California Legislature—2013–14 Regular Session

Assembly Bill No. 1558

Introduced by Assembly Member Roger Hernández

January 28, 2014

An act to add Title 22.5 (commencing with Section 100800) to the Government Code, to amend Sections 1375.7 and 1395.6 of the Health and Safety Code, and to amend Sections 10178.3 and 10178.4 of the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

AB 1558, as introduced, Roger Hernández. California Health Data Organization.

Existing law establishes the Office of Statewide Health Planning and Development (OSHPD) to perform various functions and duties with respect to health facilities, health professions development, and health policy and planning, including, but not limited to, consulting with the Insurance Commissioner, the Director of the Department of Managed Health Care, and others to adopt a California uniform billing form format for professional health care services and a California uniform billing form format for institutional provider services. Existing law requires organizations that operate or own a health facility to file specified reports with OSHPD containing various financial and patient data.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans and makes a willful violation of the act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance. Existing law requires health care service plans and health insurers to provide an explanation of benefits or explanation of review that identifies the name of the network that has a written agreement signed by the provider whereby the payor is entitled, directly or indirectly, to pay a preferred rate for the services rendered.

This bill would request the University of California to establish the California Health Data Organization and would require health care service plans and health insurers to provide the explanations of benefits or explanations of review to that organization to the extent permitted by federal law. The bill would require the organization to organize the data provided in those documents and to design and maintain an Internet Web site that allows consumers to compare the prices paid by carriers for procedures, as specified. The bill would request the University of California to seek funding from the federal government and other private sources to cover the costs associated with these provisions and would authorize the organization to charge a fee to each person or entity requesting access to data in the database it creates.

Because a willful violation of the bill’s requirement for a health care service plan to provide an explanation of benefits or explanation of review to the organization would be a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

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

SECTION 1.  

Title 22.5 (commencing with Section 100800)
is added to the Government Code, to read:

 

Title 22.5.  California Health Data
Organization

 

100800.  

For purposes of this title, the following definitions
shall apply:

(a) “Organization” means the California Health Data
Organization established pursuant to Section 100801.

(b) “Carrier claims database” or “database” means a database
that receives and stores data from carriers reported to the
organization pursuant to Section 1395.6 of the Health and Safety
Code and Section 10178.3 of the Insurance Code.

(c) “Carrier” means either a private health insurer holding a
valid outstanding certificate of authority from the Insurance
Commissioner or a health care service plan licensed by the
Department of Managed Health Care.

(d) “Health care service plan” has the same meaning as that
term is defined in subdivision (f) of Section 1345 of the Health
and Safety Code.

(e) “Health insurer” means an insurer admitted to transact health
insurance business in this state. For purposes of this subdivision,
“health insurance” has the meaning used in Section 106 of the
Insurance Code.

(f) “Individually identifiable information” means information
that includes or contains any element of personal identifying
information sufficient to allow identification of the individual,
including the person’s name, address, electronic mail address,
telephone number, or social security number, or other information
that, alone or in combination with other publicly available
information, reveals the individual’s identity.

100801.  

(a) The Legislature hereby requests the University of
California to establish the California Health Data Organization.

(b) The organization shall be staffed by persons with
demonstrated experience in all of the following:

(1) Performing statewide individual-level data collection.

(2) Managing and analyzing complex patient-level data.

(3) Complying with HIPAA requirements.

(4) Communicating information to the public via a user-friendly
web interface.

(c) The Legislature hereby requests the University of California
to seek funding from the federal government and other private
sources to cover costs associated with the planning,
implementation, and administration of this title.

100803.  

The organization shall do all of the following:

(a) Establish a carrier claims database using the data collected
and organized as described in this title.

(b) Collect data from carriers reported pursuant to Section
1395.6 of the Health and Safety Code and Section 10178.3 of the
Insurance Code.

(c) Organize data reported by carriers pursuant to Section 1395.6
of the Health and Safety Code and Section 10178.3 of the Insurance
Code into the following categories:

(1) Charges and total amounts paid by carriers and patients,
including, but not limited to, charge amount, paid amount, prepaid
amount, copayment, coinsurance, deductible, and allowed amount.

