BILL ANALYSIS �
SB 1046
Page 1
Date of Hearing: June 17, 2014
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
SB 1046 (Beall) - As Amended: April 8, 2014
SENATE VOTE : 35-0
SUBJECT : Insurance: mental illness: developmental disabilities:
coverage: penalties.
SUMMARY : Creates administrative penalties up to $2,500 per day
for health insurers regulated by the California Department of
Insurance (CDI) that violate current law related to mental
health parity. Specifically, this bill :
1)Gives CDI the authority to assess administrative penalties
against insurers for violations of current law requiring
health insurers to provide mental health parity, including
requirements related to behavioral health treatment coverage.
2)Makes any person who violates current mental health parity law
liable for a penalty of up to $2,500 for each violation or,
for an ongoing and continuous violation, up to $2,500 per day.
3)Makes each patient harmed a separate and distinct violation
subject to penalties.
4)Provides that the penalties provided by this bill are not
exclusive of other remedies in the Insurance Code.
5)Makes imposition of a penalty under this bill conform to
current standard administrative adjudication procedures.
EXISTING LAW :
1)Establishes CDI to regulate health insurers under provisions
of the Insurance Code and the Department of Managed Health
Care (DMHC) to regulate health plans under the Knox-Keene
Health Care Service Plan Act of 1975 (Knox-Keene).
2)Establishes mental health parity requirements, under which
health plans and health insurers must provide coverage for the
diagnosis and medically necessary treatment of severe mental
illnesses of a person of any age, and of serious emotional
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disturbances of a child, under the same terms and conditions
applied to other medical conditions.
3)Includes in the definition of severe mental illness:
schizophrenia; schizoaffective disorder; bipolar disorder;
major depressive disorders; panic disorder;
obsessive-compulsive disorder; pervasive developmental
disorder or autism; anorexia nervosa; and bulimia nervosa.
4)Requires health plans and insurers to 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 under mental health parity
requirements.
5)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.
6)Authorizes the Director of the DMHC to, after appropriate
notice and opportunity for a hearing, 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.
Includes in the list of acts or omissions any conduct that
constitutes fraud or dishonest dealing or unfair competition,
as defined.
7)Makes any person who violates any provision of the Knox-Keene
Act liable for a civil penalty not to exceed $2,500 for each
violation. Limits enforcement actions to four years after the
violation. Under current regulations, makes a violation that
is ongoing and continuous subject to a civil penalty up to
$2,500 for each day that the violation continues, with each
enrollee harmed constituting a separate and distinct
violation.
8)Under the Insurance Code, makes any person who engages in any
unfair method of competition or any unfair or deceptive act or
practice liable to the state for a civil penalty up to $5,000
for each act, or up to $10,000 for willful acts. Gives the
Insurance Commissioner the discretion to establish what
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constitutes an act. When the violation related to issuance,
amendment, or servicing of a policy or endorsement is
inadvertent, requires all of those acts to be a single act.
Specifies procedures for hearings and appeal of penalties
under the Administrative Procedure Act.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, this bill will
correct a disparity in penalty authority between CDI and the
DMHC for violations of the mental health parity law. The
author indicates that, whereas Knox-Keene health plans are
subject to a per day penalty for ongoing or continuous
violations, the Insurance Code has no specific penalty
provision applicable to mental health parity violations. The
author asserts that a per day penalty for ongoing violations
can be an important tool in enforcing requirements of mental
health parity law due to the importance of timeliness of
treatment for many mental health conditions.
2)BACKGROUND .
a) California mental health parity law. California's
mental health parity law, enacted in 1999, requires all
carriers (large group, small group, and individual) to
cover the diagnosis and medically necessary treatment of
severe mental illness of a person of any age, and of
serious emotional disturbances of a child. This coverage
is required to be at parity with other medical conditions:
no differences in maximum lifetime benefits; copayments,
deductibles; or cost sharing are permitted. Moreover, SB
964 (Steinberg), Chapter 650, Statutes of 2011,
specifically requires health plans and insurers to provide
behavioral health treatment for autism in a manner
consistent with current state mental health parity law and
requires plans and insurers to maintain adequate networks
of providers, as specified.
