BILL NUMBER: AB 1663 CHAPTERED
BILL TEXT
CHAPTER 979
FILED WITH SECRETARY OF STATE SEPTEMBER 27, 1996
APPROVED BY GOVERNOR SEPTEMBER 27, 1996
PASSED THE ASSEMBLY AUGUST 31, 1996
PASSED THE SENATE AUGUST 30, 1996
AMENDED IN SENATE AUGUST 29, 1996
AMENDED IN SENATE AUGUST 27, 1996
AMENDED IN SENATE AUGUST 26, 1996
AMENDED IN SENATE AUGUST 8, 1996
AMENDED IN SENATE JULY 16, 1996
AMENDED IN SENATE JUNE 13, 1996
AMENDED IN SENATE JULY 13, 1995
AMENDED IN SENATE JUNE 26, 1995
AMENDED IN ASSEMBLY MAY 18, 1995
AMENDED IN ASSEMBLY APRIL 26, 1995
AMENDED IN ASSEMBLY APRIL 6, 1995
INTRODUCED BY Assembly Members Friedman and Knowles
FEBRUARY 24, 1995
An act to add Section 1370.4 to the Health and Safety Code, and to
add Section 10145.3 to the Insurance Code, relating to health
insurance.
LEGISLATIVE COUNSEL'S DIGEST
AB 1663, Friedman. Health insurance.
Existing law requires every health care service plan and
disability insurer that denies coverage for an experimental medical
procedure or plan of treatment for a claimant with a terminal illness
to provide written notice of the medical and scientific reason for
denial, a description of alternative medical treatments, and
information about the review process or grievance procedure, as
applicable.
This bill would require every health care service plan and
disability insurer to establish a reasonable external, independent
review process, which would be required on and after July 1, 1998, to
examine coverage decisions regarding experimental or investigational
therapies for individual enrollees or insureds who meet certain
specified criteria. The bill would require the independent review
entities to be accredited by a private, nonprofit accrediting
organization under contract with the Commissioner of Corporations, in
consultation with the Insurance Commissioner. This bill would
authorize the accrediting organization to grant and revoke
accreditation, and to develop, apply, and enforce accreditation
standards, as specified, that ensure the independence of the
independent review entity, the confidentiality of medical records,
and the qualifications and independence of health care professionals
acting as medical experts.
Since a violation of this provision by a health care service plan
would be a crime, the bill would impose a state-mandated local
program by expanding the scope of a crime.
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 state legislative intent.
This bill would provide that no reimbursement is required by this
act for a specified reason.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. This act shall be known as the Friedman-Knowles
Experimental Treatment Act of 1996.
SEC. 2. (a) It is the intent of the Legislature that health care
service plans and disability insurers be required to provide an
external, independent review by qualified experts when a patient who
has a terminal condition is denied coverage for a drug, device,
procedure, or other therapy generally considered experimental or
investigational. It is further the intent of the Legislature to
provide for external, independent review of such a drug, device,
procedure, or other therapy to determine if it is medically
appropriate for the particular patient.
(b) The Legislature finds and declares that nothing in this act is
intended to preclude a health care service plan or disability
insurer from covering, at its discretion, treatments that are
provided within clinical trials, or from providing the independent
review required by this act to enrollees or insureds who do not
necessarily meet all of the eligibility requirements of subdivision
(a) of Section 1370.4 of the Health and Safety Code or subdivision
(a) of Section 10145.3 of the Insurance Code.
