BILL NUMBER: AB 78 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 15, 1999
INTRODUCED BY Assembly Member Gallegos
DECEMBER 8, 1998
An act to amend Sections 1368, 1368.01, and 1368.03 of,
to An act to amend, repeal, and add Sections
1341, 1342.5, 1347, and 1368.02 and 1347
of, and to add Division 108 (commencing with Section 140000)
to, the Health and Safety Code, relating to health care coverage, and
making an appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
AB 78, as amended, Gallegos. Health care coverage: Board of
Managed Health Care.
(1) Under existing law, the Knox-Keene Health Care Service Plan
Act of 1975, the Commissioner of Corporations is charged with
responsibility for administration and enforcement of the act, which
governs health care service plans.
This bill would establish the Board of Managed Health
Care in the State and Consumer Services Agency, on and after March 1,
2000, with prescribed membership and duties.
The bill would require the board an unspecified
entity, on and after March 1, 2000, to administer and enforce
the regulation of health care service plans on and after July 1,
2000.
The bill would require the board an
unspecified entity to administer and enforce the regulation of
disability insurers that cover hospital, medical, and surgical
benefits, preferred provider organizations, exclusive provider
organizations, and any other preferred provider insurers on and after
July 1, 2002.
(2) Existing law establishes a Health Care Service Plan Advisory
Committee in the Department of Corporations with prescribed
membership and duties.
This bill would, on March 1, 2000, establish the Advisory
Committee on Managed Care and prescribe its membership. The bill
would require the board an unspecified entity
and the committee to make various reports to the Governor and
Legislature.
(3) Existing law authorizes a subscriber or enrollee to
submit a grievance or complaint to the department for review, after
completion of a plan's grievance process or participation in the
process for 60 days.
This bill would change the length of time to 30 days.
(4) Under existing law, willful violation of any provisions
relating to the licensure and regulation of health care service plans
is punishable as either a felony or a misdemeanor.
Existing law requires a plan to resolve grievances within 30 days
whenever possible and to provide enrollees and subscribers with a
written statement on the disposition or pending status of the
grievance within 30 days of the plan's receipt of the grievance.
This bill would instead require a plan to resolve grievances
within 30 days without condition and would require the written
statement to be provided within 15 days of receipt of the plan's
receipt of the grievance.
By changing the definition of a crime, this bill would impose a
state-mandated local program.
(5) The bill would also appropriate $3,000,000 from the
State Corporations Fund to the board an
unspecified entity for expenditure to cover the startup costs
of the board an unspecified entity and
new personnel and operating expenses. The bill would authorize
the board an unspecified entity to
require health care service plans to pay an additional assessment
sufficient to pay for the startup costs, new personnel, and operating
expenses.
SEC. 6.
(4) 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.
Vote: majority. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) The regulation of health care services is a critical issue for
the public. There is a growing concern about the emerging
penetration of managed care health systems that cut costs by denying
or delaying medically necessary patient care. Recent health care
reform initiatives on the state ballot, and the numerous patient
protection bills introduced in the California Legislature and in the
Congress of the United States, demonstrate the depth of public
concern being raised about the inadequacy of current government
regulation of managed health care services.
(b) Health care service plans operating in California are
currently licensed and regulated, pursuant to the Knox-Keene Health
Care Service Plan Act of 1975, by the Department of Corporations,
which is a department primarily concerned with financial matters
involving securities and franchise investments, lender and fiduciary
plans, and health plans. The Department of Corporations is part of
the Business, Transportation and Housing Agency. The Department of
Corporations has traditionally focused its attention on securing the
financial health and solvency of health plans, with only modest
attention paid to patient protection and quality of care issues. Few
consumers in California realize that their health care service plans
are subject to regulation by the Department of Corporations.
(c) Disability insurers operating in California that cover
hospital, medical, or surgical expenses, including insurers that
provide such coverage through a preferred provider organization,
exclusive provider organization, or a similar managed health care
system, are licensed and regulated by the Department of Insurance
under the Insurance Code. It is inefficient for state government to
regulate separately, in two different departments, health plan and
health insurance coverage, and many consumers are confused about
whether the Department of Corporations or the Department of Insurance
regulates their provider of health care coverage.
(d) Some types of medical groups that provide or arrange for
medical care and bear significant financial risk related to the
provision of medical care are regulated by the Department of
Corporations and some are not directly regulated by the state and
pose a serious risk to patients with regard to medical group
financial solvency and related ability to provide care, and medical
group obligation and commitment to provide quality health care
services.
(e) The Managed Health Care Improvement Task Force, created by the
passage of Assembly Bill 2343 of the 1995-96 Regular Session,
Chapter 815, Statutes of 1996, issued a report in January of 1998
recommending that a new state entity for regulation of managed health
care should be created to regulate health care service plans
currently regulated by the Department of Corporations and to phase in
the regulation of other health care entities.
(f) As one option, the task force recommended that the new state
entity be led by a board that would meet publicly to review and
approve major policy and regulatory matters, comprising five or more
individuals appointed to staggered terms, with a majority appointed
by the Governor, including the chairperson, and at least one member
each appointed by the Assembly and Senate, with part-time board
members working with the full-time chairperson, who would have
day-to-day operating responsibility and authority, and who would be
an individual of stature in the health services field. Task force
members in support of a board maintain that such a body would provide
continuity and stability and a public process and, therefore, would
ensure confidence in the decisionmaking and greater independence from
political interference.
