BILL NUMBER: AB 2907	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JUNE 20, 2002
	AMENDED IN ASSEMBLY  MAY 14, 2002
	AMENDED IN ASSEMBLY  APRIL 11, 2002

INTRODUCED BY   Assembly Members Cohn and Thomson
   (Coauthors:  Assembly Members Corbett, Correa, Goldberg, Pavley,
Richman, and Steinberg)

                        FEBRUARY 25, 2002

    An act to add Section 1375.7 to the Health and Safety
Code, relating to health care service plans.   An act to
add Section 513 to the Business and Professions Code, and to amend
Section 1386 of the Health and Safety Code, relating to health care
coverage. 



	LEGISLATIVE COUNSEL'S DIGEST


   AB 2907, as amended, Cohn.  Provider contracts.
   The Knox-Keene Health Care Service Plan Act of 1975 provides for
the regulation and licensing of health care service plans by the
Department of Managed Health Care  .  The act  
and  makes the willful violation of any of its provisions a
crime.   The act prohibits a contract between a health care
service plan and a risk-bearing organization, as defined, from
including a provision that requires the risk-bearing organization to
be at financial risk for the provision of health care services unless
the provision has been first negotiated and agreed to by the parties
or is included within a contract meeting specified criteria
  Existing law also provides for the regulation of
health insurers by the Department of Insurance.  Under existing law,
a plan and a health insurer are prohibited from including certain
provisions in a contract with a licensed health care practitioner
regarding the practitioner's provision of care to an enrollee or
insured  .
   This bill would prohibit  provisions in  a contract
between a health care service plan  or health insurer  and a
 physician from (1) allowing  health care
provider, as defined, that would allow  the plan  or insurer
 to unilaterally change  the terms   a
material term  of the contract  or rate of payment for
services, (2) requiring a physician   without complying
with specified requirements, that would require the provider to
accept additional patients if, in the  provider's  judgment
 of the physician,  doing so would endanger patient
care,  and (3) failing to fully disclose the rate of payment
for services   subject to specified exceptions, and that
would pertain to other specified aspects of the provider's practice
 .  The bill would provide that a contract violating any of
these prohibitions would be void, unlawful, and unenforceable 
and would make a plan's violation of these requirements grounds for
disciplinary action.  The bill would also require the Department of
Insurance to report annually to the Legislature and the Governor
complaints it receives concerning these requirements and would
require the Department of Managed Health Care to report annually to
the Legislature and the Governor information it receives from plans
concerning their dispute resolution mechanism  .  
   The Knox-Keene Health Care Service Plan Act of 1975 prohibits a
health care service plan from engaging in an unfair payment pattern.

   This bill would provide that the failure of a plan to make timely
payments to providers would constitute an unfair payment pattern.

