BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 369
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          Date of Hearing:  January 14, 2014

                            ASSEMBLY COMMITTEE ON HEALTH
                                 Richard Pan, Chair
                     AB 369 (Pan) - As Amended:  January 6, 2014
           
          SUBJECT  :  Continuity of Care.

           SUMMARY  :  Allows a person with health coverage in the individual  
          market whose health plan or policy was cancelled between January  
          1, 2013, and March 31, 2014, to request that his or her new  
          health plan or insurance policy cover the completion of services  
          for treatment of specified conditions, such as cancer or  
          pregnancy, from the person's existing provider who is not a  
          participating provider with the new health plan or policy.    
          Specifically,  this bill  :  

          1)Requires a health plan or insurer, at the request of a newly  
            covered enrollee under an individual health plan contract, to  
            arrange for the completion of covered services by a  
            nonparticipating provider for one of the conditions described  
            under existing law, if the newly covered enrollee meets both  
            of the following:
             a)   The newly covered enrollee's prior coverage was  
               terminated between January 1, 2013, and March 31, 2014,  
               inclusive; and,
             b)   At the time his or her coverage became effective, the  
               newly covered enrollee was receiving services from that  
               provider for one of the conditions described under existing  
               law.

          2)Makes clear a violation of 1) above, as it relates to  
            Department of Managed Health Care (DMHC) regulated entities  
            (governed by the Health and Safety Code (H&SC)) is not a  
            crime.

          3)Deletes a provision in H&SC that excludes from the continuity  
            of care law, a newly covered enrollee who is offered an  
            out-of-network option or a newly covered enrollee who had the  
            option to continue with his or her previous health plan or  
            provider and instead voluntarily chose to change health plans.

          4)Defines "terminated provider" in H&SC as a provider whose  
            contract to provide services to enrollees is terminated or not  
            renewed by the plan or one of the plan's contracting provider  








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            groups.

          5)Defines "nonparticipating provider," in the Insurance Code  
            (IC) and excludes a terminated provider from the definition of  
            "nonparticipating provider."

          6)Requires a health insurer, at the request of a newly covered  
            insured under a group insurance policy, to arrange for the  
            completion of covered services by a nonparticipating provider  
            for one of the conditions described in existing law.

          7)Authorizes a health insurer to require a nonparticipating  
            provider whose services are continued for a newly covered  
            insured to agree in writing to be subject to the same  
            contractual terms and conditions that are imposed upon  
            currently participating providers providing similar services  
            who are practicing in the same or a similar geographic area as  
            the nonparticipating provider.

          8)Requires, unless otherwise agreed upon by the nonparticipating  
            provider and the health insurer or by the nonparticipating  
            provider and provider group, the services rendered to be  
            compensated at rates and methods of payment similar to those  
            used for currently participating providers providing similar  
            services who are practicing in the same or similar geographic  
            area as the nonparticipating provider.  

          9)Provides that neither the health insurer nor the provider  
            group is required to continue the services of a  
            nonparticipating provider if the provider does not accept the  
            payment rates provided in 8) above.  Requires the provider to  
            accept the reimbursement as payment in full and not bill the  
            insured for any amount in excess of the reimbursement rate,  
            with the exception of copayments and deductibles.

           EXISTING LAW  :  

          1)Regulates health plans at the DMHC and health insurers at the  
            California Department of Insurance (CDI).
           
          H&SC (applies to DMHC regulated entities)
           
          1)Requires a health plan, at the request of an enrollee, to  
            provide the completion of covered services by a terminated  
            provider or by a nonparticipating provider for one of the  








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            following conditions:
             a)   An acute condition, for the duration of the condition.   
               (Defined as a medical condition that involves a sudden  
               onset of symptoms due to an illness, injury, or other  
               medical problem that requires prompt medical attention and  
               that has a limited duration.)
             b)   A serious chronic condition not to exceed 12 months.   
               (Defined as a medical condition due to a disease, illness,  
               or other medical problem or medical disorder that is  
               serious in nature and that persists without full cure or  
               worsens over an extended period of time or requires ongoing  
               treatment to maintain remission or prevent deterioration.)
             c)   A pregnancy.  (Defined as the three trimesters of  
               pregnancy and the immediate postpartum period.)
             d)   A terminal illness which may exceed 12 months.  (Defined  
               as an incurable or irreversible condition that has a high  
               probability of causing death within one year or less.)
             e)   The care of a newborn child between birth and 36 months,  
               completion of covered services may not exceed 12 months.
             f)   Performance of a surgery or other procedure that is  
               authorized by the plan as part of a documented course of  
               treatment and has been recommended and documented by the  
               provider to occur within 180 days.