SEC. 3. Section 1370.4 is added to the Health and Safety Code, to
read:
1370.4. (a) Every health care service plan shall provide an
external, independent review process to examine the plan's coverage
decisions regarding experimental or investigational therapies for
individual enrollees who meet all of the following criteria:
(1) The enrollee has a terminal condition that, according to the
enrollee's physician's current diagnosis, has a high probability of
causing death within two years from the date of the request for an
independent review; and
(2) The enrollee's physician certifies that the enrollee has a
condition, as defined in paragraph (1), for which standard therapies
have not been effective in improving the condition of the enrollee,
or for which standard therapies would not be medically appropriate
for the enrollee, or for which there is no more beneficial standard
therapy covered by the plan than the therapy proposed pursuant to
paragraph (3); and
(3) Either (A) the enrollee's physician, who is under contract
with or employed by the plan, has recommended a drug, device,
procedure or other therapy that the physician certifies in writing is
likely to be more beneficial to the enrollee than any available
standard therapies, or (B) the enrollee, or the enrollee's physician
who is a licensed, board-certified or board-eligible physician
qualified to practice in the area of practice appropriate to treat
the enrollee's condition, has requested a therapy that, based on two
documents from the medical and scientific evidence, as defined in
subdivision (d), is likely to be more beneficial for the enrollee
than any available standard therapy. The physician certification
pursuant to this subdivision shall include a statement of the
evidence relied upon by the physician in certifying his or her
recommendation. Nothing in this subdivision shall be construed to
require the plan to pay for the services of a nonparticipating
physician provided pursuant to this subdivision, that are not
otherwise covered pursuant to the plan contract; and
(4) The enrollee has been denied coverage by the plan for a drug,
device, procedure or other therapy recommended or requested pursuant
to paragraph (3); and
(5) The specific drug, device, procedure or other therapy
recommended pursuant to paragraph (3) would be a covered service,
except for the plan's determination that the therapy is experimental
or investigational; and
(6) This section shall not apply to any Medi-Cal beneficiary
enrolled in a health care service plan under the plan's contract with
the Medi-Cal program.
(b) The plan's external, independent review shall meet the
following criteria:
(1) The plan shall offer all enrollees who meet the criteria in
subdivision (a) the opportunity to have the requested therapy
reviewed under the external, independent review process. The plan
shall notify eligible enrollees in writing of the opportunity to
request the external independent review within five business days of
the decision to deny coverage.
(2) The plan shall contract with one or more impartial,
independent entities that are accredited pursuant to subdivision (c).
The entity shall arrange for review of the coverage decision by
selecting an independent panel of at least three physicians or other
providers who are experts in the treatment of the enrollee's medical
condition and knowledgeable about the recommended therapy. If the
entity is an academic medical center accredited in accordance with
subdivision (e), the independent panel may include experts affiliated
with or employed by the entity. A panel of two experts may be
arranged at the plan's request, provided the enrollee consents in
writing. The independent entity may arrange for a panel of one expert
only if the independent entity certifies in writing that there is
only one expert qualified and able to review the recommended therapy.
Neither the plan nor the enrollee shall choose or control the
choice of the physician or other provider experts.
(3) Neither the expert, nor the independent entity, nor any
officer, director, or management employee of the independent entity
shall have any material professional, familial, or financial
affiliation, as defined in paragraph (4), with any of the following:
(A) The plan.
(B) Any officer, director, or management employee of the plan.
(C) The physician, the physician's medical group, or the
independent practice association (IPA) proposing the therapy.
(D) The institution at which the therapy would be provided.
(E) The development or manufacture of the principal drug, device,
procedure, or other therapy proposed for the enrollee whose treatment
is under review.
(4) For purposes of this section, the following terms shall have
the following meanings:
(A) "Material familial affiliation" shall mean any relationship as
a spouse, child, parent, sibling, spouse's parent, or child's
spouse.
(B) "Material professional affiliation" shall mean any
physician-patient relationship, any partnership or employment
relationship, a shareholder or similar ownership interest in a
professional corporation, or any independent contractor arrangement
that constitutes a material financial affiliation with any expert or
any officer or director of the independent entity. The term
"material professional affiliation" shall not include affiliations
which are limited to staff privileges at a health facility.
