BILL NUMBER: AB 78 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 28, 1999
AMENDED IN ASSEMBLY APRIL 15, 1999
INTRODUCED BY Assembly Member Gallegos
DECEMBER 8, 1998
An act to amend, repeal, and add Sections 1341, 1342.5, 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 Department 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 an unspecified entity
the Department of Managed Care , 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 an unspecified entity
the department 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 an unspecified entity the
department and the committee to make various reports to the
Governor and Legislature.
(3) The bill would also appropriate $3,000,000 from the State
Corporations Fund to an unspecified entity
the department for expenditure to cover the startup costs of
an unspecified entity the department
and new personnel and operating expenses. The bill would authorize
an unspecified entity the department to
require health care service plans to pay an additional assessment
sufficient to pay for the startup costs, new personnel, and operating
expenses.
(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. 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. 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 ____
Department 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 ____
Department of Managed Health Care and all
references to department or ____ shall be
references to the ____ Department of
Managed Health Care.
(b) This section shall become operative July 1, 2000.
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. 4. Section 1342.5 is added to the Health and Safety Code, to
read:
1342.5. (a) The ____ Department 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. 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. 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
department 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
____ department .
(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 ____ department .
(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 ____
department 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 ____
department in the implementation of the duties of the
____ department 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 ____. The ____
department. The department 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
____ department 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 ____ department
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. 7. Division 108 (commencing with Section 140000) is added to
the Health and Safety Code, to read:
DIVISION 108. ____ DEPARTMENT OF
MANAGED HEALTH CARE
CHAPTER 1. ESTABLISHMENT
140000. This division shall be known and may be cited as the
Rosenthal-Gallegos ____ Department of
Managed Health Care Act.
140001. There is in the ____ Agency a ____
California Health and Human Services Agency a Department
of Managed Health Care. The Governor shall appoint a director
of the department, who shall be subject to confirmation by the
Senate.
140004. This chapter shall become operative on March 1, 2000.
CHAPTER 4. ADMINISTRATION
140040. The central office of the ____
department shall be in the City of Sacramento. The
____ department may also establish other
suboffices as it may deem necessary.
CHAPTER 5. OFFICES
Article 1. Office of the General Counsel
140050. There is within the ____
department an Office of the General Counsel. The ____
director shall appoint a General Counsel to
manage the office.
Article 2. Office of Policy, Planning, and Interagency
Coordination
140060. There is within the ____
department an Office of Policy, Planning, and Interagency
Coordination. The ____ director 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 ____
department a Public Information and Education Office. The
____ director shall appoint a Public
Information Officer to manage the office.
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 ____
department a patient advocate division to represent the
interests of patients served by health care entities regulated by the
board department . 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 ____ department
.
140091. The director of the division shall be an individual
recommended to the Governor by the ____
director and shall be appointed by and serve at the pleasure of
the Governor, subject to confirmation by the Senate.
140092. The ____ department 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
____ department .
140093. The division may compel the production or disclosure of
any information it deems necessary to perform its duties from
entities regulated by the ____ department
, if the information is determined by the General Counsel to be
subject, under existing law, to production or disclosure to the
____ department .
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 ____
department a licensing and quality assurance division.
Article 3. Financial Division
140110. There is within the ____
department a financial division.
Article 4. Enforcement Division
140120. There is within the ____
department 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 ____
department 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, 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 ____
department .
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
____ department .
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 ____
department 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 ____ department . 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
____ Department 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 ____ department
.
140255. On or before March 1, 2001, the ____
department , 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
____ department 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 ____ director 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 ____ department
assumes jurisdiction over disability insurers pursuant to Section
140250. The ____ department 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 ____
department'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 ____
department 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 ____
department .
CHAPTER 9. REGULATION OF PROVIDER GROUPS AND OTHER
MANAGED CARE SERVICES
140300. On or before May 1, 2000, the ____
Department 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 ____
department'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.
SEC. 8. (a) The sum of three million dollars ($3,000,000) is
appropriated from the State Corporations Fund to the ____
Department of Managed Health Care for
expenditure to cover the startup costs of the ____
department and new personnel and operating expenses
necessary to implement Division 108 (commencing with Section 140000)
of the Health and Safety Code. The ____
Department 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. 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.