          2)Authorizes a plan to require a terminated provider whose  
            services are continued beyond the contract termination date to  
            agree in writing to be subject to the same contractual terms  
            and conditions that were imposed upon the provider prior to  
            termination.  

          3)Authorizes the plan to require a nonparticipating provider  
            whose services are continued for a newly covered enrollee to  
            agree in writing to be subject to the same contractual terms  
            and conditions that are imposed upon currently contracting  
            providers who are not capitated and who are practicing in the  
            same or a similar geographic area.

          4)Requires, unless otherwise agreed to by the terminated or  
            nonparticipating provider and the plan or individual provider  
            and provider group, completion of covered services to be  
            compensated at rates and methods of payment similar to those  
            used by the plan or provider group for currently contracting  
            providers who are not capitated.  States that neither the plan  
            nor the provider group is required to continue the services of  
            a terminated provider if the provider does not accept these  








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            payment rates.

          5)Provides that the amount of, and the requirement for payment  
            of, copayments, deductibles, or other cost sharing components  
            during the period of completion of covered services with a  
            terminated provider or a nonparticipating provider are the  
            same as would be paid by the enrollee if receiving care from a  
            provider currently contracting with or employed by the plan.  

          6)Provides that a plan is not required to provide completion of  
            services by a provider who is terminated or not renewed for  
            reasons related to a medical disciplinary cause, fraud, or  
            other criminal activity.
              
          7)Provides a plan is not required to cover services or provide  
            benefits that are not otherwise covered under the terms and  
            conditions of the plan contract and that 1) through 6) do not  
            apply to a newly covered enrollee covered under an individual  
            subscriber agreement who is undergoing a course of treatment  
            on the effective date of his or her coverage for a condition  
            in 1) above.

          8)Provides that 1) through 6) do not apply to a newly covered  
            enrollee who is offered an out-of-network option or to a newly  
            covered enrollee who had the option to continue with his or  
            her previous health plan or provider and instead voluntarily  
            chose to change health plans. 

          9)Defines "nonparticipating provider" as a provider who is not  
            contracted with a health plan.

           IC (which applies to CDI regulated entities)

           1)Requires, at the request of an insured, a health insurer that  
            enters into a contract with a professional or institutional  
            provider at alternative rates of payment (otherwise known as a  
            preferred provider organization), to arrange for the  
            completion of covered services by a terminated provider, if  
            the insured is undergoing a course of treatment as described  
            in 1a) through 1)e) above.

          2)Authorizes the insurer to require the terminated provider  
            whose services are continued beyond the contract termination  
            date to agree in writing to be subject to the same contractual  
            terms and conditions that were imposed upon the provider prior  








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            to termination.

          3)Requires, unless otherwise agreed upon between the terminated  
            provider and the insurer or between the terminated provider  
            and the provider group, the agreement to be construed to  
            require a rate and method of payment to the terminated  
            provider, for the services rendered, that is the same as the  
            rate and method of payment for the same services while under  
            contract with the insurer and at the time of termination.   
            Requires the provider to accept the reimbursement as payment  
            in full and precludes billing for any amount in excess of the  
            reimbursement rate, with the exception of copayments and  
            deductibles.

          4)Requires notice as to the process by which an insured may  
            request completion of covered services to be provided in any  
            insurer evidence of coverage and disclosure form.  Requires an  
            insurer to provide a written copy of this information to its  
            contracting providers and provider groups, and insured upon  
            request.

          5)Provides that the payment of copayments, deductibles, or other  
            cost-sharing components by the insured during the period of  
            completion of covered services with a terminated provider to  
            be the same copayments, deductibles, or other cost-sharing  
            components that would be paid by the insurer.

          6)Defines "terminated provider" as a provider whose contract to  
            provide services to insureds is terminated or not renewed by  
            the insurer or one of the insurer's contracting provider  
            groups.  A terminated provider is not a provider who  
            voluntarily leaves the insurer or contracting provider group.

