LEGISLATIVE COUNSEL'S DIGEST


SB 92, as amended, Aanestad. Health care reform.
(1) Existing law, the Knox-Keene Health Care Service Plan Act of
1975 (the Knox-Keene Act), provides for the licensure and regulation
of health care service plans by the Department of Managed Health Care
and makes a willful violation of the Knox-Keene Act a crime.
Existing law also provides for the regulation of health insurers by
the Department of Insurance.
The Knox-Keene Act requires, subject to specified exceptions, that
a health care service plan be licensed by the department and provide
basic health care services, as defined, among other benefits, unless
exempted from that requirement by the director of the department.
Existing law also requires, subject to specified exceptions, that an
insurer obtain a certificate of authority from the Insurance
Commissioner in order to transact business in this state and that the
insurer operate in accordance with specified requirements.
This bill would allow a carrier domiciled in another state to
offer, sell, or renew a health care service plan contract or a health
insurance policy in this state without holding a license issued by
the department or a certificate of authority issued by the
commissioner. The bill would exempt the carrier's plan contract or
policy from requirements otherwise applicable to plans and insurers
providing health care coverage in this state if the plan contract or
policy complies with the domiciliary state's requirements, and the
carrier is lawfully authorized to issue the plan contract or policy
in that state and to transact business there.
The bill would also authorize health care service plans and health
insurers to offer, market, and sell individual health care service
plan contracts and individual health insurance policies that do not
include all of the benefits mandated under state law to individuals
with income below 350% of the federal poverty level if the individual
waives those benefits, as specified, and the plan contract or
insurance policy is approved by the Director of the Department of
Managed Health Care or the Insurance Commissioner.
(2) Under existing law, health care service plans and health
insurers are required to include certain benefits in their contracts
and policies. Existing federal law authorizes an individual who has a
high deductible health plan to make tax deductible contributions to
a Health Savings Account that may be used to pay medical expenses.
This bill would require the Director of the Department of Managed
Health Care and the Insurance Commissioner to encourage the design of
health care service plan contracts and health insurance policies
that conform to current federal requirements for high deductible
health plans used in conjunction with Health Savings Accounts and to
standardize the process used to review and approve new health care
service plan contracts and health insurance policies. The bill would
require the director and the commissioner to report specified
information to the Legislature regarding those requirements.
The bill would also authorize group health care service plan
contracts and group health insurance policies to offer to include a
Healthy Action Incentives and Rewards Program, as specified.
(3) Existing law imposes certain requirements on health care
service plans and health insurers to enable small employers to access
health care coverage. Existing law requires health care service
plans and health insurers to sell to any small employer any of the
benefit plan designs it offers to small employers and prohibits plans
and insurers, among others, from encouraging or directing small
employers to refrain from filing an application for coverage with the
plan or insurer, and from encouraging or directing small employers
to seek coverage from another carrier, because of the health status,
claims experience, industry, occupation, or geographic location
within the carrier's approved service area of the small employer or
the small employer's employees.
This bill would also prohibit a plan or insurer from taking either
of those actions because of the employer's implementation of, or
intent to implement, any form of claim support for covered employees,
as specified.
Existing law defines "small employer" for these purposes to
include a guaranteed association that purchases health care coverage
for its members. Existing law defines "guaranteed association" to
mean a nonprofit organization of individuals or employers that meets
certain requirements, including having been in active existence and
having included health coverage as a membership benefit for at least
5 years prior to January 1, 1992, and covering at least 1,000 persons
in that regard.
This bill would delete the requirements for a guaranteed
association to have been in active existence and to have included
health care coverage as a membership benefit for at least 5 years
prior to January 1, 1992. The bill would reduce the required number
of persons covered by health coverage provided through the guaranteed
association from 1,000 to 100. The bill would also define "small
employer" to include an eligible association that purchases health
care coverage for its members and would define an eligible
association as a community or civic group or a charitable or
religious organization.
Because a willful violation of these requirements with respect to
health care service plans would be a crime, the bill would impose a
state-mandated local program.
(4) Existing law requires health care service plans and specified
disability insurers to have written policies and procedures
establishing the process by which the plans or insurers
prospectively, retrospectively, or concurrently review and approve,
modify, delay, or deny, based in whole or in part on medical
necessity, requests by providers of health care services for
enrollees or insureds. Existing law imposes specified requirements on
that process and specifies that only a licensed physician or
licensed health care professional with specified competency may deny
or modify requests for authorization of health care services.
This bill would authorize a specify that
only a California licensed health care professional ,
other than a person licensed to practice medicine, to
may, deny , delay, or modify requests only
with respect to for authorization of health care
services. The bill would limit that licensee's review to
services that fall within his or her scope of practice and would
make that review subject to standardized protocol limitations
or supervision requirements applicable under his or her license.
