Amended in Assembly August 18, 2014

Amended in Assembly August 4, 2014

Amended in Assembly July 1, 2014

Amended in Senate April 9, 2014

Senate Bill No. 964

Introduced by Senator Hernandez

February 10, 2014

An act to amend Section 1367.03 of, to add Section 1367.035 to, and to repeal and add Section 1380.3 of, the Health and Safety Code, and to amend Section 14456 of, and to add Section 14456.3 to, the Welfare and Institutions Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

SB 964, as amended, Hernandez. Health care coverage.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975 (Knox-Keene Act), provides for the licensure and regulation of health care service plans by the Department of Managed Health Care (DMHC) and makes a willful violation of the act a crime. Existing law requires DMHC to adopt standards for timeliness of access to care and requires that contracts between health care service plans and providers ensure compliance with those standards. Existing law requires health care service plans to annually report to DMHC on compliance with those standards in a manner specified by DMHC. Under existing law, every 3 years, DMHC is required to review information regarding compliance with those standards and make recommendations for changes that further protect enrollees.

This bill would authorize DMHC to develop standardized methodologies to be used by plans in making the reports on compliance with the timeliness standards, as specified, and would make the development and adoption of those methodologies exempt from the Administrative Procedure Act until January 1, 2020. The bill would require DMHC to annually review information regarding compliance with the timeliness standards and to post its findings from the reviews, and any waivers or alternative standards approved by DMHC, on its Internet Web site. The bill would also require a health care service begin delete plan to annually, commencing March 1, 2015, end delete begin insert plan, as part of the annual reports, to end insert submit data regarding network adequacy to DMHC, as specified, and would require DMHC to review that data for compliance with the Knox-Keene begin delete Act and post its findings from that review on its Internet Web site. end delete begin insert Act. The bill would require, if DMHC requests additional information to be reported, that the department provide health care service plans with notice of the change by November 1 of the year prior to the change. The bill would also require a health care service plan that provides services to Medi-Cal beneficiaries to provide the report data to the State Department of Health Care Services. end insert Because a violation of the requirements imposed on health care service plans would be a crime, the bill would impose a state-mandated local program.

Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services (DHCS), under which qualified low-income individuals receive health care services. One of the methods by which Medi-Cal services are provided is pursuant to contracts with various types of managed health care plans. Existing law requires DHCS to conduct annual medical audits of specified managed care plans and requires that these reviews be scheduled and carried out jointly with reviews carried out pursuant to the Knox-Keene Act. The Knox-Keene Act requires DMHC to periodically conduct an onsite medical survey of the health delivery system of each health care service plan and exempts a plan that provides services solely to Medi-Cal beneficiaries from the survey upon submission to DMHC the medical audit conducted by DHCS as part of the Medi-Cal contracting process.

This bill would eliminate that exemption and would require DMHC to coordinate the surveys conducted with respect to Medi-Cal managed care plans with DHCS, to the extent possible, provided that the coordination does not result in a delay of the surveys or the failure of DMHC to conduct the surveys.

This bill would also require DHCS to publicly report its begin insert findings of finalized end insert medical begin delete audit findings end delete begin insert audits end insert as soon as possible, as specified, and to share those findings and other information with respect to Knox-Keene plans with DMHC. The bill would specify that any preliminary audit findings shared with DMHC under this provision would be exempt from disclosure under the California Public Records Act.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

This bill would make legislative findings to that effect.

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

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

SECTION 1.  

Section 1367.03 of the Health and Safety Code
is amended to read:

1367.03.  

(a) Not later than January 1, 2004, the department
shall develop and adopt regulations to ensure that enrollees have
access to needed health care services in a timely manner. In
developing these regulations, the department shall develop
indicators of timeliness of access to care and, in so doing, shall
consider the following as indicators of timeliness of access to care:

(1) Waiting times for appointments with physicians, including
primary care and specialty physicians.

(2) Timeliness of care in an episode of illness, including the
timeliness of referrals and obtaining other services, if needed.

