BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: SB 1169
S
AUTHOR: Lowenthal
B
AMENDED: As Introduced
HEARING DATE: April 14, 2010
1
CONSULTANT:
1
Tadeo/
6 9
SUBJECT
Health care coverage: claims: prior authorization: mental
health.
SUMMARY
Requires health care service plans (health plans) and
health insurers to assign a tracking number to a claim or
provider request for authorization, provide acknowledgment
of its receipt and use the tracking number in subsequent
communication regarding the claim or request. Clarifies
that any form of treatment or benefit limitation for mental
health care services be applied under the same terms and
conditions as other benefits under the plan or policy, as
per mental health parity.
CHANGES TO EXISTING LAW
Existing federal law:
Requires health plans and health insurers that offer mental
health coverage to cover mental illness and substance abuse
disorders on the same terms and conditions as other medical
conditions.
Existing state law:
Provides for the regulation of health plans by the
Department of Managed Health Care (DMHC) and regulation of
health insurers by the California Department of Insurance
(CDI). Requires full service health plans licensed by DMHC
Continued---
STAFF ANALYSIS OF SENATE BILL 1169 (Lowenthal)Page 2
to provide basic health care services, as defined.
Requires health plans and health insurers to comply with
certain administrative requirements, premium requirements,
patient protection requirements, fiduciary and financial
requirements, provider access requirements, and to provide
certain mandated benefits to enrollees.
Requires health plans and health insurers to reimburse
uncontested claims within 30 or 45 working days and
specifies that a claim is contested if the health plan or
health insurer has not received a completed claim and all
necessary information to determine payer liability.
Requires health insurers to acknowledge receipt of a claim
within fifteen days.
Requires health plans and health insurers to provide
coverage for the diagnosis and medically necessary
treatment of certain severe mental illnesses (SMI), as
defined, and of serious emotional disturbances (SED) of a
child, as defined, under the same terms and conditions
applied to other medical conditions.
This bill:
Requires health care service plans and health insurers to
assign a tracking number to a claim or provider request for
authorization and provide electronic or written
acknowledgment of its receipt to both the provider and the
enrollee. In the case of a verbal request, a verbal
acknowledgement may be provided.
Requires the receipt of additional information that may be
needed to determine payer liability for a claim or portion
thereof to be acknowledged by the health plan and health
insurer within three days. This acknowledgment is to
include the tracking number and is to be delivered
electronically unless the claimant has requested
acknowledgment be transmitted in writing.
Requires that any form of treatment or benefit limitation
for mental health care services be applied under the same
terms and conditions as other benefits, under the plan or
policy.
FISCAL IMPACT
STAFF ANALYSIS OF SENATE BILL 1169 (Lowenthal)Page 3
This bill has not been analyzed by a fiscal committee.
BACKGROUND AND DISCUSSION
The author argues that access issues continue to interfere
with achieving true parity a decade after mental health
parity was passed. The author states that complicated
procedures interfere with patients' access to mental health
care and prevent insured consumers from obtaining mental
health care benefits. The author contends that SB 1169
addresses the problem of lost, ignored and forgotten claims
and requests for authorization of service and also
clarifies mental health parity by specifically requiring
that treatment limitation or other action that may limit
the receipt of benefits be applied under the same terms and
conditions that apply to other benefits.
State health care standards under the Knox-Keene Act of
1975
California has two regulatory agencies, DMHC and CDI, which
have oversight over roughly 200 health care service plans
and health insurers, which collectively provide coverage
for 27 million people. DMHC enforces the provisions of the
Knox-Keene Health Care Service Plan Act, which sets rules
for mandatory basic services and other specific health care
benefits and services; financial stability; availability
and accessibility of providers; review of provider
contracts; cost sharing; on-site medical surveys, including
review of patient medical records; and consumer disclosure
and grievance requirements.
State mental health parity
In 1999, the Legislature passed and the Governor signed AB
88 (Thomson), Chapter 534, Statutes of 1999, requiring
health plans and health insurers to provide coverage for
the diagnosis and medically necessary treatment of certain
types of severe mental illnesses (SMI) of a person of any
age, and of serious emotional disturbances (SED) of a
child, as defined, under the same terms and conditions
applied to other medical conditions.
Specifically, the statute defines SMI as including
schizophrenia, schizoaffective disorder, bipolar disorder,
major depressive disorders, panic disorder,
STAFF ANALYSIS OF SENATE BILL 1169 (Lowenthal)Page 4
obsessive-compulsive disorder, pervasive developmental
disorder or autism, anorexia nervosa, and bulimia nervosa.
The statute defines a child with an SED as one who has one
or more mental disorders identified in the most recent
edition of the Diagnostic and Statistical Manual of Mental
Disorders, other than a primary substance use disorder or
developmental disorder, which results in behavior that is
inappropriate to the child's age, according to expected
developmental norms.
For covered conditions, the mental health parity statute
requires benefits to include outpatient and inpatient
services, hospital services, and prescription drugs, if a
plan contract or insurance policy otherwise covers
prescription drugs, and requires terms for maximum lifetime
benefits, co-payments, and deductibles to be applied
equally to all benefits under a plan contract or insurance
policy.
