BILL NUMBER: SB 921	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 21, 2003

INTRODUCED BY    Senators Kuehl, Cedillo, Florez, and Perata
  Senator Kuehl 
    (Principal coauthor:  Assembly Member Goldberg) 
    (Coauthors:  Senators Alarcon, Cedillo, Florez, Perata, and
Soto) 
   (Coauthors: Assembly Members Goldberg   Chan
 , Hancock,  Koretz,  Levine,  Lieber, Longville,
Lowenthal,  Pavley, and Steinberg)

                        FEBRUARY 21, 2003

   An act to add Division 112 (commencing with Section 140000) to the
Health and Safety Code, relating to health care coverage.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 921, as amended, Kuehl.  Single payer health care coverage.
   Existing law does not provide a system of universal health care
coverage for California residents.  Existing law provides for the
creation of various programs to provide health care services to
persons who have limited incomes and meet various eligibility
requirements. These programs include the Healthy Families Program
administered by the Managed Risk Medical Insurance Board, and the
Medi-Cal program administered by the State Department of Health
Services. Existing law provides for the regulation of health care
service plans by the Department of Managed Health Care and health
insurers by the Department of Insurance.
   This bill would establish the California Health Care System to be
administered by the newly created  California  Health Care
Agency under the control of an elected Health Care Commissioner.  The
bill would make all California residents eligible for specified
health care benefits under the California Health Care System, which
would, on a single-payer basis, negotiate for or set fees for health
care services provided through the system and pay claims for those
services.  The bill would prohibit deductibles or copayments during
the initial first 2 years of operation of the health care system, but
would authorize the commissioner to establish deductibles and
copayments thereafter.   The bill would require the health care
system to be operational by January 1, 2006, and would enact various
transition provisions. 
   This bill would declare the intent of the Legislature to impose
taxes at unspecified rates on unearned income, tobacco, alcohol,
employers, and employees that would be dedicated to fund the
California Health Care System and would be deposited in the newly
created Health Care Fund.  The bill would require the commissioner to
seek all necessary waivers, exemptions, agreements, or legislation
to allow various existing federal, state, and local health care
payments to be paid to the California Health Care System, which would
then assume responsibility for all benefits and services previously
paid for with those funds.
   The bill would create a Health Policy Board to establish policy on
medical issues and various other matters relating to the health care
system.  The bill would create the Office of Consumer Advocacy
within the agency to represent the interests of health care consumers
relative to the health care system. The bill would create the Office
of Medical Practice Standards within the agency, headed by the chief
medical officer, to establish standards of best medical practice,
including evaluation of pharmaceuticals and medical and surgical
treatment, and in conjunction with that office, would create the
Medical Practice Standards Advisory Board with specified advisory
duties.   The bill would require the establishment of
regional health agencies throughout the state.   The bill
would create the Office of Inspector General for the California
Health Care System within the Attorney General's office, which would
have various oversight powers.  The bill would extend the application
of certain insurance fraud laws to providers of services and
products under the health care system, thereby imposing a
state-mandated local program by revising the definition of a crime.
The bill would enact other related provisions relative to 
budgeting,  federal preemption, subrogation, collective
bargaining agreements, and associated matters.
  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.
   Vote:  majority.  Appropriation:  no.  Fiscal committee:  yes.
State-mandated local program:  yes.


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


  SECTION 1.  Division 112 (commencing with Section 140000) is added
to the Health and Safety Code, to read:

      DIVISION 112.  CALIFORNIA HEALTH CARE SYSTEM
      CHAPTER 1.  GENERAL PROVISIONS

   140000.   There is hereby established in state government the
California Health Care System, which shall be administered by the
 California  Health Care Agency, an independent agency under
the control of the Health Care Commissioner.
   140001.  This division shall be known as and may be cited as the
Health Care for All Californians Act.
   140002.  This division shall be liberally construed to accomplish
its purposes.
   140003.  The California Health Care Agency is hereby designated as
the single state agency with full power to supervise every phase of
the administration of the California Health Care System and to
receive grants-in-aid made by the United States government or by the
state in order to secure full compliance with the applicable
provisions of state and federal law.
   140004.  The California Health Care Agency shall be comprised of
the following entities:
   (a) The Health Policy Board.
   (b) The Office of Consumer Advocacy.
   (c) The Office of Medical Practice Standards. 
   (d) The Regional Health Agencies. 
   140005.   Findings and declarations (RESERVED) 
 The Legislature finds and declares all of the following:
   (a) More than 6 million Californians lacked health insurance
coverage at some time in 2001 and 3.6 million had no health insurance
coverage at any time.
   (b) Since 2001, the number of uninsured Californians has risen
significantly.
   (c) More than 10 million Californians have no coverage for
prescription drugs.  Millions of Californians lacking prescription
drug coverage are otherwise insured.
   (d) Efforts to control health care costs and growth of health care
spending have been unsuccessful.
   (e) Employers, retirement funds, and unions that offer and
negotiate for health insurance and benefits and individuals who
purchase health insurance are experiencing substantial increases in
health care costs and decreases in health care benefits.
   (f) Unstable and affordable rate increases have caused significant
economic hardship for California residents and their employers.
   (g) Nearly 63 percent of all personal bankruptcies in the United
States are the result of health care costs.
   (h) California does not perform well on standard health outcome
measurements.
   (i) Unacceptable health access disparities exist by region,
ethnicity, income, and gender.
   (j) Eleven of California's rural counties have no health
maintenance organizations that provide coverage to the county on a
countywide basis and 21 rural counties no longer have a
Medicare+Choice HMO.
   (k) More than 80 percent of all Medi-Cal and uninsured patient
visits to emergency facilities are for conditions that could have
been treated in a non-emergency setting.
   (l) Emergency departments and trauma centers face growing
financial losses.
   (m) Advances in medical technology are not available to all
Californians who need them.
   (n) Health care providers express significant professional
dissatisfaction with the current health care systems, as do health
care consumers.
   (o) The California Medical Association found in 2001 that
uncompensated care totaled five hundred forty million dollars ($540
million).  Uncompensated care has caused 60 emergency departments (15
percent of the departments in the state) to close since 1990.
   (p) The California Medical Association found in January of 2001
that increasing patient volume and a decline in the number of
emergency rooms have made multiple hour waits for emergency care the
norm and that ambulance diversion is becoming a common method of
dealing with emergency department overcrowding.  These developments
pose significant dangers for both insured and uninsured Californians.

   (q) A quantitative analysis performed by the independent economic
consulting firm, Lewin Inc., indicated that under a single payer
health insurance system, California could afford to cover all
California residents at no new cost to the state.
   (r) According to the same report and numerous other studies, by
simplifying administration, achieving bulk purchase discounts on
pharmaceuticals, and reducing the use of emergency facilities for
primary care, California could divert billions of dollars toward
providing direct health care and improved quality and access  .

   140006.   Purposes (RESERVED)   This division
shall have all of the following purposes:
   (a) To provide universal and affordable health care coverage for
all California residents.
   (b) To provide California residents with an extensive benefit
package that includes prescription drugs.
   (c) To control health care costs and the growth of health care
spending.
   (d) To achieve measurable improvement in health care outcomes.
   (e) To increase provider, consumer, employee, and employer
satisfaction with the health care system.
   (f) To implement policies that strengthen and improve culturally
and linguistically sensitive care.
   (g) To develop an integrated health care database to support
health care planning  .
   140007.  As used in this division, the following terms have the
following meanings  .   : 
   (a) "Agency" means the California Health Care Agency.
   (b) "Commissioner" means the Health Care Commissioner.
   (c) "System" or "health care system" means the California Health
Care System.
   140008.  The definitions contained in Section 140007 shall govern
the construction of this division, unless the context requires
otherwise.

