BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 72
---------------------------------------------------------------
|AUTHOR: |Bonta, Bonilla, Dahle, Gonzalez, Maienschein, |
| |Wood |
|---------------+-----------------------------------------------|
|VERSION: |June 15, 2016 |
---------------------------------------------------------------
---------------------------------------------------------------
|HEARING DATE: |June 29, 2016 | | |
---------------------------------------------------------------
---------------------------------------------------------------
|CONSULTANT: |Teri Boughton |
---------------------------------------------------------------
SUBJECT : Health care coverage: out-of-network coverage.
SUMMARY : Establishes a payment rate, which is the greater of the
average of a health plan or health insurer's contracted rate, as
specified, or 125% of the amount Medicare reimburses for the
same or similar services, and a binding independent dispute
resolution process for claims and claim disputes related to
covered services provided at a contracted health facility by a
non-contracting health care professional. Limits enrollee and
insured cost sharing for these covered services to no more than
the cost sharing required had the services been provided by a
contracting health professional. Requires health plans and
insurers to collect the enrollee/insured cost sharing and
requires the plan/insurer to permit the enrollee/insured to
assign payment of benefits to the health care professional.
Existing law:
1)Provides for the regulation of health plans by the Department
of Managed Health Care (DMHC) under the Knox-Keene Act and for
health insurers by California Department of Insurance (CDI)
under the Insurance Code.
2)Requires contracts between providers and health plans to be in
writing and prohibits, except for applicable copayments and
deductibles, a provider from invoicing or balance billing a
plan's enrollee for the difference between the provider's
billed charges and the reimbursement paid by the plan or the
plan's capitated provider for any covered benefit.
3)Prohibits a provider, in the event that a contract has not
been reduced to writing, or does not contain the prohibition
above, from collecting or attempting to collect from the
AB 72 (Bonta) Page 2 of ?
subscriber or enrollee sums owed by the plan. Prohibits a
contracting provider, agent, trustee or assignee from taking
action at law against a subscriber or enrollee to collect sums
owed by the plan.
4)Establishes, pursuant to regulations, requirements that health
plans must implement in their claims settlement practice,
including the meaning of "reimbursement of a claim," such that
providers with a contract receive the contract rate. Claims
for contracted providers without a written contract and
non-contracted providers require payment of the reasonable and
customary value for the health care services rendered based
upon "statistically credible information" that is updated at
least annually and takes into consideration the following:
a) The provider's training, qualifications, and length of
time in practice;
b) The nature of the services provided;
c) The fees usually charged by the provider;
d) Prevailing provider rates charged in the
general geographic area in which the services were
rendered;
e) Other aspects of the economics of the medical
provider's practice that are relevant; and,
f) Any unusual circumstances in the case.
5)Allows a non-contracted provider to dispute the
appropriateness of a health plan's computation of the
reasonable and customary value and requires the health plan to
respond to the dispute through the plan's mandated provider
dispute resolution process.
6)Requires health plans to pay for medically necessary services
provided in a licensed acute care hospital, if the services
were related to authorized services and provided after the
plan's normal business hours, unless the plan has a system
whereby it can respond to authorization requests within 30
minutes.
7)Prohibits a health plan from engaging in an unfair payment
pattern, defined as, engaging in a demonstrable and unjust
pattern, of reviewing or processing complete and accurate
claims that results in payment delays; engaging in a
demonstrable and unjust pattern of reducing the amount of
payment or denying complete and accurate claims; failing on a
AB 72 (Bonta) Page 3 of ?
repeated basis to pay the uncontested portions of a claim
within specified timeframes; and failing on a repeated basis
to automatically include the interest due on claims, as
specified.
8)Prohibits a hospital which contracts with an insurer,
nonprofit hospital service plan, or health plan from
determining or conditioning medical staff membership or
clinical privileges upon the basis of a physician and
surgeon's or podiatrist's participation or non-participation
in a contract with that insurer, hospital service plan or
health plan.
9)Defines 'emergency services and care" as medical screening,
examination, and evaluation by a physician and surgeon, or, to
the extent permitted by applicable law, by other appropriate
licensed persons under the supervision of a physician and
surgeon, to determine if an emergency medical condition or
active labor exists and, if it does, the care, treatment, and
surgery, if within the scope of that person's license,
necessary to relieve or eliminate the emergency medical
condition, within the capability of the facility; and to
determine if a psychiatric emergency medical condition exists,
and the care and treatment necessary to relieve or eliminate
the psychiatric emergency medical condition, within the
capability of the facility.
