BILL NUMBER: SB 59	ENROLLED
	BILL TEXT

	PASSED THE SENATE   SEPTEMBER 10, 1999
	PASSED THE ASSEMBLY   SEPTEMBER 9, 1999
	AMENDED IN ASSEMBLY   SEPTEMBER 9, 1999
	AMENDED IN ASSEMBLY   SEPTEMBER 7, 1999
	AMENDED IN ASSEMBLY   AUGUST 16, 1999
	AMENDED IN SENATE   MAY 18, 1999
	AMENDED IN SENATE   APRIL 28, 1999
	AMENDED IN SENATE   MARCH 25, 1999

INTRODUCED BY   Senators Perata and Ortiz
   (Principal coauthor:  Senator Figueroa)
   (Principal coauthors:  Assembly Members Gallegos, Soto, and
Thomson)
   (Coauthor: Assembly Member Alquist)

                        DECEMBER 7, 1998

   An act to add Section 1367.01 to, and to repeal and add Section
1363.5 of, the Health and Safety Code, to add Section 10123.135 to
the Insurance Code, and to add Section 14087.41 to the Welfare and
Institutions Code, relating to health care coverage.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 59, Perata.  Health care coverage.
   (1) Existing law provides for the regulation of health care
service plans by the Department of Corporations and for the
regulation of disability insurers by the Department of Insurance.
Existing law requires a health care service plan to disclose the
process used by the plan to authorize or deny health care services,
to the Commissioner of Corporations, health care providers under
contract with the plan, and enrollees, as specified, and establishes
the criteria used by plans to determine whether to authorize or deny
health care services.  Existing law requires a health care service
plan and a disability insurer to include within its disclosure form
and evidence or certificate of coverage a statement describing how
participation may affect the choice of physicians.  Existing law
provides that a willful violation of provisions regulating health
care service plans is a crime.
   This bill would instead require a health care service plan to
disclose the process the plan, its contracting provider groups, or
any entity with which the plan contracts for services, uses to
authorize, modify, or deny health care services, to health care
providers, enrollees, or to any other person or organization upon
request, and would revise the criteria or guidelines used by plans,
or any entities with which plans contract for utilization review or
utilization management functions, to determine whether to authorize,
modify, or deny health care services.
   This bill would enact additional provisions applicable to a health
care service plan and any entity with which it contracts for
services, that prospectively, retrospectively, or concurrently
reviews and approves, modifies, delays, or denies, based on medical
necessity, requests by providers prior to, retrospectively, or
concurrent with, the provision of health care services to enrollees
or other specified entities.  It would require that those decisions
be made within specified timeframes.  These provisions would not
apply to certain decisions made for the care or treatment of the sick
who depend upon prayer or spiritual means for healing in the
practice of religion. The bill would also enact similar provisions
applicable to a disability insurer that prospectively,
retrospectively, or concurrently reviews and approves, modifies,
delays, or denies, based on medical necessity, requests by providers
prior to, retrospectively, or concurrent with, the provision of
health care services to insureds, or other specified entities.  It
would require that those decisions be made within specified
timeframes.  Because a violation of the bill's requirements with
respect to health care service plans would be a crime, this bill
would create a state-mandated local program by creating a new crime.

   This bill would also make legislative findings and declarations in
this regard.
   (2) Existing law provides for the Medi-Cal program to provide
health coverage for low-income persons.
   This bill would require the State Department of Health Services to
develop a simple form to be used by Medi-Cal managed care plans in
order to notify an enrollee of a denial, termination, delay, or
modification in benefits, as specified.
  (3) 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.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  (a) The Legislature finds and declares all of the
following:
   (1) Consumers have the right to receive quality medical care in a
timely and efficient manner.
   (2) Decisions about medical care should be made by physicians and
other relevant health care professionals.
   (3) Consumers have the right to know how and why a decision about
their medical care is made.
   (b) "Utilization review," otherwise known as "internal review," is
the process by which health care service plans and disability
insurers review, and approve, modify, or deny, requests for treatment
of patients by physicians, and the Legislature recognizes that it is
an integral component of the total process by which consumers access
health care services.
   (c) It is the intent of the Legislature to establish sound
consumer protections applicable to the internal review processes of
health care service plans and disability insurers, with the goal of
providing faster, more accessible, and better quality medical care to
patients.
  SEC. 2.  Section 1363.5 of the Health and Safety Code is repealed.