(3) Waiting time to speak to a physician, registered nurse, or
other qualified health professional acting within his or her scope
of practice who is trained to screen or triage an enrollee who may
need care.

(b) In developing these standards for timeliness of access, the
department shall consider the following:

(1) Clinical appropriateness.

(2) The nature of the specialty.

(3) The urgency of care.

(4) The requirements of other provisions of law, including
Section 1367.01 governing utilization review, that may affect
timeliness of access.

(c) The department may adopt standards other than the time
elapsed between the time an enrollee seeks health care and obtains
care. If the department chooses a standard other than the time
elapsed between the time an enrollee first seeks health care and
obtains it, the department shall demonstrate why that standard is
more appropriate. In developing these standards, the department
shall consider the nature of the plan network.

(d) The department shall review and adopt standards, as needed,
concerning the availability of primary care physicians, specialty
physicians, hospital care, and other health care, so that consumers
have timely access to care. In so doing, the department shall
consider the nature of physician practices, including individual
and group practices as well as the nature of the plan network. The
department shall also consider various circumstances affecting the
delivery of care, including urgent care, care provided on the same
day, and requests for specific providers. If the department finds
that health care service plans and health care providers have
difficulty meeting these standards, the department may make
recommendations to the Assembly Committee on Health and the
Senate Committee on Insurance of the Legislature pursuant to
subdivision (i).

(e) In developing standards under subdivision (a), the department
shall consider requirements under federal law, requirements under
other state programs, standards adopted by other states, nationally
recognized accrediting organizations, and professional associations.
The department shall further consider the needs of rural areas,
specifically those in which health facilities are more than 30 miles
apart and any requirements imposed by the State Department of
Health Care Services on health care service plans that contract
with the State Department of Health Care Services to provide
Medi-Cal managed care.

(f) (1) Contracts between health care service plans and health
care providers shall ensure compliance with the standards
developed under this section. These contracts shall require
reporting by health care providers to health care service plans and
by health care service plans to the department to ensure compliance
with the standards.

(2) Health care service plans shall report annually to the
department on compliance with the standards in a manner specified
by the department. The reported information shall allow consumers
to compare the performance of plans and their contracting providers
in complying with the standards, as well as changes in the
compliance of plans with these standards.

(3) The department may develop standardized methodologies
for reporting that shall be used by health care service plans to
demonstrate compliance with this section and any regulations
adopted pursuant to it. The methodologies shall be sufficient to
determine compliance with the standards developed under this
section for different networks of providers if a health care service
plan uses a different network for Medi-Cal managed care products
than for other products or if a health care service plan uses a
different network for individual market products than for small
group market products. The development and adoption of these
methodologies shall not be subject to the Administrative Procedure
Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code) until January 1,
2020. The department shall consult with begin delete stakeholder groups end delete
begin insert stakeholders end insert in developing standardized methodologies under this
paragraph.

(g) (1) When evaluating compliance with the standards, the
department shall focus more upon patterns of noncompliance rather
than isolated episodes of noncompliance.

(2) The director may investigate and take enforcement action
against plans regarding noncompliance with the requirements of
this section. Where substantial harm to an enrollee has occurred
as a result of plan noncompliance, the director may, by order,
assess administrative penalties subject to appropriate notice of,
and the opportunity for, a hearing in accordance with Section 1397.
The plan may provide to the director, and the director may
consider, information regarding the plan’s overall compliance with
the requirements of this section. The administrative penalties shall
not be deemed an exclusive remedy available to the director. These
penalties shall be paid to the Managed Care Administrative Fines
and Penalties Fund and shall be used for the purposes specified in
Section 1341.45. The director shall periodically evaluate grievances
to determine if any audit, investigative, or enforcement actions
should be undertaken by the department.

(3) The director may, after appropriate notice and opportunity
for hearing in accordance with Section 1397, by order, assess
administrative penalties if the director determines that a health
care service plan has knowingly committed, or has performed with
a frequency that indicates a general business practice, either of the
following:

(A) Repeated failure to act promptly and reasonably to assure
timely access to care consistent with this chapter.

