BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
2787 (Monning)
Hearing Date: 8/2/2010 Amended: 7/15/2010
Consultant: Katie Johnson Policy Vote: Health 5-3
_________________________________________________________________
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BILL SUMMARY: AB 2787 would establish the Office of the
California Health Ombudsman in state government as an
independent office of health care coverage consumer assistance.
The Ombudsman would be appointed by the Governor.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Ombudsman operations unknown, likely in the millions of
Federal/
dollars annually; General FundSpecial*
costs commencing FY 2015-16 dueGeneral
to expiration of health plan/insurer
fee
DMHC, CDI, MRMIB, unknown, costs to the extent
theirGeneral/
DHCS, and Exchange interaction with OCHO would
increaseFederal/
their current activities related
toSpecial**
consumer complaint resolution
DMHC and CDI regulations likely in the hundreds of thousands
forSpecial***
to set fee each department over a 2-3 year period
Fee revenue likely in the millions of dollars for
Special****
FY 2010-11 through FY 2014-15
*Potential federal grant funding/General Fund cost pressure for
start-up funds; ongoing, fee-supported California Health
Ombudsman Trust Fund until June 30, 2015.
**Managed Care Fund, Insurance Fund, Exchange special fund
***Managed Care Fund, Insurance Fund
****California Health Ombudsman Trust Fund
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
Ombudsman Activities
This bill would establish the Office of the California Health
Ombudsman (OCHO), which would, in relation to all health care
coverage available in California and mainly through qualified
local community-based non-profit entities, 1) assist California
consumers in the filing of complaints and appeals against a plan
or insurer, 2) collect, track, quantify, and analyze problems
and inquiries encountered by consumers with respect to health
care coverage including complaints to the Ombudsman, 3) educate
consumers about their rights and responsibilities with respect
to health care coverage, 4) assist consumers with enrollment by
providing information, referral, and assistance, 5) resolve
problems
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AB 2787 (Monning)
with obtaining tax credits, as specified, and 6) provide
assistance to consumers in their native language if they are of
limited English proficiency. In order to perform these duties,
OCHO would operate a HealthHelp 24 hour hotline and website and
would require the phone number and website to appear on every
membership card and in every evidence of coverage issued, as
specified.
Additionally, OCHO would be required to develop protocols to
refer consumers to their appropriate regulator or state
department for resolution of complaints, including to the
Department of Managed Health Care (DMHC), the California
Department of Insurance (CDI), the Managed Risk Medical
Insurance Board (MRMIB), the Department of Health Care Services
(DHCS), and the Exchange. These entities would be required to
report data to OCHO regarding, among other data, consumer
complaints, resolutions, and the timeliness of resolutions. To
the extent the requirements of this bill increase their duties
related to responding to and resolving consumer complaints, each
entity would incur unknown, but likely significant ongoing costs
in the hundreds of thousands of dollars.
Funding
This bill would create the California Health Ombudsman Trust
Fund in the State Treasury and would provide that it would be
continuously appropriated. OCHO would be required to maintain a
prudent reserve in the fund. In order to maintain Legislative
oversight, staff recommends that the bill be amended to delete
the continuous appropriation and to require that moneys be spent
upon appropriation by the Legislature.
This bill would require OCHO to apply to the federal Health and
Human Services Department (HHS) for a federal grant as provided
in the Patient Protection and Affordable Care Act (ACA), which
appropriates $30 million in the first year of the ACA
implementation to enable states to establish, expand, or provide
support for offices of health insurance consumer assistance or
health insurance ombudsman programs. In order to be eligible for
the grant funding, California would need to designate an
independent office of health insurance consumer assistance or an
ombudsman that directly or in coordination with state health
insurance regulators receives and responds to inquiries and
complaints concerning health insurance coverage. The amount of
available federal funding beyond the first year is unknown and
would be determined by HHS.
This bill would require that each health care service plan and
health insurer be assessed an annual fee during FY 2010-2011
through FY 2014-2015, to be developed through regulations by
DMHC and CDI, in consultation with OCHO, in an amount that would
be proportionate to each plan or insurer's number of covered
lives and that would be limited to the actual and necessary
expenditures of OCHO.
Health plans and insurers similarly pay annual assessments to
DMHC and CDI to support their regulation activities, which
include offering consumer complaint assistance. Costs to DMHC
and CDI to promulgate regulations related to the fee would
likely be in the hundreds of thousands of dollars for a 2-3 year
period. Ongoing costs
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AB 2787 (Monning)
through FY 2014-2015 to DMHC and CDI to collect this fee in
addition to the existing annual fee would be unknown.
DMHC's helpline budget is approximately $5 million annually. It
is reasonable to assume that OCHO's budget would be of a similar
magnitude, if not more, considering it would accept complaints
and questions from all Californians. There would be General Fund
cost pressure in the millions of dollars to provide permanent
OCHO funding commencing FY 2015-2016 due to the expiration of
the fee.