Bill Text: CA AB3260 | 2023-2024 | Regular Session | Amended

Bill Title: Health care coverage: reviews and grievances.

Spectrum: Partisan Bill (Democrat 9-0)

Status: (Engrossed) 2024-08-15 - In committee: Held under submission. [AB3260 Detail]

Download: California-2023-AB3260-Amended.html

Amended  IN  Senate  June 27, 2024
Amended  IN  Senate  June 13, 2024
Amended  IN  Assembly  May 16, 2024
Amended  IN  Assembly  April 01, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill
No. 3260

Introduced by Assembly Member Pellerin
(Coauthors: Assembly Members Cervantes, Haney, Jackson, Jones-Sawyer, McKinnor, and Ting)
(Coauthor: Senator (Coauthors: Senators Cortese and Wiener)

February 16, 2024

An act to amend Sections 1367.01, 1368, 1368.01, and 1374.30 of the Health and Safety Code, and to amend Section 10123.135 of, and to add Sections 10123.134 and 10123.136 to, the Insurance Code, relating to health care coverage.


LEGISLATIVE COUNSEL'S DIGEST


AB 3260, as amended, Pellerin. Health care coverage: reviews and grievances.
(1) Existing law, the Knox-Keene Health Care Service Plan Act of 1975, 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 act a crime. Existing law generally authorizes a health care service plan or disability insurer to use utilization review, under which a licensed physician or a licensed health care professional who is competent to evaluate specific clinical issues may approve, modify, delay, or deny requests for health care services based on medical necessity. Existing law requires these decisions to be made within 30 days, or less than 72 hours when the enrollee faces an imminent and serious threat to their health. Existing law requires a health care service plan to establish a grievance system to resolve grievances within 30 days, but limits that timeframe to 3 days when the enrollee faces an imminent and serious threat to their health. Existing law requires a plan to provide a written explanation for its grievance decisions, as specified.
This bill would require that utilization review decisions be made within 72 hours from the health care service plan’s receipt of the clinical information reasonably necessary to make the determination when the enrollee’s condition is urgent, and would make a determination of urgency by the enrollee’s health care provider binding on the health care service plan. urgent. If the plan lacks the information reasonably necessary to make a decision regarding an urgent request, the bill would require the plan to notify the enrollee and provider about the information necessary to complete the request within 24 hours of receiving the request. The bill would require the plan to notify the enrollee and the provider of the decision within a reasonable amount of time, but not later than 48 hours after specified circumstances occur. If a health care service plan fails to make a utilization review decision, or provide notice of a decision, within the specified timelines, the bill would require the health care service plan to treat the request for authorization as a grievance and provide notice with specified information to the enrollee that a grievance has commenced. commenced, if the plan has received the information necessary to make a decision.
This bill would require a plan’s grievance system to include expedited review of urgent grievances, as specified, and would make a determination of urgency by the enrollee’s health care provider binding on the health care service plan. specified. The bill would require a plan to communicate its final grievance determination within 72 hours of receipt if urgent and 30 days if nonurgent, except as specified. If a plan fails to make a utilization review decision within the applicable timelines, the bill would require a grievance to be automatically resolved in favor of the enrollee. enrollee, except in specified circumstances. Because a willful violation of these provisions by a health care service plan would be a crime, the bill would impose a state-mandated local program.
(2) Existing law establishes the Independent Medical Review System in the Department of Managed Health Care to review grievances involving a disputed health care service. Existing law authorizes an enrollee to apply to the department for an independent medical review of a decision regarding health care services based in whole or in part on a finding that the disputed services are not medically necessary within 6 months of any specified qualifying periods and authorizes the director to extend that deadline if the circumstances of a case warrant the extension.
This bill would extend the above deadline to 12 months beyond the specified qualifying periods. The bill would require the plan to provide specified correspondence and documents to an enrollee and their representative, if applicable, if the enrollee has submitted a grievance for review under the Independent Medical Review System. The bill would require the department to provide an enrollee and their representative a reasonable opportunity to respond to communications between the department and the plan or the independent review organization before the grievance is resolved. The bill would prohibit the department and its independent medical review organization from engaging in ex parte communication with a plan, enrollee, or their representatives during the grievance process, except as specified.
(3) Existing law provides for the regulation of disability insurers, including health insurers, by the Department of Insurance. Existing law requires a disability insurer, including an insurer that delegates utilization review or utilization management functions to medical groups, independent practice associations, or other contracting providers, to comply with specified requirements and limitations on their utilization review or utilization management functions. Existing law requires a decision to approve, modify, or deny a request by a provider before, or concurrent with, the provision of health care services to insureds to be made no more than 5 business days from the insurer’s receipt of information necessary to make the determination. If the insured’s condition poses an imminent and serious threat to the insured’s health, existing law requires the decision to be made within no more than 72 hours. Existing law requires a decision to be communicated to the requesting provider within 24 hours of the decision, but requires a decision resulting in denial, delay, or modification of all or part of the requested health care service to be communicated within 2 business days, except as specified.
This bill would limit the applicability of the above-described provisions to health insurers. The bill would require a decision to approve, modify, or deny a request by a provider or insured before the provision of health care services to be communicated no more than 7 calendar 5 business days from the health insurer’s receipt of the request. If the insurer lacks information reasonably necessary to make the decision, the bill would require the insurer to notify the insured and provider within 7 calendar 5 business days from receipt of request and to afford the insured and provider at least 45 days from receipt of that notice to provide the information. If the insured’s condition is urgent, as defined, the bill would require a decision to approve, modify, or deny a request by a provider or insured before, or concurrent with, the provision of health care services to be communicated no more than 72 hours from the insurer’s receipt of the request. If the insurer lacks information reasonably necessary to make the decision, the bill would require the insurer to notify the insured and provider no later than 24 hours from receipt of request and to afford the insured and provider at least 48 hours from receipt of that notice to provide the information. The bill would require an insurer to communicate a decision to modify or deny a concurrent care request, as specified, within 24 hours from the insurer’s receipt of the request. If an insurer fails to provide notice of a decision, the bill would require an insurer to treat the request as a grievance and immediately notify the insured and provider that a grievance has commenced. commenced, if the insurer has received the information necessary to make a decision.
(4) Existing law establishes the Independent Medical Review System in the department to review grievances involving a disputed health care service. Existing law requires a disability insurance policy issued, amended, renewed, or delivered on or after January 1, 2000, to provide an insured with the opportunity to seek an independent medical review when health care services have been denied, modified, or delayed if the decision was based in whole or in part on a finding that the proposed health care services are not medically necessary. Existing law authorizes an insured to apply to the department for an independent medical review when specified conditions are met.
If a grievance is filed internally with an insurer, this bill would require an insurer to acknowledge receipt of the grievance within 24 hours of receipt if urgent and 5 calendar days if nonurgent, and then communicate its final grievance determination within 72 hours of receipt if urgent and 30 days if nonurgent. Upon notice from the department to a disability health insurer that an insured has submitted a complaint to the department, the bill would require an insurer to respond within 24 hours if a complaint is urgent, or within 5 calendar days regarding a nonurgent complaint.
This bill would require the department to determine whether or not a complaint is urgent, as specified, unless the insured’s provider has already designated the complaint as urgent. The bill would require the insurer to offer to provide specified correspondence and documents to an insured and their representative, if applicable, if the insured has submitted a complaint or independent medical review case to the department. The bill would require the department to provide an insured and their representative a reasonable opportunity to respond to communications between the department and the insurer or the independent review organization before the grievance is adjudicated. resolved. The bill would prohibit the department and its independent medical review organization an insurer from engaging in ex parte communication with an insurer, insured, or their representatives during the grievance process, except as specified. the independent medical review organization deciding a case.
(5) 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.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 Section 1367.01 of the Health and Safety Code is amended to read:

1367.01.
 (a) A health care service plan and any entity with which it contracts for services that include utilization review or utilization management functions, that prospectively, retrospectively, or concurrently reviews and approves, modifies, delays, or denies, based in whole or in part on medical necessity, requests by providers prior to, retrospectively, or concurrent with the provision of health care services to enrollees, or that delegates these functions to medical groups or independent practice associations or to other contracting providers, shall comply with this section.
(b) A health care service plan that is subject to this section shall have written policies and procedures establishing the process by which the plan prospectively, retrospectively, or concurrently reviews and approves, modifies, delays, or denies, based in whole or in part on medical necessity, requests by providers of health care services for plan enrollees. These policies and procedures shall ensure that decisions based on the medical necessity of proposed health care services are consistent with criteria or guidelines that are supported by clinical principles and processes. These criteria and guidelines shall be developed pursuant to Section 1363.5. These policies and procedures, and a description of the process by which the plan reviews and approves, modifies, delays, or denies requests by providers prior to, retrospectively, or concurrent with the provision of health care services to enrollees, shall be filed with the director for review and approval, and shall be disclosed by the plan to providers and enrollees upon request, and by the plan to the public upon request.
(c) A health care service plan subject to this section, except a plan that meets the requirements of Section 1351.2, shall employ or designate a medical director who holds an unrestricted license to practice medicine in this state issued pursuant to Section 2050 of the Business and Professions Code or pursuant to the Osteopathic Act, or, if the plan is a specialized health care service plan, a clinical director with California licensure in a clinical area appropriate to the type of care provided by the specialized health care service plan. The medical director or clinical director shall ensure that the process by which the plan reviews and approves, modifies, or denies, based in whole or in part on medical necessity, requests by providers prior to, retrospectively, or concurrent with the provision of health care services to enrollees, complies with the requirements of this section.
(d) If health plan personnel, or individuals under contract to the plan to review requests by providers, approve the provider’s request, pursuant to subdivision (b), the decision shall be communicated to the provider pursuant to subdivision (h).
(e) An individual, other than a licensed physician or a licensed health care professional who is competent to evaluate the specific clinical issues involved in the health care services requested by the provider, may not deny or modify requests for authorization of health care services for an enrollee for reasons of medical necessity. The decision of the physician or other health care professional shall be communicated to the provider and the enrollee pursuant to subdivision (h).
(f) The criteria or guidelines used by the health care service plan to determine whether to approve, modify, or deny requests by providers prior to, retrospectively, or concurrent with, the provision of health care services to enrollees shall be consistent with clinical principles and processes. These criteria and guidelines shall be developed pursuant to the requirements of Section 1363.5.
(g) If the health care service plan requests medical information from providers in order to determine whether to approve, modify, or deny requests for authorization, the plan shall request only the information reasonably necessary to make the determination.
(h) In determining whether to approve, modify, or deny requests by providers prior to, retrospectively, or concurrent with the provision of health care services to enrollees, based in whole or in part on medical necessity, a health care service plan subject to this section shall meet the following requirements:
(1) Decisions to approve, modify, or deny, based on medical necessity, requests by providers prior to the provision of health care services to enrollees that do not meet the requirements for the time period for urgent review required by paragraph (2), shall be communicated to enrollees and providers by telephone, facsimile, or electronically, as well as by mail, in a timely fashion appropriate for the nature of the enrollee’s condition, not to exceed five business days from the plan’s receipt of the clinical information reasonably necessary and requested by the plan to make the determination.
(2) (A) When the enrollee’s condition is urgent, decisions to approve, modify, or deny requests by providers prior to the provision of health care services to enrollees, shall be communicated to enrollees and providers by telephone, facsimile, or electronically, as well as by mail, in a timely fashion appropriate for the nature of the enrollee’s condition, not to exceed 72 hours from the plan’s receipt of the clinical information reasonably necessary and requested by the plan to make the determination.
(B) (i) When the plan lacks the information reasonably necessary to make a decision to approve, modify, or deny an urgent request, the plan shall notify the enrollee and the provider of the specific information necessary to complete the request. The notification shall be made as soon as possible, but no later than 24 hours after the plan’s receipt of the request from the enrollee or provider. The enrollee and the provider shall be afforded a reasonable amount of time, taking into account the circumstances, but not less than 48 hours, to provide the specified information.
(ii) The plan shall notify the enrollee and the provider of the plan’s decision as soon as possible, but no later than 48 hours after the earlier of the following:
(I) The plan’s receipt of specified additional information as described in this subparagraph.
(II) The end of the period afforded the enrollee and the provider to submit the specified additional information as described in this subparagraph.
(C) This paragraph shall apply unless a shorter period of time is required under Section 2719 of the federal Public Health Service Act (42 U.S.C. Sec. 300gg-19) and any subsequent rules or regulations issued thereunder, in which case that period of time shall be binding on the health care service plan. Nothing in this section shall be construed to alter the requirements of subdivision (b) of Section 1371.4. Notwithstanding Section 1371.4, the requirements of this division shall be applicable to all health plans and other entities conducting utilization review or utilization management.
(D) A request shall be considered urgent when either of the following conditions are met:
(i) The enrollee faces an imminent and serious threat to the enrollee’s physical or behavioral health, including, but not limited to, severe pain or the potential loss of life, limb, or other major bodily function.
(ii) The normal timeframe for the decisionmaking process described in paragraph (1) could be detrimental to the enrollee’s life or physical or behavioral health, cause severe pain, or jeopardize the enrollee’s ability either to regain maximum function or to minimize any loss of function.

(E)A determination of urgency by the enrollee’s health care provider shall be binding on the health care service plan.

(3) Decisions to approve, modify, or deny concurrent care requests for an initially approved, ongoing course of treatment to be provided over a period of time or number of treatments shall be communicated to the enrollee and the provider by telephone, facsimile, or electronically, as well as by mail, within 24 hours of the receipt of the request. In the case of concurrent care, coverage shall not be discontinued until the enrollee’s treating provider has been notified of the plan’s decision and a care plan has been agreed upon by the treating provider that is appropriate for the medical needs of that patient.
(4) Retrospective review decisions shall be communicated to enrollees and providers by mail within 30 days of the receipt of information that is reasonably necessary to make retrospective determinations.
(5) Communications regarding decisions to approve requests by providers prior to, retrospectively, or concurrent with the provision of health care services to enrollees shall specify the specific health care service approved. Decisions to deny, delay, or modify health care services requested by providers prior to, retrospectively, or concurrent with the provision of health care services to enrollees shall include a clear and concise explanation of the reasons for the plan’s decision, a description of the criteria or guidelines used, and the clinical reasons for the decisions regarding medical necessity. Any written communication to a physician or other health care provider of a denial, delay, or modification of a request shall include the name and telephone number of the health care professional responsible for the denial, delay, or modification. The telephone number provided shall be a direct number or an extension, to allow the physician or health care provider easily to contact the professional responsible for the denial, delay, or modification. Responses shall also include information as to how the enrollee may file a grievance with the plan pursuant to Section 1368, and in the case of Medi-Cal enrollees, shall explain how to request an administrative hearing and aid paid pending under Sections 51014.1 and 51014.2 of Title 22 of the California Code of Regulations.
(6) If the health care service plan fails to make a decision, or provide notice of a decision, to approve, modify, or deny the request for authorization within the timeframes specified in paragraphs (1) through (5), inclusive, the health care service plan shall automatically treat the request for authorization as a grievance consistent with Sections 1368 and 1368.01 and shall immediately provide notice to the enrollee that a grievance has commenced. The notice shall include the enrollee’s appeal rights under this chapter and the ability of the enrollee to withdraw the grievance if the enrollee so chooses.
(7) Notwithstanding paragraph (6), if the plan has not received the information requested pursuant to subdivision (g), the plan need not treat the request for authorization as a grievance.

