SB 1832 Health care coverage. BILL NUMBER: SB 1832 CHAPTERED 09/16/94 CHAPTER 614 FILED WITH SECRETARY OF STATE SEPTEMBER 16, 1994 APPROVED BY GOVERNOR SEPTEMBER 15, 1994 INTRODUCED BY Senator Bergeson FEBRUARY 24, 1994 An act to amend Section 1371 of, to add Sections 1363.5, 1370.2, 1371.4, 1371.8, 1373.65, 1374.8, and 1397.5 to, the Health and Safety Code, to add Sections 791.27, 796.04, and 11512.55 to, the Insurance Code, relating to health coverage. LEGISLATIVE COUNSEL'S DIGEST SB 1832, Bergeson. Health care coverage. (1) Existing law, known as the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of specified health care service plans, administered by the Commissioner of Corporations. Existing law makes the willful violation of the act or any rule or regulation thereunder a misdemeanor. Existing law also provides for the regulation of policies of disability insurance administered by the Insurance Commissioner. Existing law requires that health care service plan contracts and disability insurance policies meet certain requirements, and provide coverage for prescribed services and treatments. This bill would require health care service plans to reimburse providers for emergency services and care without prior authorization in specified circumstances. This bill would also provide procedures for obtaining authorization and resolving disagreements in circumstances where, in the opinion of the emergency or attending physician, or other provider, a patient who has received emergency care may not be safely discharged. It would provide an exception to certain of these provisions for a provider who has a contract with a health care service plan for providing emergency and necessary medical care, and for a health care service plan that has 3,500,000 enrollees and maintains a prior authorization system that meets certain criteria. It would also require the Department of Corporations to adopt emergency regulations governing instances when an enrollee requires medical care following stabilization of an emergency condition. (2) Existing law requires every plan to establish procedures in accordance with the Department of Corporations regulations for continuously reviewing the quality of care, performance of medical personnel, utilization of services and facilities, and costs. This bill would require a plan to disclose to the commissioner and providers under contract with the plan the processes the plan uses to authorize health care services by a provider pursuant to the benefits provided by the plan, with certain exceptions. It also would require that those processes be disclosed to enrollees upon request. This bill would prohibit certain disability insurers, a health care service plan, or a nonprofit hospital service plan that authorizes a specific type of treatment by a provider from rescinding or modifying this authorization after the provider renders the health care service in good faith and pursuant to the authorization. (3) Existing law requires a plan to establish and maintain a grievance system approved by the department under which enrollees may submit grievances, and imposes procedures for this system. This bill would require the commissioner to annually file, as a public record, an aggregate summary of complaints filed against plans. The bill would also provide that upon appeal to the plan of a contested claim, the claim would be referred by the plan to the medical director or other appropriately licensed health care provider, and sets forth procedures for this appeal. (4) Existing law requires a plan to reimburse claims or any portion thereof as soon as practical, but no later than 30 working days for a health care service plan and 45 working days for a health maintenance organization after receipt of the claim unless the claim or portion thereof is contested. It deems a claim or portion thereof to be reasonably contested where the plan has not received the completed claim and all information necessary to determine payor liability for the claim. This bill would require a health care service plan to complete reconsideration of the claim within 30 working days and would require a health maintenance organization to complete reconsideration of the claim within 45 working days after receipt of this additional information. (5) This bill would require health care service plans to notify enrollees of the termination of a contract with a medical group, individual practice association, or individual provider within such a group or association selected by those enrollees, and would authorize the plan to request the medical group or individual practice association to notify the enrollees who are patients of that provider when the individual provider is within that group or association. This bill would also require plans to disclose the reasons for termination of a contract in certain circumstances. (6) This bill would, with certain exceptions, prohibit the release of any information by certain disability insurers, a health care service plan, or a nonprofit hospital service plan to an employer that would directly or indirectly indicate to the employer that an employee is receiving or has received services from a health care provider that are covered by the plan, unless authorized to do so by the