10)Requires a health plan, or its contracting medical providers,
to provide 24-hour access for enrollees and providers,
including, but not limited to, non-contracting hospitals, to
obtain timely authorization for medically necessary care, for
circumstances where the enrollee has received emergency
services, and is stabilized, but the treating provider
believes that the enrollee may not be discharged safely.
Establishes additional requirements associated with treatment
or transfer post stabilization.
This bill:
AB 72 (Bonta) Page 4 of ?
Independent Dispute Resolution Process (IDRP)
1)Requires DMHC and CDI to establish an independent dispute
resolution process (IDRP) for the purpose of resoling a claim
dispute between a health plan or insurer and a non-contracting
individual health professional, as specified, who has provided
non-emergency services or treatment for an enrollee or insured
at a contracted health facility, as specified. Requires both
parties to participate in the IDRP and the decision to be
binding on both parties.
2)Requires the parties to exhaust the plan's or insurer's
internal process prior to initiating IDRP.
3)Permits the bundling of claims for the same or similar
services provided by the individual health professional.
4)Permits, notwithstanding 1) above, a dissatisfied party to
pursue any right, remedy, or penalty established under any
applicable law.
5)Requires DMHC and CDI to establish conflict-of-interest
standards for an IDRP contractor consistent with this bill and
existing law, as specified.
6)Requires DMHC and CDI to provide, upon request of an
interested person, a copy of all non-proprietary information,
as determined by the director, or insurance commissioner,
filed with DMHC or CDI by an independent organization seeking
to contract to administer the IDRP.
7)Exempts Medi-Cal managed care health plans or any entity that
enters into a contract with the Department of Health Care
Services, as specified, from this bill.
8)Requires delegated entities to comply with this bill if a
health plan or health insurer delegates payment functions, as
specified.
9)Exempts emergency services and care from this bill.
Payment Standard
10)Requires the plan or insurer to reimburse the greater of the
average contracted rate or 125% of the amount Medicare
reimburses on a fee-for-service basis for the same or similar
AB 72 (Bonta) Page 5 of ?
services in the general geographic region in which the
services were rendered to a non-contracting individual health
professional for services, as specified, unless otherwise
agreed to by the parties.
11)Defines "average contracted rate" as the average of the
contracted rates paid by the health plan, its delegated
entity, or an insurer for the same or similar services in the
geographic regions.
12)Requires each plan or insurer to provide to DMHC or CDI by
July 1, 2017 in a manner and format specified by DMHC or CDI
both of the following:
a) Data listing its average contracted rates for
non-emergency services most frequently provided in
contracted facilities by non-contracting individual
health professionals, as specified, in each geographic
region in which the services are rendered, including
the average contracted rates paid by the plan's
delegated entities.
b) Its methodology for determining the average
contracted rates for these services. Requires the
methodology to determine an average contracted rate to
assure that the plan or insurer includes the highest
and lowest contracted rates for these services.
13)Requires each plan's delegated entities to provide data
listing its average contracted rates for these types of
services in each geographic region in which the services are
rendered.
14)Requires for each year thereafter, the plans, delegated
entities and insurers to adjust the rate initially established
in 10) - 13) above by the Consumer Price Index (CPI) for
Medical Care Services, as published by the United States
Bureau of Labor Statistics.
15)Requires DMHC and CDI to audit the accuracy of the
information in 12) above.
16)Require DMHC and CDI to report by January 1, 2020 on data
provided in 12) and 13) above to the Governor and Legislature,
as specified.
AB 72 (Bonta) Page 6 of ?
17)Requires a health plan or insurer to authorize and permit
assignment of the enrollee's or insured's right, if any, to
any reimbursement for health care services covered under the
plan contract or insurance policy to a non-contracting
individual health professional for these services.
18)Requires the plan or insurer to provide a form approved by
DMHC or CDI for the purpose of 17) above.
19)Requires the payment made by the health plan or insurer and
applicable cost sharing owed by the enrollee or insured to be
payment in full for nonemergency services rendered, as
specified, in this bill.
20)Prohibits the amount paid by a plan or insurer for services
pursuant to this bill from constituting the prevailing or
customary charges, for usual fees to the general public, or
other charges for other payers for an individual health
professional.
