BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 78|
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THIRD READING
Bill No: AB 78
Author: Gallegos (D)
Amended: 9/8/99 in Senate
Vote: 21
SENATE INSURANCE COMMITTEE : 8-2, 7/7/99
AYES: Speier, Escutia, Figueroa, Hughes, Johnston, Leslie,
Schiff, Sher
NOES: Johnson, Lewis
SENATE APPROPRIATIONS COMMITTEE : 8-4, 9/3/99
AYES: Johnston, Alpert, Bowen, Burton, Escutia, Karnette,
Perata, Vasconcellos
NOES: Johnson, Kelley, Leslie, McPherson
NOT VOTING: Mountjoy
ASSEMBLY FLOOR : 52-28, 6/4/99 - See last page for vote
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SUBJECT : Health care coverage: Department of Managed
Health Care
SOURCE : Author
DIGEST : This bill transfers responsibility for the
implementation of programs to the Department of Managed
Care in the State Business, Transportation, and Housing
Agency, established pursuant to the bill, and makes
conforming changes.
The bill also establishes in the State Department of
Managed Care an Advisory Committee on Managed Care to
CONTINUED
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assist and advise the director of the State Department of
Managed Care on various issues.
The bill also establishes in the department an Office of
Patient Advocate, in order to provide educational material
to plan enrollees and to render advice and assistance to
enrollees.
Senate Floor Amendments of 9/8/99 incorporate the
Governor's recommendations for the reorganized regulation
of health plans, including HMOs.
ANALYSIS : Existing law:
1.Charges DOC, within the State Business, Transportation
and Housing Agency, with regulating health plans.
2.Charges State Department of Insurance (DOI) with the
responsibility for regulating health insurers.
The bill:
1.Includes legislative findings that it is in the public
interest that the regulation of health plans should be
undertaken b a department of state government devoted
exclusively to that issue.
2.Moves the regulation of health plans from the State
Department of Corporations (DOC) in the State Business,
Transportation and Housing Agency (BT&H) to a new State
Department of Managed Care (DMC) in BT & H).
3.Transfers the unexpended balance of funds from DOC to the
new department as needed.
4.Includes a mission statement calling on the DMC to ensure
that health plans provide enrollees with access to
quality health care services
5.Adds legislative intent calling on the DMC to
expeditiously review enrollee grievances.
6.Establishes a director of the DMC, appointed by the
Governor and subject to Senate confirmation, who is to be
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supported by a chief deputy, a public information
officer, a chief enforcement counsel, legal counsel and
other staff as needed.
7. Establishes a new Office of Patient Advocate, headed
by a Patient Advocate appointed by the Governor and
subject to Senate confirmation, with the Office:
A. Helping patients who have complaints against
their HMOs or who need help in using the new
Independent Review Process.
B. Developing educational guides for consumers on
their health care rights, to be published in English
and in other languages, and doing public outreach and
education.
C. Issuing an annual HMO quality of care report
card, to be put on the DMC's Internet website.
D. Making recommendations to the DMC on enforcement
actions to protect patients.
8. Renames and modifies an existing advisory committee,
giving the Assembly Speaker and Senate Rules Committee
three appointees each to the advisory committee, with
other appointments made by the Governor.
9. Establishes a Clinical Advisory Panel appointed by the
director of DMC to help monitor the independent review
process (to be established by other legislation), and
to do other clinical reviews related to reducing
clinical errors and promoting patient safety.
10. Provides for the public disclosure of documents
submitted to the DMC unless such disclosure is contrary
to law.
11. Requires health plans to disclose to patients
information about their right to a second opinion and
their ability to access the independent review system.
12. Increases the ability of health plans to offer
point-of-service plan contracts.
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13. Requires a study of the feasibility of transferring
the regulation of health insurance from the State
Department of Insurance to the new DMC.
14. Gives the DMC director new enforcement authority
including the ability to order the discontinuance of
violations that threaten irreparable loss and injury to
patients.
15. Gives the DMC director contingent assessment authority
to adjust health plan fees in FY 2000-2001 if necessary
to support the reorganization transition.
16. Makes conforming changes in other code sections
including the Insurance Code, Civil Code and Business
and Professions Code.