      CHAPTER 2.  GOVERNANCE

   140100.  (a) The commissioner shall be the chief officer of the
agency.
   (b) Except as provided in subdivision (d), the commissioner shall
be elected by the people in the same time, place, and manner as the
Governor and shall serve a term of four years.
   (c) Should a vacancy occur during the term of office, legislative
confirmation shall be required for the position of the commissioner
in the same manner and procedure as that required by Section 5 of
Article V of the California Constitution.
   (d) The first commissioner shall be appointed by the Governor not
less than 75 nor more than 100 days following the operative date of
this division, and shall be subject to confirmation by the Senate
within 30 days of nomination.  If the Senate does not take up the
nomination within 30 days of nomination, the nominee shall be
considered to have been confirmed and may take office.
   (e) Should the Senate fail to confirm the nominee, the Governor
shall appoint a new nominee, subject to the confirmation of the
Senate as provided in subdivision (d).
   (f) If the commissioner is at any time unable to perform the
duties of the office, a deputy health commissioner shall perform
those duties for a period of up to 90 days.
   (g) In the event of a vacancy, or inability of the commissioner to
perform the duties of office for a period of more than 90 days, an
acting commissioner shall be appointed by the Governor and confirmed
by the Senate for the balance of the commissioner's term pursuant to
the same process provided in subdivision (d).
   (h) The commissioner is subject to impeachment pursuant to Section
18 of Article IV of the California Constitution.
   (i) The compensation and benefits of the commissioner shall be
determined pursuant to the same process as provided in Section 8 of
Article III of the California Constitution.
   (j) The commissioner shall be subject to Title 9 (commencing with
Section 81000) of the Government Code.
   140101.  (a) The commissioner shall be responsible for the
performance of all duties, the exercise of all powers and
jurisdiction, and the assumption and discharge of all
responsibilities vested by law in the agency.  The commissioner shall
perform all duties imposed upon the commissioner by this division
and other laws related to health care and shall enforce the execution
of those provisions and laws to promote their underlying aims and
purposes.  These broad powers include, but are not limited to, the
power to set rates and to promulgate generally binding regulations
concerning any and all matters relating to the implementation of this
division and its purposes.
   (b) The commissioner shall appoint the deputy health commissioner,
the  Director   director  of the Health
Care Fund,  the directors of the regional health agencies,
 the  Director of the Office of Consumer Advocacy
  consumer advocate,  , the chief medical officer,
and the members of the Medical Practice Standards Advisory Board.
   (c) In accordance with the laws governing the state civil service,
the commissioner shall employ and, with the approval of the
Department of Finance, fix the compensation of personnel as the
commissioner needs to properly discharge the duties imposed upon the
commissioner by law, including, but not limited to, a deputy
commissioner, a public information officer, a chief enforcement
counsel, a director of the  health care fund, directors of
the regional health agencies   Health Care Fund  a
chief medical officer,  a director of the office of consumer
advocacy   the consumer advocate  , and legal
counsel in any action brought by or against the  director
  commissioner  under or pursuant to any provision
of any law under the commissioner's jurisdiction, or in which the
commissioner joins or intervenes as to a matter within the
commissioner's jurisdiction, as a friend of the court or otherwise,
and stenographic reporters to take and transcribe the testimony in
any formal hearing or investigation before the commissioner or before
a person authorized by the commissioner.  The personnel of the
agency shall perform duties as assigned to them by the commissioner.
The commissioner shall designate certain employees by rule or order
that are to take and subscribe to the constitutional oath of office
within 15 days after their appointments, and to file that oath with
the Secretary of State.  The commissioner shall also designate those
employees that are to be subject to Title 9 (commencing with Section
81000) of the Government Code.
   (d) The commissioner shall adopt a seal bearing the inscription:
"Commissioner, Health Care Agency, State of California."  The seal
shall be affixed to or imprinted on all orders and certificates
issued by him or her and other instruments as he or she directs.  All
courts shall take judicial notice of this seal.
   (e) The administration of the agency shall be supported from the
Health Care Fund created pursuant to Section 140200.
   (f) The commissioner, as a general rule, shall publish or make
available for public inspection any information filed with or
obtained by the agency, unless the commissioner finds that this
availability or publication is contrary to law.  No provision of this
division authorizes the commissioner or any of the commissioner's
assistants, clerks, or deputies to disclose any information withheld
from public inspection except among themselves or when necessary or
appropriate in a proceeding or investigation under this division or
to other federal or state regulatory agencies.  No provision of this
division either creates or derogates from any privilege that exists
at common law or otherwise when documentary or other evidence is
sought under a subpoena directed to the commissioner or any of his or
her assistants, clerks, or deputies.
   (g) It is unlawful for the commissioner or any of his or her
assistants, clerks, or deputies to use for personal benefit any
information that is filed with or obtained by the commissioner and
that is not then generally available to the public.
   (h) The commissioner, in pursuit of his or her duties, shall have
unlimited access to all nonconfidential and all nonprivileged
documents in the custody and control of the agency.
   (i) The Attorney General shall render to the commissioner opinions
upon all questions of law, relating to the construction or
interpretation of any law under the commissioner's jurisdiction or
arising in the administration thereof, that may be submitted to the
Attorney General by the commissioner and upon the commissioner's
request shall act as the attorney for the commissioner in actions and
proceedings brought by or against the commissioner or under or
pursuant to any provision of any law under the commissioner's
jurisdiction.
   (j) The commissioner shall do all of the following:
   (1) Implement statutory eligibility standards.
   (2) Adopt annually a benefits package for consumers.  The benefits
package shall meet or exceed the minimums required by law.
   (3) Act directly or through one or more contractors, as the single
payer for all claims for services provided under this division.
   (4) Develop and implement separate formulae for determining
budgets pursuant to Chapter 3 (commencing with Section 140200).
   (5) Review the formulae described in paragraph (4) annually for
appropriateness and sufficiency of rates, fees, and prices.
   (6) Provide for timely payments to professional providers and
health facilities and clinics through a structure that is efficient
to administer and that eliminates unnecessary administrative costs.
   (7) Implement, to the extent permitted by federal law,
standardized claims and reporting methods under this division.
   (8)  Develop a system of centralized electronic claims and
payments.
   (9)  Establish an enrollment system that will ensure that all
eligible California residents, including those who travel
frequently, those who cannot read, and those who do not speak
English, are aware of their right to health care, and are formally
enrolled.  
   (9) Determine, with the advice of the Health Policy Board, the
number and precise geographical composition of the system's regions,
based on criteria of common economic and demographic features and
geographic contiguity. 
   (10) Report annually to the Legislature and the Governor on or
before October 1 on the performance of the health care system, its
fiscal condition and need for rate adjustments, consumer copayments,
or consumer deductible payments, recommendations for statutory
changes, receipt of payments from the federal government, whether
current year goals and priorities were met, future goals and
priorities, and major new technology or prescription drugs that may
affect the cost of health care.
   (11)  Bid   Negotiate  for prescription
drug and durable  and nondurable  medical equipment to
achieve the lowest possible cost available under the system
formulary.
   (12) Negotiate for, or set, rates, fees and prices involving any
aspect of the health system, and establish procedures relating
thereto.
   (13) Administer the revenues of the Health Care Fund pursuant to
Section 140200.
   (14) Procure funds, including loans, lease or purchase property,
obtain appropriate liability and other forms of insurance for the
system, its employees and agents.
   (15) Establish, appoint, and fund as part of the administration of
the agency, the following:
   (A) A Health Policy Board pursuant to Section 140102.
   (B) An Office of Consumer Advocacy with  appropriate staff
for each region, pursuant to 140103   offices
convenient to all the residents of the state  .
   (C) An Office of Medical Practice Standards and a Medical Practice
Standards Advisory Board  with appropriate staff, pursuant
to Section 140104  .  
   (D) Directors of agencies with appropriate staff for each region,
pursuant to Section 140108. 
   (16) Administer all aspects of the agency that include, but are
not limited to, all of the following:
   (A) Establish standards and criteria for allocation of operating
funds and funds from the Health Care Fund as described in Chapter 3
(commencing with Section 140200).
   (B) Meet regularly with the  directors of the regional
agencies, and the chief medical officer, and the Director of the
Office of Consumer Advocacy   chief medical officer and
the consumer advocate  to review the impact of the agency and
its policies on the regions.  
   (C) Budget the ____ accounts for each region in a manner to meet
most equitably the health needs of the population of the state as a
whole and the population within each region.
   (D)  
   (C)  Establish health system goals in measurable terms.

