BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: AB 2787
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AUTHOR: Monning
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AMENDED: June 22, 2010
HEARING DATE: June 30, 2010
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CONSULTANT:
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Bain
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SUBJECT
Office of the California Health Ombudsman
SUMMARY
Establishes the Office of the California Health Ombudsman,
governed by a chief executive officer known as the
California Health Ombudsman. Requires the Ombudsman to
educate consumers on their health care coverage rights and
responsibilities, assist consumers with enrollment in
health care coverage, and resolve problems with obtaining
federal premium tax credits. Requires the Ombudsman, and
the services provided by local consumer assistance programs
under this bill, to also be funded from a fee on health
plans and health insurers.
CHANGES TO EXISTING LAW
Existing state law:
Requires the director of the Department of Managed Health
Care (DMHC) to establish and maintain a toll-free telephone
number for the purpose of receiving complaints regarding
health plans regulated by DMHC. Establishes within DMHC an
Office of Patient Advocate (OPA) to represent the interests
of enrollees served by health plans regulated by DMHC, and
establishes as the goal of OPA to help enrollees secure
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health care services to which they are entitled under the
laws administered by DMHC.
Requires the Insurance Commissioner to establish a program
to investigate complaints, respond to inquiries, and to
bring enforcement actions. Requires the program to
include, but not be limited to, a toll-free telephone
number dedicated to the handling of complaints and
inquiries, public service announcements to inform consumers
of the toll-free telephone number, and information as to
how to register a complaint or make an inquiry to the
California Department of Insurance (CDI), and make
available a simple, standardized complaint form designed to
assure that complaints will be properly registered and
tracked.
Permits the director of the Department of Health Services
(DHCS), for purposes of the Medi-Cal Program, on a regional
pilot project basis and to the extent authorized by law, to
enter into contracts with one or more nonprofit
organizations to perform the functions of the DHCS' Office
of the Ombudsman.
Existing federal law:
The Patient Protection and Affordable Care Act (PPACA)
requires the federal Secretary of the Department of Health
and Human Services (DHHS) to award grants to states to
enable states (or the exchanges operating in such states)
to establish, expand, or provide support for offices of
health insurance consumer assistance or health insurance
ombudsman programs.
Establishes criteria for states to meet in order to receive
a federal PPACA grant, and requires the ombudsman to
perform certain activities, including assisting with the
filing of complaints and appeals of health plans, educating
consumers on their rights and responsibilities, assisting
consumers with enrollment in a heath plan, and resolving
problems in obtaining premium tax credits made available by
PPACA. As a condition of receiving a federal ombudsman
grant, an office of health insurance consumer assistance or
ombudsman program is required to collect and report data to
the Secretary of DHHS on the types of problems and
inquiries encountered by consumers.
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This bill:
Establishes in state government an independent office of
health care coverage consumer assistance called the Office
of the California Health Ombudsman (Office). Requires the
Office to operate in compliance with the criteria
established by the federal Secretary of DHHS, and to be
under the direction of a chief executive officer who is to
be known as the California Health Ombudsman (Ombudsman).
The Ombudsman would be appointed by an unspecified entity.
Requires the Ombudsman, in coordination with the DMHC, CDI,
DHCS, the Managed Risk Medical Insurance Board (MRMIB), the
Exchange, and consumer assistance organizations, to receive
and respond to inquiries, complaints, and requests for
assistance concerning health care coverage with respect to
requirements under federal and state law.
Requires the Ombudsman, with respect to all health care
coverage available in California, including coverage
available through public programs and coverage available
through health plans and health insurers, to do all of the
following:
Assist with the filing of complaints and appeals,
including appeals with the internal appeal or grievance
process of the health plan or health insurer involved,
and to provide information about any external appeal
process.
Collect, track, quantify, and analyze problems and
inquiries encountered by consumers regarding health care
coverage, including, but not limited to, the complaints
reported to the Ombudsman.
Publicly report its analysis of these problems and
inquiries at least annually on the Internet website of
the Office.
Track, analyze, and publicly report on complaints
reported to the Ombudsman according to the nature and
resolution of the complaints and the health status, age,
race, ethnicity, language, geographic region, and gender
of the complainants in order to identify the most common
types of problem and the problems faced by particular
populations.
