BILL NUMBER: SB 254 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Speier
JANUARY 28, 1999
An act to amend Sections 1368, 1368.01, 1368.03, and 1368.04 of,
to amend, repeal, and add Section 1370.4 to, and to add and repeal
Article 12 (commencing with Section 1399.80) to Chapter 2.2 of
Division 2 of, the Health and Safety Code, relating to health
insurance.
LEGISLATIVE COUNSEL'S DIGEST
SB 254, as introduced, Speier. Health insurance.
Under existing law, the Knox-Keene Health Care Service Plan Act of
1975, health care service plans are regulated by the Department of
Corporations.
Existing law requires every health care service plan to establish
and maintain a grievance system approved by the department under
which enrollees and subscribers may submit their grievances to the
plan. Under existing law, after participating for at least 60 days
in, or completing, the plan's grievance process, an enrollee or
subscriber may submit the grievance or complaint to the department
for review.
This bill would require health care service plans to provide
subscribers and enrollees with written responses to grievances, as
specified, and would provide that a grievance may be submitted to the
department by an enrollee or subscriber after participating in the
plan's grievance process for 30 days. The bill would require the
department to respond to each grievance in writing within 30 days.
Existing law requires every health care service plan and
disability insurer to establish a reasonable external, independent
review process to examine coverage decisions regarding experimental
or investigational therapies for individual enrollees or insureds who
have a terminal condition and meet certain specified criteria.
This bill would repeal this provision on January 1, 2001, and
thereafter instead require every health care service plan to provide
an enrollee with the opportunity to seek an independent medical
review whenever health care services have been denied, significantly
delayed, terminated, or otherwise limited by the plan or by one of
its contracting providers.
This bill would establish, beginning January 1, 2001, the
Independent Review System in the Department of Corporations, whereby
enrollee grievances involving a disputed health care service or other
adverse decision may be resolved by independent review
organizations. The bill would set forth the duties and
responsibilities of the department, health care service plans, and
enrollees with respect to the system. It would provide that Medi-Cal
and Medicare beneficiaries shall not be excluded from the system, to
the extent that their participation is not preempted by federal law.
The bill would require the commissioner to contract with a
private, nonprofit accrediting organization to accredit the
independent review organizations, and would further require the
adoption of related regulations.
This bill would require the commissioner, on or before July 1,
2000, to allocate grant funding for an independent health care
ombudsprogram. It would require the department to contract with an
independent expert entity to undertake an evaluation of the
independent review system and the independent health care
ombudsprogram. The bill would require the evaluator to provide its
evaluation to the department on or before January 1, 2003, a copy of
which shall be made available to the public.
The provisions of the bill relating to independent review would
remain in effect only until January 1, 2004, and thereafter currently
existing provisions limited to coverage decisions regarding
experimental or investigational therapies would again become
operative.
Under existing law, a willful violation of the provisions
governing health care service plans is a crime. By changing the
definition of the crime applicable to these plans, this bill would
impose a state-mandated local program.
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: no. 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 the following:
(a) The California Managed Health Care Improvement Task Force has
recommended that California enact an independent system of external
review of health plan decisions. A similar recommendation was issued
by the President's Advisory Commission on Consumer Protection and
Quality in the Health Care Industry. Proponents of independent
review maintain that this new program will enhance consumer
confidence in health plan decisionmaking.
(b) More than 15 states have enacted legislation establishing
independent review of health care decisions, and in California, one
health plan has voluntarily implemented a process for independent
review of a broad range of unresolved patient grievances. In
addition, Medicare has a system for independent review of unresolved
patient grievances. A great diversity of policies and procedures has
been applied to these various state and federal independent review
systems.
(c) Recent studies indicate only modest patient participation in
state independent review programs, because many consumers are unaware
of their right to access independent review. In addition, the
studies indicate that many consumers in need of independent review
often are ill or disabled and do not have the ability to pursue an
appeal, particularly if the rules are complex and they are not
provided with advice and assistance to participate.
(d) The Legislature has convened efforts to reach a consensus on
legislation to establish an independent review system within
California. However, a consensus has not been achieved. In general,
consumer, low-income, and senior groups are concerned about
impediments to patient access to and participation in an independent
review system. They are also concerned that expert reviewers may be
biased in favor of health plans. Health plans, insurers, medical
groups, and physicians are concerned about the potential for
frivolous appeals burdening an independent review system. They are
also concerned about the potential for excessive system costs being
imposed.
(e) It would be in the state's best interest to proceed cautiously
with a test of an independent review system that will sunset, with a
report back to the Legislature a year prior to the sunset date to
help determine whether to extend, modify, or terminate the program.
The Legislature also finds that, in light of experience in other
states that have implemented independent review systems, which shows
only modest success in helping patients, the test in California
should err on the side of promoting patient access, participation,
and assistance.
SEC. 2. This act shall be known as the Patient's Independent
Review Act of 1999.
SEC. 3. 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
grievances to be given to subscribers and enrollees who wish to
register written complaints grievances
. The forms used by plans licensed pursuant to Section 1353 shall
be approved by the commissioner in advance as to format.
(4) Provide subscribers and enrollees with written responses
to grievances, with a clear and concise explanation of the reasons
for the plan's response. For grievances involving the denial,
significant delay, termination, or the imposition of other limits on
health care services, the plan response shall describe the criteria
used and the clinical reasons for its decision, including all
criteria and clinical reasons related to medical necessity or medical
appropriateness.
(5) Keep in its files all copies of complaints
grievances , 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 60 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, severe pain,
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 60 days 30 days before submitting a
grievance to the department for review .
(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 issue that
does not pertain to compliance with this chapter 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. If, after reviewing the record,
the department concludes that the grievance is eligible for review
under the independent review system established pursuant to Article
12 (commencing with Section 1399.80), the department shall
immediately notify the subscriber or enrollee, or agent, of that
option and shall, if requested orally or in writing, assist the
subscriber or enrollee to apply to participate in the independent
medical review system.
(4) If, after reviewing the record of a grievance, the department
concludes that the grievance was clearly eligible for review under
the independent review system established pursuant to Article 12
(commencing with Section 1399.80), but this was not communicated to
the enrollee in writing along with a notice of the enrollee's
potential right to participate in the independent review system, as
required by this chapter, the commissioner shall impose a penalty.
(5) 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
30 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 . In any
department response to an enrollee grievance not subject to the
independent review system established pursuant to Article 12
(commencing with Section 1399.80), the department's written notice
shall include, at a minimum, a brief description of the purpose of
the department's review, the department's conclusion relating to the
grievance along with a summary of the findings supporting the
department's conclusion, the reasons why the department concluded
that the plan is or is not in compliance with this chapter, and
information about corrective and enforcement actions taken by the
department.
(6) 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
(7) On or before January 1, 1997
2000 , the commissioner shall establish and maintain a system
of aging of complaints grievances that
are pending and unresolved for 60 30
days or more, that shall include a brief explanation of the reasons
each complaint grievance is pending and
unresolved for 60 30 days or more.
(4)
(8) 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 grievances 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 grievances pending and
unresolved for 30 or more days with separate categories of
complaints grievances for Medicare enrollees and
Medi-Cal enrollees. The plan shall include with the report a brief
explanation of the reasons each complaint
grievance 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
grievances 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 grievances 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 grievances
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. 4. 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 30 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, severe pain, 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 five
three days from receipt of the grievance.
SEC. 5. 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 60
30 days before pursuing a complaint
grievance through the department. However, the
department may not impose this waiting period in
for expedited review 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 issue that does not
pertain to compliance with this chapter 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. 6. Section 1368.04 of the Health and Safety Code is amended
to read:
1368.04. (a) The commissioner shall , as appropriate,
investigate and take enforcement action against plans
regarding complaints by enrollees and subscribers
grievances reviewed and found by the department to involve plan
noncompliance with the requirements of this chapter, including
grievances that have been reviewed pursuant to the independent review
system established pursuant to Article 12 (commencing with Section
1399.80). Where harm to an enrollee has occurred as a result of plan
noncompliance, the commissioner shall impose penalties . The
commissioner shall periodically evaluate complaints
grievances to determine if any audit,
investigative, or enforcement actions should be undertaken by the
department.
(b) The commissioner may, after appropriate notice and opportunity
for hearing, levy an administrative penalty, by order, in an amount
not to exceed two hundred fifty thousand dollars ($250,000) if the
commissioner determines that a health care service plan has knowingly
committed, or has performed with such a
frequency so as to indicate a general business
practice, any of the following:
(1) Repeated failure to act promptly and reasonably to investigate
and resolve grievances in accordance with Section 1368.01.
