Amended in Senate August 19, 2014

Amended in Senate August 4, 2014

Amended in Senate August 13, 2013

Amended in Assembly April 15, 2013

Amended in Assembly March 19, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 617

Introduced by Assembly Member Nazarian

February 20, 2013

An act to add Sections 100501.1, 100506.1, 100506.2, 100506.3, 100506.4, and 100506.5 to the Government Code, and to amend Sections 10950, 10951, and 10960 of the Welfare and Institutions Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

AB 617, as amended, Nazarian. California Health Benefit Exchange: appeals.

Existing federal law, the federal Patient Protection and Affordable Care Act (PPACA), enacts various health care coverage market reforms that take effect January 1, 2014. PPACA also requires each state to, by January 1, 2014, establish an American Health Benefit Exchange that facilitates the purchase of qualified health plans by qualified individuals and qualified small employers, as specified. Existing law establishes the California Health Benefit Exchange (Exchange) to implement the federal law. Existing law also requires the Exchange board to establish an appeals process for prospective and current enrollees of the Exchange that complies with all requirements of the federal act concerning the role of a state Exchange in facilitating federal appeals of Exchange-related determinations.

This bill would require the Exchange board to contract with the State Department of Social Services to serve as the Exchange appeals entity designated to hear appeals of eligibility determination or redetermination for persons in the individual market. The bill would establish an appeals process for eligibility or enrollment determinations and redeterminations for insurance affordability programs, as defined, or exemption determinations within the begin delete Exchanges end delete begin insert Exchange’s end insert jurisdiction, including an informal resolution process, as specified, establishing procedures and timelines for hearings with the appeals entity, and notice provisions. The bill would also establish continuing eligibility for individuals during the appeals process. The bill would make other related changes.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 100501.1 is added to the Government
Code, to read:

100501.1.  

For purposes of this title, begin delete the following definitions
shall apply: end delete begin insert “insurance affordability program” means a program
that is one of the following: end insert

begin delete

(a) “Insurance affordability program” means a program that is
one of the following:

end delete begin delete

(1)

end delete

begin insert (a) end insert  The state’s Medi-Cal program under Title XIX of the federal
Social Security Act (42 U.S.C. Sec. 1396 et seq.).

begin delete

(2)

end delete

begin insert (b) end insert  The state’s children’s health insurance program (CHIP)
under Title XXI of the federal Social Security Act (42 U.S.C. Sec.
1397aa et seq.).

begin delete

(3)

end delete

begin insert (c) end insert  A program that makes available to qualified individuals
coverage in a qualified health plan through the Exchange with
advance payment of the premium tax credit established under
Section 36B of the Internal Revenue Code.

begin delete

(4)

end delete

begin insert (d) end insert  A program that makes available coverage in a qualified
health plan through the Exchange with cost-sharing reductions
established under Section 1402 of the federal act.

begin delete

(b) “Combined eligibility notice,” means an eligibility notice
that informs an individual, or multiple family members of a
household, of eligibility for each of the insurance affordability
programs and for enrollment in a qualified health plan through the
Exchange, for which a determination of eligibility was made.

end delete

SEC. 2.  

Section 100506.1 is added to the Government Code,
to read:

100506.1.  

An applicant or enrollee has the right to appeal any
of the following:

(a) Any action or inaction related to the individual’s eligibility
for or enrollment in an insurance affordability program, or for
advance payment of premium tax credits and cost-sharing
reductions, or the amount of the advance payment of the premium
tax credit and level of cost sharing, or eligibility for affordable
plan options.

(b) An eligibility determination for an exemption from the
individual responsibility penalty pursuant to Section 1311(d)(4)(H)
of the federal act.

(c) A failure to provide timely or adequate notice of an eligibility
determination or redetermination or an enrollment-related
determination.

SEC. 3.  

Section 100506.2 is added to the Government Code,
to read:

100506.2.  

(a) The entity making an eligibility or enrollment
determination described in Section 100506.1 shall provide notice
of the appeals process at the time of application and at the time of
eligibility or enrollment determination or redetermination.