(g) The task force recommended that the Governor and Legislature
consider transferring to the new entity the regulation of health
insurers, currently regulated by the Department of Insurance under
the Insurance Code, that provide health insurance coverage through
indemnity, preferred provider organizations, and exclusive provider
organizations.
(h) The task force also recommended that the Governor and
Legislature should consider having the new entity directly regulate,
for solvency and quality, medical groups, independent practice
associations, and other provider entities that contribute to medical
decisions and that bear significant risk.
(i) Therefore, the Legislature declares that it would be in the
best interest of the citizens of California to transfer government
responsibilities related to the regulation of health care service
plans to a new Board of Managed Health Care in the State and Consumer
Services Agency, dedicated to consumer protection and quality health
care, and thereafter to transfer to the new board the regulation of
health insurers, currently regulated by the Department of Insurance,
that provide health insurance coverage through indemnity, preferred
provider organizations, exclusive provider organizations, or through
other managed health care systems.
SEC. 2.
SECTION. 1. Section 1341 of the Health and Safety Code is
amended to read:
1341. (a) Responsibility for the administration and enforcement
of this chapter is vested in the Commissioner of Corporations. All
references to commissioner in this chapter shall be references to the
Commissioner of Corporations and all references to department shall
be references to the Department of Corporations.
(b) This section shall become inoperative on July 1, 2000, and, as
of January 1, 2001, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2001, deletes or
extends the dates on which it becomes inoperative and is repealed.
SEC. 3.
SEC. 2. Section 1341 is added to the Health and Safety Code,
to read:
1341. (a) Responsibility for the administration and enforcement
of this chapter is vested in the Board ____
of Managed Health Care established pursuant to Division 108
(commencing with Section 140000). All references to commissioner in
this chapter shall be references to the Board
____ of Managed Health Care and all references to department
or board ____ shall be references to
the Board ____ of Managed Health Care.
(b) This section shall become operative July 1, 2000.
SEC. 4.
SEC. 3. Section 1342.5 of the Health and Safety Code is
amended to read:
1342.5. (a) The commissioner shall consult with the Insurance
Commissioner prior to adopting any regulations applicable to health
care service plans subject to this chapter and nonprofit hospital
service plans subject to Chapter 11A (commencing with Section 11491)
of Part 2 of Division 2 of the Insurance Code and other entities
governed by the Insurance Code for the specific purpose of ensuring,
to the extent practical, that there is consistency of regulations
applicable to these plans and entities by the Insurance Commissioner
and the Commissioner of Corporations.
(b) This section shall become inoperative on July 1, 2000, and, as
of January 1, 2001, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2001, deletes or
extends the dates on which it becomes inoperative and is repealed.
SEC. 5.
SEC. 4. Section 1342.5 is added to the Health and Safety
Code, to read:
1342.5. (a) The Board ____ of
Managed Health Care shall consult with the Insurance Commissioner and
the Director of Health Services prior to adopting any regulations
applicable to health care service plans subject to this chapter for
the specific purpose of ensuring, to the extent practical, that there
are efficient and cost-effective health services and consistency of
regulations applicable to those plans and to the disability insurers
and other health plans subject to the jurisdiction of the Insurance
Commissioner and the Director of Health Services.
(b) This section shall become operative on July 1, 2000. This
section shall become inoperative on July 1, 2002, and, as of January
1, 2003, is repealed, unless a later enacted statute, that becomes
operative on or before January 1, 2003, deletes or extends the dates
on which it becomes inoperative and is repealed.
SEC. 6.
SEC. 5. Section 1347 of the Health and Safety Code is
amended to read:
1347. (a) There is established in the Department of Corporations
a Health Care Service Plan Advisory Committee consisting of 20
members. The members shall consist of the commissioner or the
commissioner's designee; a physician and surgeon with five years'
experience in providing services to enrollees of a health care
service plan; a person with expertise and five years' experience in
an administrative capacity of a hospital-based plan; a person with
five years' experience with a corporation formed under Section 9201
of the Corporations Code; a person with five years' experience with a
non-hospital-based independent practice association; a person with
expertise and five years' experience in a health care service plan
that is a hospital-based independent practice association; a person
with five years' experience in an administrative capacity with a
non-hospital-based health care service plan; a person with five years'
experience in an administrative capacity with a specialized health
care service plan; a certified public accountant with five years'
experience in auditing plans; and six public members having no
financial interest in the delivery of health care services or in
plans except for being enrolled in a health care service plan or
specialized health care service plan.
The members shall also include two persons with five years'
experience in an administrative capacity with a dental service plan,
two persons with five years' experience in an administrative capacity
with a vision service plan, and one person with five years'
experience in an administrative capacity with a mental health service
plan, all of whom shall be appointed by the commissioner for a term
of three years commencing January 1, 1989. With respect only to one
of the members appointed who is required to have five years'
experience in an administrative capacity with a vision service plan,
until January 1, 1996, the commissioner may at his or her discretion
substitute for the five years' experience requirement compensating
factors such as professional education, experience in related fields,
and other factors as the commissioner deems relevant.