(C) "Material financial affiliation" shall mean any financial
interest of more than 5 percent of total annual revenue or total
annual income of an entity or individual to which this subdivision
applies. "Material financial affiliation" shall not include payment
by the plan to the independent entity for the services required by
this section, nor shall "material financial affiliation" include an
expert's participation as a contracting plan provider where the
expert is affiliated with an academic medical center or a National
Cancer Institute-designated clinical cancer research center.
(5) The enrollee shall not be required to pay for the external,
independent review. The costs of the review shall be borne by the
plan.
(6) The plan shall provide to the independent entity arranging for
the panel of experts a copy of the following documents within five
business days of the plan's receipt of a request by an enrollee or
enrollee's physician for an external, independent review:
(A) The medical records relevant to the patient's condition for
which the proposed therapy has been recommended, provided the
documents are within the plan's possession. Any medical records
provided to the plan after the initial documents are provided to the
independent entity shall be forwarded by the plan to the independent
entity within five business days. The confidentiality of the medical
records shall be maintained pursuant to Section 56.10 of the Civil
Code.
(B) A copy of any relevant documents used by the plan in
determining whether the proposed therapy should be covered, and any
statement by the plan explaining the reasons for the plan's decision
not to provide coverage for the proposed therapy. The plan shall
provide, upon request, a copy of the documents required by this
paragraph, except for the documents described in subparagraphs (A)
and (C), to the enrollee and the enrollee's physician.
(C) Any information submitted by the enrollee or the enrollee's
physician to the plan in support of the enrollee's request for
coverage of the proposed drug, device, procedure, or other therapy.
(7) The experts on the panel shall render their analyses and
recommendations within 30 days of the receipt of the enrollee's
request for review. If the enrollee's physician determines that the
proposed therapy would be significantly less effective if not
promptly initiated, the analyses and recommendations of the experts
on the panel shall be rendered within seven days of the request for
expedited review. At the request of the expert, the deadline shall
be extended by up to three days for a delay in providing the
documents required by paragraph (6) of subdivision (b).
(8) Each expert's analysis and recommendation shall be in written
form and states the reasons the requested therapy is or is not likely
to be more beneficial for the enrollee than any available standard
therapy, and the reasons that the expert recommends that the therapy
should or should not be provided by the plan, citing the enrollee's
specific medical condition, the relevant documents provided pursuant
to paragraph (6), and the relevant medical and scientific evidence,
including, but not limited to, the medical and scientific evidence as
defined in subdivision (d), to support the expert's recommendation.
(9) The independent entity shall provide the plan and the enrollee'
s physician with the experts' analyses and recommendations, a
description of the qualifications of each expert, and any other
information that it chooses to provide to the plan and the enrollee's
physician, including, but not limited to, the names of the expert
reviewers. The independent entity shall not be required to disclose
the names of the expert reviewers to the plan or the enrollee's
physician, except pursuant to a properly made request for discovery.
If the independent entity chooses to disclose the names of the
experts on the panel to the plan, the independent entity must also
disclose the names of the experts to the enrollee's physician. The
enrollee's physician may provide these documents and information to
the enrollee.
(10) If the majority of experts on the panel recommend providing
the proposed therapy, pursuant to paragraph (8), the recommendation
shall be binding on the plan. If the recommendations of the experts
on the panel are evenly divided as to whether the therapy should be
provided, then the panel's decision shall be deemed to be in favor of
coverage. If less than a majority of the experts on the panel
recommend providing the therapy, the plan is not required to provide
the therapy. Coverage for the services required under this section
shall be provided subject to the terms and conditions generally
applicable to other benefits under the plan contract.
(11) The plan shall have written policies describing the external,
independent review process. The plan shall disclose the
availability of the external, independent review process and how
enrollees may access the review process in the plan's evidence of
coverage and disclosure forms.
