BILL ANALYSIS �
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 1046
AUTHOR: Beall
INTRODUCED: February 18, 2014
HEARING DATE: April 2, 2014
CONSULTANT: Boughton
SUBJECT : Insurance: mental illness: developmental disabilities:
coverage: penalties.
SUMMARY : Allows the Commissioner of the California Department
of Insurance to impose an administrative penalty of up to $2,500
for each violation, or for a violation that is continuous, up to
$2,500 each day the violation continues.
Existing law:
1.Establishes the California Department of Insurance (CDI) to
regulate health insurance pursuant to the Insurance Code and
the Department of Managed Health Care (DMHC) to regulate
health plans under the Knox-Keene Act.
2.Requires, under the California Mental Health Parity Act
(MHPA), health plans and health insurers to provide coverage
for the diagnosis and medically necessary treatment of severe
mental illnesses of a person of any age, and of serious
emotional disturbances of a child, as specified, under the
same terms and conditions applied to other medical conditions,
as specified.
3.Requires, under MHPA, maximum lifetime benefits, copayments
and coinsurance, and individual and family deductibles to be
applied equally to all benefits under the plan or policy.
4. Defines, under MHPA, "severe mental illnesses" to include:
a. Schizophrenia;
b. Schizoaffective disorder;
c. Bipolar disorder (manic-depressive illness);
d. Major depressive disorders;
e. Panic disorder;
f. Obsessive-compulsive disorder;
g. Pervasive developmental disorder or autism;
h. Anorexia nervosa; and,
i. Bulimia nervosa.
Continued---
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5.Requires health plans and insurers to also provide coverage
for behavioral health treatment for pervasive developmental
disorder or autism no later than July 1, 2012, and requires
the coverage to be provided in the same manner and subject to
the same requirements as provided in 2-4 above.
6.Requires health plans and insurers to maintain an adequate
network that includes qualified autism service providers who
supervise and employ qualified autism service professionals or
paraprofessionals who provide and administer behavioral health
treatment.
7.Establishes Kaiser Small Group HMO as California's Essential
Health Benefits (EHB) benchmark plan, which includes MHPA,
treatment for behavioral health, treatment for pervasive
developmental disorder or autism, the federal Mental Health
Parity and Addiction Equity Act of 2008 (MHPAE) and all rules,
regulations and guidance issued pursuant to the Affordable
Care Act (ACA), as mandated coverage required of
non-grandfathered individual and small group health plan
contracts and insurance policies.
8.Authorizes the director of the DMHC to, after appropriate
notice and opportunity for a hearing, by order, suspend or
revoke a health plan license or assess administrative
penalties if the director determines that the licensee has
committed any acts, or omissions, constituting grounds for
disciplinary action. Lists the numerous acts or omissions
that constitute grounds for disciplinary action including that
the plan has engaged in any conduct that constitutes fraud or
dishonest dealing or unfair competition, as defined.
9.Makes any person who violates any provision of the Knox-Keene
Act, or who violates any rule or order adopted or issued
pursuant to the Knox-Keene Act liable for a civil penalty not
to exceed $2,500 for each violation. Limits enforcement
actions unless brought before the expiration of four years
after the act or transaction constituting the violation.
10.Makes the remedies provided by 9) above and by other sections
of the Knox-Keene Act not exclusive and authorizes the
penalties to be sought and employed in any combination to
enforce the Knox-Keene Act. Through regulation, makes a
violation that is ongoing and continuous subject to a civil
penalty not to exceed $2,500 for each day that the violation
continues, and each enrollee harmed by a violation of the
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Knox-Keene Act constitutes a separate and distinct violation
subject to a civil penalty not to exceed $2,500.
11.Makes any person who engages in any unfair method of
competition or any unfair or deceptive act or practice, as
defined, liable to the state for a civil penalty to be fixed
by the CDI Commissioner, not to exceed $5,000 for each act,
or, if the act or practice was willful, a civil penalty not to
exceed $10,000 for each act. Gives the Commissioner the
discretion to establish what constitutes an act. However,
when the issuance, amendment, or servicing of a policy or
endorsement is inadvertent, all of those acts shall be a
single act, as specified.
12.Requires the penalty imposed by 11) above to be imposed and
determined by the Commissioner according to a proceeding if
determined to be of interest of the public, as specified.
13.Defines, in regulation, a "single act" for the purpose of
determining any penalty pursuant to 11) above as any
commission or omission, which in and of itself constitutes a
violation of unfair competition or deceptive acts or practice,
as specified.