The members shall be appointed by the commissioner for a term of
three years, except that of the members first appointed, four shall
serve for a term of one year and five shall serve for a term of two
years, as designated by the commissioner.
The committee shall meet at least quarterly and at the call of the
chairperson. The commissioner or the commissioner's designee shall
be chairperson of the committee. The committee may establish its own
rules and procedures. All members shall serve without compensation,
but the six public members shall be reimbursed from department funds
for expenses actually and necessarily incurred by them in the
performance of their duties.
(b) The purpose of the committee is to assist and advise the
commissioner in the implementation of the commissioner's duties under
this chapter. The commissioner shall consult with the advisory
committee on regulations and the recommendations of the committee
shall be made a part of the record with regard to those regulations.
The committee shall be given at least 45 days to review and comment
on regulations prior to setting a notice of hearing for proposed
regulations. Nothing in this subdivision prohibits the commissioner
from promulgating emergency regulations pursuant to the
Administrative Procedure Act. The commissioner shall discuss budget
changes relating to the administration of this chapter with the
committee, and the committee may make recommendations to the
commissioner regarding the proposed budget changes.
(c) This section shall become inoperative on March 1, 2000, and,
as of January 1, 2001, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2001, deletes or
extends the dates on which is becomes inoperative and is repealed.
SEC. 7.
SEC. 6. Section 1347 is added to the Health and Safety Code,
to read:
1347. (a) (1) There is established an Advisory Committee on
Managed Care consisting of 29 voting members.
(2) The members shall consist of the following:
(A) Six consumer group representatives who advocate on behalf of
health plan enrollees and health insurance policyholders, who shall
include at least two members representing the interests of vulnerable
populations.
(B) Four health care service plan enrollees and two health
insurance policyholders.
(C) Four health care professionals, including at least one
physician and one nurse.
(D) Two representatives of medical groups.
(E) Four representatives of full-service health care service
plans.
(F) Three representatives of specialized health care service
plans.
(G) Two representatives of disability insurers that cover
hospital, medical, or surgical expenses, including at least one that
provides coverage through a preferred provider organization.
(H) Two representatives of employers that purchase health care
coverage for their employees, which shall include one public or
government employer.
(3) The members shall be appointed by the board for a term of
three years, however, of the members first appointed, nine shall
serve for a term of one year and 10 shall serve for a term of two
years, as designated by the board ____
.
(4) The Department of Insurance, Department of Consumer Affairs,
State Department of Health Services, Office of Statewide Health
Planning and Development, and Department of Industrial Relations
shall appoint representatives to serve as nonvoting ex officio
members of the advisory committee. The ex officio members shall seek
to promote interagency coordination on health care issues and
enhanced capabilities, including electronic capabilities, to share
information with the board ____ .
(5) Every two years, the advisory committee shall elect a
chairperson and a vice chairperson from among its voting members.
(6) The advisory committee shall meet at least quarterly and at
the call of the chairperson. The advisory committee may establish
its own rules and procedures. All members shall serve without
compensation, but the six consumer group representatives, four health
care service plan enrollees, and two health insurance policyholders
may request and receive funds from the board
____ for travel expenses actually and necessarily incurred by
them in the performance of their advisory committee duties.
(b) The purpose of the advisory committee is to consider various
points of view and to assist and advise the board
____ in the implementation of the duties of the
board ____ under this chapter. The advisory
committee shall focus on major policy and planning issues, including
issues associated with helping patients secure health care services
to which they are entitled under the laws administered by the
board. The board ____. The ____ shall
consult with the advisory committee on regulations and the
recommendations of the committee shall be made a part of the record
with regard to those regulations. The advisory committee shall be
given at least 45 days to review and comment on regulations prior to
setting a notice of hearing for proposed regulations. Nothing in this
subdivision prohibits the board ____
from adopting urgency regulations pursuant to the Administrative
Procedure Act (Chapter 3 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code). The board
____ shall discuss budget changes relating to
the administration of this chapter with the advisory committee, and
the committee may make recommendations to the board regarding the
proposed budget changes.
(c) This section shall become operative on March 1, 2000.
SEC. 8. Section 1368 of the Health and Safety Code is amended to
read:
1368. (a) Every plan shall do all of the following:
(1) Establish and maintain a grievance system approved by the
department under which enrollees may submit their grievances to the
plan. Each system shall provide reasonable procedures in accordance
with department regulations that shall ensure adequate consideration
of enrollee grievances and rectification when appropriate.
(2) Inform its subscribers and enrollees upon enrollment in the
plan and annually thereafter of the procedure for processing and
resolving grievances. The information shall include the location and
telephone number where grievances may be submitted.
(3) Provide forms for complaints to be given to subscribers and
enrollees who wish to register written complaints. The forms used by
plans licensed pursuant to Section 1353 shall be approved by the
commissioner in advance as to format.
(4) Keep in its files all copies of complaints, and the responses
thereto, for a period of five years.
(b) (1) (A) After either completing the grievance process
described in subdivision (a), or participating in the process for at
least 30 days, a subscriber or enrollee may submit the grievance or
complaint to the department for review. In any case determined by
the department to be a case involving an imminent and serious threat
to the health of the patient, including, but not limited to, the
potential loss of life, limb, or major bodily function, or in any
other case where the department determines that an earlier review is
warranted, a subscriber or enrollee shall not be required to complete
the grievance process or participate in the process for at least 30
days.
