BILL ANALYSIS
SB 1092
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Date of Hearing: August 7, 2002
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Darrell Steinberg, Chair
SB 1092 (Sher) - As Amended: June 19, 2002
Policy Committee: HealthVote:12-6
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill establishes the Consumer Participation Program (CPP)
in the Department of Managed Health Care (DMHC) to award fees
for actions on behalf of consumers. Specifically, this bill:
1)Allows the DMHC director to award reasonable advocacy and
witness fees to any person who demonstrates he/she represents
the interests of consumers and who has made a substantial
contribution on behalf of consumers to the adoption of an
order, regulation, or decision made by the director. Excludes
individual grievances, complaints or cases.
2)Requires DMHC to adopt regulations by July 1, 2003,
establishing the CPP and specifying eligibility, rates, and
procedures for seeking compensation.
3)Caps fees awarded at $350,000 each fiscal year, payable from
assessments currently imposed on health plans regulated by
DMHC. Prohibits the assessment from being increased to pay
for CPP fees awarded.
4)Requires DMHC to report to the Legislature by March 1, 2004
and annually thereafter on the amount of fees awarded, the
recipients of fees, and the orders, decisions and regulations
that were the basis for the payment of fees.
FISCAL EFFECT
Up to $350,000 annual costs (Managed Care Fund) to DMHC to award
fees. Minor, absorbable administrative costs to develop
regulations, administer the CPP and produce the annual report.
SB 1092
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COMMENTS
1)Purpose . This bill is intended to ensure an ongoing consumer
presence in the DMHC regulatory process by establishing a
Consumer Participation Program to award "intervenor fees" to
consumer interests that have contributed significantly to the
process. It is based on existing intervenor fee programs at
the Public Utilities Commission (PUC) and the Department of
Insurance (DOI).
Six organizations-Health Access California, Western Center on
Law and Poverty, Center for Health Care Rights, California
Pan-Ethnic Health Network, Consumers Union, and Latino Issues
Forum-have worked collaboratively on the implementation of the
1999 HMO Patient Bill of Rights and other consumer protection
issues, such as the independent medical review process, fiscal
solvency of medical groups and a consumer report card on HMOs.
Three years of funding from the Wellness Foundation and the
California Consumer Protection Foundation for these activities
will expire in June 2003, and has not been adequate to provide
full consumer advocacy at regulatory hearings, advisory
committee meetings and other DMHC proceedings.
According to the author, the efforts of these consumer groups
have made a difference in the outcome of regulations and in
the HMO Report Card. Their continued presence is necessary to
balance the interests of the HMOs. This bill would provide up
to $350,000 a year for consumer advocacy, funded by
assessments currently charged HMOs to support DMHC activities.
2)DOI and PUC Programs . Proposition 103, the 1988 initiative on
auto insurance rates, requires the Insurance Commissioner or a
court to award reasonable advocacy and witness fees and
expenses to a consumer representative who has made a
substantial contribution to an order, regulation, or decision
adopted by the commissioner or court. If the advocacy is in
response to a rate application, the applicant must pay the
award, known as an intervenor fee.
Similarly, the PUC authorizes intervenor fees and expenses for
formal proceedings involving electric, gas, water and
telephone utilities. The PUC is required to award reasonable
advocate and expert witness fees and other reasonable costs of
preparation for and participation in a hearing or proceeding
to any customer who complies with specified requirements
SB 1092
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similar to those in this bill. According to the PUC,
intervenor awards are paid by the utility, which later
recovers its costs in utility rates.
This bill is patterned on the DOI and PUC program requirements,
but establishes a cap of $350,000 in annual awards. According
to the Governor's Budget, DMHC is projected to have an ending
fund balance of $2.3 million in FY 2001-02 and $3.1 million in
FY 2002-03.
3)Opposition . When this bill was heard in the Assembly Health
Committee, Health Net, Kaiser, and the California Association
of Health Plans were opposed because they felt the bill does
not establish sufficient eligibility standards for the
intervenor fees, health plans should not underwrite the
advocacy of others who are potential opponents, and existing
avenues for consumer advocacy, such as the Office of Patient
Advocate, already exist within DMHC. The California Medical
Group Association (CMGA) opposes on similar grounds, arguing
that the bill is unnecessary because the HMO Help Center, the
Office of the Patient Advocate and and the Independent Medical
Review program already provide ample representation of
consumer interests. CMGA also feels the bill does not
adequately specify eligibility standards and gives the DMHC
director too much discretion to define in regulations.
Analysis Prepared by : Joyce Iseri / APPR. / (916) 319-2081