance with the Knox-Keene Act and post its findings from that review on its Internet Web siteend insert. Because a violation ofbegin delete that requirementend deletebegin insert the requirements imposed on health care service plansend insert would be a crime, the bill would impose a state-mandated local program.

Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Servicesbegin insert (DHCS)end insert, under which qualified low-income individuals receive health care services. One of the methods by which Medi-Cal services are provided is pursuant to contracts with various types of managed health care plans.begin delete Existing law establishes the California Health Benefit Exchange for the purpose of facilitating the enrollment of qualified individuals and small employers in qualified health plans.end deletebegin insert Existing law requires DHCS to conduct annual medical audits of specified managed care plans and requires that these reviews be scheduled and carried out jointly with reviews carried out pursuant to the Knox-Keene Act.end insert The Knox-Keene Act requiresbegin delete the departmentend deletebegin insert DMHCend insert to periodically conduct an onsite medical survey of the health delivery system of each health care service plan and exempts a plan that provides services solely to Medi-Cal beneficiaries from the survey upon submission tobegin delete the departmentend deletebegin insert DMHCend insert the medicalbegin delete surveyend delete audit conducted bybegin delete the State Department of Health Care Servicesend deletebegin insert DHCSend insert as part of the Medi-Cal contracting process.

This bill would eliminate that exemptionbegin delete, would require a plan that provides services to Medi-Cal beneficiaries and a plan that provides services to enrollees in the California Health Benefit Exchange to be surveyed by those product lines distinct from other product lines and to be annually reviewed with respect to those product lines for compliance with accessibility and availability of services, continuity of care, and quality management, as specified. The bill would also require a plan that provides services to Medi-Cal beneficiaries through specified programs to be surveyed annually with respect to the populations enrolled in those products until 5 years after completion of initial enrollment in those products, as specified. The billend deletebegin insert andend insert would requirebegin delete the departmentend deletebegin insert DMHCend insert to coordinatebegin delete these surveys and reviewsend deletebegin insert the surveysend insert conducted with respect to Medi-Cal managed care plans withbegin delete the State Department of Health Care Servicesend deletebegin insert DHCS, to the extent possibleend insert, provided that the coordination does not result in a delay of the surveysbegin delete or reviewsend delete or the failure ofbegin delete the departmentend deletebegin insert DMHCend insert to conduct thebegin delete surveys or reviews.end deletebegin insert surveys.end insert

This bill would also requirebegin delete the State Department of Health Care Services to post its medical survey audit findings of Medi-Cal managed care plans on its Internet Web siteend deletebegin insert DHCS to publicly report its medical audit findings as soon as possible, as specified,end insert and to share those findings and other information with respect to Knox-Keene plans withbegin delete the Department of Managed Health Careend deletebegin insert DMHC. The bill would specify that any preliminary audit findings shared with DMHC under this provision would be exempt from disclosure under the California Public Records Actend insert.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

begin insert

Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

end insert
begin insert

This bill would make legislative findings to that effect.

end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

P3    1

SECTION 1.  

Section 1367.03 of the Health and Safety Code
2 is amended to read:

P4    1

1367.03.  

(a) Not later than January 1, 2004, the department
2shall develop and adopt regulations to ensure that enrollees have
3access to needed health care services in a timely manner. In
4developing these regulations, the department shall develop
5indicators of timeliness of access to care and, in so doing, shall
6consider the following as indicators of timeliness of access to care:

7(1) Waiting times for appointments with physicians, including
8primary care and specialty physicians.

9(2) Timeliness of care in an episode of illness, including the
10timeliness of referrals and obtaining other services, if needed.

11(3) Waiting time to speak to a physician, registered nurse, or
12other qualified health professional acting within his or her scope
13of practice who is trained to screen or triage an enrollee who may
14need care.

15(b) In developing these standards for timeliness of access, the
16department shall consider the following:

17(1) Clinical appropriateness.

18(2) The nature of the specialty.

19(3) The urgency of care.

20(4) The requirements of other provisions of law, including
21Section 1367.01 governing utilization review, that may affect
22timeliness of access.