The bill would also require the licensee to have at least the same
scope of practice as the provider submitting the request for
authorization. The bill would also prohibit a
physician or other health care professional
licensee from denying , delaying, or modifying a
request without first conducting a good faith examination of the
enrollee or insured , except as specified , and would
make a violation of that requirement unprofessional conduct and
grounds for disciplinary action. The bill would specify that the
primary obligation of that licensee is to the enrollee or insured
. The bill would also provide that a service is
medically necessary or a medical necessity when it is reasonable and
necessary to protect life, to prevent significant illness or
significant disability, or to alleviate severe pain.
Existing law establishes an independent medical review system in
which an independent medical review organization reviews grievances
involving a disputed health care service under a health care service
plan contract or disability insurance policy. Existing law requires
that the medical professionals selected
by that organization to conduct reviews to be either
physicians holding a specified certification or other appropriate
providers holding a nonrestricted license in any state.
This bill would require those physicians and other providers to be
licensed in California and would limit the reviews conducted by
those other providers persons , as
specified.
Existing law requires the medical reviewers selected to conduct a
review to review specified information, including, but not limited
to, provider reports and all pertinent medical records of the
enrollee or insured.
This bill would also require that at least one of those medical
professional reviewers conduct a good faith examination of the
enrollee, except as specified , and would make a failure to
conduct that examination unprofessional conduct and grounds for
disciplinary action. The bill would specify that the primary
obligation of these reviewers is to the enrollee or insured .
Because a willful violation of these requirements with respect to
health care service plans would be a crime, the bill would impose a
state-mandated local program.
(5) Existing law provides for insurers to be admitted to transact
business in specified types of insurance, including workers'
compensation insurance.
This bill would allow any insurer admitted to transact health
insurance or workers' compensation insurance, or a health care
service plan licensed pursuant to the Knox-Keene Act, to make written
application to the commissioner for a license to offer a single
policy that provides health care coverage and workers' compensation
benefits.
(6) Existing law provides for the Medi-Cal program, which is
administered by the State Department of Health Care Services and
under which qualified low-income persons receive various health care
services and benefits. Existing law prescribes various requirements
governing reimbursement rates for these services.
This bill would require, on January 1, 2010, the reimbursement
levels for fee-for-service physician services under Medi-Cal to be
increased to 80% of the amount that the federal Medicare Program
reimburses for these same services in Area 9 (Santa Clara County),
and would thereafter require the rates to be increased annually in
accordance with the California Consumer Price Index.
The bill would require the department, before making any
adjustment to Medi-Cal reimbursement rates, to consider the ability
of Medi-Cal beneficiaries to access physician services by geography
and specialty and to request data from the Office of Statewide Health
Planning and Development to allow the department to determine the
extent of Medi-Cal physician shortages, if any, by geography and
specialty.
The bill would require the department to ensure the existence and
operation of a single searchable Internet Web site, accessible by the
public at no cost, that specifies Medi-Cal expenditures, including a
line item breakdown of administrative overhead and provider and
health care expenses.
The bill would require the department to prepare and submit a
proposal for a demonstration project by July 31, 2010, for
participation in the federal Medicaid Demonstration Project for
Health Opportunity Accounts and would specify the details of that
demonstration project.
The bill would also require the department, on or before January
1, 2011, to provide or arrange for the provision of an electronic
personal health record and an electronic personal benefits record for
beneficiaries of the Medi-Cal program. The bill would additionally
authorize the department to establish a Healthy Action Incentives and
Rewards Program as a covered benefit under the Medi-Cal program,
subject to federal financial participation and approval.
The bill would state the intent of the Legislature to enact
legislation that would realign Medi-Cal benefits to more closely
resemble benefits offered through private health care coverage.
The bill would also state the intent of the Legislature to enact
legislation that would establish a pilot project that utilizes a
self-directed "cash and counseling" model for providing Medi-Cal
services to disabled Medi-Cal enrollees. Under a "cash and counseling"
model, disabled Medi-Cal enrollees, with assistance from family
members and Medi-Cal case managers, would be given an individual
budget to manage and direct payment for their personal care services
and enable them to determine which supportive services they want and
from whom they wish to have these services delivered.
Under existing law, the Director of Health Care Services may
contract with any qualified individual, organization, or entity to
provide services to, arrange for, or case manage the care of Medi-Cal
beneficiaries subject to specified requirements.
This bill would state the intent of the Legislature to enact
legislation that would establish a pilot project in which Medi-Cal
managed care is used as a platform to transition from a
defined-benefit system, where the state pays for services used based
on a defined set of benefits, to a defined-contribution system, where
Medi-Cal enrollees would be assigned a risk-adjusted amount to
purchase private health care coverage.
