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The State of California Healthcare Reform and Access


Email Alert

By Paul A. Gomez*

March 13, 2009

Just weeks after the California legislature passed and Gov. Schwarzenegger signed a budget that cuts Medi-Cal funds and several other healthcare-related programs, California legislators are discussing ways to expand health insurance coverage, including a new push for a single-payor system, as well as control or cap costs. Certain of these endeavors and news about clarification and possible changes to health insurance coverage of autism-related services are highlighted below.

A New Push for a Single-Payor Healthcare System in California (SB 810)

This bill, modeled after legislation previously vetoed by Gov. Arnold Schwarzenegger, would create a new, state-run, single-payor healthcare system (System). Under the bill, the System would be administered by a newly created California Healthcare Agency, under the Healthcare Commissioner's control. All California residents would be eligible for certain healthcare benefits, and the System would negotiate for or set fees for healthcare services provided and pay claims for those services. According to the bill's sponsor, Senator Leno, both workers and businesses would contribute to the System.

The bill would also create several additional new agencies, posts, and oversight bodies including, but not limited to a Healthcare Policy Board to establish medical policies; an Office of Patient Advocacy to represent interests of healthcare consumers; an Office of Inspector General for the System within the California Attorney General's office; and a California Healthcare Premium Commission to determine the cost of the System and to develop a premium structure for same.

Federal Stimulus Impact on California Health IT

The Health Information Technology for Economic and Clinical Health Act (HITECH) part of the American Recovery and Reinvestment Act of 2009 (ARRA) appropriates $36B for health technology to physician practices, $3B of which could go to California. However, California must take specific steps to assure that California physicians and physician practices qualify for these funds.

The California Healthcare Foundation (CHCF) recommended several steps to Gov. Schwarzenegger to help California take full advantage and make effective use of HITECH funds including, but not limited to establishment of policies, procedures, and information systems to facilitate adoption of health IT by various healthcare providers; prompt and active engagement with federal officials to ensure California has the necessary regulatory structure in place to take full advantage of HITECH funds; and steps to educate patients and other members of the public about related health privacy matters. CHCF also recommended appointment of a Deputy Secretary of Health Information Technology to coordinate and spur health IT planning, adoption, and implementation.

Proposition 1E

Proposition 1E will be on the ballot for the special election scheduled for May 19, 2009. If passed, Proposition 1E would reportedly authorize diversion of $460 million over two years from Mental Health Services Act (MHSA) revenues to the Early and Periodic Screening, Diagnosis, and Treatment program—which federal law requires California to fund. The California Mental Health Directors Association reports that it is concerned that such a diversion could result in more homelessness, hospitalizations, and increased pressure on California's social safety net, potentially costing taxpayers more in the long run.

Terminated Health Plans and Expansion of Coverage (SB 727)

Current law provides that healthcare service plans and health insurers must offer continuation of group coverage for a specified period of time to persons who become ineligible for group coverage.

This bill would require healthcare service plans and health insurers to offer continuing coverage if a person is covered by an employer group plan that is terminated by the employer and the employer does not provide a successor group benefit plan to its employees. Coverage would have to be offered for no less than eighteen months from the termination date and be offered under the same terms and conditions as the former group plan (subject to applicable COBRA rules).

Prescribed Categories of Health Plans and Policies (AB 786)

This bill would require the California Department of Managed Health Care the Department and the Department of Insurance to jointly prepare regulations that develop a system to categorize all healthcare service plan contracts and health insurance policies that are offered and sold to individuals into five coverage choice categories that meet certain specified requirements. Healthcare service plans and health insurers would be authorized to offer plan contracts in any coverage choice category subject to certain restrictions, including a maximum dollar limit on out-of-pocket costs for covered benefits. Moreover, the bill would also require healthcare service plans and health insurers to establish prices for the products offered to individuals that reflect a reasonable continuum between the products offered in the coverage choice category with the lowest level of benefits, and the products offered in the coverage choice category with the highest level of benefits.

Health Insurers Informed They Must Cover Speech, Occupational, and Physical Therapy for Autistic Members

The Department recently sent a letter (available on the Department's website) informing health insurers that they must cover speech, occupational, and physical therapy for autistic members. However, the Department apparently stopped short of taking a similar position with respect to behavioral therapy. The Department indicated that regulations would likely be forthcoming to further clarify and formalize health insurers obligations with respect to coverage of services related to autism.

*AHLA wishes to thank Paul A. Gomez, Esquire (Paul Hastings Janofsky & Walker LLP, Los Angeles, CA) for writing this email alert.

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