BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1169|
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THIRD READING
Bill No: SB 1169
Author: Lowenthal (D)
Amended: 5/28/10
Vote: 21
SENATE HEALTH COMMITTEE : 7-2, 4/14/10
AYES: Alquist, Aanestad, Cedillo, Leno, Negrete McLeod,
Pavley, Romero
NOES: Strickland, Cox
SENATE APPROPRIATIONS COMMITTEE : 7-3, 5/27/10
AYES: Kehoe, Alquist, Corbett, Leno, Price, Wolk, Yee
NOES: Denham, Walters, Wyland
NO VOTE RECORDED: Cox
SUBJECT : Health care coverage: claims: prior
authorization: mental
health
SOURCE : California Coalition for Mental Health
California Psychiatric Association
DIGEST : This bill requires 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 also clarifies 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.
CONTINUED
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ANALYSIS : 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
1. 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).
2. Requires full service health plans licensed by DMHC to
provide basic health care services, as defined.
3. 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.
4. 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.
5. Requires health insurers to acknowledge receipt of a
claim within fifteen days.
6. 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:
1. 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
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written acknowledgment of its receipt to the provider.
In the case of a verbal request, a verbal
acknowledgement may be provided.
2. 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.
3. Specifies that terms and conditions includes, but are
not limited to, any form of treatment limitation, or
other action by a plan or insurer that may limit the
receipt of the covered benefits described.
Background
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 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,
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
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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."
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
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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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee analysis:
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12
2012-13 Fund
DMHC regulations up to $130 up to
$170 ongoing Special*
likely minor
*Managed Care Fund
SUPPORT : (Verified 5/28/10)
California Coalition for Mental Health (co-source)
California Psychiatric Association (co-source)
California Association of Marriage and Family Therapists
California Chapter of the American College of Emergency
Physicians
California Hospital Association
California Medical Association
Mental Health Association in California
OPPOSITION : (Verified 5/28/10)
America's Health Insurance Plans
American Specialty Health
Association of California Life and Health Insurance
Companies
California Association of Health Plans
ARGUMENTS IN SUPPORT : According to the California
Coalition for Mental Health (CCMH), sponsor of this bill,
all of the various mental health professionals experience
regular problems with paperwork submitted to health plans
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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 this bill 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
deny claims based on technicalities never relayed to the
requesting provider and ensure prompt and fair resolution
and payment of health insurance claims.
ARGUMENTS IN OPPOSITION : The California Association of
Health Plans (CAHP) states that this bill imposes
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 this bill 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 this bill 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
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providers and health insurance plans.
CTW:do 5/28/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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