(b) The entity making an eligibility or enrollment determination
described in Section 100506.1 shall also issue begin delete a combined end delete begin insert an end insert
eligibility notice. The begin delete combined end delete eligibility notice shall contain all
of the following:

(1) Information about eligibility or ineligibility for Medi-Cal,
premium tax credits and cost-sharing reductions, begin delete and, if applicable, end delete
begin insert or end insert eligibility for the Medi-Cal Access Program, begin delete for each individual,
or multiple family members of a household, that has applied, end delete
including all of the following:

(A) An explanation of the action reflected in the notice,
including the effective date of the action.

(B) Any factual bases upon which the decision is made.

(C) Citations to, or identification of, the legal authority
supporting the action.

(D) Contact information for available customer service
resources, including local legal aid and welfare rights offices.

(E) The effective date of eligibility and enrollment.

(2) Information regarding the bases of eligibility for
non-modified adjusted gross income (MAGI) Medi-Cal and the
benefits and services afforded to individuals eligible on those
bases, sufficient to enable the individual to make an informed
choice as to whether to appeal the eligibility determination or the
date of enrollment, which may be included with the notice in a
separate document.

(3) An explanation that the applicant or enrollee may appeal
any action or inaction related to an individual’s eligibility for or
enrollment in an insurance affordability program with which the
applicant or enrollee is dissatisfied by requesting a state fair hearing
consistent with this title and the provisions of Chapter 7
(commencing with Section 10950) of Part 2 of Division 9 of the
Welfare and Institutions Code.

(4) Information on the applicant or enrollee’s right to represent
himself or herself or to be represented by legal counsel or an
authorized representative as provided in subdivision (f) of Section
100506.4.

(5) An explanation of the circumstances under which the
applicant’s or enrollee’s eligibility shall be maintained or reinstated
pending an appeal decision, pursuant to Section 100506.5.

SEC. 4.  

Section 100506.3 is added to the Government Code,
to read:

100506.3.  

The board shall enter into a contract with the State
Department of Social Services to serve as the Exchange appeals
entity designated to hear appeals of eligibility or enrollment
determination or redetermination for persons in the individual
market, or exemption determinations within the Exchange’s
jurisdiction. Except as otherwise provided in this title, this hearing
process shall be governed by the Medi-Cal hearing process
established in Chapter 7 (commencing with Section 10950) of Part
2 of Division 9 of the Welfare and Institutions Code, Section
100506, Subpart F of Part 155 of Title 45 of the Code of Federal
Regulations, and Article 7 of Chapter 12 of Title 10 of the
California Code of Regulations to the extent applicable and
consistent with the act that added this section.

SEC. 5.  

Section 100506.4 is added to the Government Code,
to read:

100506.4.  

(a) (1) Except as provided in paragraph (2), the
State Department of Social Services, acting as the appeals entity,
shall allow an applicant or enrollee to request an appeal within 90
days of the date of the notice of an eligibility or enrollment
determination, or exemption determination within the Exchange’s
jurisdiction, unless there is good cause as provided in Section
10951 of the Welfare and Institutions Code.

(2) The appeals entity shall establish and maintain a process for
an applicant or enrollee to request an expedited appeals process
where there is immediate need for health services because a
standard appeal could seriously jeopardize the appellant’s life,
health, or the ability to attain, maintain, or regain maximum
function. If an expedited appeal is granted, the decision shall be
issued no later than five working days unless the appellant agrees
to a delay to submit additional documents for the appeals record.
If an expedited appeal is denied, the appeals entity shall notify the
appellant within three days by telephone or through other
commonly available secure electronic means, to be followed by a
notice in writing, within five working begin delete days. end delete begin insert days end insert of the denial of
an expedited appeal. If an expedited appeal is denied, the appeal
shall be handled through the standard appeal process.

(b) Appeal requests may be submitted to the appeals entity by
telephone, by mail, in person, through the Internet, through other
commonly available electronic means, or by facsimile.

