Assembly Standing Committee on Health

Good afternoon and welcome to the Assembly Health Committee Hearing on this day, Tuesday, July 15th of 2025. Before we begin, I want to make sure everyone understands our Committee procedures to ensure we maintain order and run a fair and efficient hearing with the goal of hearing as much from the public within the limits of our time.

We seek to protect the rights of all who participate in the legislative process so that we can have effective deliberation on the critical issues facing California. Rules of conduct by members of the public include no engaging in conduct that disrupts, disturbs, or otherwise impedes the orderly conduct of this hearing.

Engaging in personal attacks of Members of this Committee, authors, staff, or other witnesses, talking or loud noises from the audience. Please be aware that violations of these rules may subject you to removal or other enforcement processes. If you are providing witness testimony at this hearing, all witnesses will be testifying in person.

Main support and opposition will be allowed two main witnesses for a maximum of two minutes each.

As a reminder, primary witnesses and support must be those accompanying the author or who otherwise have registered a support position with the, with the Committee, and the primary witnesses in opposition must have their opposition registered with the Committee per the instructions on our website.

All other support and opposition can be stated at the standing mic when called upon to simply state name, affiliation, and position. All testimony comments are limited to the Bill at hand. A few housekeeping items. I would like to note that we have a special order of business on our agenda today for SB 306 by Becker.

The author received technical assistance language from the Administration on this Bill this last week. We are hearing the Bill with late amendments that incorporate that technical assistance with modifications.

Because this is a rather late rewrite, I am giving flexibility on the usual two witnesses per side procedure so that stakeholders can give their testimony on the Bill, as it will be amended. We're going to allow for four main witnesses in support and four main witnesses in opposition, for two minutes each.

The following bills are proposed for consent for today's hearing. We have item number 10, SB 582 by Stern, with a motion of do pass to Appropriations. Item number 12, SB 626 by Smallwood-Cuevas, with a motion of do pass as amended to Appropriations. Item number 13, SB 812 by Allen, with a motion of do pass as amended to Appropriations.

Any Member of the Committee may remove a Bill from the consent calendar. With that, we will shortly begin our special session—the special order of business—with Senator Becker coming forward, and we will start as a small Subcommittee of the Committee.

Thank you, Madam Chair.

One moment. Members of the Committee. Just for your notice, you received a doc—two documents—via email and we have hard copies here for you. One is a document with proposed amendments, and the other is a, a mockup for your consideration. With that, we will begin with our special order of business, SB 306 by Senator Becker.

Whenever you're ready, Senator.

Thank you, Madam Chair. Senate Bill 306 addresses a key barrier to timely care, unnecessary prior authorization. With the Chair and Committee's approval, I'm offering amendments today, which your Committee has analyzed. However, before I summarize amendments, let me take a moment to tell you why this is an important bill.

Doctors are spending more time on paperwork than with their patients in many cases. A 2023 AMA survey found physicians complete 43 prior authorizations per week, spending average of 12 hours just on that. This red tape is preventing doctors from doing what they are trained to do, which is treat patients. Prior Authorization delays care.

94% of doctors say it causes treatment delays, and they are minor. The same survey found that 19% of doctors said a patient was hospitalized because of these delays and 13% said a patient experienced a life-threatening event or needed urgent intervention.

And the worst part, many of these requests are almost always approved just days or weeks of waiting. Right now, insurers and health plans can require prior authorization to determine if care recommended by a physician or other licensed provider is medically necessary, but that doesn't stop them from requiring approval for routine, commonly approved care, as it happened with a member of my team recently.

The issue of prior approval and its potential to delay necessary care and reduce costs is one I've worked for several years now.

Last year, authored SB 1120, known as Physicians Make Decisions Bill, which establishes a requirement for health plans and ensures applicable for the use of artificial intelligence for utilization review decisions.

This year, my goal for SB 306 is free up time for providers to focus on patient care, reduce delays in treatment, allow health plans to concentrate the review process where they're actually needed. Just overall, we want to reduce the time and money spent in our US Healthcare system, which is the only one that really has this convoluted process.

Reduce the time spent on paperwork and prior authorization deliberations. More time spent for more money, more time spent for providers with patients. Last Wednesday night, Department of Managed Healthcare, DMHC, sent us amendments which rewrite the Bill that's in print. You can imagine my dismay and frustration that they would offer such extensive changes this late in the legislative process.

Nonetheless, my Bill, the Bill sponsor, and the Committee consultants reviewed the administration's proposal to see if it accomplishes the intent of SB 306 and have concluded that with some, some modifications, the amendments are consistent with the original bill's goal but arrives there in a different manner.

While the Bill in print prohibits an insurer or health plan from requiring prior authorization for services and prescription drugs, if it had been approved 90% or more of the time, the amended version will instead largely cede the determination of services and drugs exempted from prior authorizations to DMHC and CDI, with some guiding factors.

The amendments would require DMHC and CDI to request a range of utilization data from plans and insurers and based on that data and in accordance with guidance set forth in the Bill, instruct the plans and insurers what should be exempt from prior authorization.

The Bill specifically requires DMHC and CDI to consider the potential for fraud, waste of an abuse, and patient harm when ordering exemptions from prior approval.

The Bill permits health plans and insures to petition DMHC and CDI to reinstate an exempted service or drug to prior approval if they can demonstrate an exemption that has resulted in increase in costs or decrease in quality of care. Finally, the...of this Bill would sunset in 2034.

Madam Chair, Members, I'm confident the Committee—that if the Committee accepts these amendments, we can cut red tape for providers, reduce unnecessary delays for patients, protect patient safety, protect against fraud, and still let plans exercise utilization management when appropriate.

The Bill has brought support among the California Medical Association, the California Hospital Association, Health Access, Planned Parenthood, and many more. I respectfully ask for your aye vote and I have several witnesses here with us today. Thank you.

Thank you. Your several witnesses will have two minutes each.

Good afternoon, Madam Chair and Committee Members. I am Raminder Gill, M.D. speaking on behalf of my colleagues, representing the California Medical Association. We're the proud sponsors of SB 306 by Senator Becker. We'd like to thank Senator Becker for authoring this critical measure in our prior authorization reform legislative package.

We also want to thank Chair Bonta and her staff for their countless hours of work on this legislation. This is not a new issue in health care or for this Committee, but California patients and physicians need prior authorization reform, now more than ever.

With the proposed amendments, this Bill still offers a straightforward approach that will allow the Department of Managed Healthcare to remove prior authorization from numerous services and some prescription medications that are approved for 90% or more of the requests the prior calendar year. Prior authorization was intended to ensure appropriate use of services and therefore control health care costs.

It's become increasingly an administrative roadblock that delays necessary care, increases physician administrative burden, and frustrates patients. The current process prioritizes health plan profits over patient care. Physicians routinely spend hours, sometimes days, navigating complex, inconsistent authorization requirements that often override actual clinical judgment while not reducing costs.

We are not suggesting prior authorization is not appropriate in some circumstances, but the current system needs to be drastically overhauled. The time spent on inefficient and burdensome tasks comes at the expense of patients.

By reducing the time patients spend with patients in the examining room, coordinating care for patients with chronic diseases, and increasing access to care for new patients, we need to place patients ahead of paperwork. For physicians, prior authorization has been and remains a major source of dissatisfaction in clinical practice.

I can tell you, I've spent countless hours over the course of my career submitting the needed information for prior author, then receive the reply to the request days or even weeks later. The toll on patients is tremendous and can even be dangerous. The prior authorization process is a time-consuming barrier to necessary patient care.

In closing, patients and physicians are burdened by unnecessary prior authorization requests for services that are routinely proved at high rates. In many cases, these services are routine or recurring, yet still critical to be provided in a timely manner to patients.

The overall volume of prior authorization requests impairs the delivery of care across our healthcare system and this Bill will directly address this issue. For those reasons, we urge you to support this critical reform to the prior authorization system that will result in greater access and healthier Californians.

Thank you.

George Sorries with the California Medical Association, here for any questions. Just want to really appreciate Chair Bonta and the staff and everyone here for the work on this.

Shereen Gaducey, California Medical Association, also here for technical questions and echo my colleagues' comments about Committee Members and staff. Thank you.

Chair, was going to have a request. I think the CHA would like to testify if that's possible. I think maybe the letter had gotten in slightly later.

I think because you only had one actual person to testify and they're registered support, we can have them come forward.

Great.

Thank you very much.

Happy to do it from here. Caitlyn Dean, on behalf of the California Hospital Association, representing almost nearly 400 hospitals and hospital systems. When timely access to medically necessary care is delayed or denied, waiting patients suffer and medical outcomes are compromised. One major cause of delays in access to care, as well as hospital discharges, are prior authorization.

This Bill represents reasonable prior authorization reform and will help ease administrative burdens, especially by healthcare providers and physicians, as well as hospitals and other healthcare facilities critical to the healthcare ecosystem. We're hoping that valuable time and resources are no longer diverted away from patient care to consuming communication and the appeals process.

According to studies reviewed by the California Health Benefits Review Program, also known as CHBRP, many prior authorization delays by healthcare service plans ended up being overturned upon appeal. So, as well as almost 82% of those denials were overturned. Care that is delayed is care that is denied.

And by eliminating prior authorization for services that are routinely authorized, SB 306 will reduce unnecessary and costly delays in care while still allowing for additional review and assessment of prior authorization efficacy for more complex cases. Therefore, we respectfully request your support at the appropriate time. Thank you.

Thank you. And now we will have perfect primary witnesses—sorry, we will have those in support. Please come forward. Please just indicate your name, organization, and position on the Bill.

Kim Stone of Stone Advocacy, on behalf of the California Orthopedic Association, in support.

Vanessa Cajina with KP Public Affairs, on behalf of the California Academy of Family Physicians, in support.

Christy Foy with Arnold and Associates, on behalf of the California Kidney Care Alliance and Fresenius Medical Care, in support. Thank you.

Angela Pontus, on behalf of Planned Parenthood Affiliates of California, in support.

Megan Loper, on behalf of the United Hospital Association, in support.

Fred Notor, representing Stanford Healthcare, in support.

Lizzie Kutzona, on behalf of the California Academy of Child and Adolescent Psychiatry, in support. Thank you.

Ijamai Jacob, certified child, adolescent, and adult psychiatrist, representing myself, in support.

Diana Douglas, on behalf of Health Access California, in support.