(B) A grievance or complaint may be submitted to the department
for review and resolution prior to any arbitration.
(C) Notwithstanding subparagraphs (A) and (B), the department may
refer any grievance or complaint to the State Department of Health
Services, the Department of Aging, the federal Health Care Financing
Administration, or any other appropriate governmental entity for
investigation and resolution.
(2) If the subscriber or enrollee is a minor, or is incompetent or
incapacitated, the parent, guardian, conservator, relative, or other
designee of the subscriber or enrollee, as appropriate, may submit
the grievance or complaint to the department as the agent of the
subscriber or enrollee. Further, a provider may join with, or
otherwise assist, a subscriber or enrollee, or the agent, to submit
the grievance or complaint to the department. In addition, following
submission of the grievance or complaint to the department, the
subscriber or enrollee, or the agent, may authorize the provider to
assist, including advocating on behalf of the subscriber or enrollee.
For purposes of this section, a "relative" includes the parent,
stepparent, spouse, adult son or daughter, grandparent, brother,
sister, uncle, or aunt of the subscriber or enrollee.
(3) The department shall review the written documents submitted
with the subscriber's or the enrollee's request for review, or
submitted by the agent on behalf of the subscriber or enrollee. The
department may ask for additional information, and may hold an
informal meeting with the involved parties, including providers who
have joined in submitting the grievance or complaint, or who are
otherwise assisting or advocating on behalf of the subscriber or
enrollee. The department shall send a written notice of the final
disposition of the grievance or complaint, and the reasons therefor,
to the subscriber or enrollee, the agent, to any provider that has
joined with or is otherwise assisting the subscriber or enrollee, and
to the plan, within 60 calendar days of receipt of the request for
review unless the commissioner, in his or her discretion, determines
that additional time is reasonably necessary to fully and fairly
evaluate the relevant grievance or complaint. Distribution of the
written notice shall not be deemed a waiver of any exemption or
privilege under existing law, including, but not limited to, Section
6254.5 of the Government Code, for any information in connection with
and including the written notice, nor shall any person employed or
in any way retained by the department be required to testify as to
that information or notice. On or before January 1, 1997, the
commissioner shall establish and maintain a system of aging of
complaints that are pending and unresolved for 60 days or more, that
shall include a brief explanation of the reasons each complaint is
pending and unresolved for 60 days or more.
(4) A subscriber or enrollee, or the agent acting on behalf of a
subscriber or enrollee, may also request voluntary mediation with the
plan prior to exercising the right to submit a grievance or
complaint to the department. The use of mediation services shall not
preclude the right to submit a grievance or complaint to the
department upon completion of mediation. In order to initiate
mediation, the subscriber or enrollee, or the agent acting on behalf
of the subscriber or enrollee, and the plan shall voluntarily agree
to mediation. Expenses for mediation shall be borne equally by both
sides. The department shall have no administrative or enforcement
responsibilities in connection with the voluntary mediation process
authorized by this paragraph.
(c) The plan's grievance system shall include a system of aging of
complaints that are pending and unresolved for 30 days or more. On
or before January 1, 1997, the plan shall provide a quarterly report
to the commissioner of complaints pending and unresolved for 30 or
more days with separate categories of complaints for Medicare
enrollees and Medi-Cal enrollees. The plan shall include with the
report a brief explanation of the reasons each complaint is pending
and unresolved for 30 days or more. The plan may include the
following statement in the quarterly report that is made available to
the public by the commissioner:
"Under Medicare and Medi-Cal law, Medicare enrollees and Medi-Cal
enrollees each have separate avenues of appeal that are not available
to other enrollees. Therefore, complaints pending and unresolved
may reflect enrollees pursuing their Medicare or Medi-Cal appeal
rights."
If requested by a plan, the commissioner shall include this
statement in a written report made available to the public and
prepared by the commissioner that describes or compares complaints
that are pending and unresolved with the plan for 30 days or more.
Additionally, the commissioner shall, if requested by a plan, append
to that written report a brief explanation, provided in writing by
the plan, of the reasons why complaints described in that written
report are pending and unresolved for 30 days or more. The
commissioner shall not be required to include a statement or append a
brief explanation to a written report that the commissioner is
required to prepare under this chapter, including Sections 1380 and
1397.5.
(d) Subject to subparagraph (C) of paragraph (1) of subdivision
(b), the grievance, complaint, or resolution procedures authorized by
this section shall be in addition to any other procedures that may
be available to any person, and failure to pursue, exhaust, or engage
in the procedures described in this section shall not preclude the
use of any other remedy provided by law.
(e) Nothing in this section shall be construed to allow the
submission to the department of any provider complaint or grievance
under this section. However, as part of a provider's duty to
advocate for medically appropriate health care for his or her
patients pursuant to Sections 510 and 2056 of the Business and
Professions Code, nothing in this subdivision shall be construed to
prohibit a provider from contacting and informing the department
about any concerns he or she has regarding compliance with or
enforcement of this chapter.
SEC. 9. Section 1368.01 of the Health and Safety Code is amended
to read:
1368.01. (a) The grievance system shall require the plan to
resolve grievances within 30 days whenever possible and shall require
the plan to provide enrollees and subscribers with a written
statement on the disposition or pending status of the grievance
within 15 days of the plan's receipt of the grievance.