(c) The staff of the Exchange, the county, or the State
Department of Health Care Services or its designee shall assist the
applicant or enrollee in making the appeal request.

(d) (1) Upon receipt of an appeal, the appeals entity shall send
timely acknowledgment to the appellant that the appeal has been
received. The acknowledgment shall include information relating
to the appellant’s eligibility for benefits while the appeal is
pending, an explanation that advance payments of the premium
tax credit while the appeal is pending may be subject to
reconciliation if the appeal is unsuccessful, an explanation that the
appellant may participate in informal resolution pursuant to
subdivision (g), information regarding how to initiate informal
resolution, and an explanation that the appellant shall have the
opportunity to review his or her entire eligibility file, including
information on how an income determination was made and all
papers, requests, documents, and relevant information in the
possession of the entity that made the decision that is the subject
of the appeal at any time from the date on which an appeal request
is filed to the date on which the appeal decision is issued.

(2) Upon receipt of an appeal request, the appeals entity shall
send, via secure electronic means, timely notice of the appeal to
the Exchange and the county, and the State Department of Health
Care Services or its designee if applicable.

(3) Upon receipt of the notice of appeal from the appeals entity,
the entity that made the determination of eligibility or enrollment
being appealed shall transmit, either as a hardcopy or electronically,
the appellant’s eligibility and enrollment records for use in the
adjudication of the appeal to the appeals entity.

(e) A member of the board, employee of the Exchange, a county,
the State Department of Health Care Services or its designee, or
the appeals entity shall not limit or interfere with an applicant’s
or enrollee’s right to make an appeal or attempt to direct the
individual’s decisions regarding the appeal.

(f) An applicant or enrollee may be represented by counsel or
designate an authorized representative to act on his or her behalf,
including, but not limited to, when making an appeal request and
participating in the informal resolution process provided in
subdivision (g).

(g) An applicant or enrollee who files an appeal shall have the
opportunity for informal resolution, prior to a hearing, that
conforms with all of the following:

(1) A representative of the entity that made the eligibility or
enrollment determination shall contact the appellant or the
appellant’s appropriately authorized representative and offer to
discuss the determination with the appellant if he or she agrees.

(2) The appellant’s right to a hearing shall be preserved if the
appellant is dissatisfied with the outcome of the informal resolution
process. The appellant or the authorized representative may
withdraw the hearing request voluntarily or may agree to a
conditional withdrawal that shall list the agreed-upon conditions
that the appellant and the Exchange, county, or the State
Department of Health Care Services or its designee shall meet.

(3) If the appeal advances to a hearing, the appellant shall not
be required to provide duplicative information or documentation
that he or she previously provided during the application,
redetermination, enrollment, or informal resolution processes.

(4) The informal resolution process shall not delay the timeline
for a provision of a hearing.

(5) The informal resolution process is voluntary and neither an
appellant’s participation nor nonparticipation in the informal
resolution process shall affect the right to a hearing under this
section.

(6) For eligibility or enrollment determinations for insurance
affordability programs based on modified adjusted gross income
(MAGI), the appellant or the appellant’s appropriately authorized
representative may initiate the informal resolution process with
the entity that made the determination, except that all of the
following shall apply:

(A) The Exchange shall conduct informal resolution involving
issues related only to the Exchange, including, but not limited to,
exemption from the individual responsibility penalty pursuant to
Section 1311(d)(4)(H) of the federal act, offers of affordable
employer coverage, special enrollment periods, and eligibility for
affordable plan options.

(B) Counties shall conduct informal resolution involving issues
related to non-MAGI Medi-Cal eligibility or enrollment decisions.

(C) The State Department of Health Care Services or its designee
shall conduct informal resolution involving issues related to the
Medi-Cal Access Program.

(7) The staff involved in the informal resolution process shall
try to resolve the issue through a review of case documents, in
person or through electronic means as desired by the appellant,
and shall give the appellant the opportunity to review case
documents, verify the accuracy of submitted documents, and submit
updated information or provide further explanation of previously
submitted documents.