  SEC. 3.  Section 1363.5 is added to the Health and Safety Code, to
read:
   1363.5.  (a) A plan shall disclose or provide for the disclosure
to the director and to network providers the process the plan, its
contracting provider groups, or any entity with which the plan
contracts for services that include utilization review or utilization
management functions, uses to authorize, modify, 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.  A plan shall also disclose those
processes to enrollees or persons designated by an enrollee, or to
any other person or organization, upon request.
   (b) The criteria or guidelines used by plans, or any entities with
which plans contract for services that include utilization review or
utilization management functions, to determine whether to authorize,
modify, or deny health care services shall:
   (1) Be developed with involvement from actively practicing health
care providers.
   (2) Be consistent with sound clinical principles and processes.
   (3) Be evaluated, and updated if necessary, at least annually.
   (4) If used as the basis of a decision to modify, delay, or deny
services in a specified case under review, be disclosed to the
provider and the enrollee in that specified case.
   (5) Be available to the public upon request.  A plan shall only be
required to disclose the criteria or guidelines for the specific
procedures or conditions requested.  A plan may charge reasonable
fees to cover administrative expenses related to disclosing criteria
or guidelines pursuant to this paragraph, limited to copying and
postage costs.  The plan may also make the criteria or guidelines
available through electronic communication means.
   (c) The disclosure required by paragraph (5) of subdivision (b)
shall be accompanied by the following notice:  "The materials
provided to you are guidelines used by this plan to authorize,
modify, or deny care for persons with similar illnesses or
conditions.  Specific care and treatment may vary depending on
individual need and the benefits covered under your contract."
  SEC. 4.  Section 1367.01 is added to the Health and Safety Code, to
read:
   1367.01.  (a) Every health care service plan and any entity with
which it contracts for services that include utilization review or
utilization management functions, that prospectively,
retrospectively, or concurrently reviews and approves, modifies,
delays, or denies, based in whole or in part on medical necessity,
requests by providers prior to, retrospectively, or concurrent with,
the provision of health care services to enrollees, or that delegates
these functions to medical groups or independent practice
associations or to other contracting providers, shall comply with
this section.
   (b) A health care service plan that is subject to this section
shall have written policies and procedures establishing the process
by which the plan prospectively, retrospectively, or concurrently
reviews and approves, modifies, or delays or denies, based in whole
or in part on medical necessity, requests by providers of health care
services for plan enrollees.  These policies and procedures shall
ensure that decisions based on the medical necessity of proposed
health care services are consistent with criteria or guidelines that
are supported by clinical principles and processes developed pursuant
to Section 1363.5.  These policies and procedures, and a description
of the process by which the plan reviews and approves, modifies,
delays, or denies requests by providers prior to, retrospectively, or
concurrent with, the provision of health care services to enrollees,
shall be filed with the director for review and approval, and shall
be disclosed by the plan to providers and enrollees upon request, and
by the plan to the public upon request.
   (c) Every health care service plan subject to this section shall
employ or designate a medical director who holds an unrestricted
license to practice medicine in this state issued pursuant to Section
2050 of the Business and Professions Code or pursuant to the
Osteopathic Act, or, if the plan is a specialized health care service
plan, a clinical director with California licensure in a clinical
area appropriate to the type of care provided by the specialized
health care service plan.  The medical director or clinical director
shall ensure that the process by which the plan reviews and approves,
modifies, or denies, based in whole or in part on medical necessity,
requests by providers prior to, retrospectively, or concurrent with,
the provision of health care services to enrollees, complies with
the requirements of this section.
   (d) If health plan personnel, or individuals under contract to the
plan to review requests by providers, approve the provider's
request, pursuant to subdivision (b), the decision shall be
communicated to the provider pursuant to subdivision (h).
   (e) No individual, other than a licensed physician or a licensed
health care professional, as required by Section 733, 2052.1, or
2052.2 of the Business and Professions Code, who is competent to
evaluate the specific clinical issues involved in the health care
services requested by the provider, may deny or modify requests for
authorization of health care services for an enrollee for reasons of
medical necessity.  The decision of the physician or other health
care professional shall be communicated to the provider and the
enrollee pursuant to subdivision (h).
   (f) The criteria or guidelines used by the health care service
plan to determine whether to approve, modify, or deny requests by
providers prior to, retrospectively, or concurrent with, the
provision of health care services to enrollees, shall be consistent
with clinical principles and processes developed pursuant to the
requirements of Section 1363.5.
