Bill Text: CA AB1511 | 2021-2022 | Regular Session | Amended
Bill Title: Insurance: omnibus.
Spectrum: Bipartisan Bill
Status: (Passed) 2021-10-07 - Chaptered by Secretary of State - Chapter 627, Statutes of 2021. [AB1511 Detail]
Download: California-2021-AB1511-Amended.html
Amended
IN
Senate
June 28, 2021 |
Amended
IN
Senate
June 14, 2021 |
Amended
IN
Assembly
May 03, 2021 |
Amended
IN
Assembly
April 20, 2021 |
Introduced by Committee on Insurance (Coauthor: Senator Rubio) |
February 19, 2021 |
LEGISLATIVE COUNSEL'S DIGEST
(6)Existing law requires the Department of Insurance to license and regulate health insurers. Existing law establishes an independent medical review system under which a patient may seek an independent medical review whenever health care services have been denied, modified, or delayed by a health insurer and the patient has previously filed a grievance that remains unresolved after 30 days. Existing law requires the Department of Insurance to contract with one or more independent medical review organizations in the state to conduct reviews for this purpose.
Under this bill, those contracts would be made on a noncompetitive bid basis and would be exempt from specified public contracting requirements.
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Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YESBill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 676.8 of the Insurance Code is amended to read:676.8.
(a) This section applies only to policies of workers’ compensation insurance.SEC. 2.
Section 678 of the Insurance Code is amended to read:678.
(a) (1) At least 45 days before the policy expiration, an insurer shall deliver to the named insured or mail to the named insured at the address shown in the policy, either of the following:SEC. 3.
Section 1210 of the Insurance Code is amended to read:1210.
(a) A domestic incorporated insurer, after investing an amount equal to its required minimum paid-in capital in securities specified in Article 3 (commencing with Section 1170), may make investments as it may see fit in the purchase of, or loans upon, properties and securities other than or in addition to or in excess of those set forth in Article 2 (commencing with Section 1152), Article 3 (commencing with Section 1170), and Article 4 (commencing with Section 1190). Investments under this section shall not exceed, in the aggregate, the lesser of either of the following:SEC. 4.
Section 1210 is added to the Insurance Code, to read:1210.
(a) A domestic incorporated insurer, after investing an amount equal to its required minimum paid-in capital in securities specified in Article 3 (commencing with Section 1170), may make investments as it may see fit in the purchase of, or loans upon, properties and securities other than or in addition to or in excess of those set forth in Article 2 (commencing with Section 1152), Article 3 (commencing with Section 1170), and Article 4 (commencing with Section 1190). Investments under this section shall not exceed, in the aggregate, the lesser of either of the following:SEC. 5.
Section 1656.1 of the Insurance Code is amended to read:1656.1.
(a) Every application for a license filed by a corporation shall contain the names and addresses of all stockholders owning 10 percent or more of the corporation’s stock and of all officers and directors of the corporation.SEC. 6.
Section 1656.2 of the Insurance Code is amended to read:1656.2.
(a) Every application for a license filed by a limited liability company shall contain the names and addresses of all members owning 10 percent or more of the membership interests of the limited liability company, and of all managers, officers, and directors, if any, of the limited liability company.SEC. 7.
Section 1668 of the Insurance Code is amended to read:1668.
The commissioner may deny an application for a license issued pursuant to this chapter if any of the following are true:SEC. 8.
Section 1668.5 of the Insurance Code is amended to read:1668.5.
(a) The commissioner may deny an application for a license issued pursuant to this chapter, and may suspend or revoke the permanent license of an organization licensed pursuant to this chapter as authorized by Section 1738, if the applicant or holder of the permanent license is an organization and a controlling person of the organization is any of the following:SEC. 9.
Section 1871.2 of the Insurance Code is amended to read:1871.2.
(a) An insurer who, in connection with any insurance application, contract, or provision of contract described in Section 108, prints, reproduces, or furnishes a form to any person upon which that person applies for a policy, seeks to make a change to an existing policy, or gives notice of a claim to the insurer or makes a claim against the insurer by reason of accident, injury, death, or other noticed or claimed loss, or on a rider attached to the form, shall cause to be printed or displayed in comparative prominence with other content the statement: “Any person who knowingly presents false or fraudulent information to obtain or amend insurance coverage or to make a claim for the payment of a loss is guilty of a crime and may be subject to fines and confinement in state prison.” This statement shall be preceded by the words: “For your protection California law requires the following to appear on this form” or other explanatory words of similar meaning.SEC. 10.
Section 1871.10 is added to the Insurance Code, immediately following Section 1871.9, to read:1871.10.
It is unlawful to make or cause to be made a knowingly false or fraudulent material statement or material representation for the purpose of obtaining or amending an insurance policy under any line of insurance regulated by the department. A violation of this section is a public offense, punishable by a fine not to exceed ten thousand dollars ($10,000), by imprisonment pursuant to subdivision (h) of Section 1170 of the Penal Code, or in a county jail not to exceed one year, or by both that fine and imprisonment.SEC. 11.
Section 10103.7 of the Insurance Code is amended to read:10103.7.