(2) Type of health care service, including, but not limited to,
ambulatory care procedures and services and inpatient physician
services reported by Common Procedural Terminology (CPT)
codes, and inpatient hospital services reported by
Diagnosis-Related Group (DRG) codes.

(3) Information relating to risk adjustment, including other
diagnoses, length of stay, and discharge.

(d) Ensure that patient privacy is protected in compliance with
state and federal laws. Patient privacy shall be protected using
encryption and storage of the information on secure servers.

100805.  

(a) The organization may do all of the following:

(1) Receive and accept gifts, grants, or donations of moneys
from any agency of the United States, any agency of the state, any
municipality, county, or other political subdivision of the state.

(2) Receive and accept gifts, grants, or donations from
individuals, associations, private foundations, or corporations, in
compliance with the conflict-of-interest provisions to be adopted
by the board at a public meeting.

(3) Charge a reasonable fee to each person or entity requesting
access to data stored in the database, not to exceed the actual costs
of providing that access.

(4) Explore alternative sources of funding, to the extent
permitted by law, to ensure the sustainabilty of the organization.

(b) The organization shall not accept gifts or grants from an
entity that may have a vested interest in the decisions of the
organization.

100809.  

(a) The organization shall disseminate the information
collected pursuant to this title to the public in a meaningful and
comprehensive manner.

(b) For purposes of this section, the organization shall do all of
the following:

(1) Design and maintain an interactive searchable Internet Web
site that is accessible to the public and in which both of the
following requirements are satisfied:

(A) Information on payments for services is easily searchable
by the average consumer.

(B) The format used allows for the comparison of prices paid
by carriers per procedure.

(2) Investigate how to combine price information with quality
information, either within the database or by linkage to other
searchable databases.

(3) Investigate the most efficient way of presenting information
to the public, including, but not limited to, reporting on price
information for the average severity of the condition or for different
tiers of severity.

(4) Coordinate efforts with the health care coverage market and
provide information to the public using the geographic areas used
by carriers in order to do both of the following:

(A) Make price transparency readily available to all purchasers
of health care coverage.

(B) Help guide consumers in their choice between different
health plans available through the California Health Benefit
Exchange established by Section 100500.

(c) Information disclosed pursuant to this section shall not
contain any individually identifiable information.

(d) To allow for the development of the Internet Web site
described in this section without delay, the organization may
contract with a qualified, nongovernmental, independent third
party for the delivery of a commercially available claims dataset
with the appropriate level of detail in term of payments, geocoding,
and provider information. This information shall be replaced with
information directly collected by the organization once the first
set of data directly collected from carriers has been cleaned and
analyzed.

100811.  

The organization shall use the data collected pursuant
to this title and produce annual reports on the cost of specific
ambulatory care procedures and services and inpatient physician
services aggregated within geographic market areas in this state,
as determined by the organization, so as not to identify individual
physicians.

SEC. 2.  

Section 1375.7 of the Health and Safety Code is
amended to read:

1375.7.  

(a) This section shall be known and may be cited as
the Health Care Providers’ Bill of Rights.

(b) No contract issued, amended, or renewed on or after January
1, 2003, between a plan and a health care provider for the provision
of health care services to a plan enrollee or subscriber shall contain
any of the following terms:

(1) (A) Authority for the plan to change a material term of the
contract, unless the change has first been negotiated and agreed
to by the provider and the plan or the change is necessary to comply
with state or federal law or regulations or any accreditation
requirements of a private sector accreditation organization. If a
change is made by amending a manual, policy, or procedure
document referenced in the contract, the plan shall provide 45
business days’ notice to the provider, and the provider has the right
to negotiate and agree to the change. If the plan and the provider
cannot agree to the change to a manual, policy, or procedure
document, the provider has the right to terminate the contract prior
to the implementation of the change. In any event, the plan shall
provide at least 45 business days’ notice of its intent to change a
material term, unless a change in state or federal law or regulations
or any accreditation requirements of a private sector accreditation
organization requires a shorter timeframe for compliance. However,
if the parties mutually agree, the 45-business day notice
requirement may be waived. Nothing in this subparagraph limits
the ability of the parties to mutually agree to the proposed change
at any time after the provider has received notice of the proposed
change.