   (g) If the health care service plan requests medical information
from providers in order to determine whether to approve, modify, or
deny requests for authorization, the plan shall request only the
information reasonably necessary to make the determination.
   (h) In determining whether to approve, modify, or deny requests by
providers prior to, retrospectively, or concurrent with, the
provision of health care services to enrollees, based in whole or in
part on medical necessity, every health care service plan subject to
this section shall meet the following requirements:
   (1) Decisions to approve, modify, or deny, based on medical
necessity, requests by providers prior to, or concurrent with, the
provision of health care services to enrollees that do not meet the
requirements for the 72-hour review required by paragraph (2), shall
be made in a timely fashion appropriate for the nature of the
enrollee's condition, not to exceed five business days from the plan'
s receipt of the information reasonably necessary and requested by
the plan to make the determination.  In cases where the review is
retrospective, the decision shall be communicated to the individual
who received services, or to the individual's designee, within 30
days of the receipt of information that is reasonably necessary to
make this determination, and shall be communicated to the provider in
a manner that is consistent with current law.  For purposes of this
section, retrospective reviews shall be for care rendered on or after
January 1, 2000.
   (2) When the enrollee's condition is such that the enrollee faces
an imminent and serious threat to his or her health including, but
not limited to, the potential loss of life, limb, or other major
bodily function, or the normal timeframe for the decisionmaking
process, as described in paragraph (1), would be detrimental to the
enrollee's life or health or could jeopardize the enrollee's ability
to regain maximum function, decisions to approve, modify, or deny
requests by providers prior to, or concurrent with, the provision of
health care services to enrollees, shall be made in a timely fashion
appropriate for the nature of the enrollee's condition, not to exceed
72 hours after the plan's receipt of the information reasonably
necessary and requested by the plan to make the determination.
Nothing in this section shall be construed to alter the requirements
of subdivision (b) of Section 1371.4.  Notwithstanding Section
1371.4, the requirements of this division shall be applicable to all
health plans and other entities conducting utilization review or
utilization management.
   (3) Decisions to approve, modify, or deny requests by providers
for authorization prior to, or concurrent with, the provision of
health care services to enrollees shall be communicated to the
requesting provider within 24 hours of the decision.  Except for
concurrent review decisions pertaining to care that is underway,
which shall be communicated to the enrollee's treating provider
within 24 hours, decisions resulting in denial, delay, or
modification of all or part of the requested health care service
shall be communicated to the enrollee in writing within two business
days of the decision.  In the case of concurrent review, care shall
not be discontinued until the enrollee's treating provider has been
notified of the plan's decision, and a care plan has been agreed upon
by the treating provider that is appropriate for the medical needs
of that patient.
   (4) Communications regarding decisions to approve requests by
providers prior to, retrospectively, or concurrent with, the
provision of health care services to enrollees, shall specify the
specific health care service approved.  Responses regarding decisions
to deny, delay, or modify health care services requested by
providers prior to, retrospectively, or concurrent with, the
provision of health care services to enrollees, shall be communicated
to the enrollee in writing and to providers initially by telephone,
except with regard to decisions rendered retrospectively, and then in
writing, and shall include a clear and concise explanation of the
reasons for the plan's decision, a description of the criteria or
guidelines used, and the clinical reasons for the decisions regarding
medical necessity.  Any written communication to a physician or
other health care provider of a denial, delay, or modification of a
request shall include the name and telephone number of the health
care professional responsible for the denial, delay, or modification.
  The telephone number provided shall be a direct number or an
extension, to allow the physician or health care provider easily to
contact the professional responsible for the denial, delay, or
modification. Responses shall also include information as to how the
enrollee may file a grievance with the plan pursuant to Section 1368,
and in the case of Medi-Cal enrollees, shall explain how to request
an administrative hearing and aid paid pending under Sections 51014.1
and 51014.2 of Title 22 of the California Code of Regulations.
   (5) If the health care service plan cannot make a decision to
approve, modify, or deny the request for authorization within the
timeframes specified in paragraph (1) or (2) because the plan is not
in receipt of all of the information reasonably necessary and
requested, or because the plan requires consultation by an expert
reviewer, or because the plan has asked that an additional
examination or test be performed upon the enrollee, provided the
examination or test is reasonable and consistent with good medical
practice, the plan shall, immediately upon the expiration of the
timeframe specified in paragraph (1) or (2) or as soon as the plan
becomes aware that it will not meet the timeframe, whichever occurs
first, notify the provider and the enrollee, in writing, that the
plan cannot make a decision to approve, modify, or deny the request
for authorization within the required timeframe, and specify the
information requested but not received, or the expert reviewer to be
consulted, or the additional examinations or tests required.  The
plan shall also notify the provider and enrollee of the anticipated
date on which a decision may be rendered.  Upon receipt of all
information reasonably necessary and requested by the plan, the plan
shall approve, modify, or deny the request for authorization within
the timeframes specified in paragraph (1) or (2), whichever applies.

