BILL ANALYSIS
AB 745
Page 1
GOVERNOR'S VETO
AB 745 (Coto)
As Amended May 7, 2009
2/3 vote
HEALTH 19-0
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|Ayes:|Jones, Fletcher, Adams, | | |
| |Ammiano, Block, Carter, | | |
| |Conway, De La Torre, De | | |
| |Leon, Emmerson, Gaines, | | |
| |Hall, Hayashi, Hernandez, | | |
| |Bonnie Lowenthal, Nava, | | |
| |V. Manuel Perez, Salas, | | |
| |Audra Strickland | | |
| | | | |
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|ASSEMBLY: |73-0 |(May 14, 2009) |SENATE: |31-0 |(September 2, |
| | | | | |2009) |
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SUMMARY : Requires the third party administrator (TPA) of a
self-funded dental benefit plan to include a disclosure in the
explanation of benefits (EOB) document and benefit claim forms
which provides the contact information for the federal
Department of Labor (DOL), which regulates self-funded plans, in
the event the consumer has a payment dispute with the plan.
Specifically, this bill :
1)Directs the TPA of a self-funded dental benefit plan to
include the following disclosure in the EOB document and in
forms sent to claimants in response to claims for benefits:
"This dental plan is self-funded and subject to
compliance with the federal Employee Retirement
Income Security Act (ERISA). As such, it is not
subject to state law governing health care coverage
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for dental care. Any questions, appeals, or disputes
arising from the payment of a submitted claim should
be directed to the entity providing the coverage, or
to the U.S. DOL, Office of Participant Assistance.
You can contact the Office at __________. "
2)Requires the TPA to fill in the blank in the notice in 1)
above with the appropriate telephone number for the Office of
Participant Assistance.
3)Specifies that this bill only applies to a TPA for a
self-funded dental benefit plan.
4)Makes a legislative finding that regulating TPAs pursuant to
this bill constitutes a regulation of insurance and is saved
from preemption under ERISA.
FISCAL EFFECT : None
COMMENTS : According to the author, current law requires dental
benefit plans regulated by the California Department of
Insurance (CDI) or the Department of Managed Health Care to
provide certain notices to consumers, including a notice that
specifies the "800" telephone number and address of the
regulator responsible for handling consumer complaints.
However, the author points out that self-funded
employer-sponsored benefit plans are regulated by ERISA, which
generally preempts state law and instead provides its own
requirements. According to the author, one notable exception to
ERISA preemption allows states to enforce laws that regulate the
business of insurance, including TPAs, which, the author
asserts, are maintained by most self-funded dental plans. The
author states that this bill is designed to regulate the
business of insurance by requiring insurance entities, such as
TPAs, to disclose to consumers in ERISA-covered plans
information regarding how to contact the federal DOL, the
regulatory agency that oversees these plans, relative to
possible payment disputes.
ERISA is a federal law that sets minimum standards for most
pension and group health plans voluntarily established by
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employers and employee organizations. ERISA requires plans to
provide participants with important information about plan
features and funding; provides fiduciary responsibilities for
those who manage and control plan assets; requires plans to
establish a grievance and appeals process for participants to
get benefits from their plans; and, gives participants the right
to sue for benefits and breaches of fiduciary duty.
The sponsor of this bill, the California Dental Association
(CDA) writes in support that ERISA-regulated plans are not
required to disclose that they are so regulated, and therefore
typically do not include a notification and contact number of
the federal agency which regulates them, thereby making it
difficult for either a patient or provider to know where to
pursue a possible payment dispute with a self-funded dental
plan. CDA asserts that this bill is a reasonable measure to
address the lack of adequate information provided to patients
who are in self-funded plans.
The Association of California Life and Health Insurance
Companies (ACLHIC) opposes this bill because it is concerned
that this bill sets a dangerous precedent by expanding CDI's
authority over TPAs that are not a contract of insurance.
ACLHIC also objects to requiring the disclosure in this bill to
be provided in the EOBs because they usually contain a standard
format and imposing changes that make them state-specific is a
very burdensome and costly requirement. ACHLIC contends that
most EOBs include information that meets ERISA requirements and
adding the lengthy disclosure required in this bill will only
confuse the consumer.
GOVERNOR'S VETO MESSAGE :
"This bill is unnecessary. The federal Department of Labor has
already adopted requirements governing self-funded benefit plans
and their disclosure statements. Appropriate complaint and
contact information is already included in order for patients
and providers to seek redress. For this reason, I am unable to
sign this bill."
AB 745
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Analysis Prepared by : Cassie Rafanan / HEALTH / (916)
319-2097
FN: 0003417