Senate BillNo. 1471


Introduced by Senator Hernandez

February 19, 2016


An act to amend Section 1363.5 of the Health and Safety Code, and to amend Section 10123.135 of the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

SB 1471, as introduced, Hernandez. Health care coverage: services: authorization and denial.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care, and makes a willful violation of its provisions a crime. Existing law provides for the regulation of health insurers by the Department of Insurance. Existing law requires health care service plans and insurers to disclose or provide for the disclosure to specified entities persons and the process that the plan uses to authorize or deny health care services under the benefits provided by the plan, including coverage for subacute care, transitional inpatient care, or care provided in skilled nursing facilities.

This bill would expand the above requirement to include disclosure of the process the plan uses to authorize or deny behavioral health treatment. By changing the definition of an existing crime with respect to health care service plans, this bill would impose a state-mandated local program.

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.

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

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

P2    1

SECTION 1.  

Section 1363.5 of the Health and Safety Code is
2amended to read:

3

1363.5.  

(a)  A plan shall disclose or provide for the disclosure
4to the director and to network providers the processbegin insert thatend insert the plan,
5its contracting provider groups, or any entity with which the plan
6contracts for services that include utilization review or utilization
7management functions, uses to authorize, modify, or deny health
8care services under the benefits provided by the plan, including
9coverage for subacute care, transitional inpatient care,begin delete orend delete care
10provided in skilled nursingbegin delete facilities.end deletebegin insert facilities, and behavioral
11health treatment.end insert
A plan shall also disclose those processes to
12enrollees or persons designated by an enrollee, or to any other
13person or organization, upon request. The disclosure to the director
14shall include the policies, procedures, and the description of the
15process that are filed with the director pursuant to subdivision (b)
16of Section 1367.01.

17(b)  The criteria or guidelines used by plans, or any entities with
18which plans contract for services that include utilization review
19or utilization management functions, to determine whether to
20authorize, modify, or deny health care services shall:

21(1)  Be developed with involvement from actively practicing
22health care providers.

23(2)  Be consistent with sound clinical principles and processes.

24(3)  Be evaluated, and updated if necessary, at least annually.

25(4)  If used as the basis of a decision to modify, delay, or deny
26services in a specified case under review, be disclosed to the
27provider and the enrollee in that specified case.

28(5)  Be available to the public upon request. A plan shall only
29be required to disclose the criteria or guidelines for the specific
30procedures or conditions requested. A plan may charge reasonable
31fees to cover administrative expenses related to disclosing criteria
32or guidelines pursuant to this paragraph, limited to copying and
33postage costs. The plan may also make the criteria or guidelines
34available through electronic communication means.

P3    1(c)  The disclosure required by paragraph (5) of subdivision (b)
2shall be accompanied by the following notice: “The materials
3provided to you are guidelines used by this plan to authorize,
4modify, or deny care for persons with similar illnesses or
5conditions. Specific care and treatment may vary depending on
6individual need and the benefits covered under your contract.”

7

SEC. 2.  

Section 10123.135 of the Insurance Code is amended
8to read:

9

10123.135.  

(a) Every disability insurer, or an entity with which
10it contracts for services that include utilization review or utilization
11management functions, that covers hospital, medical, or surgical
12expenses and that prospectively, retrospectively, or concurrently
13reviews and approves, modifies, delays, or denies, based in whole
14or in part on medical necessity, requests by providers prior to,
15retrospectively, or concurrent with the provision of health care
16services to insureds, or that delegates these functions to medical
17groups or independent practice associations or to other contracting
18providers, shall comply with this section.

19(b) A disability insurer that is subject to this section, or any
20entity with which an insurer contracts for services that include
21 utilization review or utilization management functions, shall have
22written policies and procedures establishing the process by which
23the insurer prospectively, retrospectively, or concurrently reviews
24and approves, modifies, delays, or denies, based in whole or in
25part on medical necessity, requests by providers of health care
26services for insureds. These policies and procedures shall ensure
27that decisions based on the medical necessity of proposed health
28care services are consistent with criteria or guidelines that are
29supported by clinical principles and processes. These criteria and
30guidelines shall be developed pursuant to subdivision (f). These
31policies and procedures, and a description of the process by which
32an insurer, or an entity with which an insurer contracts for services
33that include utilization review or utilization management functions,
34reviews and approves, modifies, delays, or denies requests by
35providers prior to, retrospectively, or concurrent with the provision
36of health care services to insureds, shall be filed with the
37commissioner, and shall be disclosed by the insurer to insureds
38and providers upon request, and by the insurer to the public upon
39request.