(7)

(8) If the director determines that a health care service plan has failed to meet any of the timeframes in this section, or has failed to meet any other requirement of this section, the director may assess, by order, administrative penalties for each failure. A proceeding for the issuance of an order assessing administrative penalties shall be subject to appropriate notice to, and an opportunity for a hearing with regard to, the person affected, in accordance with subdivision (a) of Section 1397. The administrative penalties shall not be deemed an exclusive remedy for the director. These penalties shall be paid to the Managed Care Administrative Fines and Penalties Fund and shall be used for the purposes specified in Section 1341.45.
(i) A health care service plan subject to this section shall maintain telephone access for providers to request authorization for health care services.
(j) A health care service plan subject to this section that reviews requests by providers prior to, retrospectively, or concurrent with, the provision of health care services to enrollees shall establish, as part of the quality assurance program required by Section 1370, a process by which the plan’s compliance with this section is assessed and evaluated. The process shall include provisions for evaluation of complaints, assessment of trends, implementation of actions to correct identified problems, mechanisms to communicate actions and results to the appropriate health plan employees and contracting providers, and provisions for evaluation of any corrective action plan and measurements of performance.
(k) The director shall review a health care service plan’s compliance with this section as part of its periodic onsite medical survey of each plan undertaken pursuant to Section 1380, and shall include a discussion of compliance with this section as part of its report issued pursuant to that section.
(l) This section shall not apply to decisions made for the care or treatment of the sick who depend upon prayer or spiritual means for healing in the practice of religion as set forth in subdivision (a) of Section 1270.
(m) This section shall not cause a health care service plan to be defined as a health care provider for purposes of any provision of law, including, but not limited to, Section 6146 of the Business and Professions Code, Sections 3333.1 and 3333.2 of the Civil Code, and Sections 340.5, 364, 425.13, 667.7, and 1295 of the Code of Civil Procedure.

SEC. 2.

 Section 1368 of the Health and Safety Code is amended to read:

1368.
 (a) Every plan shall do all of the following:
(1) Establish and maintain a grievance system approved by the department under which enrollees may submit their grievances to the plan. Each system shall provide reasonable procedures in accordance with department regulations that shall ensure adequate consideration of enrollee grievances and rectification when appropriate.
(2) Inform its subscribers and enrollees upon enrollment in the plan and annually thereafter of the procedure for processing and resolving grievances. The information shall include the location and telephone number where grievances may be submitted.
(3) Provide forms for grievances to be given to subscribers and enrollees who wish to register written grievances. The forms used by plans licensed pursuant to Section 1353 shall be approved by the director in advance as to format.
(4) (A) Provide for a written acknowledgment within five calendar days of the receipt of a grievance, except as noted in subparagraph (B). The acknowledgment shall advise the complainant of the following:
(i) That the grievance has been received.
(ii) The date of receipt.
(iii) The name of the plan representative and the telephone number and address of the plan representative who may be contacted about the grievance.
(B) (i) Grievances received by telephone, by facsimile, by email, or online through the plan’s internet website pursuant to Section 1368.015, that are not coverage disputes, complaints about access to care, network adequacy including complaints about the waiting time for, or distance to, covered health care services, disputed health care services involving medical necessity, or experimental or investigational treatment and that are resolved by the next business day following receipt are exempt from the requirements of subparagraph (A) and paragraph (5). The plan shall maintain a log of all these grievances. The log shall be periodically reviewed by the plan and shall include the following information for each complaint:
(I) The date of the call.
(II) The name of the complainant.
(III) The complainant’s member identification number.
(IV) The nature of the grievance.
(V) The nature of the resolution.
(VI) The name of the plan representative who took the call and resolved the grievance.
(ii) For health plan contracts in the individual, small group, or large group markets, a health care service plan’s response to grievances subject to Section 1367.24 shall also comply with subdivision (c) of Section 156.122 of Title 45 of the Code of Federal Regulations. This paragraph shall not apply to Medi-Cal managed care health care service plan contracts or any entity that enters into a contract with the State Department of Health Care Services pursuant to Chapter 7 (commencing with Section 14000), Chapter 8 (commencing with Section 14200), or Chapter 8.75 (commencing with Section 14591) of Part 3 of Division 9 of the Welfare and Institutions Code.
(5) Provide subscribers, enrollees, and providers subscribers and enrollees with written responses to grievances, with a clear and concise explanation of the reasons for the plan’s response. Providers shall also be provided a written response to a grievance if so designated by the subscriber or enrollee or if the provider submitted the grievance. For grievances involving the delay, denial, or modification of health care services, the plan response shall describe the criteria used and the clinical reasons for its decision, including all criteria and clinical reasons related to medical necessity. If a plan, or one of its contracting providers, issues a decision delaying, denying, or modifying health care services based in whole or in part on a finding that the proposed health care services are not a covered benefit under the contract that applies to the enrollee, the decision shall clearly specify the provisions in the contract that exclude that coverage.
(A) In the case of an urgent grievance, the health care service plan shall communicate its final determination to the enrollee and the enrollee’s provider by telephone, electronically, or both, as well as by hard copy mailed to their designated mailing address, no later than 72 hours from receipt of the grievance.
(B) In the case of a nonurgent grievance, the health care service plan shall communicate its final determination to the enrollee and the enrollee’s provider in writing pursuant to the timeframes set forth in Section 1368.01.
(6) For grievances involving the cancellation, rescission, or nonrenewal of a health care service plan contract, the health care service plan shall continue to provide coverage to the enrollee or subscriber under the terms of the health care service plan contract until a final determination of the enrollee’s or subscriber’s request for review has been made by the health care service plan or the director pursuant to Section 1365 and this section. This paragraph shall not apply if the health care service plan cancels or fails to renew the enrollee’s or subscriber’s health care service plan contract for nonpayment of premiums pursuant to paragraph (1) of subdivision (a) of Section 1365.
(7) Keep in its files all copies of grievances, and the responses thereto, for a period of five years.
(b) (1) (A) After either completing the grievance process described in subdivision (a), or participating in the process for at least 30 days, a subscriber or enrollee may submit the grievance to the department for review. In any case determined by the department to be a case involving an imminent and serious threat to the health of the patient, including, but not limited to, severe pain, the potential loss of life, limb, or major bodily function, cancellations, rescissions, or the nonrenewal of a health care service plan contract, or in any other case when the department determines that an earlier review is warranted, a subscriber or enrollee shall not be required to complete the grievance process or to participate in the process for at least 30 days before submitting a grievance to the department for review.
(B) A grievance may be submitted to the department for review and resolution prior to any arbitration.
(C) Notwithstanding subparagraphs (A) and (B), the department may refer any grievance that does not pertain to compliance with this chapter to the State Department of Public Health, the California Department of Aging, the federal Health Care Financing Administration, or any other appropriate governmental entity for investigation and resolution.
(2) If the subscriber or enrollee is a minor, or is incompetent or incapacitated, the parent, guardian, conservator, relative, or other designee of the subscriber or enrollee, as appropriate, may submit the grievance to the department as the agent of the subscriber or enrollee. Further, a provider may join with, or otherwise assist, a subscriber or enrollee, or the agent, to submit the grievance to the department. In addition, following submission of the grievance to the department, the subscriber or enrollee, or the agent, may authorize the provider to assist, including advocating on behalf of the subscriber or enrollee. For purposes of this section, a “relative” includes the parent, stepparent, spouse, adult son or daughter, grandparent, brother, sister, uncle, or aunt of the subscriber or enrollee.
(3) The department shall review the written documents submitted with the subscriber’s or the enrollee’s request for review, or submitted by the agent on behalf of the subscriber or enrollee. The department may ask for additional information, and may hold an informal meeting with the involved parties, including providers who have joined in submitting the grievance or who are otherwise assisting or advocating on behalf of the subscriber or enrollee. If after reviewing the record, the department concludes that the grievance, in whole or in part, is eligible for review under the independent medical review system established pursuant to Article 5.55 (commencing with Section 1374.30), the department shall immediately notify the subscriber or enrollee, or agent, of that option and shall, if requested orally or in writing, assist the subscriber or enrollee in participating in the independent medical review system.
(4) If after reviewing the record of a grievance, the department concludes that a health care service eligible for coverage and payment under a health care service plan contract has been delayed, denied, or modified by a plan, or by one of its contracting providers, in whole or in part due to a determination that the service is not medically necessary, and that determination was not communicated to the enrollee in writing along with a notice of the enrollee’s potential right to participate in the independent medical review system, as required by this chapter, the director shall, by order, assess administrative penalties. A proceeding for the issuance of an order assessing administrative penalties shall be subject to appropriate notice of, and the opportunity for, a hearing with regard to the person affected in accordance with Section 1397. The administrative penalties shall not be deemed an exclusive remedy available to the director. These penalties shall be paid to the Managed Care Administrative Fines and Penalties Fund and shall be used for the purposes specified in Section 1341.45.
(5) The department shall send a written notice of the final disposition of the grievance, and the reasons therefor, to the subscriber or enrollee, the agent, to any provider that has joined with or is otherwise assisting the subscriber or enrollee, and to the plan, within 30 calendar days of receipt of the request for review unless the director, in the director’s discretion, determines that additional time is reasonably necessary to fully and fairly evaluate the relevant grievance. In any case not eligible for the independent medical review system established pursuant to Article 5.55 (commencing with Section 1374.30), the department’s written notice shall include, at a minimum, the following:
(A) A summary of its findings and the reasons why the department found the plan to be, or not to be, in compliance with any applicable laws, regulations, or orders of the director.
(B) A discussion of the department’s contact with any medical provider, or any other independent expert relied on by the department, along with a summary of the views and qualifications of that provider or expert.
(C) If the enrollee’s grievance is sustained in whole or in part, information about any corrective action taken.
(6) In any department review of a grievance involving a disputed health care service, as defined in subdivision (b) of Section 1374.30, that is not eligible for the independent medical review system established pursuant to Article 5.55 (commencing with Section 1374.30), in which the department finds that the plan has delayed, denied, or modified health care services that are medically necessary, based on the specific medical circumstances of the enrollee, and those services are a covered benefit under the terms and conditions of the health care service plan contract, the department’s written notice shall do either of the following:
(A) Order the plan to promptly offer and provide those health care services to the enrollee.
(B) Order the plan to promptly reimburse the enrollee for any reasonable costs associated with urgent care or emergency services, or other extraordinary and compelling health care services, when the department finds that the enrollee’s decision to secure those services outside of the plan network was reasonable under the circumstances.
The department’s order shall be binding on the plan.
(7) Distribution of the written notice shall not be deemed a waiver of any exemption or privilege under existing law, including, but not limited to, Section 7921.505 of the Government Code, for any information in connection with and including the written notice, nor shall any person employed or in any way retained by the department be required to testify as to that information or notice.
(8) The director shall establish and maintain a system of aging of grievances that are pending and unresolved for 30 days or more that shall include a brief explanation of the reasons each grievance is pending and unresolved for 30 days or more.
(9) A subscriber or enrollee, or the agent acting on behalf of a subscriber or enrollee, may also request voluntary mediation with the plan prior to exercising the right to submit a grievance to the department. The use of mediation services shall not preclude the right to submit a grievance to the department upon completion of mediation. In order to initiate mediation, the subscriber or enrollee, or the agent acting on behalf of the subscriber or enrollee, and the plan shall voluntarily agree to mediation. Expenses for mediation shall be borne equally by both sides. The department shall have no administrative or enforcement responsibilities in connection with the voluntary mediation process authorized by this paragraph.
(c) The plan’s grievance system shall include a system of aging of grievances that are pending and unresolved for 30 days or more. The plan shall provide a quarterly report to the director of grievances pending and unresolved for 30 or more days with separate categories of grievances for Medicare enrollees and Medi-Cal enrollees. The plan shall include with the report a brief explanation of the reasons each grievance is pending and unresolved for 30 days or more. The plan may include the following statement in the quarterly report that is made available to the public by the director:

“Under Medicare and Medi-Cal law, Medicare enrollees and Medi-Cal enrollees each have separate avenues of appeal that are not available to other enrollees. Therefore, grievances pending and unresolved may reflect enrollees pursuing their Medicare or Medi-Cal appeal rights.”

If requested by a plan, the director shall include this statement in a written report made available to the public and prepared by the director that describes or compares grievances that are pending and unresolved with the plan for 30 days or more. Additionally, the director shall, if requested by a plan, append to that written report a brief explanation, provided in writing by the plan, of the reasons why grievances described in that written report are pending and unresolved for 30 days or more. The director shall not be required to include a statement or append a brief explanation to a written report that the director is required to prepare under this chapter, including Sections 1380 and 1397.5.
(d) Subject to subparagraph (C) of paragraph (1) of subdivision (b), the grievance or resolution procedures authorized by this section shall be in addition to any other procedures that may be available to any person, and failure to pursue, exhaust, or engage in the procedures described in this section shall not preclude the use of any other remedy provided by law.
(e) This section does not allow the submission to the department of any provider grievance under this section. However, as part of a provider’s duty to advocate for medically appropriate health care for the provider’s patients pursuant to Sections 510 and 2056 of the Business and Professions Code, this subdivision does not prohibit a provider from contacting and informing the department about any concerns the provider has regarding compliance with or enforcement of this chapter.
(f) To the extent required by Section 2719 of the federal Public Health Service Act (42 U.S.C. Sec. 300gg-19) and any subsequent rules or regulations, there shall be an independent external review pursuant to the standards required by the United States Secretary of Health and Human Services of a health care service plan’s cancellation, rescission, or nonrenewal of an enrollee’s or subscriber’s coverage.

SEC. 3.

 Section 1368.01 of the Health and Safety Code is amended to read:

1368.01.
 (a) The grievance system shall require the plan to resolve grievances and communicate its final determinations within 30 days, except as provided in subdivision (c).
(b) The grievance system shall include a requirement for expedited plan review of urgent grievances when the enrollee faces an imminent and serious threat to the enrollee’s physical or behavioral health, including, but not limited to, severe pain, the potential loss of life, limb, or other major bodily function, or the normal timeframe for the decisionmaking process, as described in subdivision (a), could be detrimental to the enrollee’s life or physical or behavioral health, cause severe pain, or jeopardize the enrollee’s ability to regain maximum function or minimize any loss of function. A determination of urgency by the enrollee’s health care provider shall be binding on the health care service plan. When the plan has notice of a case requiring expedited review, the grievance system shall require the plan to immediately inform enrollees and subscribers in writing of their right to notify the department of the grievance. The grievance system shall also require the plan to furnish enrollees, subscribers, health care providers, and the department with a written statement on the disposition no later than 72 hours from receipt of the grievance, except as provided in subdivision (c). Paragraph (4) of subdivision (a) of Section 1368 shall not apply to grievances handled pursuant to this section.
(c) A health care service plan contract in the individual, small group, or large group markets that provides coverage for outpatient prescription drugs shall comply with subdivision (c) of Section 156.122 of Title 45 of the Code of Federal Regulations. This subdivision shall not apply to Medi-Cal managed care health care service plan contracts or any entity that enters into a contract with the State Department of Health Care Services pursuant to Chapter 7 (commencing with Section 14000), Chapter 8 (commencing with Section 14200), or Chapter 8.75 (commencing with Section 14591) of Part 3 of Division 9 of the Welfare and Institutions Code.
(d) A health care service plan that fails to comply with the timeframes in this section or with the notice requirements of subparagraph (A) or (B) of paragraph (5) of subdivision (a) and subdivision (b) of Section 1368 shall automatically resolve the grievance in favor of the enrollee. enrollee, except in the following circumstances:
(1) The plan is not in receipt of the clinical information reasonably necessary and requested by the plan to resolve the grievance.
(2) The grievance is a request for services that are experimental or investigational. This paragraph does not apply to grievances related to the provision of prescription drugs if the provider has met the documentation requirements of subdivision (b) of Section 1367.21.

SEC. 4.