Patient Out of the Middle
21)Limits enrollee or insured cost sharing to no more than the
same cost sharing that the enrollee or insured would pay for
the same covered services received from a contracting
individual health professional (in-network cost sharing
amount), if the enrollee or insured receives covered services
from a contracting health facility at which, or as a result of
which, the enrollee or insured receives services provided by a
non-contracting individual health professional. Applies this
provision to health plan contracts and insurance policies
issued, amended, or renewed on or after January 1, 2017.
22)Requires the health plan or insurer to collect the in-network
cost-sharing amount from the enrollee or insured.
23)Prohibits a non-contracting individual health professional
from billing or collecting any amount from the enrollee or
insured. Requires any communication to include in 12-point
bold type that the communication is not a bill.
24)Requires the non-contracting individual health professional
to affirm in writing that he or she has not attempted to
collect payment from the enrollee or insured when submitting a
claim to the plan or insurer.
AB 72 (Bonta) Page 7 of ?
25)Requires a refund to the enrollee or insured with interest
accruing at a rate 15% per annum after receiving payment from
the plan or insurer, if non-contracting individual health
professional has received any amount from the enrollee or
insured for these services.
26)Requires cost sharing paid by the enrollee or insured to
count toward the limit on annual out-of-pocket expenses, as
specified, and any deductible.
Voluntary Choice of Non-contracting Individual Health
Professional
27)Requires the amount paid when nonemergency services are
provided by a non-contracting individual health professional
to an enrollee or insured who has voluntarily chosen to use
his or her out-of-network benefit for services covered by a
preferred provider organization or a point-of-service plan, to
be the amount set forth in the enrollee's or insured's
evidence of coverage, unless otherwise agreed to by the
parties. Excludes this payment from the IDRP.
28)Permits a non-contracting individual health professional from
billing or collecting from the enrollee or insured the
out-of-network cost sharing, if applicable, only when the
enrollee or insured consents in writing and the written
consent satisfies the following:
a) The enrollee or insured consents in writing at
least 24 hours in advance of care;
b) The consent is obtained separately from the
consent for any other part of the care or procedure,
and not obtained by the facility or its
representative, at the same time as admission or at
any time when the enrollee or insured is being
prepared for surgery or any other procedure;
c) A written estimate is provided at the time of
consent of the enrollee's or insured's total
out-of-pocket cost of care, based on the
professional's billed charges, and the collection of
more than the estimate without enrollee's or insured's
consent is not allowed;
d) The consent also must advise the enrollee or
insured that he or she may seek care from a contracted
provider or contact the plan or insurer to arrange to
receive care from a contracted provider for lower
AB 72 (Bonta) Page 8 of ?
out-of-pocket costs;
e) The consent and estimate is provided in the
language spoken by the enrollee or insured; and,
f) The consent advises the enrollee or insured
that cost sharing may not count toward annual
out-of-pocket maximum or deductible.
29)Provides that a non-contracting individual health
professional who fails to comply with 27) and 28) above has
not obtained written consent and therefore 21) - 25) above
applies.
30)Establishes requirements on non-contracting individual health
professionals on collections from enrollees and insureds and
assignment of debt.
31)Defines "contracting health facility" to include but not be
limited to a licensed hospital, an ambulatory surgery or other
outpatient setting, a laboratory, a radiology or imaging
center, or any other similar provider as DMHC or CDI may
define, by regulation, as specified.
32)Defines a "non-contracting individual health professional" as
a physician and surgeon, or other professional who is licensed
by the state to deliver or furnish health care services and
who is not contracted with the enrollee's health plan, but not
a dentist, licensed pursuant to the Dental Practice Act.
33)Provides that 21) - 31) above shall not be construed to
exempt a plan or provider from specified requirements
including the holding in Prospect Medical Group, Inc., v.
Northridge Emergency Medical Group (2009), that an emergency
room physician is prohibited form billing an enrollee of a
health plan directly for sums that the health plan failed to
pay for the enrollee's emergency room treatment.
FISCAL
EFFECT : This bill has not been analyzed by a fiscal committee.