   (6) If the director determines that a health care service plan has
failed to meet the timeframes specified in paragraph (1) or (2),
whichever applies, or has failed to meet any other requirement of
this section, the director may assess, by order, administrative
penalties for each failure.  A proceeding for the issuance of an
order assessing administrative penalties shall be subject to
appropriate notice to, an opportunity for a hearing with regard to,
the person affected, in accordance with subdivision (a) of Section
1397.  The administrative penalties shall not be deemed an exclusive
remedy for the director.  These penalties shall be paid to the State
Managed Care Fund.
   (i) Every health care service plan subject to this section shall
maintain telephone access for providers to request authorization for
health care services.
   (j) Every health care service plan subject to this section that
reviews requests by providers prior to, retrospectively, or
concurrent with, the provision of health care services to enrollees
shall establish, as part of the quality assurance program required by
Section 1370, a process by which the plan's compliance with this
section is assessed and evaluated.  The process shall include
provisions for evaluation of complaints, assessment of trends,
implementation of actions to correct identified problems, mechanisms
to communicate actions and results to the appropriate health plan
employees and contracting providers, and provisions for evaluation of
any corrective action plan and measurements of performance.
   (k) The director shall review a health care service plan's
compliance with this section as part of its periodic onsite medical
survey of each plan undertaken pursuant to Section 1380, and shall
include a discussion of compliance with this section as part of its
report issued pursuant to that section.
   (l) This section shall not apply to decisions made for the care or
treatment of the sick who depend upon prayer or spiritual means for
healing in the practice of religion as set forth in subdivision (a)
of Section 1270.
   (m) Nothing in this section shall cause a health care service plan
to be defined as a health care provider for purposes of any
provision of law, including, but not limited to, Section 6146 of the
Business and Professions Code, Sections 3333.1 and 3333.2 of the
Civil Code, and Sections 340.5, 364, 425.13, 667.7, and 1295 of the
Code of Civil Procedure.
  SEC. 5.  Section 10123.135 is added to the Insurance Code, to read:

   10123.135.  (a) Every disability insurer, or an entity with which
it contracts for services that include utilization review or
utilization management functions, that covers hospital, medical, or
surgical expenses and that prospectively, retrospectively, or
concurrently reviews and approves, modifies, delays, or denies, based
in whole or in part on medical necessity requests by providers prior
to, retrospectively, or concurrent with, the provision of health
care services to insureds, or that delegates these functions to
medical groups or independent practice associations or to other
contracting providers, shall comply with this section.
   (b) A disability insurer that is subject to this section, or any
entity with which an insurer contracts for services that include
utilization review or utilization management functions, shall have
written policies and procedures establishing the process by which the
insurer prospectively, retrospectively or concurrently reviews and
approves, modifies, delays, or denies, based in whole or in part on
medical necessity requests by providers of health care services for
insureds.  These policies and procedures shall ensure that decisions
based on medical necessity of a proposed health care service are
consistent with criteria or guidelines that are supported by clinical
principles and processes developed pursuant to subdivision (f).
These policies and procedures, and a description of the process by
which an insurer or any entities with which insurers contract for
services that include utilization review or utilization management
function, reviews and approves, modifies, or denies requests by
providers prior to, retrospectively, or concurrent with, the
provision of health care services to insureds, shall be filed with
the commissioner, and shall be disclosed by the insurer to insureds
and providers upon request, and by the insurer to the public upon
request.
   (c) If the number of insureds covered under health benefit plans
in this state that are issued by an insurer subject to this section
constitute at least 50 percent of the number of insureds covered
under health benefit plans issued nationwide by that insurer, the
insurer shall employ or designate a medical director who holds an
unrestricted license to practice medicine in this state issued
pursuant to Section 2050 of the Business and Professions Code or the
Osteopathic Act, or the insurer may employ a clinical director
licensed in California whose scope of practice under California law
includes the right to independently perform all those services
covered by the insurer.  The medical director or clinical director
shall ensure that the process by which the insurer reviews and
approves, modifies, or denies, based in whole or in part on medical
necessity requests by providers prior to, retrospectively, or
concurrent with, the provision of health care services to insureds,
complies with the requirements of this section.  Nothing in this
subdivision shall be construed as restricting the existing authority
of the Medical Board of California.
