BILL ANALYSIS Ó
AB 1579
Page 1
Date of Hearing: April 24, 2012
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 1579 (Campos) - As Amended: April 23, 2012
SUBJECT : Dental coverage: noncontracting providers: assignment
of benefits.
SUMMARY : Requires a health care service plan (health plan) or
health insurer (collectively issuers) to pay a noncontracting
dental provider directly for covered services after submitting a
written "assignment of benefits" signed by an enrollee or
insured. Specifically, this bill :
1)Defines "assignment of benefits" as the transfer of
reimbursement or other rights provided for under a health plan
contract or health insurance policy to a treating provider for
services or items rendered to an enrollee or an insured.
2)Requires an issuer, if the issuer pays a contracting dental
provider directly for covered services rendered to an enrollee
or insured, to also pay a noncontracting dental provider
directly for covered services rendered to an enrollee or
insured where the noncontracting provider submits to the
issuer a written assignment of benefits signed by the enrollee
or insured. Allows a legal representative to sign the
assignment of benefits if the enrollee or insured is a minor
or is incompetent or incapacitated.
3)Requires an issuer to give written notice to the enrollee,
insured, or legal representative when payment is made to the
noncontracting dental provider pursuant to 2) above.
4)Requires the notice to contain the following:
a) Notification that the provider is not in the network of
the enrollee's plan;
b) The estimated full cost of the planned treatment and the
estimated amount for which the enrollee is responsible;
and,
c) The estimate of the treatment cost covered by the health
plan, if available prior to treatment. States that nothing
in this bill shall be construed to require a delay in
treatment to an enrollee.
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5)Requires an issuer to, upon inquiry from the provider, provide
treatment cost estimate information as soon as possible but
not later than 3 business days from the date of the request.
6)Requires the notice to be made available by the provider in
the primary languages of the two largest populations seen by
the provider who either do not speak English or who are unable
to effectively communicate in English because it is not their
native language, and who comprise 5% or more of the patients
served by the provider.
7)Requires in addition to the notice in 3) above, prior to
providing treatment, a noncontracting dental provider
accepting an assignment of benefits to provide the enrollee on
a single page without any additional information the following
written notice, in 12-point type, and obtain a signature from
the enrollee or the enrollee's legal representative indicating
receipt thereof:
Assignment of Benefits
Your signature below acknowledges that you have chosen to have
your dental services provided by Ýprovider's name] at Ýbusiness
name and location] and that you are aware that this provider is
not participating in your plan's network. You also acknowledge
that when you obtain care from a nonparticipating or
out-of-network provider you understand the following:
Your plan's benefits and policies may not apply to the treatment
you will receive. The provider is not subject to contract
requirements or oversight by your health plan as required in
state law for participating and network providers. Contact
1-800-HMO-HELP (for CDI: 1-800-927-HELP) for more information.
Your out-of-pocket cost may be higher when visiting a dentist
who is not in your plan's network due to higher cost sharing
requirements under your health insurance and because you may be
responsible for any difference between the dentist's usual fee
and your plan's payment.
You have the right to confirm your dental benefit or insurance
information from your plan, insurer, or employer before
beginning treatment.
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8)Limits the payment amount to an amount not to exceed the
amount of the benefit covered by the contract or policy with
respect to the provider of the service, the amount of expenses
incurred on account of the dental care or treatment provided,
and states that the payment discharges the issuer's obligation
with respect to the amount paid.
9)Permits a provider accepting an assignment of benefits to only
collect from the enrollee the enrollee's estimated cost
according to the written treatment plan. Requires a provider
to refund any overpayment to the enrollee within 30 business
days after receiving the direct payment from the enrollee's
plan if the actual payment is more than the estimated payment.
10)Limits this bill to a health plan contract or health
insurance policy covering dental services or a specialized
health plan contract or policy covering dental services that
is a preferred provider organization plan contract, a
point-of-service plan contract, or a policy that provides
services at alternative rates of payment, as specified, or any
other plan contract that provides coverage for out-of-network
services.