(c) The Commissioner of Corporations, in consultation with the
Insurance Commissioner, shall, by January 1, 1998, contract with a
private, nonprofit accrediting organization to accredit the
independent review entities specified in subdivision (b). The
accrediting organization shall have the power to grant and revoke
accreditation, and shall develop, apply, and enforce accreditation
standards, including those required in subdivision (e), that ensure
the independence of the independent review entity, the
confidentiality of the medical records, and the qualifications and
independence of the health care professionals providing the analyses
and recommendations requested of them. The accrediting organization
shall demonstrate the ability to objectively evaluate the performance
of independent entities and shall demonstrate that it has no
conflict of interest, including any material professional, familial,
or financial affiliation as defined in paragraph (4) of subdivision
(b) with any independent entity or plan, in accrediting entities for
the purpose of reviewing medical treatments, treatment
recommendations, and coverage decisions by health care service plans.
(d) For the purposes of paragraph (3) of subdivision (a), "medical
and scientific evidence" means the following sources:
(1) Peer-reviewed scientific studies published in or accepted for
publication by medical journals that meet nationally recognized
requirements for scientific manuscripts and that submit most of their
published articles for review by experts who are not part of the
editorial staff.
(2) Peer-reviewed literature, biomedical compendia, and other
medical literature that meet the criteria of the National Institute
of Health's National Library of Medicine for indexing in Index
Medicus, Excerpta Medicus (EMBASE), Medline, and MEDLARS database
Health Services Technology Assessment Research (HSTAR).
(3) Medical journals recognized by the Secretary of Health and
Human Services, under Section 1861(t)(2) of the Social Security Act.
(4) The following standard reference compendia: The American
Hospital Formulary Service-Drug Information, the American Medical
Association Drug Evaluation, the American Dental Association Accepted
Dental Therapeutics, and the United States Pharmacopoeia-Drug
Information.
(5) Findings, studies, or research conducted by or under the
auspices of federal government agencies and nationally recognized
federal research institutes including the Federal Agency for Health
Care Policy and Research, National Institutes of Health, National
Cancer Institute, National Academy of Sciences, Health Care Financing
Administration, Congressional Office of Technology Assessment, and
any national board recognized by the National Institutes of Health
for the purpose of evaluating the medical value of health services.
(6) Peer-reviewed abstracts accepted for presentation at major
medical association meetings.
(e) In order to receive accreditation for the purposes of this
section, an independent entity shall meet all of the following
requirements:
(1) The independent entity must be an organization that has as its
primary function to provide expert reviews and related services and
receives a majority of its revenues from these services, except that
an academic medical center may qualify as an independent entity for
purposes of this act without having as its primary function providing
expert reviews and related services and without receiving a majority
of its revenues from these services. An independent entity may not
be a subsidiary of, nor in any way owned or controlled by, a health
plan, a trade association of health plans, or a professional
association of health care providers.
(2) The independent entity must submit to the accrediting
organization and to the Department of Corporations the following
information upon initial application for accreditation and annually
thereafter upon any change to any of the following information:
(A) The names of all stockholders and owners of more than 5
percent of any stock or options, if a publicly held organization.
(B) The names of all holders of bonds or notes in excess of one
hundred thousand dollars ($100,000), if any.
(C) The names of all corporations and organizations that the
independent entity controls or is affiliated with, and the nature and
extent of any ownership or control, including the affiliated
organization's type of business.
(D) The names and biographical sketches of all directors,
officers, and executives of the independent entity, as well as a
statement regarding any relationships the directors, officers, and
executives may have with any health care service plan, disability
insurer, managed care organization, provider group or board or
committee.
(E) The percentage of revenue the independent entity receives from
expert reviews.
(F) A description of the review process, including, but limited
not to, the method of selecting expert reviewers and matching the
expert reviewers to specific cases.
(G) A description of the system the independent entity uses to
identify and recruit expert reviewers, the number of expert reviewers
credentialed and the types of cases the experts are credentialed to
review.