   (E)  
   (D)  Establish statewide health care databases to support
health care planning.  
   (F)  
   (E)  Implement policies to assure culturally competent and
linguistically sensitive care and develop mechanisms and incentives
to achieve this purpose.
   140102.  (a) The commissioner shall establish a Health Policy
Board and shall be president of the board.  The board shall consist
of the following members:
   (1) The commissioner.
   (2) The deputy commissioner.
   (3) The Secretary of the Health and Welfare Agency.
   (4) The Director of Health Services.  
   (5) The directors of the regional agencies.
   (6) The Health Care Fund Director.
   (7) The Director of the Office of Consumer Advocacy.
   (8)  
   (5) The director of the Health Care Fund.
   (6) The consumer advocate.
   (7)  The chief medical officer.  
   (9)  
   (8)  Two physicians.  The Senate Committee on Rules and the
Speaker of the Assembly shall each appoint one of these members.

   (10)  
   (9)  One registered nurse.  The Governor shall appoint this
member.  
   (11)  
   (10)  One licensed vocational nurse.  The Senate Committee on
Rules shall appoint this member.  
   (12)  
   (11)  One licensed allied health practitioner.  The Speaker
of the Assembly shall appoint this member.  
   (13)  
   (12)  One representative of public hospitals.  The Governor
shall each appoint this member.  
   (14)  
   (13)  One representative of private hospitals.  The Senate
Committee on Rules shall appoint this member.  
   (15)  
   (14)  Four consumers of health care.  The Governor shall
appoint two of these members, of whom one shall be a member of the
disability community.  The Senate Committee on Rules and the Speaker
of the Assembly shall each appoint one of these members.  
   (16)  
   (15)  One representative of organized labor.  The Speaker of
the Assembly shall appoint this member.  
   (17)  
   (16)  One representative of the business community.  The
Governor shall appoint this member.  
   (18)  
   (17)  One representative of community clinics.  The Senate
Committee on Rules shall appoint this member.  
   (19)  
   (18)  One representative of retail businesses that dispense
pharmaceuticals or durable medical equipment.  The Speaker of the
Assembly shall appoint this member.
   (b) In making their appointment pursuant to this section, the
Governor, the Senate Committee on Rules, and the Speaker of the
Assembly shall make good faith efforts to assure that their
appointments, as a whole, reflect, to the greatest extent feasible,
the social and geographic diversity of the state.
   (c) Any member appointed by the Governor, the Senate Committee on
Rules,  or  the Speaker of the Assembly  , or the
regional directors  shall serve for a four-year term.  These
members may be reappointed for succeeding four-year terms.
   (d) Vacancies that occur shall be filled within 30 days after the
occurrence of the vacancy, and shall be filled in the same manner in
which the vacating member was selected or appointed.  The
commissioner shall notify the appropriate appointing authority of any
expected vacancies on the board.
   (e) Members of the board shall serve without compensation, but
shall be reimbursed for actual and necessary expenses incurred in the
performance of their duties to the extent that reimbursement for
those expenses is not otherwise provided or payable by another public
agency or agencies, and shall receive ____ dollars ($__) for each
full day of attending meetings of the board.  For purposes of this
section, "full day of attending a meeting" means presence at, and
participation in, not less than 75 percent of the total meeting time
of the board during any particular 24-hour period.
   (f) The board shall meet at least six times a year in a place
convenient to the public.  All meetings of the board shall be open to
the public.  A majority of the membership of the board shall
constitute a quorum.  Any action taken by the board under this
division requires a majority of the members present at a meeting of
the board at which a quorum is present.
   (g) The Health Policy Board shall do all of the following:
   (1) Establish policy on medical issues, population-based public
health issues, research priorities, scope of services, expanding
access to care, and evaluation of the performance of the system.
   (2) Investigate proposals for innovative approaches to health
promotion, disease and injury prevention, education, research, and
health care delivery.
   (3) Establish standards and criteria by which requests by health
facilities for capital improvements shall be evaluated.
   (h) It is unlawful for the board or any of its assistants, clerks,
or deputies to use for personal benefit any information that is
filed with or obtained by the board and that is not then generally
available to the public.
   (i) No member of the board shall make, participate in making, or
in any way attempt to use his or her official position to influence a
governmental decision in which he or she knows or has reason to know
that he or she has a financial interest.
   (j) Members of the board shall be subject to Title 9 (commencing
with Section 81000) of the Government Code.
   140103.  (a) There is within the agency an Office of Consumer
Advocacy to represent the interests of the consumers of health care.
The goal of the office shall be to help residents of the state
secure the health care services and benefits to which they are
entitled under the laws administered by the agency and to advocate on
behalf of and represent the interests of consumers in governance
bodies created by this division and in other forums.
   (b) The office shall be headed by a  director 
 consumer advocate  appointed by the commissioner.
   (c) The  director   consumer advocate 
shall establish an office in the City of Sacramento and  , at
minimum, in each regional district   other offices
throughout the state that shall provide convenient access to
residents  .
   (d) The duties of the  director   consumer
advocate  shall be determined by the commissioner, and shall
include, but not be limited to, the following:
   (1) Developing standards and procedures for resolving consumer
disputes with the agency.
   (2) Developing educational and informational guides for consumers
describing their rights and responsibilities, and informing them on
effective ways to exercise their rights to secure health care
services.  The guides shall be easy to read and understand, available
in English and other languages, and shall be made available to the
public by the agency, including access on the agency's Internet Web
site and through public outreach and educational programs.
   (3) Establishing a toll-free telephone number to receive
complaints regarding the agency and its services.  The hearing and
speech impaired may use the California Relay Service's toll-free
telephone numbers to contact the Office of Consumer Advocacy.  The
agency's Internet Web site shall have complaint forms and
instructions online.
   (4) Examining complaints and suggestions from the public.
   (5) Recommending improvements to the agency, the office of the
commissioner, the Health Policy Board, the Office of Medical Practice
Standards, and the Medical Standards Practice Board.
   (6) Examining the extent to which individual health facilities and
clinics  in a region  meet the needs of the
community in which they are located
   (7) Receiving, investigating, and responding to complaints from
any source about any aspect of the  health care system
  system  , referring the results of investigations
to the appropriate professional provider or facility licensing
boards or law enforcement agencies, as appropriate.
   (8) Publishing an annual report to the public and the Legislature
containing a statewide evaluation of the agency  , as well as
an evaluation of each regional agency.   . 
   (9) Holding public hearings, at least annually,  within
each region   throughout the state  concerning
complaints and suggestions from the public.
   (e) The  director   consumer advocate  ,
in pursuit of his or her duties, shall have unlimited access to all
nonconfidential and all nonprivileged documents in the custody and
control of the agency.
   (f) Nothing in this division shall prohibit a consumer or class of
consumers or the  director   consumer advocate
 from seeking relief through the judicial system.
   140104.  There is within the agency an Office of Medical Practice
Standards which shall establish standards of best medical practice,
including evaluation of pharmaceuticals and medical and surgical
treatments, based on credible evidence of benefit, for care provided
pursuant to this division. The office shall be headed by the chief
medical officer, who is appointed by the commissioner.
   140105.  (a) The chief medical officer shall do all of the
following:
   (1) Serve as president of the Medical Practice Standards Advisory
Board.
   (2) In consultation with the Medical Practice Standards Advisory
Board:
   (A) Study and report on the efficacy of health care treatments and
of drugs for particular conditions.
   (B) Evaluate medical services to determine credible evidence of
significant benefit.
   (C) Identify causes of medical errors and procedures that would
decrease those errors.
   (D) Establish an evidence-based formulary.
   (E) Identify treatments and medications that are unsafe or of no
proven value.
                                               (3) Establish a
process for soliciting information on these standards from health
care providers and consumers.
   140106.  (a) There is within the Office of Medical Practice
Standards the Medical Practice Standards Advisory Board.  The
commissioner shall appoint the members of the board.  The board shall
consist of the following members:
   (1) Six physicians and surgeons or osteopathic physicians.
   (2) One physician assistant.
   (3) One nurse practitioner.
   (4) One dentist.
   (5) One pharmacist.
   (6) One psychologist.
   (7) One chiropractor.
   (8) One optometrist.
   (9) One podiatrist.
   (10) One member of an allied licensed health care profession.
   (11) The chief medical officer.
   (12) Four health care consumers, one of whom shall have a
disability.
   (b) In making these appointments, the commissioner shall make a
good faith effort to assure that the appointments, as a whole,
reflect, to the greatest extent feasible, the social and geographic
diversity of the state. The commissioner, in appointing the licensed
members of the board, shall include members whose health care
practice or employment includes fee-for-service, group practice,
clinics, hospitals, and integrated health delivery systems.
   (c) Members of the board shall serve without compensation, but
shall be reimbursed for actual and necessary expenses incurred in the
performance of their duties to the extent that reimbursement for
those expenses is not otherwise provided or payable by another public
agency or agencies, and shall receive ____ dollars ($__) for each
full day of attending meetings of the board.  For purposes of this
section, "full day of attending a meeting" means presence at, and
participation in, not less than 75 percent of the total meeting time
of the board during any particular 24-hour period.
   (d) The board shall meet at least six times a year in a place
convenient to the public.  All meetings of the board shall be open to
the public.  A majority of the membership of the board shall
constitute a quorum.  Any action taken by the board under this
division requires a majority of the members present at a meeting of
the board at which a quorum is present.
   (e) Members of the board shall be subject to Title 9 (commencing
with Section 81000) of the Government Code.
   140107.  (a) The Medical Practice Standards Advisory Board shall
advise the chief medical officer on the following:
   (1) The efficacy of health care treatments and of drugs for
particular conditions.
   (2) Medical services for which there is credible evidence of
significant benefit.
   (3) Causes of medical errors and procedures that would decrease
those errors.
   (4) The establishment of an evidence-based formulary.
   (5) Treatments and medications that are unsafe or of no proven
value.
   (b) No member of the board shall make, participate in making, or
in any way attempt to use his or her official position to influence a
governmental decision in which he or she knows or has reason to know
that he or she has a financial interest.  
   140108.  There shall be established regional health agencies
throughout the state, as determined by the commissioner. 
   140109.  There is within the Office of the Attorney General an
Office of Inspector General for the California Health Care System.
The Inspector General shall be appointed by the Governor and subject
to Senate confirmation. The Inspector General shall be subject to the
direction of the Attorney General.
   140110.  The Inspector General shall have broad powers to
investigate and review the financial and business records of
individuals, public and private agencies and institutions, and
private corporations that provide services or products to the system,
the costs of which are reimbursed by the system.  The Inspector
General shall investigate allegations of misconduct on the part of an
employee or appointee of the agency and on the part of any provider
of services that are reimbursed by the system and shall report any
findings of misconduct to the Attorney General.  The Inspector
General shall investigate patterns of medical practice that may
indicate fraud and abuse related to over or under utilization or
other inappropriate utilization of medical products and services.
The Inspector General shall arrange for the collection and analysis
of data needed to investigate the inappropriate utilization of these
products and services.  The Inspector General shall conduct
additional reviews or investigations of financial and business
records when requested by the Governor or by any member of the
Legislature and shall report findings of the review or investigation
to the Governor and the Legislature.  The Inspector General shall
annually report recommendations for improvements to the system or the
agency to the Governor and the Legislature.
   140111.  The provisions of the Insurance Fraud Prevention Act
(Chapter 12 (commencing with Section 1871) of Division 1 of the
Insurance Code) and the provisions of Article 6 (commencing with
Section 650) of Chapter 1 of Division 2 of the Business and
Professions Code, shall be applicable to providers of services and
products, payment for which is made through the system under this
division.
   140112.  Nothing contained in this division is intended to repeal
any legislation or regulation governing the professional conduct of
any person licensed by the State of California or any legislation
governing the licensure of any facility licensed by the State of
California.  All federal legislation and regulations governing
referral fees and fee-splitting, including, but not limited to,
Sections 1370a-7b and 1395nn of Title 42 of the United States Code
shall be applicable to all providers of services reimbursed under
this division, whether or not that provider is paid with funds coming
from the federal government.  
   140113.  (a) The health care system shall be operational no later
than January 1, 2006.
   (b) (1) The commissioner shall appoint a transition advisory group
to assist with the transition to the system.  The transition
advisory group shall include, but not be limited to, the following
members:
   (A) The commissioner.
   (B) Experts in health care financing and health care
administration.
   (C) Health care practitioners.
   (D) Representatives of retirement boards.
   (E) Employer and employee representatives.
   (F) Hospital, clinic, and long term care facility representatives.

