BILL ANALYSIS
SB 499
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Date of Hearing: July 1, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
SB 499 (Ducheny) - As Introduced: February 26, 2009
Policy Committee: Health Vote:17-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires the Managed Risk Medical Insurance Board
(MRMIB) to report to the Legislature annually about the funding
transfers and programmatic uses related to SB 1379 (Ducheny),
Chapter 607, Statutes of 2008. Specifically, this bill requires
MRMIB to report by March 1:
1)The amount of funds transferred to support California's
high-risk insurance program, the Major Risk Medical Insurance
Program (MRMIP).
2)The impact of this funding on the wait list for MRMIP.
FISCAL EFFECT
No direct fiscal impact to MRMIB to provide the required
information to the Legislature each year.
COMMENTS
1)Rationale . This bill requires increased reporting about the
amount and use of funding related to recently enacted
legislation. SB 1379 requires fines and administrative
penalties levied against health plans under the Knox-Keene Act
to be used to support the Thompson Loan Repayment Program and
MRMIP. SB 1379 requires the fist $1 million in fines and
penalties to be shifted to the Thompson Program and requires
additional fines to be shifted to MRMIP to reduce or eliminate
the waiting list for that program. According to the author, SB
1379 was intended to be an interim funding solution for MRMIP
and additional information about the impact of funding on the
waiting list is needed to inform a more permanent solution for
SB 499
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MRMIP.
2)Background . Prior to the enactment of SB 1379, penalties paid
by health plans that have violated provisions of the
Knox-Keene Act were deposited in the Managed Care Fund, which
supports the operating budget for the Department of Managed
Health Care (DMHC). The department was required to limit fees
paid each year by health plans to no more than DMHC operating
costs. Therefore, an increase in penalties reduced annual fees
paid by all health plans. SB 1379 created a firewall between
penalties collected and the fee calculation used to fund DMHC,
shifting penalties away from DMHC and toward to the high risk
pool and the physician loan repayment program.
3)MRMIP . California, along with 34 other states, has a high risk
insurance pool in order to accommodate individuals who have
been unable to obtain health coverage in the individual
market. MRMIP was established in 1991 and provides health
insurance to California residents unable to obtain it for
themselves or their families because of pre-existing medical
conditions. The annual caseload is periodically capped due to
limited funding that is unable to meet demand. In May of 2008
the enrollment cap was lowered from 8,100 to 7,100. Since that
time, the waiting list has ranged from 50 to 1,000
individuals.
4)The Thompson Loan Repayment Program repays up to $105,000 in
government or commercial educational loans for expenses
incurred for undergraduate education and graduate medical
education for physicians who agree to practice in medically
underserved areas. Physicians in the loan repayment program
must serve three years and priority consideration is given to
applicants who meet the cultural and linguistic needs of a
particular area.
5)Health Plan Fines . The DMHC is authorized to levy penalties
when provisions of state law governing health plans are
violated. Examples of violations that have led to fines levied
by DMHC against health plans include overcharging patients,
posting of confidential patient information, illegal
rescission (retroactive cancellation) of health coverage,
wrongful denial of claims, and failure to respond to member
appeals and provider disputes.
SB 499
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Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081