(2) Repeated failure to act promptly and reasonably to resolve
grievances when the obligation of the plan to the enrollee or
subscriber is reasonably clear.
(c) The administrative penalties available to the commissioner
pursuant to this section are not exclusive, and may be sought and
employed in any combination with civil, criminal, and other
administrative remedies deemed warranted by the commissioner to
enforce this chapter.
(d) The administrative penalties authorized pursuant to this
section shall be paid to the State Corporations Fund.
SEC. 7. Section 1370.4 of the Health and Safety Code is amended to
read:
1370.4. (a) Every health care service plan shall provide an
external, independent review process to examine the plan's coverage
decisions regarding experimental or investigational therapies for
individual enrollees who meet all of the following criteria:
(1) The enrollee has a terminal condition that, according to the
enrollee's physician's current diagnosis, has a high probability of
causing death within two years from the date of the request for an
independent review; and
(2) The enrollee's physician certifies that the enrollee has a
condition, as defined in paragraph (1), for which standard therapies
have not been effective in improving the condition of the enrollee,
or for which standard therapies would not be medically appropriate
for the enrollee, or for which there is no more beneficial standard
therapy covered by the plan than the therapy proposed pursuant to
paragraph (3); and
(3) Either (A) the enrollee's physician, who is under contract
with or employed by the plan, has recommended a drug, device,
procedure or other therapy that the physician certifies in writing is
likely to be more beneficial to the enrollee than any available
standard therapies, or (B) the enrollee, or the enrollee's physician
who is a licensed, board-certified or board-eligible physician
qualified to practice in the area of practice appropriate to treat
the enrollee's condition, has requested a therapy that, based on two
documents from the medical and scientific evidence, as defined in
subdivision (d), is likely to be more beneficial for the enrollee
than any available standard therapy. The physician certification
pursuant to this subdivision shall include a statement of the
evidence relied upon by the physician in certifying his or her
recommendation. Nothing in this subdivision shall be construed to
require the plan to pay for the services of a nonparticipating
physician provided pursuant to this subdivision, that are not
otherwise covered pursuant to the plan contract; and
(4) The enrollee has been denied coverage by the plan for a drug,
device, procedure or other therapy recommended or requested pursuant
to paragraph (3); and
(5) The specific drug, device, procedure or other therapy
recommended pursuant to paragraph (3) would be a covered service,
except for the plan's determination that the therapy is experimental
or investigational; and
(6) This section shall not apply to any Medi-Cal beneficiary
enrolled in a health care service plan under the plan's contract with
the Medi-Cal program.
(b) The plan's external, independent review shall meet the
following criteria:
(1) The plan shall offer all enrollees who meet the criteria in
subdivision (a) the opportunity to have the requested therapy
reviewed under the external, independent review process. The plan
shall notify eligible enrollees in writing of the opportunity to
request the external independent review within five business days of
the decision to deny coverage.
(2) The plan shall contract with one or more impartial,
independent entities that are accredited pursuant to subdivision (c).
The entity shall arrange for review of the coverage decision by
selecting an independent panel of at least three physicians or other
providers who are experts in the treatment of the enrollee's medical
condition and knowledgeable about the recommended therapy. If the
entity is an academic medical center accredited in accordance with
subdivision (e), the independent panel may include experts affiliated
with or employed by the entity. A panel of two experts may be
arranged at the plan's request, provided the enrollee consents in
writing. The independent entity may arrange for a panel of one expert
only if the independent entity certifies in writing that there is
only one expert qualified and able to review the recommended therapy.
Neither the plan nor the enrollee shall choose or control the
choice of the physician or other provider experts.
(3) Neither the expert, nor the independent entity, nor any
officer, director, or management employee of the independent entity
shall have any material professional, familial, or financial
affiliation, as defined in paragraph (4), with any of the following:
(A) The plan.
(B) Any officer, director, or management employee of the plan.
(C) The physician, the physician's medical group, or the
independent practice association (IPA) proposing the therapy.
(D) The institution at which the therapy would be provided.
(E) The development or manufacture of the principal drug, device,
procedure, or other therapy proposed for the enrollee whose treatment
is under review.
(4) For purposes of this section, the following terms shall have
the following meanings:
(A) "Material familial affiliation" shall mean any relationship as
a spouse, child, parent, sibling, spouse's parent, or child's
spouse.
(B) "Material professional affiliation" shall mean any
physician-patient relationship, any partnership or employment
relationship, a shareholder or similar ownership interest in a
professional corporation, or any independent contractor arrangement
that constitutes a material financial affiliation with any expert or
any officer or director of the independent entity. The term
"material professional affiliation" shall not include affiliations
which are limited to staff privileges at a health facility.
(C) "Material financial affiliation" shall mean any financial
interest of more than 5 percent of total annual revenue or total
annual income of an entity or individual to which this subdivision
applies. "Material financial affiliation" shall not include payment
by the plan to the independent entity for the services required by
this section, nor shall "material financial affiliation" include an
expert's participation as a contracting plan provider where the
expert is affiliated with an academic medical center or a National
Cancer Institute-designated clinical cancer research center.
(5) The enrollee shall not be required to pay for the external,
independent review. The costs of the review shall be borne by the
plan.
(6) The plan shall provide to the independent entity arranging for
the panel of experts a copy of the following documents within five
business days of the plan's receipt of a request by an enrollee or
enrollee's physician for an external, independent review:
(A) The medical records relevant to the patient's condition for
which the proposed therapy has been recommended, provided the
documents are within the plan's possession. Any medical records
provided to the plan after the initial documents are provided to the
independent entity shall be forwarded by the plan to the independent
entity within five business days. The confidentiality of the medical
records shall be maintained pursuant to Section 56.10 of the Civil
Code.
(B) A copy of any relevant documents used by the plan in
determining whether the proposed therapy should be covered, and any
statement by the plan explaining the reasons for the plan's decision
not to provide coverage for the proposed therapy. The plan shall
provide, upon request, a copy of the documents required by this
paragraph, except for the documents described in subparagraphs (A)
and (C), to the enrollee and the enrollee's physician.
(C) Any information submitted by the enrollee or the enrollee's
physician to the plan in support of the enrollee's request for
coverage of the proposed drug, device, procedure, or other therapy.
(7) The experts on the panel shall render their analyses and
recommendations within 30 days of the receipt of the enrollee's
request for review. If the enrollee's physician determines that the
proposed therapy would be significantly less effective if not
promptly initiated, the analyses and recommendations of the experts
on the panel shall be rendered within seven days of the request for
expedited review. At the request of the expert, the deadline shall
be extended by up to three days for a delay in providing the
documents required by paragraph (6) of subdivision (b).
(8) Each expert's analysis and recommendation shall be in written
form and states the reasons the requested therapy is or is not likely
to be more beneficial for the enrollee than any available standard
therapy, and the reasons that the expert recommends that the therapy
should or should not be provided by the plan, citing the enrollee's
specific medical condition, the relevant documents provided pursuant
to paragraph (6), and the relevant medical and scientific evidence,
including, but not limited to, the medical and scientific evidence as
defined in subdivision (d), to support the expert's recommendation.
(9) The independent entity shall provide the plan and the enrollee'
s physician with the experts' analyses and recommendations, a
description of the qualifications of each expert, and any other
information that it chooses to provide to the plan and the enrollee's
physician, including, but not limited to, the names of the expert
reviewers. The independent entity shall not be required to disclose
the names of the expert reviewers to the plan or the enrollee's
physician, except pursuant to a properly made request for discovery.
If the independent entity chooses to
disclose the names of the experts on the panel to the
plan, the independent entity must also disclose the names of the
experts to the enrollee's physician. The enrollee's physician may
provide these documents and information to the enrollee.
(10) If the majority of experts on the panel recommend providing
the proposed therapy, pursuant to paragraph (8), the recommendation
shall be binding on the plan. If the recommendations of the experts
on the panel are evenly divided as to whether the therapy should be
provided, then the panel's decision shall be deemed to be in favor of
coverage. If less than a majority of the experts on the panel
recommend providing the therapy, the plan is not required to provide
the therapy. Coverage for the services required under this section
shall be provided subject to the terms and conditions generally
applicable to other benefits under the plan contract.