(b) The grievance system shall include a requirement for expedited
plan review of grievances for cases involving an imminent and
serious threat to the
health of the patient, including, but not limited to, potential loss
of life, limb, or major bodily function. When the plan has notice of
a case requiring expedited review, the grievance system shall
require the plan to immediately inform enrollees and subscribers in
writing of their right to notify the department of the grievance.
The grievance system shall also require the plan to provide
enrollees, subscribers, and the department with a written statement
on the disposition or pending status of the grievance no later than
three days from receipt of the grievance.
SEC. 10. Section 1368.02 of the Health and Safety Code, as added
by Section 3 of Chapter 377 of the Statutes of 1998, is amended to
read:
1368.02. (a) The commissioner shall establish and maintain a
toll-free telephone number for the purpose of receiving complaints
regarding health care service plans regulated by the commissioner.
(b) Every health care service plan shall publish the department's
toll-free telephone number, the California Relay Service's toll-free
telephone numbers for the hearing and speech impaired, the plan's
telephone number, and the department's Internet address, on every
plan contract, on every evidence of coverage, on copies of plan
grievance procedures, on plan complaint forms, and on all written
notices to enrollees required under the grievance process of the
plan, including any written communications to an enrollee that offer
the enrollee the opportunity to participate in the grievance process
of the plan and on all written responses to grievances. The
department's telephone number, the California Relay Service's
telephone numbers, the plan's telephone number, and the department's
Internet address shall be displayed by the plan in each of these
documents in 12-point boldface type in the following regular type
statement:
"The California Department of Corporations is responsible for
regulating health care service plans. The department's Health Plan
Division has a toll-free telephone number (1-800-400-0815) to receive
complaints regarding health plans. The hearing and speech impaired
may use the California Relay Service's toll-free telephone numbers
(1-800-735-2929 (TTY) or 1-888-877-5378 (TTY)) to contact the
department. The department's Internet website
(http://www.corp.ca.gov) has complaint forms and instructions online.
If you have a grievance against your health plan, you should first
telephone your plan at (plan's telephone number) and use the plan's
grievance process before contacting the Health Plan Division. If you
need help with a grievance involving an emergency, a grievance that
has not been satisfactorily resolved by your plan, or a grievance
that has remained unresolved for more than 60 days, you may call the
Health Plan Division for assistance. The plan's grievance process
and the Health Plan Division's complaint review process are in
addition to any other dispute resolution procedures that may be
available to you, and your failure to use these processes does not
preclude your use of any other remedy provided by law."
(c) The commissioner shall designate an ombudsperson. The duties
of the ombudsperson shall be determined by the commissioner. The
commissioner may designate a member of the existing staff to serve as
the ombudsperson.
(d) This section shall become inoperative on July 1, 2000, and, as
of January 1, 2001, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2001, deletes or
extends the dates on which it becomes inoperative and is repealed.
SEC. 11. Section 1368.02 is added to the Health and Safety Code,
to read:
1368.02. (a) The board shall establish and maintain a toll-free
telephone number for the purpose of receiving complaints regarding
health care service plans regulated by the board. The board shall
coordinate with the Department of Insurance to use the board's
toll-free telephone number also to provide advice and assistance to
disability insurance policyholders, as provided in Section 140257.
(b) Every health care service plan shall publish the board's
toll-free telephone number, the California Relay Service's toll-free
telephone numbers for the hearing and speech impaired, the plan's
telephone number, and the board's Internet address, on every plan
contract, on every evidence of coverage, on copies of plan grievance
procedures, on plan complaint forms, and on all written notices to
enrollees required under the grievance process of the plan, including
any written communications to an enrollee that offer the enrollee
the opportunity to participate in the grievance process of the plan
and on all written responses to grievances. The board's telephone
number, the California Relay Service's telephone numbers, the plan's
telephone number, and the board's Internet address shall be displayed
by the plan in each of these documents in 12-point boldface type in
the following regular type statement:
"The Board of Managed Health Care is responsible for regulating
health care service plans. The board's Patient Advocate Division has
a toll-free telephone number (1-800-400-0815) to receive complaints
regarding health plans. The hearing and speech impaired may use the
California Relay Service's toll-free telephone numbers
(1-800-735-2929 (TTY) or 1-888-877-5378 (TTY)) to contact the board.
The board's Internet website (http://www.bmhc.ca.gov) has complaint
forms and instructions on line. If you have a grievance against your
health plan, you should first telephone your plan at (plan's
telephone number) and use the plan's grievance process before
contacting the Patient Advocate Division. If you need help with a
grievance involving an emergency, a grievance that has not been
satisfactorily resolved by your plan, or a grievance that has
remained unresolved for more than 30 days, you may call the Patient
Advocate Division for assistance. The plan's grievance process and
the Patient Advocate Division's complaint review process are in
addition to any other dispute resolution procedures that may be
available to you, and your failure to use these processes does not
preclude your use of any other remedy provided by law."
(c) This section shall become operative on July 1, 2000.
SEC. 12. Section 1368.03 of the Health and Safety Code is amended
to read:
1368.03. (a) The department may require enrollees and subscribers
to participate in a plan's grievance process for up to 30 days
before pursuing a complaint through the department. However, the
department may not impose this waiting period in cases covered by
subdivision (b) of Section 1368.01 or in any other case where the
department determines that an earlier review is warranted.
