BILL NUMBER: SB 1387 CHAPTERED
BILL TEXT
CHAPTER 403
FILED WITH SECRETARY OF STATE SEPTEMBER 27, 2008
APPROVED BY GOVERNOR SEPTEMBER 27, 2008
PASSED THE SENATE AUGUST 19, 2008
PASSED THE ASSEMBLY AUGUST 13, 2008
AMENDED IN ASSEMBLY AUGUST 12, 2008
AMENDED IN SENATE MAY 7, 2008
AMENDED IN SENATE APRIL 21, 2008
AMENDED IN SENATE APRIL 3, 2008
INTRODUCED BY Senator Padilla
(Coauthors: Senators Aanestad and Alquist)
FEBRUARY 21, 2008
An act to amend Section 1371.1 of the Health and Safety Code, and
to amend Section 10123.145 of the Insurance Code, relating to health
care coverage.
LEGISLATIVE COUNSEL'S DIGEST
SB 1387, Padilla. Dental coverage: provider overpayments.
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 and makes a willful
violation of the act a crime. Existing law provides for the
regulation of health insurers by the Department of Insurance.
Under existing law, each contract between a health care service
plan or a health insurer and a provider must contain provisions
requiring a fast, fair, and cost-effective dispute resolution
mechanism, as specified. Existing law requires a provider to
reimburse a health care service plan or a health insurer for an
overpayment within a specified period of time after receiving notice
of the overpayment, unless that overpayment is contested by the
provider. If an overpayment is contested, existing law requires that
the plan or insurer be notified in writing within 30 days.
This bill would enact various provisions regarding overpayments by
plans and health insurers providing dental coverage. The bill would
require that the overpayment notice sent by the plan or insurer
contain specified information.
Because a willful violation of the bill's provisions with respect
to health care service plans 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.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1371.1 of the Health and Safety Code is amended
to read:
1371.1. (a) Whenever a health care service plan, including a
specialized health care service plan, determines that in reimbursing
a claim for provider services an institutional or professional
provider has been overpaid, and then notifies the provider in writing
through a separate notice identifying the overpayment and the amount
of the overpayment, the provider shall reimburse the health care
service plan within 30 working days of receipt by the provider of the
notice of overpayment unless the overpayment or portion thereof is
contested by the provider in which case the health care service plan
shall be notified, in writing, within 30 working days. The notice
that an overpayment is being contested shall identify the portion of
the overpayment that is contested and the specific reasons for
contesting the overpayment.
If the provider does not make reimbursement for an uncontested
overpayment within 30 working days after receipt, interest shall
accrue at the rate of 10 percent per annum beginning with the first
calendar day after the 30 working day period.
(b) (1) This subdivision shall only apply to a health care service
plan contract covering dental services or a specialized health care
service plan contract covering dental services pursuant to this
chapter.
(2) The health care service plan's notice of overpayment shall
inform the provider how to access the plan's dispute resolution
mechanism offered pursuant to subdivision (h) of Section 1367. The
notice shall include the name and address to which the dispute should
be submitted and a statement that Section 1371.1 requires a provider
to reimburse the plan for an overpayment within 30 working days of
receipt by the provider of the notice of overpayment unless the
provider contests the overpayment within 30 working days. The notice
shall also include information clearly identifying the claim, the
name of the patient, the date of service, and a clear explanation of
the basis upon which the plan or the plan's capitated provider
believes the amount paid on the claim was in excess of the amount
due, including interest and penalties on the claim. The notice shall
also include a statement that if the provider does not make
reimbursement of an uncontested overpayment within 30 working days
after receipt of the notice, interest shall accrue at a rate of 10
percent per annum.
SEC. 2. Section 10123.145 of the Insurance Code is amended to
read:
10123.145. (a) Whenever an insurer issuing group or individual
policies of disability insurance which covers hospital, medical, or
surgical expenses determines that in reimbursing a claim for provider
services an institutional or professional provider has been
overpaid, and then notifies the provider in writing through a
separate notice identifying the overpayment and the amount of the
overpayment, the provider shall reimburse the insurer within 30
working days of receipt by the provider of the notice of overpayment
unless the overpayment or portion thereof is contested by the
provider in which case the insurer shall be notified, in writing,
within 30 working days. The notice that an overpayment is being
contested shall identify the portion of the overpayment that is
contested and the specific reasons for contesting the overpayment.
If the provider does not make reimbursement for an uncontested
overpayment within 30 working days after receipt, interest shall
accrue at the rate of 10 percent per annum beginning with the first
calendar day after the 30 working day period.
(b) (1) This subdivision shall only apply to a health insurance
policy covering dental services or a specialized health insurance
policy covering dental services.
(2) The insurer's notice of overpayment shall inform the provider
how to access the insurer's dispute resolution mechanism offered
pursuant to subdivision (a) of Section 10123.137. The notice shall
include the name and address to which the dispute should be submitted
and a statement that Section 10123.145 requires a provider to
reimburse the insurer for an overpayment within 30 working days of
receipt by the provider of the notice of overpayment unless the
provider contests the overpayment within 30 working days. The notice
shall also include information clearly identifying the claim, the
name of the patient, the date of service, and a clear explanation of
the basis upon which the insurer believes the amount paid on the
claim was in excess of the amount due, including interest and
penalties on the claim. The notice shall also include a statement
that if the provider does not make reimbursement of an uncontested
overpayment within 30 working days after receipt of the notice,
interest shall accrue at a rate of 10 percent per annum.
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.