(H) Documentation regarding the medical institutions from which
the independent entity has selected the experts during the previous
12 months, and the percentage of opinions obtained from each
institution.
(I) A description of the areas of expertise available from expert
reviewers retained by the independent entity.
(J) A description of how the independent entity ensures compliance
with the conflict-of-interest provisions of this section.
(3) The independent entity must demonstrate that it has a quality
assurance mechanism in place that does the following:
(A) Ensures that the experts retained are appropriately
credentialed and privileged.
(B) Ensures that the reviews provided by the experts are timely,
clear and credible, and that reviews are monitored for quality on an
ongoing basis.
(C) Ensures that the method of selecting expert reviewers for
individual cases achieves a fair and impartial panel of experts who
are qualified to render recommendations regarding the clinical
conditions and therapies in question.
(D) Ensures the confidentiality of medical records and the review
materials, consistent with the requirements of this section.
(E) Ensures the independence of the experts retained to perform
the reviews through conflict-of-interest policies and prohibitions
and adequate screening for conflicts of interest, pursuant to
paragraph (3) of subdivision (b).
(f) (1) The Department of Corporations shall receive the
information filed by independent entities pursuant to paragraph (2)
of subdivision (e) for the purpose of creating a file of public
records. The Department of Corporations shall not be responsible for
accrediting independent entities.
(2) The accrediting organization shall provide, upon the request
of any interested person, a copy of all nonproprietary information
filed with it by the independent entity under paragraph (2) of
subdivision (e). The accrediting organization may charge a
reasonable fee to the interested person for photocopying the
requested information.
(g) The independent review process established by this section
shall be required on and after July 1, 1998.
SEC. 4. Section 10145.3 is added to the Insurance Code, to read:
10145.3. (a) Every disability insurer that covers hospital,
medical, or surgical benefits shall provide an external, independent
review process to examine the insurer's coverage decisions regarding
experimental or investigational therapies for individual insureds who
meet all of the following criteria:
(1) The insured has a terminal condition that, according to the
insured's physician's current diagnosis, has a high probability of
causing death within two years from the date of the request for an
independent medical review; and
(2) The insured's physician certifies that the insured has a
condition, as defined in paragraph (1), for which standard therapies
have not been effective in improving the condition of the insured, or
for which standard therapies would not be medically appropriate for
the insured, or for which there is no more beneficial standard
therapy covered by the insurer than the therapy proposed pursuant to
paragraph (3); and
(3) Either (A) the insured's contracting physician has recommended
a drug, device, procedure, or other therapy that the physician
certifies in writing is likely to be more beneficial to the insured
than any available standard therapies, or (B) the insured, or the
insured's physician who is a licensed, board-certified or
board-eligible physician qualified to practice in the area of
practice appropriate to treat the insured's condition, has requested
a therapy that, based on two documents from the medical and
scientific evidence, as defined in subdivision (d), is likely to be
more beneficial for the insured than any available standard therapy.
The physician certification pursuant to this subdivision shall
include a statement of the evidence relied upon by the physician in
certifying his or her recommendation. Nothing in this subdivision
shall be construed to require the insurer to pay for the services of
a noncontracting physician, provided pursuant to this subdivision,
that are not otherwise covered pursuant to the contract; and
(4) The insured has been denied coverage by the insurer for a
drug, device, procedure, or other therapy recommended or requested
pursuant to paragraph (3), unless coverage for the specific therapy
has been excluded by the plan contract; and
(5) This section shall not apply to any Medi-Cal beneficiary
enrolled with an insurer under the insurer's contract with the
Medi-Cal program; and
(6) The specific drug, device, procedure, or other therapy
recommended pursuant to paragraph (3) would be a covered service,
except for the plan's determination that the therapy is experimental
or under investigation.