(11) The plan shall have written policies describing the external,
independent review process. The plan shall disclose the
availability of the external, independent review process and how
enrollees may access the review process in the plan's evidence of
coverage and disclosure forms.
(c) The Commissioner of Corporations, in consultation with the
Insurance Commissioner, shall, by January 1, 1998, contract with a
private, nonprofit accrediting organization to accredit the
independent review entities specified in subdivision (b). The
accrediting organization shall have the power to grant and revoke
accreditation, and shall develop, apply, and enforce accreditation
standards, including those required in subdivision (e), that ensure
the independence of the independent review entity, the
confidentiality of the medical records, and the qualifications and
independence of the health care professionals providing the analyses
and recommendations requested of them. The accrediting organization
shall demonstrate the ability to objectively evaluate the performance
of independent entities and shall demonstrate that it has no
conflict of interest, including any material professional, familial,
or financial affiliation as defined in paragraph (4) of subdivision
(b) with any independent entity or plan, in accrediting entities for
the purpose of reviewing medical treatments, treatment
recommendations, and coverage decisions by health care service plans.
(d) For the purposes of paragraph (3) of subdivision (a), "medical
and scientific evidence" means the following sources:
(1) Peer-reviewed scientific studies published in or accepted for
publication by medical journals that meet nationally recognized
requirements for scientific manuscripts and that submit most of their
published articles for review by experts who are not part of the
editorial staff.
(2) Peer-reviewed literature, biomedical compendia, and other
medical literature that meet the criteria of the National Institute
of Health's National Library of Medicine for indexing in Index
Medicus, Excerpta Medicus (EMBASE), Medline, and MEDLARS database
Health Services Technology Assessment Research (HSTAR).
(3) Medical journals recognized by the Secretary of Health and
Human Services, under Section 1861(t)(2) of the Social Security Act.
(4) The following standard reference compendia: The American
Hospital Formulary Service-Drug Information, the American Medical
Association Drug Evaluation, the American Dental Association Accepted
Dental Therapeutics, and the United States Pharmacopoeia-Drug
Information.
(5) Findings, studies, or research conducted by or under the
auspices of federal government agencies and nationally recognized
federal research institutes including the Federal Agency for Health
Care Policy and Research, National Institutes of Health, National
Cancer Institute, National Academy of Sciences, Health Care Financing
Administration, Congressional Office of Technology Assessment, and
any national board recognized by the National Institutes of Health
for the purpose of evaluating the medical value of health services.
(6) Peer-reviewed abstracts accepted for presentation at major
medical association meetings.
(e) In order to receive accreditation for the purposes of this
section, an independent entity shall meet all of the following
requirements:
(1) The independent entity must be an organization that has as its
primary function to provide expert reviews and related services and
receives a majority of its revenues from these services, except that
an academic medical center may qualify as an independent entity for
purposes of this act without having as its primary function providing
expert reviews and related services and without receiving a majority
of its revenues from these services. An independent entity may not
be a subsidiary of, nor in any way owned or controlled by, a health
plan, a trade association of health plans, or a professional
association of health care providers.
(2) The independent entity must submit to the accrediting
organization and to the Department of Corporations the following
information upon initial application for accreditation and annually
thereafter upon any change to any of the following information:
(A) The names of all stockholders and owners of more than 5
percent of any stock or options, if a publicly held organization.
(B) The names of all holders of bonds or notes in excess of one
hundred thousand dollars ($100,000), if any.
(C) The names of all corporations and organizations that the
independent entity controls or is affiliated with, and the nature and
extent of any ownership or control, including the affiliated
organization's type of business.
(D) The names and biographical sketches of all directors,
officers, and executives of the independent entity, as well as a
statement regarding any relationships the directors, officers, and
executives may have with any health care service plan, disability
insurer, managed care organization, provider group or board or
committee.
(E) The percentage of revenue the independent entity receives from
expert reviews.
(F) A description of the review process, including, but limited
not to, the method of selecting expert reviewers and matching the
expert reviewers to specific cases.
(G) A description of the system the independent entity uses to
identify and recruit expert reviewers, the number of expert reviewers
credentialed and the types of cases the experts are credentialed to
review.
(H) Documentation regarding the medical institutions from which
the independent entity has selected the experts during the previous
12 months, and the percentage of opinions obtained from each
institution.
(I) A description of the areas of expertise available from expert
reviewers retained by the independent entity.
(J) A description of how the independent entity ensures compliance
with the conflict-of-interest provisions of this section.
(3) The independent entity must demonstrate that it has a quality
assurance mechanism in place that does the following:
(A) Ensures that the experts retained are appropriately
credentialed and privileged.
(B) Ensures that the reviews provided by the experts are timely,
clear and credible, and that reviews are monitored for quality on an
ongoing basis.
(C) Ensures that the method of selecting expert reviewers for
individual cases achieves a fair and impartial panel of experts who
are qualified to render recommendations regarding the clinical
conditions and therapies in question.
(D) Ensures the confidentiality of medical records and the review
materials, consistent with the requirements of this section.
(E) Ensures the independence of the experts retained to perform
the reviews through conflict-of-interest policies and prohibitions
and adequate screening for conflicts of interest, pursuant to
paragraph (3) of subdivision (b).
(f) (1) The Department of Corporations shall receive the
information filed by independent entities pursuant to paragraph (2)
of subdivision (e) for the purpose of creating a file of public
records. The Department of Corporations shall not be responsible for
accrediting independent entities.
(2) The accrediting organization shall provide, upon the request
of any interested person, a copy of all nonproprietary information
filed with it by the independent entity under paragraph (2) of
subdivision (e). The accrediting organization may charge a
reasonable fee to the interested person for photocopying the
requested information.
(g) The independent review process established by this section
shall be required on and after July 1, 1998.
(h) This section shall remain in effect only until January 1, 2001,
and as of that date is repealed, unless a later enacted statute,
that becomes effective on or before January 1, 2001, deletes or
extends that date.
SEC. 8. Section 1370.4 is added to the Health and Safety Code, to
read:
1370.4. (a) Every health care service plan shall provide an
external, independent review process to examine the plan's coverage
decisions regarding experimental or investigational therapies for
individual enrollees who meet all of the following criteria:
(1) The enrollee has a terminal condition that, according to the
enrollee's physician's current diagnosis, has a high probability of
causing death within two years from the date of the request for an
independent review; and
(2) The enrollee's physician certifies that the enrollee has a
condition, as defined in paragraph (1), for which standard therapies
have not been effective in improving the condition of the enrollee,
or for which standard therapies would not be medically appropriate
for the enrollee, or for which there is no more beneficial standard
therapy covered by the plan than the therapy proposed pursuant to
paragraph (3); and
(3) Either (A) the enrollee's physician, who is under contract
with or employed by the plan, has recommended a drug, device,
procedure or other therapy that the physician certifies in writing is
likely to be more beneficial to the enrollee than any available
standard therapies, or (B) the enrollee, or the enrollee's physician
who is a licensed, board-certified or board-eligible physician
qualified to practice in the area of practice appropriate to treat
the enrollee's condition, has requested a therapy that, based on two
documents from the medical and scientific evidence, as defined in
subdivision (d), is likely to be more beneficial for the enrollee
than any available standard therapy. The physician certification
pursuant to this subdivision shall include a statement of the
evidence relied upon by the physician in certifying his or her
recommendation. Nothing in this subdivision shall be construed to
require the plan to pay for the services of a nonparticipating
physician provided pursuant to this subdivision, that are not
otherwise covered pursuant to the plan contract; and
(4) The enrollee has been denied coverage by the plan for a drug,
device, procedure or other therapy recommended or requested pursuant
to paragraph (3); and
(5) The specific drug, device, procedure or other therapy
recommended pursuant to paragraph (3) would be a covered service,
except for the plan's determination that the therapy is experimental
or investigational; and
(6) This section shall not apply to any Medi-Cal beneficiary
enrolled in a health care service plan under the plan's contract with
the Medi-Cal program.
(b) The plan's external, independent review shall meet the
following criteria:
(1) The plan shall offer all enrollees who meet the criteria in
subdivision (a) the opportunity to have the requested therapy
reviewed under the external, independent review process. The plan
shall notify eligible enrollees in writing of the opportunity to
request the external independent review within five business days of
the decision to deny coverage.
(2) The plan shall contract with one or more impartial,
independent entities that are accredited pursuant to subdivision (c).