This bill:
1.Authorizes the CDI Commissioner to assess administrative
penalties as specified in this bill against insurers for
violations of MHPA and requirements associated with behavioral
health treatment for pervasive developmental disorder or
autism.
2.Makes any person who violates the laws described in 1) above,
or who violates any rules or orders adopted or issued pursuant
to laws governing health insurers, as specified, based on a
violation of the laws described in 1) above, liable for a
penalty not to exceed $2,500 for each violation or, for a
violation that is ongoing and continuous, not to exceed $2,500
for each day that the violation continues.
3.Makes each patient harmed by a violation of laws governing
health insurers, as specified, a separate and distinct
violation subject to the penalties set forth in this bill.
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4.Makes the remedies provided by this bill and by other sections
of the Insurance Code not exclusive, and authorizes that the
remedies be sought and employed in any combination to enforce
the laws governing health insurers, as specified.
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee.
COMMENTS :
1.Author's statement. According to the author, this bill will
correct a disparity in penalty authority between CDI and DMHC
for violations of the MHPA. The Knox-Keene Act has a broad
penalty provision applicable to health plans that provides for
a per day penalty for on-going or continuous violations by
DMHC regulation. Currently, the Insurance Code has no
specific penalty provision applicable to MHPA violations. This
bill seeks to add a specific penalty provision for MHPA
violations identical to that applicable to DMHC regulated
health plans so that regardless of which state agency
regulates the payor the same penalties will apply. A per day
penalty for on-going violations can be an important tool in
enforcing requirements of the MHPA due to the importance of
timeliness of treatment for many mental health conditions.
2.Senate Select Committee on Autism and Related Disorders. On
March 4, 2014, the Senate Select Committee on Autism and
Related Disorders held an informational hearing on SB 946
(Steinberg), Chapter 650, Statutes of 2011, implementation.
Included as part of the hearing record was document from DMHC
responding to questions raised by the Senate Office of
Research regarding the assessment of monetary penalties.
According to DMHC, there were 20 matters (enforcement action
listed under a matter number, which may be more than one
complaint or type of enforcement action imposed) in total
related to MHPA and its corresponding regulation. The
monetary penalties for these matters totaled $4.2 million.
DMHC also indicated when determining monetary penalties, it
makes a determination whether to pursue civil or
administrative penalties. If a civil remedy is pursued DMHC
must bring a civil action on behalf of California in an
applicable court of law within four years of the action. For
administrative penalties, procedure is followed according to
the Administrative Procedures Act. DMHC also indicates that
the range of enforcement actions include not only assessing
monetary penalties and filing civil actions, but also issuing
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cease and desist orders, corrective actions, and installing
conservators and monitors. DMHC has negotiated settlements
for community investments as well.
3.Senate Select Committee on Mental Health. On June 27, 2013,
the Senate Select Committee on Mental Health held a hearing on
compliance with MHPA. The CDI Commissioner testified at the
hearing and included in the record a letter in response to
questions from the Committee regarding MHPA, EHB, and the
California Insurance Code. Included in this letter, CDI
indicates that after passage of SB 946, it continued to
receive complaints about insurers denying claims for
autism-related services and treatment. Additionally, the
letter indicates that CDI reviews policies for compliance with
California's EHB, MHPAE, MHPA, SB 946 and coverage
requirements for mental disorders based on the EHB. In 2012,
CDI received 184 complaints about mental health coverage,
almost all of which included claims denial. Also CDI sent 153
mental health claims denials through the Independent Medical
Review process, 80 of which saw the insurer's decision fully
or partially overturned. CDI has also directed staff to
conduct market examinations to assess compliance with MHPA,
and coverage for Autism Spectrum Disorder. The letter also
mentions an enforcement action taken against Blue Shield of
California Life and Health Insurance Company in 2011 for
denial of autism treatment. A settlement was negotiated and
then similar agreements were negotiated with other major
health insurance carriers.
4.Related legislation. SB 22 (Beall) required health plans and
insurers to submit an annual report to state regulators
certifying compliance with state and federal mental health
parity laws. SB 22 was held on the Assembly Appropriations
Suspense file.
5.Prior legislation. SB 126 (Steinberg), Chapter 680, Statutes
of 2013, extends, until January 1, 2017, the sunset date of an
existing state health benefit mandate that requires health
plans and health insurance policies to cover behavioral health
treatment for pervasive developmental disorder or autism and
requires plans and insurers to maintain adequate networks of
service providers.
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AB 1453 (Monning), Chapter 854, Statutes of 2012, and SB 951
(Ed Hernandez), Chapter 866, Statutes of 2012, established
California's EHBs.