(a) In the event of a covered loss relating to a state of emergency, as defined in Section 8558 of the Government Code, an insured under a residential property insurance policy shall be permitted to combine payments for claims for losses up to the policy limits for the primary dwelling and other structures, for any of the covered expenses reasonably necessary to rebuild or replace the damaged or destroyed dwelling, if the policy limits for coverage to rebuild or replace the primary dwelling are insufficient. Any claims payments for losses pursuant to this subdivision for which replacement cost coverage is applicable shall be for the full replacement value of the loss without requiring actual replacement of the other structures. Claims payments for other structures in excess of the amount applied towards the necessary cost to rebuild or replace the damaged or destroyed dwelling shall be paid according to the terms of the policy.SEC. 12.
Section 10168.25 of the Insurance Code is amended to read:10168.25.
(a) This section shall apply to contracts issued on and after January 1, 2006, and may be applied by a company, on a contract-form-by-contract-form basis, to any contract issued on or after January 1, 2004, and before January 1, 2006.(a) The department shall contract with one or more independent medical review organizations in the state to conduct reviews for purposes of this article. The contracts shall be on a noncompetitive bid basis and shall be exempt from Chapter 2 (commencing with Section 10290) of Part 2 of Division 2 of the Public Contract Code. The independent medical review organizations shall be independent of any disability insurer doing business in this state. The commissioner may establish additional requirements, including 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 Medical Review System and to
assist the department in carrying out its responsibilities.
(b)The independent medical review organizations and the medical professionals retained to conduct reviews shall be deemed to be medical consultants for purposes of Section 43.98 of the Civil Code.
(c)The independent medical review organization, any experts it designates to conduct a review, or any officer, director, or employee of the independent medical review organization shall not have any material professional, familial, or financial affiliation, as determined by the commissioner, with any of the following:
(1)The insurer.
(2)Any officer, director, or employee of the insurer.
(3)A physician, the physician’s medical group,
or the independent practice association involved in the health care service in dispute.
(4)The facility or institution at which either the proposed health care service, or the alternative service, if any, recommended by the insurer, would be provided.
(5)The development or manufacture of the principal drug, device, procedure, or other therapy proposed by the insured whose treatment is under review, or the alternative therapy, if any, recommended by the insurer.
(6)The insured or the insured’s immediate family.
(d)In order to contract with the department for purposes of this article, an independent medical review organization shall meet all of the following requirements:
(1)The
organization shall not be an affiliate or a subsidiary of, nor in any way be owned or controlled by, a disability insurer or a trade association of insurers. A board member, director, officer, or employee of the independent medical review organization shall not serve as a board member, director, or employee of a disability insurer. A board member, director, or officer of a disability insurer or a trade association of insurers shall not serve as a board member, director, officer, or employee of an independent medical review organization.
(2)The organization shall submit to the department the following information upon initial application to contract for purposes of this article 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 medical 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 medical 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 an insurer, a plan, a managed care organization, or a provider group.
(E)(i)The percentage of revenue the independent medical 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 insurer or provider group for which the independent medical 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 medical review organization uses to identify and recruit medical professionals to review treatment and treatment recommendation decisions, the number of medical professionals credentialed, and the types of cases and areas of expertise that the medical professionals are credentialed to review.
(H)A description of how the independent medical review organization ensures compliance with the conflict-of-interest provisions of this section.
(3)The 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.
(B)Ensures that the reviews provided by the medical professionals 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 for individual cases achieves a fair and impartial panel of medical professionals who are qualified to render recommendations regarding the clinical conditions and the medical necessity of treatments or therapies in question.
(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 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 medical 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 expert in the treatment of the insured’s medical condition and knowledgeable about the proposed treatment through recent or current actual clinical experience treating patients with the same or a similar medical condition as the insured.
(B)Notwithstanding any other provision of law, the medical professional shall hold a nonrestricted license in any state of the United States, 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. The independent medical review organization shall give preference
to the use of a physician licensed in California as the reviewer, except when training and experience with the issue under review reasonably requires the use of an out-of-state reviewer.
(C)The medical professional 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 medical review organization, shall have any material professional, material familial, or material financial affiliation with any of the following:
(A)The disability insurer or a provider group of the insurer, except that an academic medical center under contract to the insurer to provide services to insureds may qualify as an independent
medical 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 insurer.
(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 insured whose condition is under review.
(F)The insured or the insured’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 medical 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 medical
review organization or individual to which this subdivision applies. “Material financial affiliation” does not include payment by the insurer to the independent medical review organization for the services required by this section, nor does “material financial affiliation” include an expert’s participation as a contracting provider where the expert is affiliated with an academic medical center or a National Cancer Institute-designated clinical cancer research center.
(e)The department 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 medical review organization seeking to contract under this article. The department may charge a nominal fee to the interested person for photocopying the requested information.
(f)The commissioner may contract with the Department of
Managed Health Care to administer the independent medical review process established by this article.
(g)This section shall become operative on July 1, 2015.
(a)After considering all relevant information on program costs, the commissioner shall establish a reasonable, per-case reimbursement schedule to pay the costs of independent medical review organization reviews, which may vary depending on the type of medical condition under review and on other relevant factors.
(b)The costs of the independent medical review system for insureds shall be borne by disability insurers pursuant to an assessment fee system established by the
commissioner. In determining the amount to be assessed, the commissioner shall consider all appropriations available for the support of this article, and existing fees paid to the department. The commissioner may adjust fees upward or downward, on a schedule set by the department, to address shortages or overpayments, and to reflect utilization of the independent review process.
(c)The commissioner may contract with the Department of Managed Health Care to administer the requirements of this article.