employee. (7) Since this bill would create new crimes with respect to health care service 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. ------------------------------------------------------------------------- SECTION 1. Section 1363.5 is added to the Health and Safety Code, to read: 1363.5. (a) A plan shall disclose or provide for the disclosure to the commissioner and providers under contract with the plan the process the plan uses to authorize or deny health care services under the benefits provided by the plan. A plan shall also disclose those processes to enrollees or persons designated by an enrollee upon request. The criteria used by plans to determine whether to authorize or deny health care services shall: (1) Be developed with involvement from actively practicing health care providers. (2) Be developed using sound clinical principles and processes. (3) Be evaluated, and updated if necessary, at least annually. (4) If used as the basis of a decision to deny services in a specified case under review, be disclosed to the provider or the enrollee, or both, in that specified case, upon request. (b) Subdivision (a) shall not apply to plans that, prior to January 1, 1995, have entered into a contract with an entity that performs determinations for the authorization of health care services to plan enrollees where the contract prohibits disclosure of utilization guidelines and other procedures used to make those determinations. Plans that have existing contracts of this type prior to January 1, 1995, shall not be subject to subdivision (a) until January 1, 1996. SEC. 2. Section 1370.2 is added to the Health and Safety Code, to read: 1370.2. Upon an appeal to the plan of a contested claim, the plan shall refer the claim to the medical director or other appropriately licensed health care provider. This health care provider or the medical director shall review the appeal and, if he or she determines that he or she is competent to evaluate the specific clinical issues presented in the claim, shall make a determination on the appealed claim. If the health care provider or medical director determines that he or she is not competent to evaluate the specific clinical issues of the appealed claim, prior to making a determination, he or she shall consult with an appropriately licensed health care provider who is competent to evaluate the specific clinical issues presented in the claim. For the purposes of this section, "competent to evaluate the specific clinical issues" means that the reviewer has education, training, and relevant expertise that is pertinent for evaluating the specific clinical issues that serve as the basis of the contested claim. The requirements of this section shall apply to claims that are contested on the basis of a clinical issue, the necessity for treatment, or the type of treatment proposed or utilized. The plan shall determine whether or not to use an appropriate specialist provider in the review of contested claims. SEC. 3. Section 1371 of the Health and Safety Code is amended to read: 1371. A health care service plan, including a specialized health care service plan, shall reimburse claims or any portion of any claim, whether in state or out of state, as soon as practical, but no later than 30 working days after receipt of the claim by the health care service plan, or if the health care service plan is a health maintenance organization, 45 working days after receipt of the claim by the health care service plan, unless the claim or portion thereof is contested by the plan in which case the claimant shall be notified, in writing, that the claim is contested or denied, within 30 working days after receipt of the claim by the health care service plan, or if the health care service plan is a health maintenance organization, 45 working days after receipt of the claim by the health care service plan. The notice that a claim is being contested shall identify the portion of the claim that is contested and the specific reasons for contesting the claim. If an uncontested claim is not reimbursed by delivery to the claimants' address of record within the respective 30 or 45 working days after receipt, interest shall accrue at the rate of 10 percent per annum beginning with the first calendar day after the 30- or 45-working day period. For the purposes of this section, a claim, or portion thereof, is reasonably contested where the plan has not received the completed claim and all information necessary to determine payer liability for the claim, or has not been granted reasonable access to information concerning provider services. Information necessary to determine payer liability for the claim includes, but is not limited to, reports of investigations concerning fraud and misrepresentation, and necessary consents, releases, and assignments, a claim on appeal, or other information necessary for the plan to determine the medical necessity for the health care services provided. If a claim or portion thereof is contested on the basis that the plan has not received all information necessary to determine payer liability for the claim or portion thereof and notice has been provided pursuant to this section, then the plan shall have 30 working days or, if the health care service