   By creating new prohibitions applicable to health care service
plans, the violation of which 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.  The Legislature finds and declares the  
  SECTION 1.  Section 513 is added to the Business and Professions
Code, to read:
   513.  (a) This section shall be known and may be cited as the
Health Care Providers' Bill of Rights.
   (b) The purpose of this section is to ensure that health care
service plans and health insurers do not enter into contracts that
interfere with any ethical responsibility or legal right of health
care providers.
   (c) No contract between a health care service plan or health
insurer and a health care provider for the provision of health
services to a plan enrollee or an insured shall contain any of the
following terms:
   (1) Authority for the health care service plan or health insurer
to change a material term of the contract, unless the contract
requires at least 45 days' notice to the health care provider of the
change, and the provision has first been negotiated and agreed to by
the provider and the plan or health insurer.  If a contract between a
provider and a plan or health insurer provides benefits to
enrollees, subscribers, or insureds through a preferred provider
arrangement, the contract may contain provisions permitting a
material change to the contract by the plan or health insurer if the
plan or health insurer provides at least 45 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.
   (2) A provision that requires a health care provider to accept
additional patients if, in the judgment of the provider, accepting
additional patients would endanger patients' access to or continuity
of care.  A provider may not refuse to accept Medi-Cal or Healthy
Family beneficiaries enrolled with the health care service plan or
health insurer if the provider is continuing to accept other
enrollees or insureds under the contract with the plan or insurer,
and the provider has contracted to provide health care services to
those beneficiaries.
   (3) A requirement to comply with quality improvement or
utilization management programs or procedures of a health care
service plan or a health insurer, unless the requirement is fully
disclosed to the health care provider at least 30 days prior to the
provider executing the contract.
   (4) A provision that waives or is inconsistent with any provision
of the Knox-Keene Health Care Service Plan Act (Chapter 2.2
(commencing with Section 1340) of Division 2 of the Health and Safety
Code) or the Insurance Code.
   (5) A requirement to permit access to patient information in
violation of federal or state laws concerning the confidentiality of
patient information.
   (d) Any contract that violates subdivision (c) shall be void,
unlawful, and unenforceable.
   (e) The Department of Managed Health Care shall compile the
information submitted by health care service plans pursuant to
subdivision (h) of Section 1367 of the Health and Safety Code into a
report and submit the report to the Governor and the Legislature by
March 15 of each calendar year.
   (f) The Department of Insurance shall annually compile all
provider complaints if receives under this section and report to the
Legislature and the Governor the number and nature of those
complaints 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
health care service plans or health insurers and health care
providers.  Nothing in this section shall require a provider to
continue a relationship with a patient who fails to comply with the
provider's posted office policies or who behaves in a manner that is
abusive, offensive, or dangerous to patients, office staff, or health
care personnel, if the patient and the patient's health care service
plan or health insurer are given at least 30 days' notice of the
termination for those reasons.
   (h) For purposes of this section the following definitions apply:

