BILL ANALYSIS
AB 55
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CONCURRENCE IN SENATE AMENDMENTS
AB 55 (Migden)
As Amended September 9, 1999
Majority vote
ASSEMBLY: 45-27 (June 2, 1999)
SENATE: 29-2 (September 9, 1999)
Original Committee Reference: HEALTH
SUMMARY : Establishes an independent medical review system
(IMRS) for unresolved consumer complaints against health plans
and health insurers. Specifically, this bill :
1)Establishes, commencing January 1, 2001, an IMRS for enrollees
to seek an independent review whenever health care services
have been denied, delayed, or otherwise limited by a health
plan or one of its contracting providers based on a finding
that the service is not medically necessary. Includes
Medi-Cal beneficiaries subject to conditions, and Medicare
beneficiaries if not federally preempted.
2)Provides that independent reviews be conducted by expert
medical organizations independent of plans pursuant to
conflict of interest provisions.
3)Directs the Department of Managed Care (DMC) to adopt the
determination of the independent review entity, which shall be
binding on the 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 emergency or
urgent care received if so directed by DMC.
4)Specifies that the enrollee shall not pay any application or
processing fees; the costs of IMRS are to be paid for through
an industry wide assessment which may be adjusted to reflect
plan use of the process.
5)Creates a similar IMRS in the Department of Insurance (DOI)
for review of similar unresolved complaints by health
insurers.
The Senate amendments :
1)Change the term "medically necessary or appropriate" to
AB 55
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"medically necessary" thereby limiting the scope of the
medical decisions subject to the IMRS program.
2)Apply IMRS to some but not all "specialized" health plan
services.
3)Eliminate a requirement for IMRS organizations to be approved
by an "accrediting" body, instead letting DMC directly
contract with such organizations.
4)Clarify that health plans and insurers are only responsible
for reimbursement in cases of emergency or urgent care
services out of network that are found by IMRS review to have
been medically necessary.
5)Delete provisions related to the admissibility in court of
IMRS decisions.
6)Postpone the effective date of the IMRS program to January 1,
2001.
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.
AS PASSED BY THE ASSEMBLY , this bill expedited health plan and
DOC review of consumer complaints, established an IMRS for
unresolved consumer complaints against health plans, and held
health plans and other managed care entities liable in court for
patient harm resulting from the failure to exercise ordinary
care.
FISCAL EFFECT : According to the Assembly Appropriations
Committee analysis, significant costs to DMC 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.
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COMMENTS : The author maintains that this bill will restore
consumer confidence in our health care system by requiring an
independent, outside expert review when HMOs deny care. 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 IMRSs
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 plan
executives.
SB 189 (Schiff) contains related provisions which further
implement the IMRS program.
This bill, in its current form, represents the results of
intense and detailed negotiations among the author, the Davis
Administration, and Assembly and Senate leadership
representatives. The final bill is a key element in the
Governor's HMO reform package.
Analysis Prepared by : Michael Shapiro / HEALTH / (916) 319-2097
FN: 0003651