The Managed Health Care Improvement Task Force issued a
report last year recommending that a new state entity for
regulation of managed health care be created. The task
force called for an initial transfer of health plan
regulation from DOC to the new regulator, to be followed by
the phased-in transfer of regulation of other health care
entities including health insurers. Last week the State
Auditor issued a report concluding that, despite receiving
a $6.5 million budget increase in 1997 to enhance its
regulation of health plans, DOC has shown only limited
improvement in its efforts to protect health plan
enrollees from inadequate medical care.
Similar legislation (SB 406 - Rosenthal) would have created
a Board of Managed Care and was vetoed last year.
According to the Governor's veto message:
"I am returning Senate Bill No. 406 without my signature.
"This bill would transfer the responsibility for regulating
health care service plans from the Department of
Corporations to a board with five members. Three members
would e appointed by the Governor and two members b the
Legislature. The Chairperson would hold a full time
position, while the other four members would hold part time
positions. The Chairperson would appoint two advisors and
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each board member would appoint an additional advisor. The
bill would also establish a 29 member advisory board.
"This bill fails to deliver the reform it promises. It
would establish a weak and unaccountable regulatory
bureaucracy with dispersed enforcement authority. The
Little Hoover commission, an independent non-partisan
advisory organization, has rejected the key feature of this
bill, establishing a board to regulate health plans,
because the burden of collective decision making will not
provide consistent and responsive leadership.
"The Commission instead concluded that health plans should
be regulated by a focused department or agency lead by a
single gubernatorial appointee.
The Commission found that a single appointee would be more
accountable and would be in the best position to provide
strong and decisive leadership, particularly on different
issues lacking broad political consensus.
"The regulation of health care service plans must be
improved. That is why I sponsored legislation to create
the Department of Managed Health Care lead by a single,
focused regulator. I am disappointed that the Legislature
rejected this health care reform."
SENATE FLOOR : 22-13, 8/20/98
AYES: Alpert, Ayala, Burton, Calderon, Costa, Dills,
Greene, Hayden, Hughes, Johnston, Karnette, Kopp,
Lockyer, O'Connell, Peace, Rosenthal, Schiff, Sher,
Solis, Thompson, Vasconcellos, Watson
NOES: Brulte, Haynes, Hurtt, Johannessen, Johnson, Kelley,
Knight, Lewis, McPherson, Monteith, Mountjoy, Rainey
NOT VOTING: Craven, Leslie, Maddy, Polanco
Assemblymember votes who are now Senators:
AYES: Baca, Bowen, Escutia, Figueroa, Murray, Ortiz,
Perata
NOES: Morrow, Poochigian
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: Yes
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ARGUMENTS IN SUPPORT : The author states that it is time
to transfer plan regulation out of DOC to a new regulator
dedicated to consumer protection and quality of care. The
author also believes it is inefficient and confusing for
consumers to have two different departments, DOC and DOI,
regulate plans and insurers, and therefore also calls for
the later transfer of health insurance to the new
regulator. In light of recent medical practice group
bankruptcies, the author is also concerned about enhancing
state authority over medical groups and independent
practice associations that arrange for care and assume
significant financial risk.
ASSEMBLY FLOOR : 52-28, 6/4/99
AYES: Alquist, Aroner, Bock, Calderon, Cardenas, Cardoza,
Cedillo, Corbett, Correa, Cunneen, Davis, Ducheny, Dutra,
Firebaugh, Florez, Floyd, Gallegos, Granlund, Havice,
Hertzberg, Honda, Jackson, Keeley, Knox, Kuehl, Lempert,
Longville, Lowenthal, Machado, Maldonado, Mazzoni,
Migden, Nakano, Papan, Pescetti, Reyes, Romero, Scott,
Shelley, Soto, Steinberg, Strom-Martin, Thomson,
Torlakson, Vincent, Washington, Wayne, Wesson, Wiggins,
Wildman, Wright, Villaraigosa
NOES: Aanestad, Ackerman, Ashburn, Baldwin, Bates, Battin,
Baugh, Brewer, Briggs, Campbell, Cox, Dickerson,
Frusetta, House, Kaloogian, Leach, Leonard, Maddox,
Margett, McClintock, Olberg, Oller, Robert Pacheco, Rod
Pacheco, Runner, Strickland, Thompson, Zettel
DLW:kb 9/9/99 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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