BILL ANALYSIS
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UNFINISHED BUSINESS
Bill No: SB 1092
Author: Sher (D)
Amended: 8/23/02
Vote: 21
SENATE VOTES NOT RELEVANT
ASSEMBLY FLOOR : 44-30, 8/26/02 - See last page for vote
SUBJECT : Health care service plans
SOURCE : Western Center on Law and Poverty
DIGEST : Assembly Amendments delete the Senate version of
the bill, which defined "grievance" for purposes of the
Knox-Keene Health Care Service Plan Act of 1975.
The bill requires the adoption of regulations by the
director of the State Department of Managed Health Care to
establish the Consumer Participation Program, 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.
ANALYSIS : This bill:
1. Requires the director of State Department of Managed
Health Care, on or before July 1, 2003, to adopt
regulations to establish Consumer Participation Program
CONTINUED
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(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.
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
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fees awarded each fiscal year.
B. The individuals or organization to whom advocacy
and witness fees were awarded pursuant to this
section.
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 : Appropriation: No Fiscal Com.: Yes
Local: Yes
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
develop regulations, administer the CPP and produce the
annual report.
SUPPORT : (Verified 6/11/02)
California Pan-Ethnic Health Network
Center for Health Care Rights
Consumers Union
Health Access California
Western Center on Law and Poverty
OPPOSITION : (Verified 6/11/02)
California Association of Health Plans
Health Net
Kaiser Permanente Medical Care Program
ARGUMENTS IN SUPPORT : 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 advisory boards and proposed regulations
on a variety of managed care topics require an on-going
consumer presence in the regulatory process. Six
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organizations have obtained three years of funding from two
foundations, but this funding is due to expire in June
2003. This bill establishes a CPP similar to what is
presently in place at the Public Utilities Commission (PUC)
and the State 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 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
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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.
ARGUMENTS IN OPPOSITION : 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.
ASSEMBLY FLOOR
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AYES: Alquist, Aroner, Calderon, Canciamilla, Cardenas,
Cardoza, Cedillo, Chan, Chavez, Chu, Cohn, Diaz, Dutra,
Firebaugh, Frommer, Goldberg, Havice, Hertzberg, Horton,
Jackson, Keeley, Kehoe, Koretz, Liu, Longville,
Lowenthal, Migden, Nakano, Nation, Oropeza, Pavley,
Reyes, Salinas, Shelley, Simitian, Steinberg,
Strom-Martin, Thomson, Vargas, Washington, Wayne,
Wiggins, Wright, Wesson
NOES: Aanestad, Ashburn, Bates, Bogh, Briggs, Bill
Campbell, John Campbell, Cogdill, Cox, Daucher,
Dickerson, Harman, Hollingsworth, Kelley, La Suer, Leach,
Leonard, Leslie, Maddox, Maldonado, Mountjoy, Robert
Pacheco, Rod Pacheco, Pescetti, Richman, Runner,
Strickland, Wyland, Wyman, Zettel
DLW:kb 8/26/02 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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