BILL ANALYSIS Ó SENATE COMMITTEE ON HEALTH Senator Ed Hernandez, O.D., Chair BILL NO: AB 369 AUTHOR: Pan AMENDED: January 16, 2014 HEARING DATE: February 12, 2014 CONSULTANT: Boughton SUBJECT : Continuity of Care. (Urgency) SUMMARY : Allows, under certain circumstances, a new health plan enrollee or insured to complete treatment from a non-participating health care provider if his or her individual health plan contract or insurance policy was terminated between December 1, 2013 and March 31, 2014 and he or she was receiving services from the non-participating provider for a specified condition on the effective date of his or her new coverage. Contains an urgency clause that will make this bill effective upon enactment. Existing law: 1.Establishes the California Department of Insurance (CDI) to regulate health insurers and the Department of Managed Health Care (DMHC) to regulate health plans. 2.Requires health plans and health insurers to cover the completion of covered services by a terminated provider, if requested by an enrollee or insured for the treatment of certain conditions, and if the provider and plan agree on terms and reimbursement, as specified. Requires health plans to cover the completion of covered services by non-participating providers for new enrollees under similar circumstances. 3.Establishes the following conditions as eligible for completion of services: a. An acute condition, as specified. Requires completion of covered services to be provided for the duration of the acute condition; b. A serious chronic condition, as specified. Requires completion of covered services to be provided for a period of time necessary to complete a course of treatment and to arrange for a safe transfer to another provider, as specified, not to exceed 12 months from the contract termination or 12 months from the effective date of Continued--- AB 369 | Page 2 coverage for a newly covered enrollee; c. The three trimesters of pregnancy and the immediate postpartum period. Requires the completion of covered services to be provided for the duration of pregnancy; d. A terminal illness, as specified. Requires completion of covered services to be provided for the duration of the terminal illness, which may exceed 12 months from the contract termination date or 12 months from the effective date of coverage for a new enrollee; e. The care of a newborn child between birth and age 36 months. Concludes the completion of covered services at 12 months from the contract termination date or 12 months from the effective date of coverage for a new enrollee; and, f. Performance of a surgery or other procedure that has been recommended and documented by the provider to occur within 180 days of the contract's termination date or within 180 days of the effective date of coverage for a newly covered enrollee. 4.Permits a health plan or health insurer to require the terminated provider (or non-participating provider in the case of a health plan) to agree in writing to be subject to certain contract terms and conditions including, but not limited to, credentialing, hospital privileging, utilization review, peer review, and quality assurance requirements, as specified. If the terminated provider (or non-participating provider in the case of a health plan) does not agree to comply or does not comply with these contractual terms and conditions, the plan or insurer is not required to continue the provider's services. 5.Compensates, unless otherwise agreed to by the provider and the health plan, the services at rates and methods similar to those used by the plan or provider group for currently contracting providers who are not capitated and who are practicing in the same or similar geographic area. Neither the plan nor the provider group is required to continue the services if the provider does not accept the payment rates. 6.Requires, unless otherwise agreed to by the terminated provider and the health insurer or provider group, the agreement to be construed to require a rate and method of payment that are the same as the rate and method of payment for the same services while under contract with the insurer at the time of termination. Requires the provider to accept the reimbursement as payment in full and not bill the insured for AB 369 | Page 3 any amount in excess of the reimbursement rate, with the exception of copayments and deductibles, as specified. 7.Requires the payment of copayments, deductibles, or other cost-sharing by the insured during the period of completion of services with a terminated provider to be the same copayments, deductibles, or other cost-sharing components that would be paid by the insured when receiving care from a provider currently contracting with the insurer. Applies substantially similar provisions to health plan enrollees for completion of services with a terminated or non-participating provider. 8.Requires a health insurer to provide a notice as to the process by which an insured may request completion of covered services in any insurer evidence of coverage and disclosure form issued after March 31, 2004. Requires a written copy to be provided to contracting providers and provider groups, and an insured, upon request. 9.Defines, for health insurers, "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. 10.States that these continuity of care laws do not: a. Require a health plan or health insurer to cover services or provide benefits that are not otherwise covered under the terms and conditions of the contract; b. Apply to a newly covered health plan enrollee covered under an individual subscriber agreement who is undergoing a course of treatment on the effective date of his or her coverage; or, c. Apply to a newly covered health plan 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. This bill: 1.Requires a health plan, at the request of a newly covered enrollee under an individual contract, or a health insurer at the request of a newly covered insured under an individual AB 369 | Page 4 insurance policy, to arrange for the completion of covered services by a non-participating provider for one of the conditions specified in existing law, if the newly covered enrollee or insured meets both of the following: a. Had coverage that was terminated between December 1, 2013, and March 31, 2014, inclusive because the plan or insurer ceased to provide or arrange health benefits or the plan or insurer withdrew from the market; and, b. At the time his or her coverage became effective, the newly covered enrollee or insured was receiving services from that provider for one of the specified conditions. 