BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      AB 41


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          Date of Hearing:  May 6, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          AB  
          41 (Chau) - As Introduced December 1, 2014


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          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,  








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          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  








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            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  








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            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  








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            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