Jennifer Rowe, on behalf of the Physicians Association of California, in support.

Christine Falabel, on behalf of the American Diabetes Association, in support.

Thanks so much. We'll now move forward with primary witnesses in opposition. As indicated, we can have up to four witnesses. We'll spend two minutes each and we're going to have to make some room at the table for them for three people, four people.

Thank you, Chair and Members. Nick Louiseos, on behalf of the California Association of Health Plans. We do have an opposed position on the Bill, recognizing that several amendments are going into it today. But just, you know, taking a step back and looking at this from a broader perspective, authorization for care is a critical tool.

It ensures that care aligns with the latest guidelines while protecting patients from unnecessary procedures, excessive costs, and harmful treatments, otherwise known as low value care. This is a standard practice across all markets, including Medi Cal, CalPERS, and commercial markets.

Indeed, the state budget that was just recently enacted and signed into law acknowledged the importance of authorization by adding it to specific services in Medi Cal. While we strongly believe that appropriate checks and balances are important to prevent low value care, we also believe it's important to embrace solutions.

This is why health plans nationally have volunteered and voluntarily, I should say, committed to a set of reforms aimed at increasing transparency, reducing administrative burdens, and accelerating access to care. Among these is reducing the scope of claims subject to authorization.

Signatory plans to this commitment have—those that provide fully insured ACA marketplace coverage commit that they will individually reduce the volume of in network prior authorizations by January 1st, 2026, and they further commit to provide data on the extent of such reductions.

In that light, we do need some time to sit with the amendments that are going into the Bill today, and once we have fully analyzed those, we will determine whether they align with these industry principles and that will guide our position moving forward.

In the meantime, we want to thank the chair, the Committee, and of course the author and the sponsors for the level of discussion that we've had on the issue of prior authorization this session thus far. However, at this time, we remain opposed. Thank you.

Thank you. Go ahead.

Madam Chair and Members, Stephanie Watkins on behalf of the Association of California Life and Health Insurance Companies. First and foremost, I'd like to thank the author, sponsor, Committee staff, and the Department of Managed Health Care for their thoughtful engagement on the Bill.

As you know, health plans and insurers work diligently to ensure that enrollees and insureds are getting the right care at the right time from the right provider. Medical and utilization management tools like prior authorization are key to promoting safe and effective care for enrollees and insurers.

To that end, health plans and insurers act as stewards of the premium dollar and therefore have an obligation to invest those dollars in proper and effective care. Understanding those goals, we appreciate the recent amendments that are being taken today, as well as all the hard work that has gone into ensuring a thoughtful and effective process is established.

Unfortunately, while we recognize how far the Bill has come, we would be remiss if we didn't acknowledge there are a few outstanding issues that we need—that we would like to see addressed. First and foremost, as the Bill states, it creates no less than a 90% threshold. We're concerned and would respectfully request that be considered to 95%.

Given the work that the Office of Healthcare Affordability has done this past year and setting the current healthcare target at 3.5%, we're concerned that 90% threshold referenced in the Bill may be too low.

Additionally, we would recommend that the definition of the most frequently approved services for the purposes of determining what meets the minimum threshold be limited to approvals. Currently, the definition includes modifications. Modifications for the for all intents and purposes are considered denials as they make changes to the initial request.

For those reasons, we would recommend that the threshold be limited to approvals only.

Additionally, we would recommend, while we acknowledge that the Bill does exclude tier 3 and 4 drugs, we would like to have further conversations about the potential to exclude all drugs at this point, with the consideration of at a later date coming back and having that overall discussion.

Given the widespread growth we have seen in this sector, we're very concerned about the inclusion of prescription drugs and the potential cost impacts it may have on the market.

And lastly, we would also recommend that while the Bill does require the regulators to work together on implementation, that it would require the regulators to compile one singular list of services that would be removed from prior authorization, so we would see a uniform application against all market segments.

So, for—those are the primary issues based on the most recent review of the amendments. We sincerely appreciate all the hard work that's gone into this. We look forward to continuing conversations if the Bill moves forward for today, but those are our remaining concerns. Thank you.

Thank you, Chair and Members. Ryan Parini on behalf of America's Physician Groups, in respectful, opposed unless amended position to SB 306. APG represents California's capitated delegated medical groups across California who are provider organizations that assume responsibility from health plans for critical functions like prior authorization review.

A central feature of this delegated model is the physician-led utilization management process, basically physicians managing physicians, which leads and promotes accountability, clinical appropriateness, and care delivery that is both timely and cost effective. The amended version of SB 306 currently treats modifications to prior authorization requests as approvals.

However, beginning January 1, 2026, all health plans and their delegated entities must comply with National Committee for Quality Assurance Standards for utilization management. Under NCQA standards, most modifications to a prior authorization are treated as denials, not approvals. This creates a conflict between SB 306 and the NCQA compliance requirements already mandated under AB 133.

SB 306 should further be amended to align with NCQA definitions and standards, specifically for modifications that constitute material changes to request. This alignment is necessary to avoid confusion and to ensure consistent federally recognized reporting metrics. APG continues to support a more effective and transparent approach to prior authorization reform.

Rather than imposing rigid timelines or conflicting definitions, reform should focus on, one, collecting comprehensive data on prior authorization denials, two, publicly reporting denial rates for all organizations performing UM functions, and three, leveraging DMHC existing authority to address organizations with excessive denial rates.

We look forward to continued dialogue with the Legislature Committee, the author, the sponsors, and other stakeholders to improve SB 306 in ways that preserve clinical integrity, support compliance, and protect patient access to timely care. Thank you for your consideration.

Thank you.

Good afternoon, Chair and Members. Kelly Larue, here with Resilient Advocacy, on behalf of the California Chamber of Commerce. The Chamber's members are evaluating the new language, and we appreciate the work the author, the Administration, and Committee have all put into this policy. It's been a long time coming. It's been a process.

It's also important to strike the right balance. Reducing administrative burden for providers, patients, plans, all without increasing premiums for employers and patients. The Chamber echoes my colleague's concerns regarding prior...modifications to ensure that we get it right for providers and consumers. Thank you.

Thank you. Are there any others in the hearing room who would like to offer a Me Too in opposition? Please come forward. State your name, position on the Bill, and affiliation.

Good afternoon. Katie Andrew, with Local Health Plans of California. I just want to thank the Committee for the recent amendments, and we'd like to remove our opposition. Thank you.

Thank you. Seeing no other opposition, I will bring it back to Committee for any comments or questions. Assemblymember Patel.

I'll just make a comment that I know that this Committee has heard several bills and moved along several bills on prior authorization, modifications, and changes.

Personal narrative, my father had a medical condition, and he had a prior authorization and there was a modification required, which was a substantial change but necessary because the scope of the of the procedure wasn't going to be sufficient. That caused a six week delay in him getting treatment and unfortunately, he succumbed before that happened.

So, as a jurist, that would exclude me from a trial, but as a Legislator, that informs me in my decision. So, I'm looking forward to forward—to supporting this Bill today.

Thank you, Assemblymember. Senator Becker, thank you so much. I know that this has been a Bill long time in coming and we heard three other bills related to—that were sponsored by your proponents here today, that really relate to different aspects of prior authorization and several others that related to specific services.

I wanted to just dive into some of the areas of concern raised by the opposition for your, for your opportunity to kind of walk us through your agreement with the amendments that align with the technical assistance that was very lately provided by DMHC.

The first is around this idea of the threshold being set at 95% instead of 90%. I know that that was something that was also a part of your original piece of legislation.

Do you have any thoughts on either the calculation that was used for that and whether it is something that we should continue to consider at the 90% level?

Well, we thought that 90% was already very high threshold and that recognizes the, you know, anyway, the goal of having that high threshold but also having protection.

We also looked at other reforms on prior authorization and other states they had used the sort of gold carding standard where they used 90% as their threshold, and we thought that was a very high threshold for trying to identify these, you know, low value prior authorization requirements.

We would be happy to continue, you know, exploring additional ways to improve the Bill.

We do think that the safeguards that are in the amendments provided by the Department of Managed Healthcare should help hopefully provide greater comfort to the plans for being able to remove something from the prior auth exemption list if there is a cost concern, or a fraud concern, or safety concern, or anything else.

Right. And Senator, you did mention that this kind of fundamentally changes the structure of who's establishing what services get listed under prior authorization, cedes that to DMHC, that fundamentally—what is your assessment of that particular change?

You know, it clearly wasn't how we structured the Bill initially. I do think that, as I stated in my opening, I think with some of the modifications that we're working on with the Committee that it still certainly moves us in the right direction. It's certainly the Administration's preferred approach, so it increases the likelihood of success on that end.

But I do think that it, again, it's going to be certainly positive and get the job done if we can, you know, structure in the way that we've discussed.

And I also want to appreciate the opposition's concerns about the potential—or the request—to have complete exclusion of all drugs in this. We've obviously made a limitation around that to particular types of drugs, which I think was our Committee amendment.

Can you speak to the idea of either including or not including drugs in the prior authorization list? And then I also want to just hear a little bit more from the opposition on this point.

Yeah, we had a lot of discussion on this. May ask my sponsor if that's okay.

Of course. From the reports that we've gotten and the surveys that have been done in prior authorization, prescription drugs make up a very large portion of the prior authorization request that physician offices have to review and respond—or submit and sort of negotiate with plans.

So, it makes up a really large volume of the administrative burden here. We did try to target the lower cost tiers here, which would be generally generics and maybe preferred brands.

And again, with all the safeguards that have been added in this latest set of amendments, allowing the regulators to withhold a particular medication, in this example, from that exemption list, if there is a particularly point concern that's raised by removing prior auth for any drugs. We think that this is a really appropriate balance to strike.

But again, happy to continue discussions on this point as well.

Thank you, Madam Chair, for the question. I think from our perspective, and this is well new to the Committee, this is something, a proposal that we worked quite a bit last year on. And I know one of the big conversations was about the inclusion or exclusion of drugs.

From our perspective, looking at the—what we've seen is the growth, certainly more in specialty drugs and the cost, but in the growth in total of drugs.

I think one of the conversations we had last year was about excluding drugs in the short term and looking to OKA or another entity to do a cost benefit analysis of the potential to include drugs at a later date.

That was kind of an internal conversation that we were having with, you know, a way to move forward with that. Additionally, I think, you know, the thing to note is with drugs historically, I think it's probably a decade ago, we increased the timeframes and the speed for which drugs were approved. It's a 24, 72 hour.