(B) If a contract between a provider and a plan provides benefits
to enrollees or subscribers through a preferred provider
arrangement, the contract may contain provisions permitting a
material change to the contract by the plan if the plan provides at
least 45 business days’ notice to the provider of the change and
the provider has the right to terminate the contract prior to the
implementation of the change.

(C) If a contract between a noninstitutional provider and a plan
provides benefits to enrollees or subscribers covered under the
Medi-Cal or Healthy Families Program and compensates the
provider on a fee-for-service basis, the contract may contain
provisions permitting a material change to the contract by the plan,
if the following requirements are met:

(i) The plan gives the provider a minimum of 90 business days’
notice of its intent to change a material term of the contract.

(ii) The plan clearly gives the provider the right to exercise his
or her intent to negotiate and agree to the change within 30 business
days of the provider’s receipt of the notice described in clause (i).

(iii) The plan clearly gives the provider the right to terminate
the contract within 90 business days from the date of the provider’s
receipt of the notice described in clause (i) if the provider does not
exercise the right to negotiate the change or no agreement is
reached, as described in clause (ii).

(iv) The material change becomes effective 90 business days
from the date of the notice described in clause (i) if the provider
does not exercise his or her right to negotiate the change, as
described in clause (ii), or to terminate the contract, as described
in clause (iii).

(2) A provision that requires a health care provider to accept
additional patients beyond the contracted number or in the absence
of a number if, in the reasonable professional judgment of the
provider, accepting additional patients would endanger patients’
access to, or continuity of, care.

(3) A requirement to comply with quality improvement or
utilization management programs or procedures of a plan, unless
the requirement is fully disclosed to the health care provider at
least 15 business days prior to the provider executing the contract.
However, the plan may make a change to the quality improvement
or utilization management programs or procedures at any time if
the change is necessary to comply with state or federal law or
regulations or any accreditation requirements of a private sector
accreditation organization. A change to the quality improvement
or utilization management programs or procedures shall be made
pursuant to paragraph (1).

(4) A provision that waives or conflicts with any provision of
this chapter. A provision in the contract that allows the plan to
provide professional liability or other coverage or to assume the
cost of defending the provider in an action relating to professional
liability or other action is not in conflict with, or in violation of,
this chapter.

(5) A requirement to permit access to patient information in
violation of federal or state laws concerning the confidentiality of
patient information.

(c) With respect to a health care service plan contract covering
dental services or a specialized health care service plan contract
covering dental services, all of the following shall apply:

(1) If a material change is made to the health care service plan’s
rules, guidelines, policies, or procedures concerning dental provider
contracting or coverage of or payment for dental services, the plan
shall provide at least 45 business days’ written notice to the dentists
contracting with the health care service plan to provide services
under the plan’s individual or group plan contracts, including
specialized health care service plan contracts, unless a change in
state or federal law or regulations or any accreditation requirements
of a private sector accreditation organization requires a shorter
timeframe for compliance. For purposes of this paragraph, written
notice shall include notice by electronic mail or facsimile
transmission. This paragraph shall apply in addition to the other
applicable requirements imposed under this section, except that it
shall not apply where notice of the proposed change is required to
be provided pursuant to subparagraph (C) of paragraph (1) of
subdivision (b).

(2) For purposes of paragraph (1), a material change made to a
health care service plan’s rules, guidelines, policies, or procedures
concerning dental provider contracting or coverage of or payment
for dental services is a change to the system by which the plan
adjudicates and pays claims for treatment that would reasonably
be expected to cause delays or disruptions in processing claims or
making eligibility determinations, or a change to the general
coverage or general policies of the plan that affect rates and fees
paid to providers.