   (G) Representatives from state departments and regulatory bodies
that shall or may relinquish some or all parts of their delivery of
health service to the system.
   (H) Representatives of counties.
   (I) Consumers of health care.
   (2) The transition advisory group shall advise the commissioner on
all aspects of the implementation of this division.
   (3) The transition advisory group shall make recommendations to
the commissioner, the Governor, and the Legislature on how to
integrate health care delivery services and responsibilities of the
following departments and agencies into the system.
   (A) The State Department of Health Services.
   (B) The Department of Managed Health Care.
   (C) The Department of Aging.
   (D) The Department of Developmental Services.
   (E) The Health and Welfare Data Center.
   (F) The Department of Mental Health.
   (G) The Department of Alcohol and Drugs.
   (H) The Department of Rehabilitation.
   (I) The Emergency Medical Services Authority.
   (J) The Managed Risk Medical Insurance Board.
   (K) The Office of Statewide Health Planning and Development.
   (L) The Medical Board of California and other California
regulatory boards.
   (4) The transition advisory group shall investigate the
feasibility and costs of including the delivery of health care
aspects of the following into the system:
   (A) Workers' compensation.
   (B) State disability insurance.
   (5) The transition advisory group shall report its findings to the
commissioner, the Governor, and the Legislature. The transition to
the system shall not adversely affect publicly funded programs
currently providing health care services.
   (c) The transition shall be funded from a loan from the General
Fund. 

      CHAPTER 3.  FUNDING
      Article 1.  General Provisions

   140200.   (a)  In order to support the agency effectively
in the administration of this division, there is hereby established
in the State Treasury the Health Care Fund.  The fund shall be
administered by a director, appointed by the commissioner.  
   All  
   (b) All  moneys collected, received, and transferred pursuant
to this division shall be transmitted to the State Treasury to be
deposited to the credit of the Health Care Fund for the purpose of
financing the California Health Care System.  
   (c) All claims for health care services rendered shall be made to
the Health Care Fund.
   (d) All payments made for health care service shall be disbursed
from the Health Care Fund.
   140201.  (a) The director of the Health Care Fund shall establish
the following accounts within the Health Care Fund:
   (1) A system account to provide for all annual state expenditures
for the health care system.
   (2) A reserve account to protect the system from unforeseen costs.

   (b) During the first five years of the operation of the system,
the director shall maintain a reserve account that equals, at
minimum, 5 percent of the system's budget.  After five years of the
system's operation, the director, at the request of the commissioner,
may reduce the minimum reserve requirement to 3 percent of the
system's budget.
   (c) The director of the Health Care Fund shall immediately notify
the commissioner when annual costs appear to exceed annual revenues.
The commissioner shall determine the cause of excessive costs and
implement cost control measures.
   (d) The commissioner shall seek either a special appropriation or
an increase in health care taxes if cost control measures are
insufficient to maintain the system.
   (e) If, on June 30 of any year, the Budget Act for the fiscal year
beginning on July 1 has not been enacted, all monies in the reserve
account of the Health Care Fund shall be used to implement this
division until funds are available through the Budget Act.
   (f) Notwithstanding any other provision of law and without regard
to fiscal year, if the annual State Budget is not enacted by June 30
of any fiscal year preceding the fiscal year to which the budget
would apply and if the commissioner determines that funds in the
reserve account are depleted, the following shall occur:
   (1) The Controller shall annually transfer from the General Fund,
in the form of one or more loans, an amount not to exceed a
cumulative total of one billion dollars ($1,000,000,000) in any
fiscal year, to the Health Care Fund for the purpose of making
payments to providers of health care services.
   (2) Upon enactment of the annual Budget Act in any fiscal year to
which paragraph (1) applies, the Controller shall transfer all
expenditures and unexpended funds loaned to the Health Care Fund to
the appropriate Budget Act item.
   (3) The amount of any loan make pursuant to subdivision (a) and
for which moneys were expended from the Health Care Fund shall be
repaid by debiting the appropriate Budget Act item in accordance with
the procedure prescribed by the Department of Finance.
   140202.  (a) The commissioner shall prepare the annual state
budget for health care.  The budget shall specify and set a limit on
total annual state expenditures for health care provided pursuant to
this division.  The budget shall include all of the following:
   (1) A system budget that includes all expenditures for the system.

