BILL NUMBER: AB 78 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JUNE 2, 1999
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: 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 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 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 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 the department for expenditure to cover the
startup costs of the department and new personnel and operating
expenses. The bill would authorize 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 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 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 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 California Health and Human
Managed Health Care 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 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
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.