We created a single form process in order to kind of streamline that prior authorization system. So, to that degree, I think we kind of looked at that blended opportunity of maybe, you know, having OKA or another entity really do cost benefit analysis of what that would look like.

I appreciate the amendments that this Committee did to look at those higher cost tier 3 and tier 4 specialty drugs as having that exclusion. But at this point, we'd like to continue to have further conversations about the potential to have drugs excluded.

Thank you. And then, I just also wanted to just share that we do have other legislation coming through that we will be hearing very shortly related to the kind of the authority of DMHC to be able to really look at some of the excessive denials, denial rates, through another Bill that Senator Wiener is being—putting forward.

So, I think that there is some synergy between your Bill, Senator, and that of Senator Wiener's on that front. Senator, kind of last question from me before we move on.

We had a lot of opportunity to hear from the provider's perspective, the opportunity costs that come with not having prior authorization in place and something that is viable. From your perspective and kind of to Assemblymember Patel's point, there is an incredible impact on patients as well.

In your closing remarks, would you like to address some of the opportunities that there are for increasing access to care for patients and quality of care for patient outcomes?

Absolutely. Happy to do that in my close.

Thank you. I don't see any other questions, so please go ahead, Senator.

Well, thank you. And first to Assemblymember Patel, it's a, this is just a devastating story and so sorry that happened with your—to your family. It does unfortunately highlight the real cost of a prior authorization denial.

As I mentioned in my opening statement, the fact that 19% of doctors said a patient was hospitalized because of delays and 13% said the patients finished a life-threatening event. That's a—those are extraordinarily high numbers and represents just a massive risk and a massive cost.

I mentioned someone on my own team had, you know, something, a drug that was approved but then, just because of the—essentially, almost a packaging piece that was required to, prior authorization has had to go through just a really terrible time.

So, there is a massive cost and obviously, we're here in a state and there's only certain things we can do. Healthcare is one of those issues where we are obviously governed in part by the Federal Government. But just a quick look country by country. Canada, very little prior authorization medically necessary service.

UK, no prior authorization for most medical treatment. Germany, patients have free choice providers, and most services are offered with minimal or no prior authorization. France, no general prior authorization for hospital care specialists. Japan, patients can go to almost any provider without referral or prior authorization.

In Australia, the public system has no prior authorization for most services and far less in private plans. So, it's just one of these areas where the US unfortunately is just dramatically trailing the rest of the world and just subjecting our system to just really a massive waste of cost and with real repercussions on patient care.

So, I appreciate the testimony—the providers who have to deal with this every day. Appreciate the plans for working through it and the Administration and I think we are on a good path, and I respectfully ask for an aye vote.

Thank you, Senator. When we have quorum, we will be able to accept a motion and a second on this. I want to thank you for bringing forward this Bill. From my perspective, this Bill is probably the most unconventional of the legislative process right now.

But I did want to make sure that we had an opportunity to fully air the policy concerns in Committee so that we can continue to work on this Bill as it moves forward over the summer.

With that, I want to thank you for bringing forward this Bill. We definitely want to make sure that we have an opportunity to not provide low value care, but we also want to make sure that patients are put into a position where they have to have endurance and resilience in order to be able to receive basic care.

And I want to thank you for bringing this forward. And with that, we will move on to our next item, item number two by—SB 35 by Senator Umberg, who is also Chair of the Senate Judiciary Committee.

My condolences and grateful thank you to you for your work as Chair in that regard and in advance of the long night that I think you are likely to have.

Thank you, Madam Chair. My condolences to you and anybody else in the Assembly who happens to be in Senate Judiciary. So thank you. And a particular thanks to Logan Hess for his work on the Committee, from the Committee on amendments to SB 35. SB 35 concerns itself with unlicensed sober living homes.

Unlicensed sober living homes have proliferated throughout, especially Southern California, but they exist all over California and they are problematic, to say the least. They're problematic because there's very little enforcement of any rules or regulations or statutes that exist to actually regulate their behavior.

The Department of Healthcare Services has responsibility to regulate unlicensed sober living homes and for good or for ill, they are inadequately resourced. And what this Bill simply does, it allows a city or a county to make an on site visit and take a look around if the DHCS does not have the resources to do so.

In other words, if there's been a report and there's been no investigation initiated within 10 days, or completed within 60 days, then the city or county may go in and simply inspect the facility or the house. And with me today is Ms. Caroline Grinder from the California League of Cities.

Please go ahead. You'll have two minutes.

Great. Thank you. Good afternoon Chair and Members. Caroline Grinder on behalf of the League of California Cities, which is proud to sponsor SB 35, residential recovery housing provides a range of benefits to some of California's most vulnerable residents and it's critical that their needs are prioritized over profits.

That's why compliance with state licensing laws administered through the Department of Healthcare Services is essential to safeguarding residents well being and maintaining quality care. Under current law, any alcohol or drug treatment facility that provides recovery or detox services must obtain a valid license from the Department before operating.

The Department is also currently responsible for receiving and investigating complaints about unlicensed facilities that are alleged to be illegally providing or advertising treatment services. However, a recent state audit revealed the Department has not consistently investigated or followed up on these types of complaints.

That failure has allowed unlicensed operators providing legal services to continue operating in residential neighborhoods and without oversight or accountability. SB 35 would respond to the Auditor's request by ensuring that the Department meets specific timelines for investigating allegations of unlicensed treatment services.

Would also require the Department to conduct follow up site visits to ensure that that unlawful activity has stopped, and also investigate other facilities run by the same operator to ensure that those facilities are in compliance. If the Department fails to meet these deadlines, the county can request approval to conduct that site visit and enforce that licensure law.

This will help hold the Department accountable, ensuring swift action for violations, protecting Public Health and safety. As the number of these facilities continues to rise with billions of dollars in behavioral health funding in the pipeline, we know that the Department faces a major hurdle in providing oversight and regulation of these types of facilities.

We hope to enhance that oversight and enforcement capacity through SB 35 with local government as partners. For these reasons, we're proud to sponsor SB 35 and we urge you to support this important measure. Thank you so much.

Thank you. Are there others in the room who would like to offer me too in support. Please come forward with your name, affiliation and position on the Bill.

Good afternoon. Kiara Ross, on behalf of the City of Glendale, in support. Thank you.

Hi, Madam Chair, Members. Dylan Hoffman, on behalf of the City of Beverly Hills, in support.

Thank you. And now, do we have any primary witnesses in opposition? Please come forward. If so, seeing none, are there any in the hearing room who would like to offer a Me Too in opposition?

Lizzie Cootsona, on behalf of the California State Association of Psychiatrists, in support. Thank you.

Please come forward with your name, affiliation and position on the Bill.

Good afternoon, Chair and Members. Amer Rashid with the County Behavioral Health Directors Association of California, with an opposed unless amended position. Thank you.

Thank you. Seeing no others, I will bring it back to the Committee for any questions or comments on this legislation. Assemblymember Schiavo.

You know, I just want to thank the author for this, for working on this issue. It's becoming a more and more complicated issue in our communities where there's a dire need for services and supports. But as you said the, you know the oversight, the lacking oversight is really allowing the proliferation of abuse in this industry.

And you know, it's doing a disservice to the people they're supposed to be serving. It's doing a disservice to people in the community where people are literally being kind of thrown out on the streets and then sometimes brought back in again to be able to charge on again.

So it really is something that we have to get a handle on. And I think, you know, making sure that we're in partnership at all levels of government will be an important piece of that. So happy to support and move the Bill at the appropriate time today.

Assemblymember Addis.

Thank you, Senator. I just wanna concur and say thank you as well. We had one of these facilities come into my hometown. It was very, very, very contentious, even though not as much of a proliferation as in Southern California.

And one of the biggest concerns had to do with oversight, lack of oversight, quality of treatment, and would folks actually get the care that they are promised that they're going to get, particularly when you have these facilities in residential neighborhoods. And so really appreciate you putting your eyes on this and happy to support when the time comes.

Assembly Member Patterson.

Great, thank you. Can you describe exactly what's. How you would do this being unlicensed?

Well, unlicensed sober living homes aren't allowed to provide, for example, treatment. They aren't allowed to offer behavioral health modification. And so if they're doing that then, or if they're allowing drug use to be continued or initiated in the house then they're operating illegally.

And so if you make a complaint, typically a neighbor might make a complaint to DHCS and say: Hey, there's all kinds of problems in our neighborhood. DHCS in theory then would investigate, and in theory, if there's a violation, then would pursue that violation. Unfortunately, as I mentioned, they are inadequately resourced. And so most often nothing happens.

When nothing happens, these kinds of unlicensed sober living homes that are operating, in my view, illegally proliferate. And that's why certain areas in Southern California are known as the Rehab Riviera. Or when I was in the U.S. attorney's office, we called it Coastal Del Fraud.

Now, so they're operating under, you know, just being a sober living home or something like that, but they're allowing certain activities to go beyond. And what would DHCS's, what kind of authority do they have of these homes if they're not licensed.

Well, if you are providing a location where illegal drug use is happening, or you are advertising, for example, that you provide treatment and you're not, there are a variety of sanctions that can be imposed, everything from criminal sanctions to civil sanctions. And are these often the homes with six or fewer beds?

I should defer to Ms. Grinder, but whether there's six or fewer, I think that's the authorized maximum. But that's one of the violations, is when they have more than six, that's a violation.

Okay, if you have more than six, then you're subject to certain zoning requirements within the city, under six years. Yeah.

Yeah. I used to work for an Orange County Legislator back in the day, and I remember it being an issue down there, but it's also become an issue in other communities as well. But sometimes, just a question. Are these homes often government funded by some, maybe they get a grant.

Maybe nonprofit gets a grant or something for a sober living home, and then they end up doing other things there. Does that happen at times?

Does it happen? I would expect it happens, but most often they're for profit. But again, I'll defer to our expert.

Some of the eligible uses of Proposition 1 were for these types of facilities as well. That was kind of what we were alluding to with, like lots of money in the pipeline for these types of facilities. It can be a mixed. But, you know, to the Senator's point, it's largely.

Yeah, well, I think this Bill is really important for all the reasons that you outlined.

In my own community, you know, an organization in charge of sort of addressing homelessness in my community, which has actually partnered with the county was putting some of these homes for intended for homeless individuals, which is fine, you know, using government funds, but they were doing it in the communities without working with the community at all.

