BILL NUMBER: AB 2429	CHAPTERED  08/30/04

	CHAPTER  348
	FILED WITH SECRETARY OF STATE  AUGUST 30, 2004
	APPROVED BY GOVERNOR  AUGUST 27, 2004
	PASSED THE ASSEMBLY  AUGUST 12, 2004
	PASSED THE SENATE  JULY 29, 2004
	AMENDED IN SENATE  JUNE 3, 2004
	AMENDED IN ASSEMBLY  APRIL 26, 2004

INTRODUCED BY   Assembly Member Chavez
   (Principal coauthor:  Assembly Member Cohn)

                        FEBRUARY 19, 2004

   An act to amend Section 1375.7 of the Health and Safety Code,
relating to health care service plans.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2429, Chavez.  Health Care Providers' Bill of Rights.
   Existing law, the Knox-Keene Health Care Service Plan Act of 1975
(the Knox-Keene Act), provides for the licensure and regulation of
health care service plans by the Department of Managed Health Care.
Under the Knox-Keene Act, the Health Care Providers' Bill of Rights
prohibits a contract between a health care service plan and a health
care provider from including a term authorizing the plan to change a
material term of the contract unless the parties have agreed to it or
it is required to comply with state or federal law or with
accreditation requirements of a private sector accreditation
organization.
   This bill would exempt a contract from this prohibition if it is
between a noninstitutional provider and a health care service plan
that provides benefits to enrollees or subscribers covered under the
Medi-Cal or Healthy Families programs and compensates the provider on
a fee-for-service basis and extends to the provider specified rights
to negotiate the change and to terminate the contract.
   Because the bill would specify additional requirements under the
Knox-Keene Act, the violation of which would be 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 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 requires 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.
   (C) If a contract between a noninstitutional provider and a plan
provides benefits to enrollees or subscribers covered under the
Medi-Cal or Healthy Families program and compensates the provider on
a fee-for-service basis, the contract may contain provisions
permitting a material change to the contract by the plan, if the
following requirements are met:
   (i) The plan gives the provider a minimum of 90 business days'
notice of its intent to change a material term of the contract.
   (ii) The plan clearly gives the provider the right to exercise his
or her intent to negotiate and agree to the change within 30
business days of the provider's receipt of the notice described in
clause (i).
   (iii) The plan clearly gives the provider the right to terminate
the contract within 90 business days from the date of the provider's
receipt of the notice described in clause (i) if the provider does
not exercise the right to negotiate the change or no agreement is
reached, as described in clause (ii).
   (iv) The material change becomes effective 90 business days from
the date of the notice described in clause (i) if the provider does
not exercise his or her right to negotiate the change, as described
in clause (ii), or to terminate the contract, as described in clause
(iii).
   (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 provider's 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 care
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. 2.  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.