(b) Notwithstanding subdivision (a), the department may refer any
grievance or complaint to the State Department of Health Services,
the Department of Aging, the federal Health Care Financing
Administration, or any other appropriate governmental entity for
investigation and resolution.
SEC. 13.
SEC. 7. Division 108 (commencing with Section 140000) is
added to the Health and Safety Code, to read:
DIVISION 108. BOARD ____ OF
MANAGED HEALTH CARE
CHAPTER 1. ESTABLISHMENT
140000. This division shall be known and may be cited as the
Rosenthal-Gallegos Board ____ of
Managed Health Care Act.
140001. There is in the State and Consumer Services
____ Agency a Board ____
of Managed Health Care.
140004. This chapter shall become operative on March 1, 2000.
CHAPTER 2. MEMBERSHIP
140005. The board shall be composed of five members.
140006. (a) The Governor shall appoint three members, subject to
confirmation by the Senate, including the chairperson.
(b) The Senate Committee on Rules shall appoint one member.
(c) The Speaker of the Assembly shall appoint one member.
140007. (a) Each member of the board shall be appointed for a
term of four years. For purposes of the initial appointments, the
Governor shall appoint one member to a two-year term, one member to a
three-year term, and one member, designated by the Governor as the
chairperson, to a four-year term. The initial appointment by the
Speaker of the Assembly shall be for a two-year term. The initial
appointment by the Senate Committee on Rules shall be for a
three-year term. Vacancies occurring on the board shall be filled by
appointment of the appointing power for the unexpired term.
(b) The appointing power may remove any member of the board for
neglect of duty required by this division, incompetence, or
unprofessional conduct.
140008. The chairperson of the board shall hold a full-time
position. The remaining board members shall hold part-time
positions.
140009. The chairperson shall serve as the principal advisor to,
and spokesperson for, the Governor on, and shall assist the Governor
in establishing, major policy and program matters concerning managed
health care.
140010. Every two years, the board shall elect a vice chairperson
from its members.
140011. (a) The chairperson of the board shall receive the salary
provided for by Chapter 6 (commencing with Section 11550) of Part 1
of Division 3 of Title 2 of the Government Code. The remaining board
members shall receive a salary that is one-third of that amount.
(b) Each member of the state board shall receive his or her actual
necessary traveling and other expenses incurred in the performance
of his or her official duties. When necessary, the members of the
board and its employees may travel within or without the state.
140012. No person who is, or within two years prior to
appointment has been, employed by, contracted to provide services to,
part of a brokerage or agency relationship with, or a member of the
board of directors of, a health care service plan or disability
insurer subject to the regulatory jurisdiction of the board or the
Department of Insurance may be appointed to the board.
140013. While serving on the board, no board member shall make,
participate in making, or in any way attempt to use his or her
official position to influence the making of any decision that he or
she knows or has reason to know will have a reasonably foreseeable
material financial effect, distinguishable from its effect on the
public generally, on the board member or on a member of his or her
immediate family, or otherwise make, participate in making, or in any
way use his or her official position to influence any other
financial interest as prohibited by the Political Reform Act of 1974
(Title 9 (commencing with Section 81000) of the Government Code).
140014. No person appointed to the board may be employed by,
contract to provide services to, be part of a brokerage or agency
relationship with, or serve on the board of directors of, a health
care service plan or disability insurer subject to the regulatory
jurisdiction of the board or the Department of Insurance for a period
of 12 months after service on the board.
140024. This chapter shall become operative on March 1, 2000.
CHAPTER 3. MEETINGS
140025. The board shall hold regular public meetings at least
once a month to review major policy and regulatory matters. Special
meetings may be called by the chairperson or upon the request of a
majority of the members.
140026. In addition to the regularly scheduled and any special
meetings of the board, the board shall convene at least two public
hearings each calendar year to receive public testimony regarding
matters affecting the interests of patients served by entities
regulated by the board. The board may hold such public hearings in
conjunction with meetings of the Advisory Committee on Managed Care
established pursuant to Section 1347.
140027. The board shall comply with the Bagley-Keene Open Meeting
Act (Article 9 (commencing with Section 11120) of Chapter 1 of
Division 3 of Title 2 of the Government Code), including, but not
limited to, deliberating and taking action in public after providing
an opportunity for members of the public to address the board
directly.
140039. This chapter shall become operative on March 1, 2000.
CHAPTER 4. ADMINISTRATION
140040. The central office of the board
____ shall be in the City of Sacramento. The board
____ may also establish other suboffices as it
may deem necessary.
140041. The chairperson of the board may appoint two full-time
advisers exempt from the Civil Service Act (Part 2 (commencing with
Section 18500) of Division 5 of Title 2 of the Government Code) who
shall advise, assist, and serve at the pleasure of the chairperson.
Each of the other board members may appoint one full-time adviser
each, exempt from the Civil Service Act, who shall advise, assist,
and serve at the pleasure of the appointing board members. Board
members may designate an existing board employee to serve as an
adviser.
140042. (a) The board shall appoint an executive officer who
shall serve at the pleasure of the board and the board may delegate
any duty to the executive office that the board deems appropriate.