And that's a whole separate problem I think that that organization has in terms of working with actually working with the communities. But they got their funds from the county. Again, another problem I had. But the other thing is, I think will be the proliferation of these because of the Prop 1.

And I brought this up in Committee many times when Prop 1, was coming through the Legislature that this was going to become an issue.

And so I think to give some kind of enforcement or some kind of teeth when these kind of complaints are coming in. I mean something has to be done about it and especially if government funds are going into these facilities in the first place.

So I look forward to supporting your Bill and if the time comes, I actually would love to be a co-author on it. Thank you. We welcome that. Thank you. Very well.

Thank you, Senator. I just we had a couple of questions and it kind of came up in our in the discussions around this Bill. One is there is the potential for the associated license or fees or the fees to be considerable and potentially prohibitive for residential recovery residences should this Bill move forward?

Have you do you have any thoughts around the need ultimately to have a qualified, bona fide and legitimate recovery residences from having to deal with the weight of the increased licensure fees.

Well, let me turn again to the expert. But so far as I know, this Bill doesn't deal at all with fees. And so it if you're unlicensed, then there isn't an unlicensed fee. But let me turn to the expert here.

Yeah, it's our understanding that there was budget allocations to the Department in 2023 to help to increase their enforcement capacity and to help reach some of their goals of responding in a timely manner to some of these complaints. And so we are in conversation with the Department about how they reach those goals.

And I know that they're going to be responding to the Department or to the audit with some needed reforms. And so it is our hope that, you know, they're planning for changes along these lines anyway in response to the audit, and have had previous budget allocations that would help them beef up their compliance Department.

Right, I think the relationship between the recovery residence and the associated parents and the relationship that there is between those the money transfer, the look at the money transfers between those are ultimately going to generate some costs. There are going to be some cost drivers associated with that.

It's not a question for this policy Committee overall, but it is a consideration around whether or not we ultimately, are going to be fee increasing so much that it's impossible for us to be able to provide this very important service. So it's just something to consider for the Senator.

And I guess you are correct, Madam Chair, that to the extent that you increase investigations, which is what I would hope would happen, that needs to be paid for someplace. Query whether it, you know, where it comes from. Could come from the General Fund, could come from increased license fees. But that's, as you say.

That's a issue for a different day and a different Committee.

I appreciate that. We have one other Me Too, who I was too quick. From the TV to the room. Who's going to offer in support.

Madam Chair, you were not too quick. I've been bouncing from Committee to Committee and I apologize for the tardiness. Kobi Bouzaidi, on behalf of the cities of Thousand Oaks and Carlsbad in strong support of this Bill.

Thank you. I don't see any other questions or comments from the Committee. And Senator, I will see you somewhere around midnight with that. Would you like to close.

Thank you very much. I urge you to take a nap. With that I urgent aye vote as well. Thank you.

Moving on to item number four, SB 62 by Menjivar. Whenever you're ready, Senator. And press the button.

Appreciate that. And when we have quorum, we will be able to consider that request.

Chair thank you, Madam Chair. Good afternoon, everyone. I'm here to present a Bill that is very similar to something that you saw in the first House as this is a Bill that both Health Chairs are carrying simultaneously to increase our essential health benefits.

So you've probably seen a couple of us in the past couple years look to introduce bills that wanted to add coverage. Assemblymember from Santa Clarita, you know that I've introduced a Bill on hearing aids for children. And we always wonder, like, why are these getting vetoed?

These are really just causes that we need to provide hearing aids for our kids. Well, it's because it goes above the essential health benefits required under mandated coverage for certain plans. And we can't add these additional coverage unless we do a request to the Federal Government to increase our essential health benefits.

So this started last year with the previous health chair starting that work, and then this year through stakeholder meetings, through a joint informational hearing that both houses put on in this very room to talk about what we should add. We came up with these items.

And SB 62 is looking to now codify, if the Federal Government approves us, to add to our essential health benefits things like, things like these specifics: hearing aids for children and adults, durable medical equipment such as wheelchairs, personal mobility devices, and infertility diagnosis and treatment, which includes IVF.

I don't ignore the fact that this will result, as we've heard, in some increases in premium costs. According to CHPRBN, it could be an increase of $8.55 per member per month in premium of silver plans.

But I do believe, colleagues, it's a trade off that is worth it because we will be able to give a child who is hard of hearing or death hearing aids that currently cost parents approximately 3 to 5 thousand dollars every three years. And don't get me started on fertility costs.

We know that's around tens and tens of thousands of dollars that impact millions of people in California. Now, the timeline has passed in terms of submitting the plan we have already submitted to the Federal Government and we're merely waiting. So this Bill, like I mentioned, would simply codify should the Federal Government approve our plan.

Madam Chair and I'd like to now turn over to my witness.

Thank you. You'll have two minutes.

Thank you. Diana Douglas with Health Access California. We are pleased to support SB 62, which as we heard, comes after a long process to solicit stakeholder feedback on potential updates to our state's benchmark plan. Health Access has police support and believes the new required benefits will provide significant benefit to consumers.

We were part of the original development of the first EHB standards in 2014, and at the time we knew that not everything consumers wanted or even needed was included, but it was the most comprehensive benefit package that we could develop under the rules that applied then.

In the decade since the rules have changed. We've seen that California can lead the way in higher standards of care, and we have this opportunity now. SB 62, as we heard, includes hearing exams and aids, includes DME, including wheelchairs and oxygen equipment, and also extensive fertility coverage for IVF.

Health Access appreciates the careful consideration of the full range of benefits to include in the DECCS benchmark and we ask for your aye vote on SB 62.

Thank you so much. And with that, we will move to any others in the room who would like to provide a me-too in support of SB 62.

Good afternoon. Martin Radosevich on behalf of Reproductive Freedom for All California in support.

Good afternoon Madam Chair and Members. Nick Brokaw here on behalf of the California Academy of Audiology and support. Thank you.

Nora Angeles with Children Now in support.

Whitney Francis with the Western Center on Law and Poverty in support.

Matt Lege with SEIU in support.

Thank you. We will now move to any primary witnesses in opposition of this measure. Seeing none. If there are any in the hearing room who would just like to offer a me-too, please come forward.

Greg Burt with the California Family Council in opposition.

Thank you. Thank you. Seeing no other opposition, we will bring it back to the Committee for any questions or comment. Senator, I want to thank you for bringing forward this Bill.

We were able to do a pretty lengthy hearing informational hearing on EHBs and have very much appreciated your collaboration and partnership Senate and Assembly on essential health benefits and and know that this is both a passion project for you and a policy endeavor that I have joined you on and very much thankful for your leadership in this. With that, would you like to close?

I would like to echo the sentiments. It's been one of the most smoothest bicameral projects I've ever been a part of. So thank you so much for being a great partner in this. And with that, respectfully ask for an aye vote.

Thank you. And when we have quorum, we shall certainly consider that. We'll move on now to your Second item, Senator. SB 596 by menjavar is item number 11 which with regards to health facilities and administrative penalties.

Great. Thank you. SB 596. I want to make sure we all are on the same page in terms of currently in state law, this body has passed nursing ratios. So my bill does not establish new nursing ratios. It's been in law since 2019 that this body has approved established specific fines for nurse ratio violations.

My bill does not touch, establish, re-establish, increase any fines on nurse patient ratio violations. However, when the bill was passed to establish these nurse ratios, it allowed an off ramp or a waiver if you will, for hospitals to say might be caught in a violation. However, don't find me because I called an on call list.

So the on call list is not a new phenomenon that is being introduced by SB 596 that's already in statute right now. However, the bill that passed in saying you have to call an on call list did not define what that is. You can have a different definition. I can have a different definition.

One hospital can say, well, my on call list is calling my brother. I, I called my brother not even a nurse, but I called an on call list.

Another hospital can say I'm going to call A nurse that I know is in Germany, I know they're not going to be able to come in and work today, but I'm just calling.

So the original intent, or the intent of SB 596 was to define what an on call list is only when a hospital says, do not find me, even though I was caught in violation because I called an on call list.

So we want to make sure that hospitals are in good faith providing an effort to avoid that finding, actually calling individuals. The original prior version of this had a definition of the on call list to include 10% of the people of the nurses coming to work.

And throughout this legislative process, we heard loud and clear that the 10% was a heartburn for hospitals and we couldn't land on what really that 10% looked like and they wanted more flexibility.

So what you see in front of you now is the removal of the 10% to provide even more flexibility to hospitals to claim that they're using an on call list. Now, within this space, hospitals still have the flexibility to use any type of approach they may use to get people to come and fill their spaces.

If your hospital has a flex pool, use a flex pool. If your hospital automatically brings in nurses and puts them on the shift because they know they're going to have people call out, use that system.

This bill does not remove the flexibility of hospitals to use any kind of system they may need to fill and meet the nurse patient ratio. However, this bill will only kick in when CDPH comes and finds a hospital in violation of the ratios and the hospital wants to claim a waiver.

Again, this bill only kicks in only when a hospital is saying, don't find me. I used an on call list. I recognize that the opposition still was not able to be supportive of this, but in good faith, I accepted amendments with the information I was given.

The information I was given is that the 10% is too hard for us. We can't define it. So after removing that, it's a little respectfully difficult to continue in these negotiations. If I gave the opposition what they wanted and then they're still opposed to this, hospitals have lots of options to avoid being short staffed.

Some hospitals contract with nurse staffing agencies. Some schedule in a way that makes being short staffed unlikely in some units and uses, like I mentioned, a flow pool. But what we don't want to do is have hospitals call people that they never intended to show up. You want to know that you're on call.

You want to know that you're scheduled to be on call, that you're available at a cause notice to come in. I want to know if I can't go to Germany or Zurich during my off days because I'm on call or not.

If not, we're going to continue to put our consumer, our patients right to equitable and right care behind and not in front of the hospital's needs right now.

Now I recognize that this is coming at a time where, you know, the big ugly bill just got passed and so forth and Medi Cal is going to be impacting our hospitals. But this is an extra burden. Hospitals have to meet those ratios right now. This bill does not say you have to do new different ratios.

They have to meet that right now. Hospitals get fined right now. My bill does not increase that. But of the 400 hospitals that exist in California, only 32 hospitals have ever been found in violation since 2020. If I'm not mistaken, in four years, only 32.

And CDPH or any Department doesn't come with a heavy hand on violations of those 32 hospitals. If one of those said we want to be excluded from that fine, they would have had to deem with this bill that they had an on call list.