 Section 1374.30 of the Health and Safety Code is amended to read:

1374.30.
 (a) Commencing January 1, 2001, there is hereby established in the department the Independent Medical Review System.
(b) For the purposes of this chapter, “disputed health care service” means any health care service eligible for coverage and payment under a health care service plan contract that has been denied, modified, or delayed by a decision of the plan, or by one of its contracting providers, in whole or in part due to a finding that the service is not medically necessary. A decision regarding a disputed health care service relates to the practice of medicine and is not a coverage decision. A disputed health care service does not include services provided by a specialized health care service plan, except to the extent that the service (1) involves the practice of medicine, or (2) is provided pursuant to a contract with a health care service plan that covers hospital, medical, or surgical benefits. If a plan, or one of its contracting providers, issues a decision denying, modifying, or delaying health care services, based in whole or in part on a finding that the proposed health care services are not a covered benefit under the contract that applies to the enrollee, the statement of decision shall clearly specify the provision in the contract that excludes that coverage.
(c) For the purposes of this chapter, “coverage decision” means the approval or denial of health care services by a plan, or by one of its contracting entities, substantially based on a finding that the provision of a particular service is included or excluded as a covered benefit under the terms and conditions of the health care service plan contract. A “coverage decision” does not encompass a plan or contracting provider decision regarding a disputed health care service.
(d) (1) All enrollee grievances involving a disputed health care service are eligible for review under the Independent Medical Review System if the requirements of this article are met. If the department finds that an enrollee grievance involving a disputed health care service does not meet the requirements of this article for review under the Independent Medical Review System, the enrollee request for review shall be treated as a request for the department to review the grievance pursuant to subdivision (b) of Section 1368. All other enrollee grievances, including grievances involving coverage decisions, remain eligible for review by the department pursuant to subdivision (b) of Section 1368.
(2) In any case in which an enrollee or provider asserts that a decision to deny, modify, or delay health care services was based, in whole or in part, on consideration of medical necessity, the department shall have the final authority to determine whether the grievance is more properly resolved pursuant to an independent medical review as provided under this article or pursuant to subdivision (b) of Section 1368.
(3) The department shall be the final arbiter when there is a question as to whether an enrollee grievance is a disputed health care service or a coverage decision. The department shall establish a process to complete an initial screening of an enrollee grievance. If there appears to be any medical necessity issue, the grievance shall be resolved pursuant to an independent medical review as provided under this article or pursuant to subdivision (b) of Section 1368.
(e) Every health care service plan contract that is issued, amended, renewed, or delivered in this state on or after January 1, 2000, shall provide an enrollee with the opportunity to seek an independent medical review whenever health care services have been denied, modified, or delayed by the plan, or by one of its contracting providers, if the decision was based in whole or in part on a finding that the proposed health care services are not medically necessary. For purposes of this article, an enrollee may designate an agent to act on the enrollee’s behalf, as described in paragraph (2) of subdivision (b) of Section 1368. The provider may join with or otherwise assist the enrollee in seeking an independent medical review, and may advocate on behalf of the enrollee.
(f) Medi-Cal beneficiaries enrolled in a health care service plan shall not be excluded from participation. Medicare beneficiaries enrolled in a health care service plan shall not be excluded unless expressly preempted by federal law. Reviews of cases for Medi-Cal enrollees shall be conducted in accordance with statutes and regulations for the Medi-Cal program.
(g) The department may seek to integrate the quality of care and consumer protection provisions, including remedies, of the Independent Medical Review System with related dispute resolution procedures of other health care agency programs, including the Medicare and Medi-Cal programs, in a way that minimizes the potential for duplication, conflict, and added costs. Nothing in this subdivision shall be construed to limit any rights conferred upon enrollees under this chapter.
(h) The independent medical review process authorized by this article is in addition to any other procedures or remedies that may be available.
(i) Every health care service plan shall prominently display in every plan member handbook or relevant informational brochure, in every plan contract, on enrollee evidence of coverage forms, on copies of plan procedures for resolving grievances, on letters of denials issued by either the plan or its contracting organization, on the grievance forms required under Section 1368, and on all written responses to grievances, information concerning the right of an enrollee to request an independent medical review in cases where the enrollee believes that health care services have been improperly denied, modified, or delayed by the plan, or by one of its contracting providers.
(j) An enrollee may apply to the department for an independent medical review when all of the following conditions are met:
(1) (A) The enrollee’s provider has recommended a health care service as medically necessary, or
(B) The enrollee has received urgent care or emergency services that a provider determined was medically necessary, or
(C) The enrollee, in the absence of a provider recommendation under subparagraph (A) or the receipt of urgent care or emergency services by a provider under subparagraph (B), has been seen by an in-plan provider for the diagnosis or treatment of the medical condition for which the enrollee seeks independent review. The plan shall expedite access to an in-plan provider upon request of an enrollee. The in-plan provider need not recommend the disputed health care service as a condition for the enrollee to be eligible for an independent review.
For purposes of this article, the enrollee’s provider may be an out-of-plan provider. However, the plan shall have no liability for payment of services provided by an out-of-plan provider, except as provided pursuant to subdivision (c) of Section 1374.34.
(2) The disputed health care service has been denied, modified, or delayed by the plan, or by one of its contracting providers, based in whole or in part on a decision that the health care service is not medically necessary.
(3) The enrollee has filed a grievance with the plan or its contracting provider pursuant to Section 1368, and the disputed decision is upheld or the grievance remains unresolved after 30 days. The enrollee shall not be required to participate in the plan’s grievance process for more than 30 days. In the case of a grievance that requires expedited review pursuant to Section 1368.01, the enrollee shall not be required to participate in the plan’s grievance process for more than three days.
(k) An enrollee may apply to the department for an independent medical review of a decision to deny, modify, or delay health care services, based in whole or in part on a finding that the disputed health care services are not medically necessary, within 12 months of any of the qualifying periods or events under subdivision (j). The director may extend the application deadline beyond 12 months if the circumstances of a case warrant the extension.
(l) The enrollee shall pay no application or processing fees of any kind.
(m) As part of its notification to the enrollee regarding a disposition of the enrollee’s grievance that denies, modifies, or delays health care services, the plan shall provide the enrollee with a one- or two-page application form approved by the department, and an addressed envelope, which the enrollee may return to initiate an independent medical review. The plan shall include on the form any information required by the department to facilitate the completion of the independent medical review, such as the enrollee’s diagnosis or condition, the nature of the disputed health care service sought by the enrollee, a means to identify the enrollee’s case, and any other material information. The form shall also include the following:
(1) Notice that a decision not to participate in the independent medical review process may cause the enrollee to forfeit any statutory right to pursue legal action against the plan regarding the disputed health care service.
(2) A statement indicating the enrollee’s consent to obtain any necessary medical records from the plan, any of its contracting providers, and any out-of-plan provider the enrollee may have consulted on the matter, to be signed by the enrollee.
(3) Notice of the enrollee’s right to provide information or documentation, either directly or through the enrollee’s provider, regarding any of the following:
(A) A provider recommendation indicating that the disputed health care service is medically necessary for the enrollee’s medical condition.
(B) Medical information or justification that a disputed health care service, on an urgent care or emergency basis, was medically necessary for the enrollee’s medical condition.
(C) Reasonable information supporting the enrollee’s position that the disputed health care service is or was medically necessary for the enrollee’s medical condition, including all information provided to the enrollee by the plan or any of its contracting providers, still in the possession of the enrollee, concerning a plan or provider decision regarding disputed health care services, and a copy of any materials the enrollee submitted to the plan, still in the possession of the enrollee, in support of the grievance, as well as any additional material that the enrollee believes is relevant.
(4) A section designed to collect information on the enrollee’s ethnicity, race, and primary language spoken that includes both of the following:
(A) A statement of intent indicating that the information is used for statistics only, in order to ensure that all enrollees get the best care possible.
(B) A statement indicating that providing this information is optional and will not affect the independent medical review process in any way.
(n) Upon notice from the department that the health care service plan’s enrollee has applied for an independent medical review, the plan or its contracting providers shall provide to the independent medical review organization designated by the department a copy of all of the following documents within three business days of the plan’s receipt of the department’s notice of a request by an enrollee for an independent review:
(1) (A) A copy of all of the enrollee’s medical records in the possession of the plan or its contracting providers relevant to each of the following:
(i) The enrollee’s medical condition.
(ii) The health care services being provided by the plan and its contracting providers for the condition.
(iii) The disputed health care services requested by the enrollee for the condition.
(B) Any newly developed or discovered relevant medical records in the possession of the plan or its contracting providers after the initial documents are provided to the independent medical review organization shall be forwarded immediately to the independent medical review organization. The plan shall concurrently provide a copy of medical records required by this subparagraph to the enrollee or the enrollee’s provider, if authorized by the enrollee, unless the offer of medical records is declined or otherwise prohibited by law. The confidentiality of all medical record information shall be maintained pursuant to applicable state and federal laws.
(2) A copy of all information provided to the enrollee by the plan and any of its contracting providers concerning plan and provider decisions regarding the enrollee’s condition and care, and a copy of any materials the enrollee or the enrollee’s provider submitted to the plan and to the plan’s contracting providers in support of the enrollee’s request for disputed health care services. This documentation shall include the written response to the enrollee’s grievance, required by paragraph (4) of subdivision (a) of Section 1368. The confidentiality of any enrollee medical information shall be maintained pursuant to applicable state and federal laws.
(3) A copy of any other relevant documents or information used by the plan or its contracting providers in determining whether disputed health care services should have been provided, and any statements by the plan and its contracting providers explaining the reasons for the decision to deny, modify, or delay disputed health care services on the basis of medical necessity. The plan shall concurrently provide a copy of documents required by this paragraph, except for any information found by the director to be legally privileged information, to the enrollee and the enrollee’s provider. The department and the independent medical review organization shall maintain the confidentiality of any information found by the director to be the proprietary information of the plan.
(o) (1) With respect to an enrollee grievance to the department concerning a disputed health care service, coverage decision, or access to care, network adequacy, including complaints about the waiting time for, or distance to, health care services, the plan shall promptly offer to provide to the enrollee and, to the extent applicable, the enrollee’s representative unredacted copies of all correspondence, including ongoing correspondence, between the department and the plan concerning the enrollee’s grievance. Upon the election of the enrollee, the plan shall promptly transmit all correspondence to the enrollee and, to the extent applicable, to the enrollee’s representative.