In addition, the federal Patient Protection and Affordable
Care Act (ACA) explicitly includes mental health and
substance abuse services, including behavioral health
treatment, as one of the 10 categories of service that must
be covered as essential health benefits (EHBs). Beginning
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in 2014, under the ACA, all new small group and individual
market plans will be required to cover these essential
health benefit categories and will be required to cover
them at parity with medical and surgical benefits.
b) Senate Hearings. On June 27, 2013, the Senate Select
Committee on Mental Health held a hearing on compliance
with the state's mental health parity law. The Insurance
Commissioner's written testimony indicates that after
passage of SB 946, complaints about insurers denying claims
for autism-related services and treatment continued. In
2012, CDI received 184 complaints about mental health
coverage, almost all of which included claims denial. CDI
indicates 153 mental health claims denials were subject to
the Independent Medical Review process, 80 of which saw the
insurer's decision fully or partially overturned. The
letter also mentions an enforcement action taken against
Blue Shield of California in 2011 for denial of autism
treatment. CDI indicates it negotiated an agreement that
required Blue Shield to cover the treatment and then
entered into similar agreements with other major California
health insurers.
On March 4, 2014, the Senate Select Committee on Autism and
Related Disorders held an informational hearing on SB 946
implementation. Included as part of the hearing record was
a 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 the state's mental
health parity law 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, the procedure followed is
set out according to the Administrative Procedures Act.
DMHC also indicates that the range of enforcement actions
includes not only assessing monetary penalties and filing
civil actions, but also issuing cease and desist orders,
corrective actions, and installing conservators and
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monitors. DMHC has negotiated settlements for community
investments as well.
3)SUPPORT . CDI, the sponsor of this bill, argues that DMHC
regulations allow for a violation that is ongoing and
continuous to be subject to a civil penalty for each day the
violation continues, but CDI, under current law, cannot
multiply the penalty by the number of days the violation
occurs. CDI argues by rectifying this disparity, this bill
will enhance current enforcement efforts to ensure consumers
have access to mental health services in compliance with the
law.
Autism Research Group, in support, writes that health plans and
insurers routinely impose caps on autism treatment that
violate the mental health parity law, and this bill would help
prevent the typical delay and denial that Californians seeking
treatment currently experience. Supporters write that this
bill will give CDI appropriate authority to enforce
California's mental health parity law.
4)OPPOSE UNLESS AMENDED . The Association of California Life and
Health Insurance Companies (ACLHIC) requests additional
clarity to ensure that carriers understand what constitutes an
"ongoing and continuous" violation so they may understand the
nature of the alleged violation, the required corrective
action, the time allowed for resolution and the opportunity
for hearing. ACLHIC indicates it is in discussions with CDI
about these concerns and hope to come to a mutual agreement
that will allow ACLHIC to remove its opposition.
5)RELATED LEGISLATION . SB 22 (Beall) would have required health
plans and insurers to report to DMHC and CDI, respectively, on
compliance with state and federal law related to mental health
parity. SB 22 was held on the suspense file in the Assembly
Appropriations Committee.
6)PREVIOUS LEGISLATION .
a) SB 126 (Steinberg), Chapter 680, Statutes of 2013,
extends, until January 1, 2017, the sunset date of SB 946's
autism mandate.
b) AB 1453 (Monning), Chapter 854, Statutes of 2012, and SB
951 (Ed Hernandez), Chapter 866, Statutes of 2012,
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establishes California's EHBs.
c) SB 946 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, establishes an Autism Task Force in DMHC, and
sunsets SB 946's autism mandate provisions on July 1, 2014.
d) 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, who stated that the bill was
"?overbroad in its application and would affect all of the
Department's grievance procedures."
e) AB 88 (Thomson), Chapter 534, Statutes of 1999, requires
health plans and 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, under the same terms and
conditions applied to other medical conditions.
7)DOUBLE REFERRAL . This bill is double referred. Upon passage
in this Committee it will be referred to the Assembly
Committee on Insurance.
REGISTERED SUPPORT / OPPOSITION :
Support
California Department of Insurance (sponsor)
ACT Today!
American Association for Marriage and Family Therapy, California
Division
Association of Regional Center Agencies
Autism Health Insurance Project
Autism Research Group
Autism Speaks
California Association for Behavior Analysis
California Association of Alcohol and Drug Program Executives
California Association of Local Mental Health Boards and
Commissions
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California Chapter of the American College of Emergency
Physicians
California Council of Community Mental Health Agencies
California Mental Health Planning Council
California Psychiatric Association
California Psychological Association
Center for Autism and Related Disorders
Children Now
Institute for Behavioral Training
Mental Health America of California
NAMI San Fernando Valley
NAMI San Francisco
National Alliance on Mental Illness (NAMI) California
National Association of Social Workers, California Chapter
Southern California Psychiatric Society
The Children's Partnership
Several Individuals
Opposition
Association of California Life and Health Insurance Companies
(unless amended)
Analysis Prepared by : Ben Russell / HEALTH / (916) 319-2097