PRIOR
VOTES :
-----------------------------------------------------------------
|Assembly Floor: |Not relevant |
|------------------------------------+----------------------------|
AB 72 (Bonta) Page 9 of ?
|Assembly Appropriations Committee: |Not Relevant |
|------------------------------------+----------------------------|
|Assembly Health Committee: |Not Relevant |
| | |
-----------------------------------------------------------------
COMMENTS :
1)Author's statement. According to the author, AB 72 protects
patients from surprise medical bills when they follow the rules of
their health plan by going to an in-network hospital, lab, imaging
center or other health care facility. Patients would only be
responsible for their in-network cost sharing and would be
prohibited from getting outrageous out-of-network bills from
doctors they did not choose. Surprise medical bills wreak havoc on
people's finances and their ability to pay for basic necessities.
The bill also provides certainty for doctors and insurers and
keeps our health care costs under control. Insurers must reimburse
doctors a fair rate for their services, and doctors are assured a
minimum payment in statute. The Affordable Care Act requires all
consumers to have health coverage, and it is the state's
responsibility to ensure patients are safeguarded from hidden
costs unfairly imposed upon them when they have followed their
insurers' rules.
2)Out-of-network services and surprise bills. A recent survey
commissioned by the Consumer Reports National Research Center
found that nearly one third of privately insured Americans
received a surprise medical bill where their health plan paid
less than expected in the past two years. Among the 2,200
adult U.S. respondents, nearly one out of four got a bill from
a doctor that was unexpected. Survey findings also suggest
that consumers overall seem largely confused when it comes to
their rights to fight surprise bills. Based on the California
respondents to this survey, one in four privately insured
Californians faced surprise medical bills. One quarter of
Californians who had hospital visits or surgery in the past
two years were charged an out-of-network rate when they
thought the provider was in-network. 63% assume doctors at an
in-network hospital are also in-network.
3)Unfair claims practices. AB 1455 (Scott, Chapter 1827,
Statutes of 2000) prohibits unfair claims practices, and the
resulting regulations detailed requirements health plans must
meet in processing and paying claims for both contracting and
non-contracting providers. The AB 1455 regulations define
AB 72 (Bonta) Page 10 of ?
reimbursement of a claim for non-contracting providers as the
"reasonable and customary value," based on statistically
credible information that is updated at least annually, and
that takes into consideration the following specified
criteria: a) the provider's training, qualifications, and
length of time in practice; b) the nature of the services
provided; c) the fees usually charged by the provider; d)
prevailing provider rates charged in the general geographic
area in which the services were rendered; e) other aspects of
the economics of the medical provider's practice that are
relevant; and, f) any unusual circumstances in the case.
These regulations codified the factors for determining
non-contracted provider reimbursement as outlined in Gould v.
Workers' Compensation Appeals Board, City of Los Angeles,
(1992) 4 Cal.App.4th 1059, 1071. Consequently, the AB 1455
regulations are often referred to as requiring payments for
non-contracting providers according to the "Gould criteria."
More recently in Children's Hospital Central California v.
Blue Cross of California et.al, (2014) 226 Cal.App4th 1260,
172. the appellate court determined that the Gould criteria
includes more than the charges billed by the provider.
Charges are just one data point and payments and rates
accepted by other payors could also be considered.
4)IDRP. Both CDI and DMHC have voluntary IDRPs. CDI advises
providers to first attempt to resolve disputes with the
insurance company. According to CDI the insurer is required
to resolve each provider dispute consistent with applicable
law and issue a written determination within 45 working days
after the date of receipt of the provider dispute.
According to the DMHC, participation in IDRP is voluntary and
non-binding. Parties are encouraged to comply with the
decision issued by the IDRP External Reviewer. Non-contracted
providers who deliver EMTALA-required emergency services
("Providers") working with health plans or capitated providers
("Payers") are eligible to submit a IDRP concerning the
"reasonable and customary" value of services rendered. A
provider may request review through the IDRP for an individual
claim or for multiple claims (up to a total of 50
substantially similar claims.) Eligible claim disputes are
those disputes that are subject to DMHC jurisdiction and meet
each of the following four criteria: 1) the disputed claim is
limited to emergency services rendered by non-contracted
physicians or hospitals, 2) the services were rendered within
the last four years, 3) the dispute is limited to disagreement
AB 72 (Bonta) Page 11 of ?
concerning the reasonable and customary value of the services
rendered, and 4) the Provider has completed the Payer's
dispute resolution process.