11)States that nothing in this section shall be construed to
exempt a health plan from the requirements existing law
related to payment for out-of-network emergency services and
continuity of care provisions.
EXISTING LAW :
1)Establishes the Knox-Keene Health Care Service Plan Act of
1975 (Knox-Keene) which establishes licensing standards for
health plans, including for specialized health plan contracts
for dental care. Establishes the California Department of
Insurance (CDI) which establishes licensing standards for
health insurers, including specialized health insurance
policies for dental care.
2)Requires group contracts administered by Knox-Keene licensed
health plans to authorize and permit assignment of enrollee's
or subscriber's right to reimbursement to the Department of
Health Care Services (DHCS) when services are provided to a
Medi-Cal beneficiary.
3)Requires health insurers to pay group insurance benefits for,
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or contingent upon, hospitalization or medical or surgical
aid, upon written consent of the insured, to the person or
persons having provided or having paid for the services, if
the person submits specified information and the insured
person or dependent is covered by the policy. Prohibits the
amount of the payment from exceeding the amount of benefit
provided by the policy with respect to the service or billing
of the provider of aid, and the amount of expenses incurred on
account of the hospitalization, medical, or surgical aid.
4)Requires a health insurer to pay group insurance benefits to
DHCS, in the case of a Medi-Cal beneficiary, where DHCS has
paid for hospital, medical, or surgical services, as
specified.
5)Requires each contract between an issuer and a provider to
contain provisions requiring a fast, fair, and cost-effective
dispute resolution mechanism under which providers may submit
disputes to the issuer and requires issuers to notify
providers of the procedures for processing and resolving
disputes, including the location and telephone number where
information regarding disputes may be submitted.
6)Allows a noncontracted provider to dispute the appropriateness
of a Knox-Keene health plan's computation of the reasonable
and customary value and requires the health plan to respond to
the dispute through the health plan's mandated provider
dispute resolution process.
7)Establishes, pursuant to regulations adopted by the Department
of Managed health Care (DMHC) and CDI, similar but not
identical requirements issuers must implement in their claims
settlement practices with providers.
8)Permits an enrollee, an insured, or a health care provider to
file a written complaint with DMHC or CDI with respect to the
handling of a claim or other obligation under a health plan
contract or health insurance policy, as specified, and
requires DMHC and CDI to respond to the complaint in a
specified manner within specified timeframes.
9)Prohibits a contracting provider with respect to a contract
covering dental services from charging more for dental
services that are not covered services than his or her usual
and customary rate for those services and specifies that DMHC
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and CDI are not required to enforce this provision.
10)Establishes the Dental Board of California to license and
regulate the practice of dentists.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, some dental
insurance plans will not honor assignment of benefits and
instead send a check directly to the enrollee, who is then
responsible for cashing the check and making the payment to
the dentist. The author states that most dental plans ignore
a patient's request to designate their dentist to receive
direct payments unless the dentist has a contract with the
dental plan. The author asserts that dental offices are small
businesses, and when they do not receive payment for the
services they perform, their practices suffer and costs of
care increase, dentists incur bad debt, become creditors,
spend time tracking down payments, and are forced to take
legal action to receive proper payment. The author believes
out-of-network providers should not have to choose between the
certainty of receiving payment for services rendered, and
joining a network. According to the author, an association of
Maryland medical group administrators conducted a survey
revealing that 84% of respondents indicated that patients
frequently fail to pay their medical bills after receiving due
payment. The author indicates that some insurance companies
pressure dentists to join a network to receive direct payment.
The author also suggests that refusal to honor assignment of
benefits may reduce access to care. The author says some
providers require up-front payments from consumers because of
the uncertainties of being able to receive payment.
Additionally, the author states that in rural communities,
sometimes the nearest in-network provider is not within
proximity and an out-of-network provider is much more
accessible.