(8) The informal resolution process set forth by the State
Department of Social Services for Medi-Cal fair hearings shall be
used for the informal resolutions pursuant to this subdivision and
shall require the Exchange, county representative, or the State
Department of Health Care Services or its designee to do the
following:

(A) Review the file to determine the appropriateness of the
action and whether a hearing is needed.

(B) Attempt to resolve the matter if the action was incorrect.

(C) Determine whether a dual agency appeal is required to
resolve the matter at hearing and notice the other agency if not
already included.

(D) Determine whether interpretation services are necessary
and arrange for those services accordingly.

(E) Inform appellants of other agencies that may also be
available to resolve the controversy.

(h) (1) A position statement, as required by Section 10952.5
of the Welfare and Institutions Code, shall be made available at
least two working days before the hearing on the appeal. The
position statement shall be made available electronically by the
entity that determined eligibility if the entity has the capacity to
send information electronically in a secure manner.

(2) The appeals entity shall send written notice, electronically
or in hard copy, to the appellant of the date, time, and location of
the hearing no later than 15 days prior to the date of the hearing.
If the date, time, and location of the hearing are prohibitive of
participation by the appellant, the appeals entity shall make
reasonable efforts to set a reasonable, mutually convenient date,
time, and location. The notice shall explain what format the hearing
shall be held in, via telephone or video conference or in person,
and include the right of the appellant to request that the hearing
be held via telephone or video conference or in person. The notice
shall include instructions for submitting the request on the notice,
by telephone or through other commonly available electronic
means.

(3) The hearing format may be held via telephone or video
conference, unless the appellant requests the hearing be held in
person pursuant to paragraph (2).

(4) The hearing shall be an evidentiary hearing where the
appellant may present evidence, bring witnesses, establish all
relevant facts and circumstances, and question or refute any
testimony or evidence, including, but not limited to, the opportunity
to confront and cross-examine adverse witnesses, if any.

(5) The hearing shall be conducted by one or more impartial
officials who have not been directly involved in the eligibility or
enrollment determination or any prior appeal decision in the same
matter.

(6) The appellant shall have the opportunity to review his or
her appeal record, case file, and all documents to be used by the
appeals entity at the hearing, at a reasonable time before the date
of the hearing as well as during the hearing.

(7) Cases and evidence shall be reviewed de novo by the appeals
entity.

(i) Decisions shall be made within 90 days from the date the
appeal is filed and shall be based exclusively on the application
of the applicable laws and eligibility and enrollment rules to the
information used to make the eligibility or enrollment decision,
as well as any other information provided by the appellant during
the course of the appeal. The content of the decision of appeal
shall include a decision with a plain language description of the
effect of the decision on the appellant’s eligibility or enrollment,
a summary of the facts relevant to the appeal, an identification of
the legal basis for the decision, and the effective date of the
decision, which may be retroactive at the election of the appellant
if the appellant is otherwise eligible.

(j) Upon adjudication of the appeal, the appeals entity shall
transmit the decision of appeal to the entity that made the eligibility
or enrollment determination via a secure electronic means.

(k) If an appellant disagrees with the decision of the appeals
entity, he or she may make an appeal request regarding coverage
in a qualified health plan through the Exchange to the federal
Department begin insert of end insert Health and Human Services within 30 days of the
notice of decision through any of the methods in subdivision (b).

(l) An appellant may also seek judicial review to the extent
provided by law. Appeal to the federal Department of Health and
Human Services is not a prerequisite for seeking judicial review,
nor shall seeking an appeal to the federal Department of Health
and Human Services preclude a judicial review.

(m) Nothing in this section, or in Sections 100506.1 and
100506.2, shall limit or reduce an appellant’s rights to notice,
hearing, and appeal under Medi-Cal, county indigent programs,
or any other public programs.

SEC. 6.  

Section 100506.5 is added to the Government Code,
to read:

100506.5.  