5)Related legislation. AB 533 (Bonta) would have required DMHC
and CDI to establish a binding IDRP for claims for
non-emergency covered services provided at contracted health
facilities by a non-contracting health care professional. AB
533 limits enrollee and insured cost sharing for these covered
services to no more than the cost sharing required had the
services been provided by a contracting health professional;
and requires the plan or insurer to base reimbursement for
covered services on the amount the individual health
professional would have been reimbursed by Medicare for the
same or similar services in the geographic area in which the
services were rendered. AB 533 failed passage on the Assembly
Floor.
SB 1252 (Stone) would have required when a medical procedure
is scheduled to be performed on a patient, the general acute
care hospital, surgical clinic, and the attending physician,
as applicable, to notify the patient, in writing, of the net
costs to the patient for the medical procedure being done, as
provided, and requires disclosure, in writing, if any of the
physicians providing medical services to the patient are not
contracted with the patient's health care service plan or
health insurer and the costs for which the patient would be
responsible as a result. SB 1252 was held in the Senate Health
Committee was set for hearing in the Senate Health Committee,
but not heard per the request of the author.
6)Prior legislation. AB 1579 (Campos of 2012), would have
required issuers to pay a non-contracting dental provider
directly for covered services rendered to an enrollee or
insured in certain circumstances. AB 1579 was set for hearing
in the Senate Health Committee, but not heard per the request
of the author.
SB 1373 (Lieu of 2012), would have required, when an enrollee
or insured seeks care from a non-contracting provider, the
provider to provide a specified written notice to the enrollee
or insured informing the enrollee or insured that the provider
is not in the enrollee's or insured's plan or provider
network, as specified. Would have prohibited a health
facility or a provider group from holding itself out as being
AB 72 (Bonta) Page 12 of ?
within a plan network unless all of the individual providers
providing services at the facility or with the provider group
are within the plan network. This bill failed passage by the
Senate Health Committee.
SB 981 (Perata of 2008), would have prohibited non-contracting
hospital ER physicians from directly billing enrollees of
health plans licensed by DMHC under the Knox-Keene Health Care
Service Plan Act of 1975, other than allowable copayments and
deductibles, and would have established statutory standards
and requirements for claims payment and dispute resolution
related to non-contracting ER physician claims, including an
IDRP. SB 981 was vetoed by Governor Schwarzenegger. The veto
message is below:
This bill does not solve the problem facing California
patients and only serves to highlight one of the many
reasons I introduced my comprehensive health care
reform proposal. Californians are paying a hidden tax
on their health care which subsidizes care for the
uninsured and allows providers to shift costs when
they are not fully reimbursed by their payers. The
insured population bears the brunt of this hidden tax
and the larger it gets, fewer people are able to
afford coverage.
This bill, in essence, asks for California to embrace
this cost-shift, reward non-contracting physicians by
assuring their continued financial slice of the pie,
and allow the status quo to continue. I cannot agree
to a measure that is a piecemeal approach to our
broken health care system.
Our health care system relies on physicians, hospitals
and health plans to work together. The patient that
pays health insurance premiums should not be part of a
payment dispute between these sophisticated market
players. It is unfortunate that this bill takes sides
in the dispute within the health care industry instead
of taking the side of patients.
Until the Legislature can send me legislation that
removes that patient from all disputes involving these
parties, I direct my Department of Managed Health Care
to aggressively continue in its efforts to identify
AB 72 (Bonta) Page 13 of ?
unfair payment practices and keep patients from being
caught in the middle.
AB 1203 (Salas, Chapter 603, Statutes of 2008), established
uniform requirements governing communications between health
plans and non-contracting hospitals related to
post-stabilization care following an emergency, and prohibits
a non-contracting hospital from billing a patient who is a
health plan enrollee for post-stabilization services, except
as specified.
AB 2220 (Jones, 2008), would have allowed parties to a
contract negotiation between ER physicians and health care
service plans or their contracting risk bearing organization
to, on a one-time basis per contract negotiation, invoke a
mandatory mediation process to assist in resolving any
remaining issues in the contract negotiations, as specified.
AB 2220 was vetoed by Governor Schwarzenegger. The veto
message is below:
"I applaud the author for seeking to address one of
the most important consumer issues facing patients
today. This bill attempts to change the market dynamic
in a way that encourages contracts between health
plans and providers. It is a good starting point.
Unfortunately, it does not contain the comprehensive
solution that patients need and deserve when it comes
to addressing the disgraceful practice of balance
billing.
I believe the author and Administration can work
together to solve this issue next year. I look forward
to our combined efforts that will take the patient out
of the middle of these payment disputes."
