BILL ANALYSIS
AB 55
Page 1
ASSEMBLY THIRD READING
AB 55 (Migden)
As Amended April 27, 1999
Majority vote
HEALTH 9-5 JUDICIARY 10-4
-----------------------------------------------------------------
|Ayes:|Gallegos, Corbett, |Ayes:|Kuehl, Aroner, Bock, |
| |Firebaugh, Kuehl, | |Corbett, Jackson, Knox, |
| |Steinberg, Thomson, | |Longville, Shelley, |
| |Vincent, Wayne, Wildman | |Steinberg, Wiggins |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Granlund, Aanestad, |Nays:|Ackerman, Robert Pacheco, |
| |Bates, Strickland, | |House, Strickland |
| |Thompson | | |
| | | | |
-----------------------------------------------------------------
APPROPRIATIONS 14-6
-----------------------------------------------------------------
|Ayes:|Migden, Cedillo, Davis, | | |
| |Hertzberg, Kuehl, Papan, | | |
| |Romero, Shelley, | | |
| |Steinberg, Thomson, | | |
| |Wesson, Wiggins, Wright, | | |
| |Aroner | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Brewer, Ashburn, Battin, | | |
| |Pescetti, Maldonado, | | |
| |Runner, | | |
| | | | |
-----------------------------------------------------------------
SUMMARY : Expedites health plan and Department of Corporations
(DOC) review of consumer complaints, establishes an independent
medical review system for unresolved consumer complaints against
health plans, and holds health plans and managed care entities
liable in court for patient harm resulting from the failure to
exercise ordinary care. Specifically, this bill :
1)Allows enrollees to seek DOC review of unresolved grievances
after 30 days (instead of the current 60 days), requires plans
to provide enrollees with a written status report on
grievances within 15 days (instead of the current 30 days) and
AB 55
Page 2
requires plans to act on emergency grievances, including those
involving severe pain, within three days from receipt of the
grievance (instead of the current five days).
2)Establishes an Independent Medical Review System that requires
health plans to provide enrollees the opportunity to seek an
independent review whenever health services have been denied,
significantly delayed, terminated or otherwise limited by a
plan or one of its contracting providers based in whole or in
part on a finding that the proposed health services are not
medically necessary or appropriate.
3)Provides that independent reviews be conducted by expert
medical organizations independent of health plans and
certified by an accrediting organization, pursuant to conflict
of interest provisions.
4)Directs DOC to adopt the determination of the independent
review entity, which shall be binding on the health plan. In
cases where the enrollee's position prevails, the plan must
either offer the enrollee the disputed health care service or
reimburse the enrollee for care received if so directed by
DOC.
5)Requires a similar but unspecified independent medical review
system to be established in the Department of Insurance (DOI)
for review of similar decisions by health insurers.
6)Provides that a health plan shall have a duty of ordinary care
to provide medically appropriate health services and shall be
liable for any and all harm resulting from the failure to
exercise ordinary care.
7)Declares that there shall be no liability on the part of an
employer that purchases health coverage or assumes risk on
behalf of its employees.
EXISTING LAW :
1)Provides for the regulation of health plans by DOC and the
regulation of health insurers by DOI.
2)Requires health plans and health insurers to establish
external, independent review systems to examine coverage
decisions regarding experimental or investigational therapies
for patients.
AB 55
Page 3
FISCAL EFFECT : According to the Assembly Appropriations
Committee analysis, significant costs to DOC to implement the
independent review process, exceeding $6.5 million annually,
with these costs fully offset by fees paid by health plans. As
a purchaser of health care from health plans, a portion of these
costs would be borne by the state. In addition, the bill's
liability provisions will cause health plan costs to rise
through higher premiums, which in part will be passed on to the
state as a purchaser of health care.
COMMENTS : The author maintains that this bill will restore
consumer confidence in our health care system by requiring an
independent, outside review when health maintenance
organizations (HMOs) deny care, and by giving consumers access
to the courts in the same manner as public employees who are
injured by HMOs. This bill rectifies the current situation
where patients and their doctors who believe needed care has
been denied can be left hanging while the health plan dispute
resolution process drags on indefinitely. The author believes
that when HMOs deny a patient care, those patients should have
the right to an independent look from medical experts concerned
with that patient's health, not HMO personnel preoccupied with
the bottom line.
Supporters argue that experience in other states that have
independent review systems has shown that the mere existence of
such a process acts as a policing mechanism that increases the
reasonableness of health plans in reviewing the medical
necessity of decisions. They also believe that this bill will
help ensure that health care treatment decisions are driven by
physicians and not health plans. Supporters also endorse giving
injured private sector employees the right to sue HMOs, a right
now enjoyed only by public employees, so that all patients
injured by negligent HMO conduct can recover damages.
Opponents object to the provisions in this bill which increase
health plan liability. In particular, they object to the fact
that the liability provisions withhold MICRA protection for
HMOs. They argue that the liability provisions will result in
defensive medical practices that will lead to increased costs
and unnecessary treatment, and as costs go up the number of
uninsured will go up as well. The opponents favor independent
review over liability lawsuits. In addition to concerns about
the liability provisions, the health plans seek amendments
regarding independent review to ensure that decisions are
AB 55
Page 4
admissible in court.
AB 1621 (Thomson), SB 189 (Schiff) and SB 254 (Speier) also
create an independent review system. In addition, SB 21
(Figueroa) would also establish liability for HMOs.
Analysis Prepared by : Michael Shapiro / HEALTH / (916)
319-2097FN: 0001248