(B) Repeated failure to act promptly and reasonably to require
contracting providers to assure timely access that the plan is
required to perform under this chapter and that have been delegated
by the plan to the contracting provider when the obligation of the
plan to the enrollee or subscriber is reasonably clear.

(C) The administrative penalties available to the director
pursuant to this section are not exclusive, and may be sought and
employed in any combination with civil, criminal, and other
administrative remedies deemed warranted by the director to
enforce this chapter.

(4) The administrative penalties shall be paid to the Managed
Care Administrative Fines and Penalties Fund and shall be used
for the purposes specified in Section 1341.45.

(h) The department shall work with the patient advocate to
assure that the quality of care report card incorporates information
provided pursuant to subdivision (f) regarding the degree to which
health care service plans and health care providers comply with
the requirements for timely access to care.

(i) The department shall annually review information regarding
compliance with the standards developed under this section and
shall make recommendations for changes that further protect
enrollees. Commencing no later than December 1, 2015, and
annually thereafter, the department shall post its begin insert final end insert findings
from the review on its Internet Web site.

(j) The department shall post on its Internet Web site any
waivers or alternative standards that the department approves under
this section on or after January 1, 2015.

SEC. 2.  

Section 1367.035 is added to the Health and Safety
Code, to read:

1367.035.  

(a)  begin delete Commencing March 1, 2015, and annually
thereafter, end delete begin insert As part of the reports submitted to the department
pursuant to subdivision (f) of Section 1367.03 and regulations
adopted pursuant to that section, end insert a health care service plan shall
submit to the department, in a manner specified by the department,
data regarding network adequacy, including, but not limited to,
the following:

(1) Provider location.

(2) Area of specialty.

(3)  begin delete Provider end delete begin insert Hospitals where providers have end insert admitting
privileges begin insert , if any end insert .

(4) Providers with open practices.

(5)  begin delete Provider patient capacity. end delete begin insert Provider to enrollee ratios for
providers on a full-time equivalent basis. end insert

(6) The number of patients assigned to a begin insert primary care end insert provider
begin insert or, for providers who do not have assigned enrollees, the number
of enrollee primary care provider end insert begin insert visits for the calendar year being
reported end insert .

(7)  begin delete Complaints end delete begin insert Grievances end insert regarding network adequacy and
timely access that the health care service plan received during the
preceding year.

(b) A health care service plan that uses a network for its
Medi-Cal managed care product line that is different from the
network used for its other product lines shall submit the data
required under subdivision (a) for its Medi-Cal managed care
product line separately from the data submitted for its other product
lines.

(c) A health care service plan that uses a network for its
individual market product line that is different from the network
used for its small group market product line shall submit the data
required under subdivision (a) for its individual market product
line separate from the data submitted for its small group market
product line.

(d) The department shall review the data submitted pursuant to
this section for compliance with this begin delete chapter and the regulations
adopted thereunder. The department shall post its findings from
that review on its Internet Web site. end delete begin insert chapter. end insert

(e) In begin delete collecting end delete begin insert submitting end insert data under this section, begin delete the
department shall maximize the use of all relevant existing reports
and information already submitted to the department by a plan
and, if applicable, the outcomes of medical audits and monthly
provider files provided to the department by the State Department
of Health Care Services pursuant to Section 14456.3 of the Welfare
and Institutions Code. This end delete begin insert a health care service plan that provides
services to Medi-Cal beneficiaries pursuant to Chapter 7
(commencing with Section 14087.98) or Chapter 8 (commencing
with Section 14200) of Part 3 of Division 9 of the Welfare and
Institutions Code, shall provide the same data to the State
Department of Health Care Services pursuant to Section 14456.3
of the Welfare and Institutions Code. end insert

begin insert (f) end insert begin insert   end insert begin insert In developing the format and requirements for reports, data,
or other information provided by plans pursuant to subdivision
(a), the department shall not create duplicate reporting
requirements, but, instead, shall take into consideration all existing
relevant reports, data, or other information provided by plans to
the department. This end insert subdivision does not limit the authority of
the department to request additional information from the plan as
deemed necessary to carry out and complete any enforcement
action initiated under this chapter.

