BILL ANALYSIS Ó
AB 369
Page 1
ASSEMBLY THIRD READING
AB 369 (Pan)
As Amended January 16, 2014
2/3 vote. Urgency
HEALTH 16-0 APPROPRIATIONS 16-0
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|Ayes:|Pan, Maienschein, |Ayes:|Gatto, Bigelow, Allen, |
| |Ammiano, Atkins, Bonilla, | |Bocanegra, Bradford, Ian |
| |Bonta, Chesbro, Gomez, | |Calderon, Campos, Eggman, |
| |Gonzalez, Logue, Mansoor, | |Gomez, Holden, Linder, |
| |Nazarian, Ridley-Thomas, | |Pan, Quirk, |
| |Wagner, Wieckowski, V. | |Ridley-Thomas, Wagner, |
| |Manuel Pérez | |Weber |
| | | | |
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SUMMARY : Allows a person with health coverage in the individual
market whose health plan or policy was cancelled between
December 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.
Contains an urgency clause to ensure that the provisions of this
bill go into immediate effect upon enactment. Specifically, this
bill :
1)Requires a health care service plan or insurer, at the request
of a newly covered enrollee/insured under an individual health
plan contract or individual insurance policy, 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/insured meets both of the
following:
a) The newly covered enrollee/insured's prior coverage was
terminated, as specified, between December 1, 2013, and
March 31, 2014, inclusive; and,
b) At the time his or her coverage became effective, the
newly covered enrollee/insured was receiving services from
that provider for one of the conditions described under
existing law.
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2)Limits the bill's requirement for completion of covered
services to services rendered to the newly covered
enrollee/insured on and after the effective date of his or her
new coverage.
3)Makes clear a violation of 1) above, as it relates to
Department of Managed Health Care (DMHC) regulated entities is
not a crime.
4)Authorizes a health insurer (regulated by the California
Department of Insurance (CDI)) to require a nonparticipating
provider whose services are continued for a newly covered
insured under the provisions of this bill 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.
5)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.
6)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 5) above.
7)States legislative intent that, with respect to CDI-regulated
health insurers, a nonparticipating provider whose services
are continued accept the reimbursement provided 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.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, costs to the DMHC and CDI to enforce this bill's
provisions are likely to be minor. Even if a complaint related
to these provisions results in a trial, for example, enforcement
costs would likely be less than $100,000 (Managed Care Fund or
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Insurance Fund).
COMMENTS : 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 Health and Safety Code (H&SC), which governs
DMHC regulated entities and the Insurance Commissioner, which
governs CDI regulated entities.
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.
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).
Under the ACA, states were allowed to either establish a
separate health insurance exchange to offer individual and
small-group coverage or rely 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,
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premium limits, and use of a single risk pool for determining
rates.
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 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.
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
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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. The California Association of
Physician Groups, in support, writes that this bill 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, in support, writes that the ACA created a sea
change for consumers obtaining non-group coverage, and the
important continuity of care protections also should apply to
the newly reformed individual market.
Opposition: None on file.
Analysis Prepared by : Ben Russell / HEALTH / (916) 319-2097
FN: 0003033