plan is a health maintenance organization, 45 working days after receipt of this additional information to complete reconsideration of the claim. SEC. 4. Section 1371.4 is added to the Health and Safety Code, to read: 1371.4. (a) A health care service plan, or its contracting medical providers, shall provide 24-hour access for enrollees and providers to obtain timely authorization for medically necessary care, for circumstances where the enrollee has received emergency services and care as defined in Section 1317.1, is stabilized, but the treating provider believes that the enrollee may not be transferred or discharged safely. A physician and surgeon shall be available for consultation and for resolving disputed requests for authorizations. A health care service plan that does not require prior authorization as a prerequisite for payment for necessary medical care following stabilization of an emergency condition need not satisfy the requirements of this subdivision. (b) A health care service plan shall reimburse providers for emergency services and care, as defined in Section 1317.1, provided to its enrollees, until the care results in stabilization of the enrollee, except as provided in subdivision (c). (c) Payment for emergency services and care may be denied only if the health care service plan reasonably determines that the emergency services and care were never performed; provided that a health care service plan may deny reimbursement to a provider for a medical screening examination in cases when the plan enrollee did not require emergency services and care and the enrollee reasonably should have known that an emergency did not exist. As long as federal or state law requires that emergency services and care be provided without first questioning the patient's ability to pay, a health care service plan shall not require a provider to obtain authorization prior to the provision of emergency services and care. (d) If there is a disagreement between the health care service plan and the provider regarding the need for necessary medical care, the plan shall assume responsibility for the care of the patient either by having its medical personnel personally take over the case of the patient within a reasonable amount of time after the disagreement, or by having a general acute care hospital under contract with the plan agree to accept the transfer of the patient as provided in Section 1317.2, Section 1317.2a, or other pertinent statute. However, this requirement shall not apply to necessary medical care provided in hospitals outside the service area of the health care service plan. If the health care service plan fails to satisfy the requirements of this subdivision, further necessary care shall be deemed to have been authorized by the plan. Payment for this care may not be denied. (e) A health care service plan may delegate the responsibilities enumerated in this section to the plan's contracting medical providers. (f) Subdivisions (b), (c), (d), and (g) shall not apply with respect to either a provider with which the health care service plan has a contract that includes the provision of emergency services and care and necessary medical care or a health care service plan that has 3,500,000 enrollees and maintains a prior authorization system which includes the availability by telephone within 30 minutes of an emergency physician who is on duty at an emergency department of a general acute care hospital. (g) The Department of Corporations shall adopt by July 1, 1995, on an emergency basis, regulations governing instances when an enrollee requires medical care following stabilization of an emergency condition, including appropriate time frames for a health care service plan to respond to requests for treatment authorization. SEC. 5. Section 1371.8 is added to the Health and Safety Code, to read: 1371.8. A health care service plan that authorizes a specific type of treatment by a provider shall not rescind or modify this authorization after the provider renders the health care service in good faith and pursuant to the authorization. This section shall not be construed to expand or alter the benefits available to the enrollee or subscriber under a plan. SEC. 6. Section 1373.65 is added to the Health and Safety Code, immediately preceding Section 1373.7, to read: 1373.65. (a) When a plan terminates a contract with an entire medical group or individual practice association, the plan shall notify enrollees who have selected that medical group or individual practice association of the termination. (b) When a plan terminates a contractual arrangement with an individual provider within a medical group or individual practice association, the plan may request that medical group or individual practice association to notify the enrollees who are patients of that provider of the termination. (c) A plan shall disclose the reasons for the termination of a contract with a provider to the provider only when the termination occurs during the contract year. (d) Notwithstanding subdivision (c), whenever a plan indicates that a provider's contract is being terminated for quality of care reasons, it shall state specifically what those reasons are. SEC. 7. Section 1374.8 is added to the Health and Safety Code, to