The entity shall arrange for review of the coverage decision by
selecting an independent panel of at least three physicians or other
providers who are experts in the treatment of the enrollee's medical
condition and knowledgeable about the recommended therapy. If the
entity is an academic medical center accredited in accordance with
subdivision (e), the independent panel may include experts affiliated
with or employed by the entity. A panel of two experts may be
arranged at the plan's request, provided the enrollee consents in
writing. The independent entity may arrange for a panel of one expert
only if the independent entity certifies in writing that there is
only one expert qualified and able to review the recommended therapy.
Neither the plan nor the enrollee shall choose or control the
choice of the physician or other provider experts.
(3) Neither the expert, nor the independent entity, nor any
officer, director, or management employee of the independent entity
shall have any material professional, familial, or financial
affiliation, as defined in paragraph (4), with any of the following:
(A) The plan.
(B) Any officer, director, or management employee of the plan.
(C) The physician, the physician's medical group, or the
independent practice association (IPA) proposing the therapy.
(D) The institution at which the therapy would be provided.
(E) The development or manufacture of the principal drug, device,
procedure, or other therapy proposed for the enrollee whose treatment
is under review.
(4) For purposes of this section, the following terms shall have
the following meanings:
(A) "Material familial affiliation" shall mean any relationship as
a spouse, child, parent, sibling, spouse's parent, or child's
spouse.
(B) "Material professional affiliation" shall mean any
physician-patient relationship, any partnership or employment
relationship, a shareholder or similar ownership interest in a
professional corporation, or any independent contractor arrangement
that constitutes a material financial affiliation with any expert or
any officer or director of the independent entity. The term
"material professional affiliation" shall not include affiliations
which are limited to staff privileges at a health facility.
(C) "Material financial affiliation" shall mean any financial
interest of more than 5 percent of total annual revenue or total
annual income of an entity or individual to which this subdivision
applies. "Material financial affiliation" shall not include payment
by the plan to the independent entity for the services required by
this section, nor shall "material financial affiliation" include an
expert's participation as a contracting plan provider where the
expert is affiliated with an academic medical center or a National
Cancer Institute-designated clinical cancer research center.
(5) The enrollee shall not be required to pay for the external,
independent review. The costs of the review shall be borne by the
plan.
(6) The plan shall provide to the independent entity arranging for
the panel of experts a copy of the following documents within five
business days of the plan's receipt of a request by an enrollee or
enrollee's physician for an external, independent review:
(A) The medical records relevant to the patient's condition for
which the proposed therapy has been recommended, provided the
documents are within the plan's possession. Any medical records
provided to the plan after the initial documents are provided to the
independent entity shall be forwarded by the plan to the independent
entity within five business days. The confidentiality of the medical
records shall be maintained pursuant to Section 56.10 of the Civil
Code.
(B) A copy of any relevant documents used by the plan in
determining whether the proposed therapy should be covered, and any
statement by the plan explaining the reasons for the plan's decision
not to provide coverage for the proposed therapy. The plan shall
provide, upon request, a copy of the documents required by this
paragraph, except for the documents described in subparagraphs (A)
and (C), to the enrollee and the enrollee's physician.
(C) Any information submitted by the enrollee or the enrollee's
physician to the plan in support of the enrollee's request for
coverage of the proposed drug, device, procedure, or other therapy.
(7) The experts on the panel shall render their analyses and
recommendations within 30 days of the receipt of the enrollee's
request for review. If the enrollee's physician determines that the
proposed therapy would be significantly less effective if not
promptly initiated, the analyses and recommendations of the experts
on the panel shall be rendered within seven days of the request for
expedited review. At the request of the expert, the deadline shall
be extended by up to three days for a delay in providing the
documents required by paragraph (6) of subdivision (b).
(8) Each expert's analysis and recommendation shall be in written
form and states the reasons the requested therapy is or is not likely
to be more beneficial for the enrollee than any available standard
therapy, and the reasons that the expert recommends that the therapy
should or should not be provided by the plan, citing the enrollee's
specific medical condition, the relevant documents provided pursuant
to paragraph (6), and the relevant medical and scientific evidence,
including, but not limited to, the medical and scientific evidence as
defined in subdivision (d), to support the expert's recommendation.
(9) The independent entity shall provide the plan and the enrollee'
s physician with the experts' analyses and recommendations, a
description of the qualifications of each expert, and any other
information that it chooses to provide to the plan and the enrollee's
physician, including, but not limited to, the names of the expert
reviewers. The independent entity shall not be required to disclose
the names of the expert reviewers to the plan or the enrollee's
physician, except pursuant to a properly made request for discovery.
If the independent entity chooses to disclose the names of the
experts on the panel to the plan, the independent entity must also
disclose the names of the experts to the enrollee's physician. The
enrollee's physician may provide these documents and information to
the enrollee.
(10) If the majority of experts on the panel recommend providing
the proposed therapy, pursuant to paragraph (8), the recommendation
shall be binding on the plan. If the recommendations of the experts
on the panel are evenly divided as to whether the therapy should be
provided, then the panel's decision shall be deemed to be in favor of
coverage. If less than a majority of the experts on the panel
recommend providing the therapy, the plan is not required to provide
the therapy. Coverage for the services required under this section
shall be provided subject to the terms and conditions generally
applicable to other benefits under the plan contract.
(11) The plan shall have written policies describing the external,
independent review process. The plan shall disclose the
availability of the external, independent review process and how
enrollees may access the review process in the plan's evidence of
coverage and disclosure forms.
(c) The Commissioner of Corporations, in consultation with the
Insurance Commissioner, shall contract with a private, nonprofit
accrediting organization to accredit the independent review entities
specified in subdivision (b). The accrediting organization shall
have the power to grant and revoke accreditation, and shall develop,
apply, and enforce accreditation standards, including those required
in subdivision (e), that ensure the independence of the independent
review entity, the confidentiality of the medical records, and the
qualifications and independence of the health care professionals
providing the analyses and recommendations requested of them. The
accrediting organization shall demonstrate the ability to objectively
evaluate the performance of independent entities and shall
demonstrate that it has no conflict of interest, including any
material professional, familial, or financial affiliation as defined
in paragraph (4) of subdivision (b) with any independent entity or
plan, in accrediting entities for the purpose of reviewing medical
treatments, treatment recommendations, and coverage decisions by
health care service plans.
(d) For the purposes of paragraph (3) of subdivision (a), "medical
and scientific evidence" means the following sources:
(1) Peer-reviewed scientific studies published in or accepted for
publication by medical journals that meet nationally recognized
requirements for scientific manuscripts and that submit most of their
published articles for review by experts who are not part of the
editorial staff.
(2) Peer-reviewed literature, biomedical compendia, and other
medical literature that meet the criteria of the National Institute
of Health's National Library of Medicine for indexing in Index
Medicus, Excerpta Medicus (EMBASE), Medline, and MEDLARS database
Health Services Technology Assessment Research (HSTAR).
(3) Medical journals recognized by the Secretary of Health and
Human Services, under Section 1861(t)(2) of the Social Security Act.
(4) The following standard reference compendia: The American
Hospital Formulary Service-Drug Information, the American Medical
Association Drug Evaluation, the American Dental Association Accepted
Dental Therapeutics, and the United States Pharmacopoeia-Drug
Information.
(5) Findings, studies, or research conducted by or under the
auspices of federal government agencies and nationally recognized
federal research institutes including the Federal Agency for Health
Care Policy and Research, National Institutes of Health, National
Cancer Institute, National Academy of Sciences, Health Care Financing
Administration, Congressional Office of Technology Assessment, and
any national board recognized by the National Institutes of Health
for the purpose of evaluating the medical value of health services.
(6) Peer-reviewed abstracts accepted for presentation at major
medical association meetings.
(e) In order to receive accreditation for the purposes of this
section, an independent entity shall meet all of the following
requirements:
(1) The independent entity must be an organization that has as its
primary function to provide expert reviews and related services and
receives a majority of its revenues from these services, except that
an academic medical center may qualify as an independent entity for
purposes of this act without having as its primary function providing
expert reviews and related services and without receiving a majority
of its revenues from these services. An independent entity may not
be a subsidiary of, nor in any way owned or controlled by, a health
plan, a trade association of health plans, or a professional
association of health care providers.
(2) The independent entity must submit to the accrediting
organization and to the Department of Corporations the following
information upon initial application for accreditation and annually
thereafter upon any change to any of the following information:
(A) The names of all stockholders and owners of more than 5
percent of any stock or options, if a publicly held organization.
(B) The names of all holders of bonds or notes in excess of one
hundred thousand dollars ($100,000), if any.