Track, analyze, and report on those complaints by health
insurer or health plan and by the type of health care
coverage program, including the timeliness of resolution
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of the complaints, and to take into account the number of
individuals enrolled in each health insurer or health
plan and in each health care coverage program.
Educate consumers on their rights and responsibilities
with respect to health care coverage and provide this
information in plain language.
Assist consumers with enrollment in health care coverage
by providing information, referral, and assistance.
Resolve problems with obtaining premium tax credits under
federal PPACA.
Provide the assistance and education described in this
bill to consumers with limited English language
proficiency in their primary language.
Requires the Ombudsman, in order to assist consumers in
navigating and resolving problems with health care coverage
and programs, to do both of the following:
Operate a HealthHelp hotline that is available 24 hours a
day, seven days a week.
Operate a HealthHelp Internet website, other social
media, and up-to-date communication systems.
Requires the telephone number and Internet website for the
HealthHelp hotline described above to be included on every
membership card and evidence of coverage issued to an
individual insured under a health plan contract, a health
insurance policy, and a Medi-Cal beneficiary.
Requires, the Ombudsman, in order to carry out its duties
to utilize a network of local community-based non-profit
consumer assistance programs with experience in the
following areas:
Assisting consumers in navigating the local health care
system.
Enrolling consumers in health care coverage.
Resolving consumer problems associated with health care
access.
Serving consumers with special needs, including, but not
limited to, consumers with limited English language
proficiency, low-income consumers, consumers with
disabilities, and consumers with multiple health
conditions.
Collecting and reporting data on the types of health care
STAFF ANALYSIS OF ASSEMBLY BILL 2787 (Monning) Page
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coverage problems consumers face.
Requires the Ombudsman to collect and report data to the
federal DHHS on the types of problems and inquiries
encountered by consumers.
Requires the Ombudsman to develop protocols and procedures
for the resolution of consumer complaints and the
establishment of responsibility or referral as appropriate
with regard to specified state and federal departments.
The Ombudsman would directly assist consumers enrolled in
Medi-Cal, MRMIB's three programs, the Exchange, DMHC and
CDI-regulated plans/insurers, and would provide information
and referrals to consumers in Medicare and individuals
enrolled in employee welfare benefit plans regulated under
federal law by the Department of Labor.
Requires DMHC, CDI, DHCS, MRMIB, the Department of Public
Health, and the Exchange to report data and other
information to the ombudsman regarding consumer complaints
submitted to those agencies, including the nature of the
complaints, the resolution of the complaints and their
timeliness, and the health status, age, race, ethnicity,
language, geographic region, and gender of the
complainants. Requires this information to be reported
according to the particular health insurer or health care
service plan involved.
Requires the Ombudsman to apply to DHHS for a grant under
PPACA to implement the requirements of this bill.
Requires the Ombudsman and the services provided by local
consumer assistance programs, under this bill, to also be
funded out of licensure fees on health plans, and out of
fees on health insurers by assessing a per policy
assessment. Requires the fees to be set by the Director of
the DMHC or the Commissioner of CDI, as applicable, in
consultation with the Ombudsman. Requires the fees to be
allocated based on the number of covered lives, and to be
the same per covered life regardless of the regulator.
Allows the Ombudsman, to the extent permitted by federal
law, to seek federal financial participation for assisting
beneficiaries of the Medi-Cal program.
FISCAL IMPACT
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This bill has not been analyzed by a fiscal committee. PPACA
appropriates $30 million to the Secretary of DHHS for the first
fiscal year, and this amount is available to states without
fiscal year limitation. This bill establishes the California
Health Ombudsman Trust Fund in the State Treasury as a
continuously appropriated fund without regard to fiscal year for
the purposes of this bill. This bill allows any monies in the
fund that are unexpended or unencumbered at the end of the
fiscal year to be carried forward to the next succeeding fiscal
year. This bill requires the Ombudsman to establish and
maintain a prudent reserve in the fund. All interest earned on
monies that have been deposited in the fund are required to be
retained in the fund and used for the purposes consistent with
this bill. This bill also generates an unknown amount of
revenue from a new fees on health plans and health insurers to
help fund the Ombudsman and local consumer assistance programs.