          7)Provides that an insurer or provider group is not required to  
            provide for the completion of covered services by a provider  
            whose contract has been terminated or not renewed for reasons  
            relating to medical disciplinary cause, fraud, or other  
            criminal activity.

          8)Provides that an insurer is not required to cover services or  
            provide benefits that are not otherwise covered under the  
            contract.

          9)Provides that the provisions are in addition to any other  
            responsibilities of insurers to provide continuity of care, as  








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            specified.

           FISCAL EFFECT  :  This bill has not yet been analyzed by a fiscal  
          committee.

           COMMENTS  :

           1)PURPOSE OF THIS BILL  .  According to the author, California's  
            continuity of care laws, which create an opportunity for a  
            patient to complete treatment with their existing provider  
            under certain conditions when the provider's contract is  
            terminated with a health plan/insurer or when a health plan  
            enrollee is forced to choose a new plan, leave out people who  
            lose plans/policies of health insurance coverage in the  
            individual market, including people whose policies have been  
            cancelled because the policies are not compliant with the  
            Patient Protection and Affordable Care Act (ACA).  This bill  
            is intended to fix deficiencies in the existing law as soon as  
            possible so that people currently undergoing treatments have  
            the opportunity to maintain access to their providers during  
            this transition to new coverage under the ACA.  This bill also  
            makes consistent continuity of care provisions in the H&SC,  
            which governs DMHC regulated entities and the IC, which  
            governs CDI regulated entities.

           2)BACKGROUND  .  On March 23, 2010, the federal ACA (Public Law  
            (P.L.) 111-148), as amended by the Health Care and Education  
            Reconciliation Act of 2010 (P.L. 111-152) became law.  Among  
            many other provisions, the new law makes statutory changes  
            affecting the regulation of and payment for certain types of  
            private health insurance.  Beginning in 2014, individuals will  
            be required to maintain health insurance or pay a penalty,  
            with exceptions for financial hardship (if health insurance  
            premiums exceed 8% of household adjusted gross income),  
            religion, incarceration, and immigration status.  Several  
            insurance market reforms are required, such as prohibitions  
            against health insurers imposing preexisting health condition  
            exclusions.  Many of these reforms took effect January 1,  
            2014, including the imposition of nondiscrimination  
            requirements, requirements that health plans and insurers  
            offer coverage on a guaranteed issue and renewal basis, and  
            determine premiums based on adjusted community rating (age,  
            family, geography, and tobacco use).

          Additionally, by 2014 either a state established a separate  








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            health insurance exchange to offer individual and small-group  
            coverage or a state relies on a new federal exchange.   
            California has established Covered California, as a  
            state-based exchange that is operating as an independent  
            government entity with a five-member Board of Directors.   
            California has also enacted legislation to incorporate most of  
            the federal insurance market reforms into state law, including  
            a requirement that coverage issued, amended, or renewed on or  
            after January 1, 2014 be compliant with ACA reforms such as  
            guaranteed issue, premium limits, and use of a single risk  
            pool for determining rates.

           3)CANCELLED PLANS  .  On May 7, 2013, Covered California adopted  
            model contract requirements that require participating plans,  
            also known as Qualified Health Plans (QHPs), to terminate all  
            non-ACA compliant policies effective December 31, 2013.  QHPs  
            began sending out cancellation letters to their enrollees and  
            insureds in late September.  The Commissioner of CDI did not  
            approve the termination of policies of two companies under  
            CDI's jurisdiction indicating that the cancellations were not  
            in compliance with notice requirements of existing law.  For  
            people insured by these companies cancellation periods were  
            extended to allow for adequate notice.  As such these policy  
            cancellations are permitted to take place by February and  
            March of 2014.  

            On November 14, 2013, the President announced and the federal  
            Center for Consumer Information and Insurance Oversight issued  
            a policy giving insurers the option to offer renewals to  
            people in noncompliant plans who were enrolled on October 1,  
            2013.  However, implementation was deferred to states and is  
            subject to state law.  