(3) A plan that automatically renews a contract with a dental
provider shall annually make available to the provider, within 60
days following a request by the provider, either online, via email,
or in paper form, a copy of its current contract and a summary of
the changes described in paragraph (1) of subdivision (b) that have
been made since the contract was issued or last renewed.

(4) This subdivision shall not apply to a health care service plan
that exclusively contracts with no more than two medical groups
in the state to provide or arrange for the provision of professional
medical services to the enrollees of the plan.

(d) (1) When a contracting agent sells, leases, or transfers a
health provider’s contract to a payor, the rights and obligations of
the provider shall be governed by the underlying contract between
the health care provider and the contracting agent.

(2) For purposes of this subdivision, the following terms shall
have the following meanings:

(A) “Contracting agent” has the meaning set forth in paragraph
(2) of subdivision begin delete (d) end delete begin insert (e) end insert of Section 1395.6.

(B) “Payor” has the meaning set forth in paragraph (3) of
subdivision begin delete (d) end delete begin insert (e) end insert of Section 1395.6.

(e) Any contract provision that violates subdivision (b), (c), or
(d) shall be void, unlawful, and unenforceable.

(f) The department shall compile the information submitted by
plans pursuant to subdivision (h) of Section 1367 into a report and
submit the report to the Governor and the Legislature by March
15 of each calendar year.

(g) Nothing in this section shall be construed or applied as
setting the rate of payment to be included in contracts between
plans and health care providers.

(h) For purposes of this section the following definitions apply:

(1) “Health care provider” means any professional person,
medical group, independent practice association, organization,
health care facility, or other person or institution licensed or
authorized by the state to deliver or furnish health services.

(2) “Material” means a provision in a contract to which a
reasonable person would attach importance in determining the
action to be taken upon the provision.

SEC. 3.  

Section 1395.6 of the Health and Safety Code is
amended to read:

1395.6.  

(a) In order to prevent the improper selling, leasing,
or transferring of a health care provider’s contract, it is the intent
of the Legislature that every arrangement that results in a payor
paying a health care provider a reduced rate for health care services
based on the health care provider’s participation in a network or
panel shall be disclosed to the provider in advance and that the
payor shall actively encourage beneficiaries to use the network,
unless the health care provider agrees to provide discounts without
that active encouragement.

(b) Beginning July 1, 2000, every contracting agent that sells,
leases, assigns, transfers, or conveys its list of contracted health
care providers and their contracted reimbursement rates to a payor,
as defined in subparagraph (A) of paragraph (3) of subdivision begin delete (d) end delete
begin insert (e) end insert , or another contracting agent shall, upon entering or renewing
a provider contract, do all of the following:

(1) Disclose to the provider whether the list of contracted
providers may be sold, leased, transferred, or conveyed to other
payors or other contracting agents, and specify whether those
payors or contracting agents include workers’ compensation
insurers or automobile insurers.

(2) Disclose what specific practices, if any, payors utilize to
actively encourage a payor’s beneficiaries to use the list of
contracted providers when obtaining medical care that entitles a
payor to claim a contracted rate. For purposes of this paragraph,
a payor is deemed to have actively encouraged its beneficiaries to
use the list of contracted providers if one of the following occurs:

(A) The payor’s contract with subscribers or insureds offers
beneficiaries direct financial incentives to use the list of contracted
providers when obtaining medical care. “Financial incentives”
means reduced copayments, reduced deductibles, premium
discounts directly attributable to the use of a provider panel, or
financial penalties directly attributable to the nonuse of a provider
panel.

(B) The payor provides information to its beneficiaries, who
are parties to the contract, or, in the case of workers’ compensation
insurance, the employer, advising them of the existence of the list
of contracted providers through the use of a variety of advertising
or marketing approaches that supply the names, addresses, and
telephone numbers of contracted providers to beneficiaries in
advance of their selection of a health care provider, which
approaches may include, but are not limited to, the use of provider
directories, or the use of toll-free telephone numbers or Internet
web site addresses supplied directly to every beneficiary. However,
internet web site addresses alone shall not be deemed to satisfy
the requirements of this subparagraph. Nothing in this subparagraph
shall prevent contracting agents or payors from providing only
listings of providers located within a reasonable geographic range
of a beneficiary.

