BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 1410 (Hernandez) - Independent medical review
Amended: April 26, 2012 Policy Vote: Health 6-3
Urgency: No Mandate: No
Hearing Date: May 7, 2012 Consultant: Brendan McCarthy
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 1410 would make several changes to the
Independent Medical Review process for health care consumers
that are seeking to overturn a decision by their health plan or
insurer.
Fiscal Impact:
One-time costs of about $200,000 and ongoing costs of about
$100,000 to implement a shared database by the Department of
Managed Health Care (Managed Care Fund).
One-time costs of about $500,000 and ongoing costs of about
$100,000 to implement and maintain a shared database system
by the Department of Insurance (Insurance Fund).
Ongoing costs of about $360,000 per year to collect and
analyze additional data relating to review cases by the
Department of Insurance (Insurance Fund).
Ongoing costs in the low hundreds of thousands for the
operation of the independent medical review process due to
increased standards for reviewer experience (Managed Care
Fund and Insurance Fund).
Background: Under current law, health care consumers who have
been denied coverage of services can appeal to the state's
independent medical review process. There are three categories
of decisions that can be appealed through this process: coverage
decisions relating to medical necessity of the service, the
urgency of emergency care, or the need for experimental or
investigational services.
This process does not review issues where there is a dispute as
to whether the service is a covered benefit under the health
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plan or insurance policy. Those reviews are handled separately
by the appropriate department and are based on contractual
responsibilities, rather than clinical issues.
Under independent medical review, an outside contractor arranges
for medical professionals with relevant training and experience
to review the appeal and decide whether to overturn the coverage
decision, based on the consumer's medical condition and the best
available information about the service requested.
Proposed Law: SB 1410 makes several changes to the independent
medical review process, both for the Department of Managed
Health Care and the Department of Insurance. The bill would:
Require applications for a review to include a section
where consumers could voluntarily disclose demographic data,
such as ethnicity and language spoken.
Increase the level of expertise required of reviewers, by
requiring them to be expert in the treatment of the
consumer's specific medical condition and have recent
clinical experience in that area.
Require decisions to be available to the public and
eliminate the current prohibition on including the name of
the health plan or insurer in public documents.
Require the departments to establish a coordinated database
of all decisions that is searchable by the public.
The provisions of the bill would go into effect on the later of
either January 1, 2013 or the termination dates of any existing
contracts between the two departments and the outside contractor
that each has hired to manage their process.
Staff Comments: Both the Department of Managed Health Care and
the Department of Insurance have developed estimates of the cost
to develop a shared database that would include additional
information than is currently reported and would include
information from reviews under both departments' Independent
Medical Review system. Because the database will be shared
between the departments, there may be some economies of scale
and the final costs may be lower than the combined costs of both
departments' estimates.
In January of 2012, the California Healthcare Foundation
released a report on the independent medical review process. The
report recommended changes to increase the consistency and
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availability of data on decisions made by reviewers.