2.Applies the completion of covered services to services rendered to the newly covered enrollee or insured on or after the effective date of his or her new coverage. 3.Authorizes a health insurer to require a non-participating 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 geographic area as the non-participating provider, as specified. If the non-participating provider does not agree to comply or does not comply with these contractual terms and conditions, the insurer is not required to continue the provider's services. 4.Requires, unless otherwise agreed upon by the non-participating provider and the insurer, the services rendered to be compensated at rates and methods of payment similar to those used by the insurer for currently participating providers providing similar services who are practicing in the same or similar geographic areas as the non-participating provider. Neither the insurer nor the provider group is required to continue the services of a non-participating provider if the provider does not accept these payment rates. 5.States legislative intent that a non-participating provider whose services are continued pursuant to this bill accept the reimbursement provided under this bill 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, as specified. 6.Contains an urgency clause that will make this bill effective AB 369 | Page 5 upon enactment. FISCAL EFFECT : According to the Assembly Appropriations Committee analysis, 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 Insurance Fund). PRIOR VOTES : Assembly Health: 16- 0 Assembly Appropriations:16- 0 Assembly Floor: 78- 0 COMMENTS : 1.Author's statement. 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. 2.Health Insurance Market in Transition. 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 are required to maintain health insurance or pay a penalty, with exceptions for financial hardship (if health insurance premiums exceed 8 percent of household adjusted gross income), religion, incarceration, and immigration status. Several insurance market reforms are required, such as prohibitions against health insurers imposing pre-existing health condition exclusions. AB 369 | Page 6 Pursuant to the ACA, 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. On May 7, 2013, Covered California adopted model contract requirements that require participating plans, also known as Qualified Health Plans (QHPs), to terminate all of their non-ACA compliant policies effective December 31, 2013. In compliance with this requirement, QHPs began sending out cancellation letters to their enrollees and insureds in late September. However, 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, President Obama announced and the federal Center for Consumer Information and Insurance Oversight issued a policy giving insurers the option to offer renewals to people in non-ACA compliant 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 could be affected by these plan cancellations in California. Half of these individuals are estimated to be able to obtain more affordable and comprehensive coverage with premium rate reductions. It is believed that 25 percent 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 due to insurance carriers withdrawing from California's individual market. Approximately 20,000 of those individuals are expected to be eligible for federal subsidies. AB 369 | Page 7 In response to the November 2013 federal policy option to allow for renewals of insurance coverage, Covered California's governing board chose to maintain its policy to require the cancellations (with the exception of the two CDI regulated carriers) for a number of reasons including that the board made a determination 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. An unknown but likely small subset of the effected individuals will be in the midst of treatment for a condition such as cancer or a scheduled surgery and may not be enrolled in a new ACA plan that includes his or her existing provider. 3.Related legislation. a. SB 780 (Jackson) establishes consumer notice requirements for health insurance preferred provider organizations (PPOs) regulated by CDI and additional consumer notice requirements for health plans regulated by DMHC. SB 780 requires PPOs and DMHC-regulated health plans to allow enrollees with authorized or scheduled services from a terminated unassigned provider group or general acute care hospital to receive those services at in network cost-sharing until completion of the authorized or scheduled service for at least 60 days from date of the termination notice. SB 780 is pending in the Assembly. b. AB 1507 (Logue) allows an individual or small employer health benefit plan in effect on October 1, 2013 to be renewed until October 1, 2014, and continue to be in force until December 31, 2014. AB 1507 is pending in the Assembly. 