2)BACKGROUND . Regulation and oversight of health insurance in
California is split between two state departments. DMHC
regulates health plans under Knox-Keene. DMHC health plans
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include health maintenance organizations (HMOs) and some
Preferred Provider Organization (PPO) plans. CDI regulates
disability insurers offering health insurance, which includes
PPO plans and traditional indemnity insurance. In a PPO
arrangement, the health insurer contracts with a network of
providers who agree to accept lower fees and/or to control
utilization. Enrollees in a PPO plan receive a higher level
of benefits if they go to a preferred provider than if they go
to a non-preferred or noncontracted provider.
3)HOW ASSIGNMENT OF BENEFITS WORKS . Assignment of benefits
refers to an arrangement where a patient requests that their
health benefit payments be made directly to a designated
person or facility, such as a physician, hospital, or in the
case of a dental specialized plan, a dentist. All health
plans under Knox-Keene, HMOs, and the PPOs subject to DMHC
jurisdiction are required to directly reimburse providers for
emergency care and services, providing certain statutory and
regulatory conditions are met. Otherwise, HMO model plans
would generally have no legal obligation to reimburse
noncontracted providers, except in an emergency, since the
plan contract provides that enrollees must get services from
network providers in order for the benefits to be covered.
PPO plan enrollees may seek services from noncontracted
providers. Traditional indemnity insurance and PPO coverage
plans have historically reimbursed the patients directly for
covered services but have generally allowed for assignment of
benefits to network providers, and even for out-of-network
providers. If a patient signs a written authorization, the
provider may seek payment directly and the insurer must pay
the provider directly.
Even if a patient authorizes assignment of benefits, the patient
is still liable for their share of costs, which can be
substantial for a provider outside the PPO network. For
example, a PPO policy might pay 80% of the negotiated rate for
contracted providers and the patient pays the remaining 20% of
that negotiated rate. For noncontracted providers, the policy
might only pay 60% of what the issuer determines is the usual
and customary fee and the patient is liable for the difference
between what the issuer paid and the provider's billed
charges, which might be higher than the usual and customary
fees. Even where the patient assigns the benefits to the
provider, unless the provider waives the right to payment, the
patient remains liable for full payment to the provider.
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According to the DMHC website, in a PPO when a patient goes to
an out-of-network provider, the patient's cost usually depends
on the plan's Maximum Allowable Amount for the service, which
is the most the plan will pay for the service.
The DMHC provides the following example as it relates to
hospital care:
---------------------------------------------------------------
| |Network Hospital |Out-of-Network Hospital |
| |(PPO pays 80%) |(PPO pays 60%) |
|----------------+--------------------+-------------------------|
|Hospital charge |$22,000 |$22,000 |
| | | |
|----------------+--------------------+-------------------------|
|The PPO's |$14,000 |$14,000 |
|Maximum | | |
|Allowable | | |
|Amount for the | | |
|service | | |
|----------------+--------------------+-------------------------|
|PPO pays |$14,000 x 80% = |$14,000 x 60% = $8,400 |
| |$11,200 | |
|----------------+--------------------+-------------------------|
|Patient pays |$14,000 x 20% = |$14,000 x 40% = $5,600 |
| |$2,800 |plus |
| | |all of the amount over |
| | |the allowed cost: |
| | |$22,000 - $14,000 = |
| | |$8,000 for a total of |
| | |$5,600 + $8,000 = |
| | |$13,600 |
---------------------------------------------------------------
In addition to the added cost to the patient for going to an
out-of-network provider, a PPO may exclude amounts the patient
pays to out-of-network providers for covered services from
application toward the deductible and annual maximum copayment
limits.
4)PROVIDER AND CONSUMER COMPLAINTS . Both CDI and DMHC respond
to complaints from providers regarding inadequate, delayed, or
incomplete payments from issuers. According to DMHC, the
Independent Dispute Resolution Process (IDRP) is intended to
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afford noncontracted providers of emergency hospital and
physician services for HMO enrollees a fast, fair, and cost
effective way to resolve claim payment disputes with health
plans and their capitated providers. The IDRP is voluntary
for both noncontracted providers and payers. According to
DMHC, since 2009, 85 IDRP cases have been completed: of those,
46 disputes have been overturned in favor of the provider and
39 have been overturned in favor of the plan. None of these
cases involve assignment of benefits issues.