begin insert

(g) If the department requests additional information or data
to be reported pursuant to subdivision (a), which is different or in
addition to the information required to be reported in paragraphs
(1) to (7), inclusive, of subdivision (a), the department shall provide
health care service plans notice of that change by November 1 of
the year prior to the change.

end insert begin insert

(h) A health care service plan may include in the provider
contract provisions requiring compliance with the reporting
requirements of Section 1367.03 and this section.

end insert

SEC. 3.  

Section 1380.3 of the Health and Safety Code is
repealed.

SEC. 4.  

Section 1380.3 is added to the Health and Safety Code,
to read:

1380.3.  

The department shall coordinate the surveys conducted
pursuant to Section 1380 with the State Department of Health Care
Services, to the extent possible, in order to allow for simultaneous
oversight of Medi-Cal managed care plans by both departments,
provided that this coordination does not result in a delay of the
surveys required under Section 1380 or in the failure of the
department to conduct those surveys.

SEC. 5.  

Section 14456 of the Welfare and Institutions Code is
amended to read:

14456.  

The department shall conduct annual medical audits of
each prepaid health plan unless the director determines there is
good cause for additional reviews.

The reviews shall use the standards and criteria established
pursuant to the Knox-Keene Health Care Service Plan Act of 1975,
as appropriate. Except in those instances where major unanticipated
administrative obstacles prevent, or after a determination by the
director of good cause, the reviews shall be scheduled and carried
out jointly with reviews carried out pursuant to the Knox-Keene
Health Care Service Plan Act of 1975, if reviews will be carried
out within time periods which satisfy the requirements of federal
law.

The department shall be authorized to contract with professional
organizations or the Department of Managed Health Care, as
appropriate, to perform the periodic review required by this section.
The department, or its designee, shall make a finding of fact with
respect to the ability of the prepaid health plan to provide quality
health care services, effectiveness of peer review, and utilization
control mechanisms, and the overall performance of the prepaid
health plan in providing health care benefits to its enrollees.

The director shall publicly report the findings of begin insert finalized end insert annual
medical audits conducted pursuant to this section as soon as
possible begin insert , end insert but no later than 90 days following completion of any
corrective action plan initiated pursuant to the audit begin insert , if any, end insert unless
the director determines, in his or her discretion, that additional
time is reasonably necessary to fully and fairly report the results
of the audit.

SEC. 6.  

Section 14456.3 is added to the Welfare and
Institutions Code, to read:

14456.3.  

(a) The department shall share with the Department
of Managed Health Care its findings from medical audits and
monthly provider files of a Medi-Cal managed care plan that
provides services to Medi-Cal beneficiaries pursuant to Chapter
7 (commencing with Section 14000) or this chapter and is subject
to Chapter 2.2 (commencing with Section 1340) of Division 2 of
the Health and Safety Code.

(b) To the extent that the department communicates its
preliminary investigative audit findings to the Department of
Managed Health Care under subdivision (a), those communications
shall be exempt from disclosure under the California Public
Records Act (Chapter 3.5 (commencing with Section 6250) of
Division 7 of Title 1 of the Government Code).

SEC. 7.  

The Legislature finds and declares that Section 6 of
this act, which adds Section 14456.3 to the Welfare and Institutions
Code, imposes a limitation on the public’s right of access to the
meetings of public bodies or the writings of public officials and
agencies within the meaning of Section 3 of Article I of the
California Constitution. Pursuant to that constitutional provision,
the Legislature makes the following findings to demonstrate the
interest protected by this limitation and the need for protecting
that interest:

In order to ensure the confidentiality of preliminary investigative
findings disclosed by the State Department of Health Care Services
to the Department of Managed Health Care pursuant to this act,
the limitation on the public’s right of access to those files is
necessary.

SEC. 8.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.