SB 363: Health care coverage: independent medical review.

Official summary

Legislative Counsel’s Digest (official, as of the latest version). Written by nonpartisan legislative staff; reproduced verbatim.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care, and makes a willful violation of the act a crime. Existing law provides for the regulation of health insurers by the Department of Insurance. Existing law establishes the Independent Medical Review System within each department, under which an enrollee or insured may seek review if a health care service has been denied, modified, or delayed by a health care service plan or health insurer and the enrollee or insured has previously filed a grievance that remains unresolved after 30 days.

This bill would require a health care service plan or health insurer to annually report to the appropriate department the total number of claims processed by the health care service plan or health insurer for the prior year and its number of treatment denials or modifications, separated and disaggregated as specified, commencing on or before June 1, 2026. The bill would require the departments to compare the number of a health care service plan’s or health insurer’s treatment denials and modifications to (1) the number of successful independent medical review overturns of the plan’s or insurer’s treatment denials or modifications and (2) the number of treatment denials or modifications reversed by a plan or insurer after an independent medical review for the denial or modification is requested, filed, or applied for. For a health care service plan or health insurer with 10 or more independent medical reviews in a given year, the bill would make the health care service plan or health insurer liable for an administrative penalty, as specified, if more than 50% of the independent medical reviews filed with a health care service plan or health insurer result in an overturning or reversal of a treatment denial or modification in any one individual category of specified general types of care. The bill would make a health care service plan or health insurer liable for additional administrative penalties for each independent medical review resulting in an additional overturned or reversed denial or modification in excess of that threshold. The bill would require the departments to annually include data, analysis, and conclusions relating to these provisions in specified reports.

Because a willful violation of these provisions by a health care service plan would be a crime, this bill would impose a state-mandated local program.

Existing law creates the Managed Care Administrative Fines and Penalties Fund in the State Treasury for the deposit of fines and administrative penalties collected pursuant to provisions licensing and regulating health care service plans.

This bill would create the Managed Care Independent Medical Review Administrative Penalties Subaccount in the Managed Care Administrative Fines and Penalties Fund for the receipt and deposit of moneys generated from the administrative penalties described above with respect to health care service plans. The bill would create the Health Insurance Independent Medical Review Administrative Penalties Fund in the State Treasury for the receipt and deposit of moneys generated from the administrative penalties described above with respect to health insurers. The bill would authorize the moneys in the Managed Care Independent Medical Review Administrative Penalties Subaccount and Health Insurance Independent Medical Review Administrative Penalties Fund to be expended, as specified, upon appropriation by the Legislature.

This bill would declare that its provisions are severable.

Sponsors

Sponsors by party (alphabetical): Democratic 5

“Support” is shown only as formal sponsorship recorded by the legislature. Roll-call votes are available on the official bill page.

Recent official actions

1. August 13, 2026August 13 hearing: Held in committee and under submission.
2. August 29, 2025August 29 hearing postponed by committee.
3. August 20, 2025August 20 set for first hearing. Placed on APPR. suspense file.
4. July 17, 2025Read second time and amended. Re-referred to Com. on APPR.
5. July 16, 2025From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 13. Noes 0.) (July 15).
6. June 24, 2025From committee with author's amendments. Read second time and amended. Re-referred to Com. on HEALTH.
7. June 5, 2025Referred to Com. on HEALTH.
8. May 28, 2025In Assembly. Read first time. Held at Desk.
9. May 28, 2025Read third time. Passed. (Ayes 29. Noes 8. Page 1291.) Ordered to the Assembly.
10. May 27, 2025Read second time. Ordered to third reading.
11. May 23, 2025Read second time and amended. Ordered to second reading.
12. May 23, 2025From committee: Do pass as amended. (Ayes 5. Noes 1. Page 1198.) (May 23).