(C) The names of all corporations and organizations that the
independent entity controls or is affiliated with, and the nature and
extent of any ownership or control, including the affiliated
organization's type of business.
(D) The names and biographical sketches of all directors,
officers, and executives of the independent entity, as well as a
statement regarding any relationships the directors, officers, and
executives may have with any health care service plan, disability
insurer, managed care organization, provider group or board or
committee.
(E) The percentage of revenue the independent entity receives from
expert reviews.
(F) A description of the review process, including, but limited
not to, the method of selecting expert reviewers and matching the
expert reviewers to specific cases.
(G) A description of the system the independent entity uses to
identify and recruit expert reviewers, the number of expert reviewers
credentialed and the types of cases the experts are credentialed to
review.
(H) Documentation regarding the medical institutions from which
the independent entity has selected the experts during the previous
12 months, and the percentage of opinions obtained from each
institution.
(I) A description of the areas of expertise available from expert
reviewers retained by the independent entity.
(J) A description of how the independent entity ensures compliance
with the conflict-of-interest provisions of this section.
(3) The independent entity must demonstrate that it has a quality
assurance mechanism in place that does the following:
(A) Ensures that the experts retained are appropriately
credentialed and privileged.
(B) Ensures that the reviews provided by the experts are timely,
clear and credible, and that reviews are monitored for quality on an
ongoing basis.
(C) Ensures that the method of selecting expert reviewers for
individual cases achieves a fair and impartial panel of experts who
are qualified to render recommendations regarding the clinical
conditions and therapies in question.
(D) Ensures the confidentiality of medical records and the review
materials, consistent with the requirements of this section.
(E) Ensures the independence of the experts retained to perform
the reviews through conflict-of-interest policies and prohibitions
and adequate screening for conflicts of interest, pursuant to
paragraph (3) of subdivision (b).
(f) (1) The Department of Corporations shall receive the
information filed by independent entities pursuant to paragraph (2)
of subdivision (e) for the purpose of creating a file of public
records. The Department of Corporations shall not be responsible for
accrediting independent entities.
(2) The accrediting organization shall provide, upon the request
of any interested person, a copy of all nonproprietary information
filed with it by the independent entity under paragraph (2) of
subdivision (e). The accrediting organization may charge a
reasonable fee to the interested person for photocopying the
requested information.
(g) The
independent review process established by this section shall be
required on and after January 1, 2004.
(h) This section shall become operative on January 1, 2004.
SEC. 9. Article 12 (commencing with Section 1399.80) is added to
Chapter 2.2 of Division 2 of the Health and Safety Code, to read:
Article 12. Appeals Seeking Independent Reviews
1399.80. (a) Commencing January 1, 2001, there is established in
the department the Independent Review System.
(b) For the purposes of this chapter, "disputed health care
service" means any health care service that would otherwise be a
covered benefit under a health care service plan contract that has
been denied, significantly delayed, terminated, or otherwise limited
by a decision of the plan, or by one of its contracting providers,
based, in whole or in part, on a finding that the service is not
medically necessary or appropriate for the enrollee's medical
condition.
(c) For the purposes of this chapter, "other adverse decision"
means the denial, significant delay, termination, or the imposition
of other limits on health care services by a plan, or by one of its
contracting entities, for reasons other than those in subdivision
(b).
(d) All enrollee grievances involving a disputed health care
service or other adverse decision are eligible for review under the
Independent Review System if the requirements of this chapter are
met. If the department finds that an enrollee grievance does not
meet the requirements of this chapter for review under the
Independent Review System, the enrollee request for review shall be
treated as a request for the department to review the grievance
pursuant to subdivision (b) of Section 1368. All other enrollee
grievances remain eligible for review by the department pursuant to
subdivision (b) of Section 1368.
(e) No later than January 1, 2001, every health care service plan,
except a specialized health care service plan, shall provide an
enrollee with the opportunity to seek an independent review for
unresolved grievances that involve a disputed health care service or
other adverse decision. For purposes of this article, "enrollee"
shall include a subscriber or designee as described in paragraph (2)
of subdivision (b) of Section 1368. The enrollee's provider may join
with or otherwise assist the enrollee to seek an independent medical
review, and may advocate on behalf of the enrollee.
(f) Every health care service plan contract, except a specialized
health care service plan contract, that is issued, amended, renewed,
or delivered in this state on or after January 1, 2001, shall
authorize enrollee participation in the Independent Review System.
(g) Medicare and Medi-Cal beneficiaries enrolled in a health care
service plan shall not be excluded from participation in the
Independent Review System. The department shall seek to integrate
the quality of care and consumer protection provisions, including
remedies, of the Independent Review System with related dispute
resolution procedures of other health care agency programs, including
the Medicare and Medi-Cal programs, in a way that minimizes the
potential for duplication, conflict, and added costs. Nothing in
this subdivision shall be construed to limit any rights conferred
upon enrollees under this chapter. However, the application of this
subdivision to a Medicare beneficiary shall not apply in the event,
and to the extent, that application is judicially determined to be
preempted by federal law.
(h) The independent review process authorized by this article is
in addition to any other procedures or remedies that may be
available. The enrollee's election to either pursue or not pursue,
exhaust, or engage in the procedures described in this article does
not preclude the use of any other remedy provided by law and shall
not be relevant in any subsequent civil or administrative proceeding.
(i) No later than January 1, 2001, every health care service plan
shall prominently display in every plan contract, on enrollee and
subscriber evidence of coverage forms, on copies of plan procedures
for resolving grievances, on the grievance forms required under
Section 1368, 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, information concerning the right of
an enrollee to request an independent review in cases where the
enrollee believes that health care services have been improperly
denied, significantly delayed, terminated, or otherwise limited by
the plan, or by one of its contracting providers. Enrollees shall be
notified of the availability of a standard application form to
request an independent review.
(j) The department shall develop a standard application form for
independent review that shall be used by each plan. An enrollee may
apply for an independent review when all of the following conditions
are met:
(1) The grievance involves a disputed health care service or other
adverse decision and the enrollee first sought the health care
service that is the subject of the grievance from an in-plan
participating provider, except that the requirement to have first
sought care from an in-plan provider shall not apply in cases
involving emergency services or out-of-network urgent care.
(2) The health care service was denied, significantly delayed,
terminated, or otherwise limited by the plan, or by one of its
contracting providers, or in cases involving emergency services or
urgent out-of-network care where the enrollee did not first seek care
from a participating plan provider, the plan has denied
reimbursement for the reasonable costs of securing such care.
(3) The enrollee has filed a grievance with the plan or its
contracting provider pursuant to Section 1368, and the disputed
decision is upheld or the grievance remains unresolved after 30 days.
The enrollee shall not be required to participate in the plan's
grievance process for more than 30 days. In the case of a grievance
that requires expedited review pursuant to Section 1368.01, the
enrollee shall not be required to participate in the plan's grievance
process for more than three days.
(k) An enrollee may apply for an independent review within 60 days
of any of the qualifying periods or events under subdivision (j), in
a manner determined by the commissioner. The commissioner may
extend the application deadline beyond 60 days if the circumstances
of a case warrant the extension. Each plan shall notify its
enrollees of the commissioner's authority to extend the application
deadline.
(l) As part of an appeal for an independent review, the enrollee
shall provide all of the following:
(1) A brief description of the enrollee's medical condition for
which health care services were denied, significantly delayed,
terminated, or otherwise limited, or for which reimbursement for
reasonable costs was denied.
(2) If the grievance involves a disputed health care service, an
explanation of the reasons why the enrollee believes that the
disputed health care service is or was medically necessary or
appropriate for the enrollee's medical condition. If the grievance
involves one or more other adverse decisions, an explanation of the
reasons why the enrollee believes the plan's decision was incorrect.
The enrollee shall be encouraged to also provide other information
supporting the enrollee's position as well as a copy of all
information provided to the enrollee by the plan or any of its
contracting providers, still in the possession of the enrollee,
concerning a plan or provider decision regarding disputed health care
services and services related to other adverse decisions, and a copy
of any materials the enrollee submitted to the plan, still in the
possession of the enrollee, in support of the grievance, as well as
any additional material that the enrollee believes is relevant.
(3) A written consent to obtain any necessary medical records from
the plan, any of its contracting providers, and any out-of-plan
provider the enrollee may have consulted on the matter.