4.Prior legislation. a. AB 1180 (Pan), Chapter 441, Statutes of 2013, makes inoperative several provisions in existing law that implement the health insurance laws of the federal Health Insurance Portability and Accountability 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 AB 1180 of health insurance available in 2014. b. SB X1 2 (Ed Hernandez), Chapter 2, Statutes 2013-14 First Extraordinary Session and AB X1 2 (Pan), Chapter 1, AB 369 | Page 8 Statutes of 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 1596 (Frommer), Chapter 164, Statutes of 2004, provides, regarding health plans arranging for the completion of covered services by a terminated or non-participating 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 non-participating 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. d. AB 1286 (Frommer), Chapter 591, Statutes of 2003, and SB 244 (Speier), Chapter 590, Statutes of 2003, require a health 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 DMHC at least 75 days prior to the termination of its contract with a provider group or a general acute care hospital, 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 non-participating 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. e. AB 1522 (Thomson) of 2001 would have required a provider organization to continue to provide health care 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 AB 369 | Page 9 amended on the Senate Floor to establish intent that enrollees receive continuity of care. AB 1522 died in Conference Committee in 2002. f. 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. g. 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. h. AB 1152 (Bordonaro), Chapter 504, Statutes of 1995, requires health care plan contracts, certain group disability insurance policies, and certain non-profit 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. 5.Support. Health Access California is the sponsor of this bill to extend existing continuity of care protections to individuals in cancelled plans terminated before March 31, 2014. The California Association of Physician Groups (CAPG) supports this update to the continuity of care laws for the specific purpose of ensuring that newly-covered individual in the Covered California health benefit exchange will be guaranteed the same rights to continuity of care that existing managed care patients under employer-sponsored group health plan have enjoyed for the past decade. CAPG points out that these enrollees face an involuntary disruption of their patient-provider relationship. The California School Employees Association believes this bill is greatly needed and provides continuity of care for the patients at their request, during transition to new health care policies. The Congress of California Seniors supports this bill indicating that AB 369 | Page 10 disruptions in care because of policy transitions could cause distress and a potential medical setback. 6.Neutral. The Association of Northern California Oncologists (ANCO) strongly supports the intent of this legislation indicating any disruption in a given cancer treatment can have disastrous effects. But ANCO writes that the legislation is unclear regarding how non-contracting physicians would be reimbursed for providing services to this population, and how the agreement between the physician and the plan would work. This is especially important to oncologists since they buy and bill for the extremely expensive anti-cancer medicines used to treat cancer patients. With this lack of clarity, the legislation could have unintended consequences that would actually hamper access to cancer care. 7.Amendments. The author requests the Committee adopt the following amendments which are reflective of negotiations between health plan, provider and consumer stakeholders: a. 1373.96 (j)Subdivision (b) doesExcept as provided in subdivision (l), this section shall not apply to a newly covered enrollee who is offered an out-of-network? b. 1373.96(l)(1) A health care service plan shall, at the request of a newly covered enrollee under an individual health care service plan contract, arrange for the completion of covered services as set forth in this section by?. c. 1373.96(l)(1)(A) The newly covered enrollee's prior coverage was terminated under paragraph (5) or (6) of subdivision (a) of Section 1365 or subdivision (d) or (e) of Section 10273.6 of the Insurance Code between December 1, 2013, and March 31, 2014, inclusive. d. 1373.96(m)(2) "Non-participating provider" means a provider who is not contracted with the enrollee's health care service plan to provide services under the enrollee's health plan contract. e. 10133.56 (a)(1)(B)?. Completion of covered services under this paragraph shall not exceed 12 months from the contract termination date or 12 months from the effective date of coverage for a newly covered insured. f. 10133.56 (a)(1)(D)?Completion of covered services shall be provided for the duration of a terminal illness, which may exceed 12 months from contract termination date or 12 months from the effective date of coverage or a new insured. g. 10133.56 (a)(1)(E)?.Completion of covered services under AB 369 | Page 11 this paragraph shall not exceed 12 months from the contract termination date or 12 months from the effective date of coverage for a newly covered insured. h. 10133.56(a)(1)(F) Performance of a surgery or other procedure that has been recommended and documented by the provider to occur within 180 days of the contract's termination date or within 180 days of the effective date of coverage for a newly covered insured. i. 10133.56 (e)(3) "Non-participating provider" means a provider whodoes not have a contract with an insurer to provide services to insuredsis not contracted with the insured's health insurer to provide services under the insured's policy. A non-participating provider does not include a terminated provider. j. 10133.56(i)(l)?.covered services as set forth in this section by a non-participating provider? aa. 10133.56(i)(1)(A) The newly covered insured's prior coverage was terminated under subdivision (d) or (e) of section 10273.6 or paragraph (5) or (6) of subdivision (a) of Section 1365 of the Health and Safety Code between December 1, 2013, and March 31, 2014, inclusive. SUPPORT AND OPPOSITION : Support: Health Access California (sponsor) American Federation of State, County and Municipal Employees, AFL-CIO California Association of Physician Groups California Pan-Ethnic Health Network California Primary Care Association California School Employees Association Congress of California Seniors Consumers Union SEIU California Western Center on Law and Poverty Oppose: None received. --END-- AB 369 | Page 12