According to CDI, in 2010 there were five complaints related
to assignment of benefits. Two of the five involved the
insured getting paid rather that the provider even though an
assignment of benefits was on file. One case was a patient
complaint that the provider was paid directly even though
there was no assignment of benefits on file and the patient
had already paid the provider. The patient was having
difficulty getting reimbursed from the provider. In 2011, CDI
received 24 complaints related to assignment of benefits: two
from consumers, 22 from providers (20 of which were from the
same provider and involved a self-funded plan outside of CDI's
jurisdiction). Of the four remaining: one involved workers'
compensation and another had to do with a prescription drug
plan. A third was a provider complaint that the insured was
paid instead of the provider even though an assignment of
benefits was on file. The fourth case involved the consumer
complaining that the health insurer received direct payment
even though an assignment of benefits was not on file. The
patient had paid the provider already and was having trouble
getting reimbursement.
5)CONSUMER PROTECTIONS . Licensed health plans and if
applicable, specialized health plans, under Knox-Keene must
meet certain standards such as that services be furnished in a
manner providing continuity of care and ready referral of
patients to other providers consistent with good professional
practice. Additionally, all services shall be readily
available at reasonable times to each enrollee consistent with
good professional practice. Further, regulations require
services to be within reasonable proximity of enrollees' homes
or workplaces, and distance may not be an unreasonable barrier
to accessibility. Plans must monitor accessibility and have a
system designed for correcting problems, if they develop.
Regulations also require each dental plan to ensure contracted
dental provider networks have adequate capacity and
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availability to offer enrollees appointments for covered
dental services according to specified time frames: within 72
hours of the time of request for urgent appointments; 36
business days of the request for non-urgent appointments; and,
within 40 business days of the request for appointment for
preventive dental care appointments.
6)SUPPORT . The California Dental Association (CDA) is the
sponsor of this bill. CDA cites many advantages to patients
in having the option to assign their right to treatment
payments to their dental care providers: the patient can
designate to their dentist the responsibility of filling out
the claim form and assuring that all the necessary
documentation is attached, eliminating confusion that patients
often have over using correct insurance codes and procedure
descriptions; the patient does not need to attend to the
specific details of recordkeeping associated with billing and
payment of the care they were provided; and, any difficulties
or disputes arising from a dental insurer's failure to
properly reimburse the claim can be handled by the dental
office rather than by the patient. CDA asserts that a dental
plan's refusal to accept patients' assignment of rights for
benefit payment is a denial of the patient's wishes and
choice. Since a PPO allows enrollees to seek care from a
dentist of their choice, whether in-network or out-of-network,
a plan's refusal to honor an enrollee's assignment of payment
punishes the patient for receiving care from a dentist of
their choice who happens to be outside of the plan's provider
network. CDA states in response to claims that assignment of
benefits laws erodes provider networks that Colorado passed
legislation in 2005 and in 2010 Delta Dental's network saw a
net growth of 2.1%. According to CDA, quality of care is a
matter for the Dental Board of California and in keeping with
their obligation of service to the public, CDA and its 32
component dental societies have established a statewide peer
review system to resolve disputes regarding dental treatment,
utilization, and irregular billing practices.