   (2) Facility and provider budgets for each of the two principal
mechanisms of professional provider reimbursement (fee-for-service
and integrated health delivery system, and for individual health
facilities and their associated clinics).
   (3) A capital investment budget.
   (4) A purchasing budget.
   (5) A research and innovation budget.
   (6) A workforce development budget.
   (b) In preparing for the budgets, the commissioner shall consider
anticipated increased expenditures and savings, including, but not
limited to, the following:
   (1) Projected increases in expenditures due to improved access for
underserved populations and improved reimbursement for primary care.

   (2) Projected administrative savings under the single payer
mechanism.
   (3) Projected savings in prescription drug expenditures under
competitive bidding and a single buyer.
   (4) Projected savings due to provision of primary care rather than
emergency room treatment.
   140203.  (a) The system budget shall be comprised of the cost of
the system, including the cost of services and benefits provided,
administration, data gathering, planning, and other activities, and
revenues deposited with the system account.
   (b) The commissioner shall limit administrative costs to 5 percent
and shall annually evaluate methods to reduce administrative costs
and report the results of that evaluation to the Legislature.
   (c) The commissioner shall limit growth of health care costs in
the system budget by reference to changes to state gross domestic
product, population, employment rates, and other demographic
indicators, as appropriate.
   (d) Monies in the Reserve Account shall not be considered as
available revenues for purposes of preparing the system budget.
   140204.  (a) The facility and provider budgets shall include
allocations for each of the following:
   (1) Fee-for-service providers.
   (2) Health facilities and associated clinics that are not part of
a capitated provider network.
   (3) Capitated providers.
   (b)  Providers and facilities shall choose whether they will be
recompensed as fee-for-services providers or as part of a capitated
provider network. The commissioner shall prohibit charges to the
system for medical services other than those established by
regulation or negotiation.
   (c) The allocations in subdivision (a) shall consider the relative
usage of fee-for-service providers, capitated providers, and health
facilities and associated clinics that are not part of a capitated
provider network.
   (d) The provider and facility budget shall be adjusted annually to
reflect changes in the utilization of services, changes in any
co-payment or deductible payment for covered services, and the
addition or exclusion of covered services made by the commissioner
upon the recommendation of the Medical Practice Standards Advisory
Board.
   (e) No provider may charge or receive any payments for covered
services except those provided for under this division.
   (f) Licensed health care providers who provide services not
covered by this division may charge patients for those services.
   140205.  (a) The budget for fee-for-services providers shall be
divided among categories of licensed health care providers, in order
to establish a total annual budget for each category.  Each of these
category budgets shall be sufficient to cover all included services
anticipated to be required by eligible individuals choosing
fee-for-service at the rates negotiated or set by the commissioner,
except as necessary for cost containment purposes pursuant to Section
140212.
   (b) The commissioner shall negotiate fee-for-service reimbursement
rates or salaries for licensed health care providers.  In the event
negotiations are not concluded in a timely manner, the commissioner
shall establish the reimbursement rates.  Reimbursement rates shall
reflect the goals of the system.
   140206.  (a) The budget shall encompass all operating expenses for
health facilities or clinics that are not part of a capitated
provider network.  In establishing a facility budget, the
commissioner shall develop and utilize separate formulae that reflect
the differences in cost of primary, secondary, and tertiary care
services and health care services provided by academic medical
centers.
   (b) The commissioner shall negotiate facility reimbursement rates
with facilities and clinics.  Reimbursement rates shall reflect the
goals of the system.
   140207.  (a) The budget for capitated providers shall be
sufficient to cover all eligible individuals choosing an integrated
health care delivery system at the rates negotiated or set by the
commissioner.
   (b) The commissioner shall prepare an annual operating budget for
all care provided by facilities, group practices, and integrated
health care systems, including the labor costs of providing care.
All facilities, group practices, and integrated health care systems
shall submit annual operating budget requests to the commissioner and
may choose to be reimbursed through a global facility budget or on a
capitated basis.
   (c) The commissioner shall adjust budgets on the basis of the
health risk of enrollees, the scope of services provided, proposed
innovative programs that improve quality, workplace safety, consumer,
provider and employee satisfaction, costs of providing care for
non-members, and an appropriate operating margin.
   (d) Providers and facilities that choose to operate a facility on
a capitated basis shall not be paid additionally on a fee-for-service
basis unless they are providing services in a separate private
medical practice or facility.
   (e) Facilities and providers that operate on a capitated basis
shall report immediately any projected operating deficits to the
commissioner.  The commissioner shall determine whether the projected
deficits reflect appropriate increases in health care needs, in
which case the commissioner shall adjust the facility budget
appropriately.  If the commissioner determines that the deficit is
not justifiable, no adjustment shall be made.
   (f) The commissioner may terminate the funding for facilities,
group practices, and integrated health care systems or particular
services provided by them if they fail to meet standards of care and
practice established by the commissioner.  The commissioner shall
make future funding contingent on measurable improvements in quality
of care and health care outcomes.
   140208.  (a) The commissioner, with the advice of the Health
Policy Board, shall establish an annual budget for capital
maintenance and development, determine capital investment priorities,
and evaluate whether the capital investment program has improved
access to services and has eliminated redundant capital investments.

   (b) All capital investments valued at $500,000 or greater,
including the costs of studies, surveys, design plans and working
drawing specifications or other activities essential to planning and
execution of capital investment, or capital investment that changes
the bed capacity of a facility or adds a new service or license
category incurred by any health system entity shall require the
approval of the commissioner.
   (c) When a health facility, or individual acting on behalf of a
health facility, or any other purchaser, obtains by lease or
comparable arrangement, any facility or part thereof, or any
equipment for a facility, the market value of which would have been a
capital expenditure, the lease or arrangement shall be considered a
capital expenditure for purposes of this division.
   (d) Health care facilities shall provide the commissioner with
three months' advance notice of planned capital investments of more
than $50,000 but less than $500,000.  These capital investments shall
minimize unneeded expansion of facilities and services based on the
priorities and goals for capital investment established by the
commissioner.
   (e) No capital investment may be undertaken using funds from a
facility operating budget.
   (f) The costs of mandatory earthquake retrofits to health
facilities shall not be the responsibility of the system.
   140209.  The commissioner shall establish a budget for the
purchase of prescription drugs and durable and non-durable medical
equipment for the system.  The commissioner shall purchase all
prescription drugs and durable and non-durable medical equipment for
the system from this budget.
   140210.  The commissioner shall establish a budget to support
research and innovation that has been recommended by the
commissioner, the Health Policy Board, the chief medical officer, and
the consumer advocate.  This research and innovation includes, but
is not limited to, methods of improving the administration of the
system, improving the quality of health care, educating patients, and
improving communication among health care providers.
   140211.  The commissioner shall establish a budget to support the
development and training of a health system workforce sufficient to
meet the health care needs of the population.  The commissioner shall
give special consideration for training to workers who may have been
displaced from employment due to the inception of the system.
   140212.  (a) The commissioner shall implement cost controls
pursuant to subdivision (c) of Section 140201.  No cost control
measure shall limit access to care that is needed on an emergency
basis or that is determined by a patient's provider to be medically
appropriate for a patient's condition.
   (b) Mandatory cost control measures shall include, but not be
limited to, some or all of the following:
   (1) Postponement of introduction of new benefits or benefit
improvements.
   (2) Postponement of new capital investment.
   (3) Adjustment of provider budgets to correct for inappropriate
provider utilization.
   (4) Limitations on provider reimbursement above a specified amount
of aggregate billing.
   (5) Deferred funding of the Reserve Account.
   (6) Establishment of a limit on aggregate reimbursements to
pharmaceutical manufacturers.
   (7) Imposition of co-payments or deductible payments pursuant to
provisions of Section 140504.
   (8) Imposition of an eligibility waiting period in event of
substantial influx of individuals into the state for purpose of
obtaining health care through the system. 