P4    1(c) If the number of insureds covered under health benefit plans
2in this state that are issued by an insurer subject to this section
3constitute at least 50 percent of the number of insureds covered
4under health benefit plans issued nationwide by that insurer, the
5insurer shall employ or designate a medical director who holds an
6unrestricted license to practice medicine in this state issued
7pursuant to Section 2050 of the Business and Professions Code or
8the Osteopathic Initiative Act, or the insurer may employ a clinical
9director licensed in California whose scope of practice under
10California law includes the right to independently perform all those
11services covered by the insurer. The medical director or clinical
12director shall ensure that the process by which the insurer reviews
13and approves, modifies, delays, or denies, based in whole or in
14part on medical necessity, requests by providers prior to,
15retrospectively, or concurrent with the provision of health care
16services to insureds, complies with the requirements of this section.
17Nothing in this subdivision shall be construed as restricting the
18existing authority of the Medical Board of California.

19(d) If an insurer subject to this section, or individuals under
20contract to the insurer to review requests by providers, approve
21the provider’s request pursuant to subdivision (b), the decision
22shall be communicated to the provider pursuant to subdivision (h).

23(e) An individual, other than a licensed physician or a licensed
24health care professional who is competent to evaluate the specific
25clinical issues involved in the health care services requested by
26the provider, may not deny or modify requests for authorization
27of health care services for an insured for reasons of medical
28necessity. The decision of the physician or other health care
29provider shall be communicated to the provider and the insured
30pursuant to subdivision (h).

31(f) (1) An insurer shall disclose, or provide for the disclosure,
32to the commissioner and to network providers, the processbegin insert thatend insert
33 the insurer, its contracting provider groups, or any entity with
34which it contracts for services that include utilization review or
35utilization management functions, uses to authorize, delay, modify,
36or deny health care services under the benefits provided by the
37insurance contract, including coverage for subacute care,
38transitional inpatient care,begin delete orend delete care provided in skilled nursing
39begin delete facilities.end deletebegin insert facilities, and behavioral health treatment.end insert An insurer
40shall also disclose those processes to policyholders or persons
P5    1designated by a policyholder, or to any other person or
2organization, upon request.

3(2) The criteria or guidelines used by an insurer, or an entity
4with which an insurer contracts for utilization review or utilization
5management functions, to determine whether to authorize, modify,
6delay, or deny health care services, shall comply with all of the
7following:

8(A) Be developed with involvement from actively practicing
9health care providers.

10(B) Be consistent with sound clinical principles and processes.

11(C) Be evaluated, and updated if necessary, at least annually.

12(D) If used as the basis of a decision to modify, delay, or deny
13services in a specified case under review, be disclosed to the
14provider and the policyholder in that specified case.

15(E) Be available to the public upon request. An insurer shall
16only be required to disclose the criteria or guidelines for the
17specific procedures or conditions requested. An insurer may charge
18reasonable fees to cover administrative expenses related to
19disclosing criteria or guidelines pursuant to this paragraph that are
20limited to copying and postage costs. The insurer may also make
21the criteria or guidelines available through electronic
22communication means.

23(3) The disclosure required by subparagraph (E) of paragraph
24(2) shall be accompanied by the following notice: “The materials
25provided to you are guidelines used by this insurer to authorize,
26modify, or deny health care benefits for persons with similar
27illnesses or conditions. Specific care and treatment may vary
28depending on individual need and the benefits covered under your
29insurance contract.”

30(g) If an insurer subject to this section requests medical
31information from providers in order to determine whether to
32approve, modify, or deny requests for authorization, the insurer
33shall request only the information reasonably necessary to make
34the determination.

35(h) In determining whether to approve, modify, or deny requests
36by providers prior to, retrospectively, or concurrent with the
37provision of health care services to insureds, based in whole or in
38part on medical necessity, every insurer subject to this section shall
39 meet the following requirements:

P6    1(1) Decisions to approve, modify, or deny, based on medical
2necessity, requests by providers prior to, or concurrent with, the
3provision of health care services to insureds that do not meet the
4requirements for the time period for review required by paragraph
5(2), shall be made in a timely fashion appropriate for the nature of
6the insured’s condition, not to exceed five business days from the
7insurer’s receipt of the information reasonably necessary and
8requested by the insurer to make the determination. In cases where
9the review is retrospective, the decision shall be communicated to
10the individual who received services, or to the individual’s
11designee, within 30 days of the receipt of information that is
12reasonably necessary to make this determination, and shall be
13communicated to the provider in a manner that is consistent with
14current law. For purposes of this section, retrospective reviews
15shall be for care rendered on or after January 1, 2000.

16(2) When the insured’s condition is such that the insured faces
17an imminent and serious threat to his or her health, including, but
18not limited to, the potential loss of life, limb, or other major bodily
19function, or the normal timeframe for the decisionmaking process,
20as described in paragraph (1), would be detrimental to the insured’s
21life or health or could jeopardize the insured’s ability to regain
22maximum function, decisions to approve, modify, or deny requests
23by providers prior to, or concurrent with, the provision of health
24care services to insureds shall be made in a timely fashion,
25appropriate for the nature of the insured’s condition, but not to
26exceed 72 hours or, if shorter, the period of time required under
27Section 2719 of the federal Public Health Service Act (42 U.S.C.
28Sec. 300gg-19) and any subsequent rules or regulations issued
29thereunder, after the insurer’s receipt of the information reasonably
30necessary and requested by the insurer to make the determination.

