- Governor Newsom today signed SB 858 (Wiener) which will increase the level of fines for health plans who violate patient protections and modernizes outdated standards.
- These DMHC fines have not been updated since 1975. The new law will incentivize plans to improve their practices, and not just pay the fine as the cost of doing business.
SACRAMENTO, CA – On the final day to take action on legislation on his desk, Governor signed SB 858 by Senator Scott Wiener updating penalty amounts that the state can levy on health plans that don’t meet state consumer protection standards. It will go into effect on January 1, 2023.
Despite strong consumer protections for Californians in health plans regulated at the Department of Managed Health Care (DMHC), many have still been denied or delayed in getting medically necessary services. Yet fine amounts for violations related to grievance handling and other specific consumer protections had not been updated for decades, all while health insurance premiums have not just doubled, but quadrupled since 1999. Some of these fine amounts had not been updated since 1975 when gas was 59 cents a gallon.
The new law increases the maximum fines from $2,500 per violation to $25,000 when they violate standards such as timely access to care, adequate network standards, language access, behavioral health care services, gender-affirming care, or other consumer protections.
“For years health care corporations have been skirting consumer protection laws with minimal consequences. This new law will change the behavior of these health plans and ensure access to needed care for Californians,” said Diana Douglas, Health Access California’s director of policy and legislative advocacy.
“Californians rely on their health insurance to cover critical, even life-saving, care, and we must hold health plans accountable for following the rules and providing timely and adequate coverage,” said Senator Wiener. “California’s low, outdated fine levels allow health plans to view these fines as a mere cost of doing business. SB 858 makes clear that when we pass a law requiring coverage, we mean it.”
Even for the biggest, headline-making penalties in recent years, the fines didn’t necessarily match the severity and breadth of the violations. Just this year, L.A. Care was fined a historic $35 million by DMHC for failure to appropriately handle grievances and for a severe backlog of authorization requests for services over a five year span. However, with over 67,000 grievances and over 9,000 requests for authorization, this seemingly large fine amounted to only a few hundred dollars per instance—essentially less than a speeding ticket for delaying or denying care to a patient. Meanwhile, the plan reported a tangible net equity of over $1 billion, an amount $923 million over that which is required by law
This new law will give DMHC the additional authority to levy higher fines and impose corrective action plans when necessary. It will also modernize penalty amounts every 5 years, and updates the methodology to ensure the penalty amounts reflect the true harm caused to enrollees.