23(c) The department may adopt standards other than the time
24elapsed between the time an enrollee seeks health care and obtains
25care. If the department chooses a standard other than the time
26elapsed between the time an enrollee first seeks health care and
27obtains it, the department shall demonstrate why that standard is
28more appropriate. In developing these standards, the department
29shall consider the nature of the plan network.

30(d) The department shall review and adopt standards, as needed,
31concerning the availability of primary care physicians, specialty
32physicians, hospital care, and other health care, so that consumers
33have timely access to care. In so doing, the department shall
34consider the nature of physician practices, including individual
35and group practices as well as the nature of the plan network. The
36department shall also consider various circumstances affecting the
37delivery of care, including urgent care, care provided on the same
38day, and requests for specific providers. If the department finds
39that health care service plans and health care providers have
40 difficulty meeting these standards, the department may make
P5    1recommendations to the Assembly Committee on Health and the
2Senate Committee on Insurance of the Legislature pursuant to
3subdivision (i).

4(e) In developing standards under subdivision (a), the department
5shall consider requirements under federal law, requirements under
6other state programs, standards adopted by other states, nationally
7recognized accrediting organizations, and professional associations.
8The department shall further consider the needs of rural areas,
9specifically those in which health facilities are more than 30 miles
10apart and any requirements imposed by the State Department of
11Health Care Services on health care service plans that contract
12with the State Department of Health Care Services to provide
13Medi-Cal managed care.

14(f) (1) Contracts between health care service plans and health
15care providers shall ensure compliance with the standards
16developed under this section. These contracts shall require
17reporting by health care providers to health care service plans and
18by health care service plans to the department to ensure compliance
19with the standards.

20(2) Health care service plans shall report annually to the
21department on compliance with the standards in a manner specified
22by the department. The reported information shall allow consumers
23to compare the performance of plans and their contracting providers
24in complying with the standards, as well as changes in the
25compliance of plans with these standards.

begin delete

26(3) In making reports to the department pursuant to this
27subdivision, health care service plans shall use standardized survey
28methodology if developed by the department.

end delete
begin insert

29(3) The department may develop standardized methodologies
30for reporting that shall be used by health care service plans to
31demonstrate compliance with this section and any regulations
32adopted pursuant to it. The methodologies shall be sufficient to
33determine compliance with the standards developed under this
34section for different networks of providers if a health care service
35plan uses a different network for Medi-Cal managed care products
36than for other products or if a health care service plan uses a
37different network for individual market products than for small
38group market products. The development and adoption of these
39methodologies shall not be subject to the Administrative Procedure
40Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of
P6    1Division 3 of Title 2 of the Government Code) until January 1,
22020. The department shall consult with stakeholder groups in
3developing standardized methodologies under this paragraph.

end insert

4(g) (1) When evaluating compliance with the standards, the
5department shall focus more upon patterns of noncompliance rather
6than isolated episodes of noncompliance.

7(2) The director may investigate and take enforcement action
8against plans regarding noncompliance with the requirements of
9this section. Where substantial harm to an enrollee has occurred
10as a result of plan noncompliance, the director may, by order,
11assess administrative penalties subject to appropriate notice of,
12and the opportunity for, a hearing in accordance with Section 1397.
13The plan may provide to the director, and the director may
14 consider, information regarding the plan’s overall compliance with
15the requirements of this section. The administrative penalties shall
16not be deemed an exclusive remedy available to the director. These
17penalties shall be paid to the Managed Care Administrative Fines
18and Penalties Fund and shall be used for the purposes specified in
19Section 1341.45. The director shall periodically evaluate grievances
20to determine if any audit, investigative, or enforcement actions
21should be undertaken by the department.

22(3) The director may, after appropriate notice and opportunity
23for hearing in accordance with Section 1397, by order, assess
24administrative penalties if the director determines that a health
25care service plan has knowingly committed, or has performed with
26a frequency that indicates a general business practice, either of the
27following:

28(A) Repeated failure to act promptly and reasonably to assure
29timely access to care consistent with this chapter.

30(B) Repeated failure to act promptly and reasonably to require
31contracting providers to assure timely access that the plan is
32required to perform under this chapter and that have been delegated
33by the plan to the contracting provider when the obligation of the
34plan to the enrollee or subscriber is reasonably clear.