   (d) If an insurer subject to this section, or individuals under
contract to the insurer to review requests by providers, approve the
provider's request pursuant to subdivision (b), the decision shall be
communicated to the provider pursuant to subdivision (h).
   (e) No individual, other than a licensed physician or a licensed
health care professional, as required by Sections 733, 2052.1, or
2052.2 of the Business and Professions Code who is competent to
evaluate the specific clinical issues involved in the health care
services requested by the provider, may deny or modify requests for
authorization of health care services for an insured for reasons of
medical necessity.  The decision of the physician or other health
care provider shall be communicated to the provider and the insured
pursuant to subdivision (h).
   (f) (1) An insurer shall disclose or provide for the disclosure to
the commissioner and to network providers, the process the insurer,
its contracting provider groups, or any entity with which it
contracts for services that include utilization review or utilization
management functions, uses to authorize, modify, or deny health care
services under the benefits provided by the insurance contract,
including coverage for subacute care, transitional inpatient care, or
care provided in skilled nursing facilities.  An insurer shall also
disclose those processes to policyholders or persons designated by a
policyholder, or to any other person or organization, upon request.
   (2) The criteria or guidelines used by insurers, or any entities
with which insurers contract for utilization review or utilization
management functions, to determine whether to authorize, modify, or
deny health care services shall:
   (A) Be developed with involvement from actively practicing health
care providers.
   (B) Be consistent with sound clinical principles and processes.
   (C) Be evaluated, and updated if necessary, at least annually.
   (D) If used as the basis of a decision to modify, delay, or deny
services in a specified case under review, be disclosed to the
provider and the policyholder in that specified case.
   (E) Be available to the public upon request.  An insurer shall
only be required to disclose the criteria or guidelines for the
specific procedures or conditions requested.  An insurer may charge
reasonable fees to cover administrative expenses related to
disclosing criteria or guidelines pursuant to this paragraph, limited
to copying and postage costs.  The insurer may also make the
criteria or guidelines available through electronic communication
means.
   (3) The disclosure require by subparagraph (E) of paragraph (2)
shall be accompanied by the following notice:  "The materials
provided to you are guidelines used by this insurer to authorize,
modify, or deny health care benefits for persons with similar
illnesses or conditions.  Specific care and treatment may vary
depending on individual need and the benefits covered under your
insurance contract.
   (g) If an insurer subject to this section requests medical
information from providers in order to determine whether to approve,
modify, or deny requests for authorization, the insurer shall request
only the information reasonably necessary to make the determination.

   (h) In determining whether to approve, modify, or deny requests by
providers prior to, retrospectively, or concurrent with, the
provision of health care services to insureds, based in whole or in
part on medical necessity, every insurer subject to this section
shall meet the following requirements:
   (1) Decisions to approve, modify, or deny, based on medical
necessity, requests by providers prior to, or concurrent with, the
provision of health care services to insureds that do not meet the
requirements for the 72-hour review required by paragraph (2), shall
be made in a timely fashion appropriate for the nature of the insured'
s condition, not to exceed five business days from the insurer's
receipt of the information reasonably necessary and requested by the
insurer to make the determination.  In cases where the review is
retrospective, the decision shall be communicated to the individual
who received services, or to the individual's designee, within 30
days of the receipt of information that is reasonably necessary to
make this determination, and shall be communicated to the provider in
a manner that is consistent with current law.  For purposes of this
section, retrospective reviews shall be for care rendered on or after
January 1, 2000.
   (2) When the insured's condition is such that the insured faces an
imminent and serious threat to his or her health, including, but not
limited to, the potential loss of life, limb, or other major bodily
function, or the normal timeframe for the decisionmaking process, as
described in paragraph (1), would be detrimental to the insured's
life or health or could jeopardize the insured's ability to regain
maximum function, decisions to approve, modify, or deny requests by
providers prior to, or concurrent with, the provision of health care
services to insureds shall be made in a timely fashion, appropriate
for the nature of the insured's condition, but not to exceed 72 hours
after the insurer's receipt of the information reasonably necessary
and requested by the insurer to make the determination.
