BILL ANALYSIS
SENATE COMMITTEE ON INSURANCE
Senator Jackie Speier, Chair
SB254 (Speier) Hearing Date: 4/21/99
As Amended:3/17/99
Fiscal: Yes
Urgency: No
SUMMARY
Senate Bill 254 would establish an external, independent
review (IR) system in the Department of Corporations (DOC)
and the Department of Insurance (DOI) to review a plan's or
insurer's decision to deny benefits.
DIGEST
Existing law
1. Provides for regulation of health care service plans
by the DOC and for regulation of disability (health)
insurers by the DOI.
2. Requires every health care service plan to establish
and maintain a grievance system, and after
participating for 60 days in the plan's grievance
process, an enrollee or subscriber (hereafter
"enrollee") may submit the grievance to the department
for review.
3. Requires every health plan and disability (health)
insurer (hereafter called simply "plan") to establish a
reasonable external, IR process to examine coverage
decisions regarding experimental or investigational
therapies for terminal conditions.
This bill
1. Would modify the existing internal grievance system as
follows: a) by replacing the term "complaint" with the
term "grievance;" b) by requiring a written and
specified response to a grievance; c) by shortening
that process from 60 to 30 days; d) by adding "severe
pain" and "the immediate or serious deterioration of
the health of the enrollee" as a criteria for expedited
review; e) by requiring under penalty the plan to
notify the enrollee of their right to access the
independent review system (IRS); f) by requiring the
respective department to provide a specified response
to an enrollee when the grievance is not subject to the
IRS; g) by shortening the respective department's
system of aging of grievances from 60 to 30 days; h) by
requiring the plan to respond in writing to the
enrollee within 15 days of the plan's receipt of the
grievance; i) by shortening the respective department's
requirement in the enrollee's participation in a plan's
grievance process from 60 to 30 days before pursuing a
grievance through that department; j) by penalizing a
plan when harm to an enrollee occurs as a result of
plan non-compliance.
2. Would specifically modify the existing grievance
system by changing the "expedited plan review" to
"immediate referral to the IRS" for "imminent and
serious threat."
3. Would suspend the existing Friedman-Knowles external,
IR process regarding experimental or investigational
therapies for terminal conditions from 1/1/01 until
1/1/04, and would allow such therapies (without a
terminally ill pre-condition) to be subject to the same
new IR process that all enrollees could access.
4. Would establish an IRS in the DOC and DOI.
5. Would require enrollees to exhaust their plan's
internal appeals process before requesting the IRS.
6. Would not require a minimum dollar threshold for the
service in dispute to initiate the IRS.
7. Would require the respective department to choose and
contract with an IR organization (IRO) and prohibit
conflicts of interest between reviewers and the parties
involved.
8. Would require the IRS to be conducted on paper within
30 days, except for specified cases.
9. Would require the IRO decision to be binding on the
plans, except pursuant to a department reconsideration
in the case of contractual disputes.
10. Would allow for IRS eligibility for both "medical" and
"coverage" decisions.
11. Would not require a "doctor's note" as a pre-condition
for a review.
12. Would require no application fee to the IRS but makes
other provisions to discourage frivolous review
applications.
13. Would treat the IRS analysis, recommendations and
conclusions of the review panel as inadmissible in any
subsequent proceeding, consistent with current
department policy.
14. Would establish an independent health care
ombudsprogram to assist enrollees in navigating the
internal and external review processes.
COMMENTS
1. Purpose of the bill . The author states that as of
mid-1998, 18 states had enacted legislation
establishing external, IR of contested medical care
decisions, and that in California, Health Net and Aetna
U.S. Healthcare have voluntarily adopted an IR process
covering a broad range of unresolved enrollee
grievances, and that in addition, Medicare has an IR
system for all unresolved enrollee grievances. The
author states that a great diversity of policies and
procedures has been applied to these various State and
federal IR systems. The author cites recent studies
that indicate that there has been only modest enrollee
participation in State IR programs, possibly because
either many consumers are unaware of their right to
access IR or those in need of IR often are ill or
disabled and do not have the ability to pursue an
appeal, and that IR participation could also be limited
if the rules are complex or enrollees are not provided
with advice and assistance to the program.