      Article 2.  Revenue

   140220.  It is the intent of the Legislature to dedicate revenue
from the following sources for deposit in the Health Care Fund:
   (a) A personal income tax surtax for health care on unearned
income at the rate of __ percent, pursuant to Section __ of the
Revenue and Taxation Code.
   (b) A cigarette and tobacco products surtax for health care,
imposed pursuant to Section __ of the Revenue and Taxation Code, as
follows:
   (1) On all cigarettes sold in this state, ___ on each pack of
cigarettes.
   (2) On tobacco products other than cigarettes sold in this state,
a tax rate determined by the State Board of Equalization that is
equivalent to the tax imposed on cigarettes.
   (c) An alcohol surtax for health care, imposed pursuant to Section
__ of the Revenue and Taxation Code, as follows:
   (1) On all beer sold in this state, ___ on each 12-ounce can and
at a proportionate rate for any other quantity.
   (2) On all still wines containing not more than 14 percent of
absolute alcohol by volume that are sold in this state,  ___ on each
750 milliliter bottle and at a proportionate rate for any other
quantity.
   (3) On champagne, sparkling wine, and sparkling hard cider whether
naturally or artificially carbonated, sold in this state, ___ on
each 750 milliliter bottle and at a proportionate rate for any other
quantity.
   (4) On all distilled spirits sold in this state, ____ on each 1.75
liter bottle and at a proportionate rate for any other quantity.

      Article 3.  Governmental Payments

   140240.  The commissioner shall seek all necessary waivers,
exemptions, agreements, or legislation, so that all current federal
payments to the state for health care shall be paid directly to the
California Health Care System, which shall then assume responsibility
for all benefits and services previously paid for by the federal
government with those funds.  In obtaining the waivers, exemptions,
agreements, or legislation, the commissioner shall seek from the
federal government a contribution for health care services in
California that shall not decrease in relation to the contribution to
other states as a result of the waivers, exemptions, agreements, or
legislation.
           140241.  The commissioner shall seek all necessary
waivers, exemptions, agreements, or legislation, so that all current
state payments for health care shall be paid directly to the system,
which shall then assume responsibility for all benefits and services
previously paid for by state government with those funds.  In
obtaining the waivers, exemptions, agreements, or legislation, the
commissioner shall seek from the Legislature a contribution for
health care services that shall not decrease in relation to state
government expenditures for health care services in the year that
this division was enacted, corrected for change in state gross
domestic product, the size and age of population, and the number of
residents living below the federal poverty level.
   140242.  The commissioner shall seek all necessary waivers,
exemptions, agreements, or legislation, so that all current county or
other local government agency payments for  direct  health
care  , including   to residents, as well as
 employee health benefits and health benefits for retired
employees, shall be paid directly to the system, which shall then
assume responsibility for all benefits and services previously paid
for by  a  county or local government agency with those
funds.  In obtaining the waivers, exemptions, agreements, or
legislation, the commissioner shall seek contributions for health
care services that shall not decrease in relation to expenditures for
health care services in the year of passage of the division,
corrected for change in gross domestic product, the size and age of
population, and the number of residents living below the federal
poverty level.
   140243.  The system's responsibility for providing care shall be
secondary to existing federal, state or local governmental programs
for health care services to the extent that funding for these
programs are not transferred to the Health Care Fund or that the
transfer is delayed beyond the date on which initial benefits are
provided under the system.
   140244.  In order to minimize the administrative burden of
maintaining eligibility records for programs transferred to the
system, the commissioner shall strive to reach an agreement with
federal, state, and local governments in which their contributions to
the Health Care Fund shall be fixed to the rate of change of the
state gross domestic product, the size and age of population, and the
number of residents living below the federal poverty level.
   140245.  If, and to the extent that, federal law and regulations
allows the transfer of Medi-Cal funding to the system, the
commissioner shall pay all premiums, deductible payments, and
coinsurance for qualified Medicare beneficiaries who are receiving
benefits pursuant to Chapter 3 (commencing with Section 12000) of
Part 3 of Division 9 of the Welfare and Institutions Code.
   140246.  In the event and to the extent that the commissioner
obtains authorization to incorporate Medicare revenues into the
Health Care Fund, Medicare Part B payments that previously were made
by individuals or the commissioner shall be paid by the system for
all individuals eligible for both the system and the Medicare
program.

      Article 4.  Employee Contributions

   140260.  (a) Commencing on January 1 of the second year following
passage of this division and quarterly thereafter, it is the intent
of the Legislature to require all persons employed in this state to
pay a health care tax of __ percent on their wage income pursuant to
Section __ of the Unemployment Insurance Code.  The tax payments
shall be withheld by employers pursuant to Chapter 2 (commencing with
Section 13020) of Division 6 of the Unemployment Insurance Code.
   (b) Nothing in this section shall invalidate an employer's
existing obligation under a collective bargaining agreement to pay an
employee's health care benefits.  If an existing contractual
agreement requires an employer to pay the entire cost of an employee'
s health care premium, the employer shall pay the employee's portion
of the health care tax.

      Article 5.  Employer Contributions

   140280.  Commencing on January 1 of the second year following
passage of this division and quarterly thereafter, it is the intent
of the Legislature to require all employers of resident employees to
pay a health care tax of __ percent of total payroll pursuant to
Section ____ of the Unemployment Insurance Code.

      Article 6.  Federal Preemption

   140300.  An employer is exempt from the payroll tax requirements
of Section 140280 if the employer has established an employee benefit
plan subject to federal law which preempts the funding provisions of
this division.
   140301.  (a) The commissioner shall pursue all reasonable means to
secure a repeal or a waiver of any provision of federal law that
preempts any provision of this division.
   (b) In the event that a repeal or a waiver cannot be secured, the
commissioner shall exercise his or her powers to promulgate rules and
regulations, or seek conforming state legislation, consistent with
federal law, in an effort to best fulfill the purposes of this
division.
   140302.  (a) To the extent permitted by federal law, an employee
entitled to health or related benefits under a contract or plan
which, under federal law, preempts provisions of this division, shall
first seek benefits under that contract or plan before receiving
benefits from the system under this division.
   (b) No benefits shall be denied under the system created by this
division unless the employee has failed to take reasonable steps to
secure like benefits from the contract or plan, if those benefits are
available.
   (c) Nothing in this section shall preclude an employee from
receiving benefits from the system under this division that are
superior to benefits available to the employee under the contract or
plan.
   (d) Nothing in this division is intended, nor shall this division
be construed, to discourage recourse to contracts or plans that are
protected by federal law.
   (e) To the extent permitted by federal law, a provider shall first
seek payment from the contract or plan, before submitting bills to
the health care system.

