BILL ANALYSIS
SB 1092
Page 1
SENATE THIRD READING
SB 1092 (Sher)
As Amended August 23, 2002
Majority vote
SENATE VOTE :22-11
HEALTH 12-06 APPROPRIATIONS 15-7
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|Ayes:|Thomson, Chan, Chavez, |Ayes:|Steinberg, Alquist, |
| |Cohn, Frommer, Goldberg, | |Aroner, Cohn, Corbett, |
| |Koretz, | |Diaz, Firebaugh, |
| |Negrete McLeod, Salinas, | |Goldberg, Negrete McLeod, |
| |Strom-Martin, Washington, | |Papan, Pavley, Simitian, |
| |Wayne | |Washington, Wiggins, |
| | | |Wright |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Robert Pacheco, Aanestad, |Nays:|Bates, Ashburn, Daucher, |
| |Bates, Dickerson, | |Maldonado, Robert |
| |Richman, Zettel | |Pacheco, Runner, Zettel |
| | | | |
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SUMMARY : Requires the adoption of regulations by the director
of the Department of Managed Health Care (DMHC) to establish the
Consumer Participation Program (CPP), which would allow the
awarding of reasonable advocacy and witness fees to any person
who meets specified criteria who has made a substantial
contribution on behalf of consumers to the adoption of any
regulation, order or decision made by the director. Sunsets
this bill January 1, 2007. Specifically, this bill :
1)Requires the Director of DMHC, on or before July 1, 2003, to
adopt regulations to establish CPP.
2)Requires the regulations to allow for the director of DMHC to
award reasonable advocacy and witness fees to any person or
organization that demonstrates that the person or organization
represents the interests of consumers and has made a
substantial contribution on behalf of consumers to the
adoption of any regulation or to an order or decision made by
the Director if the order or decision has the potential to
impact a significant number of enrollees.
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3)Requires the regulations adopted by the Director to include
specifications for eligibility of participation, rates of
compensation, and procedures for seeking compensation.
Requires the regulations to require that the person or
organization demonstrate a record of advocacy on behalf of
health care consumers in administrative or legislative
proceedings in order to determine whether the person or
organization represents the interests of consumers.
4)Requires this bill to apply to all proceedings of DMHC, but
prohibits it from applying to the resolution of individual
grievances, complaints, or cases.
5)Requires fees awarded under this bill to be considered costs
and expenses pursuant to a specified provision of existing law
requiring licensing fees and assessments of health plans,
requires the fees to be paid from an assessment required under
a specified provision of existing law, and prohibits the
amount of the assessment from being increased to pay the fees
awarded under this bill.
6)Prohibits fees awarded under this bill from exceeding $350,000
each fiscal year.
7)Requires the DMHC to report to the appropriate policy and
fiscal committees of the Legislature before March 1, 2004, and
annually thereafter, the following information:
a) The amount of reasonable advocacy and witness fees
awarded each fiscal year;
b) The individuals or organization to whom advocacy and
witness fees were awarded pursuant to this section; and,
c) The orders, decisions, and regulations pursuant to which
the advocacy and witness fees were awarded.
8)Sunsets this bill January 1, 2007.
9)Makes various legislative finding and declarations, and states
legislative intent regarding the purpose of this bill.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, up to $350,000 in annual costs (Managed Care Fund) to
DMHC to award fees. Minor, absorbable administrative costs to
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develop regulations, administer the CPP and produce the annual
report.
COMMENTS : The author states the passage of the HMO reform
legislation in 1999 shifted the focus of consumer advocates to
the regulatory area. The newly created DMHC's advisory boards
and proposed regulations on a variety of managed care topics
require an on-going consumer presence in the regulatory process.
Six organizations have obtained three years of funding from two
foundations, but this funding is due to expire in June 2003.
This bill would establish a Consumer Participation Program
similar to what is presently in place at the Public Utilities
Commission (PUC) and the Department of Insurance (DOI).
Consumer participants would receive compensation if they
demonstrate that the person or organization represents the
interests of consumers and the individual has made a
"substantial contribution" on behalf of consumers to the
adoption of any regulation or to an order or decision made by
the director if the order or decision has the potential to
impact a significant number of enrollees. The author states a
consumer voice in the regulatory process has made a difference
in the outcome of regulations and in the HMO Report Card, and
this bill will ensure an on-going consumer presence in the
regulatory process to prevent the regulated entities from taking
over the regulator.
Proposition 103, a 1988 ballot initiative dealing with auto
insurance rates, required the commissioner or a court to award
reasonable advocacy and witness fees and expenses to any person
who demonstrates that the person represents the interests of
consumers, and that he or she has made a substantial
contribution to the adoption of any order, regulation or
decision by the commissioner or a court. If the advocacy occurs
in response to a rate application, the award is required to be
paid by the applicant. The fees awarded under this provision of
Proposition 103 are referred to as "intervenor fees." The
Public Utilities Act also authorizes intervenor's fees and
expenses for formal proceedings of the PUC.
This bill is supported by consumer groups, including Western
Center on Law and Poverty, Consumers Union and Health Access
California, which argue that administrative agencies often hear
only from the industries they regulate and the public interest
is not represented, primarily because of a lack of funding for
this type of advocacy. Proponents write that this bill is
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modeled on similar programs at DOI and the PUC, and that the
rationale for such programs is that administrative agencies make
better decisions when they hear from the full-range of affected
interests. Supporters argue that administrative proceedings,
such as rulemaking, are often lengthy and complex, can involve
expert witnesses, and that preparation and travel expenses for
these proceedings can be prohibitive for nonprofit consumer and
public interest organizations. Supporters argue that their work
before the DMHC has involved drafting extensive comments on
proposed regulations to implement the independent medical review
system, representing consumer interests in the fiscal solvency
crisis affecting medical groups, and successfully advocating for
inclusion of cultural and linguistic data on the first HMO
report card. Proponents argue that sufficient funding exists in
DMHC to fund a consumer participation program, and that this
bill will provide a stable source of funding to ensure a strong
consumer voice at the DMHC that will benefit enrollees of
managed care plans.
This bill is opposed by Health Net, Kaiser Permanente Medical
Care Program, and the California Association of Health Plans
(CAHP). CAHP argues that basing this bill on the practice of
DOI and the PUC is dubious because, unlike DMHC, these entities
award witness fees and reimbursement for advocacy in the context
of their overriding public policy responsibility, which CAHP
states is rate regulation. Additionally, CAHP argues that this
bill would require health plans to underwrite the advocacy of
others who are potentially opponents, and that consumer advocacy
is already assured in DMHC. CAHP concludes that those who
appear before DMHC in regulatory proceedings are advocates for a
specific point of view, but that no side in a democracy should
be forced to pay for the advocacy costs of others who want to
join the discussion in support or opposition. The Kaiser
Permanente Medical Care Program (KPMCP) writes in opposition
that the bill does not establish sufficient standards to govern
who would be eligible for advocacy fees, that the Office of the
Patient Advocate was created to represent health care consumers,
and that during a time of rapidly rising health care costs,
KPMCP believes it is neither fiscally responsible or good public
policy to create a program without legislatively established
guidelines as to who would be eligible, and that it is a
duplication of the role played by the Office of Patient
Advocate.
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Analysis Prepared by : Scott Bain / HEALTH / (916) 319-2097
FN: 0007153