The author believes Senate Bill 254 is a
consumer-friendly external, IR process as it does the
following:
a) makes access to IR quick, simple and inexpensive
for enrollees,
b) provides enrollees with independent assistance to
navigate the process,
c) requires enrollees to go to the plan first for
care, except in emergencies,
d) requires enrollees to go through the plan's
grievance process first before applying to the IRS,
e) keeps frivolous cases out of the IR process,
f) includes Medi-Cal and Medicare enrollees,
c g) defines "medically necessary or appropriate care,"
d) reconsiders IR contract "coverage"
determinations,
e) improves accountability,
f) prevents litigation linkage.
2. Background . Last year, the Governor's Managed
Health Care Improvement Task Force recommended the
creation of an independent, third-party review process
by January 2000, that
would provide consumers with an unbiased,
expert-based review
of patient grievances pertaining to delays, denials
or curtailment of care based on medical necessity
or appropriateness. This bill seeks to implement that
recommendation.
3. Support . Health Access California (sponsor) states
that 40% of Californians have had problems with their
HMO and yet most have no remedy. Health Access
believes the bill would correct these problems but
seeks amendments to include automatic referral of all
denials rather than requiring consumers to seek review.
Health Access also states that medical groups
participate in denial of care and as such should be
part of the IR process.
The Western Center on Law and Poverty and others
support the bill as it includes Medi-Cal and Medicare,
has no dollar threshold or application fee or doctor's
note, and they are in support of the concept of
requiring medical necessity or other utilization review
decisions to be made by licensed medical professionals.
The Center for Health Care Rights also supports the
bill except they have concerns about portions relating
to the independent assistance section.
2. Support if amended . The California Association of
Health Plans (CAHP) supports the concept of IR but
would ask to consider that the results of the IR
process be admissible in subsequent litigation, that
the IR make their decisions based on clinical evidence
and medical literature rather than generally accepted
practice guidelines, that reviewers not be limited to
California-licensed physicians, that the IR process not
apply to Medicare enrollees, that the review should not
include "coverage" issues, that "all" criteria and
clinical reasons related to medical necessity may be
impossible to provide for review, and that penalties
should be discretionary rather than required by the
respective commissioner. The California Physicians
Group Council also supports the bill except they would
like to see a second opinion from within the plan
before going to IR, and would like to see a financial
threshold or fee which they believe would minimize
premium increases.
3. Opposition . The Association of California Life and
Health Insurance Companies (ACLHIC) and Health Net
oppose the bill because of the inadmissibility of the
IR decision which they believe is patently unfair and
would make for lopsided justice. ACLHIC also objects
to reviewers giving an opinion upon the "contract"
provisions beyond "medical necessity," and believe the
cost of the process to be prohibitive. Blue Cross (BC)
agrees with ACHLIC and also requests a nominal
application fee. BC also would prefer to exclude
Medi-Cal and Medicare from IR, and would like the IR
process to include prospective, concurrent and
retrospective denials for payment.
6. Recent Legislation . In the 1997-98 session, SB 1504
(Rosenthal) was vetoed by Governor Wilson, SB 1653
(Johnston) died in the Assembly. In the 1999-00
session, IR is considered in AB 55 (Migden), AB 136
(Migden), AB 1283 (Baugh), AB 1621 (Thomson), SB 189
(Schiff), and dental IR is considered in SB 292
(Figueroa).
POSITIONS
Support
Health Access California (sponsor)
American Federation of State, County and Municipal
Employees
California Firefighters
Center for Health Care Rights
Congress of California Seniors
Resources for Independent Living
United Nurses Association of California
Western Center on Law and Poverty
Oppose
Association of California Life and Health Insurance
Companies
Blue Cross of California
Health Net
Consultant: Michael Ashcraft