AB 2839 (Huffman of 2008), would have prohibited a health plan
or health insurer from requiring providers to execute unfair
and unreasonable contracts, as specified, as a condition of
entering into negotiations with the health plan or insurer.
AB 2839 was held on the Assembly Appropriations Committee
Suspense file.
SB 389 (Yee of 2008), would have prohibited a hospital-based
physician, as defined, from seeking payment from individual
AB 72 (Bonta) Page 14 of ?
enrollees for services rendered and would have required such
physicians to seek reimbursement solely from the enrollee's
health care service plan or the contracting risk-bearing
organization. Also the bill would have required DMHC and CDI,
on or before March 1, 2008, to implement an independent
provider dispute resolution system, in consultation with
representatives of health plans or insurers, providers, and
consumer representatives. SB 389 died in the Senate without a
committee hearing.
SB 697 (Yee, Chapter 606, Statutes of 2008), prohibits a
health care service provider from seeking reimbursement for
services furnished to a person enrolled in the Healthy
Families Program or the Access for Infants and Mothers Program
from other than the participating health plan covering that
person.
AB 1X 1 (Nunez of 2008), would have enacted the Health Care
Security and Cost Reduction Act, a comprehensive health reform
proposal. Among other provisions related to health insurance
markets and hospital financing, AB 1X 1 would have prohibited
a non-contracting hospital from billing any patient, who has
coverage for emergency and post stabilization health care
services, for those services, as defined, except for
applicable copayments and cost sharing. AB 1X 1 died in the
Senate Health Committee.
SB 417 (Ortiz of 2005), would have prohibited a hospital-based
physician, as defined, from engaging in a pattern of billing a
patient for covered services in excess of applicable
co-payments, deductibles or coinsurance, unless specified
conditions are met, and required providers to provide specific
notice requirements when they send a bill or statement to a
patient. SB 417 died in Assembly Health Committee.
SB 364 (Perata of 2005), would have allowed an emergency
physician who has a contract with a health plan, but does not
have a contract with a medical group or other entity that has
been assigned responsibility for paying claims by the health
plan, to submit a claim to the plan, and requires the plan to
pay the claim to the terms of the contract. SB 364 died on
Assembly floor.
AB 1321 (Yee of 2005), would have prohibited hospital-based
anesthesiologists, radiologists, pathologists, and emergency
AB 72 (Bonta) Page 15 of ?
room physicians, or a group of such physicians, from seeking
payment for services, other than allowable copayments and
deductibles; from individual enrollees of a health plan. AB
1321 was held on the Assembly Appropriations Suspense File.
SB 367 (Speier, Chapter 723, Statutes of 2005), enacted the
Patient and Provider Protection Act in the Insurance Code and
revises the way complaints from health care providers about
health insurers are handled by CDI.
AB 755 (Chan of 2005), would have required provider contracts
entered into with contracting agents, as defined, to include
specific provisions and would have prohibited contracting
agents from selling, leasing, assigning, transferring, or
conveying a list of contracted providers and their discounted
rates to any entity that is not a payer. AB 757 died on the
Assembly Appropriations Suspense file.
AB 1686 (Pacheco of 2004), would have encouraged county
medical societies to establish a process to resolve billing
disputes between a contracting provider group and a
non-contracting provider group. AB 1686 died in the Assembly.
AB 2389 (Koretz of 2003), would have required a health plan or
health insurer that owns a preferred provider organization to
pay non-contracting physicians a reasonable and customary fee
for hospital-based anesthesiology, radiology, or pathology
services provided to the plan's enrollees. Would have
prohibited those physicians from balance billing an enrollee
for any charge that exceeds the reasonable and customary fee.
AB 2389 died in the Senate.
AB 2907 (Cohn, Chapter 925, Statutes of 2002), established the
Health Care Providers Bill of Rights and prohibits certain
provisions in contracts between a health plan or a health
insurer and a health care provider.
AB 1455 (Scott of 2000), bars health plans from engaging in
unfair payment patterns in the reimbursement of providers. AB
1455 also includes a number of other provisions regarding
payment practices of health plans, including requiring health
plans to make their dispute resolution process available to
non-contracting providers.