35(C) The administrative penalties available to the director
36pursuant to this section are not exclusive, and may be sought and
37employed in any combination with civil, criminal, and other
38administrative remedies deemed warranted by the director to
39enforce this chapter.

P7    1(4) The administrative penalties shall be paid to the Managed
2Care Administrative Fines and Penalties Fund and shall be used
3for the purposes specified in Section 1341.45.

4(h) The department shall work with the patient advocate to
5assure that the quality of care report card incorporates information
6provided pursuant to subdivision (f) regarding the degree to which
7health care service plans and health care providers comply with
8the requirements for timely access to care.

9(i) The department shall annually review information regarding
10compliance with the standards developed under this section and
11shall make recommendations for changes that further protect
12enrollees.begin insert Commencing no later than December 1, 2015, and
13annually thereafter, the department shall post its findings from
14the review on its Internet Web site.end insert

begin insert

15(j) The department shall post on its Internet Web site any
16waivers or alternative standards that the department approves
17under this section on or after January 1, 2015.

end insert
18begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 1367.035 is added to the end insertbegin insertHealth and Safety
19Code
end insert
begin insert, to read:end insert

begin insert
20

begin insert1367.035.end insert  

(a) Commencing March 1, 2015, and annually
21thereafter, a health care service plan shall submit to the
22department, in a manner specified by the department, data
23regarding network adequacy, including, but not limited to, the
24following:

25(1) Provider location.

26(2) Area of specialty.

27(3) Provider admitting privileges.

28(4) Providers with open practices.

29(5) Provider patient capacity.

30(6) The number of patients assigned to a provider.

31(7) Complaints regarding network adequacy and timely access
32that the health care service plan received during the preceding
33year.

34(b) A health care service plan that uses a network for its
35Medi-Cal managed care product line that is different from the
36network used for its other product lines shall submit the data
37required under subdivision (a) for its Medi-Cal managed care
38product line separately from the data submitted for its other
39product lines.

P8    1(c) A health care service plan that uses a network for its
2individual market product line that is different from the network
3used for its small group market product line shall submit the data
4required under subdivision (a) for its individual market product
5line separate from the data submitted for its small group market
6product line.

7(d) The department shall review the data submitted pursuant to
8this section for compliance with this chapter and the regulations
9adopted thereunder. The department shall post its findings from
10that review on its Internet Web site.

11(e) In collecting data under this section, the department shall
12maximize the use of all relevant existing reports and information
13already submitted to the department by a plan and, if applicable,
14the outcomes of medical audits and monthly provider files provided
15to the department by the State Department of Health Care Services
16pursuant to Section 14456.3 of the Welfare and Institutions Code.
17This subdivision does not limit the authority of the department to
18request additional information from the plan as deemed necessary
19to carry out and complete any enforcement action initiated under
20this chapter.

end insert
21

begin deleteSEC. 2.end delete
22begin insertSEC. 3.end insert  

Section 1380.3 of the Health and Safety Code is
23repealed.

begin delete
24

SEC. 3.  

Section 1380.4 is added to the Health and Safety Code,
25to read:

26

1380.4.  

A plan that provides services to Medi-Cal beneficiaries
27pursuant to Chapter 8 (commencing with Section 14200) of Part
283 of Division 9 of the Welfare and Institutions Code shall do both
29of the following:

30(a) Be surveyed under Section 1380 by its Medi-Cal managed
31care product lines distinct from its other product lines, if any, in
32order to determine whether the services received by Medi-Cal
33beneficiaries comply with the requirements of this chapter.

34(b) (1) Be annually reviewed, with respect to its Medi-Cal
35managed care product lines, for compliance with all of the
36following:

37(A) Accessibility and availability of services, including network
38adequacy and timely access to care.

39(B) Continuity of care.

40(C) Quality management.

P9    1(2) This subdivision shall not be construed to require an onsite
2survey in addition to the survey required by Section 1380.

3(3) The department may conduct the annual review required by
4this subdivision through telephonic or other means and is not
5required to perform the review onsite, unless the director
6determines that an onsite review is necessary.