(m) (1) Upon receipt of an enrollee appeal for an independent
review, the plan or its contracting providers shall provide the
independent review organization a copy of all of the following
documents within three business days of the plan's receipt of the
request by an enrollee for an independent review:
(A) A copy of all of the enrollee's medical records in the
possession of the plan or its contracting providers relevant to each
of the following:
(i) The enrollee's medical condition that is the subject of the
independent review.
(ii) The health care services being provided by the plan and its
contracting providers for the condition.
(iii) The health care services requested by the enrollee for the
condition.
Any newly developed or discovered relevant medical records in the
possession of the plan or its contracting providers after the initial
documents are provided shall be forwarded immediately to the
independent review organization. The plan shall concurrently provide
a copy of medical records required by this subparagraph to the
enrollee or the enrollee's provider unless the offer of medical
records is declined or otherwise prohibited by law. The
confidentiality of all medical record information shall be maintained
pursuant to applicable state and federal laws.
(B) A copy of all information provided to the enrollee by the plan
and any of its contracting providers concerning plan and provider
decisions in response to the grievance, and a copy of any materials
the enrollee or the enrollee's provider submitted to the plan and to
the plan's contracting providers in support of the enrollee's
grievance. This documentation shall include the written response to
the enrollee's grievance, required by paragraph (4) of subdivision
(a) of Section 1368, which requires, in part, a description of the
criteria used and the clinical reasons for the decision, including
all criteria and clinical reasons related to medical necessity or
appropriateness. The confidentiality of any enrollee medical
information shall be maintained pursuant to applicable state and
federal laws.
(C) A copy of any other relevant documents or information used by
the plan or its contracting providers in determining whether disputed
health care services or services subject to one or more other
adverse decisions should have been provided, and any statements by
the plan and its contracting providers explaining the reasons for the
decision not to provide the services on the basis of medical
necessity or appropriateness, or for any other reason. The plan shall
concurrently provide a copy of documents required by this
subparagraph, except for any information found by the commissioner to
be legally privileged information, to the enrollee and the enrollee'
s provider. The department and the independent review organization
shall maintain the confidentiality of any information found by the
commissioner to be the proprietary information of the plan.
(2) The provisions of paragraph (1) requiring the referral of a
grievance and related documents to an independent review organization
shall not apply in cases where the plan files a written objection
with the department and the enrollee, within three days of receiving
a request for independent review, stating its belief that the
requested appeal:
(A) Does not meet the eligibility requirements for independent
review.
(B) Is frivolous and without merit.
(C) Is deficient due to both subparagraphs (A) and (B).
The written objection to the department shall be accompanied by a
copy of the entire grievance record. The department shall establish
an expedited process, which shall not exceed three days from receipt
of an objection unless an extension is requested by the enrollee, for
reviewing these cases and notifying the enrollee of its decision.
If there is an imminent and serious threat to the health of the
enrollee, as defined in subdivision (c) of Section 1399.83, the
department shall accelerate its review of the objection. If the
department disagrees with the plan's objection, the grievance shall
be referred immediately to an independent review organization. If
the department agrees with the plan, the grievance shall immediately
be treated as a request for the department to review the grievance
pursuant to subdivision (b) of Section 1368. The department shall
consider the entire grievance record, as well as any material
submitted by the enrollee and the enrollee's providers, when making
its decision regarding an objection.
1399.81. (a) Except in cases involving a plan objection submitted
to the department, upon receipt of an enrollee's request for an
independent review, the plan shall assign the request to an
independent review organization as described in Section 1399.82 in
accordance with any regulations or orders of the commissioner when
the enrollee has complied with the requirements of subdivisions (j),
(k), and (l) of Section 1399.80.
(b) The independent review organization, which shall be selected
by the department based on selection criteria developed by the
department, shall conduct the review in accordance with Section
1399.83 and any regulations or orders of the commissioner adopted
pursuant thereto.
1399.82. (a) By January 1, 2001, the commissioner shall make
every effort to contract with one or more independent review
organizations in the state to conduct reviews for purposes of this
article. The independent review organizations shall be accredited
pursuant to this article and shall be independent of any health care
service plans doing business in this state. Prior to July 1, 2000,
the commissioner, after public notice, hearings, and comment, shall
adopt regulations to ensure the independence of these organizations.
The regulations shall include conflict-of-interest standards,
consistent with the purposes of this article, that an organization
shall be required to meet in order to qualify for participation in
the Independent Review System.
(b) (1) The independent review organization, any experts it
designates to conduct a review, or any officer, director, or employee
of the independent entity shall have no material professional,
familial, or financial affiliation, as determined by the
commissioner, with any of the following:
(A) The plan.
(B) Any officer, director, or employee of the plan.
(C) A physician, the physician's medical group, or the independent
practice association either denying or proposing the health care
service in dispute.
(D) The institution at which either the proposed health care
service, or the alternative service, if any, recommended by the plan,
would be provided.
(E) The development or manufacture of the principal drug, device,
procedure, or other therapy proposed by the enrollee whose treatment
is under review, or the alternative therapy, if any, recommended by
the plan.
(c) The commissioner shall, by July 1, 2000, contract with a
private, nonprofit accrediting organization to accredit the
independent review organizations described in subdivision (a). The
accrediting organization may grant and revoke accreditation, and
shall develop, apply, and enforce accreditation standards that ensure
the independence of the independent review organization, the
confidentiality of the medical records, and the qualifications and
independence of the health care professionals and other experts
providing the analyses and recommendations requested of them. The
accrediting organization shall demonstrate the ability to objectively
evaluate the performance of independent review organizations and
shall demonstrate that it has no conflict of interest, including any
material professional, familial, or financial affiliation, as
provided in subdivision (b), with any independent review organization
or plan, in accrediting those organizations for the purpose of
reviewing disputed health care decisions and other adverse decisions
made by health care service plans.
(d) Prior to July 1, 2000, the commissioner, after public notice,
hearings, and comment, shall adopt regulations related to the
accreditation of independent review organizations. In developing the
regulations required by this subdivision, the department shall
consider adopting the following, but may accept, reject, or modify
the following based on information received as a result of the
rulemaking process. If the department rejects or modifies any of the
following, it shall discuss its reasons for doing so in the final
rulemaking document. In order to receive accreditation for the
purposes of this section, an independent review organization shall
meet all of the following requirements:
(1) An independent review organization shall not be an affiliate
or a subsidiary of, nor in any way be owned or controlled by, a
health plan, or a trade association of health plans. A board member,
director, officer, or employee of the independent review
organization shall not serve as a board member, director, or employee
of a health care service plan. A board member, director, or officer
of a health plan or a trade association of health plans shall not
serve as a board member, director, officer, or employee of an
independent review organization.
(2) The independent review organization shall submit to the
accrediting organization and to the department the following
information upon initial application for accreditation and, except as
otherwise provided, annually thereafter upon any change to any of
the following information:
(A) The names of all stockholders and owners of more than 5
percent of any stock or options, if a publicly held organization.
(B) The names of all holders of bonds or notes in excess of one
hundred thousand dollars ($100,000), if any.
(C) The names of all corporations and organizations that the
independent review organization controls or is affiliated with, and
the nature and extent of any ownership or control, including the
affiliated organization's type of business.
(D) The names and biographical sketches of all directors,
officers, and executives of the independent review organization, as
well as a statement regarding any past or present relationships the
directors, officers, and executives may have with any health care
service plan, disability insurer, managed care organization, provider
group, or board or committee of a plan, managed care organization,
or provider group.
(E) (i) The percentage of revenue the independent review
organization receives from expert reviews, including, but not limited
to, external medical reviews, quality assurance reviews, and
utilization reviews.
(ii) The names of any health care service plan or provider group
for which the independent review organization provides review
services, including, but not limited to, utilization review, quality
assurance review, and external medical review. Any change in this
information shall be reported to the department within five business
days of the change.
(F) A description of the review process, including, but not
limited to, the method of selecting expert reviewers and matching the
expert reviewers to specific cases.
(G) A description of the system the independent review
organization uses to identify and recruit medical professionals and
other experts to review disputed health care decisions and other
adverse decisions made by health care service plans, the number of
medical professionals credentialed, and the types of cases and areas
of expertise which the medical professionals are credentialed to
review, and the number of other experts, the types of cases and areas
of expertise which those other experts are licensed or credentialed
to review.
(H) A description of how the independent review organization
ensures compliance with the conflict-of-interest provisions of this
section.