(3) Disclose whether payors to which the list of contracted
providers may be sold, leased, transferred, or conveyed may be
permitted to pay a provider’s contracted rate without actively
encouraging the payors’ beneficiaries to use the list of contracted
providers when obtaining medical care. Nothing in this subdivision
shall be construed to require a payor to actively encourage the
payor’s beneficiaries to use the list of contracted providers when
obtaining medical care in the case of an emergency.

(4) Disclose, upon the initial signing of a contract, and within
30 calendar days of receipt of a written request from a provider or
provider panel, a payor summary of all payors currently eligible
to claim a provider’s contracted rate due to the provider’s and
payor’s respective written agreement with any contracting agent.

(5) Allow providers, upon the initial signing, renewal, or
amendment of a provider contract, to decline to be included in any
list of contracted providers that is sold, leased, transferred, or
conveyed to payors that do not actively encourage the payors’
beneficiaries to use the list of contracted providers when obtaining
medical care as described in paragraph (2). Each provider’s election
under this paragraph shall be binding on the contracting agent with
which the provider has the contract and any contracting agent that
buys, leases, or otherwise obtains the list of contracted providers.
A provider shall not be excluded from any list of contracted
providers that is sold, leased, transferred, or conveyed to payors
that actively encourage the payors’ beneficiaries to use the list of
contracted providers when obtaining medical care, based upon the
provider’s refusal to be included on any list of contracted providers
that is sold, leased, transferred, or conveyed to payors that do not
actively encourage the payors’ beneficiaries to use the list of
contracted providers when obtaining medical care.

(6) Nothing in this subdivision shall be construed to impose
requirements or regulations upon payors, as defined in
subparagraph (A) of paragraph (3) of subdivision begin delete (d) end delete begin insert (e) end insert .

(c) Beginning July 1, 2000, a payor, as defined in subparagraph
(B) of paragraph (3) of subdivision begin delete (d) end delete begin insert (e) end insert , shall do all of the
following:

(1) Provide an explanation of benefits or explanation of review
that identifies the name of the network that has a written agreement
signed by the provider whereby the payor is entitled, directly or
indirectly, to pay a preferred rate for the services rendered.

(2) Demonstrate that it is entitled to pay a contracted rate within
30 business days of receipt of a written request from a provider
who has received a claim payment from the payor. The failure of
a payor to make the demonstration within 30 business days shall
render the payor responsible for the amount that the payor would
have been required to pay pursuant to the applicable health care
service plan contract, including a specialized health care service
plan contract, covering the beneficiary, which amount shall be due
and payable within 10 business days of receipt of written notice
from the provider, and shall bar the payor from taking any future
discounts from that provider without the provider’s express written
consent until the payor can demonstrate to the provider that it is
entitled to pay a contracted rate as provided in this paragraph. A
payor shall be deemed to have demonstrated that it is entitled to
pay a contracted rate if it complies with either of the following:

(A) Discloses the name of the network that has a written
agreement with the provider whereby the provider agrees to accept
discounted rates, and describes the specific practices the payor
utilizes to comply with paragraph (2) of subdivision (b).

(B) Identifies the provider’s written agreement with a contracting
agent whereby the provider agrees to be included on lists of
contracted providers sold, leased, transferred, or conveyed to payors
that do not actively encourage beneficiaries to use the list of
contracted providers pursuant to paragraph (5) of subdivision (b).

begin insert

(d) To the extent permitted by federal law, beginning on the
date that the Health Care Data Organization is established by the
University of California pursuant to Title 22.5 (commencing with
Section 100800) of the Government Code, a payor, as defined in
subparagraph (B) of paragraph (3), of subdivision (e) shall provide
a copy of the explanation of benefits or explanation of review
provided pursuant to paragraph (1) of subdivision (c) to the Health
Care Data Organization.

end insert begin delete

(d)

end delete

begin insert (e) end insert  For the purposes of this section, the following terms have
the following meanings:

(1) “Beneficiary” means:

(A) For workers’ compensation insurance, an employee seeking
health care services for a work-related injury.