31(3) Decisions to approve, modify, or deny requests by providers
32for authorization prior to, or concurrent with, the provision of
33health care services to insureds shall be communicated to the
34requesting provider within 24 hours of the decision. Except for
35concurrent review decisions pertaining to care that is underway,
36which shall be communicated to the insured’s treating provider
37within 24 hours, decisions resulting in denial, delay, or
38modification of all or part of the requested health care service shall
39be communicated to the insured in writing within two business
40days of the decision. In the case of concurrent review, care shall
P7    1not be discontinued until the insured’s treating provider has been
2notified of the insurer’s decision and a care plan has been agreed
3upon by the treating provider that is appropriate for the medical
4needs of that patient.

5(4) Communications regarding decisions to approve requests
6by providers prior to, retrospectively, or concurrent with the
7provision of health care services to insureds shall specify the
8specific health care service approved. Responses regarding
9decisions to deny, delay, or modify health care services requested
10by providers prior to, retrospectively, or concurrent with the
11provision of health care services to insureds shall be communicated
12to insureds in writing, and to providers initially by telephone or
13facsimile, except with regard to decisions rendered retrospectively,
14and then in writing, and shall include a clear and concise
15explanation of the reasons for the insurer’s decision, a description
16of the criteria or guidelines used, and the clinical reasons for the
17decisions regarding medical necessity. Any written communication
18to a physician or other health care provider of a denial, delay, or
19modification or a request shall include the name and telephone
20number of the health care professional responsible for the denial,
21delay, or modification. The telephone number provided shall be a
22direct number or an extension, to allow the physician or health
23care provider easily to contact the professional responsible for the
24denial, delay, or modification. Responses shall also include
25information as to how the provider or the insured may file an appeal
26with the insurer or seek department review under the unfair
27practices provisions of Article 6.5 (commencing with Section 790)
28of Chapter 1 of Part 2 of Division 1 and the regulations adopted
29thereunder.

30(5) If the insurer cannot make a decision to approve, modify,
31or deny the request for authorization within the timeframes
32specified in paragraph (1) or (2) because the insurer is not in receipt
33of all of the information reasonably necessary and requested, or
34because the insurer requires consultation by an expert reviewer,
35or because the insurer has asked that an additional examination or
36test be performed upon the insured, provided that the examination
37or test is reasonable and consistent with good medical practice,
38the insurer shall, immediately upon the expiration of the timeframe
39specified in paragraph (1) or (2), or as soon as the insurer becomes
40aware that it will not meet the timeframe, whichever occurs first,
P8    1notify the provider and the insured, in writing, that the insurer
2cannot make a decision to approve, modify, or deny the request
3for authorization within the required timeframe, and specify the
4information requested but not received, or the expert reviewer to
5be consulted, or the additional examinations or tests required. The
6insurer shall also notify the provider and enrollee of the anticipated
7date on which a decision may be rendered. Upon receipt of all
8information reasonably necessary and requested by the insurer,
9the insurer shall approve, modify, or deny the request for
10authorization within the timeframes specified in paragraph (1) or
11 (2), whichever applies.

12(6) If the commissioner determines that an insurer has failed to
13meet any of the timeframes in this section, or has failed to meet
14any other requirement of this section, the commissioner may assess,
15by order, administrative penalties for each failure. A proceeding
16for the issuance of an order assessing administrative penalties shall
17be subject to appropriate notice to, and an opportunity for a hearing
18with regard to, the person affected. The administrative penalties
19shall not be deemed an exclusive remedy for the commissioner.
20These penalties shall be paid to the Insurance Fund.

21(i) Every insurer subject to this section shall maintain telephone
22access for providers to request authorization for health care
23services.

24(j) Nothing in this section shall cause a disability insurer to be
25defined as a health care provider for purposes of any provision of
26law, including, but not limited to, Section 6146 of the Business
27and Professions Code, Sections 3333.1 and 3333.2 of the Civil
28Code, and Sections 340.5, 364, 425.13, 667.7, and 1295 of the
29Code of Civil Procedure.

30

SEC. 3.  

No reimbursement is required by this act pursuant to
31Section 6 of Article XIII B of the California Constitution because
32the only costs that may be incurred by a local agency or school
33district will be incurred because this act creates a new crime or
34infraction, eliminates a crime or infraction, or changes the penalty
35for a crime or infraction, within the meaning of Section 17556 of
36the Government Code, or changes the definition of a crime within
37the meaning of Section 6 of Article XIII B of the California
38Constitution.



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