(b) The insurer's external, independent review shall meet the
following criteria:
(1) The insurer shall offer all insureds who meet the criteria in
subdivision (a) the opportunity to have the requested therapy
reviewed under the external, independent review process. The insurer
shall notify eligible insureds in writing of the opportunity to
request the external independent review within five business days of
the decision to deny coverage.
(2) The insurer shall contract with one or more impartial,
independent entities that are accredited pursuant to subdivision (c).
The entity shall arrange for review of the coverage decision by
selecting an independent panel of at least three physicians or other
providers who are experts in the treatment of the insured's medical
condition and knowledgeable about the recommended therapy. If the
entity is an academic medical center accredited in accordance with
subdivision (e), the independent panel may include experts affiliated
with or employed by the entity. A panel of two experts may be
arranged at the insurer's request, provided the insured consents in
writing. The independent entity may arrange for a panel of one
expert only if the independent entity certifies in writing that there
is only one expert qualified and able to review the recommended
therapy. Neither the insurer nor the insured shall choose or control
the choice of the physician or other provider experts.
(3) Neither the expert, nor the independent entity, nor any
officer, director, or management employee of the independent entity
shall have any material professional, familial, or financial
affiliation, as defined in paragraph (4), with any of the following:
(A) The insurer.
(B) Any officer, director, or management employee of the insurer.
(C) The physician, the physician's medical group, or the
independent practice association (IPA) proposing the therapy.
(D) The institution at which the therapy would be provided.
(E) The development or manufacture of the principal drug, device,
procedure, or other therapy proposed for the insured whose treatment
is under review.
(4) For purposes of this section, the following terms shall have
the following meanings:
(A) "Material familial affiliation" shall mean any relationship as
a spouse, child, parent, sibling, spouse's parent, or child's
spouse.
(B) "Material professional affiliation" shall mean any
physician-patient relationship, any partnership or employment
relationship, a shareholder or similar ownership interest in a
professional corporation, or any independent contractor arrangement
that constitutes a material financial affiliation with any expert or
any officer or director of the independent entity. The term
"material professional affiliation" shall not include affiliations
which are limited to staff privileges at a health facility.
(C) "Material financial affiliation" shall mean any financial
interest of more than 5 percent of total annual revenue or total
annual income of an entity or individual to which this subdivision
applies. "Material financial affiliation" shall not include payment
by the insurer to the independent entity for the services required by
this section, nor shall "material financial affiliation" include an
expert's participation as a contracting provider for the insurer
where the expert is affiliated with an academic medical center or a
National Cancer Institute-designated clinical cancer research center.
(5) The insured shall not be required to pay for the external
independent review. The costs of the review shall be borne by the
insurer.
(6) The insurer shall provide to the independent entity arranging
for the panel of experts a copy of the following documents within
five business days of the insurer's receipt of a request by an
insured or insured's physician for an external independent review.
(A) The medical records relevant to the patient's condition for
which the proposed therapy has been recommended, provided the
documents are within the insurer's possession. Any medical records
provided to the insurer after the initial documents are provided to
the independent entity shall be forwarded by the insurer to the
independent entity within five business days. The confidentiality of
the medical records shall be maintained pursuant to Section 56.10 of
the Civil Code.
(B) A copy of any relevant documents used by the insurer in
determining whether the proposed therapy should be covered, and any
statement by the insurer explaining the reasons for the insurer's
decision not to provide coverage for the proposed therapy. The
insurer shall provide, upon request, a copy of the documents required
by this paragraph, except for the documents described in paragraphs
(A) and (C), to the insured and the insured's physician.
(C) Any information submitted by the insured or the insured's
physician to the insurer in support of the insured's request for
coverage of the proposed drug,
device, procedure, or other therapy.
(7) The experts on the panel shall render their analyses and
recommendations within 30 days of the receipt of the insured's
request for review. If the insured's physician determines that the
proposed therapy would be significantly less effective if not
promptly initiated, the analyses and recommendations of the experts
on the panel shall be rendered within seven days of the request for
expedited review. At the request of the expert, the deadline shall
be extended by up to three days for a delay in providing the
documents required by paragraph (6) of subdivision (b).