(B) For automobile insurance, those persons covered under the
medical payments portion of the insurance contract.

(C) For group or individual health services covered through a
health care service plan contract, including a specialized health
care service plan contract, or a policy of disability insurance that
covers hospital, medical, or surgical benefits, a subscriber, an
enrollee, a policyholder, or an insured.

(2) “Contracting agent” means a health care service plan,
including a specialized health care service plan, while engaged,
for monetary or other consideration, in the act of selling, leasing,
transferring, assigning, or conveying, a provider or provider panel
to payors to provide health care services to beneficiaries.

(3) (A) For the purposes of subdivision (b), “payor” means a
health care service plan, including a specialized health care service
plan, an insurer licensed under the Insurance Code to provide
disability insurance that covers hospital, medical, or surgical
benefits, automobile insurance, workers’ compensation insurance,
or a self-insured employer that is responsible to pay for health care
services provided to beneficiaries.

(B) For the purposes of begin delete subdivision end delete begin insert subdivisions end insert (c) begin insert and (d) end insert ,
“payor” means only a health care service plan, including a
specialized health care service plan that has purchased, leased, or
otherwise obtained the use of a provider or provider panel to
provide health care services to beneficiaries pursuant to a contract
that authorizes payment at discounted rates.

(4) “Payor summary” means a written summary that includes
the payor’s name and the type of plan, including, but not limited
to, a group health plan, an automobile insurance plan, and a
workers’ compensation insurance plan.

(5) “Provider” means any of the following:

(A) Any person licensed or certified pursuant to Division 2
(commencing with Section 500) of the Business and Professions
Code.

(B) Any person licensed pursuant to the Chiropractic Initiative
Act or the Osteopathic Initiative Act.

(C)  Any person licensed pursuant to Chapter 2.5 (commencing
with Section 1440) of Division 2.

(D) A clinic, health dispensary, or health facility licensed
pursuant to Division 2 (commencing with Section 1200).

(E) Any entity exempt from licensure pursuant to Section 1206.

begin delete

(e)

end delete

begin insert (f) end insert  This section shall become operative on July 1, 2000.

SEC. 4.  

Section 10178.3 of the Insurance Code is amended to
read:

10178.3.  

(a) In order to prevent the improper selling, leasing,
or transferring of a health care provider’s contract, it is the intent
of the Legislature that every arrangement that results in a payor
paying a health care provider a reduced rate for health care services
based on the health care provider’s participation in a network or
panel shall be disclosed to the provider in advance and that the
payor shall actively encourage beneficiaries to use the network,
unless the health care provider agrees to provide discounts without
that active encouragement.

(b) Beginning July 1, 2000, every contracting agent that sells,
leases, assigns, transfers, or conveys its list of contracted health
care providers and their contracted reimbursement rates to a payor,
as defined in subparagraph (A) of paragraph (3) of subdivision begin delete (d) end delete
begin insert (e) end insert , or another contracting agent shall, upon entering or renewing
a provider contract, do all of the following:

(1) Disclose whether the list of contracted providers may be
sold, leased, transferred, or conveyed to other payors or other
contracting agents, and specify whether those payors or contracting
agents include workers’ compensation insurers or automobile
insurers.

(2) Disclose what specific practices, if any, payors utilize to
actively encourage a payor’s beneficiaries to use the list of
contracted providers when obtaining medical care that entitles a
payor to claim a contracted rate. For purposes of this paragraph,
a payor is deemed to have actively encouraged its beneficiaries to
use the list of contracted providers if one of the following occurs:

(A) The payor’s contract with subscribers or insureds offers
beneficiaries direct financial incentives to use the list of contracted
providers when obtaining medical care. “Financial incentives”
means reduced copayments, reduced deductibles, premium
discounts directly attributable to the use of a provider panel, or
financial penalties directly attributable to the nonuse of a provider
panel.

