BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1169 (Lowenthal)
Hearing Date: 5/10/2010 Amended: 4/26/2010
Consultant: Katie Johnson Policy Vote: Health 7-2
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BILL SUMMARY: SB 1169 would require health care service plans
and health insurers to assign a tracking number to a claim or a
provider request for authorization, provide acknowledgment of
its receipt, and use the tracking number in subsequent
communications. The bill would also clarify that any form of
treatment or benefit limitation for mental health care services
be applied under the same terms as other benefits under the plan
or policy.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
DMHC regulations up to $130 up to
$170ongoingSpecial*
unknown, likely minor
Increased premiums to indeterminate, potentially
General/**
CalPERS, Medi-Cal, and more than $50 Federal/
Healthy Families Special
*Managed Care Fund
**CalPERS: 55 percent General Funds, 45 percent special and
other funds
**Medi-Cal: 38 percent General Funds, 62 percent federal funds
until December 31, 2010. 50 percent General Funds, 50 percent
federal funds thereafter.
**Healthy Families: 35 percent General Funds, 65 percent federal
funds.
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
Mental Health Services
Existing law requires that the terms and conditions applied to
mental health benefits be applied equally to all benefits under
the health plan or policy including maximum lifetime benefits,
copayments and coinsurance, and individual and family
deductibles. Although existing law currently provides for the
diagnosis and treatment of severe mental illness and severe
emotional disturbances of a child under the same terms and
conditions applied to other medical conditions, this bill would
clarify the requirement further. This bill would clarify that
any form of treatment or benefit limitation for mental health
care services would be applied under the same terms as other
benefits under the health plan or policy. Treatment or benefit
limitations or actions include maximum lifetime benefits,
copayments and coinsurance, and individual and family
deductibles.
If the Department of Managed Health Care (DMHC) needed to update
the existing regulations on mental health parity, staff could
cost up to $130,000 in FY 2010-2011
Page 2
SB 1169 (Lowenthal)
and up to $170,000 in FY 2011-2012 in special funds. Ongoing
costs would likely be minor. Any fiscal impact on the California
Department of Insurance (CDI) would be minor and absorbable.
Tracking Claims and Treatment Authorization Requests
This bill would require health care service plans and health
insurers, collectively carriers, to assign a tracking number to
claims and provider requests for treatment
authorization, provide acknowledgment of receipt, and use the
tracking number in subsequent communications. This bill would
also require that, if a claim is contested on the basis that the
carrier has not received all necessary information to complete
it, carriers would be required within three working days of
receipt of any of the additional information to provide
acknowledgment of receipt. This bill would provide that all
communications of acknowledgment of receipt of claims, requests
for treatment authorization, and additional claims information
be communicated via email unless the claimant or provider
requests that receipts be sent in writing.
Existing law provides that claims be processed within 30 working
days for insurers and health plans and within 45 working days if
the health plan is a managed care organization and that
treatment authorizations be approved in a timely fashion not to
exceed five business days unless the request is retroactive or
urgent and for the claimant, beneficiary, and provider to be
notified upon completion. It does not require carriers to
acknowledge the receipt of a claim or a treatment authorization
request or to assign a tracking number.
Since carriers likely utilize computerized claims systems, it is
possible that they would already assign tracking numbers to
claims. It is unknown how many carriers currently track claims.
Additionally, it is unknown if carriers assign tracking numbers
to treatment authorization requests or whether or not they send
a receipt of claims or treatment authorization requests to
enrollees and providers.
Carriers would likely need to invest in software changes,
updates, or augmentations in order to 1) track claims, 2) track
treatment authorization requests, and 3) have the ability to
notify enrollees and providers of the receipt of claims and
treatment authorization requests in order to comply with this
bill. While the cost to each plan would be unknown, it could be
significant enough to necessitate an increase in premiums for
private carriers and carriers that contract with the California
Public Employees Retirement System (CalPERS), Medi-Cal, and the
Healthy Families Program. Plans that contract with the Medi-Cal
Managed Care Program and the Healthy Families Program submit
annual cost reports. These updates could necessitate an increase
in the capitated rates paid by the state to the plans to provide
services to Medi-Cal and Healthy Families beneficiaries and
subscribers. If state costs increased, public funds would pay
for the costs for CalPERS, Medi-Cal, and Healthy Families
respectively as follows: 55 percent General Funds, 45 percent
special and other funds; 38 percent General Funds, 62 percent
federal funds until December 31, 2010, 50 percent General Funds,
50 percent federal funds thereafter; 35 percent General Funds,
65 percent federal funds. Any costs to state programs are
indeterminate at this time.