read: 1374.8. A health care service plan shall not release any information to an employer that would directly or indirectly indicate to the employer that an employee is receiving or has received services from a health care provider covered by the plan unless authorized to do so by the employee. An insurer that has, pursuant to an agreement, assumed the responsibility to pay compensation pursuant to Article 3 (commencing with Section 3750) of Chapter 4 of Part 1 of Division 4 of the Labor Code, shall not be considered an employer for the purposes of this section. Nothing in this section prohibits a health care service plan from releasing relevant information described in this section for the purposes set forth in Chapter 12 (commencing with Section 1871) of Part 2 of Division 1 of the Insurance Code. SEC. 8. Section 1397.5 is added to the Health and Safety Code, to read: 1397.5. (a) The commissioner shall make and file annually with the Department of Corporations as a public record, an aggregate summary of complaints against plans filed with the commissioner by enrollees or subscribers. This summary shall include at least all of the following information: (1) The total number of complaints filed. (2) The types of complaints. (b) The summary set forth in subdivision (a) shall include the following disclaimer: THIS INFORMATION IS PROVIDED FOR STATISTICAL PURPOSES ONLY. THE COMMISSIONER OF CORPORATIONS HAS NEITHER INVESTIGATED NOR DETERMINED WHETHER THE COMPLAINTS COMPILED WITHIN THIS SUMMARY ARE REASONABLE OR VALID. (c) Nothing in this section shall require or authorize the disclosure of complaints filed with or received by the commissioner and made confidential pursuant to any other provision of law including, but not limited to, the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code) and the Information Practices Act of 1977 (Chapter 1 (commencing with Section 1798) of Title 1.8 of Part 4 of Division 3 of the Civil Code). Nothing in this section shall affect any other provision of law including, but not limited to, the California Public Records Act and the Information Practices Act of 1977. SEC. 9. Section 791.27 is added to the Insurance Code, immediately following Section 791.26, to read: 791.27. A disability insurer that provides coverage for hospital, medical, or surgical expenses shall not release any information to an employer that would directly or indirectly indicate to the employer that an employee is receiving or has received services from a health care provider covered by the plan unless authorized to do so by the employee. An insurer that has, pursuant to an agreement, assumed the responsibility to pay compensation pursuant to Article 3 (commencing with Section 3750) of Chapter 4 of Part 1 of Division 4 of the Labor Code, shall not be considered an employer for the purposes of this section. Nothing in this section prohibits a disability insurer from releasing relevant information described in this section for the purposes set forth in Chapter 12 (commencing with Section 1871) of Part 2 of Division 1. SEC. 10. Section 796.04 is added to the Insurance Code, immediately following Section 796.03, to read: 796.04. A disability insurer that provides coverage for hospital, medical, or surgical expenses and a nonprofit hospital service plan that authorizes a specific type of treatment for services covered under a policyholder's contract or plan by a provider shall not rescind or modify this authorization after the provider renders the health care service in good faith and pursuant to the authorization. This section shall not be construed to expand or alter the benefits available or the terms and conditions of the contract as may be agreed upon between a policyholder, certificate holder, or trust, and the insurer. SEC. 11. Section 11512.55 is added to the Insurance Code, immediately preceding Section 11512.6, to read: 11512.55. Notwithstanding any other provision of law, a nonprofit hospital service plan shall not release any information to an employer that would directly or indirectly indicate to the employer that an employee is receiving or has received services from a health care provider covered by the plan. An insurer that has, pursuant to an agreement, assumed the responsibility to pay compensation pursuant to Article 3 (commencing with Section 3750) of Chapter 4 of Part 1 of Division 4 of the Labor Code, shall not be considered an employer for the purposes of this section. Nothing in this section prohibits a nonprofit hospital service plan from releasing relevant information described in this section for the purposes set forth in Chapter 12 (commencing with Section 1871) of Part 2 of Division 1 of the Insurance Code. SEC. 12. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs which may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, changes the definition of a crime or infraction, changes the penalty for a crime or infraction, or eliminates a crime or infraction. Notwithstanding Section 17580 of the Government Code, unless otherwise specified in this act, the provisions of this act shall become operative on the same date that the act takes effect pursuant to the California Constitution. ---------------------------------------------------------------------------