BILL ANALYSIS SB 1832 Date of Hearing: July 5, 1994 ASSEMBLY COMMITTEE ON HEALTH Burt Margolin, Chair SB 1832 (Bergeson) - As Amended: June 16, 1994 And As Proposed To Be Amended SENATE ACTIONS: COMMITTEE I.C. & C. VOTE 8-0 FLOOR VOTE 25-0 SUBJECT Should the laws governing health plan and health insurer relationships with šproviders be amended to provide specific procedures for dealing with šprovider terminations, discipline, medical utilization decisions and šreimbursement? DIGEST Existing law provides that health care service plans, generally health šmaintenance type health plans, are subject to licensure and regulation by the State Department of Corporations. Existing law provides for šutilization review by health care service plans. For example, health care šservice plans are required to establish procedures for reviewing quality of šcare, performance of medical personnel, utilization of services and šfacilities, and costs. This bill provides for a series of changes to the Knox-Keene Act and the šInsurance Code relating to health insurance plans. Specifically: 1) Health care plans are required to establish and disclose protocols and š standards used by the plan in determining whether a medical service is a covered benefit under the health care service plan. These protocols will include the process by which claims are reviewed and the plan must: a) Be developed with the involvement of health care providers; b) Use sound medical clinical principles; and c) Be evaluated and updated at annually. Plans which have contracted with a utilization review entity prior to January 1, 1995 are exempted from this requirement until January 1, 1996. - continued - SB 1832 Page 1 SB 1832 2) Health care service plans would be required to use health personnel in the review of contested claims with training, educational background, and experience that is equivalent to the provider who appeals the rejection of a claim for payment. 3) In the case of claims that are not paid based on a lack of necessary information, this bill requires those contested claims to be completed within 30 to 45 days of receipt of the necessary information. 4) Requires the Commissioner to provide plans a description of any š complaint found to be justified, 30 days before public release where the release protects the confidentiality of enrollees, subscribers, or providers, unless waived by them. 5) Health care service plans or health insurance plans which provide an initial authorization to perform services would be prohibited from rescinding that authorization for services after the medical practitioner has provided the care, insofar as the authorization does not expand or alter the benefits available to the enrollee under a plan. 6) Health care service plans which provided health services would be š required to provide a 60-day extension to providers prior to termination from the plan if the provider's patient would be jeopardized. A plan may immediately terminate a provider based on any disciplinary action against the license or a determination by the plan that provider competence or conduct is likely to be detrimental to patient safety, or delivery of care or the provider is charged, or convicted of a felony, or convicted of a misdemeanor related to professional duties. 7) Health care services plans and health insurance carriers would be š prohibited from disclosing any information to an employer that would indicate that an employee is receiving health services without authorization of the employee. 8) OB-GYN Providers. Specifies that, as of January 1, 1995, all health š care service plan contracts, disability insurance policies, and nonprofit hospital service plans contracts that provide hospital, medical care or surgical coverage allow women enrollees to directly access obstetrician-gynecologists for obstetrical and gynecological physician services. 9) Emergency Physician Services. a) Requires a plan or its contracting providers to provide 24-hour access for timely authorization for medically necessary care, including cases where an emergency patient has been stabilized, but the treating provider believes that the patient may not be discharged safely. b) Requires a Health Care Service Plan to reimburse physicians and surgeons for emergency services and care until the patient is - continued - SB 1832 Page 2 SB 1832 stabilized. c) Emergency screening exams may be denied by the health plan when the enrollee did not require emergency care and should have reasonably known an emergency did not exist. d) Provides that in those cases where a patient initially receives emergency services and the emergency physician or the attending physician or other provider determines that the patient may not be safely discharged from the hospital, authorization from the plan will be deemed to be given if the plan fails to respond to a physician's call within 30 minutes for permission to transfer. e) In those cases where a plan does not provide authorization for services, then the health plan's medical personnel shall personally take over the care of the patient within a reasonable period of time following the physician-plan disagreement. f) Any failure on the part of the plan to meet the requirements of the bill will be deemed authorization for care. 10) Health Insurance Utilization Panel. a) Creates a scientific panel composed of 11 members drawn from a pool of defined professionals, but also requires selection of a member of the general public. b) Requires the Commissioner of Insurance and the Commissioner of Corporations to develop a memorandum of understanding setting out the joint selection of panel members by the commissioners, the terms of their tenure and cause for removal by the commissioners. Also requires the memorandum include the provision of a budget to provide staff and other support for the panel. c) Defines basic health care as the kind of coverage provided by a comprehensive plan licensed under Knox-Keene or under the comprehensive care corporation provisions of the insurance code. Also limits the definition to medical/surgical care so we don't get into a turf war with chiropractors, psychologists, etc. d) Sets up a priority system for the kind of procedure reviews that the panel in its discretion can choose to do. e) Requires plans and insurers to set a procedure for letting enrollees ask for an outside second opinion from outside experts, which will be binding on the plan in the case of an affirmative finding. f) Allows any determinations of the state panel to preempt plan actions based upon its second opinion or internal decision making regarding experimental procedure designation. - continued - SB 1832 Page 3 SB 1832 FISCAL EFFECT This bill would result in significant cost to the Departments of Corporations and Insurance for the operation of utilization review panels. šAdditionally, state and local governments may experience increases in the šcost of providing health benefits from increased cost associated with špayment to emergency physicians and increased cost from utilization of šspecialty OB-GYN providers. COMMENTS 1) NEED FOR THE BILL. This bill was introduced at the request of the š California Medical Association in response to increasing concerns over the quality of medical care and the treatment of physicians by health care plans. This measure is a compilation of a proposal intended by the California Medical Association to deal with utilization review and enforcement issues affecting California's citizens. The CMA believes that the trend toward managed care has created new incentives for carriers to deny care to patients and reduce payments to physicians. 