BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 1579
AUTHOR: Campos
AMENDED: April 23, 2012
HEARING DATE: June 13, 2012
CONSULTANT: Trueworthy
SUBJECT : Dental coverage: noncontracting providers: assignment
of benefits.
SUMMARY : Requires a health care service plan or health insurer
that 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 provider submits a
written assignment of benefits signed by the enrollee or
insured, or their legal representative.
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, and provides for the regulation of health
plans by the Department of Managed Health Care (DMHC) pursuant
to Knox-Keene. Establishes the California Department of
Insurance (CDI) which establishes licensing standards for
health insurers, including specialized health insurance
policies for dental care, and providers for the regulation of
health insurers by CDI under the Insurance Code.
2.Requires group contracts administered by Knox-Keene-licensed
health plans to authorize and permit assignment of an
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,
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
Continued---
AB 1579 | Page 2
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 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
and CDI are not required to enforce this provision.
10.Establishes the Dental Board of California to license and
regulate the practice of dentists.
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
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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. 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.
4.States that nothing in this section shall be construed to
require a delay in treatment to an enrollee.
5.Requires an issuer, upon inquiry from the provider, to provide
treatment cost estimate information as soon as possible but
not later than three 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 five percent or more of the
patients served by the provider.
7.Requires in addition to the notice described in 3) and 4)
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 to obtain
a signature from the enrollee or the enrollee's legal
representative indicating receipt thereof:
AB 1579 | Page 4
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.
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
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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.Prohibits anything in this section from being 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.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, AB 1579 has the following fiscal impact: (1) minor,
absorbable costs to DMHC and CDI to ensure plans comply with the
new requirement to directly reimburse noncontracting providers;
and (2) could potentially lead to indirect state cost pressure
associated with the provision of dental plans to its employees.
By making it easier for a noncontracting provider to receive
payment from a dental plan, this bill is likely to somewhat
reduce incentives for dental providers to join or maintain
participation in a plan network. If these reduced incentives
lead to a significant decrease in the number of participating
providers, there could be pressure to increase fees to providers
in order to entice a sufficient number of providers to join plan
networks, the cost of which could be passed on to consumers as
increased premiums. These market effects are difficult to
predict and potential state costs are indeterminate.
PRIOR VOTES :
Assembly Health: 19- 0
Assembly Appropriations:16- 0
Assembly Floor: 74- 1
COMMENTS :
1.Author's statement. There are dental insurance plans that
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. When dental
offices, who are small businesses, do not receive payments for
the services they perform, their practices suffer and cost of
care increases. It is also unfair to patients for insurance
companies not to honor their assignment of benefits to their
dental provider. Reimbursement checks often take weeks to
come, creating confusion and uncertainty for both patient and
dentist. Additionally, patient coverage by two insurance plans
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increases the complexity and confusion of medical billing with
respect to how much each plan covers and what the remaining
balance is, if any. AB 1579 allows a patient, at his or her
discretion, to request a dental plan to pay the dentist
directly for services rendered when the dentist is an
out-of-network provider.
2.Background. Regulation and oversight of health insurance in
California is split between two state departments, DMHC and
CDI. While CDI regulates most of the PPO plans, DMHC also
regulates some PPO plans. In a PPO arrangement, the health
insurer contracts with a network of providers who agree to
accept lower fees and/or to control utilization. PPOs allow
patients to practice "self-referral" which means an enrollee
can see any provider without prior referral. PPOs typically
cover 80 percent of the cost to see an in-network provider and
just 50 percent of the cost to see an out-of-network provider.
The cost will depend on the plan's maximum allowable amount
for the service, which is the most the plan will pay for a
service.
3.Assignment of benefits. Assignment of benefits refers to an
arrangement where a patient requests 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, provided certain statutory and regulatory
conditions are met. HMO-model plans 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. In a PPO arrangement, the health insurer contracts
with a network of medical providers who agree to accept lower
fees and/or to control utilization.
Even if a patient authorizes assignment of benefits, the
patient is still liable for their share of costs, which can be
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substantial for a provider outside the PPO network. 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.
4.Dental. According to the California Association of Dental
Plans website, there are 24 dental plan options in California
regulated by DMHC or CDI. DMHC regulates approximately 21.5
million lives of which approximately 82 percent are members of
Delta Dental. CDI regulates approximately 4.1 million
enrollees as of 2010 but CDI does not have data by plan
enrollment.