(2)If the department determines that the enrollee’s grievance concerns a coverage decision, access to care, or both, and the department seeks a nonbinding expert opinion from an independent medical review organization, then the plan shall provide the enrollee and, to the extent applicable, the enrollee’s representative with an unredacted copy of the nonbinding expert opinion by the independent medical review organization.

(3)The

(2) For grievances not requiring an independent medical review, the department shall provide to the enrollee and, to the extent applicable, the enrollee’s representative a reasonable opportunity to respond to any communications between the department and the plan and, if applicable, between the department and the independent medical review organization before the enrollee’s grievance is resolved.

(4)

(3) The department, including its independent medical review organization, shall not engage in ex parte communication with the plan, the enrollee, or the representatives of either party without concurrently providing the plan, the enrollee, and, to the extent applicable, their respective representatives unredacted copies of all communications in which the plan, enrollee, or their representatives did not participate and without providing the plan, enrollee, and their representatives a reasonable opportunity to respond.
(4) Notwithstanding paragraphs (1) to (3), inclusive, copies of an enrollee’s medical records regarding sensitive services, as defined in subdivision (s) of Section 56.05 of the Civil Code, shall only be provided to the enrollee to whom the services pertain.
(5) This subdivision does not alter the timeframes in this article within which an independent medical review is required to be completed.

SEC. 5.

 Section 10123.134 is added to the Insurance Code, to read:

10123.134.
 (a) (1) A health insurer shall provide insureds and providers with written responses to grievances, with a clear and concise explanation of the reasons for the health insurer’s response. Providers shall also be provided a written response to a grievance if so designated by the insured or if the provider submitted the grievance. For grievances involving the delay, denial, or modification of health care services, the health insurer’s response shall describe the criteria used and the clinical reasons for its decision, including all criteria and clinical reasons related to medical necessity. If a health insurer, or one of its contracting providers or another entity on its behalf, issues a decision delaying, denying, or modifying health care services based in whole or in part on a finding that the proposed health care services are not a covered benefit under the contract that applies to the insured, the decision shall clearly specify the provisions in the contract that exclude that coverage.
(2) In the case of an urgent grievance, the health insurer shall communicate its final determination to the insured and the insured’s provider by telephone, electronically, or both, as well as in writing, no later than 72 hours from receipt of the grievance.
(3) In the case of a nonurgent grievance, the health insurer shall communicate its final determination to the insured and the insured’s provider in writing within 30 calendar days of receipt.
(b) For grievances involving the cancellation, rescission, or nonrenewal of a health insurer contract, the health insurer shall continue to provide coverage to the insured or subscriber under the terms of the contract until a final determination of the insured’s request for review has been made by the health insurer or commissioner. This subdivision shall not apply if the health insurer cancels or fails to renew the insured’s contract for nonpayment of premiums.

(c)A determination that a grievance is urgent by an insured’s health care provider shall be binding on a health insurer.

(d)

(c) With respect to an insured’s grievance involving a disputed health care service, a health insurer shall comply with Section 2719 of the federal Public Health Service Act (42 U.S.C. Sec. 300gg-19) and any subsequent rules or regulations issued thereunder, including Section 147.136 of Title 45 of the Code of Federal Regulations, except as otherwise provided in this chapter.

(e)

(d) A health insurer shall acknowledge receipt of a grievance to the insured, the insured’s provider, and the insured’s authorized representative, as applicable, in writing within five calendar days of receipt, or within 24 hours of receipt if the grievance is urgent. The written acknowledgment shall advise the complainant of all of the following:
(1) That the grievance has been received.
(2) The date of receipt.
(3) The name, telephone number, and email address of the insurer representative who may be contacted about the grievance.

(f)

(e) A health insurer that fails to strictly comply with the time limits or notice requirements in this section shall automatically resolve the grievance in favor of the insured. insured, except in the following circumstances:
(1) The insurer is not in receipt of the clinical information reasonably necessary and requested by the insurer to resolve the grievance.
(2) The grievance is a request for services that are experimental or investigational. This paragraph does not apply to grievances related to the provision of prescription drugs if the provider has met the documentation requirements of subdivision (b) of Section 10123.195.

(g)

(f) A health insurer shall keep in its files all copies of grievances, and the responses thereto, for a period of five years.

(h)

(g) The department shall be the final arbiter if there is a dispute as to whether a grievance involves a coverage decision or disputed health care service.

(i)

(h) For purposes of this section:
(1) “Coverage decision” has the same meaning as defined in Section 10169.
(2) “Disputed health care service” has the same meaning as defined in Section 10169, and shall also include a failure to cover an item or service for which benefits are otherwise provided because it is determined to be experimental or investigational.
(3) “Grievance” means a written or oral expression of dissatisfaction regarding the health insurer or a health care provider, including quality of care concerns, and includes a complaint, dispute, or request for reconsideration or appeal made by an insured, an insured’s provider, or an insured’s authorized representative. If an insurer is unable to distinguish between a grievance and an inquiry, it shall be considered a grievance.
(4) “Urgent” has the same meaning as defined in Section 10123.135.

(j)This section does not apply to a specialized health insurance policy that covers only dental or vision benefits or Medicare supplement insurance.

(k)

(i) The department and commissioner may exercise the authority provided by this code and the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340), Chapter 4.5 (commencing with Section 11400), and Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code) to implement and enforce this section. If the commissioner assesses a civil penalty for a violation, a hearing requested by the insurer may be conducted by an administrative law judge of the administrative hearing bureau of the department under the formal procedure of Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. This subdivision does not impair or restrict the commissioner’s authority pursuant to this code or the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code). A civil penalty shall not exceed twenty-five thousand dollars ($25,000) for each violation, and shall be scaled based on published factors determined by the department, including the scope and gravity of the violation, the insurer’s knowledge that a violation was occurring, and the insurer’s history of violations.