I've rambled enough, Madam Chair, so I'm now going to turn to my witness testimony in support. Thank you.

Good afternoon, Chair Bunta and Members of the Committee. My name is Anna Bergeron. I am a registered nurse and a Member of the United Nurses Associations of California Union of Healthcare Professionals. I've been a nurse for more than 20 years and I can't remember a time when nurse patient ratios have been consistently or meaningly, meaningfully enforced.

SB596 closes a loophole that existed for years, a loophole that hospitals have exploited to bypass nurse staffing regulations without consequences. I have worked so many shifts where the staffing has been short and I have reported the issue to the Department of Public Health and rarely have there been any penalties for unsafe staffing.

SB 596 brings long overdue enforcement mechanisms by requiring timely investigations of staffing complaints and treating each day a violation occurs as a separate incident. The bill ensures that repeated understaffing is no longer treated as one time. Eventually, critically. SB 596 also tightens what it means for a hospital to claim that they've exhausted their on call list.

I've seen hospitals claim compliance while never truly calling a qualified nurse or float pool staff. This bill makes that tactic much harder to justify by requiring real documentation, real on call staff and verified competencies for those expected to float when ratios are violated.

Patients suffer, nurses burn out, and the promise of safe, high quality care becomes an empty promise. SB 596 is a practical step forward, not just for nurses, but for every patient in California. I respectfully urge for your support.

Thank you. You'll have two minutes.

Good afternoon. Matt Lajay, the proud co-sponsor with SEIU, the proud co sponsor of SB 596. I appreciate the Committee and the staff and the analysis on the bill. I think, as has been mentioned on call lists are not a new thing.

What have we have seen since the enactment of SB 227 in 2019 is that this on call, this procedure could use some tightening up. And this is what this bill seeks to do.

What we have seen in some hospitals practice is just texting a couple people and actually not having nurses who are aware or even available to come into work being notified. And unfortunately, that puts a significant burden on the nurses who are on the front line.

And the real difficult thing about that is those nurses who may have too many patients if something unfortunate would happen to those patients because there's not enough coverage there. The fact they're out of ratio is not a defense when they go to the BRN and they're licensed at risk.

So for the nurses, this is really putting a significant burden on them to try to make sure they're caring for their patients well. At the same time, we want to make sure that the staffing is appropriate, that our patients have what they need.

There's been some conversations, some questions as we've talked to Members around that collective bargaining agreements. And from our view, this doesn't prohibit or impact the existing collective bargaining agreements. If your decision is not to use on call lists and a hospital's elected to do that within their cba, this wouldn't violate that.

So, you know, of course hospitals can update their CBAs if they, you know, as the law changes. And I'm sure they will want to have those conversations with their labor partners.

But if they're planning on using an on call list and then it's prohibited within the cba, then they must be staffing appropriately, as Senator Menjewar mentioned in our opening. So happy to take any questions if there are any questions, but thank you very much and I appreciate your support.

Thank you. Are there any others in the room who would like to offer a me too, in support of SB 596, please come forward.

My name is Guillermo Mendoza Lujan. I'm with the CIU 12 hour RN. I'm a registered nurse in the emergency emergency Department. And we support SB 596.

Thank you. We'll move on now to any primary witnesses in opposition. Please go ahead. You'll have two minutes.

Good afternoon, Madam Chair and Members. I'm Christy Weiss with Capital Advocacy here in opposition on behalf of the California Hospital Association.

This is such a challenging conversation and I really regret to hear some of the comments that the Senator made in her opening because, you know, scheduling nurses to meet California's nurse staffing requirements is a very challenging situation that hospitals manage every day and have since the original bill was signed into law, I think by Governor Davis.

Scheduling nurses is very. It's a very sensitive situation that hospitals have to manage at any given time in a hospital, a patient could take a turn for the worse, suddenly needing more intense nursing care. This would immediately increase the number of nurses that are needed.

The hospital could have an unexpected surge of patients requiring more nurses than were planned. Many of our hospitals overstaff to ensure that they meet the ratio and can manage an ever changing patient census 24 hours a day around the clock.

Hospitals maintain on call lists in various ways to meet this challenge tailored to best meet their patients care needs and operational dynamics. There is no one size fits all answer for defining an on call list, nor for determining who populates the list.

As you all know, we have a very diverse set of hospitals throughout California and they need flexibility to manage this in the way that works with their patients and their employees.

In many cases, as Matt mentioned, a collective bargaining agreement determines how nurses can be called and if a nurse is out in the hospital, could be out of ratio. We've had some conversations with the author and the sponsor about addressing this. Oftentimes it includes using a float pool before using a scheduled on call nurse.

SB 596 would impose new requirements on hospitals on call nurse staffing lists. And while we appreciate the recent amendments that the Senator mentioned, CHA remains in opposition. Unfortunately, this proposal as it's currently written would disrupt current staffing processes and increased costs for all hospitals without improving patient care.

Effective patient care requires that nurse leaders have the flexibility to make real time staffing decisions based on constantly changing conditions within a hospital, such as changing patient acuity levels, emergencies that cause a surge in patients or other operational challenges.

Beyond the operational and implementation challenges, this bill would significantly increase the cost of care at a time when California's hospitals can least afford it. I have Erica Frank with me who's legal counsel at CHA, to answer any technical questions and we remain in respectful opposition. Thank you.

Thank you. Are there others in opposition who would like to offer a me too? Please come forward.

Kelly Brooks, on behalf of the California Association of Public Hospitals and Health Systems, here in respectful opposition. Thank you.

Chloe King with Political Solutions on behalf of Memorial Carol Health System in opposition. Thank you.

Thank you. Seeing no other opposition, I will bring it back to the Committee for any questions or comments. Assemblymember Patel and then Schiavo.

Thank you for bringing this Bill forward and for your work with the opposition, your earnest work with the opposition to try to find some compromises.

I have a couple of basic questions as I'm learning this whole process. One is that in existing law there are fees and penalties. Where do those fees and penalties go? What systems are they used to improve?

I feel like I should know this since I sit on sub 3. I don't know if it's self fulfilling the actual...to actually run the program, if I'm not mistaken, to actually run the program to send out investigators. That's as far as I remember. Unless.

Yeah, that's correct. It goes to the Quality...Center for Quality and Improvement.

The Licensing and Certification Fund so they can run family members.

So then that would help certainly if more fees were coming in, that would help with more accountability and oversight and make sure that the program is working as it's expected to work. Even though there may be more work involved in that. That's good to know.

Second question is I'm trying to understand the labor negotiated on-call list versus the float pool. Right now as I understand all hospitals healthcare systems get to negotiate that system individually and this Bill would not make any changes to how that operates. Is that correct?

That is correct. My Bill does not touch how any hospital has to meet the 2019 passed legislation on their required to meet that nurse-patient ratio. They still have to require to meet that and they can use whatever tool they want to use to meet those ratios.

Okay. And then for the last question, as I'm just trying to understand when we have an on-call list - and maybe the opposition can also provide some input here - it's my understanding that whoever is on the on-call list is compensated in some way for having to be on call.

And a hospital system can use a float list first where the employee is working, maybe in a different department, maybe overstaffed in a certain area and available to switch over. So they have those strategies available to them.

But the on-call list is a separate thing where they are compensated for having to wait and be ready to jump in their car and rush over to fulfill a vacancy or an absence.

I'd like to go first and then turn over to the opposition on your question here. So it ties into your second question where the hospital has any flexibility to meet their nurse-patient ratio by law.

However, the law says the law only refers to on call list as a get out of jail free card, meaning if you're caught in violation, your only ability to waive the fine is to say that you contacted an on-call list. That's in statute right now. It does not say that you had a float pool.

They say you contacted an on-call list...so far. So because that's in statute right now, while there's flexibility how to meet the ratios, the only way for you to avoid a penalty is that you use an on-call list.

Now, since that's already in statute as the only ability to avoid a penalty, you then by default you should have an on-call list only if you think you're going to be in violation and you want to be able to prove that you used an on-call list.

Yes, labor law does say that if you schedule people in an on-call list, they should be getting paid.

But you can avoid that if you think you're never going to be in violation and you have a float pool and schedule people regardless because you think you're going to have a heavier case today or this month or because xyz.

Thank you. If I can. Thank you for the question. Assemblymember. The ratio laws are very specific. A hospital works very hard to remain in compliance with them at any time. And they can't just call any available nurse.

The nurse has to be appropriate for the unit of the hospital, the acuity of the patients and the shifts that have to be covered. And the ratios have different requirements, whether it's care in the ER, care in the NICU, care in different settings. So it's not as simple as just calling any nurse that you can find.

And that's why the hospitals need this flexibility. To your question about enforcement, the analysis does a great job on page four of specifically outlining what actions CDPH has taken.

I think it's important to note that the hospital's primary objection with the Bill is it takes away their flexibility to manage the care for their patients in the way that they think is best. So I'm going to stop there and ask, give Erica the opportunity to weigh in to answer your question as well.

Thank you very much. On the specific question with regard to the mandatory the scheduling of a nurse on call, you are correct, that does trigger compensation requirements. Hospitals, though, will utilize their flip pools. They'll utilize a voluntary on-call list that may not necessarily have the same compensation requirements.

But also in many of the CBAs that we have seen, if a nurse is going to be on call. Then there's standby pay requirements that kick in with premium rates. And we've even seen some CBAs that actually restrict the total number of hours that a nurse may work or be on call.

So these are some of the challenges that our hospitals are wrangling with when we're looking at the specific language of the Bill and that we're not able to utilize nurse staffing agencies or an on call list of nurses that who are voluntarily making themselves available.

Thank you.

Assemblymember Schiavo.

Thank you. In my former life before being here, I worked with nurses a lot for 13 years. And, you know, the ratio law was revolutionary. It really made a world of difference for nurses.

I've worked with nurses outside of the state and hear the horror stories of them taking care of 13, 16, 24 patients in some of the units. And they just dream about someday being like California nurses. But California nurses know that the reality is that they're often out of ratio.

I mean, we, you know, where I was, we had a form called assignment despite objection. And you know, as the witness mentioned, nurses are the ones who can be held accountable on their license if something happens in these situations where they're out of ratio.

And this is a form that will cover them and take an assignment despite objection because they feel like it's unsafe. And there's been whole campaigns that we waged day after day after day after day after day after day after day after day where they were out of ratio.