7(4) In conducting the annual review required by this subdivision,
8the department shall maximize the use of all relevant existing
9reports and information already submitted to the department by
10the plan and, if applicable, the outcomes of medical survey audits
11and monthly provider files provided to the department by the
12Department of Health Care Services pursuant to Section 14456.3
13of the Welfare and Institutions Code. This paragraph shall not limit
14the authority of the department to request additional information
15from the plan as deemed necessary to carry out and complete the
16annual review required by this subdivision and any enforcement
17action initiated as a result of the review.

18

SEC. 4.  

Section 1380.5 is added to the Health and Safety Code,
19to read:

20

1380.5.  

(a) A plan that provides services to enrollees in the
21California Health Benefit Exchange pursuant to Title 22
22(commencing with Section 100500) of the Government Code shall
23do both of the following:

24(1) Be surveyed under Section 1380 by its product lines sold
25through the Exchange distinct from its product lines sold outside
26the Exchange, if any, in order to determine whether the services
27received by the Exchange enrollees comply with the requirements
28of this chapter.

29(2) (A) Be annually reviewed, with respect to its product lines
30sold through the Exchange, for compliance with all of the
31following:

32(i) Accessibility and availability of services, including network
33adequacy and timely access to care.

34(ii) Continuity of care.

35(iii) Quality management.

36(B) This paragraph shall not be construed to require an onsite
37survey in addition to the survey required by Section 1380.

38(C) The department may conduct the annual review required
39by this paragraph through telephonic or other means and is not
P10   1required to perform the review onsite, unless the director
2determines that an onsite review is necessary.

3(D) In conducting the annual review required by this paragraph,
4the department shall maximize the use of all relevant existing
5reports and information already submitted to the department by
6the plan and, if applicable, the outcomes of medical survey audits
7and monthly provider files provided to the department by the
8Department of Health Care Services pursuant to Section 14456.3
9of the Welfare and Institutions Code. This subparagraph shall not
10limit the authority of the department to request additional
11information from the plan as deemed necessary to carry out and
12complete the annual review required by this paragraph and any
13enforcement action initiated as a result of the review.

14(b) This section shall not apply to either of the following:

15(1) A plan that uses the same network for its product lines sold
16in the individual and small group markets through the Exchange
17as the network used for its product lines sold in the individual and
18small group markets outside the Exchange.

19(2) A plan that uses the same network for its product lines sold
20through the Exchange as the network used for its Medi-Cal
21managed care product lines.

22

SEC. 5.  

Section 1380.6 is added to the Health and Safety Code,
23to read:

24

1380.6.  

A plan that enrolls Medi-Cal beneficiaries as a result
25of any of the following shall be surveyed annually under Section
261380 with respect to the populations enrolled in those products
27until five years after the completion of initial enrollment under
28those products:

29(a) The transition of Healthy Families Program enrollees to the
30Medi-Cal program pursuant to Chapter 16.2 (commencing with
31Section 12694.1) of Part 6.2 of Division 2 of the Insurance Code.

32(b) Article 2.82 (commencing with Section 14087.98) of Chapter
337 of Part 3 of Division 9 of the Welfare and Institutions Code.

34(c) Section 14182 of the Welfare and Institutions Code.

35(d) Sections 14182.16 and 14182.17, or Section 14132.275, of
36the Welfare and Institutions Code.

end delete
37

begin deleteSEC. 6.end delete
38begin insertSEC. 4.end insert  

Sectionbegin delete 1380.7end deletebegin insert 1380.3end insert is added to the Health and Safety
39 Code
, to read:

P11   1

begin delete1380.7.end delete
2begin insert 1380.3.end insert  

The department shall coordinate the surveysbegin delete and
3reviewsend delete
conducted pursuant tobegin delete Sections 1380.4 and 1380.6end deletebegin insert Section
41380end insert
with the State Department of Health Care Servicesbegin insert, to the
5extent possible,end insert
in order to allow for simultaneous oversight of
6Medi-Cal managed care plans by both departments, provided that
7this coordination does not result in a delay of the surveysbegin delete or reviewsend delete
8 required underbegin delete Sections 1380.4and 1380.6end deletebegin insert Section 1380end insert or in the
9failure of the department to conduct those surveysbegin delete or reviewsend delete.

10begin insert

begin insertSEC. 5.end insert  

end insert

begin insertSection 14456 of the end insertbegin insertWelfare and Institutions Codeend insertbegin insert is
11amended to read:end insert

12

14456.  