2) THE ENFORCEMENT OF THE KNOX-KEENE ACT BY THE DEPARTMENT OF š CORPORATIONS. On April 6, 1994, the Senate Insurance Committee held a hearing on the quality of care provided under the Knox-Keene law and how we regulate health maintenance organizations. Consumer complaints: The Department of Corporations consumer complaint program is primarily operated by only two consumer services representatives for all 16 million health plan subscribers (according to the Department of Corporations one of the two consumer services representatives has been ill since December of 1993 and has not been replaced as of April 1994). Department of Corporations Enforcement Action: During the period from 1989 to 1994, the Department of Corporations took only 6 enforcement actions related to quality of care provided by health plans. Enforcement actions by the Department of Corporations, such as they are, apply to consumer and not provider concerns about the internal processes of the plans. The department is required to conduct periodic medical quality surveys which ostensibly deal with the processes used to authorize and provide care. This bill requires plans to provide specific disclosure of their processes used to authorize or deny care and disclosure of justified complaints against plans. 3) CLAIMS REVIEW REQUIREMENTS. The standard for peer review and quality assurance, in general, is provided in the Knox-Keene Act (HSC Sec. 1370). - continued - SB 1832 Page 4 SB 1832 This bill provides that in the case of appeals on claims the review done at the time of the appeal could only be carried out by someone with "education, training, and current expertise that is pertinent for evaluating the specific clinical issues". This implies the creation of a peer review panel of potentially significant proportions if all areas of expertise are to be represented. It might be more economical to refer significant cases for outside review as opposed to requiring a plan to seek opinions from among its staff. 4) PUBLIC DISCLOSURE OF DISCIPLINARY ACTIONS. This bill generally provides that the information released by the Department of Corporations relative to consumer complaints must be justified, but prohibits identification of problem providers. 5) INITIAL SERVICE AUTHORIZATION. This bill would require a plan to pay š a provider's claim for services if an initial authorization was provided, subject to a prohibition on expansion or addition of benefits. This is designed to prevent the health plan from rescinding an initial authorization when new information becomes available. Generally, this occurs when a patient is found to be ineligible for a specific type of service such as mental health counseling, which may not be available to all members of a plan. The current law provides for the health care service plan to recover payment from the provider in the case of overpayment or inappropriate payment (HSC Sec. 1371.1). A provider may contest a plans' request for the repayment of an overpayment. This blanket prohibition on rescinding an authorization may have the effect of slowing the time required to receive an authorization for the majority of patients. Additionally, if the information provided to the plan is in error, then the plan would have some difficulty in determining the appropriateness of the authorization. 6) EMERGENCY ROOM DOCTORS. This bill provides, extended opportunities š to seek additional services for patients that have been stabilized when plans do not respond to a request for transfer within 30 minutes. With respect to the automatic authorization for services: The bill provides that if a patient enters the hospital though the emergency room, and the emergency physician, attending physician or even another provider believes that the patient may not be safely discharged even though the patient must be stabilized before any transfer or discharge is contemplated, the health plan has 30 minutes to respond to a request for authorization for additional treatment. A key element contained in existing law is the necessity to stabilize the patient. This is required to permit additional treatment outside of the emergency department. Failure by a plan to authorize transfer requires the ER department to continue necessary medical care for a patient that should be - continued - SB 1832 Page 5 SB 1832 treated in a hospital contracting for the care of plan enrollees. 7) OB-GYN PRIMARY PROVIDER STATUS. This bill provides that patients may š seek treatment from OB-GYN providers without receiving a referral from a primary care provider. These provisions are similar to those contained in AB 2493 (Speier), that was heard and passed by the Assembly Health Committee. AB 2493 differs from this bill however, by deeming OB/GYN providers as šprimary care providers. This designation permits OB/GYN physicians to šprovide primary care, as well as the OB/GYN speciality services. 8) STATE HEALTH CARE PANEL. This bill contains provisions identical to š AB 3571 (Margolin), which establishes a state level panel to determine the medical necessity of procedures and make determinations as to whether the procedures may be excluded from coverage by health care plans. AB 3571 passed the Assembly and is now in the Senate. 9) RELATED LEGISLATION. This bill contains provisions also contained in š SB 1348, and as noted above, AB 2493 and AB 3571. SPONSOR: California Medical Association California Association of Obstetricians and Gynecologists California Chapter,American College of Emergency Physicians California Chapter,American College of Cardiology California Society of Plastic Surgeons SUPPORT: Alameda/Contra Costa County Emergency physicians Marina Women's Medical Group Frank R. Howard Memorial Hospital Several individuals OPPOSITION: Aetna Health Plans American College of Obstetricians and Gynecologists (unless amended) Blue Cross Blue Shield of California California Association of HMOs,Inc. California Chamber of Commerce California Manufacturers Association California Women Lawyers CIGNA HealthCare of California FHP Health Care Health Net HIMA I-Flow Corporation (unless amended) Molecular Biosystems, Inc. Office of Insurance Advisor (unless amended) Pacificare Planned Parenthood Affiliates of California - continued - SB 1832 Page 6