(l)

(j) The department may issue guidance to insurers regarding implementation of this section. section before adopting regulations. The guidance shall not be subject to the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code). Regulations shall be adopted by January 1, 2029.

SEC. 6.

 Section 10123.135 of the Insurance Code is amended to read:

10123.135.
 (a) Every health insurer, or an entity with which it contracts for services that include utilization review or utilization management functions, that covers hospital, medical, or surgical expenses and that prospectively, retrospectively, or concurrently reviews and approves, modifies, delays, or denies, based in whole or in part on medical necessity, requests by providers prior to, retrospectively, or concurrent with the provision of health care services to insureds, or that delegates these functions to medical groups or independent practice associations or to other contracting providers, shall comply with this section.
(b) A health insurer that is subject to this section, or any entity with which an insurer contracts for services that include utilization review or utilization management functions, shall have written policies and procedures establishing the process by which the insurer prospectively, retrospectively, or concurrently reviews and approves, modifies, delays, or denies, based in whole or in part on medical necessity, requests by providers of health care services for insureds. These policies and procedures shall ensure that decisions based on the medical necessity of proposed health care services are consistent with criteria or guidelines that are supported by clinical principles and processes. These criteria and guidelines shall be developed pursuant to subdivision (f). These policies and procedures, and a description of the process by which an insurer, or an entity with which an insurer contracts for services that include utilization review or utilization management functions, reviews and approves, modifies, delays, or denies requests by providers prior to, retrospectively, or concurrent with the provision of health care services to insureds, shall be filed with the commissioner, and shall be disclosed by the insurer to insureds and providers upon request, and by the insurer to the public upon request.
(c) If the number of insureds covered under health benefit plans in this state that are issued by an insurer subject to this section constitute at least 50 percent of the number of insureds covered under health benefit plans issued nationwide by that insurer, the insurer shall employ or designate a medical director who holds an unrestricted license to practice medicine in this state issued pursuant to Section 2050 of the Business and Professions Code or the Osteopathic Initiative Act, or the insurer may employ a clinical director licensed in California whose scope of practice under California law includes the right to independently perform all those services covered by the insurer. The medical director or clinical director shall ensure that the process by which the insurer reviews and approves, modifies, delays, or denies, based in whole or in part on medical necessity, requests by providers prior to, retrospectively, or concurrent with the provision of health care services to insureds, complies with the requirements of this section. Nothing in this subdivision shall be construed as restricting the existing authority of the Medical Board of California.
(d) If an insurer subject to this section, or individuals under contract to the insurer to review requests by providers, approve the provider’s request pursuant to subdivision (b), the decision shall be communicated to the provider pursuant to subdivision (h).
(e) An individual, other than a licensed physician or a licensed health care provider who is competent to evaluate the specific clinical issues involved in the health care services requested by the provider, shall not deny or modify requests for authorization of health care services for an insured for reasons of medical necessity. The decision of the physician or other health care provider shall be communicated to the provider and the insured pursuant to subdivision (h).
(f) (1) An insurer shall disclose, or provide for the disclosure, to the commissioner and to network providers, the process the insurer, its contracting provider groups, or any entity with which it contracts for services that include utilization review or utilization management functions, uses to authorize, delay, modify, or deny health care services under the benefits provided by the insurance contract, including coverage for subacute care, transitional inpatient care, or care provided in skilled nursing facilities. An insurer shall also disclose those processes to policyholders or persons designated by a policyholder, or to any other person or organization, upon request.
(2) The criteria or guidelines used by an insurer, or an entity with which an insurer contracts for utilization review or utilization management functions, to determine whether to authorize, modify, delay, or deny health care services, shall comply with all of the following:
(A) Be developed with involvement from actively practicing health care providers.
(B) Be consistent with sound clinical principles and processes.
(C) Be evaluated, and updated if necessary, at least annually.
(D) If used as the basis of a decision to modify, delay, or deny services in a specified case under review, be disclosed to the provider and the policyholder in that specified case.
(E) Be available to the public upon request. An insurer shall only be required to disclose the criteria or guidelines for the specific procedures or conditions requested. An insurer may charge reasonable fees to cover administrative expenses related to disclosing criteria or guidelines pursuant to this paragraph that are limited to copying and postage costs. The insurer may also make the criteria or guidelines available through electronic communication means.
(3) The disclosure required by subparagraph (E) of paragraph (2) shall be accompanied by the following notice: “The materials provided to you are guidelines used by this insurer to authorize, modify, or deny health care benefits for persons with similar illnesses or conditions. Specific care and treatment may vary depending on individual need and the benefits covered under your insurance contract.”
(g) If an insurer subject to this section requests medical information from providers in order to determine whether to approve, modify, or deny requests for authorization, the insurer shall request only the information reasonably necessary to make the determination.
(h) In determining whether to approve, modify, or deny requests by providers or insureds before, retrospectively, or concurrent with the provision of health care services to insureds, based in whole or in part on medical necessity, every insurer subject to this section shall meet the following requirements:
(1) (A) Decisions to approve, modify, or deny, based on medical necessity, requests by providers or insureds before the provision of health care services to insureds that do not meet the requirements for the time period for review required by paragraph (2), shall be communicated to insureds and providers by telephone, facsimile, or electronically, as well as by mail, in a timely fashion appropriate for the nature of the insured’s condition, not to exceed seven calendar five business days from the insurer’s receipt of the request.
(B) If an insurer lacks information reasonably necessary to make a decision to approve, modify, or deny a nonurgent prior authorization request, the insurer shall notify the insured and provider of the specific information necessary to complete the request in writing in a timely fashion appropriate for the nature of the insured’s condition, not to exceed seven calendar five business days from the insurer’s receipt of the request. The insured and provider shall be afforded at least 45 calendar days from receipt of the notice to provide the specified information.
(2) (A) If the insured’s condition is urgent, decisions to approve, modify, or deny requests by providers or insureds before, or concurrent with, the provision of health care services to insureds shall be communicated to insureds and providers by telephone, facsimile, or electronically, as well as by mail, in a timely fashion, appropriate for the nature of the insured’s condition, but not to exceed 72 hours from the insurer’s receipt of the request.
(B) (i) If an insurer lacks information reasonably necessary to make a decision to approve, modify, or deny an urgent request, the insurer shall notify the insured and provider of the specific information necessary to complete the request. The notification shall be made as soon as possible, but no later than 24 hours after the insurer’s receipt of the request from the insured or provider. The insured and the provider shall be afforded a reasonable amount of time, taking into account the circumstances, but not less than 48 hours, to provide the specified information.
(ii) The insurer shall notify the insured and provider of the insurer’s decision as soon as possible, but no later than 48 hours after the earlier of the following:
(I) The insurer’s receipt of the specified additional information as described in this subparagraph.
(II) The end of the period afforded the insured and the provider to submit the specified additional information as described in this subparagraph.
(C) This paragraph shall apply unless a shorter period of time is required under Section 2719 of the federal Public Health Service Act (42 U.S.C. Sec. 300gg-19) and any subsequent rules or regulations issued thereunder, in which case that period of time shall be binding on the health insurer.
(D) A request shall be considered urgent when either of the following conditions are met:
(i) The insured faces an imminent and serious threat to the insured’s physical or behavioral health, including severe pain or the potential loss of life, limb, or other major bodily function.
(ii) The normal timeframe for the decisionmaking process described in paragraph (1) could be detrimental to the insured’s life or physical or behavioral health, cause severe pain, or jeopardize the insured’s ability either to regain maximum function or to minimize any loss of function.

(E)A determination of urgency by the insured’s health care provider shall be binding on the health insurer.