      Article 7.  Subrogation

   140320.  (a) It is the intent of this division to establish a
single public payer for all health care in the State of California.
However, until such time as the role of all other payers for health
care have been terminated, health care costs shall be collected from
collateral sources whenever medical services provided to an
individual are, or may be, covered services under a policy of
insurance, health care service plan, or other collateral source
available to that individual, or for which the individual has a right
of action for compensation to the extent permitted by law.
   (b) As used in this article, the term collateral source includes
all of the following:
   (1) Insurance policies written by insurers, including the medical
components of automobile, homeowners, and other forms of insurance.
   (2) Health care service plans and pension plans.
   (3) Employers.
   (4) Employee benefit contracts.
   (5) Government benefit programs.
   (6) A judgment for damages for personal injury.
   (7) Any third party who is or may be liable to an individual for
health care services or costs.
   (c) The term collateral source does not include either of the
following:
   (1) A contract or plan subject to federal preemption.
   (2) Any governmental unit, agency or service, to the extent that
subrogation is prohibited by law.  An entity described in subdivision
(b) is not excluded from the obligations imposed by this article by
virtue of a contract or relationship with a governmental unit,
agency, or service.
   (d) The commissioner shall attempt to negotiate waivers, seek
federal legislation, or make other arrangements to incorporate
collateral sources in California into the health care system.
   140321.  Whenever an individual receives health care services
under the system and he or she is entitled to coverage,
reimbursement, indemnity, or other compensation from a collateral
source, he or she shall notify the health care provider and provide
information identifying the collateral source, the nature and extent
of coverage or entitlement, and other relevant information. The
health care provider shall forward this information to the
commissioner. The individual entitled to coverage, reimbursement,
indemnity, or other compensation from a collateral source shall
provide additional information as requested by the commissioner.
   140322.  (a) The system shall seek reimbursement from the
collateral source for services provided to the individual, and may
institute appropriate action, including suit, to recover the
reimbursement.  Upon demand, the collateral source shall pay to the
Health Care Fund the sums it would have paid or expended on behalf of
the individual for the health care services provided by the system.

   (b) In addition to any other right to recovery provided in this
article, the commissioner shall have the same right to recover the
reasonable value of benefits from a collateral source as provided to
the Director of Health Services by Article 3.5 (commencing with
Section 14124.70) of Chapter 7 of Part 3 of Division 9, in the manner
so provided.
   140323.  (a) If a collateral source is exempt from subrogation or
the obligation to reimburse the system as provided in this article,
the commissioner may require that an individual who is entitled to
medical services from the source first seek those services from that
source before seeking those services from the system.
   (b) To the extent permitted by federal law, contractual retiree
health benefits provided by employers shall be subject to the same
subrogation as other contracts, allowing the health care system to
recover the cost of services provided to individuals covered by the
retiree benefits, unless and until arrangements are made to transfer
the revenues of the benefits directly to the health care system.
   (c) In the event of unanticipated expenditures in excess of ____,
or if cost control mechanisms indicated under ____ are unable to
lower expenditures without endangering the health of Californians,
the commissioner shall request the Legislature to increase system
funding either by increasing tax rates on the sources described in
this division or from other revenue sources.
   140324.  (a) Default, underpayment, or late payment of any tax or
other obligation imposed by this division shall result in the
remedies and penalties provided by law except as provided in this
section.
   (b) Eligibility for benefits under Chapter 4 (commencing with
Section 140400) shall not be impaired by any default, underpayment,
or late payment of any tax or other obligation imposed by this
chapter.
   140325.  The agency and the commissioner shall be exempt from the
regulatory oversight and review procedures empowered to the Office of
Administrative Law pursuant to Chapter 3.5 (commencing with Section
11340) of Division 3 of Title 2 of the Government Code.  Actions
taken by the agency, including, but not limited to, the negotiating
or setting of rates, fees, or prices, and the promulgation of any and
all regulations, shall be exempt from any review by the Office of
Administrative Law, except for Sections 11344.1, 11344.2, 11344.3,
and 11344.6 of the Government Code, addressing the publication of
regulations.

      CHAPTER 4.  ELIGIBILITY

   140400.  All California residents shall be eligible for the
California Health Care System.  Residency shall be based upon
physical presence in the state with the intent to reside.  The
commissioner shall establish standards and a simplified procedure to
demonstrate proof of residency.
   140401.  The commissioner shall establish a procedure to enroll
eligible residents and provide each eligible individual with
identification that can be used by providers to determine eligibility
for services.
   140402.  The commissioner shall determine eligibility standards
for residents temporarily out of state and for nonresidents
temporarily employed in California.  Coverage for emergency care
shall be at prevailing local rates.  Coverage for nonemergency care
shall be according to rates and conditions established by the
commissioner.  The commissioner may require that a resident be
transported back to California when prolonged treatment of an
emergency condition is necessary.
   140403.  Visitors to California shall be billed for all services
received under the system.  The commissioner may establish
intergovernmental arrangements with other states and countries to
provide reciprocal coverage for temporary visitors.
   140404.  All persons eligible for health benefits from California
employers but who are residing in another jurisdiction shall be
eligible for health  benefit   benefits 
under this division providing that they make payments equivalent to
the payments they would be required to make if they were residing in
California.
   140405.  Unmarried, unemancipated minors shall be deemed to have
the residency of their parent or guardian.  If a minor's parents are
deceased and a legal guardian has not been appointed, or if a minor
has been emancipated by court order, the minor may establish his or
her own residency.
   140406.  (a) An individual shall be presumed to be eligible if he
or she arrives at a health facility or clinic and is unconscious,
comatose, or otherwise unable, because of his or her physical or
mental condition, to document eligibility or to act in his or her own
behalf, or if the patient is a minor, the patient shall be presumed
to be eligible, and the health facility or clinic shall provide care
as if the patient were eligible.
   (b) Any individual shall be presumed to be eligible when brought
to a health facility pursuant to any provision of Section 5150 of the
Welfare and Institutions Code.
   (c) Any individual involuntarily committed to an acute psychiatric
facility or to a hospital with psychiatric beds pursuant to any
provision of Section 5150 of the Welfare and Institutions Code,
providing for involuntary commitment, shall be presumed eligible.
   (d) All health care facilities subject to provisions governing
emergency medical treatment and active labor shall comply with those
provisions.
      CHAPTER 5.  BENEFITS

   140500.  Any eligible individual may choose to receive services
under the California Health Care System from any willing professional
provider participating in the system.  No provider may refuse to
care for a patient solely because of race, religious creed, color,
national origin, ancestry, physical disability, mental disability,
medical condition, marital status, sex, age, or sexual orientation
 whether actual or perceived  .
   140501.  Covered benefits in this chapter shall include all
medical care determined to be medically appropriate by the consumer's
health care provider.  These benefits include, but are not limited
to, all of the following:
   (a) Inpatient and outpatient health facility or clinic services.
   (b) Inpatient and outpatient professional provider services by
licensed health care professionals.
   (c) Diagnostic imaging, laboratory services, and other diagnostic
and evaluative services.
   (d) Durable medical equipment, appliances, and assistive
technology including prosthetics, eyeglasses, and hearing aids and
their repair.
   (e) Rehabilitative care.
   (f) Emergency transportation and necessary transportation for
health care services for disabled persons.
   (g) Language interpretation for health care services, including
sign language for those unable to speak, or hear, or who are language
impaired, and braille translation or other services for those with
no or low vision.
   (h) Child and adult immunizations and preventive care.
   (i) Health education.
   (j) Hospice care.
   (k) Home health care.
   (l) Prescription drugs that are listed on the system formulary.
Nonformulary prescription drugs may be included where special
standards and criteria are met.
   (m) Mental health care.
   (n) Dental care.
   (o) Podiatric care.
   (p) Chiropractic care.
   (q) Acupuncture.
   (r) Blood and blood products.
   (s) Emergency care services.
   (t) Vision care.
   (u) Adult day care.
   (v) Case management and coordination to ensure services necessary
to enable a person to remain safely in the least restrictive setting.

   (w) Substance abuse treatment.
   (x) Care of up to  seven   100  days in
a skilled nursing facility following hospitalization.
   (y) Dialysis.
   140502.   (a)  The commissioner may expand benefits
beyond the minimum benefits described in this chapter when expansion
meets the intent of this division and there are sufficient funds to
cover the expansion.  
   (b) The commissioner, with the advice of the chief medical officer
and the Medical Practices Advisory Board, shall remove or exclude
treatments from the benefit package that are unsafe or of no proven
value.
   (c) The commissioner, with the advice of the chief medical officer
and the Medical Practices Advisory Board, shall remove or exclude
prescription drugs from the formulary that add no therapeutic
advantage. 
   140503.  The following health care services shall be excluded from
coverage by the system:
   (a) Health care services determined to have no medical indication
by the chief medical officer and the Medical Practice Standards
Advisory Board.
   (b) Surgery, dermatology, orthodontia, prescription drugs, and
other procedures primarily for cosmetic purposes, unless required to
correct a congenital defect, restore or correct a part of the body
that has been altered as a result of injury, disease, or surgery, or
determined to be medically necessary by a qualified, licensed health
care provider in the system.
   (c) Private rooms in inpatient facilities, unless determined to be
medically necessary by a qualified, licensed provider in the system.