For appeals of redetermination of Exchange advance
premium tax credits or cost-sharing reductions, upon receipt of
notice from the appeals entity that it has received an appeal, the
entity that made the redetermination shall continue to consider the
applicant or enrollee eligible for the same level of advance
premium tax credits or cost-sharing reductions while the appeal
is pending in accordance with the level of eligibility immediately
before the redetermination being appealed.

SEC. 7.  

Section 10950 of the Welfare and Institutions Code is
amended to read:

10950.  

(a) If any applicant for or recipient of public social
services is dissatisfied with any action of the county department
relating to his or her application for or receipt of public social
services, if his or her application is not acted upon with reasonable
promptness, or if any person who desires to apply for public social
services is refused the opportunity to submit a signed application
therefor, and is dissatisfied with that refusal, he or she shall, in
person or through an authorized representative, without the
necessity of filing a claim with the board of supervisors, upon
filing a request with the State Department of Social Services or
the State Department of Health Care Services, whichever
department administers the public social service, be accorded an
opportunity for a state hearing.

(b) (1) The requirements of Sections 100506.2, 100506.3, begin insert and end insert
100506.4 of the Government Code apply to state hearings regarding
eligibility for or enrollment in an insurance affordability program
administered by the State Department of Health Care Services to
the extent that those sections conflict with the state hearing
requirements under this chapter.

(2) Notwithstanding Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code,
the department, without taking any further regulatory action, shall
implement, interpret, or make specific this subdivision by means
of all-county letters, plan letters, plan or provider bulletins, or
similar instructions until the time regulations are adopted. The
department shall adopt regulations by July 1, 2017, in accordance
with the requirements of Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code.
Notwithstanding Section 10231.5 of the Government Code,
beginning July 1, 2015, the department shall provide a semiannual
status report to the Legislature, in compliance with Section 9795
of the Government Code, until regulations have been adopted.

(c) Priority in setting and deciding cases shall be given in those
cases in which aid is not being provided pending the outcome of
the hearing. This priority shall not be construed to permit or excuse
the failure to render decisions within the time allowed under federal
and state law.

(d) Notwithstanding any other provision of this code, there is
no right to a state hearing when either (1) state or federal law
requires automatic grant adjustments for classes of recipients unless
the reason for an individual request is incorrect grant computation,
or (2) the sole issue is a federal or state law requiring an automatic
change in services or medical assistance which adversely affects
some or all recipients.

(e) For the purposes of administering health care services and
medical assistance, the Director of Health Care Services shall have
those powers and duties conferred on the Director of Social
Services by this chapter to conduct state hearings in order to secure
approval of a state plan under applicable federal law.

(f) The Director of Health Care Services may contract with the
State Department of Social Services for the provisions of state
hearings in accordance with this chapter.

(g) As used in this chapter, “recipient” means an applicant for
or recipient of public social services except aid exclusively financed
by county funds or aid under Article 1 (commencing with Section
12000) to Article 6 (commencing with Section 12250), inclusive,
of Chapter 3 of Part 3, and under Article 8 (commencing with
Section 12350) of Chapter 3 of Part 3, or those activities conducted
under Chapter 6 (commencing with Section 18350) of Part 6, and
shall include any individual who is an approved adoptive parent,
as described in subdivision (C) of Section 8708 of the Family
Code, and who alleges that he or she has been denied or has
experienced delay in the placement of a child for adoption solely
because he or she lives outside the jurisdiction of the department.

SEC. 8.  

Section 10951 of the Welfare and Institutions Code is
amended to read:

10951.  

(a) A person is not entitled to a hearing pursuant to
this chapter unless he or she files his or her request for the same
within 90 days after the order or action complained of.

(b) (1) Notwithstanding subdivision (a), a person shall be
entitled to a hearing pursuant to this chapter if he or she files the
request more than 90 days after the order or action complained of
and there is good cause for filing the request beyond the 90-day
period. The director may determine whether good cause exists.