And so, you know, I understand the examples that were given by the opposition that sometimes things happen out of your control. There's a surge in the ER, there's things like that. But the reality, from what I've seen and experienced is that it's normal for hospitals to understaff on a regular basis as a cost-saving measure.

And it's a way that, you know, that hospitals kind of cut corners and cost save. And I don't know if it's optimistic thinking every single day or what, but. But there's so many.

Putting aside the impact to patients who are not in the safest possible position and getting the care that they need and deserve by law, but it's also leading to huge burnout by nurses, nurses that I talk to.

We know nurses are leaving the profession and this is one of the huge challenges is that they're feeling overwhelmed and stretched and exhausted and constantly understaffed. And it is just this burden that they can never get out from under.

And so having...we know that there are resources available to appropriately staff. Travelers are used more often than many of us would like them to be used, but they're unavailable resource as well for a whole lot more money than just hiring more staff. Hiring more staff would be another way to fully staff.

So, you know, so there are, there are so many ways to ensure that appropriate staffing happens and making sure that there is a realistic on call list that, you know, that that is utilized to earnestly try to staff up when understaffing is happening, you know, I think is really kind of the least that we can do.

And you know, and just, you know, just I have to say from my experience, it's not the exception, it's the norm that short staffing happens.

And it really, it's very frustrating to see it be almost a policy, an unwritten policy for hospitals to short staff and continue to try to get around what is state law, what is the law, what is safest for patients and the care that nurses desperately want to be providing to their patients as well.

So, you know, I'm happy to support this Bill today and I hope that, you know, that there can be some kind of agreement that happens.

But I think that it's really critical that we make sure that this law that we fought so hard for in California to make sure that there's safe staffing and safe patient care, that it is real. When we talk about having nurse to patient ratios here in California.

Assemblymember Patterson.

Yes. Question. Is the primary objective of this Bill to basically ensure imposition of penalties should a hospital not comply with, with the existing law? Or is it to, I don't know, this isn't the greatest word, but dictate how they fulfill the obligations that are required under the law.

I would say kind of neither, Assemblymember, because I think the Bill that was passed years ago already kind of dictated how they have to meet those ratios. Right. And there's flexibility there. It already dictated how they can avoid a penalty already, but we just fell short of defining that on-call list.

So we're just looking to define on-call list. So it's to have clarity because you're going to have a lot more healthcare representatives file complaints to departments and say, "hey, we're not feeling like we have support or meeting the ratios. I have too many patients under my belt." Those complaints are going up to the Department.

The Department right now is, as I said, maybe 32, have gone into investigation in the past five years. And they also need clarity on how can I enforce something when I don't know what an on-call list is.

So it's not to increase or add penalties, which is why I didn't want to increase the current penalties right now in this Bill. It's to actually have the intent of the previous Bill actually be enforced and put some teeth behind the on-call list. That's really my intent behind this.

Yeah, I get that and appreciate that. I'm thinking, you know, I think half of the people who live on my street are nurses just based on the proximity of where I live. And honestly, all of them are, you know, I mean, they work really hard. I mean they're, you know, they're...

...hard workers and they're often tired, you know. But also I know what I would be concerned about from some of them. And I think these are some, some Members, some of the supporters of this Bill. You know, they, some of them like the flexibility of the way their jobs are now.

And so I do have some concerns about what this could mean for, for those individuals because that's actually how they get their respite, how they get their relax is sort of the amount of flexibility they have. Some of them. Right. Not all of them have that same kind of flexibility. And feel free to address that point if you'd like.

Assemblymember, this doesn't change the amount of hours a nurse works. The amount of shifts a nurse will take on whatsoever does not touch. If a nurse wants to stick to their three shifts of 12 hours a week, they can stick to that whatsoever.

The Assemblymember from Santa Clarita mentioned, you know, the ability of contracting with traveling nurses companies to fill in those spots. So it's not to add, not to say nurses, you have to take additional shifts. It's not to say nurses, you have to accept to be an on-call list.

It's not to say, hey, nurses, you have to be scheduled to be on-call list. No, it's the responsibility always of the employer, regardless of what sector we're in, to maintain an adequate level employee to meet the needs and demands of their sector.

So this Bill would just say hospital, make sure you have that number, not hospital, force employees to be on your on-call list whatsoever. So the flexibility of your neighbors will still exist.

Thank you. I don't see any other comments or questions. So I wanted to just to offer my thoughts on this. Senator, I know that this is.

You've worked very hard and what I heard in your opening was just the reality that we work really hard for our bills and often negotiate to make sure that we're moving forward policy that really considers all stakeholders and sometimes we're not able to get there by the policy hearing date. And there's always some frustration around that.

But I also know you to be an author that continues to just work with people to ensure that we're very balanced and being able to move forward policy. And I'm sure-

I will always work. With Christy Wiese, always.

And I'm sure that that will be the case here as well, Chair. So I appreciate that same same. Good.

I'll not have you have to write that down, but know that that will be true. And I also appreciate that we are in the need of making sure that we're continuing to advance our analysis around staff-patient ratios.

Many of the nurses that I talk to when I visit hospitals throughout the state are and also quite frankly then the other kind of supportive healthcare providers as well talk a lot about the level of burnout that they are experiencing.

We know that we are currently facing an issue with making sure that our nurses are continuing to continue to be able to stay within the healthcare workforce. And that is something that we need to very much protect. So I'm thankful that you're moving forward this Bill, that you were able to take some of the amendments.

I also hear the opposition's concerns around ensuring that we they continue to be able to be responsive to what is a very dynamic setting within the hospital within the hospital setting. So I know that we will get there in being able to strike the perfect balance to be able to do both.

And with that, when the time comes, I'm sure we will be able to entertain a motion for support. And with that, would you like to close?

Thank you Madam Chair. And thank you colleagues for the conversation here. You know, throughout this time I was trying to read through the Bill just to make sure and if it's not clear the intent is to allow flexibility in hospitals ability to staff, that should remain. That is the intent of their flexibility to stay the same.

And the amendments that we took in removing the 10%, we even had an opposition move from opposed to neutral. The Association of California Healthcare Districts that represent hospitals in rural and small areas.

And they state that SB 596 is, as it's written now with the amendments, is consistent with current law and in our view does not expand existing staffing requirements because that's already in law.

In January 1, 2026 when all our bills yeah, 2026, when most of our bills are going to go into law, this 596, if it's passed, nothing will change.

Nothing will happen on January 1st because hospitals will still have to meet the same old staffing requirements. They still have to call whatever they need to call float pools, what have you to meet those needs.

However, if on January 3rd or January 4th, CDPH goes and inspects a hospital and they're found in violation, then my Bill would kick in if that hospital says I called the non call list. So the Department will only say let me see your list. Did you actually call people that you had scheduled on call?

Did you actually call people that were that have the background of that set unit in the hospital that are applicable to that unit? Let's make sure that that on call list is actually an on-call list. It does not say you have to call five people.

A hospital could just call one person if they want, just make sure that one person was scheduled to be on call and so forth.

We attempted to be as flexible as possible, but also ensuring that the needs that what we're hearing from our healthcare staff is real and if we don't support them, then our loved ones are going to be the ones who are going to be at the front end of receiving perhaps inadequate health care.

Not because of the health care workers that they don't want to, it's because they don't have that support. With that, we'll always continue to make sure we can make that clear in my Bill to move forward and respectfully ask an aye vote to get out of this Policy Committee.

Thank you. And at the appropriate time we will be able to consider that. Thank you so much, Senator. We're going to be moving on now to item number three, SB 40 by Wiener, followed by his second item number six, SB 363.

Whenever you're ready, Senator.

Okay. Thank you very much, Madam Chair. I'm here to present SB 40, the Insulin Affordability Act. And I want to start by thanking the Committee for working with us.

And we're happy to accept the amendments in the Committee analysis, removing rapid acting inhaled from the definition of drug type and only including one definition of drug type in the Bill.

So, SB 40 caps the monthly co-pay for insulin at $35 for a 30-day supply and prohibits step therapy requirements for insulin treatments unless health plans have at least one insulin for each drug type covered, similar to what's in statute for antiretroviral drugs for HIV treatment.

We know that there are hundreds of thousands of Californians diagnosed with type 1 diabetes each year, and 4 million adults in California have diabetes overall. Insulin is not optional, it's life saving. And people should never have to choose whether to get their insulin or buy food or pay rent.

And they should never have to ration insulin, which unfortunately, we know is happening. The Inflation Reduction Act, which has not been completely repealed, only partially caps insulin co-pays at $35 a month for Medicare. And we should do the same in California for the health plans that we oversee. The time has come.

This Bill has been receiving essentially unanimous bipartisan support, and I respectfully ask for an aye vote. With me today to testify is Shagun Bindlish, Dr. Shagun Bindlish, a diabetologist, internist, and Benton Bucher, President of the Democratic Club at UC Davis.

Thank you. You'll each have two minutes.

Good afternoon, Madam Chair and Members, and thank you very much for the opportunity to speak here today. My name is Dr. Shagun Bindlish. I'm a board certified diabetologist, obesity medicine specialist, and Scientific and Medical Director of American Diabetes Association Northern California Leadership Board.

I'm here today to express my strong support for the Bill SB 40, especially the provisions that make insulin more affordable and accessible for every person who needs it. Insulin is not a luxury, it's a lifesaving medication. For people living with diabetes, especially with type 1 diabetes, it is essential for daily survival.

Yet I see too many patients facing barriers that compromise their health and safety, that result in diabetes fatigue, impacting their mental health, and frequent hospitalizations. One of my patient, a 28 year old who had type 1 diabetes, recently shared that he sometimes has to choose between his paying rent and buying insulin.

These are choices no one should have to make in a state as resource rich as California. There are many other patients who try to even stretch doses to get enough the month. SB 40 is a meaningful step forward, by capping insulin cost and improving access, this Bill ensures patients can focus on their health without the fear of financial hardship.

This Bill is not just about numbers on a spreadsheet.

It's about human dignity, equity, and it is also about saving lives and preventing avoidable suffering, especially like complications that patients who are who are facing uncontrolled diabetes face every day, especially like a limb amputation is one of the major cause. As a physician, a scientist, and a passionate advocate for my patients, I really urge to support SB 40.

Thank you very much for your time.

Thank you. Please go ahead. You'll have two minutes.