   (1) "Health care provider" means a person who is described in
subdivision (f) of Section 900 and who either contracts with or is
considering a contract to provide health care services to health care
service plan enrollees or insureds.
   (2) "Health care service plan" means any person licensed pursuant
to the Knox-Keene Health Care Service Plan Act of 1975 (Chapter 2.2
(commencing with Section 1340) of Division 2 of the Health and Safety
Code).
   (3) "Health insurer" means any admitted insurer writing health
insurance, as defined in Section 106 of the Insurance Code.
   (4) "Material" means a proposed provision in a contract that is
substantive and would affect the decision of an individual or entity
to accept the terms of the contract.
  SEC. 2.  Section 1386 of the Health and Safety Code is amended to
read: 
   1386.  (a) The director may, after appropriate notice and
opportunity for a hearing, by order suspend or revoke any license
issued under this chapter to a health care service plan or assess
administrative penalties if the director determines that the licensee
has committed any of the acts or omissions constituting grounds for
disciplinary action.
   (b) The following acts or omissions constitute grounds for
disciplinary action by the director:
   (1) The plan is operating at variance with the basic
organizational documents as filed pursuant to Section 1351 or 1352,
or with its published plan, or in any manner contrary to that
described in, and reasonably inferred from, the plan as contained in
its application for licensure and annual report, or any modification
thereof, unless amendments allowing the variation have been submitted
to, and approved by, the director.
   (2) The plan has issued, or permits others to use, evidence of
coverage or uses a schedule of charges for health care services
 which   that  do not comply with those
published in the latest evidence of coverage found unobjectionable by
the director.
   (3) The plan does not provide basic health care services to its
enrollees and subscribers as set forth in the evidence of coverage.
This subdivision shall not apply to specialized health care service
plan contracts.
   (4) The plan is no longer able to meet the standards set forth in
Article 5 (commencing with Section 1367).
   (5) The continued operation of the plan will constitute a
substantial risk to its subscribers and enrollees.
   (6) The plan has violated or attempted to violate, or conspired to
violate, directly or indirectly, or assisted in or abetted a
violation or conspiracy to violate any provision of this chapter, any
rule or regulation adopted by the director pursuant to this chapter,
or any order issued by the director pursuant to this chapter.
   (7) The plan has engaged in any conduct that constitutes fraud or
dishonest dealing or unfair competition, as defined by Section 17200
of the Business and Professions Code.
   (8) The plan has permitted, or aided or abetted any violation by
an employee or contractor who is a holder of any certificate,
license, permit, registration or exemption issued pursuant to the
Business and Professions Code, or this code  which 
 that  would constitute grounds for discipline against the
certificate, license, permit, registration, or exemption.
   (9) The plan has aided or abetted or permitted the commission of
any illegal act.
   (10) The engagement of a person as an officer, director, employee,
associate, or provider of the plan contrary to the provisions of an
order issued by the director pursuant to subdivision (c) of this
section or subdivision (d) of Section 1388.
   (11) The engagement of a person as a solicitor or supervisor of
solicitation contrary to the provisions of an order issued by the
director pursuant to Section 1388.
   (12) The plan, its management company, or any other affiliate of
the plan, or any controlling person, officer, director, or other
person occupying a principal management or supervisory position in
the plan, management company or affiliate, has been convicted of or
pleaded nolo contendere to a crime, or committed any act involving
dishonesty, fraud, or deceit, which crime or act is substantially
related to the qualifications, functions, or duties of a person
engaged in business in accordance with this chapter.  The director
may revoke or deny a license hereunder irrespective of a subsequent
order under the provisions of Section 1203.4 of the Penal Code.
   (13) The plan violates Section 510,  513,  2056, or
2056.1 of the Business and Professions Code.
   (14) The plan has been subject to a final disciplinary action
taken by this state, another state, an agency of the federal
government, or another country, for any act or omission that would
constitute a violation of this chapter.
   (15) The plan violates the Confidentiality of Medical Information
Act (Part 2.6 (commencing with Section 56) of Division 1 of the Civil
Code).
   (c) (1) The director may prohibit any person from serving as an
officer, director, employee, associate, or provider of any plan or
solicitor firm, or of any management company of any plan, or as a
solicitor, if either of the following applies:
   (A) The prohibition is in the public interest and the person has
committed, caused, participated in, or had knowledge of a violation
of this chapter by a plan, management company, or solicitor firm.
   (B) The person was an officer, director, employee, associate, or
provider of a plan or of a management company or solicitor firm of
any plan whose license has been suspended or revoked pursuant to this
section and the person had knowledge of, or participated in, any of
the prohibited acts for which the license was suspended or revoked.
   (2) A proceeding for the issuance of an order under this
subdivision may be included with a proceeding against a plan under
this section or may constitute a separate proceeding, subject in
either case to subdivision (d).
   (d) A proceeding under this section shall be subject to
appropriate notice to, and the opportunity for a hearing with regard
to, the person affected in accordance with subdivision (a) of Section
1397.   
  SEC. 3.  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.    following:
   (a) The health of the residents of California and their access to
quality medical care depends on a stable and adequately reimbursed
medical workforce.
   (b) Physicians are entitled to know in advance the rate at which
they will be reimbursed for the health care they deliver and to
receive payment on a timely basis.
   (c) Contracts that fail to disclose payment rates, allow health
care service plans to unilaterally change their terms, or force
physicians to accept an excessive number of patients, threaten the
health care of Californians.
  SEC. 2.  Section 1375.7 is added to the Health and Safety Code, to
read:
   1375.7.  (a) This section shall be known and may be cited as the
Doctors' Bill of Rights.
   (b) No contract between a health care service plan and a physician
shall do any of the following:
   (1) Contain a provision that allows a health care service plan to
unilaterally change the terms of the contract or the rate of payment
for services.
   (2) Contain a provision that requires a physician to accept
additional patients if, in the judgment of the physician, accepting
additional patients would endanger patient care.
   (3) Fail to fully disclose the rate of payment for services,
including any fee schedule.
   (c) Any contract that violates subdivision (b) shall be void,
unlawful, and unenforceable.
   (d) The failure of a health care service plan to make timely
payments to a health care provider shall constitute an unfair payment
pattern.
  SEC. 3.  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.