(3) The independent review organization shall demonstrate that it
has a quality assurance mechanism in place that does the following:
(A) Ensures that the medical professionals retained are
appropriately credentialed and privileged and that the other experts
retained are appropriately qualified, licensed, and credentialed.
(B) Ensures that the reviews provided by the medical professionals
and other experts are timely, clear, and credible, and that reviews
are monitored for quality on an ongoing basis.
(C) Ensures that the method of selecting medical professionals and
other experts for individual cases achieves a fair and impartial
panel of medical professionals and other experts who are qualified to
render recommendations regarding disputed health care decisions and
other adverse decisions made by health care service plans.
(D) Ensures the confidentiality of medical records and the review
materials, consistent with the requirements of this section and
applicable state and federal law.
(E) Ensures the independence of the medical professionals and
other experts retained to perform the reviews through
conflict-of-interest policies and prohibitions, and ensures adequate
screening for conflicts of interest, pursuant to paragraph (5).
(4) Medical professionals selected by independent review
organizations to review medical treatment decisions shall be
physicians or other appropriate providers who meet the following
minimum requirements:
(A) The medical professional shall be a clinician knowledgeable in
the treatment of the enrollee's medical condition, knowledgeable
about the proposed treatment, and familiar with guidelines,
protocols, and the criteria set forth in subdivision (b) of Section
1399.83 in the area of treatment under review.
(B) The medical professional shall hold a nonrestricted license in
the State of California, and for physicians, a current certification
by a recognized American medical specialty board in the area or
areas appropriate to the condition or treatment under review. For
good cause shown, such as the unavailability of licensed qualified
medical professionals in California or the availability of uniquely
qualified clinics outside of California, the independent review
organization may utilize a medical professional who holds a
nonrestricted license in any state of the United States, provided
that the out-of-state medical professional is knowledgeable about the
treatment standards required in California and applies those
standards.
(C) The medical professional and other experts shall have no
history of disciplinary action or sanctions, including, but not
limited to, loss of staff privileges or participation restrictions,
taken or pending by any hospital, government, or regulatory body.
(5) Neither the expert reviewer, nor the independent review
organization, shall have any material professional, material
familial, or material financial affiliation with any of the
following:
(A) The plan or a provider group of the plan, except that an
academic medical center under contract to the plan to provide
services to enrollees may qualify as an independent review
organization provided it will not provide the service and provided
the center is not the developer or manufacturer of the proposed
treatment.
(B) Any officer, director, or management employee of the plan.
(C) The physician, the physician's medical group, or the
independent practice association (IPA) proposing the treatment.
(D) The institution at which the treatment would be provided.
(E) The development or manufacture of the treatment proposed for
the enrollee whose condition is under review.
(F) The enrollee or the enrollee's immediate family.
(6) For purposes of this section, the following terms shall have
the following meanings:
(A) "Material familial affiliation" means any relationship as a
spouse, child, parent, sibling, spouse's parent, or child's spouse.
(B) "Material professional affiliation" means any
physician-patient relationship, any partnership or employment
relationship, a shareholder or similar ownership interest in a
professional corporation, or any independent contractor arrangement
that constitutes a material financial affiliation with any expert or
any officer or director of the independent review organization.
"Material professional affiliation" does not include affiliations
that are limited to staff privileges at a health facility.
(C) "Material financial affiliation" means any financial interest
of more than 5 percent of total annual revenue or total annual income
of an independent review organization or individual to which this
subdivision applies. "Material financial affiliation" does not
include payment by the plan to the independent review organization
for the services required by this section, nor does "material
financial affiliation" include an expert's participation as a
contracting plan provider where the expert is affiliated with an
academic medical center or a National Cancer Institute-designated
clinical cancer research center.
(e) The accrediting organization shall provide, upon the request
of any interested person, a copy of all nonproprietary information,
as determined by the commissioner, filed with it by an independent
review organization seeking accreditation under this article. The
accrediting organization may charge a nominal fee to the interested
person for photocopying the requested information.
(f) The independent review process established by this article
shall not commence until one or more independent review organizations
have been accredited and have executed a contract with the
department pursuant to this section.
1399.83. (a) Upon receipt of information and documents related to
a case pursuant to subdivision (c) of Section 1399.81, the expert
reviewer or reviewers selected to conduct the review by the
independent review organization shall promptly review all pertinent
medical records of the enrollee, provider reports, as well as any
other information submitted to the organization as authorized by the
department or requested from any of the parties to the dispute by the
reviewers. If reviewers request information from any of the
parties, a copy of the request and the response shall be provided to
all of the parties.
(b) (1) Following its review of a grievance involving a disputed
health care service, the medical expert reviewer or reviewers shall
determine and state whether the disputed health care service is or
was medically necessary or appropriate based on:
(A) Generally accepted practice guidelines developed by
federal agencies, nationally recognized federal research institutes,
or national professional medical specialty societies.
(B) Relevant medical or scientific evidence, if any exists,
regarding the clinical value of the disputed health care service.
(C) Generally accepted standards of medical practice.
(D) Treatments that are likely to provide a benefit to a patient
for conditions for which other treatments are not clinically
efficacious.
(2) Medically necessary or appropriate health care services shall
include those related to treatment or therapy to maximize functional
capacity. This subdivision is to be construed in the best interests
of the enrollee.
(c) Following its review of a grievance involving one or more
other adverse decisions, the expert reviewer or reviewers shall
determine and state whether the decision to deny, significantly
delay, terminate, or otherwise impose limits on health care services
was reasonable taking into consideration, among other relevant
information, all of the provisions of the enrollee's health care
service plan contract.
(d) The independent review organization shall require its expert
reviewers to complete a review and make a determination in writing,
and in layperson's terms to the maximum extent practicable, within 30
days of the receipt by the independent review organization of the
application for review and supporting documentation, or within less
time as prescribed by the commissioner. If a requested health care
service that is the subject of the grievance has not been provided
and the enrollee's provider or the department certifies in writing
that an imminent and serious threat to the health of the enrollee may
exist, including, but not limited to, serious pain, the potential
loss of life, limb, or major bodily function, or the immediate and
serious deterioration of the health of the enrollee, the analyses and
determinations of the reviewers shall be expedited and rendered
within three days of the certification notice. Subject to the
approval of the department, the deadlines for analyses and
determinations involving both regular and expedited reviews may be
extended by up to three days following reviewer receipt of delayed
documentation required by this chapter.
(e) Each analysis shall cite the enrollee's medical condition and
the relevant documents in the record to support the determination.
(f) In cases involving disputed health care services, each
analysis shall cite relevant findings associated with the provisions
of subdivision (b). If more than one medical expert reviews the
case, the recommendation of the majority shall prevail. If the
medical experts reviewing the case are evenly split as to whether the
disputed health care service is or was medically necessary or
appropriate, the decision shall be in favor of the enrollee.
(g) In cases related to a grievance involving one or more other
adverse decisions, if more than one expert reviews the case, the
recommendation of the majority shall prevail. If the experts
reviewing the case are evenly split as to whether it was reasonable
to deny, significantly delay, terminate, or otherwise impose limits
on health care services, the decision shall be in favor of the
enrollee.
(h) The independent review organization shall provide the
commissioner with the analyses and determinations of the experts
reviewing the case, a description of the qualifications of the
experts, and the names of the reviewers. If more than one expert
reviewed the case and the result was differing determinations, the
independent review organization shall provide the commissioner with
each of the separate reviewer analyses and determinations.
(i) The commissioner, except in cases subject to expedited
reconsideration under subdivision (j), shall immediately adopt the
determination of the independent review organization, and shall
promptly issue a written decision to the parties, which decision
shall be binding on the plan as an order.
(j) The commissioner may request the independent review
organization, on an expedited basis, to reconsider any determination
involving one or more other adverse decisions when the commissioner
finds that the determination is clearly contrary to the legal
requirements of this chapter or other laws. If after
reconsideration, the independent review organization renders a
determination that the commissioner finds remains clearly contrary to
the legal requirements of this chapter or other law, the
commissioner shall forward the determination to the parties, along
with the commissioner's finding, and the disputed portion of the
determination involving one or more other adverse decisions shall not
be binding. In these cases, the department shall immediately treat
that portion of the grievance related to the disputed determination
pursuant to subdivision (b) of Section 1368.
(k) Nothing about the independent review process established by
this article, including, but not limited to, the analysis,
recommendations, and conclusions of the review panel, shall be
admissible in any subsequent proceeding.