Good afternoon, Madam Chair and Members of the Committee. My name is Benton Bucher and I'm a student at UC Davis, here representing the Davis College Democrats, and I am proud to support SB 40 to cap insulin co-pays at $35/month. As a college student, I know how hard it is to make ends meet.

A recent poll of U.S. college students found 1 in 5 students have less than $100 in the bank right now. Moreover, 47% either don't have a savings account or have one with no money in it. Overall, 23% of undergraduates are experiencing food insecurity. These statistics make life difficult for college students.

But for students with diabetes, these statistics can be deadly because California, unlike 28 other states, has yet to pass insulin co pay cap protections into law. Insulin is not optional. In California, a health plan can charge $250 for an insulin copay, and that's after you've met your deductible.

If you haven't met your deductible, they charge the full price, which can be $1,000, even though the health plan or their PBM never paid that much for the insulin, as a result of rebate contracts with manufacturers.

In fact, the Federal Trade Commission found in their investigation that patients with deductibles and coinsurance were forced to pay more out of pocket for their insulin than the entire net cost of the drug to the payer. SB 40 is a necessary step to making insulin more affordable for Californians, including college students and others who live on the margins.

Now, with rising prices on basic necessities like food and housing, insulin co-pay protections are needed more than ever. Insulin is not optional. I therefore ask for your aye vote to cap insulin co-pays at $35 a month. Thank you.

Thank you. Are there others in the hearing room who would like to offer a me too? Please come forward.

Good afternoon, Madam Chair Members. Mari Lopez, with the California Nurses Association, in support.

Jennifer Carroll from Sacramento. I support SB 40.

Noel Taminin from Livermore, California. I support SB 40.

Christine Christianson, from Danville, California, mother of a type 1 diabetic. We are both in support of SB 40.

Valerie Kovakovich from Alamo. I am in support of SB 40.

Rhea Bintlish, President of Dublin High's Chapter of American Diabetes Association, in support.

David Gonzalez, a student at California State University, Chico, and I support SB 40.

Alison Ito, as a student of UCLA, I'm in strong support of SB 40.

Benny Mock, UC Davis student, in strong support of SB 40. Thank you.

Matt Diamond, I'm a CPA in San Francisco, in full support.

Christine Falabel, on behalf of the American Diabetes Association and as someone who has lived with type 1 diabetes for 25 years, in strong support.

Mark Passos from Pleasanton, California, living with type 1 diabetes and insulin dependent for 50 years. In strong support of Senate Bill 40.

Michaela Spencer, on behalf of the American College of OBGYN Statute 9 and the California Podiatric Medical Association, in support.

Matt Lajay, with SEIU California, in support.

Michelle Rivas, California Pharmacists Association, in support.

Alex Kahn, California Chronic Care Coalition, in support.

Diana Douglas, with Health Access California, in support.

Tim Cole, with California Academy of Family Physicians, in support.

Madam Chair and Members, Rand Martin, on behalf of the AIDS Healthcare Foundation, in support. Thank you.

Kevin Guzman, with the California Medical Association, in support.

Thank you. Are there any others in opposition to this Bill who are primary witnesses? Seeing no opposition primary witnesses. Are there any others in the hearing room who want to offer me too? Seeing none, I will bring it back to the Committee for questions or comments. Assemblymember Patterson.

I was back just in time to comment on another Bill. Well, I appreciate you bringing this Bill today. I don't really understand why insulin is so expensive. I don't necessarily think, you know, I think there are a lot of parties that contribute to that, not necessarily only, you know, the health plans or whatnot.

I also don't think California is capable of producing its own. I think it can be produced by the private market at this price. But it doesn't make any sense why insulin, which has been around, the first peptide created, is so expensive. And so, you know, I think we obviously got to do something about that.

I think this is something to consider. This Bill's maybe a step in the right direction. And if you can enlighten me on why you think it's important or why it's expensive, I'd be happy to hear that. But just my comments are more in tune to this is people die without insulin.

This isn't some drug that people can optionally take. I grew up, one of my best friends was type one, and at that time, in the 80s, he was scared of dying from eating the wrong thing. And they didn't have continuous glucose monitors back then, so. But anyways, after 40 years, insulin's more expensive, not cheaper.

So, I don't really understand that. But anyways, thanks for bringing the Bill.

Thank you.

Assemblymember Addis.

Right. No, thank you, Senator, for bringing this. I supported a Bill like this, similar Bill last year, that I know that struggled, and I'm glad you brought it back this year. I think it's incredibly important and appreciate you working on it and happy to move the Bill and support it when we have quorum.

Thank you.

Thank you, Senator. This ensures that we are able to instill an insulin copayment cap, which I think is so critical, particularly in this moment in time, as we are trying to ensure that we are focusing on a healthy California and affordability at the same time.

And I think certainly when it is available, we'll have higher levels of adherence and insurance that people won't be able to suffer as much. So, with that, would you like to close?

Thank you, Madam Chair and colleagues. Yes, we—to Mr. Patterson, we have a broken health care system, and a lot of the costs are distorted, and there are many things we need to do. And I appreciate a lot of leadership on this Committee around some of these issues.

I also just want to say that my father is type 1 diabetic. He actually developed it as an adult in his 30s, which is not common. I still remember when I was a child and he first had it and it was very, very hard. And insulin has kept him alive, and he's been very privileged that it's never—he's never had to struggle with the cost.

But it really made me understand in a very personal way what it would mean if someone were struggling with the cost, that you have to take it. It's not optional. It's not like you're just going to feel worse if you don't take it.

You're going to not be with us any longer. This is not optional. It's time to cap the copay, and I respectfully ask for an aye vote.

Thank you. And when we are able to establish quorum, I'm sure that will come. We'll move on now and thank you for Davis Dems for coming to speak today. We'll move on now to your second item, SB 363, which is about health care coverage and independent medical Reviews.

Okay, thank you, Madam Chair. And speaking of another piece of the system that needs some work here today to present Senate Bill 363. Happy to accept the Committee amendments, and I appreciate the Committee working with US colleagues.

We know that it is quite common that a provider decides that there's a certain type of medical care that the patient needs, and then the health plan denies that coverage. And those denials can be devastating. And sometimes they're denials that stick. Sometimes they're denials that after a labyrinthine process, you can get overturned.

The process in California is that you have to do an internal, essentially grievance within the health plan. And if that doesn't work, you are entitled to seek, or an independent medical review, or IMR. And from the data that we have, it appears that a large majority of IMRs end up overturning the denials.

We also know that IMRs are overwhelmingly in English and that a lot of people do not even know that they are entitled to seek an IMR. And it's a complicated process.

And for people who are just trying to get by and raise their families and maybe working more than one job, the last thing that they need is to have to spend time on a lengthy process. Thank you so much.

And so a lot of denials just stand as a result. But the ones that get appealed to an IMR, we know that are largely overturned, particularly around behavioral health.

So unfortunately, because most of these denials do not result in IMRs, there's not a big downside for health plans to engage in patterns of denials, because largely it's not going to be a challenge. I've worked on this issue for a few years.

Last year we've tried for a few years to do a Bill to trigger automatic IMRs for behavioral health, didn't work. So we're taking a different approach with SB 363, which is first of all to require much greater transparency so that we actually have comprehensive data about denials. And so we don't have to just cobble it together.

That in and of itself will be extremely valuable. And then the other piece of the Bill is that when a health plan is getting overturned on IMRs at a rate of more than 50%, then there will be significant penalties because we know that again, the IMRs are the tip of the iceberg.

And so that's what this Bill does. I know that there have been questions and comments about the size of the fines. And the fines by the way, used to be higher. They were cut in half in Senate Health And I appreciate that conversation.

But the purpose of these fines is to not be a cost of doing business, to be meaningful enough that if that tip of the iceberg shows that you are a majority of the time being overturned in your denials, that is a systemic problem and there needs to be true accountability.

So it is not just a cost of doing business. So it's cheaper to pay the fine than it is to deny people care. So, colleagues, I appreciate the Committee's work and the amendments, and I respectfully ask for your aye vote with me today.

To testify is we have Liz Helms, President and CEO of the California Chronic Care Coalition, and Dr. Ijeoma Ijeaku, MD physician, distinguished fellow of the President of the California Academy of Child and Adolescent Psychiatry.

Okay. Good afternoon. My name is Ijeoma Ijeaku. I'm board certified child, adolescent and adult psychiatrist, President of California Academy of Child and Adolescent Psychiatry. one of the co-sponsor of this Bill. And I've had over 15 years of psychiatric practice, so I'm 100% in support of this Bill.

So when I evaluate my patients in the clinic, I'm considering not just their diagnosis, their disorder, I'm also looking at other factors that affect them, all the psychosocial factors.

And so when I come up with a plan, when I come up with that treatment plan in collaboration with the patient, their families, it is just ridiculous that somebody else who is not, who has not examined what I have examined, gets to decide whether that treatment should happen or not.

And so what this Bill does is make sure we have that transparency that we know why a company decides that they don't pay for treatment that I've determined or my colleagues have determined that the patient requires. And so to have that third party deny treatment is just ridiculous, Right.

Because we have determined that the treatment is appropriate, is adequate, it's comprehensive, it's very individualized. And so to have somebody else just say, no, that's not necessary, it's not right.

And this is really important because we know that 82% of youth mental health services that were overturned by IMR, there were 82% of them in 2020 that were overturned IMR. We also know that psychiatric reasons remain number one reason that youth in California gets hospitalized and then we are short staffed.

The AACAP, which is American Academy of Child and Adolescent Psychiatry, says we need about 47 child and adolescent psychiatrists per 100,000 kids. The average in California is 14 to 15. There are about a third of the counties in California that do not have child and adolescent psychiatry.

So when insurance companies says, you're denied, nobody has the time to go back and fight. So it pushes it on the patients to fight, even they can. And so that's just a way that we are burdening the system, making sure that our youth don't get the care that they need.

And that's how they end up being hospitalized. They utilize other avenues there're either in the ER or something happens, they end up in jail. So we are just redistributing what we're doing with our resources.

So I urge you to put the power back in the hands of the patient and allow our patients get the care that they need when the appropriate provider has determined that that's what they need on time. Thank you.

Thank you. You'll have two minutes now.

Thank you. Good afternoon, Chair Bonta, Members of the Committee. My name is Liz Helms, and I'm the President and CEO of the California Chronic Care Coalition, an alliance of more than 30 leading consumer health organizations and provider groups committed to improving care for Californians living with chronic conditions.