(b) It is the intent of the Legislature that the executive officer
shall perform and discharge, under the direction and control of the
board, the powers, duties, purposes, functions, and jurisdiction
vested in the board and delegated to the executive officer by the
board.
(c) Any power, duty, purpose, function, or jurisdiction that the
board may lawfully delegate shall be conclusively presumed to have
been delegated to the executive officer unless it is shown that the
board, by affirmative vote recorded in the minutes of the board,
expressly has reserved the same for the board's own action. The
executive officer may redelegate to subordinates unless, by board
rule or express provision of law, the executive officer is expressly
required to act personally.
140043. In addition to the executive officer, the board shall
also employ a general counsel, an ombudsperson, a public information
and education officer, a chief of policy, planning, and interagency
coordination, division chiefs, and other persons as it may deem
necessary to carry into effect this chapter.
140044. The board may fix the compensation to be paid for
services subject to applicable state laws and regulations and may
incur other expenses as it may deem necessary.
140045. Employees of the board shall, as necessary, be provided
special ongoing training in overseeing the operations of health care
service plans and other entities subject to board jurisdiction to
ensure that patients receive timely access to medically necessary and
appropriate health care services to which they are entitled under
the laws administered by the board.
140046. The board may select and contract with necessary
consultants to assist it in its programs. Subject to Section 19130
of the Government Code, the board may contract with these consultants
on a sole source basis.
140049. This chapter shall become operative on March 1, 2000.
CHAPTER 5. OFFICES
Article 1. Office of the General Counsel
140050. There is within the board ____
an Office of the General Counsel. The board
____ shall appoint a General Counsel to manage the
office.
Article 2. Office of Policy, Planning, and Interagency
Coordination
140060. There is within the board ____
an Office of Policy, Planning, and Interagency Coordination.
The board ____ shall appoint a Policy
and Planning Officer to manage the office.
140061. The office shall provide staff support for the Advisory
Committee on Managed Care established pursuant to Section 1347.
Article 3. Public Information and Education Office
140070. There is within the board ____
a Public Information and Education Office. The board
____ shall appoint a Public Information Officer
to manage the office.
Article 4. Ombudsprogram Office
140080. There is within the board an Ombudsprogram Office.
140081. (a) The board shall appoint an ombudsperson to manage the
office.
(b) The board may also employ staff as necessary to carry out the
duties of the ombudsprogram office, and shall have at least one staff
member of the office assigned to each of the regional offices of the
board.
140082. The ombudsperson shall advise the board on procedural
matters relating to public participation in proceedings of the board.
140083. The office shall have the following powers and duties:
(a) The office shall assist members of the public who have an
interest in testifying before, or presenting information to, the
board in any public hearing or proceeding of the board open to public
participation. The office shall also assist members of the public
who have an interest in participating in the deliberations of the
Advisory Committee on Managed Care, established pursuant to Section
1347.
(b) The office shall have the capacity to assist members of the
public, including health care service plan enrollees, in a language
other than English if another language is the primary language used
by the individual.
(c) The office shall act as a clearinghouse for the collection and
distribution of information and materials developed by the board,
and by other health care agencies, including federal, state, and
local agencies with health care responsibilities, regarding public
participation in agency proceedings and dispute resolution procedures
administered by the agencies.
140084. The ombudsperson shall consult and coordinate with other
government and private health care ombudsprograms, including, but not
limited to, any ombudsprograms administered by the State Department
of Health Services, the Department of Insurance, the California
Department of Aging, and federal and local agencies responsible for
health services.
140085. The ombudsperson shall provide the board with an annual
report summarizing the activities undertaken and planned by the
office. The report shall be made available to the public.
Article 10. Operative Date
140089. This chapter shall become operative March 1, 2000.
CHAPTER 6. DIVISIONS
Article 1. Patient Advocate Division
140090. There is within the board ____
a patient advocate division to represent the interests of
patients served by health care entities regulated by the board. The
goal of the division shall be to help patients secure medically
necessary and appropriate health care services to which they are
entitled under the laws administered by the board
____ .
140091. The director of the division shall be an individual
recommended to the Governor by the board ____
and shall be appointed by and serve at the pleasure of the
Governor, subject to confirmation by the Senate.
140092. The board ____ shall, by
rule or order, provide for the assignment of personnel to the
division. The division may employ experts necessary to carry out its
functions. Personnel and resources shall be provided to the
division at a level sufficient to ensure that patient interests are
fully and fairly represented. The annual budget for the division
shall be separately identified in the annual budget request of the
board ____ .
140093. The division may compel the production or disclosure of
any information it deems necessary to perform its duties from
entities regulated by the board ____ ,
if the information is determined by the General Counsel to be
subject, under existing law, to production or disclosure to the
board ____ .
140094. The director shall annually appear before the appropriate
policy and fiscal committees of the Senate and Assembly to report on
the activities of the division.
Article 2. Licensing and Quality Assurance Division
140100. There is within the board ____
a licensing and quality assurance division.
Article 3. Financial Division
140110. There is within the board ____
a financial division.
Article 4. Enforcement Division
140120. There is within the board ____
an enforcement division.
140121. The enforcement division shall include a liaison officer
to the patient advocate division.
Article 5. Administrative Division
140130. There is within the board ____
an administrative division.
