BILL ANALYSIS
AB 2907
Page 1
ASSEMBLY THIRD READING
AB 2907 (Cohn)
As Amended May 14, 2002
Majority vote
HEALTH 16-1 APPROPRIATIONS 22-0
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|Ayes:|Thomson, Aanestad, Bates, |Ayes:|Steinberg, Bates, |
| |Chan, Chavez, Cohn, | |Alquist, Aroner, Cohn, |
| |Frommer, Goldberg, | |Corbett, Correa, Daucher, |
| |Koretz, Richman, Runner, | |Diaz, Firebaugh, |
| |Salinas, Strom-Martin, | |Goldberg, Maldonado, |
| |Washington, Kehoe, Zettel | |Negrete McLeod, Robert |
| | | |Pacheco, Papan, Pavley, |
| | | |Runner, Simitian, |
| | | |Washington, Wiggins, |
| | | |Wright, Zettel |
| | | | |
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|Nays:|Dickerson |
| | |
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SUMMARY : Establishes a "Doctors Bill of Rights." Prohibits
certain provisions in contracts between health care service
plans and physicians. Makes the failure of a health care
service plan to make timely payments to a health care provider
an unfair payment pattern. Specifically, this bill :
1)Prohibits any contract between a health care service plan and
a physician from doing any of the following:
a) Containing a provision that allows a health care service
plan to unilaterally change the terms of the contract or
the rate of payment for services;
b) Containing a provision that requires a physician to
accept additional patients if, in the judgment of the
physician, accepting additional patients would endanger
patient care; and,
c) Failing to fully disclose the rate of payment for
services, including any fee schedule.
AB 2907
Page 2
2)Makes any contract that violates #1) above, void, unlawful,
and unenforceable.
3)Makes the failure of a health care service plan to make timely
payments to a health care provider an unfair payment pattern.
4)Makes legislative findings regarding access to quality care by
the residents of California.
FISCAL EFFECT : According to the Assembly Appropriations
Committee analysis, minor, absorbable costs to the Department of
Managed Health Care (DMHC) to monitor health plan compliance
with this bill. Current law already requires that contracts be
fair and reasonable, and prohibits health plans from engaging in
unfair payment patters.
COMMENTS :
1)According to the author, this bill is designed to create a
"Doctors Bill of Rights" that assures that physicians are
treated fairly in their contractual relations with HMOs. This
bill addresses four points on which doctors have frequently
not been treated fairly. Current California law states that
contracts between providers and health plans must be "fair,
reasonable and consistent with the objectives of the
Knox-Keene Act" (Act). However, existing law does not define
what constitutes a fair and reasonable contract. Many in the
medical community argue there is an imbalance in negotiating
power between physicians and health plans that has resulted in
provider contracts that do not meet the fair and reasonable
standard in existing law. Unreasonable contracts can diminish
access to quality care. This bill explicitly sets out
provisions of contracts that are unfair and that would violate
existing law and makes it clear that it is unfair for
physicians to be forced to sign contracts that allow health
plans to unilaterally change the contract terms. Similarly,
when a contract is for the payment for services to be
rendered, it is only fair and equitable that physicians know
in advance what the payment for a given service will be. In
addition, physicians must be able to exercise their
professional judgement in determining the number of patients
they can see and still provide the quality care that
Californians expect. Finally, disincentives to discourage
health plans from delaying payments to providers should be
increased.
AB 2907
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2)A recent review of capitation contracting in New York and
California published in the journal Health Affairs found the
atmosphere between health plans and physicians is charged with
distrust and that contractual relationships between the two
entities are under severe strain. California has one of the
highest rates of HMO penetration in the country (52% compared
to 30% nationally). There are over 17 million Californians
enrolled in one of the state's 36 HMOs, and 78% of total HMO
enrollment is concentrated in five HMOs. Physician
associations have argued that the state's high managed care
penetration has created a market imbalance and that physicians
are leaving the state, although the ratio of California
physicians to 100,000 population has increased from 177 in
1994 to 190 in 2000.
Contracts between health care service plans (health plans) and
physicians and other providers are governed by the Act. The
Act is enforced by DMHC. The Act requires, among other
things, that all contracts with subscribers and enrollees, and
all contracts with providers, be fair, reasonable, and
consistent with the objectives of the Act.
3)According to the California Medical Association (CMA), patient
care is at-risk when health plans treat health care providers
unfairly. CMA states that the Act recognizes that in order
for accessible, high quality care to be delivered to
Californians, there must be some limitations on plan behavior
to keep the plans' for-profit mission in check. CMA argues
this bill prohibits contract terms that are patently unfair
and unreasonable.
Analysis Prepared by : John Gilman / HEALTH / (916) 319-2097
FN: 0004749