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 24, 2012      Consultant: Brendan McCarthy
          
          SUSPENSE FILE.  AS PROPOSED TO BE AMENDED.
          
          
          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 $100,000 and ongoing costs of about 
              $100,000 to revise the existing database by the Department 
              of Managed Health Care (Managed Care Fund).

              One-time costs of about $460,000 and ongoing costs of about 
              $100,000 to revise the existing database system by the 
              Department of Insurance (Insurance Fund).

              Ongoing costs of about $200,000 per year to collect and 
              analyze additional data by the Department of Insurance 
              (Insurance Fund).

              Ongoing costs of about $200,000 per year to collect and 
              analyze additional data by the Department of Managed Health 
              Care (Managed Care 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 








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          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 
          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.








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          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 
          availability of data on decisions made by reviewers.

          Proposed Author Amendments: The proposed amendments would 
          eliminate the requirement that the two departments collaborate 
          on a coordinated database.