            It is estimated that approximately 900,000 individuals will be  
            affected by these plan cancellations in California.  However,  
            half will be able to obtain more affordable, more  
            comprehensive coverage with premium rate reductions.  It is  
            believed that 25% of these individuals will be able to obtain  
            more comprehensive coverage at premium rates comparable to  
            what they would have paid for comprehensive coverage without  
            the ACA.  Another 50,000 people will be losing access to their  
            existing plans because of insurance carriers withdrawing from  
            California's individual market.  Approximately 20,000 of those  
            individuals are expected to be eligible for federal subsidies.  
             Covered California's governing board chose to maintain its  








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            policy (with the exception of the two CDI regulated carriers)  
            because they determined that for the vast majority of  
            Californians ACA coverage is better coverage.  A special  
            consumer assistance unit was established to help consumers  
            through this transition.
                
            4)SUPPORT  .  Health Access California supports this bill because  
            it provides continuity of care protections to Californians  
            facing cancellation of health insurance as a result of the  
            implementation of the consumer protections in the ACA.  In the  
            world prior to the ACA, consumers obtaining coverage as  
            individuals were subjected to medical underwriting which made  
            it unlikely that someone receiving care for a serious or acute  
            condition or in the midst of pregnancy would be able to obtain  
            coverage at any price.  The new rules prohibiting denials of  
            coverage based on pre-existing conditions mean that consumers  
            in the midst of care can change individual coverage without  
            fear of being locked out of coverage.  This bill broadens  
            existing protections by applying them to plan cancellations as  
            a result of termination of coverage before March 31, 2014.    
            The California Association of Physician Groups supports this  
            bill based on amendments under discussion to extend continuity  
            of care rights to individuals whose coverage changes from  
            December 1, 2013 through March 31, 2014.  By doing this, the  
            California Legislature, health plans, and providers will  
            create a mechanism to ensure that these affected Californians  
            maintain their active course of treatment through their  
            transition into the newly created Covered California QHPs.   
            Without this bill, these patients will not have continuity of  
            care rights.  Simply put, it will ensure that people won't  
            fall through the cracks in the system.  Western Center on Law  
            and Poverty supports this bill because it is critical that  
            treatment not be interrupted for enrollees during these  
            transitions to new coverage.  Consumers Union supports this  
            bill as proposed to be amended.  According to Consumers Union,  
            the ACA created a sea change for consumers obtaining non-group  
            coverage.  These important continuity of care protections also  
            should apply to the newly reformed individual market.  

           5)PREVIOUS LEGISLATION  .  

             a)   AB 1180 (Pan), Chapter 441, Statutes of 2013, makes  
               inoperative because of the ACA several provisions in  
               existing law that implement the health insurance laws of  
               the federal Health Insurance Portability and Accountability  








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               Act of 1996 and additional provisions that provide former  
               employees rights to convert their group health insurance  
               coverage to individual market coverage without medical  
               underwriting.  Establishes notification requirements  
               informing individuals affected by this bill of health  
               insurance available in 2014.

             b)   AB 2 X1 (Pan), Chapter 1, Statutes of 2013-14 First  
               Extraordinary Session, and SB 2 X1 (Ed Hernandez), Chapter  
               2, Statutes 2013-14 First Extraordinary Session, conform  
               California law to the ACA as it relates to the ability to  
               sell and purchase individual health insurance by  
               prohibiting preexisting condition exclusions, establishing  
               modified community rating, requiring the guaranteed issue  
               and renewal of health insurance, and ending the practice of  
               carriers conditioning health insurance on health status,  
               medical condition, claims experience, genetic information,  
               or other factors.

             c)   AB 1083 (Monning), Chapter 852, Statutes of 2012,  
               reforms California's small group health insurance laws to  
               enact the ACA.  Eliminates preexisting condition  
               requirements and establishes premium rating factors based  
               only on age, family size, and 19 geographic regions, except  
               for grandfathered plans.  New guaranteed issue provisions  
               and the rating provisions are tied to those provisions in  
               the ACA.  Should guaranteed issue and rating factors be  
               repealed in the ACA, California's existing small group  
               guaranteed issue and rating law pre-ACA would become  
               operative.

             d)   AB 1596 (Frommer), Chapter 164, Statutes of 2004,  
               provides, regarding health plans arranging for the  
               completion of covered services by a terminated or  
               nonparticipating provider, that the duration of covered  
               services for a terminal illness may exceed 12 months from  
               the contract termination date or 12 months from the  
               effective date of coverage for a new employee.  Exempts a  
               health plan from arranging for the completion of covered  
               services by terminated or nonparticipating providers if the  
               newly covered enrollee is either offered an out-of-network  
               option or had the option to continue with a health plan or  
               provider and voluntarily chose to change health plans.