BACKGROUND AND DISCUSSION
According to the author, this bill establishes the Office of the
California Health Ombudsman in state government to position
California to receive federal monies made available by PPACA for
the purpose of establishing and operating such an office. The
author states California currently has a fragmented system for
consumer assistance with health care coverage complaints. The
author states that there are currently eight governmental
entities and two private, non-profit entities that provide a
number of services to assist persons with public and private
health care coverage. These services include advice on coverage
options, education about how to navigate the system, assistance
with complaints and grievances, and assistance in choosing a
health plan and finding a provider. These entities also respond
to complaints about, among other things, eligibility, coverage
of services, and timely access to health care providers. The
author argues it is imperative that Californians be provided
with a single source of correct and current information on
PPACA, and that the Ombudsman will also provide for much needed,
clear and understandable consumer information and assistance by
expanding and strengthening current programs operating at the
local level that will be consistent with the federal
requirements for independence and consumer orientation. The
author concludes that, in the present fiscal crisis climate,
there are no new state funds that could be used for this
purpose, but PPACA allocates $30 million for the federal
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Secretary of DHHS to provide as grants to states to establish an
Ombudsman.
Background on PPACA
In March 2010, President Obama signed PPACA into law. Among its
many provisions, PPACA appropriates $30 million in the first
fiscal year funding for states to establish health insurance
ombudsman programs. To be eligible to receive a grant, a state
must designate an independent office of health insurance
consumer assistance, or an ombudsman, that either directly, or
in coordination with state health insurance regulators and
consumer assistance organizations, receives and responds to
inquiries and complaints concerning health insurance coverage
regarding federal and state health insurance requirements. A
state that receives a grant under PPACA must comply with federal
criteria established by the Secretary.
Under PPACA, the office of health insurance consumer
assistance or health insurance ombudsman is required to do
the following:
Assist with the filing of complaints and appeals,
including filing appeals with the internal appeal or
grievance process of the health plan or health insurer
involved, and providing information about the external
appeal process;
Collect, track, and quantify problems and inquiries
encountered by consumers;
Educate consumers on their rights and responsibilities
with respect to health plans and health insurers;
Assist consumers with enrollment in a health plan or
health insurer by providing information, referral, and
assistance; and,
Resolve problems with obtaining premium tax credits under
PPACA.
As a condition of receiving a federal ombudsman grant, an
office of health insurance consumer assistance or ombudsman
program is also required to collect and report data to the
Secretary of DHHS on the types of problems and inquiries
encountered by consumers. The Secretary is required to use
this data to identify areas where more enforcement action
is necessary. Additionally, the Secretary is required to
share such information with state insurance regulators, and
the federal Secretaries of Labor and Treasury for use in
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the enforcement activities of such agencies.
Arguments in support
This bill is supported by consumer and children's health
groups. Western Center on Law & Poverty (WCLP) writes in
support that this bill positions California to secure its
share of federal ombudsman funds to establish a new
Ombudsman to assist consumers across all types of coverage.
WCLP writes that there are a plethora of different
agencies charged with regulating health plans and programs
and they assist consumers to varying degrees, but what
Californians need, and do not currently have is one
telephone number they can call for help in understanding
coverage choices and resolving problems. WCLP writes this
bill would create such an entity with a hotline and
internet website for consumers to use.
To maximize its effectiveness and ability to assist
consumers, WCLP writes the Ombudsman would contract with
local community-based non-profit consumer assistance
programs with experience in helping health care consumers.
WCLP writes California is fortunate to have a network of
experienced local health consumer centers known as the
Health Consumer Alliance which already assists health care
consumers and which can be built upon in developing
California's Ombudsman program. In addition to their
mission of helping consumers, the Ombudsman and the local
programs with whom it contracts would collect and report on
the types of problems or inquiries presented by consumers.
WCLP writes this will serve a vital means to identify and
correct systemic problems in the health care arena
PRIOR ACTIONS
Assembly: Votes not relevant
COMMENTS
1. Appointing authority not specified.
This bill requires the Office to be under the direction of
a chief executive officer known as the California Health
Ombudsman. The ombudsman would be appointed by an
unspecified entity. The author indicates he intends the
ombudsman to be appointed by the Governor and be subject to
STAFF ANALYSIS OF ASSEMBLY BILL 2787 (Monning) Page
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Senate confirmation.