(l) After removing the names of the parties, including, but not
limited to, the enrollee, all medical providers, the plan, and any of
its employees or contractors, commissioner orders adopting a
determination of an independent review organization shall be made
available by the department to the public upon request, at the
department's cost.
1399.84. (a) Upon receiving the order adopted by the commissioner
pursuant to subdivision (i) or (j) of Section 1399.83, the plan
shall immediately contact the enrollee and offer to promptly
implement the order.
(b) In any case where an enrollee secured urgent care or emergency
services outside of the plan provider network, and these services
are later found by the independent review organization to have been a
covered benefit under the terms and conditions of the health care
service plan contract and were medically necessary or appropriate,
the commissioner shall require the plan to promptly reimburse the
enrollee for any reasonable costs associated with those services when
the commissioner finds that the enrollee's decision to secure the
services outside of the plan provider network prior to seeking an
independent review was reasonable under the circumstances.
(c) In addition to requiring plan compliance regarding
subdivisions (a) and (b), the commissioner shall review individual
cases submitted for independent review to determine whether any
enforcement actions, including penalties, may be appropriate. In
particular, where harm to an enrollee has already occurred because of
the decision of a plan, or one of its contracting providers, to
deny, significantly delay, terminate, or otherwise limit covered
health care services that an independent review determines to be
medically necessary or appropriate, the commissioner shall impose
penalties.
(d) Pursuant to Section 1368.04, the commissioner shall
periodically evaluate independent review cases to determine if any
audit, investigative, or enforcement actions should be undertaken by
the department, particularly if a plan repeatedly fails to act
promptly and reasonably to resolve grievances associated with a
denial, significant delay, termination, or the imposition of other
limits on medically necessary or appropriate health care services
when the obligation of the plan to provide those health care services
to enrollees or subscribers is reasonably clear.
1399.85. (a) After considering the results of a competitive
bidding process and any other relevant information on program costs,
the commissioner shall establish a reasonable, per-case reimbursement
schedule to pay the costs of independent review organization
reviews, which may vary depending on the type of medical condition
under review and on other relevant factors.
(b) As a condition for receiving payments for reviews, independent
review organizations shall agree to provide reasonable data required
for an evaluation of the independent review system.
1399.86. (a) On or before July 1, 2000, the commissioner shall
allocate grant funding for an independent health care ombudsprogram.
At a minimum, the commissioner shall approve project grants for at
least one new or existing independent assistance project in southern,
central, and northern California if qualified applicants apply from
each of those three regions. The number of projects approved shall
eventually be sufficient to provide independent assistance to all
California enrollees. However, in order to facilitate the start-up
and effective implementation of this section, the commissioner may
take until July 1, 2002, if necessary, to fund a sufficient number of
projects to serve all California enrollees.
(b) Project activities shall include, but are not limited to,
providing counseling, advising, assisting, and advocating for
enrollees at every stage of:
(A) The health plan grievance process.
(B) The department's grievance review process under subdivision
(b) of Section 1368.
(C) Applying for and participating in the Independent Review
System.
(c) All of the projects shall, as necessary and appropriate,
directly assist enrollees in their dealings with plans, provider
groups, providers, and government agencies, including advocating on
behalf of enrollees in any informal or formal proceeding.
(d) The commissioner shall use a competitive bidding process to
select projects. The projects shall be selected based on, but not
limited to, all of the following selection criteria:
(1) The applicant's experience providing enrollees with education,
counseling, and advocacy services.
(2) The number of enrollees covered by health plans served by the
project and the size of the geographic region to be served by the
project.
(3) Evidence of an understanding of the range and complexity of
health care concerns likely to be raised by enrollees, including
vulnerable populations served by various health plans.
(4) The number and quality of staff with formal training and
experience in health care, counseling, and consumer advocacy.
(5) The ability to complement, and not duplicate, existing
consumer services provided by health plans, other independent
assistance programs, and regulatory assistance programs, which shall
include a commitment to refer enrollees, as appropriate, to the
Health Insurance Counseling and Advocacy Program (HICAP) in cases
eligible for HICAP assistance.
(6) The commitment to collect and analyze data on enrollee
experiences in health plan grievance systems, in the department's
grievance review process, and in the Independent Review System.
(7) The ability and commitment to provide significant matching
contributions to support the program in the form of private or public
financial support or in-kind contributions, or a combination of the
two.
(8) The commitment to provide project services to enrollees free
of charge.
(9) The degree of consumer representation on the applicant's
governing advisory board, if such a board exists.
(e) The evaluation of bids submitted pursuant to subdivision (d)
shall be conducted by the commissioner in consultation with a panel
of at least three individuals screened and appointed by the
commissioner who have no conflicts of interest including, but not
limited to, a financial interest in the outcome of the bidding
process, or employment or contractual arrangements with plans, their
contracting medical groups or contracting providers, and who have
significant experience with, and knowledge about, managed health care
issues, health care dispute resolution mechanisms, and consumer
advocacy.
(f) Funding for the projects shall commence no earlier than July
1, 2000, and may continue for a period extending no later than
December 31, 2003.
(g) As a condition for receiving funding, each of the projects
shall agree to provide reasonable data required for an evaluation of
the independent health care ombudsprogram.
1399.87. (a) The costs of the independent review system and
independent health care ombudsprogram shall be borne by health care
service plans pursuant to an assessment fee system established by the
commissioner. Every health care service plan shall pay annually to
the department, on the date or dates set by the department, its
prorated share of fees, as determined by the commissioner, to pay for
the estimated annual costs associated with carrying out, overseeing,
and evaluating the independent review system and independent health
care ombudsprogram. In determining the amount to be assessed, the
commissioner shall consider all existing assessments and
appropriations available for the support of this chapter including
any offsetting funds that can be made available as a result of
enrollee grievances being diverted from the department and reviewed
instead by independent review organizations with enrollees assisted
by the independent health care ombudsprogram instead of by department
staff. The commissioner may adjust fees upward or downward, on a
schedule set by the department, to address shortages or overpayments.
(b) The portion of the assessment fee imposed by subdivision (a)
to pay for the independent health care ombudsprogram shall not apply
to any health care service plan that is funding and has in place by
July 1, 2000, or thereafter, an independent, external health care
ombudsprogram certified by the commissioner as substantially
complying with the selection criteria for eligibility utilized under
this chapter, and provided that the health plan ombudsprogram agrees
to collect and provide reasonable data to the department and its
evaluator in accordance with subdivisions (a) and (b) of Section
1399.88. The commissioner's certification review shall be done in
consultation with the panel established pursuant to subdivision (e)
of Section 1399.86.
(c) These funds shall be used for all costs reasonably incurred in
the administration of this article, including, but not limited to,
startup costs, overhead, department administration, contracting with
an accrediting organization, contracts with independent review
organizations, payments to expert reviewers, grants for ombudsprogram
projects and program evaluation.
1399.88. (a) The department shall contract with an independent
expert entity to undertake an evaluation of the independent review
system and the independent health care ombudsprogram.
(b) The independent evaluation shall include, but not be limited
to, an assessment of the effectiveness and value of the independent
review system and the ombudsprogram. The evaluation shall include a
description of assessments imposed on plans to implement these
programs, changes in department staffing attributable to these new
programs, any increase, reduction, or redirection of existing
department staff as a result of these new programs, and any changes
in department workload attributed to enrollee use of the
ombudsprogram and the referral of grievances to the independent
review system.
(c) The evaluation shall assess the long-term efficacy of these
programs as a means of providing timely and effective resolution of
enrollee grievances with plans, and for improving access to and the
quality of health care services, and as a catalyst for systemic
improvements in the delivery of health care services. In addition to
reviewing data generated by these new California programs, the
evaluator shall survey and report on similar programs underway in
other states.
(d) The evaluator shall provide its evaluation to the department
on or before January 1, 2003. The department shall make a single
copy of the evaluation available at no cost to members of the public
upon request. The department may recover the cost of additional
copies that are requested. After holding a series of public hearings
on the evaluation, the department shall submit a report, along with
its own recommendations for continuing, modifying, or terminating the
independent review system and the independent health care
ombudsprogram, to the Legislature by March 1, 2003. The department
shall make a single copy of its report available at no cost to
members of the public upon request. The department may recover the
cost of additional copies that are requested.
1399.89. A plan's coverage decision regarding experimental or
investigational therapies for individual enrollees shall be subject
to this article.
1399.90. This article shall remain in effect only until January
1, 2004, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2004, deletes or extends
that date.
SEC. 10. 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.