(B) The payor provides information to its beneficiaries, who
are parties to the contract, or, in the case of workers’ compensation
insurance, the employer, advising them of the existence of the list
of contracted providers through the use of a variety of advertising
or marketing approaches that supply the names, addresses, and
telephone numbers of contracted providers to beneficiaries in
advance of their selection of a health care provider, which
approaches may include, but are not limited to, the use of provider
directories, or the use of toll-free telephone numbers or Internet
Web site addresses supplied directly to every beneficiary. However,
Internet Web site addresses alone shall not be deemed to satisfy
the requirements of this subparagraph. Nothing in this subparagraph
shall prevent contracting agents or payors from providing only
listings of providers located within a reasonable geographic range
of a beneficiary.

(3) Disclose whether payors to which the list of contracted
providers may be sold, leased, transferred, or conveyed may be
permitted to pay a provider’s contracted rate without actively
encouraging the payors’ beneficiaries to use the list of contracted
providers when obtaining medical care. Nothing in this subdivision
shall be construed to require a payor to actively encourage the
payor’s beneficiaries to use the list of contracted providers when
obtaining medical care in the case of an emergency.

(4) Disclose, upon the initial signing of a contract, and within
30 calendar days of receipt of a written request from a provider or
provider panel, a payor summary of all payors currently eligible
to claim a provider’s contracted rate due to the provider’s and
payor’s respective written agreements with any contracting agent.

(5) Allow providers, upon the initial signing, renewal, or
amendment of a provider contract, to decline to be included in any
list of contracted providers that is sold, leased, transferred, or
conveyed to payors that do not actively encourage the payors’
beneficiaries to use the list of contracted providers when obtaining
medical care as described in paragraph (2). Each provider’s election
under this paragraph shall be binding on the contracting agent with
which the provider has a contract and any other contracting agent
that buys, leases, or otherwise obtains the list of contracted
providers. A provider shall not be excluded from any list of
contracted providers that is sold, leased, transferred, or conveyed
to payors that actively encourage the payors’ beneficiaries to use
the list of contracted providers when obtaining medical care, based
upon the provider’s refusal to be included on any list of contracted
providers that is sold, leased, transferred, or conveyed to payors
that do not actively encourage the payors’ beneficiaries to use the
list of contracted providers when obtaining medical care.

(6) Nothing in this subdivision shall be construed to impose
requirements or regulations upon payors, as defined in
subparagraph (A) of paragraph (3) of subdivision begin delete (d) end delete begin insert (e) end insert .

(c) Beginning July 1, 2000, a payor, as defined in subparagraph
(B) of paragraph (3) of subdivision begin delete (d) end delete begin insert (e) end insert , shall do all of the
following:

(1) Provide an explanation of benefits or explanation of review
that identifies the name of the network that has a written agreement
signed by the provider whereby the payor is entitled, directly or
indirectly, to pay a preferred rate for the services rendered.

(2) Demonstrate that it is entitled to pay a contracted rate within
30 business days of receipt of a written request from a provider
who has received a claim payment from the payor. The failure of
a payor to make the demonstration within 30 business days shall
render the payor responsible for the amount that the payor would
have been required to pay pursuant to the beneficiary’s policy with
the payor, which amount shall be due and payable within 10
business days of receipt of written notice from the provider, and
shall bar the payor from taking any future discounts from that
provider without the provider’s express written consent until the
payor can demonstrate to the provider that it is entitled to pay a
contracted rate as provided in this subdivision. A payor shall be
deemed to have demonstrated that it is entitled to pay a contracted
rate if it complies with either of the following:

(A) Discloses the name of the network that has a written
agreement with the provider whereby the provider agrees to accept
discounted rates, and describes the specific practices the payor
utilizes to comply with paragraph (2) of subdivision (b).