(3) (A) Decisions to modify or deny concurrent care requests for continuation or extension of an initially approved, ongoing course of treatment to be provided over a period of time or number of treatments shall be communicated to the provider and insured by telephone, facsimile, or electronically, as well as by mail, within 24 hours from the insurer’s receipt of the request.
(B) In the case of concurrent review, coverage shall not be discontinued until the insured’s treating provider has been notified of the insurer’s decision and a care plan has been agreed upon by the treating provider that is appropriate for the medical needs of that patient.
(C) Notwithstanding subparagraph (B), a health insurer shall provide continued coverage pending the outcome of a grievance concerning a concurrent care denial or modification.
(4) (A) Retrospective review decisions shall be communicated to insureds and providers by mail within 30 calendar days of receipt of a claim.
(B) If an insurer lacks information reasonably necessary to decide the medical necessity of a claim retrospectively, the insurer shall notify the insured and provider in writing of the specific information necessary to complete the claim within 30 calendar days of receipt of the claim. The insured and provider shall be afforded at least 45 days from receipt of the notice to provide the specified information.
(5) (A) Communications regarding decisions to approve requests by providers or insureds before, retrospectively, or concurrent with the provision of health care services to insureds shall specify the specific health care service approved. Decisions to deny, delay, or modify health care services requested by providers or insureds before, retrospectively, or concurrent with the provision of health care services to insureds shall include a clear and concise explanation of the reasons for the insurer’s decision, a description of the criteria or guidelines used, and the clinical reasons for the decisions regarding medical necessity.
(B) A written communication to a physician or other health care provider of a denial, delay, or modification or of a request shall include the name, telephone number, and professional credentials of the health care provider professional responsible for the denial, delay, or modification. The telephone number provided shall be a direct number or an extension, to allow the physician or health care provider easily to contact the provider professional responsible for the denial, delay, or modification. Responses shall also include information as to how the provider or the insured may file an appeal with the insurer or seek department review.
(6) If the health insurer fails to provide notice of a decision to approve, modify, or deny a request for authorization within the time limits specified in paragraphs (1) to (5), inclusive, the insurer shall automatically treat the request for authorization as a grievance and immediately provide notice to the insured and the insured’s provider that a grievance has commenced. The notice shall include a description of the insured’s appeal rights and the ability of the insured to withdraw the automatic grievance if the insured so chooses. Automatic grievances shall be subject to the same level of urgency as initial requests and shall be resolved pursuant to Section 10123.134.
(7) Notwithstanding paragraph (6), if the insurer has not received the information requested pursuant to subdivision (g), the insurer need not treat the request for authorization as a grievance.

(7)

(8) If the commissioner determines that an insurer has failed to meet any of the timeframes in this section, or has failed to meet any other requirement of this section, the commissioner may assess, by order, administrative penalties for each failure. A proceeding for the issuance of an order assessing administrative penalties shall be subject to appropriate notice to, and an opportunity for a hearing with regard to, the person affected. The administrative penalties shall not be deemed an exclusive remedy for the commissioner. These penalties shall be paid to the Insurance Fund.
(i) Every insurer subject to this section shall maintain telephone access during California business hours for providers to request authorization for health care services.
(j) This section shall not cause a health insurer to be defined as a health care provider for purposes of any provision of law, including, but not limited to, Section 6146 of the Business and Professions Code, Sections 3333.1 and 3333.2 of the Civil Code, and Sections 340.5, 364, 425.13, 667.7, and 1295 of the Code of Civil Procedure.

SEC. 7.

 Section 10123.136 is added to the Insurance Code, to read:

10123.136.
 (a) This section shall govern complaints submitted to the department by insureds in relation to health insurance coverage.
(b) (1) Notwithstanding any other provision of this code, a health insurer shall provide the following information concerning a complaint to the department within the applicable time limit set forth in paragraph (2):
(A) A written response to the issues raised by the complaint.
(B) A copy of the insurer’s responses to any grievances.
(C) A complete and legible copy of all medical records related to the complaint. The health insurer shall inform the department if medical records were not used in resolving the grievance.
(D) A complete copy of the insured’s policy, with the applicable portions underlined.
(E) All other information used by the insurer or relevant to the resolution of the complaint.
(2) A health insurer shall respond to the department within five calendar days of the department’s notice of receiving a nonurgent complaint, and within 24 hours of notice if a complaint is urgent. The insurer shall provide any additional information that is requested by the department within five calendar days of the request, or within 24 hours of the request if a complaint is urgent. The failure of a health insurer to timely provide requested initial or additional information shall result in the department resolving the complaint in favor of the insured.
(c) (1) With respect to a complaint, an independent medical review case, or a combination thereof to the department involving a disputed health care service or coverage decision, an insurer shall promptly offer to provide the insured and the insured’s authorized representative, as applicable, with unredacted copies of all written correspondence concerning the complaint, independent medical review, or combination thereof, including ongoing correspondence, between the insurer and department, and between the insurer and independent medical review organization. Upon the election of the insured, the insurer shall promptly transmit all correspondence to the insured and, to the extent applicable, to the insured’s representative.
(2) A health insurer shall comply with subdivision (n) of Section 10169 and shall not engage in ex parte communication with the independent medical review organization deciding a case.
(3) The department shall provide the insured with a reasonable opportunity to respond to any communications between the department or independent medical review organization and an insurer before the insured’s complaint or independent medical review case is resolved.
(4) Notwithstanding paragraphs (1) to (3), inclusive, copies of an insured’s medical records regarding sensitive services, as defined in subdivision (s) of Section 56.05 of the Civil Code, shall only be provided to the insured to whom the services pertain.
(d) (1) The department shall be the final arbiter of fact and shall issue binding orders on health insurers concerning all consumer complaints that do not involve disputed health care services. The department shall resolve complaints that do not concern disputed health care services within 10 calendar days or less if urgent, or within 30 calendar days or less if nonurgent.
(2) Whether or not a complaint is urgent shall be determined by the department consistent with Section 10123.135, unless the complaint is designated as urgent by the insured’s provider, in which case the provider’s designation of urgency shall control.
(e) In a department review of a consumer complaint involving a disputed health care service that is not eligible for the independent medical review system established pursuant to Article 3.5 (commencing with Section 10169), in which the department finds that the health insurer has delayed, denied, or modified health care items or services that are medically necessary, and those items or services are a covered benefit under the terms and conditions of the health insurance policy or as required by law, the department may do any of the following:
(1) Order the health insurer to promptly offer and provide those health care items or services to the insured.
(2) Order the insurer to hold the insured harmless for any amounts exceeding in-network cost sharing for out-of-network services provided due to application of Section 10133.54 or Section 10144.5, or Section 2240.1 of Title 10 of the California Code of Regulations.
(3) Order the insurer to promptly reimburse the insured for any additional costs that the department finds reasonable, associated with urgent care or emergency services, or other extraordinary and compelling health care services, if the department finds that the insured’s decision to secure those services outside of the insurer’s network was reasonable under the circumstances.
(f) If, after reviewing the record of a complaint, the department concludes that a health care item or service eligible for coverage and payment under a health insurance policy was delayed, denied, or modified by a health insurer, or by a participating provider or other entity on its behalf, in whole or in part due to a determination that the item or service is not medically necessary, and that determination was not communicated to the insured in writing along with a notice of the insured’s right to participate in the independent medical review system, the commissioner shall, by order, assess administrative penalties. A proceeding for the issuance of an order assessing administrative penalties shall be subject to appropriate notice of, and the opportunity for, a hearing conducted by the commissioner in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. The administrative penalties are not an exclusive remedy available to the commissioner.
(g) The department and commissioner may exercise the authority provided by this code and the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340), Chapter 4.5 (commencing with Section 11400), and Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code) to implement and enforce this section. If the commissioner assesses a civil penalty for a violation, a hearing that is requested by the insurer may be conducted by an administrative law judge of the administrative hearing bureau of the department under the formal procedure of Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. This subdivision does not impair or restrict the commissioner’s authority pursuant to this code or the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code). A civil penalty shall not exceed twenty-five thousand dollars ($25,000) for each violation, and shall be scaled based on published factors determined by the department, including the scope and gravity of the violation, the insurer’s knowledge that a violation was occurring, and the insurer’s history of violations.
(h) The department may issue guidance to insurers regarding implementation of this section. section before adopting regulations. The guidance shall not be subject to the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code). Regulations shall be adopted by January 1, 2029.

SEC. 8.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.

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