BILL ANALYSIS
AB 78
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CONCURRENCE IN SENATE AMENDMENTS
AB 78 (Gallegos)
As Amended September 8, 1999
Majority vote
ASSEMBLY: 52-28 (June 4, 1999)
SENATE: 27-10 (September 9, 1999)
Original Committee Reference: HEALTH
SUMMARY : Establishes a new Department of Managed Care (DMC) and
transfers the regulation of health care service plans (health
plans) from the Department of Corporations (DOC) to the new
department. Specifically, this bill :
1)Moves the regulation of health plans from DOC in the Business,
Transportation and Housing Agency (BT&H) to a new state
Department of Managed Care (DMC) in BT&H.
2)Transfers the unexpended balance of funds from DOC to the new
department as needed.
3)Includes a mission statement calling on DMC to ensure that
health plans provide enrollees with access to quality health
care services.
4)Establishes a director of DMC, appointed by the Governor and
subject to Senate confirmation.
5)Establishes a new Office of Patient Advocate, headed by a
Patient Advocate appointed by the Governor, with the Office
directed to:
a) Help patients who have complaints against their HMOs or
who need help in using the new Independent Review process.
b) Develop educational guides for consumers on their health
care rights, to be published in English and in other
languages, and do public outreach and education.
c) Issue an annual HMO quality of care report card, to be
put on the DMC's Internet website.
d) Make recommendations to DMC on enforcement actions to
protect patients.
AB 78
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6)Renames and modifies an existing advisory committee, giving
the Assembly Speaker and Senate Rules Committee three
appointees each to the advisory committee.
7)Makes conforming changes in other code sections including the
Insurance Code, Civil Code and Business and Professions Code.
The Senate amendments :
1)Establish a Clinical Advisory Panel appointed to help monitor
the new Independent Review process and to do other clinical
reviews related to reducing clinical errors and promoting
patient safety.
2)Provide for the public disclosure of documents submitted to
the DMC unless such disclosure is contrary to law.
3)Require health plans to disclose to patients information about
their right to a second opinion and their ability to access
the Independent Review system.
4)Increase the ability of health plans to offer point-of-service
plan contracts.
5)Require a study of the feasibility of transferring the
regulation of health insurance from the Department of
Insurance (DOI) to the new DMC.
6)Give the DMC director new enforcement authority including the
ability to order the discontinuance of violations that
threaten irreparable loss and injury to patients.
EXISTING LAW directs DOC to regulate health plans and directs
DOI to regulate health insurers.
AS PASSED BY THE ASSEMBLY , this bill established a new
Department of Managed Health Care and transferred the regulation
of health plans from DOC to a new department, and later
transferred the regulation of health insurers from DOI to the
new department.
FISCAL EFFECT: Unknown. The Senate amendments give the DMC
director contingent assessment authority to adjust health plan
fees in FY 2000-2001 if necessary to support the reorganization
AB 78
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transition.
COMMENTS : In response to continued criticisms of the regulation
of health plans in this state, the author believes it is time to
transfer health plan regulation out of DOC to a new regulator
dedicated to consumer protection and quality of care. In
particular, the author believes that it is inadequate to simply
enact new HMO reforms, such as Independent Review or access to
second opinions, without also providing patients with help in
securing the new rights provided by those important reforms.
Consequently, the author added to the new department an Office
of Patient Advocate to help patients secure health care services
to which they are entitled under the laws administered by the
new department. This bill includes a number of elements from AB
138 (Gallegos and Alpert) which called for patient assistance
services.
This bill also incorporates numerous amendments recommended by
the Davis Administration to put in place a new DMC capable of
effectively regulating HMOs.
Analysis Prepared by : Michael Shapiro / HEALTH / (916) 319-2097
FN: 0003648