7)OPPOSITION . Delta Dental opposes this bill because they
believe it targets them, will result in the erosion of their
provider network, and impact patient quality. Terms of
participation in Delta Dental networks includes the provider's
agreement to limit fees, guarantee that treatment quality
meets professional standards, and accept an assortment of
terms and conditions that protect patients; such as not
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charging for filling out forms, and providing subordinate
parts of treatment. Delta Dental indicates that only about 8%
of California dentists are not currently in one of their
networks. Delta Dental believes that patients are unaware
that their average out-of-pocket costs will roughly double
what they would pay an in-network provider. Delta Dental
argues that most out-of-network providers make that choice
because they want the ability to charge more than their
network fee limits, and do not want to be subject to Delta
Dental's Quality Management Program. Delta Dental states that
California is different from any other state where mandated
assignment of benefits has been enacted. Delta Dental
believes assignment of benefits is the main reason why its
Premier network enjoys 92% participation. Delta Dental states
that for every 5% reduction in dentists, there will be a
corresponding increase of $97 million in total out-of-pocket
costs for their California enrollees. With regard to consumer
protections, Delta Dental enrollees are guaranteed the right
to a second opinion and should Delta Dental determine a
procedure was done improperly or insufficiently, Delta Dental
can withhold payment from the provider, require retreatment,
or authorize care from a different dentist at no additional
cost to the enrollee. Lastly, Delta Dental indicates that
participating dentists agree to be subject to ongoing Quality
Management, with a host of protections that neither the
California State Board of Dental Examiners, nor CDA's
statewide peer review system can extend.
Both the Association of California Life & Health Insurance
Companies and America's Health Insurance Plans (AHIP) oppose
this bill because it reduces incentive to contract with
insurers and exposes consumers to potential harm without
appropriate transparency. AHIP indicates that this bill
threatens the efforts of all health care stakeholders to
provide consumers with meaningful health care choices and
affordable coverage options.
8)RELATED LEGISLATION .
a) AB 1742 (Pan), also pending in the Assembly Health
Committee, would amend Knox-Keene to extend to all health
plans requirements to authorize and permit assignment of
the enrollee's right to reimbursement to the provider who
furnished the health care services. In addition, AB 1742
would require, on or after January 1, 2013, a disability
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insurer to pay individual insurance benefits for expenses
incurred on account of, hospitalization, medical or
surgical aid to the person or persons having provided the
aid, and limits the amount of payment to not exceed the
amount of benefit covered by the policy.
b) SB 1373 (Lieu), pending in the Senate, requires, when an
enrollee or insured seeks care from a noncontracting
provider, the provider to provide a specified written
notice to the enrollee or insured informing the enrollee or
insured that the provider is not in the enrollee's or
insured's plan or provider network, as specified.
Prohibits a health facility or a provider group from
holding itself out as being within a plan network unless
all of the individual providers providing services at the
facility or with the provider group are within the plan
network.
9)PREVIOUS LEGISLATION .
a) AB 2805 (Ma) of 2008, would have required issuers to
permit enrollees to assign benefits directly to health care
providers, or pay providers directly, respectively, for
health care services in the same way that existing law
requires such benefits be assigned or paid directly to
providers of beneficiaries of the Medi-Cal program. AB
2805 failed passage on the Assembly Floor.
b) AB 2275 (Hayashi), Chapter 673, Statutes of 2010,
prohibits a provider from charging more for non-covered
dental services than his or her usual and customary rate
for those services.
c) AB 1455 (Scott), Chapter 827, Statutes of 2000, bars
Knox-Keene health plans from engaging in unfair payment
patterns in the reimbursement of providers. AB 1455 also
contained a number of other provisions regarding payment
practices of health plans, including requiring health plans
to make their dispute resolution process available to
noncontracting providers.
d) AB 2309 (Woodruff), Chapter 744, Statutes of 1993,
requires health plans and health insurers that cover the
expenses of health care services to permit the insured or
covered person to assign reimbursement to the provider of
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services, in which case the insurer shall directly pay the
provider, custodial parent, or DHCS for Medi-Cal
beneficiaries.
10)POLICY COMMENT . In a market based system, a party which has
more leverage will fare better in a negotiation. In this
case, this bill would require in law a business practice
(assignment of benefits) which would make it easier for
out-of-network providers to obtain payment from an issuer.
