BILL NUMBER: AB 175	CHAPTERED  08/11/03

	CHAPTER  203
	FILED WITH SECRETARY OF STATE  AUGUST 11, 2003
	APPROVED BY GOVERNOR  AUGUST 9, 2003
	PASSED THE SENATE  JULY 24, 2003
	PASSED THE ASSEMBLY  MAY 22, 2003
	AMENDED IN ASSEMBLY  APRIL 28, 2003
	AMENDED IN ASSEMBLY  APRIL 21, 2003

INTRODUCED BY   Assembly Member Cohn

                        JANUARY 23, 2003

   An act to add Section 511.3 to the Business and Professions Code,
to amend Section 1375.7 of the Health and Safety Code, to add Section
10178.4 to the Insurance Code, and to add Section 4610 to the Labor
Code, relating to health care.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 175, Cohn.  Health care provider contracts.
   Existing law, the Knox-Keene Health Care Service Plan Act of 1975,
provides for the licensure and regulation of health care service
plans by the Department of Managed Health Care.  Under existing law,
a violation of the act's provisions is a crime.   Existing law also
provides for the regulation of insurers by the Department of
Insurance.
   Existing law imposes certain requirements on payors, including
health care service plans, specialized health care service plans,
disability or liability insurers, workers' compensation insurers,
employers, or any other 3rd party that is responsible to pay for
health care services provided to beneficiaries by health care
providers, and a failure to comply with the requirements renders the
payor liable to pay the nonpreferred rate.
   This bill would require the rights and obligations of a health
care provider contract, when a contracting agent sells, leases, or
transfers the contract to a payor, to be governed by the underlying
contract between the provider and the contracting agent.
   Because the bill would add a requirement to the provisions
governing a health care service plan, a violation of which is a
crime, it 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.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 511.3 is added to the Business and Professions
Code, to read:
   511.3.  (a) When a contracting agent sells, leases, or transfers a
health providers contract to a payor, the rights and obligations of
the provider shall be governed by the underlying contract between the
health care provider and the contracting agent.
   (b) For purposes of this section, the following terms shall have
the following meanings:
   (1) "Contracting agent" has the meaning set forth in paragraph (2)
of subdivision (d) of Section 511.1.
   (2) "Payor" has the meaning set forth in paragraph (3) of
subdivision (d) of Section 511.1.
  SEC. 2.  Section 1375.7 of the Health and Safety Code is amended to
read:
   1375.7.  (a) This section shall be known and may be cited as the
Health Care Providers' Bill of Rights.
   (b) No contract issued, amended, or renewed on or after January 1,
2003, between a plan and a health care provider for the provision of
health care services to a plan enrollee or  subscriber shall contain
any of the following terms:
   (1) (A) Authority for the plan to change a material term of the
contract, unless the change has first been negotiated and agreed to
by the provider and the plan or the change is necessary to comply
with state or federal law or regulations or any accreditation
requirements of a private sector accreditation organization.  If a
change is made by amending a manual, policy, or procedure document
referenced in the contract, the plan shall provide 45 business days'
notice to the provider, and the provider has the right to negotiate
and agree to the change.  If the plan and the provider cannot agree
to the change to a manual, policy, or procedure document, the
provider has the right to terminate the contract prior to the
implementation of the change.  In any event, the plan shall provide
at least 45 business days' notice of its intent to change a material
term, unless a change in state or federal law or regulations or any
accreditation requirements of a private sector accreditation
organization require a shorter timeframe for compliance.  However, if
the parties mutually agree, the 45 business day notice requirement
may be waived.  Nothing in this subparagraph limits the ability of
the parties to mutually agree to the proposed change at any time
after the provider has received notice of the proposed change.
   (B) If a contract between a provider and a plan provides benefits
to enrollees or subscribers through a preferred provider arrangement,
the contract may contain provisions permitting a material change to
the contract by the plan if the plan provides at least 45 business
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 beyond the contracted number or in the absence of
a number if, in the reasonable professional judgment of the
provider, accepting additional patients would endanger patients'
access to, or continuity of, care.
   (3) A requirement to comply with quality improvement or
utilization management programs or procedures of a  plan, unless the
requirement is fully disclosed to the health care provider at least
15 business days prior to the provider executing the contract.
However, the plan may make a change to the quality improvement or
utilization management programs or procedures at any time if the
change is necessary to comply with state or federal law or
regulations or any accreditation requirements of a private sector
accreditation organization.  A change to the quality improvement or
utilization management programs or procedures shall be made pursuant
to paragraph (1).
   (4) A provision that waives or  conflicts with any provision of
this chapter.  A provision in the contract that allows the plan to
provide professional liability or other coverage or to assume the
cost of defending the provider in an action relating to professional
liability or other action is not in conflict with, or in violation
of, this chapter.
   (5) A requirement to permit access to patient information in
violation of federal or state laws concerning the confidentiality of
patient information.
   (c) (1) When a contracting agent sells, leases, or transfers a
health providers contract to a payor, the rights and obligations of
the provider shall be governed by the underlying contract between the
health care provider and the contracting agent.
   (2) For purposes of this subdivision, the following terms shall
have the following meanings:
   (A) "Contracting agent" has the meaning set forth in paragraph (2)
of subdivision (d) of Section 1395.6.
   (B) "Payor" has the meaning set forth in paragraph (3) of
subdivision (d) of Section 1395.6.
   (d) Any contract provision that violates subdivision (b) or (c)
shall be void, unlawful, and unenforceable.
   (e) The department shall compile the information submitted by
plans pursuant to subdivision (h) of Section 1367 into a report and
submit the report to the Governor and the Legislature by March 15 of
each calendar year.
   (f) Nothing in this section shall be construed or applied as
setting the rate of payment to be included in contracts between
plans and health care providers.
   (g) For purposes of this section the following definitions apply:

   (1) "Health care provider" means  any professional person, medical
group, independent practice association, organization, health
facility, or other person or  institution licensed or authorized by
the state to deliver or furnish health services.
   (2) "Material" means a provision in a contract  to which a
reasonable person would attach importance in determining the action
to be taken upon the provision.
  SEC. 3.  Section 10178.4 is added to the Insurance Code, to read:
   10178.4.  (a) When a contracting agent sells, leases, or transfers
a health providers contract to a payor, the rights and obligations
of the provider shall be governed by the underlying contract between
the health care provider and the contracting agent.
   (b) For purposes of this section, the following terms shall have
the following meanings:
   (1) "Contracting agent" has the meaning set forth in paragraph (2)
of subdivision (d) of Section 10178.3.
   (2) "Payor" has the meaning set forth in paragraph (3) of
subdivision (d) of Section 10178.3.
  SEC. 4.  Section 4610 is added to the Labor Code, to read:
   4610.  (a) When a contracting agent sells, leases, or transfers a
health providers contract to a payor, the rights and obligations of
the provider shall be governed by the underlying contract between the
health care provider and the contracting agent.
   (b) For purposes of this section, the following terms shall have
the following meanings:
   (1) "Contracting agent" has the meaning set forth in paragraph (2)
of subdivision (d) of Section 4609.
   (2) "Payor" has the meaning set forth in paragraph (3) of
subdivision (d) of Section 4609.
  SEC. 5.  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.