   (3) Decisions to approve, modify, or deny requests by providers
for authorization prior to, or concurrent with, the provision of
health care services to insureds shall be communicated to the
requesting provider within 24 hours of the decision.  Except for
concurrent review decisions pertaining to care that is underway,
which shall be communicated to the insured's treating provider within
24 hours, decisions resulting in denial, delay, or modification of
all or part of the requested health care service shall be
communicated to the insured in writing within two business days of
the decision.  In the case of concurrent review, care shall not be
discontinued until the insured's treating provider has been notified
of the insurer's decision and a care plan has been agreed upon by the
treating provider that is appropriate for the medical needs of that
patient.
   (4) Communications regarding decisions to approve requests by
providers prior to, retrospectively, or concurrent with, the
provision of health care services to insureds, shall specify the
specific health care service approved.  Responses regarding decisions
to deny, delay, or modify health care services requested by
providers prior to, retrospectively, or concurrent with, the
provision of health care services to insureds, shall be communicated
to insureds in writing to providers initially by telephone except
with regard to decisions rendered retrospectively and then in
writing, shall include a clear and concise explanation of the reasons
for the insurer's decision, a description of the criteria or
guidelines used, and the clinical reasons for the decisions regarding
medical necessity.  Any written communication to a physician or
other health care provider of a denial, delay, or modification or a
request shall include the name and telephone number of the health
care professional responsible for the denial, delay, or modification.
  The telephone number provided shall be a direct number or an
extension, to allow the physician or health care provider easily to
contact the professional responsible for the denial, delay, or
modification.  Responses shall also include information as to how the
provider or the insured may file an appeal with the insurer or seek
department review under the unfair practices provisions of Article
6.5 (commencing with Section 790) of Chapter 1 of Part 7 of Division
1 and the                                            regulations
adopted thereunder.
   (5) If the insurer cannot make a decision to approve, modify, or
deny the request for authorization within the timeframes specified in
paragraph (1) or (2) because the insurer is not in receipt of all of
the information reasonably necessary and requested, or because the
insurer requires consultation by an expert reviewer, or because the
insurer has asked that an additional examination or test be performed
upon the insured, provided that the examination or test is
reasonable and consistent with good medical practice, the insurer
shall, immediately upon the expiration of the timeframe specified in
paragraph (1) or (2), or as soon as the insurer becomes aware that it
will not meet the timeframe, whichever occurs first, notify the
provider and the insured, in writing, that the insurer cannot make a
decision to approve, modify, or deny the request for authorization
within the required timeframe, and specify the information requested
but not received, or the expert reviewer to be consulted, or the
additional examinations or tests required.  The insurer shall also
notify the provider and enrollee of the anticipated date on which a
decision may be rendered.  Upon receipt of all information reasonably
necessary and requested by the insurer, the insurer shall approve,
modify, or deny the request for authorization within the timeframes
specified in paragraph (1) or (2), whichever applies.
   (6) If the commissioner determines that an insurer has failed to
meet the timeframes specified in paragraph (1) or (2), whichever
applies, or has failed to meet any other requirement of this section,
the commissioner may assess, by order, administrative penalties for
each failure.  A proceeding for the issuance of an order assessing
administrative penalties shall be subject to appropriate notice to,
an opportunity for a hearing with regard to, the person affected.
The administrative penalties shall not be deemed an exclusive remedy
for the commissioner.  These penalties shall be paid to the State
Insurance Fund.
   (i) Every insurer subject to this section shall maintain telephone
access for providers to request authorization for health care
services.
   (j) Nothing in this section shall cause a disability insurer to be
defined as a health care provider for purposes of any provision of
law, including, but not limited to, Section 6146 of the Business and
Professions Code, Sections 3333.1 and 3333.2 of the Civil Code, and
Sections 340.5, 364, 425.13, 667.7, and 1295 of the Code of Civil
Procedure.
  SEC. 6.  Section 14087.41 is added to the Welfare and Institutions
Code, to read:
   14087.41.  The department shall develop a simple form, consistent
with the notice requirements of Sections 51014.1 and 51014.2 of Title
22 of the California Code of Regulations, for Medi-Cal managed care
plans to use to notify a Medi-Cal enrollee of a denial, termination,
delay, or modification in benefits.  The department shall require all
Medi-Cal managed care plans to use the form as a condition of
participation in Medi-Cal managed care pursuant to any contract
negotiated after the effective date of this section.
  SEC. 7.  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.