Health care coverage: independent medical review.

The bill text was reformatted from a traditional legislative print document (with line numbers, page headers like '94 SB 363', and two-column layout) to a web page presentation. Website navigation elements (skip to content, home, accessibility, FAQ, search, etc.) were added. No changes to any substantive provision.

Care type categories reduced from four (Surgical, Medical, Behavioral, Pharmaceutical) to two (Surgical/Medical and Behavioral), eliminating Pharmaceutical as a standalone reporting category.

Specific age brackets (0-10, 11-20, 21-30, 31-40, 41-50, 51-64, 65+) removed and replaced with a general requirement to disaggregate by age, giving the department discretion to set the groups.

Enumerated demographic categories (gender, gender identity, sexuality, race, ethnicity) removed from the bill text. Reporting will now be disaggregated by categories determined in accordance with the department's recommendation in coordination with the other department.

The Department of Insurance's first annual report including data and analysis on health insurer compliance is delayed from the 2026 report to the 2028 report.

A new minimum threshold is added: the 50% overturn-rate penalty only applies to a health care service plan or health insurer that has 10 or more independent medical reviews in a given year. Plans and insurers with fewer than 10 reviews are exempt from penalties.

The department's obligation to publish annual data, analysis, and conclusions reports is delayed. For health care service plans (DMHC), the requirement now begins January 1, 2028 instead of simply 'at least once per year.' For health insurers (DOI), the commissioner's report changes from commencing with the 2026 report to commencing with the 2028 report.

The demographic disaggregation requirement is changed from a fixed list of categories (gender, gender identity, sexuality, race, ethnicity) to 'categories determined in accordance with the department's recommendation in coordination with' the other department. This gives regulators flexibility to choose which demographic data points to require.

The first reporting category for type of care is renamed from 'Surgical' to 'Surgical/Medical' in both the Health and Safety Code and Insurance Code sections, while 'Medical' remains as a separate second category. This appears to consolidate or clarify the surgical and medical categories.

A legislative intent statement is removed from both the health care service plan and health insurer penalty sections that declared it was the Legislature's intent for penalty funds to be used to fund child health care services. The actual fund structure (subaccount/fund creation) remains unchanged.

New Section 1374.38 added to the Health and Safety Code as a separate enforcement provision for health care service plans, with its own penalty structure and a CPI-based (medical care index) penalty adjustment mechanism starting in 2031, distinct from the premium-rate-based adjustment in Section 1374.37.

The bill title and scope were updated to reflect the addition of Sections 1374.38 (Health and Safety Code) and 10169.7 (Insurance Code), expanding the number of new statutory sections from two to four.

The threshold for triggering administrative penalties was lowered from 'more than half' (50%) to 'more than 40 percent' of independent medical reviews resulting in an overturn or reversal in any one category of care, as reflected in the new Section 1374.38.

Type-of-care reporting categories were dramatically expanded from 3 general categories (Surgical, Medical, Behavioral) to 4 general categories (adding Pharmaceutical) plus approximately 35 specific disease and condition categories including autism spectrum, cancer, cardiac problems, mental disorders, substance use disorder, autoimmune disorders, chronic pain syndrome, and others.

Age disaggregation was specified into defined groups: 0-10, 11-20, 21-30, 31-40, 41-50, 51-64, and 65+ years of age, replacing the previous unspecified 'disaggregated by age' requirement.

New requirement to disaggregate reporting by gender, gender identity, sexuality, race, and ethnicity to the extent demographic data is available.

Plans and insurers must now report the specific reason for each denial or modification from a defined list including medical necessity, investigative or experimental, urgent care, incorrect billing, duplicate claims, out-of-network provider, insufficient information, ineligibility or coverage issue, lack of timely submission, and other.

Health care service plans must now annually report the total number of claims processed in the prior year (new subdivision (b) of Section 1374.37).

The Department of Managed Health Care is required to include data, analysis, and conclusions relating to plan reporting and compliance with penalty provisions in at least one annual report, either a standalone IMR report or the report required by Section 1375.7(f).

A severability clause was added declaring that the bill's provisions are severable.

The threshold for triggering administrative penalties was raised from more than 40% to more than 50% of independent medical reviews resulting in an overturn or reversal in any one category of care. This applies to both health care service plans and health insurers.

Administrative penalty amounts were reduced by half across all tiers: first violation lowered from $50,000 to $25,000; second violation lowered from $100,000-$400,000 to $50,000-$200,000; subsequent violations lowered from $1,000,000 to $500,000. Applies to both health care service plans and health insurers.

New fund provisions were added. For health care service plans, a Managed Care Independent Medical Review Administrative Penalties Subaccount is created within the existing Managed Care Administrative Fines and Penalties Fund. For health insurers, a new Health Insurance Independent Medical Review Administrative Penalties Fund is created in the State Treasury. Both may be expended upon legislative appropriation to offset implementation costs.

The detailed statutory list of 37+ specific diagnosis categories (such as Autism spectrum, Digestive system, Cancer, etc.) was removed from the bill text and replaced with a general reference to 'diagnosis category or subcategory as determined by the department.' This shifts the authority to define specific categories from the legislature to the regulating departments.

A duplicate denial reason category was cleaned up: the old version listed both '(C) Urgent care' and '(C) Emergency or urgent care reimbursement'; the new version retains only 'Emergency or urgent care reimbursement.'

Senator Cortese was added as a coauthor of the bill.