BILL ANALYSIS �
SB 1410
Page 1
Date of Hearing: August 8, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 1410 (Hernandez) - As Amended: May 25, 2012
Policy Committee: HealthVote:19-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill would make several changes to the Independent Medical
Review (IMR) process for health care consumers seeking to appeal
a decision made by their health plan or insurer. Specifically,
this bill:
1)Increases the level of expertise required of the individuals
reviewing the appeal, by requiring them to be expert in the
treatment of the consumer's specific medical condition.
2)Requires applications for an appeal to include a section where
consumers could voluntarily disclose demographic data.
3)Requires decisions made by reviewers on appeal to be available
to the public, and eliminates the current prohibition on
including the name of the health plan or insurer in public
documents.
4)Requires the Department of Insurance (CDI) and Department of
Managed Health Care (DMHC) establish a database, searchable by
the public, listing all decisions made on IMR appeals, as well
as a lengthy list of facts and data about each decision, as
specified.
FISCAL EFFECT
1)One-time costs of about $125,000 for DMHC to revise its
existing database (Managed Care Fund).
2)Ongoing costs of about $100,000 per year for DMHC to input and
manage additional data, and $200,000 per year for DMHC to
provide medical consultants with increased clinical expertise
SB 1410
Page 2
(Managed Care Fund).
3)One-time costs of about $580,000 for CDI to revise its
existing database (Insurance Fund). CDI's system is a legacy
system and more costly to upgrade.
4)Ongoing costs of about $100,000 per year for CDI to input and
manage additional data, and $200,000 per year for CDI to
provide medical consultants with increased clinical expertise
(Insurance Fund).
Both DMHC and CDI have estimated the cost of developing a IMR
database. 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.
COMMENTS
1)Background and Purpose. 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 related to medical necessity
of a service, the urgency of medical care, and the need for
experimental or investigational services. Under independent
medical review, an outside contractor arranges for medical
professionals with relevant training and experience to review
the consumer's appeal and decide whether to overturn the
coverage decision.
The California HealthCare Foundation (CHCF) evaluated 10 years
of IMR cases in California and identified a number of areas in
which the IMR process could be improved. The study revealed
inconsistent resolutions for similar IMR cases, a lack of
clarity and transparency regarding the basis for decisions
made by IMR reviewers, and evidence that the qualifications
and training of IMR reviewers may be poorly matched to the
cases they review. Additionally, the report suggested making
IMR resolutions public, requiring that a greater level of
detail and scientific data accompany case resolutions, and
allowing demographic data to be collected on consumers using
the IMR system. This bill attempts to remedy some of the
weaknesses found by the CHCF study.
SB 1410
Page 3
The bill requires the IMR database to show the annual number,
rate, and resolution ratios of IMR cases by health plan or
insurer, as well as similar information for different
demographics in the customer base. The end result is intended
to be greater insight into the behavior and decision-making of
companies in the health care industry, and into variance in
IMR outcomes by race.
2)Support. This bill is supported by a broad coalition of
medical groups, consumers groups, and health access groups.
There is no known opposition.
3)Support If Amended. The California Association of Health Plans
(CAHP) would support this bill if it is amended to exclude the
name of the health plan associated with specific IMR cases.
CAHP believes including the plan name without any meaningful
context can be misleading to consumers. Kaiser Permanente also
supports an amendment to exclude from publication the name of
the health plan associated with specific IMR cases. Failing
that, Kaiser Permanente supports amendments that (1) implement
another CHCF recommendation that would require a more thorough
review of the IMR organizations, (2) require all
communications and inquiries be transmitted to each party
involved in the IMR process and posted on the web site, and
(3) require a consumer disclosure notice that provides more
context about the IMR process. The last amendment appears to
be intended to protect the reputation of health plans and
insurers. Kaiser Permanente's proposed amendments would drive
up the cost of the bill substantially.
Analysis Prepared by : Jonathan Stein / APPR. / (916) 319-2081