SB 946 (Steinberg) Chapter 650, Statutes of 2012, requires
health plans and health insurance policies to cover behavioral
health treatment for pervasive developmental disorder or
autism, requires plans and insurers to maintain adequate
networks of autism service providers, established an Autism
Task Force in the DMHC, and sunsets SB 946's autism mandate
provisions on July 1, 2014.
SB 1283 (Steinberg) of 2010 would have established guidelines
to expedite the appeals process for grievances that are filed
with DMHC and imposed fines on health plans that did not
comply, as specified. SB 1283 was vetoed by Governor
Schwarzenegger.
AB 88 (Thomson), Chapter 534, Statutes of 1999 requires a
health care service plan contract or disability insurance
policy to provide coverage for severe mental illness, and for
the serious emotional disturbances of a child under the same
terms and conditions as applied to other medical conditions.
6.Support. CDI sponsors this bill to give CDI equal treatment
with DMHC enforcement penalties for non-compliance with the
MHPA. California's MHPA requires that all comprehensive
health insurance policies provide coverage for the diagnosis
and medically necessary treatment of severe mental illness of
a person of any age, and of serious emotional disturbance of a
child under the same terms and conditions applied to other
medical conditions. CDI promulgated emergency regulations
which prohibit specified conditions or limitations on coverage
of therapies when determined to be medically necessary to
ensure compliance with the MHPA. CDI is currently working on
finalizing permanent mental health parity regulations. In
addition, California's EHB law incorporates the requirements
from both the federal and state mental health parity laws.
Currently DMHC regulations allow for a violation that is
ongoing and continuous to be subject to a civil penalty for
each day that a violation continues. Additionally, each
enrollee harmed constitutes a separate and distinct violation
subject to civil penalty. Under the Insurance Code every
violation is an unfair insurance practice, which cannot be
multiplied by the number of days the violation occurs. This
bill would rectify the penalty disparity between CDI and DMHC.
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The California Association for Behavior Analysis believes CDI
should be given penalty authority in line with the penalty
authority of DMHC to enhance current enforcement efforts of
the MHPA to ensure consumers have access to mental health
services in compliance with the law.
7.Opposition. The Association of California Life and Health
Insurance Companies (ACLHIC) writes in opposition, that
currently, CDI has the authority to evaluate the policies and
procedures of health insurers to ensure compliance with all
requirements of the law, including those services that fall
within the mental health parity statutes. As such, CDI
already has very broad authority under the Insurance Code to
impose civil penalties of up to $5000 per act and/or $10,000
for a willful act or practice against any person who engages
in any unfair method of competition or any unfair or deceptive
act. ACLHIC adds that this bill, as drafted, is not identical
or even consistent with the referenced DMHC civil penalty and
the two enforcement actions are, for numerous reasons,
distinctively different.
8.Policy Comment. The enactment of this bill does not bring
parity with regard to monetary enforcement mechanisms
applicable to CDI as compared to DMHC. DMHC has broad
authority to pursue administrative actions against violators
of the Knox-Keene Act, and somewhat limited authority to
pursue civil actions against violators of the Knox-Keene Act.
CDI has broad authority to apply "civil" penalties for
violations of the unfair practice of the business of
insurance. However, it appears that these "civil" penalties
are essentially administrative penalties as the proceedings
for adjudication are administrative in nature and somewhat
limited, in terms of how the fines are assessed based on the
department's own regulations. This bill is modeled after the
DMHC civil assessment authority but has been revised to be an
administrative assessment and is lacking an adjudicative
process. In addition, it should be noted that it is the
author and sponsor's intent that this bill is limited to an
assessment of administrative penalties for violations of MHPA
and coverage for behavioral health treatment for pervasive
developmental disorder or autism, not EHBs or any other
violations of laws governing health insurers.
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9.Amendments. To keep this bill narrowly focused on violations
of MHPA and behavioral health treatment for pervasive
developmental disorder or autism as is the author's intent
this bill should be amended as follows:
a. (c) Each patient harmed by a violation of section
10144.5 and 10144.51 or any rules or orders adopted or
issued pursuant to this chapter based on a violation of
section 10144.5 or 10144.51 , constitutes a separate and
distinct violation subject to the penalties set forth in
this section.
b. The bill should be amended to specify the process
for hearing and appealing the allegations.
SUPPORT AND OPPOSITION :
Support: Department of Insurance (sponsor)
Autism Speaks
American Association for Marriage and Family Therapy,
California Division
California Association for Behavior Analysis
California Psychological Association
Children Now
Southern California Psychiatric Society
The Children's Partnership
Oppose: Association of California Life and Health Insurance
Companies
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