Even with an assignment of benefit requirement, unless the
provider waives some of his or her fee, he or she will still
have to collect cost-sharing obligation from the patient. If
opponents are correct in their assertion that direct payment
is one of the most significant reasons providers agree to join
a network, often at discounted rates, then California could
see an erosion of HMO and PPO managed care networks. On the
other hand, proponents argue that plans will still be able to
offer in network providers a sufficient number of patients
which should make it beneficial for providers to want to join
or remain in a plan's network.
California has a long history with managed care. Good or bad,
rates have traditionally been lower in California compared to
the rest of the country. Over the last 15 years, the
Legislature has passed many laws to strengthen consumer rights
and protections to ensure patients in managed care have access
to important benefits such as adequate networks, timely access
to care, and grievance opportunities. The concept of managed
care is further embraced with the passage of federal health
reform. Under health reform the state and federal government
are moving toward more integrated and coordinated care through
accountable care organizations models and patient health
homes.
From the issuer and provider perspective there are many
legitimate business reasons to support or oppose this bill.
Policymakers may want to explore the implications of
assignment of benefits mandates for patients. On the one
hand, patients will not be burdened with passing payment
issued by the plan on to the provider. In anticipation of
health reform or other life transitions, a patient who changes
plans may have less of a burden remaining with their current
providers, who may not be in a new issuer's network, but he or
she will have to contribute more out-of-pocket to do this.
However, as the CDI complaint data suggest even with
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assignment of benefits a provider may still charge the patient
the full fee, and if the issuer pays the provider directly,
the patient may have trouble getting reimbursed from the
provider.
When a consumer chooses a PPO, he or she is usually making a
conscious choice to pick a plan type that may cost him or her
more out-of-pocket, but that gives him or her flexibility to
go to providers who are outside of the issuer's network. PPO
plans incentivize patients to go to in-network providers
largely through the offer of lower cost-sharing. If a patient
knowingly goes to an out-of-network provider, it is unlikely
that the patient will know the true cost to him or her until
the service is provided and the issuer informs the patient
through the Explanation of Benefit of the patient's financial
responsibility, which is the difference between what the
issuer will pay an out-of-network provider and the provider's
billed charges. In addition, not all of those expenses paid
by the consumer will count toward the patient's maximum
out-of-pocket limitations, or the annual deductible. Issuers
inform patients of these trade-offs through marketing material
and Evidence of Coverage documents. Further, certain consumer
rights and protections required of the issuer in law, such as
continuity of coverage requirements, timely access and
provider credentialing are difficult to enforce by the issuer
on out-of-network providers, so consumers lose access to those
benefits when they go to out-of-network providers. These
trade-offs are not always apparent to patients.
What is unknown is the extent to which the enactment of this
legislation will have a negative effect on current and future
managed care networks. What is known is that consumers
benefit by broader networks, lower cost sharing and strong
consumer protections.
The April 23, 2012 amendments address concerns outlined above
and the following principles:
a) Disclosure in primary language of patient at the point
of service about cost to the patient for out-of-network
costs, that plan benefits do not apply when the patient
goes out-of-network, and includes a written estimate of
costs. A comparison of in network vs. out-of-network costs
proves to be challenging to produce at present because of
the proprietary nature of health care finance and the lack
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of transparency of cost and payment information in the
current structure of the health care system.
Unfortunately, of any party in this transaction, the
patient decision maker has little access to the information
necessary to make an informed decision;
b) Assignment of benefits form in the primary language of
the patent;
c) Limitations on issuer payment from exceeding the amount
of expenses incurred;
d) Application of assignment of benefits only in PPO and
similar models, not HMOs;
e) Clarification that prohibitions on balance billing for
emergency services and continuity of care requirements
apply; and,
f) Limit provider to collecting from the patient only the
patient's responsibility, not the total cost (which would
include the issuer obligation), when assignment of benefits
form is signed by the patient.
REGISTERED SUPPORT / OPPOSITION :
Support
California Dental Association (sponsor)
Western Dental Services, Inc.
Opposition
America's Health Insurance Plans
Association of California Life & Health Insurance Companies
California Association of Dental Plans
California Association of Health Plans
Delta Dental
Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097