Existing law requires an applicant that is not currently enrolled
as a provider in the Medi-Cal program, a provider required to apply
for continued enrollment, or a provider not currently enrolled at a
location where the provider intends to provide Medi-Cal goods or
services to submit a complete application package for enrollment,
continuing enrollment, or enrollment at a new location, except as
specified. Existing law requires the department to provide, within 30
days of receipt, written notice that the application package has
been received, except as specified. Applicants or providers that meet
certain criteria may be granted preferred provisional provider
status for up to 18 months.
This bill would, notwithstanding any other provision of law,
additionally provide that, on and after January 1, 2010, certain
licensed health care providers submitting an application to the
department pursuant to the above provisions shall be granted
preferred provisional provider status, effective from the date the
department received their application, if the applicant is in good
standing as a provider under the federal Medicare Program and with
his or her state licensing board.
This bill would require the department to provide written notice
to the applicant that the application package has been received
within 15 days after receiving the application. The bill would
require the department to provide successful applicants with written
notice of their preferred provisional provider status within 30 days
after receiving the application.
Existing law establishes, within the office of the Attorney
General, the Bureau of Medi-Cal Fraud for the investigation and
prosecution of violations of applicable laws pertaining to the
Medi-Cal program, and to review complaints alleging abuse or neglect
of patients in health care facilities receiving payments under the
Medi-Cal program.
This bill would require the State Department of Health Care
Services to establish a computer modeling program to be used to
prevent and identify Medi-Cal fraud. The bill would require the
computer modeling program to alert the department when providers
engage in specified billing behavior. The bill would require the
department, upon receiving the alert, to conduct a Medi-Cal fraud
investigation if the department determines an investigation is
appropriate under the circumstances.
Existing law, administered by the State Department of Public
Health, provides for the licensure and regulation of various clinics,
including primary care clinics, as defined.
Existing law establishes the Medi-Cal Hospital/Uninsured Care
Demonstration Project Act that revises hospital reimbursement
methodologies in order to maximize the use of federal funds
consistent with federal Medicaid law and stabilize the distribution
of funding for hospitals.
This bill would require the Director of Health Care Services to
provide to the Legislature, no later than July 1, 2010, a plan to
permit these funds to be used for the purpose of creating new, and
expanding existing, primary care clinics.
Under existing law, one of the utilization controls to which
services are subject under the Medi-Cal program is the treatment
authorization request process, which is approval by a department
consultant of a specified service in advance of the rendering of that
service based upon a determination of medical necessity. Other
utilization controls include postservice prepayment audits and
postservice postpayment audits, that involve reviews for medical
necessity and program coverage.
This bill would, instead, provide that treatment authorization
requests shall be approved based upon a determination that the
service is covered under Medi-Cal. The bill would also provide that
postservice prepayment audits and postservice postpayment audits
shall only involve reviews for program coverage.
(7) Existing law allows the Controller, in his or her discretion,
to offset any amount due to a state agency by a person or entity
against any amount owed to that person or entity by a state agency.
Existing law requires the Controller, to the extent feasible, to
offset any amount overdue and unpaid for a fine, penalty, assessment,
bail, vehicle parking penalty, or court-ordered reimbursement for
court-related services, from a person or entity, against any amount
owed to the person or entity by a state agency on a claim for a
refund from the Franchise Tax Board under the Personal Income Tax Law
or the Bank and Corporation Tax Law or from winnings in the
California State Lottery.
This bill would permit a hospital or health care provider, as
defined, that provides health care services to an uninsured
individual who does not qualify for government health care benefits
to file a claim with the State Department of Health Care Services to
be reimbursed for those services if the recipient of the services
does not pay for those services. The bill would require the Director
of Health Care Services to certify the debt owed to the hospital or
health care provider to the Franchise Tax Board and the California
Lottery Commission in order to the have the debt satisfied with any
tax refund or lottery winnings owed to the debtor, as specified.
(8) Under the Public Employees' Medical and Hospital Care Act, the
Board of Administration of the Public Employees' Retirement System
contracts for and administers health care benefit plans for public
employees and annuitants. Existing state and federal income tax laws
allow a deduction for contributions to a qualifying medical savings
account by a taxpayer who is covered under a high deductible health
plan, as defined. Money within this type of account may be used to
pay for qualified medical expenses, as defined.
This bill would require the board to offer a high deductible
health plan, as defined in the federal tax law, and a Health Savings
Account option to public employees and annuitants, as specified. The
bill would establish the Public Employees' Health Savings Fund, a
continuously appropriated trust fund within the State Treasury, for
payment of qualified medical expenses of eligible employees and
annuitants who elect to enroll in the high deductible health plan and
participate in the Health Savings Account option, and would require
those employees and annuitants, and their employers, to make
specified contributions to that fund, thereby making an
appropriation.
The bill would also require the board, on or before January 1,
2011, to provide or arrange for the provision of an electronic
personal health record and an electronic personal benefits record for
enrollees receiving health care benefits. The bill would
additionally authorize the board to provide a Healthy Action
Incentives and Rewards Program to its enrollees, as specified.