(B) Identifies the provider’s written agreement with a contracting
agent whereby the provider agrees to be included on lists of
contracted providers sold, leased, transferred, or conveyed to payors
that do not actively encourage beneficiaries to use the list of
contracted providers pursuant to paragraph (5) of subdivision (b).

begin insert

(d) To the extent permitted by federal law, beginning on the
date that the Health Care Data Organization is established by the
University of California pursuant to Title 22.5 (commencing with
Section 100800) of the Government Code, a payor, as defined in
subparagraph (C) of paragraph (3) of subdivision (e) shall provide
a copy of the explanation of benefits or explanation of review
provided pursuant to paragraph (1) of subdivision (c) to the Health
Care Data Organization.

end insert begin delete

(d)

end delete

begin insert (e) end insert  For the purposes of this section, the following terms have
the following meanings:

(1) “Beneficiary” means:

(A) For automobile insurance, those persons covered under the
medical payments portion of the insurance contract.

(B) For group or individual health services covered through a
health care service plan contract, including a specialized health
care service plan contract, or a policy of disability insurance that
covers hospital, medical, or surgical benefits, a subscriber, an
enrollee, a policyholder, or an insured.

(C) For workers’ compensation insurance, an employee seeking
health care services for a work-related injury.

(2) “Contracting agent” means an insurer licensed under this
code to provide disability insurance that covers hospital, medical,
or surgical benefits, automobile insurance, or workers’
compensation insurance, while engaged, for monetary or other
consideration, in the act of selling, leasing, transferring, assigning,
or conveying a provider or provider panel to provide health care
services to beneficiaries.

(3) (A) For the purposes of subdivision (b), “payor” means a
health care service plan, including a specialized health care service
plan, an insurer licensed under this code to provide disability
insurance that covers hospital, medical, or surgical benefits,
automobile insurance, or workers’ compensation insurance, or a
self-insured employer that is responsible to pay for health care
services provided to beneficiaries.

(B) For the purposes of subdivision (c), “payor” means only an
insurer licensed under this code to provide disability insurance
that covers hospital, medical, or surgical benefits, or automobile
insurance, if that insurer is responsible to pay for health care
services provided to beneficiaries.

begin insert

(C) For purposes of subdivision (d), “payor” means only an
insurer licensed under this code to provide disability insurance
that covers hospital, medical, or surgical benefits if that insurer
is responsible to pay for health care services provided to
beneficiaries.

end insert

(4) “Payor summary” means a written summary that includes
the payor’s name and the type of plan, including, but not limited
to, a group health plan, an automobile insurance plan, and a
workers’ compensation insurance plan.

(5) “Provider” means any of the following:

(A) Any person licensed or certified pursuant to Division 2
(commencing with Section 500) of the Business and Professions
Code.

(B) Any person licensed pursuant to the Chiropractic Initiative
Act or the Osteopathic Initiative Act.

(C) Any person licensed pursuant to Chapter 2.5 (commencing
with Section 1440) of Division 2 of the Health and Safety Code.

(D) A clinic, health dispensary, or health facility licensed
pursuant to Division 2 (commencing with Section 1200) of the
Health and Safety Code.

(E) Any entity exempt from licensure pursuant to Section 1206
of the Health and Safety Code.

begin delete

(e)

end delete

begin insert (f) end insert  This section shall become operative on July 1, 2000.

SEC. 5.  

Section 10178.4 of the Insurance Code is amended to
read:

10178.4.  

(a) When a contracting agent sells, leases, or transfers
a health provider’s contract to a payor, the rights and obligations
of the provider shall be governed by the underlying contract
between the health care provider and the contracting agent.

(b) For purposes of this section, the following terms shall have
the following meanings:

(1) “Contracting agent” has the meaning set forth in paragraph
(2) of subdivision begin delete (d) end delete begin insert (e) end insert of Section 10178.3.

(2) “Payor” has the meaning set forth in paragraph (3) of
subdivision begin delete (d) end delete begin insert (e) end insert of Section 10178.3.

SEC. 6.  

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