7)Support. Health Access California writes that patients know
AB 72 (Bonta) Page 16 of ?
they have to follow their health plan or insurer's rules and
go to in-network providers and facilities to keep their
out-of-pocket costs low. Unfortunately, many patients end up
getting a surprise medical bill for hundreds or thousands of
dollars from an anesthesiologist, radiologist, pathologist or
other specialist who turns out to be out-of-network, one the
patient never met, did not choose, and often has no control
over selecting. These surprise bills do not count toward the
annual out-of-pocket maximum so a consumer can find themselves
exposed to costs well in excess of $6,600 a year. The
California Labor Federation indicates patients may not even be
able to rely on their hospitals to tell them if they will be
treated by an out-of-network doctor, since doctors are not
direct employees of most hospitals, they are independent
contractors and not all necessarily in the same network as the
hospital. The Affordable Care Act was supposed to reduce
medical debt and bankruptcies. Surprise bills threaten to
undo that work by subjecting patients to astronomically high
bills they were not expecting. This bill takes the burden off
of patients of dealing with surprise bills and negotiating
with the provider. Consumers Union writes health insurance
coverage should provide protection against overwhelming
medical bills and debt. Consumers should not pay the price
for the complicated relationships between doctors, facilities
and health plans. This bill is a balanced solution that
protects patients from unfair surprises, while also requiring
insurers to reimburse out-of-network doctors at in-network
facilities fairly, at a minimum, the greater of the average
contracted rate or 125% of Medicare. It also allows doctors
to appeal for a higher payment through a streamlined IDRP.
8)Opposition. The California Medical Association (CMA) writes
that this bill does provide a framework for a comprehensive,
fair solution to the surprise billing issue, but amendments
are needed to complete the legislation. In order to provide
some balance, CMA indicates this bill contains a provision
whereby the health insurance plan shall collect any in-network
cost sharing amount a patient is responsible for if they
receive out of network care pursuant to this bill. CMA
believes this provision is essential in providing balance
between the physicians and health insurance companies as well
as clearly details for the consumer to what portion of the
care they are required to pay. Health plans and insurers
collect premiums and pay claims according to contracts they
sign with enrollees and medical providers, billing is the core
AB 72 (Bonta) Page 17 of ?
of their business. CMA has great concerns about the health
plans and insurers using their own methodology to determine
what their average contracted rate should be as each plan
could create their own metrics in determining the average
contracted rate. CMA asks that a consistent standard be
applied to all health insurance plans that actually reflects
the average rate paid for each in-network service in a given
year and have provided the authors and the committee with
language to that effect. CMA believes that on-call
specialists who provide post stabilization service should be
exempted from this bill. Physicians volunteer to participate
in on-call panels and provide care to all patients regardless
of ability to pay or insurance coverage similar to emergency
room physicians. One unintended consequence of this bill
would be to limit access to on-call specialists who will
become more reticent to volunteer. The California Chapter of
the American College of Cardiology believes this bill is an
improvement over AB 533 but has a number of concerns that the
bill may adversely affect the ability of patients to receive
quality care in a time fashion. The determination of average
contract rates is problematic. The geographic regions are way
too broad and may not reflect the local cost of care or local
reimbursement levels. Contracted rates with the largest
physician groups would be averaged with contract rates from
solo physicians and both lead to lower reimbursements rates
for non-contracted physicians. This will lead to a high
volume of IDRP claims, and the IDRP process remains largely
undefined. No payment standard is set (recommend Gould), no
fees are established and both parties are required to pay. If
the fees are too high it will be a barrier to physician
participation. The losing party should pay the fees. The
consent and estimate process is problematic and they support
CMA's amendments to fix language spoken and updating the
estimate if complications occur.
9)Policy comments.
a) Differences between AB 533 and AB 72. The most
significant difference between AB 533 and AB 72 is the
payment standard. AB 533 would have set the payment
standard at the Medicare payment rate. AB 72 sets it at
the greater of 125% of Medicare or average contracted
rates of each health plan based on a single benchmark
year with an annual adjustment equal to the consumer
price index for medical care services. In addition to
AB 72 (Bonta) Page 18 of ?
this higher payment standard, AB 72 allows non-contracted
individual health professionals to receive assignment of
benefits, which requires the health plan or insurer to
make payment directly to the provider rather than issuing
payment to the patient who in turn pays the provider. AB
72 allows either party to pursue legal remedies if
dissatisfied with the IDRP. AB 72 requires the health
plan or insurer to collect the copays from the patient,
instead of the provider. The burden of collecting
copayment would remain on contracting providers.