(9) The Personal Income Tax Law and the Corporation Tax Law
authorize various credits against the taxes imposed by those laws.
This bill would authorize a credit against those taxes for each
taxable year beginning on or after January 1, 2010, and before
January 1, 2015, in an amount equal to the amount paid or incurred
during the taxable year for qualified health expenses, as defined,
that do not exceed specified amounts.
This bill would authorize a credit against personal income taxes
for each taxable year beginning on or after January 1, 2009, in an
amount equal to 25% of the tax imposed on a medical care professional
who provides medical services in a rural area. The bill would also
authorize a credit against personal income taxes, as specified, for a
primary care provider, as defined, and for uncompensated medical
care provided by a physician.
This bill would authorize a credit under the Personal Income Tax
Law and the Corporation Tax Law for each taxable year beginning on or
after January 1, 2009, and before January 1, 2015, in an amount
equal to 15% of the amount paid or incurred by a qualified taxpayer,
as defined, during the taxable year for qualified health insurance,
as defined, for employees of the taxpayer. This bill would require
the Legislative Analyst to report to the Legislature on or before
March 1, 2014, on the effectiveness of the credit, as specified.
The Personal Income Tax Law authorizes various deductions in
computing income subject to taxation.
This bill would allow a deduction in computing adjusted gross
income for the costs of health insurance, as provided. This bill
would also allow a deduction in connection with Health Savings
Accounts in conformity with federal law. In general, the deduction
would be an amount equal to the aggregate amount paid in cash during
the taxable year by, or on behalf of, an eligible individual, as
defined, to a Health Savings Account of that individual, as provided.
This bill would also provide related conformity to that federal law
with respect to treatment of the account as a tax-exempt trust, the
allowance of rollovers from Archer Medical Savings Accounts to a
Health Savings Account, and penalties in connection therewith.
(10) Existing law, with certain exceptions, establishes 8 hours as
a day's work and a 40-hour workweek, and requires payment of
prescribed overtime compensation for additional hours worked.
Existing law authorizes the adoption by 2/3 of employees in a work
unit of alternative workweek schedules providing for workdays no
longer than 10 hours within a 40-hour workweek.
This bill would authorize an individual employee employed by an
employer with 50 or fewer employees that offers health care coverage
benefits to its employees to request a work schedule of up to 10
hours per day within a 40-hour workweek, and would authorize an
employer to implement this schedule without any obligation to pay
overtime compensation for hours worked as part of the schedule. The
bill would enact related provisions and would make other conforming
and technical changes.
The bill would also authorize an employer to provide health
coverage that includes a Healthy Action Incentives and Rewards
Program to his or her employees. In addition, the bill would state
the intent of the Legislature to enact legislation providing
incentives to employers who offer health insurance, flex-time work
schedules, and other benefits agreed upon by employers and employees.

(11) Existing law defines the term "medical assistant" and sets
forth the scope of services a medical assistant is authorized to
perform. Existing law provides that a medical assistant may
administer medication upon the specific authorization and supervision
of a licensed physician and surgeon or licensed podiatrist or, in
specified clinic settings, upon the specific authorization and
supervision of a nurse practitioner, nurse-midwife, or physician
assistant.
This bill would remove the requirement that a medical assistant's
administration of medication upon the specific authorization and
supervision of a nurse practitioner, nurse-midwife, or physician
assistant occur in specified clinic settings, and would make related
changes.
(12) Existing law provides for the licensure and regulation by the
Commissioner of Financial Institutions of money transmitters, who
receive money in this state for transmission to foreign countries,
and makes a violation of these provisions a crime.
This bill would require a licensee, or its agent, to collect a 3%
fee on any money transmission received from a client who is unable to
provide documentation of lawful presence in the United States. The
bill would require the deposit of the fee in an unspecified fund to
be used to pay for emergency medical care provided in this state to
persons without documentation of legal residence in the United
States.
Because a violation of this requirement would be a crime, the bill
would impose a state-mandated local program.
In addition, the bill would memorialize the Congress and President
of the United States to enact legislation that would provide full
reimbursement for the costs of providing federally mandated health
care services to anyone, regardless of immigration status.
(13) Existing law regulates the establishment and operation of
hospitals, including emergency rooms.
This bill would state the intent of the Legislature to enact
legislation that would allow hospitals to offer preventative medical
services delivered through the hospital's primary care or
community-based clinic.
(14) The bill would enact other related provisions and make
various technical, nonsubstantive changes.
(15) This bill would result in a change in state taxes for the
purpose of increasing state revenues within the meaning of Section 3
of Article XIII A of the California Constitution, and thus would
require for passage the approval of 2/3 of the membership of each
house of the Legislature.
(16) 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.

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