BILL ANALYSIS Ó AB 369 Page 1 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 AB 369 Page 2 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 AB 369 Page 3 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 AB 369 Page 4 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 AB 369 Page 5 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 AB 369 Page 6 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 AB 369 Page 7 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 AB 369 Page 8 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 AB 369 Page 9 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 AB 369 Page 10 244 (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 AB 369 Page 11 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 AB 369 Page 12 Opposition None on file. Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097