Health care coverage: prospective review.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975 (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 its provisions a crime. Existing law provides for the regulation of health insurers by the Department of Insurance. Existing law requires a health care service plan or health insurer to have written policies and procedures establishing the process by which the plan or insurer approves, modifies, delays, or denies requests for health care services based in whole or in part on medical necessity, including those plans or insurers that delegate these functions to medical groups, independent practice associations, or to other contracting providers. Existing law requires a plan or insurer to evaluate its criteria used to authorize, modify, or deny health care services at least annually. Existing law creates the Managed Care Administrative Fines and Penalties Fund, into which certain fines and penalties paid by health care service plans for violations of the Knox-Keene Act are deposited. This bill would require a health care service plan or health insurer, on or before July 1, 2020, and annually on July 1 thereafter, to report to the appropriate department the number of times in the preceding calendar year that it approved or denied each of the 30 health care services for which prospective review was most frequently requested. The bill would require an entity that performs utilization review or utilization management functions for a plan or insurer, or to which a plan or insurer delegates these functions, to report to the plan or insurer the number of times in the preceding calendar year that it approved or denied each of the 30 health care services for which prospective review was most frequently requested, and would require the plan or insurer to include that information in its report to the appropriate department. The bill would require a plan or insurer to take the reported information into account when evaluating its criteria used to authorize, modify, or deny health care services. The bill would require each department to determine the form and manner of that reporting. The bill would authorize the Director of the Department of Managed Health Care or the Insurance Commissioner to assess an administrative penalty by order, after appropriate notice and opportunity for hearing, if the director or commissioner determines that a health care service plan or a health insurer has failed to comply with utilization review requirements. The bill would create the Managed Care Penalty Account, within the Managed Care Administrative Fines and Penalties Fund, which would be subject to appropriation by the Legislature, and into which those administrative penalties for a health care service plan's noncompliance and existing fines and penalties for violations of the Knox-Keene Act would be deposited. The bill would specify that administrative penalties assessed against a health insurer be deposited into the Insurance Fund. Because a willful violation of the bill's requirements relative to health care service plans would be a crime, the 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.