(2) For purposes of this subdivision “good cause” means a
substantial and compelling reason beyond the party’s control,
considering the length of the delay, the diligence of the party
making the request, and the potential prejudice to the other party.
The inability of a person to understand an adequate and
language-compliant notice, in and of itself, shall not constitute
good cause. The department shall not grant a request for a hearing
for good cause if the request is filed more than 180 days after the
order or action complained of.

(3) This section shall not preclude the application of the
principles of equity jurisdiction as otherwise provided by law.

(c) Notwithstanding the Administrative Procedure Act (Chapter
3.5 (commencing with Section 11340) of Part 1 of Division 3 of
Title 2 of the Government Code), the department shall implement
this section through an all-county information notice no later than
January 1, 2008. The department may also provide further
instructions through training notes.

SEC. 9.  

Section 10960 of the Welfare and Institutions Code is
amended to read:

10960.  

(a) Within 30 days after receiving the decision of the
director, which is the proposed decision of an administrative law
judge adopted by the director as final, a final decision rendered by
an administrative law judge, or a decision issued by the director
himself or herself, the affected county or applicant or recipient
may file a request with the director for a rehearing. The director
shall immediately serve a copy of the request on the other party
to the hearing and that other party may within five days of the
service file with the director a written statement supporting or
objecting to the request. The director shall grant or deny the request
no later than the 35th working day after the request is made to
ensure the prompt and efficient administration of the hearing
process. If the director grants the request, the rehearing shall be
conducted in the same manner and subject to the same time limits
as the original hearing.

(b) The grounds for requesting a rehearing are as follows:

(1) The adopted decision is inconsistent with the law.

(2) The adopted decision is not supported by the evidence in
the record.

(3) The adopted decision is not supported by the findings.

(4) The adopted decision does not address all of the claims or
issues raised by the parties.

(5) The adopted decision does not address all of the claims or
issues supported by the record or evidence.

(6) The adopted decision does not set forth sufficient information
to determine the basis for its legal conclusion.

(7) Newly discovered evidence, that was not in custody or
available to the party requesting rehearing at the time of the
hearing, is now available and the new evidence, had it been
introduced, could have changed the hearing decision.

(8) For any other reason necessary to prevent the abuse of
discretion or an error of law, or for any other reason consistent
with Section 1094.5 of the Code of Civil Procedure.

(c) The notice granting or denying the rehearing request shall
explain the reasons and legal basis for granting or denying the
request for rehearing.

(d) The decision of the director, which is the proposed decision
of an administrative law judge adopted by the director as final, a
final decision rendered by an administrative law judge, or a
decision issued by the director himself or herself, remains final
pending a request for a rehearing. Only after a rehearing is granted
is the decision no longer the final decision in the case.

(e) Notwithstanding any other provision of law, a rehearing
request or decision shall not be a prerequisite to filing an action
under Section 10962.

(f) (1) Notwithstanding subdivision (a), an applicant or recipient
otherwise may be entitled to a rehearing pursuant to this chapter
if he or she files a request more than 30 days after the decision of
the director is issued, or if he or she did not receive a copy of the
decision of the director, or if there is good cause for filing beyond
the 30-day period. The director may determine whether good cause
exists.

(2) For purposes of this subdivision, “good cause” means a
substantial and compelling reason beyond the party’s control,
considering the length of the delay, the diligence of the party
making the request, and the potential prejudice to the other party.
The inability of a person to understand an adequate and
language-compliant notice, in and of itself, shall not constitute
good cause. The department shall not grant a request for a rehearing
for good cause if the request is filed more than 180 days after the
order or action complained of.

(3) This section shall not preclude the application of the
principles of equity jurisdiction as otherwise provided by law.

(g) Notwithstanding the Administrative Procedure Act (Chapter
3.5 (commencing with Section 11340) of Part 1 of Division 3 of
Title 2 of the Government Code), the department shall implement
this section through an all-county information notice no later than
January 1, 2008. The department may also provide further
instructions through training notes.