             e)   AB 1286 (Frommer), Chapter 591, Statutes of 2003, and SB  








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               244 (Speier), Chapter 590, Statutes of 2003, require a  
               health care service plan and a provider to include in any  
               written, printed, or electronic communication to an  
               enrollee a specific statement concerning continuity of care  
               rights.  These bills require that a health care service  
               plan submit a block transfer filing to the department at  
               least 75 days prior to the termination of its contract with  
               a provider group or a general acute care hospital and  
               provide 60 days' notice of the contract's termination to  
               enrollees assigned to the terminated provider and specify  
                                    the requirements for an insurer to provide completion of  
               covered services by a terminated provider and for a plan to  
               provide those services either by a terminated provider or  
               by a nonparticipating provider to a newly covered enrollee.  
                In addition, these bills also require a plan and a health  
               insurer to provide completion of covered services for a  
               surgery or procedure recommended and documented by a  
               provider under specified circumstances.

             f)   AB 1522 (Thomson) of 2001 would have required a provider  
               organization to continue to provide healthcare services to  
               patients for one year after its contract is not renewed  
               with a health care service plan or health insurer or be  
               subject to disciplinary action and fines.  AB 1522 was  
               amended on the Senate Floor to establish intent that  
               enrollees receive continuity of care.  AB 1522 died in  
               Conference Committee in 2002.

             g)   SB 103 (Speier) of 2001 would have required every health  
               plan to ensure the continuation of covered services to an  
               enrollee by a terminated provider, instead of existing law,  
               which requires every health plan to, at the request of the  
               enrollee, arrange for the continuation of covered services.  
                SB 103 was amended to establish intent with regard to  
               continuity of care.  SB 103 died in Conference Committee in  
               2002.

             h)   SB 1129 (Sher), Chapter 180, Statutes of 1998, requires  
               health plans and disability insurers to provide continuity  
               of care, at the request of  an enrollee, who is currently  
               being treated for an acute or  serious condition or a  
               pregnancy by a provider terminated by the plan.

             i)   AB 1152 (Bordonaro), Chapter 504, Statutes of 1995,  
               requires health care plan contracts, certain group  








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               disability insurance policies, and  certain nonprofit  
               hospital service plan contracts to file a  policy with CDI  
               or the Department of Corporations (predecessor to DMHC)  
               describing coverage for new subscribers,  enrollees, or  
               insureds receiving services during a current episode of  
               care from a non-contracting provider.  AB 1152 also  
               requires that this policy be provided to enrollees,  
               subscribers, or insureds on request, as well as to all new  
               enrollees, insureds, or subscribers, except those who are  
               not eligible.  

           6)PROPOSED AMENDMENTS  .  
             a)   The author requests amendments be adopted in committee  
               to add an urgency clause to this bill so that its  
               provisions can take effect immediately upon enactment.
             b)   Additionally, the author requests the following  
               amendments:
               i)     Narrow the qualifying period to the period between  
                 December 1, 2013, and March 31, 2014, and specify that  
                 coverage termination is because of cancellations and  
                 withdrawals of products.
               ii)    Reinstate a provision in existing law that excludes  
                 from continuity of care a newly covered enrollee who is  
                 offered an out-of-network option or a new enrollee who  
                 had the option to continue with his or her previous  
                 health plan or provider and instead voluntarily chose to  
                 change plans.
               iii)   Restore definition of "terminated provider".
               iv)    Delete IC provisions providing new continuity of  
                 care rights for newly covered insureds under a group  
                 insurance policy.
               v)     Clarify a requirement that the nonparticipating  
                 provider accept as payment in full with exception of  
                 copayments and deductibles the reimbursement applies only  
                 for purposes of a subdivision in this bill. 

           REGISTERED SUPPORT / OPPOSITION  :  

           Support 
           
          Health Access California
          American Federation of State, County and Municipal Employees,  
          AFL-CIO
          California Association of Physician Groups
          Western Center on Law and Poverty








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           Opposition 
           
          None on file.
           
          Analysis Prepared by  :    Teri Boughton / HEALTH / (916) 319-2097