Existing regulations specify that, in addition to all basic
and other health care services required by the Knox-Keene
Act, mental health parity provides, at a minimum, for the
coverage of crisis intervention and stabilization,
psychiatric inpatient services, including voluntary
inpatient services, and services from licensed mental
health providers including, but not limited to,
psychiatrists and psychologists. The regulations also
require that a plan's referral system shall provide "timely
access and ready referral in a manner consistent with good
professional practice."
Since the parity law was passed, several reports have
evaluated the law's implementation. In March, 2005, the
Department of Mental Health issued its report, "Mental
Health Parity-Barriers and Recommendations," noting "there
are a number of barriers at the operational level that keep
California from achieving mental health parity. The largest
barrier to full implementation is lack of access. Confusion
remains about what parity actually means beyond the fiscal
and structural requirements. Covered diagnoses are clear,
but what array of services is covered for individuals with
these diagnoses, and for how long, remains inconsistent
from plan to plan. It remains unclear what services are
the responsibility of health plans versus the
responsibility of public agencies and organizations."
STAFF ANALYSIS OF SENATE BILL 1169 (Lowenthal)Page 5
In March 2007, DMHC issued a report, "Mental Health Parity
in California; Mental Health Parity Focused Survey Project:
A Summary of Survey Findings and Observations," based on a
"focus survey" it had conducted in 2005 of seven large
health plans, covering 85 percent of the commercial managed
care population and representing all delivery models of
mental health services. DMHC found that the most common
problems were payment of emergency room claims, plans'
monitoring of access to after-hours services to ensure
timely response to enrollees', and plans' explanations in
letters denying treatment requests. DMHC also found
significant concerns on the part of consumer and industry
stakeholders about perceived limitations on, and lack of
coordination of, care for children with autism and other
pervasive developmental disturbances.
Federal mental health parity
The Mental Health Parity and Addiction Equity Act of 2008
(MHPAEA) requires group health insurance plans to cover
mental illness and substance abuse disorders on the same
terms and conditions as other illnesses and help to end
discrimination against those who seek treatment for mental
illness. The federal Departments of Labor, Health and
Human Services, and the Treasury issued an interim final
rule and accompanying guidelines governing its
implementation on February 2, 2010, that includes a 90-day
public comment period that closes May 3, 2010. The MHPAEA
does not mandate group health plans provide any mental
health coverage. However, if a plan does offer mental
health
coverage, then it requires equity in financial
requirements, such as deductibles, co-payments,
coinsurance, and out-of-pocket expenses; equity in
treatment limits, such as
caps on the frequency or number of visits, limits on days
of coverage, or other similar limits on the scope and
duration of treatment; and, equality in out-of-network
coverage. The MHPAEA applies to all group health plans for
plan years beginning after October 3, 2009, and exempts
small firms of 50 or fewer employees.
Related bills
AB 1600 (Beall) would require a health care service plan
contract and health insurance policy issued, amended, or
renewed on or after January 1, 2011, that provides
hospital, medical, or surgical coverage, to provide
STAFF ANALYSIS OF SENATE BILL 1169 (Lowenthal)Page 6
coverage for the diagnosis and medically necessary
treatment of a mental illness of a person of any age,
including a child, and would have defined mental illness as
a mental disorder as defined in the Diagnostic and
Statistical Manual IV.
Prior federal legislation
Mental Health Parity and Addiction Equity Act of 2008
requires health plans and insurers that offer mental health
coverage to cover mental illness and substance abuse
disorders on the same terms and conditions as other medical
conditions.
Mental Health Parity Act of 1996 requires that annual or
lifetime dollar limits on mental health benefits be no
lower than any such dollar limits for medical and surgical
benefits offered by a group health plan or health insurance
issuer offering coverage in connection with a group health
plan.
Prior state legislation
SB 296 (Lowenthal) Chapter 575, Statutes of 2009, requires
health care service plans and health insurers that provide
professional mental health services to issue identification
cards to all enrollees and insured containing specified
information by July 1, 2011, and provide specified
information relating to their policies and procedures on
their Internet websites by January 1, 2012.
SB 1553 (Lowenthal) Chapter 722, Statutes of 2008, requires
the websites of health plans that provide coverage for
professional mental health services to include, but not be
limited to, providing information for subscribers,
enrollees, and providers on accessing mental health
services.
AB 1887 (Beall) of 2008 would have required a health care
service plan contract and health insurance policy issued,
amended, or renewed on or after January 1, 2009, that
provides hospital, medical, or surgical coverage, to
provide coverage for the diagnosis and medically necessary
treatment of a mental illness of a person of any age,
including a child, and would have defined mental illness as
a mental disorder as defined in the Diagnostic and
Statistical Manual IV. This bill was vetoed by the
Governor.