Now in our 19th year, we are proud to co-sponsor 363. Thank you, Senator Wiener. But I am here today not only as an advocate, but to share my personal journey, one that has taken me 30 years to get here, one that has shaped my dedication to patient and public policy.

30 years into my second career, I'm honored to support a Bill that truly has the potential to change lives. In 1993, I suffered a traumatic injury to my right jaw joint. As it healed, the joint fused, leaving me in constant pain, headaches, nausea, vertigo, and dependent on opioid medications and muscle relaxants. My life was upended.

I was running a small business in Folsom while pursuing an agricultural science degree, but I faced denial after denial after denial from my health plan for nearly a year and a half. The financial and emotional toll was devastating. Bankruptcy, loss of my family home, and nearly losing my business.

It took a decade to rebuild my credit and my stability. My health plan failed to recognize the medical needs. The prevailing model seems to be deny first delay, and maybe the patient will go away. Many do, I know they wish I had. Realizing many share my story propelled me into patient advocacy.

No one should ever endure what I went through. The deny and the delay first approach is inhumane. And the situation is even worse for today's patients. I was fortunate that my Doctor said he wasn't going to allow a third party to tell him how to do it. He provided surgery and took the full risk.

I was Back to work in six weeks. I haven't stopped since then. Since then, I've dedicated myself to being a voice for those who cannot speak up. I lost my fear and gained purpose. Today I speak on behalf of the millions of patients asking for your help.

We need health plans to be transparent about their denials, overturns and reversals. This is not health care. It's sick care. Patients and providers deserve better. We urge you to hold health plans accountable to their Members, to the physicians and the providers who must dedicate precious resources to contest denials. Thank you very much.

And we urge your support. Thank you.

Others in the hearing room who would like to offer support, please come forward.

Mari Lopez, California Nurses Association, in support.

Lashawn Francis, with Children Now, proud co-sponsors and support.

Michelle Johnston, National Multiple Sclerosis Society, in support.

Melissa Cortese, on behalf of Autism Speaks, and the Council of Autism Service Providers. In support.

Kevin Guzman with the California Medical Association. In support.

Kalyn Dean with the California Hospital Association. In support.

Michelle Rivas, California Pharmacists Association, in support.

Jorge Cruz, on behalf of the California Behavioral Health Association. In support.

Penny Schenken, on behalf of the California Association for Behavior Analysis and support.

Tim Cole, on behalf of California Academy of Family Physicians and support.

Trevor Nelson with the California alliance of Child and Family Services and support.

Whitney Francis with the Western center On Law Poverty. In support.

Diana Douglas with Health Access California. And support.

Alex Kahn, on behalf of my client, the ALS Association. In support.

Lauren Phillips, provider for individuals with severe behaviors, in strong support.

Emily Schuman, parent to a child with autism, in support. Thank you.

Colette Madden, representing California Rheumatology alliance and California Chapter of the American College of Emergency physicians and in support.

Dr. Andrea Davis with the DIR Floortime Coalition of California, in support.

Thank you. We will now move to primary opposition. Please come forward.

Thank you, Chair Members. Nick Louizos on behalf of the California Association of Health Plans, in opposition to SB 363. Members, CAHP health plans or the California Association of Health Plans members are the backbone of our healthcare delivery system in the sense that they cover 28 million Californians.

Our Member plans process hundreds of millions of claims every year, ensuring access to vital medical services and that they're paid for. In 2023 alone, plans paid about $220 billion, or about 90% of every premium dollar on direct medical care. A testament to the scale and financial stewardship of our Members in the system.

We operate within a massive health care system, one that we acknowledge is not without its challenges, and we are committed to embracing sensible solutions that improve the delivery of care.

Indeed, we've offered amendments to some of the more sensible bills that have been introduced related to prior authorization, as long as they improve the delivery of care and make things more efficient. Regrettably, SB 363 is not such a solution.

Instead, this Bill imposes pretty significant penalties on our Members that are costly and burdensome, and recent amendments that went into the Bill do not resolve our concerns. Fundamentally, the Bill demonstrates a misunderstanding about the IMR process. IMR is a venue to resolve differences of opinion regarding the medical necessity of a covered service.

The practice of medicine, unfortunately is not an exact science. It's pretty nuanced field where equally qualified and experienced Clinicians frequently arrive at differing yet valid conclusions regarding a patient's needs in a particular case. To impose punitive penalties on plans for these inherent differences of opinion. Clinical opinion particularly on complex medical questions, we believe is punitive and overreaching.

Our Members do take the outcomes of IMR seriously. They review their policies and procedures when IMR decisions result in an overturn. These insights are already a subject of regular discussions between the Department of Managed Healthcare and our Members. Fundamentally, though, we believe that arbitrary and excessive penalties will not enhance care.

Instead, they will apply unnecessary complexity and ultimately increase cost, for those reasons were opposed. Thank you.

Madam Chair, Member. Stephanie Watkins on behalf of the Association of California Life and Health Insurance Companies. Regrettably here in opposition as well.

Just to build off of some of my colleagues comments, we're also concerned that SB 363, establishes a new and extensive reporting requirement on health plans and insurers, manding the collection and submission of disaggregated data based on various factors.

Such requirements will place a significant administrative burden on plans and insurers at a time when affordability is key to the success of healthcare system. With that in mind, it's critical that we ensure that any additional administrative requirements directly benefit consumers experience and bring additional value to the system.

To that end, we're not certain that the reporting parameters outlined in this Bill meet that threshold. For those reasons we are opposed. And based on my colleague's comments, we do look forward to continuing to have conversations if there's a pathway forward. But at this point, unfortunately we are opposed to the measure.

Are there any others in the hearing room who would like to offer a Me too in opposition to SB 363.

Katie Andrew Local Health Plans of California, in opposition. Thank you.

Thank you. Cassidy Eggma on behalf of America's physician groups, in opposition.

Seeing no other opposition, I'll bring it back to the Committee for any comments or questions. Senator, I'll just start off with a question.

You know, we were able to dig in a little bit on this, and one thing that I learned, which was incredibly helpful to me, was a comment raised in the analysis that 72% of IMRs brought to DMHC last year resulted in a successful overturning or reversal of a denial, meaning the enrollee eventually got the services they requested.

And for some demographics and diagnoses, the IMR process was overturned. The overturn rate is even higher, particularly related to youth mental health, behavioral health. 82% of health plan denials for youth and mental health care, were overturned by IMR. That's a pretty astounding statistic.

So you've certainly kind of hit on what I would call is a very significant and dire concern.

I appreciate the testimony offered by your witness that described kind of what happens when you have to go through a process over many months and months to be able to get some resolution for health care, only to then perhaps end up in a percentage of likelihood, percentage of you being able to get the care that you need through that being overturned.

So this is a bit for the opposition. How do you account for such a high overturn rate at the IMR process to be able to justify not being able to do something about this right now.

Yeah, thank you Chair, for that question. We've actually talked to the Department about those numbers.

We have a little disagreement about that percentage, that 72% in particular. About 30% of those are overturned by the plans themselves because as a result of the IMR process or the cases being filed, information has come to light that was needed in the first place to process the approval.

So a good percentage of that 72%, we believe, fall into that category. So we think the overturns are more like 50% from our perspective, that are actually overturned by the department's reviewers.

Wouldn't you expect though, particularly given the gravity of the situation. As I understand it, if you are undergoing an IMR, you are at the 11th hour, right. You have gone through every single denial process along the way. It's been weeks, perhaps months, maybe even in some instances years.

Where to get to the point of IMR. So 50% is a lot for me. Even if you want to go with that number, that number should be for me somewhere in the neighborhood of 5 to 10%. So how do we create an opportunity for us to be able to really address that. I Appreciate the.

No, I'm happy to respond. Is that a question. Yeah. I mean so, you know, as we've stated on prior bills, I mean the industry's come together nationally to come up with some prior authorization principles that deal with this at a systemic level. The industry's committed to reduce the scope of prior authorizations.

They've, you know, they talk about the importance of electronic submissions and other areas. Also, I think data is really important as well.

There is a data requirement that's going to be kicking the gear on health plans in 2026 that require a little bit more transparency on what services have to go through authorization and what the percentage of denials are. And I think once we get the data, I think you'll find that California probably performs better than.

Than other states in the country. I don't know that for sure, but I think, you know, starting with data is really important. And those requirements are going into place for the Medicare plans and the plans that operate in the federal exchanges.

We've advocated within the context of other bills to follow that data format, and I think that'll be revealing. But again, we have offered amendments to other bills related to authorization for care. We just find that this Bill goes a little bit too far and, you know, we're unable to you know, engage at that level.

I appreciate that, and I'm heartened to hear that you believe that many of the policy innovations that we will be moving forward with as it relates to prior authorization and electronic health records and participation in the data exchange and other things, will.

And our prior authorization legislation, much with this author here has moved forward, will result in perhaps that not being such an incredibly high number. But as it stands right now, it is too high in my estimation.

Senator, I just wanted to just give you an opportunity to address the concern that I raised with you and stakeholders when we were able to meet around the nature of the very, very high fines.

I know that you are going to be continuing to be in conversation with DMHC on this and will be able to land in a place that is responsive to the technical assistance that DMHC has offered, while also taking into account some of the concerns that this Committee had as well. You want to address that in your close.

Sure. Great. And first of all, I just want to also before I get to that, I appreciate, so I think what Mr. Louizos was saying is that there are times when someone goes for the internal grievance procedure at the health plan and loses, and then they file an IMR and then the health plan before the IMR gets adjudicated reverses itself. I believe that's what more or less what he was I think. And it's great.

It's never too late to self correct when one makes a mistake. But it did require the person to go through that whole process and file and most people don't even do that.

So whether or not the Department is overturning or whether or if it's happening at that stage, it means that someone was forced to file for an IMR. I just wanted to sort of state that, and most people again don't even know they have the right to an IMR.

And it's just very problematic in terms of the size of the fine. And we've had the conversation. I appreciate that and I appreciate the work and the analysis. And as mentioned we did have a reduction in Senate health and it is something we'll be discussing with the MHA, absolutely.

There's no number as magical in particular, but it's just about making sure that it's high enough that it's not a cost of doing business or viewed as a cost of doing business and that it has a real impact on behavior.

So with that this is about increasing access and making sure that people are able to get the benefits that they deserve from their health plan so that they can stay healthy. And I respectfully ask for an aye vote.