BILL ANALYSIS Ó AB 41 Page 1 Date of Hearing: May 6, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair AB 41 (Chau) - As Introduced December 1, 2014 ----------------------------------------------------------------- |Policy |Health |Vote:|18 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: YesReimbursable: No SUMMARY: This bill codifies a federal law requirement that prohibits health plans and insurers from discriminating, with respect to provider participation or coverage under the plan or policy, AB 41 Page 2 against any health care provider who is acting within the scope of that provider's license or certification. Additionally, this bill: 1)Specifies plans and insurers are not required to contract with "any willing provider" (any provider willing to abide by the terms and conditions for participation established by the plan or insurer). 2)Specifies it shall not be construed as preventing a health care service plan from establishing varying reimbursement rates based on quality or performance measures. 3)Requires implementation only to the extent required by the provider nondiscrimination provisions established in Section 2706 of the federal Public Health Service Act (42 U.S.C. Sec. 300gg-5), and any federal rules or regulations issued under that section. FISCAL EFFECT: 1)One-time special fund costs to the Department of Managed Health Care (DMHC) in the range of $50,000-$100,000 (Managed Care Fund) to issue regulations, if necessary, and $50,000 to verify that plan filings reflect the provider nondiscrimination requirements enacted by this bill, to the extent required by federal law. The cost for the California Department of Insurance (CDI) to similarly review policies under their jurisdiction is expected to be similar, in the AB 41 Page 3 range of $50,000-$100,000 (Insurance Fund). Although the provisions of the bill do not exceed what is required by federal law, in the absence of this bill there would be no specific state requirement for DMHC and CDI to verify compliance with the provider nondiscrimination provision of federal law. 2)Enforcement costs would likely be minor, under $100,000 annually combined for CDI and DMHC (Managed Care Fund/Insurance Fund). However, given the uncertainty surrounding federal interpretation of the provider nondiscrimination provision of the ACA and how it may interact with this bill, it is difficult to project the necessity, type, and extent of any enforcement actions. 3)Increased costs to DMHC's legal services unit to respond to complaints related to provider discrimination and to process Public Records Act (PRA) requests, potentially in the hundreds of thousands of dollars annually (Managed Care Fund). CDI's costs for similar activities are expected to be in the low hundreds of thousands of dollars annually. These costs may decrease in future years as plans and providers adjust to the new rules. COMMENTS: 1)Purpose. According to the author, this bill is needed to eliminate the harmful practice of health plan discrimination AB 41 Page 4 against whole classes of healthcare providers. The author believes that licensed health care providers who have contracted with plans and insurers should be reimbursed for covered services they are qualified to perform, as long as they are working within their scopes of practice. This bill is sponsored by the California Chiropractic Association which states that codifying the ACA provisions in this bill will help guarantee that patients have access to the health care providers of their choice. The bill is supported by numerous nonphysician health care provider groups. 2)Background. Though the extent to which health plans and insurers include "discriminatory" provisions in their contracts is unclear, commonly cited cases include, for example, optometrists who contract with plans and insurers but are not eligible to be reimbursed for delivering certain covered services that are within their scope of practice. Similarly, a plan may contract with chiropractors for chiropractic services, but may not reimburse a chiropractor for primary care office visits. The federal government may be considering further action on this front. The federal ACA includes a provider nondiscrimination provision similar to the one enacted by this bill. No formal federal guidance has been released on this provision. However, in an April 2013 "Frequently Asked Questions"(FAQ) document, relevant federal agencies described the provider nondiscrimination language as self-implementing, stating that the departments did not intend to issue regulations, but allowing for discrimination in reimbursement rates based on "broad market considerations." Subsequently, the US Senate issued a report that directed the departments to correct the FAQ to hew more closely to the law and to reflect congressional intent that any allowable discrimination in reimbursement rates be more narrowly defined. As a result of this report, the departments issued a Request for Information on the provider nondiscrimination issue and are considering comments submitted until June 10, 2014. The US Senate issued another report in June 2014, directing the departments to AB 41 Page 5 correct its FAQ by November 3, 2014. At this time, there has been no further federal action as a result of the 2014 RFI. The federal government has not adopted specific federal rules to implement PHSA Section 2706(a). It is unclear if additional federal rules will be forthcoming. 3)Prior Legislation. AB 2015 (Chau) from 2014, and SB 690 (Ed Hernandez) from 2012, were identical to this bill. Both bills were held on the Suspense File of this committee. Analysis Prepared by:Lisa Murawski / APPR. / (916) 319-2081