Amendments drafted by the authors would delete this
provision from the bill. AB 72 allows for a 24 hour
consent period prior to a patient voluntarily choosing a
non-contracted individual health professional, rather
than the "at least three business days" required in AB
533. AB 72 limits the reporting of adverse information
to consumer credit reporting agencies and prohibits wage
garnishment or liens on primary residences.
b) How is average contracted rate determined? The bill
requires the methodology to include the highest and
lowest contracted rates in order to prevent the rates
from being weighted in favor of large, dominant provider
groups who can command higher prices. The bill also
requires the methodology to be provided to the
departments along with data listing average contracted
rates for services most frequently subject to the bill.
The departments are given authority to audit the
information provided by the plans and insurers.
Amendments requested by the opposition and accepted by
the authors clarify that the rates are based on
contracted commercial rates. However, it is not clear
what authority the departments will have to require use
of a consistent methodology, if necessary.
c) Is a guaranteed raise in rates appropriate and if
so, by how much? The bill includes an adjustor to the
average contracted rate benchmark of the CPI for Medical
Care Services. Medical Care Services is organized into
three components: Professional Services, Hospital and
Related Services, and Health Insurance. Some have
suggested it would be more appropriate to use the CPI for
Professional Services, which is more specific to
physicians, dentists, eye care providers, and other
medical providers.
AB 72 (Bonta) Page 19 of ?
10)Amendments requested by the authors. The Assemblymembers
authoring this bill request the Senate Health Committee adopt
amendments contained in the attached mock-up. The amendments
would:
a) Require the plan and insurer to implement the
determination obtained through the IDRP.
b) Clarify that the payment standard is based on the
average of the contracted commercial rates paid by the
health plan or insurer.
c) Clarify that the base payment year for the average
contracted rates is 2015 and that the CPI for medical
care services adjuster be applied for each year after
December 31, 2015.
d) Require data on average contracted rates provided to
DMHC and CDI to be confidential and not subject to the
Public Records Act.
e) State that the payment made pursuant to this bill is
payment in full unless either party uses the IDRP or
other lawful means pursuant to 4) above in the bill
summary.
f) Clarify that this bill does not apply to emergency
services and stabilization, as specified.
g) Delete the requirement that the health plan or
insurer collects the copayment.
h) Require the plan or insurer to notify the
non-contracting individual health professional of the
in-network cost sharing owed by the enrollee or insured.
i) Permit the non-contracting individual health
professional to collect only the in-network cost sharing
owed by the enrollee or insured.
j) Permit the non-contracting individual health
professional to affirm that she or he has not attempted
to collect any payment from the enrollee or insured other
than in writing.
aa) Require any overpayment from the enrollee or insured
to be refunded within 30 days of receiving notice from
the plan of the in-network cost-sharing amount.
bb) Permit the collection of more than the written
estimate of the enrollee or insureds total out-of-pocket
cost of care when voluntarily choosing the services of
the non-contracting individual health professional if
circumstances arise during the delivery of services that
were unforeseen at the time the estimate was given that
AB 72 (Bonta) Page 20 of ?
would require the provider to change the estimate.
cc) Require the consent and estimate for voluntary
services to be provided in the language spoken by the
enrollee if the language is a Medi-Cal threshold
language, as specified.
dd) Delete "any other similar provider as DMHC or CDI
may define, by regulation, as a health facility for
purposes of this bill," in the definition of contracted
health facility.
ee) Delete "that an emergency room physician is
prohibited from billing an enrollee of a health care
service plan directly for sums that the health care
service plan has failed to pay for the enrollee's
emergency room treatment," from the reference to Prospect
v. Northridge.
ff) Make several other clarifying changes.
SUPPORT AND OPPOSITION :
Support: California Labor Federation (cosponsor)
Health Access California (cosponsor)
Association of California State Supervisors
California Alliance for Retired Americans
California Black Health Network
California Pan-Ethnic Health Network
California Professional Firefighters
California State Retirees
CALPIRG
Children Now
Congress of California Seniors
Consumers Union
Hunger Action Los Angeles
Inland Empire Immigrant Youth Coalition
NAMI California
National Health Law Program
National Multiple Sclerosis Society CA Action Network
The Children's Partnership
USW Local 675
Oppose:California Society of Anesthesiologists (oppose unless
amended)
California Chapter of the American College of
Cardiology
California Medical Association
-- END --
AB 72 (Bonta) Page 21 of ?