BILL NUMBER: AB 684	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Ma
   (Coauthors: Assembly Members Tom Berryhill and Skinner)

                        FEBRUARY 26, 2009

   An act to amend Section 1371 of the Health and Safety Code, and to
amend Section 10123.13 of the Insurance Code, relating to health
care coverage.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 684, as introduced, Ma. Claim reimbursement: late payments:
dental services.
   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 that act a crime. Existing law provides for the
regulation of health insurers by the Department of Insurance. Under
existing law, health care service plans and health insurers are
required to reimburse uncontested claims no later than 30 or 45
working days, as specified, after receipt of the claim, and if a
claim is not reimbursed within that time period, existing law
requires that interest accrue at the rate of 15% per annum, for
health care service plans, and 10% per annum, for health insurers.
   With respect to contracts or policies covering dental services,
this bill would increase the interest rate if uncontested claims are
not reimbursed within 60 or 90 working days after receipt, as
specified.
   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.
   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.  Section 1371 of the Health and Safety Code is amended
to read:
   1371.   (a)    A health care service plan,
including a specialized health care service plan, shall reimburse
claims or any portion of any claim, whether in state or out of state,
as soon as practical, but no later than 30 working days after
receipt of the claim by the health care service plan, or if the
health care service plan is a health maintenance organization, 45
working days after receipt of the claim by the health care service
plan, unless the claim or portion thereof is contested by the plan in
which case the claimant shall be notified, in writing, that the
claim is contested or denied, within 30 working days after receipt of
the claim by the health care service plan, or if the health care
service plan is a health maintenance organization, 45 working days
after receipt of the claim by the health care service plan. The
notice that a claim is being contested shall identify the portion of
the claim that is contested and the specific reasons for contesting
the claim. 
    If 
    (b)     If  an uncontested claim is
not reimbursed by delivery to the  claimants'  
claimant's  address of record within the respective 30 or 45
working days after receipt, interest shall accrue at the rate of 15
percent per annum beginning with the first calendar day after the 30-
or 45-working-day period.  A  
   (c) With respect 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, in addition to
subdivision (b), both of the following shall apply:  
   (1) If an uncontested claim is not reimbursed by delivery to the
claimant's address of record within 60 working days after receipt,
interest shall accrue at the rate of 20 percent per annum beginning
with the first calendar day after the 60-working-day period. 

   (2) If an uncontested claim is not reimbursed by delivery to the
claimant's address of record within 90 working days after receipt,
interest shall accrue at the rate of 25 percent per annum beginning
with the first calendar day after the 90-working-day period. 
    (d)     A  health care service plan
shall automatically include in its payment of the claim all interest
that has accrued pursuant to this section without requiring the
claimant to submit a request for the interest amount. Any plan
failing to comply with this requirement shall pay the claimant a ten
dollar ($10) fee. 
    For 
    (e)     For  the purposes of this
section, a claim, or portion thereof, is reasonably contested where
the plan has not received the completed claim and all information
necessary to determine payer liability for the claim, or has not been
granted reasonable access to information concerning provider
services. Information necessary to determine payer liability for the
claim includes, but is not limited to, reports of investigations
concerning fraud and misrepresentation, and necessary consents,
releases, and assignments, a claim on appeal, or other information
necessary for the plan to determine the medical necessity for the
health care services provided. 
    If 
    (f)     If  a claim or portion thereof
is contested on the basis that the plan has not received all
information necessary to determine payer liability for the claim or
portion thereof and notice has been provided pursuant to this
section, then the plan shall have 30 working days or, if the health
care service plan is a health maintenance organization, 45 working
days after receipt of this additional information to complete
reconsideration of the claim. If a plan has received all of the
information necessary to determine payer liability for a contested
claim and has not reimbursed a claim it has determined to be payable
within 30 working days of the receipt of that information, or if the
plan is a health maintenance organization, within 45 working days of
receipt of that information, interest shall accrue and be payable at
a rate of 15 percent per annum beginning with the first calendar day
after the 30- or 45-working day period. 
    The 
    (g)     The  obligation of the plan to
comply with this section shall not be deemed to be waived when the
plan requires its medical groups, independent practice associations,
or other contracting entities to pay claims for covered services.
  SEC. 2.  Section 10123.13 of the Insurance Code is amended to read:

   10123.13.  (a) Every insurer issuing group or individual policies
of health insurance that covers hospital, medical, or surgical
expenses, including those telemedicine services covered by the
insurer as defined in subdivision (a) of Section 2290.5 of the
Business and Professions Code, shall reimburse claims or any portion
of any claim, whether in state or out of state, for those expenses as
soon as practical, but no later than 30 working days after receipt
of the claim by the insurer unless the claim or portion thereof is
contested by the insurer, in which case the claimant shall be
notified, in writing, that the claim is contested or denied, within
30 working days after receipt of the claim by the insurer. The notice
that a claim is being contested or denied shall identify the portion
of the claim that is contested or denied and the specific reasons
including for each reason the factual and legal basis known at that
time by the insurer for contesting or denying the claim. If the
reason is based solely on facts or solely on law, the insurer is
required to provide only the factual or the legal basis for its
reason for contesting or denying the claim. The insurer shall provide
a copy of the notice to each insured who received services pursuant
to the claim that was contested or denied and to the insured's health
care provider that provided the services at issue. The notice shall
advise the provider who submitted the claim on behalf of the insured
or pursuant to a contract for alternative rates of payment and the
insured that either may seek review by the department of a claim that
the insurer contested or denied, and the notice shall include the
address, Internet Web site address, and telephone number of the unit
within the department that performs this review function. The notice
to the provider may be included on either the explanation of benefits
or remittance advice and shall also contain a statement advising the
provider of its right to enter into the dispute resolution process
described in Section 10123.137. The notice to the insured may also be
included on the explanation of benefits.
   (b) If an uncontested claim is not reimbursed by delivery to the
claimant's address of record within 30 working days after receipt,
interest shall accrue and shall be payable at the rate of 10 percent
per annum beginning with the first calendar day after the 30-working
day period. 
   (c) With respect to a health insurance policy covering dental
services or a specialized health insurance policy covering dental
services, in addition to subdivision (b), both of the following shall
apply:  
   (1) If an uncontested claim is not reimbursed by delivery to the
claimant's address of record within 60 working days after receipt,
interest shall accrue at the rate of 20 percent per annum beginning
with the first calendar day after the 60-working day period. 

   (2) If an uncontested claim is not reimbursed by delivery to the
claimant's address of record within 90 working days after receipt,
interest shall accrue at the rate of 25 percent per annum beginning
with the first calendar day after the 90-working day period. 

   (c) 
    (d)  For purposes of this section, a claim, or portion
thereof, is reasonably contested when the insurer has not received a
completed claim and all information necessary to determine payer
liability for the claim, or has not been granted reasonable access to
information concerning provider services. Information necessary to
determine liability for the claims includes, but is not limited to,
reports of investigations concerning fraud and misrepresentation, and
necessary consents, releases, and assignments, a claim on appeal, or
other information necessary for the insurer to determine the medical
necessity for the health care services provided to the claimant. If
an insurer has received all of the information necessary to determine
payer liability for a contested claim and has not reimbursed a claim
determined to be payable within 30 working days of receipt of that
information, interest shall accrue and be payable at a rate of 10
percent per annum beginning with the first calendar day after the
30-working day period. 
   (d) 
    (e)  The obligation of the insurer to comply with this
section shall not be deemed to be waived when the insurer requires
its contracting entities to pay claims for covered services.
  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.