Article 10. Operative Date
140149. This chapter shall become operative March 1, 2000.
CHAPTER 7. REGULATION OF HEALTH CARE SERVICE PLANS
Article 1. General
140150. Effective July 1, 1999 2000
, responsibility for the administration and enforcement of the
regulation of health care service plans under the Knox-Keene Health
Care Service Plan Act of 1975 (Chapter 2.2 (commencing with Section
1340) of Division 2) is transferred from the Department of
Corporations to the board ____ .
140153. Any rights given by any license issued under the
Knox-Keene Health Care Service Plan Act of 1975 (Chapter 2.2
(commencing with Section 1340) of Division 2) are not affected by the
enactment of this division, but those rights shall be exercised
according to this division, and under the jurisdiction of the
board ____ .
140158. It is the intent of the Legislature that all personnel
and funds dedicated to health care service plan regulation by the
Department of Corporations be transferred to the board
____ on or before July 1, 2000.
CHAPTER 8. REGULATION OF HEALTH INSURANCE PRODUCTS
Article 1. General
140250. Effective July 1, 2002, responsibility under the
Insurance Code for the administration and enforcement of the
regulation of disability insurers that cover hospital, medical, or
surgical expenses shall be transferred from the Department of
Insurance to the board ____ . For the
purpose of regulating disability insurers that cover hospital,
medical, or surgical expenses, all references to commissioner and
department in the Insurance Code shall be references to the
Board ____ of Managed Health Care.
140253. Any rights given by any license issued under the
Insurance Code are not affected by the enactment of this division,
but those rights shall be exercised according to this division, and
under the jurisdiction of the board ____
.
140255. On or before March 1, 2001, the board
____ , in consultation with the Insurance Commissioner and
the Advisory Committee on Managed Care established pursuant to
Section 1347, shall provide the Governor and Legislature with a
report regarding legislation, if any, that may be necessary and
appropriate to facilitate, modify, or rescind the transfer to the
board ____ of jurisdiction over
disability insurers that cover hospital, medical, or surgical
expenses, including, but not limited to, disability insurers that
provide that coverage through a preferred provider organization,
exclusive provider organization, or any other managed health care
system.
140257. (a) It is the intent of the Legislature that this article
be implemented in a manner that insures the greatest assistance to
disability insurance policyholders and the least disruption to the
business of insurance.
(b) The board ____ shall designate
an individual who shall serve as a liaison to the Insurance
Commissioner for the purpose of assisting in the transfer of
responsibility required pursuant to Section 140250.
(c) As of January 1, 2000, and until July 1, 2002, the toll-free
telephone number required by Section 1368.02 shall be staffed by
personnel equipped to respond to inquiries regarding disability
insurance that covers hospital, medical, or surgical services as well
as to inquiries regarding health care service plans, and to make
referrals to the Department of Insurance if the staff of the
toll-free telephone number is unable to adequately assist the
consumer, until the board ____ assumes
jurisdiction over disability insurers pursuant to Section 140250.
The board ____ shall coordinate with
the Insurance Commissioner, health care service plans, and disability
insurers to provide notice to enrollees, policyholders, and members
of the public of the availability of a toll-free
telephone number that responds to inquiries
involving both health care service plans and disability insurers.
(d) On and after July 1, 2002, the board's
____ toll-free telephone number shall provide the same
services to policyholders of disability insurance, including the
receipt and consideration of complaints, as provided to health care
service plan enrollees.
140258. It is the intent of the Legislature that all personnel
and funds dedicated to the regulation by the Department of Insurance
of disability insurers that cover hospital, medical, or surgical
expenses be transferred to the board ____
on or before July 1, 2002, unless a later enacted statute, that
becomes operative on or before July 1, 2002, deletes or extends the
date on which jurisdiction shall be transferred from the Department
of Insurance to the board ____ .
CHAPTER 9. REGULATION OF PROVIDER GROUPS AND OTHER MANAGED
CARE SERVICES
140300. On or before March 1, 2002, the board, in consultation
with the Advisory Committee on Managed Care established pursuant to
Section 1347, shall provide
140300. On or before May 1, 2000, the ____ of Managed Care shall
provide the Governor and Legislature with a report regarding
legislation, if any, that may be necessary and appropriate to expand
the board's ____ existing jurisdiction
over medical groups, independent practice associations, and other
provider groups that provide or arrange for medical care and bear
significant financial risk associated with the provision of
the care, and to facilitate the exercise of jurisdiction by the board
over other managed health care services. The report shall include
consideration of transforming the board into a separate agency or
independent commission. provision of the care.
SEC. 14.
SEC. 8. (a) The sum of three million dollars ($3,000,000) is
appropriated from the State Corporations Fund to the Board
____ of Managed Health Care for expenditure to
cover the startup costs of the board ____
and new personnel and operating expenses necessary to implement
Division 108 (commencing with Section 140000) of the Health and
Safety Code. The Board ____ of Managed
Health Care may require health care service plans to pay an
additional assessment sufficient to pay for these startup costs, new
personnel, and expenses.
(b) This section shall become operative on March 1, 2000.
SEC. 15.
SEC. 9. No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB 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 XIIIB of the California Constitution.
Notwithstanding Section 17580 of the Government Code, unless
otherwise specified, the provisions of this act shall become
operative on the same date that the act takes effect pursuant to the
California Constitution.