BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 1059 (Huffman)
Hearing Date: 8/25/2011 Amended: 7/12/2011
Consultant: Katie Johnson Policy Vote: Health 8-1
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BILL SUMMARY: AB 1059 would require the director of the
Department of Managed Health Care (DMHC), upon making a final
determination that a health care service plan has underpaid or
failed to pay a provider, to compel the health plan to pay the
provider the amount owed plus interest.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
DMHC enforcement up to the low hundreds
of Special*
thousands of dollars annually
*Managed Care Fund
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STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
This bill would require the director of the Department of
Managed Health Care (DMHC), upon making a final determination
that a health care service plan (health plan) has underpaid or
failed to pay a provider, to compel the health plan to pay the
provider the amount owed plus interest. A provider would not be
required to resubmit the claim to the health plan except in
extraordinary circumstances. The plan would be required to
reimburse the provider the cost of resubmission.
This bill is unclear as to whether these provisions would be
interpreted to continue the current provider complaint review
process of surveying data and searching for patterns of unlawful
behavior that DMHC currently conducts through its Office of
Provider Oversight's Provider Complaint Unit (PCU), or if it
would be read to compel DMHC to review and to take action on
each individual provider complaint.
AB 1059 (Huffman)
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If the bill is interpreted to mean that DMHC would continues its
current process of tracking, trending, and reviewing complaint
data for patterns and adjudicating unjust payment patterns, then
costs would likely be minor and absorbable for the PCU and may
increase enforcement's workload by about $400,000 annually if
enforcement had to enforce an additional 10 cases a year.
If however, DMHC were to interpret that this bill would
necessitate a review and action on every individual complaint,
there would be PCU staff costs of about $4 million to
individually review and adjudicate approximately 9,000
complaints annually. The increased number of adjudications would
beget increased enforcement at a cost of approximately $1
million annually to handle about 3,000 cases related to this
bill in addition to the normal caseload of 700 cases annually
department-wide.
This bill is similar, though not identical, to AB 1155 (Huffman,
2007). Governor Schwarzenegger vetoed AB 1155 saying, "Current
law already gives broad authority to the Department of Managed
Health Care (Department) to assess administrative penalties
against health plans for a variety of violations, including
unlawful provider payment practices of health plans...Since the
creation of the Department's provider complaint unit, it has
assisted providers in recovering $5.8 million in reimbursements.
The Department has also collected over $4.2 million in fines as
a result of plans' failure to pay claims in a timely manner and
based on other related violations of law."
AS PROPOSED TO BE AMENDED. The author's proposed amendments
would clarify that the intent of these provisions is to utilize
DMHC's existing provider complaint resolution process.
These amendments would significantly reduce the estimated costs
of this bill; they are now anticipated to be in the low hundreds
of thousands of dollars annually due to increased enforcement
activity by DMHC.