The department shall conduct annual medical audits of
13each prepaid health plan unless the director determines there is
14good cause for additional reviews.

15The reviews shall use the standards and criteria established
16pursuant to the Knox-Keene Health Care Service Plan Act of 1975,
17begin delete or to Chapter 11A (commencing with Section 11491) of Part 2 of
18Division 2 of the Insurance Code,end delete
as appropriate. Except in those
19instances where major unanticipated administrative obstacles
20prevent, or after a determination by the director of good cause, the
21reviews shall be scheduled and carried out jointly with reviews
22carried out pursuant to the Knox-Keene Health Care Service Plan
23Act of 1975, begin delete or to Chapter 11A (commencing with Section 11491)
24of Part 2 of Division 2 of the Insurance Code, as appropriate,end delete
if
25reviewsbegin delete under either actend delete will be carried out within time periods
26which satisfy the requirements of federal law.

27The department shall be authorized to contract with professional
28organizations or the Department of Managed Healthbegin delete Care or the
29Department of Insurance,end delete
begin insert Care,end insert as appropriate, to perform the
30periodic review required by this section. The department, or its
31designee, shall make a finding of fact with respect to the ability
32of the prepaid health plan to provide quality health care services,
33effectiveness of peer review, and utilization control mechanisms,
34and the overall performance of the prepaid health plan in providing
35health care benefits to its enrollees.

begin insert

36The director shall publicly report the findings of annual medical
37audits conducted pursuant to this section as soon as possible but
38no later than 90 days following completion of any corrective action
39plan initiated pursuant to the audit unless the director determines,
P12   1in his or her discretion, that additional time is reasonably
2necessary to fully and fairly report the results of the audit.

end insert
3

begin deleteSEC. 7.end delete
4begin insertSEC. 6.end insert  

Section 14456.3 is added to the Welfare and Institutions
5Code
, to read:

6

14456.3.  

(a) The department shall share with the Department
7of Managed Health Care its findings from medicalbegin delete surveyend delete audits
8and monthly provider files of a Medi-Cal managed care plan that
9provides services to Medi-Cal beneficiaries pursuant to Chapter
107 (commencing with Section 14000) or this chapter and is subject
11to Chapter 2.2 (commencing with Section 1340) of Division 2 of
12the Health and Safety Code.

begin insert

13(b) To the extent that the department communicates its
14preliminary investigative audit findings to the Department of
15Managed Health Care under subdivision (a), those communications
16shall be exempt from disclosure under the California Public
17Records Act (Chapter 3.5 (commencing with Section 6250) of
18Division 7 of Title 1 of the Government Code).

end insert
begin delete

19(b) The department shall post on its Internet Web site its findings
20from medical survey audits of a Medi-Cal managed care plan that
21provides services to Medi-Cal beneficiaries pursuant to Chapter
227 (commencing with Section 14000) or this chapter.

end delete
23begin insert

begin insertSEC. 7.end insert  

end insert
begin insert

The Legislature finds and declares that Section 6 of
24this act, which adds Section 14456.3 to the Welfare and Institutions
25Code, imposes a limitation on the public’s right of access to the
26meetings of public bodies or the writings of public officials and
27agencies within the meaning of Section 3 of Article I of the
28California Constitution. Pursuant to that constitutional provision,
29the Legislature makes the following findings to demonstrate the
30interest protected by this limitation and the need for protecting
31that interest:

end insert
begin insert

32In order to ensure the confidentiality of preliminary investigative
33findings disclosed by the State Department of Health Care Services
34to the Department of Managed Health Care pursuant to this act,
35the limitation on the public’s right of access to those files is
36necessary.

end insert
37

SEC. 8.  

No reimbursement is required by this act pursuant to
38Section 6 of Article XIII B of the California Constitution because
39the only costs that may be incurred by a local agency or school
40district will be incurred because this act creates a new crime or
P13   1infraction, eliminates a crime or infraction, or changes the penalty
2for a crime or infraction, within the meaning of Section 17556 of
3the Government Code, or changes the definition of a crime within
4the meaning of Section 6 of Article XIII B of the California
5Constitution.



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