BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
591 (De La Torre)
Hearing Date: 8/17/2009 Amended: 7/23/2009
Consultant: Katie Johnson Policy Vote: B., F., I. 8-1
Health 7-3
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BILL SUMMARY: AB 591 would require health care service plans
and health insurers to file a copy of each of its plan contracts
issued and a list of health insurance policies with more than
50,000 insureds issued to their respective regulating agencies
annually. The bill would also require health care service plans
and health insurers, if they issue identification cards, to
identify their respective state regulating agencies and provide
a phone number where the departments may be reached. The bill
would increase the maximum fine for violating the prohibition on
unlawful referrals for compensation in relation to auto
insurance claims from $1,000 to $5,000.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
CDI implementation $80 $50 $50 Special*
and enforcement
DMHC implementation $200 $260 $125 Special**
and enforcement
CDI fine increase unknown, but potentially
significant General
(revenue)
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
Existing law provides for the regulation of health care service
plans by the Department of Managed Health Care (DMHC). Existing
law provides for the regulation of health insurers and motor
vehicle insurers by the California Department of Insurance
(CDI).
This bill would require a health care service plan, by June 30
of each year, to file a copy of each of its plan contracts
issued or outstanding in California with DMHC and to provide a
list of the marketing names used for those contracts, if any.
This bill would require a health insurer, by June 30 of each
year, to file a list of health insurance policies with more than
50,000 insureds issued or outstanding in California with the
Insurance Commissioner and to indentify each policy by the form
number approved by CDI and by marketing name. This bill would
provide that the filing required by these provisions would be
separate from a health insurer's annual filing.
This bill would require a health plan that issues identification
cards to enrollees to indicate on those cards that DMHC is its
regulator and to include a telephone number of DMHC that an
enrollee could call to obtain assistance about submitting a
grievance
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AB 591 (De La Torre)
either to the health plan or to DMHC. This bill would also
require a health plan that issues identification cards annually
to add this information to the cards prior to January 1, 2010.
If a health plan does not issue cards annually, this bill would
require it to update the cards by July 1, 2010.
This bill would require a health insurer that issues
identification cards to insureds to indicate on those cards that
CDI is its regulator and to include a telephone number of CDI
that an insured could call for consumer affairs assistance. This
bill would also require a health insurer that issues
identification cards annually to add this information to the
cards prior to January 1, 2010. If a health insurer does not
issue cards annually, this bill would require it to update the
cards by July 1, 2010.
Additionally, this bill would increase the maximum penalty for
violating the prohibition of an illegal referral with respect to
motor vehicle insurance from $1,000 to $5,000. Currently, all
penalties and fines assessed by CDI are sent to the General Fund
and this could result in a significant increase in General
Funds. For example, if 20 individuals were assessed a maximum
fine under these provisions, the net gain to the General Fund
would be $80,000.
There would be significant costs to DMHC and CDI to implement
these provisions. Since this is not simply a filing, DMHC would
need to create and maintain a database for this bill, as well as
absorb increased calls from consumers in its call center.
Depending on the complexity of the database and its maintenance
and the number of increased calls, it could cost DMHC
approximately $200,000 in FY 2009-2010, $260,000 in FY
2010-2011, and $125,000 ongoing. Costs to CDI would be
approximately $80,000 in FY 2009-2010 and $50,000 ongoing to
update insurer policy filings, enforcement, and increased call
center contacts.