STAFF ANALYSIS OF SENATE BILL 1169 (Lowenthal)Page 7
AB 423 (Beall) of 2007 would have required a health care
service plan contract and health insurance policy issued,
amended, or renewed on or after January 1, 2008, that
provides hospital, medical, or surgical coverage, to
provide coverage for the diagnosis and medically necessary
treatment of a mental illness of a person of any age,
including a child, and would have defined mental illness as
a mental disorder as defined in the Diagnostic and
Statistical Manual IV. This bill was vetoed by the
Governor.
AB 2179 (Cohn), Chapter 797, Statutes of 2002, requires
DMHC to develop and adopt regulations to ensure that
enrollees have access to needed health care services in a
timely manner. Requires DMHC to develop indicators of
timeliness of access to care and specifies three indicators
for the department to consider.
AB 88 (Thomson), Chapter 534, Statutes of 1999, requires
health plans and health insurers to provide coverage for
the diagnosis and medically necessary treatment of certain
severe mental illnesses, as defined, and of serious
emotional disturbances of a child, as defined, under the
same terms and conditions applied to other medical
conditions.
Arguments in support.
According to the California Coalition for Mental Health
(CCMH), sponsor of SB 1169, all of the various mental
health professionals experience regular problems with
paperwork submitted to health plans and insurers for
authorizations or claims becoming lost, delayed, forgotten
or otherwise untraceable, leading to extraordinary claims
on their time and resources to resubmit those claims or
authorization requests. CCMH argues that this affects both
clinicians and patients with delays in treatment and
reimbursement of treatment, and worse, denials of
authorizations and treatment. CCMH contends that
notwithstanding current law, these administrative and/or
clerical process interactions between providers and plans
or insurers continue to be unnecessarily problematic and
that SB 1169 is a modest attempt to fix this problem.
The California Medical Association states that this bill
will improve the process of health plans and health insurer
reviews, make it more difficult for plans and insurers to
STAFF ANALYSIS OF SENATE BILL 1169 (Lowenthal)Page 8
deny claims based on technicalities never relayed to the
requesting provider and ensure prompt and fair resolution
and payment of health insurance claims.
The Mental Health Association in California, co-sponsor of
SB 1169, contends that by assigning a tracking number and
letting the provider and enrollee know the request is
tracked will improve access, and notes as an example, that
tracking numbers are used successfully to track packages by
UPS and FedEx worldwide.
The California Hospital Association adds that the bill
addresses the problem of different, more stringent
standards for non-qualitative treatment limitations such as
utilization review being applied to mental illness than to
physical illnesses by clarifying parity language to make it
clear that any form of treatment limitation or action is
subject to parity requirements.
Arguments in opposition
The California Association of Health Plans (CAHP) states
that SB 1169 would impose unnecessary administrative costs
and create complicated, new notifications at a time when
health care costs are already making it difficult for
Californians to secure health insurance, and that state law
and regulations already require a complicated set of
timelines and notifications that health plans must meet in
handling claims. CAHP adds that SB 1169 also amends the
state's mental health parity law in a manner that has
unclear implications for coverage, since current law
already requires health plans to provide parity for covered
mental health services.
America's Health Insurance Plans (AHIP) argues that the
administrative changes proposed by SB 1169 will duplicate
existing requirements for patient-provider communication,
burdening physicians and confusing consumers, and result in
additional unnecessary administrative burdens that increase
costs for health care providers and health plans. AHIP
adds that the recent federal health care reform legislation
will establish administrative simplification processes
aimed at standardized claims submission and payment
processes that will reduce clerical burdens on both
providers and health insurance plans.
COMMENTS
STAFF ANALYSIS OF SENATE BILL 1169 (Lowenthal)Page 9
1.Removing existing mental health parity language not
necessary.
It is the author's intent to clarify mental health parity,
clarifying parity language to make it clear that any form
of treatment limitation or action is subject to parity
requirements. Removing existing language requiring parity
in the terms and conditions of coverage is not necessary.
Suggested amendments:
Page 13, line 35 through page 14, line 2:
(c) The terms and conditions applied to the benefits
required
by this section that shall be applied equally to all
benefits under
the plan contract include Any any form of treatment
limitation or other
action by a plan that may limit the receipt of
benefits required by
this section . These treatment limitations or actions
These shall include, but are not be limited to, the
use of any of the following:
Page 27, lines 4-11:
(c) The terms and conditions applied to the benefits
required
by this section that shall be applied equally to all
benefits under
the insurance policy include Any any form of treatment
limitation or other
action by an insurer that may limit the receipt of
benefits required by
this section . These treatment limitations or actions
These shall include, but are not be limited to, the
use of any of the following:
POSITIONS
Support: California Coalition for Mental Health (sponsor)
California Association of Marriage and Family
Therapists (co-sponsor)
California Psychiatric Association (co-sponsor)
STAFF ANALYSIS OF SENATE BILL 1169 (Lowenthal)Page 10
Mental Health Association in California (co-sponsor)
California Chapter of the American College of
Emergency Physicians
California Hospital Association
California Medical Association
Oppose: America's Health Insurance Plans
Association of California Life and Health Insurance
Companies
California Association of Health Plans
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