   (d) Services of a professional health care provider or facility
that is not licensed or accredited by the state.
   140504.  (a) The commissioner shall institute no deductible
payments or copayments during the initial two years of the systems
operation.  The commissioner and the Health Policy Board shall review
this policy annually, beginning in the third year of operation, and
determine whether deductible payments or copayments should be
established.
   (b) If the commissioner establishes copayments consistent with
subdivision (a), they shall be limited to two hundred fifty dollars
($250) per person per year and five hundred dollars ($500) per family
per year.
   (c) If the commissioner establishes deductible payments consistent
with subdivision (a), they shall be limited to two hundred fifty
dollars ($250) per person per year and five hundred dollars ($500)
per family per year.
   (d) Copayments shall be imposed first on individuals who obtain
specialist care and are not referred for that care by their primary
health care provider.  These copayments shall not be included in the
individual's or family's copayment limit.
   (e) No copayments or deductible payments may be established for
preventive care as determined by a patient's primary care provider.
   (f) No copayments or deductible payments may be established when
prohibited by federal law.
   (g) The commissioner shall establish standards and procedures for
waiving copayments or deductible payments.  Waivers of copayments or
deductible payments shall not affect the reimbursement of facilities
and providers of care.
   (h) Any copayments established pursuant to subdivision (b) and
collected by health care providers or facilities shall be transmitted
to the Treasurer to be deposited to the credit of the Health Care
Fund.
   (i) Nothing in this division shall be construed to diminish the
benefits that an individual has under a collective bargaining
agreement.
   (j) Nothing in this division shall preclude employees from
receiving benefits available to them under a collective bargaining
agreement or other employee-employer agreement that are superior to
benefits under this division.  

      CHAPTER 6.  DELIVERY OF CARE

   140600.  (a) All health care providers licensed to practice in
California may participate in the Health Care System.
   (b) All integrated health care systems, group medical practices,
clinics, and hospitals accredited and licensed in California that
provide services covered by this division, may participate in the
system.
   (c) No health care practitioner or health care facility whose
license or accreditation is under suspension or who is under
disciplinary action may be a participating provider of care.
   (d) Providers shall allow eligible persons to enroll for care in
the order of time of application and by the provider's ability to
provide services needed by the applicant.
   (e) No health care provider or group of providers or integrated
health care system may refuse to enroll an individual solely because
of a preexisting health condition, age, sex, race, national origin,
ancestry, sexual orientation, gender, disability, ethnicity or
religion, whether actual or perceived.
   (f) The commissioner and the chief medical officer shall establish
methods to detect, correct, and decrease medical errors.
   (g) Persons who are eligible for health care services under this
division may choose their health care provider.  However, persons
electing to enroll in integrated health care systems or group medical
practices shall retain membership for at least one year after an
initial three-month evaluation period during which time they may
withdraw for any reason.  Persons who want to withdraw after an
initial three-month period may appeal to the consumer advocate who
may authorize early disenrollment.
   140601.  (a) The commissioner, with the advice of the Health
Policy Board, and the chief medical officer, with the advice of the
Medical Practices Advisory Board, shall develop guidelines and
incentives for providers and facilities to encourage all of the
following:
   (1) Comprehensive services.
   (2) Information on standards of care for health care
practitioners.
   (3) Prevention and disease management programs to patients.
   (4) Peer review of health care practitioner performance and early
intervention to correct practitioner problems.
   (5) Medical error reduction.
   (6) Patient satisfaction and response to patient concerns.
   (7) Reimbursement for performance and accountability.
   (8) Provider satisfaction.
   (9) Improvements to access of care.
   (10) Workplace safety.
   (11) Reduction in administrative costs.
   (12) Sufficient primary care practitioners to meet the needs of
the population.
   However, no incentive may adversely affect the care a patient
receives or the care recommended by a provider.  Nor shall any
incentive reward overutilization or underutilization of care.
   (b) Physicians in private practice may choose to be reimbursed on
a fee-for-service basis or on a salaried basis.
   (c) The commissioner and the chief medical officer shall assess
the number of primary and specialist care providers needed to supply
adequate health care services to all residents and shall develop a
plan to meet those needs.  The commissioner shall develop incentives
for health care practitioners and facilities to increase access to
health care services in unserved or underserved areas.
   (d) The chief medical officer shall establish guidelines for
prescribing drugs and medical equipment outside of an evidence-based
formulary. The guidelines shall not impose an undue administrative
burden on licensed health care providers, pharmacists, or pharmacies.

   (e) The commissioner shall establish cultural and linguistic
standards for the system.  The standards shall include, but not be
limited to, the following:
   (1) The State Department of Health Services and the Department of
Managed Health Care guidelines for culturally competent and
linguistically sensitive care.
   (2) Medi-Cal Managed Care Division (MMCD) Policy Letters 99-01 to
99-04 and MMCD All Plan Letter 99005 by the Cultural and Linguistic
Standards Task Force and the State Department of Health Services.
   (3) Title VI of the Civil Rights Act of 1964  (42 U.S.C. Section
2000d)
   (4) The United States Department of Health and Human Services'
Office of Civil Rights; Title VI of the Civil Rights Act of 1964;
Policy Guidance on Prohibition Against National Origin Discrimination
as It Affects Persons with Limited English Proficiency (February 1,
2002).
   (5) The United States Department of Health and Human Services'
Office of Minority Health; National Standards on Culturally and
Linguistically Appropriate Services (CLAS) in Health Care--Final
Report (December 22, 2000).
   (f) The commissioner annually shall evaluate residents' access to
trauma care and shall establish measures to ensure equitable access
for all residents.
   (g) The commissioner shall establish measures to ensure equitable
access for all residents to specialized medical procedures and
technology.
   140602.  (a) The commissioner, with the advice of the Health
Policy Board, and the chief medical officer shall define performance
criteria and goals for the health care system and shall report to the
Legislature at least annually on the system performance.
   (b) The commissioner shall establish a system to monitor the
quality of care and patient and provider satisfaction and to develop
measures to ensure improvements.
   (c) All health care practitioners, health care facilities,
employers, and other public or private agencies providing services
under the system shall provide data as required by the commissioner
to maintain and improve health care services under this division.
The commissioner shall
establish an enforcement mechanism, including penalties, to ensure
implementation of this provision.
   140603.  (a) The commissioner, with the advice of the Health
Policy Board, shall coordinate health care planning with other state
and local agencies that provide direct health care to residents.
   (b) In planning for the health care needs of the population, the
commissioner shall do all of the following:
   (1) Establish annual goals and priorities for health outcomes.
   (2) Develop equitable access to services for eligible residents.
   (3) Develop equitable distribution of health care resources and
personnel.
   (4) Ensure culturally and linguistically competent care.
   (5) Develop statewide health care databases.
   (6) Assess the capacity of health care training programs to
provide an adequate health care workforce.
   (7) Develop a professional and non-professional health care
workforce to provide sufficient services to residents.
   (8) Measure provider, consumer, and employer satisfaction as a
factor of the performance of the health care system.
   (9) Promote workplace safety.
   (10) Develop quality of care education programs for health care
providers and the health care workforce.
   (11) Assess and improve capital infrastructure.
   (12) Improve the enrollment system to ensure its ease of use.
   (13) Develop protocols to ensure the privacy rights of patients.
   (14) Ensure continuing compliance with the federal Health
Insurance Accountability and Portability Act of 1996.
   (15) Assist in the implementation of public health programs.
   (16) Develop protocols to decrease medical errors. 
  SEC. 2.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B 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 XIII B of the California
Constitution.