(8) Each expert's analysis and recommendation shall be in written
form and states the reasons the requested therapy is or is not likely
to be more beneficial for the insured than any available standard
therapy, and the reasons that the expert recommends that the therapy
should or should not be covered by the insurer, citing the insured's
specific medical condition, the relevant documents provided pursuant
to paragraph (6), and the relevant medical and scientific evidence,
including, but not limited to, the medical and scientific evidence as
defined in subdivision (d), to support the expert's recommendation.
(9) The independent entity shall provide the insurer and the
insured's physician with the expert's analyses and recommendations, a
description of the qualifications of each expert, and any other
information that it chooses to provide to the insurer and the insured'
s physician, including, but not limited to, the names of the expert
reviewers. The independent entity shall not be required to disclose
the names of the expert reviewers to the insurer or to the insured's
physician, except pursuant to a properly made request for discovery.
If the independent entity chooses to disclose the names of the
experts on the panel to the insurer, the independent entity must also
disclose the names of the experts to the insured's physician. The
insured's physician may provide these documents and information to
the enrollee.
(10) If the majority of experts on the panel recommend providing
the proposed therapy, pursuant to paragraph (8), the recommendation
shall be binding on the insurer. If the recommendations of the
experts on the panel are evenly divided as to whether the therapy
should be provided, then the panel's decision shall be deemed to be
in favor of coverage. If less than a majority of the experts on the
panel recommend providing the therapy, the insurer is not required to
provide the therapy. Coverage for the services required under this
section shall be provided subject to the terms and conditions
generally applicable to other benefits under the contract.
(11) The insurer shall have written policies describing the
external, independent review process. The insurer shall disclose the
availability of the external, independent review process and how
insureds may access the review process in the insurer's evidence of
coverage and disclosure forms.
(c) The Commissioner of Corporations, in consultation with the
Insurance Commissioner, shall, by January 1, 1998, contract with a
private, nonprofit accrediting organization to accredit the
independent review entities specified in subdivision (b). The
accrediting organization shall have the power to grant and revoke
accreditation, and shall develop, apply, and enforce accreditation
standards, including those required in subdivision (e), that ensure
the independence of the independent review entity, the
confidentiality of the medical records, and the qualifications and
independence of the health care professionals providing the analyses
and recommendations requested of them. The accrediting organization
shall demonstrate the ability to objectively evaluate the performance
of independent entities and shall demonstrate that it has no
conflict of interest, including any material professional, familial,
or financial affiliation as defined in paragraph (4) of subdivision
(b) with any independent entity or disability insurer, in accrediting
entities for the purpose of reviewing medical treatments, treatment
recommendations, and coverage decisions by disability insurers.
(d) For the purposes of paragraph (3) of subdivision (a), "medical
and scientific evidence" means the following sources:
(1) Peer-reviewed scientific studies published in or accepted for
publication by medical journals that meet nationally recognized
requirements for scientific manuscripts and that submit most of their
published articles for review by experts who are not part of the
editorial staff.
(2) Peer-reviewed literature, biomedical compendia and other
medical literature that meet the criteria of the National Institute
of Health's National Library of Medicine for indexing in Index
Medicus, Excerpta Medicus (EMBASE), Medline and MEDLARS database
Health Services Technology Assessment Research (HSTAR).
(3) Medical journals recognized by the Secretary of Health and
Human Services, under Section 1861(t)(2) of the Social Security Act.
(4) The following standard reference compendia: The American
Hospital Formulary Service-Drug Information, the American Medical
Association Drug Evaluation, the American Dental Association Accepted
Dental Therapeutics and The United States Pharmacopoeia-Drug
Information.