2. Fees for support of Office and local consumer
assistance programs.
In addition to federal funds made available by PPACA, this
bill requires the Office and the services provided by local
consumer assistance programs to also be funded out of fees
on health plans and health insurers. The author indicates
there are nine local health consumer centers which are part
of the Health Consumer Alliance (HCA). These entities have
been funded by The California Endowment (TCE), but the TCE
announced at the end of 2009 that they would only be
funding the HCA through 2010. The author indicates HCA is
continuing to find foundation funds, including from TCE,
but some programs have begun to lay off staff.
To clarify the drafting of the fee provisions of this bill,
the author intends to delete the current language and
instead replace it with language generally modeled on the
fee provisions used in existing law (except for the $2
million annual cap) to fund the California Health Benefits
Review Program, which is administered by the University of
California and which reviews health benefit mandate
legislation.
On page 6, delete lines 13-24 and replace with italicized
language below:
(2) The office and the services provided by local
consumer assistance programs under subdivision (e) shall be
also be funded out of licensure fees on health care service
plans, consistent with Section 1356, and out of fees on
health insurers by assessing a per policy assessment. The
fees shall be set by the Director of the Department of
Managed Health Care or the Insurance Commissioner, as
applicable, in consultation with the ombudsman.
The fees shall be allocated based on the number of covered
lives and shall be the same per covered life regardless of
the regulator.
(a) For fiscal years 2010-11 to 2014-15, inclusive, each
health care service plan, including a specialized health
care service plan, and each health insurer, as defined in
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Section 106 of the Insurance Code, shall be assessed an
annual fee in an amount determined through regulation and
shall be proportionate to the number of covered lives
regulated by each department. The amount of the fee shall
be determined by the Department of Managed Health Care and
the Department of Insurance in consultation with the
ombudsman and shall be limited to the amount necessary to
fund the actual and necessary expenses of the ombudsmen and
its work in implementing this chapter.
(b) The Department of Managed Health Care and the
Department of Insurance, in coordination with the
ombudsman, shall assess the health care service plans and
health insurers, respectively, for the costs required to
fund the activities pursuant to this section.
(1) Health care service plans shall be notified of the
assessment on or before June 15 of each year with the
annual assessment notice issued pursuant to Section 1356.
The assessment pursuant to this section is separate and
independent of the assessments in Section 1356.
(2) Health insurers shall be noticed of the assessment in
accordance with the notice for the annual assessment or
quarterly premium tax revenues.
(3) The assessed fees required pursuant to subdivision (a)
shall be paid on an annual basis no later than August 1 of
each year. The Department of Managed Health Care and the
Department of Insurance shall forward the assessed fees to
the Controller for deposit in the California Health
Ombudsman Trust Fund immediately following their receipt.
3. Posting of ombudsman information on health benefit
cards.
This bill requires the telephone number and Internet Web
site for the HealthHelp
Hotline established by this bill to be included on every
membership card and evidence of coverage issued to a person
with a health plan or health insurance policy and a
beneficiary in the Medi-Cal program (known as a beneficiary
identification card or "BIC card").
The Department of Health Care Services indicates that in
2005, 6.5 million Medi-Cal BIC cards were reissued to
remove the beneficiary's Social Security number from the
card, and the cost of reissuing cards was approximately $4
million. DHCS believes it would cost more now to replace
the BIC cards, it would require six to nine months to make
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system changes, and an additional six to twelve months to
mail the new cards. DHCS indicates it does not recommend
placing numbers on the BIC card that can change, as such a
requirement could require reissuance of the BIC card, which
is costly. DHCS also states that every time a new BIC card
is issued, the BIC card identification number changes,
which results in claims by Medi-Cal providers being denied
if the provider uses the old BIC card number.
POSITIONS
Support: 100% Campaign
California Children's Health Initiatives
Children Now
Consumers Union
Health Access California
PICO California
The Children's Partnership
United Ways of California
Western Center on Law & Poverty
Oppose: None received
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