5.Consumer protections. Licensed health plans and, if
applicable, specialized health plans under Knox-Keene must
meet certain standards, such as services furnished must be
provided 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 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.Related legislation. AB 1742 (Pan) would have required all
health care service plans and individual insurers, except
specialized health plans and insurers, to permit enrollees to
assign benefits directly to health care providers for health
care services. AB 1742 failed passage in the Assembly Health
Committee.
SB 1373 (Lieu) would have required hospitals to provide an
enrollee or insured, who seeks services at a hospital for an
elective or scheduled procedure, a notice with specified
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information further requires a plan to either refer the
enrollee or subscriber to a contracting provider or authorize
the person to obtain services from a noncontracting provider.
SB 1373 failed passaged in the Senate Health Committee.
7.Prior legislation. 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.
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.
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
contains 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.
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 services, in which
case the insurer shall directly pay the provider, custodial
parent, or DHCS for Medi-Cal beneficiaries.
8.Support. The California Dental Association (CDA) writes that
there are many advantages to patients in having the option to
assign their right to treatment payments to their dental care
providers. For example, 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. CDA also
argues that the patient does not need to attend to the
specific details of financial 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
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dental office rather than by the patient. CDA writes that
assignment of benefit laws have passed in 21 other states and
not one of those states has seen their provider networks
diminish as a result. CDA contends that the state of Colorado
passed legislation is 2005 and according to Delta Dental's
2010 annual report, their provider network saw a net growth of
2.1 percent.
9.Opposition. Delta Dental writes that this bill would
compromise the ability of dental plans to maintain networks
for the broader enrollee community because it would require
Delta to provide a contractual benefit, which they have agreed
to provide to the patient, to the dentist instead, even though
that dentist has no contractual agreement with Delta.
Assignment of benefits erodes the value of contracting for our
participating dentists who agree to discount their fees in
return for direct payment and higher patient volume. Delta
Dental argues AB 1579 would give the ten percent of California
dentists who do not contract with Delta the same advantages of
direct payment as network dentists. These network dentists not
only agree to discounted fees, but also agree to refrain from
balance billing patients as well as other patient protections
Delta Dental and Knox-Keene require of them.
America's Health Insurance Plans writes in opposition that AB
1579 would significantly diminish the ability of health plans
to enter into contracts because the bill eliminates incentives
for dental providers to contract with health providers. The
California Association of Health Plans (CAHP) writes that a
dentist that forgoes entering into contracts with a dental
plan should not by law enjoy the privileges of participating
dentists. CAHP argues that effective provider networks are
essential in delivering high quality and affordable care,
particularly as California gears up for 2014, when millions of
people will be eligible for expanded health coverage through
the California Health Benefits Exchange.
10.Author's amendments.
a. To address the opposition's concern that a plan would be
responsible for finding a means of checking that an
out-of-network dentist provided the disclosure required by
this bill, the author is proposing to require the provider
submit the disclosure form to the plan. On Page 3, Line 4,
after "or" insert: "and a copy of the signed written
disclosure required pursuant to (c)(4)."
AB 1579 | Page 10
b. AB 1579 is intended to be limited to PPOs. To correct a
drafting error and ensure AB 1579 is limited to PPOs the
author has agreed to the following amendment: On Page 5,
Line 14, strike the comma and insert "or:" On Page 5, Lines
15 and 16, strike "or any other plan contract that provides
coverage for out-of-network services."
11.Suggested amendments. The author may wish to amend on Page
3, Line 11 that the notice be given at the time of
appointment, rather than prior to treatment.
The author may also wish to add language to the notification
to ensure consumers are aware of the various protections
(described in #5 above) they will be losing by receiving
services from an out-of-network provider. On Page 4, Lines
11-20 amend as follows:
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 by state law for participating
and network providers. Your health plan may be unable
to assist you in obtaining timely access to care, in
recovering any out-of-pocket expenses for
inappropriate or unnecessary services, or in
redressing any complaints you have about the quality
or appropriateness of services received. Contact
1-800-HMO-HELP for more information.
Your out-of-pocket costs may be higher when visiting a
dentist who is not in your plan's network due to
higher patient cost-sharing requirements under your
health plan and because you may will be responsible
for any difference between the out-of-network
dentist's usual fee and your plan's payment. what your
plan would pay an in-networ dentist for the same
service.
SUPPORT AND OPPOSITION :
Support: California Dental Association (sponsor)
Western Dental Services, Inc.
Oppose: America's Health Insurance Plans
California Association of Dental Plans
California Association of Health Plans
Delta Dental
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