(5) Findings, studies or research conducted by or under the
auspices of federal government agencies and nationally recognize
federal research institutes including the Federal Agency for Health
Care Policy and Research, National Institutes of Health, National
Cancer Institute, National Academy of Sciences, Health Care Financing
Administration, Congressional Office of Technology Assessment, and
any national board recognized by the National Institutes of Health
for the purpose of evaluating the medical value of health services.
(6) Peer-reviewed abstracts accepted for presentation at major
medical association meetings.
(e) In order to receive accreditation for the purposes of this
section, an independent entity shall meet all of the following
requirements:
(1) The independent entity must be an organization that has as its
primary function to provide expert reviews and related services and
receives a majority of its revenues from these services, except that
an academic medical center may qualify as an independent entity for
purposes of this act without having as its primary function providing
expert reviews and related services and without receiving a majority
of its revenues from these services. An independent entity may not
be a subsidiary of, nor in any way owned or controlled by, a health
plan, a trade association of health plans, or a professional
association of health care providers.
(2) The independent entity must submit to the accrediting
organization and to the Department of Corporations the following
information upon initial application for accreditation and annually
thereafter upon any change to any of the following information:
(A) The names of all stockholders and owners of more than 5
percent of any stock or options, if a publicly held organization.
(B) The names of all holders of bonds or notes in excess of one
hundred thousand dollars ($100,000), if any.
(C) The names of all corporations and organizations that the
independent entity controls or is affiliated with, and the nature and
extent of any ownership or control, including the affiliated
organization's type of business.
(D) The names and biographical sketches of all directors,
officers, and executives of the independent entity, as well as a
statement regarding any relationships the directors, officers, and
executives may have with any health care service plan, disability
insurer, managed care organization, provider group or board or
committee.
(E) The percentage of revenue the independent entity receives from
expert reviews.
(F) A description of the review process, including, but limited
not to, the method of selecting expert reviewers and matching the
expert reviewers to specific cases.
(G) A description of the system the independent entity uses to
identify and recruit expert reviewers, the number of expert reviewers
credentialed and the types of cases the experts are credentialed to
review.
(H) Documentation regarding the medical institutions from which
the independent entity has selected the experts during the previous
12 months, and the percentage of opinions obtained from each
institution.
(I) A description of the areas of expertise available from expert
reviewers retained by the independent entity.
(J) A description of how the independent entity ensures compliance
with the conflict-of-interest provisions of this section.
(3) The independent entity must demonstrate that it has a quality
assurance mechanism in place that does the following:
(A) Ensures that the experts retained are appropriately
credentialed and privileged.
(B) Ensures that the reviews provided by the experts are timely,
clear and credible, and that reviews are monitored for quality on an
ongoing basis.
(C) Ensures that the method of selecting expert reviewers for
individual cases achieves a fair and impartial panel of experts who
are qualified to render recommendations regarding the clinical
conditions and therapies in question.
(D) Ensures the confidentiality of medical records and the review
materials, consistent with the requirements of this section.
(E) Ensures the independence of the experts retained to perform
the reviews through conflict-of-interest policies and prohibitions
and adequate screening for conflicts of interest, pursuant to
paragraph (3) of subdivision (b).
(f) (1) The Department of Corporations shall receive the
information filed by independent entities pursuant to paragraph (2)
of subdivision (e) for the purpose of creating a file of public
records. The Department of Corporations shall not be responsible for
accrediting independent entities.
(2) The accrediting organization shall provide, upon the request
of any interested person, a copy of all nonproprietary information
filed with it by the independent entity under paragraph (2) of
subdivision (e). The accrediting organization may charge a
reasonable fee to the interested person for photocopying the
requested information.
(g) The independent review process established by this section
shall be required on and after July 1, 1998.
SEC. 5. No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.
Notwithstanding Section 17580 of the Government Code, unless
otherwise specified, the provisions of this act shall become
operative on the same date that the act takes effect pursuant to the
California Constitution.