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  




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            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  




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            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. 




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            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  




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               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  




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            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) does   Except 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  




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               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 who  does not have a contract with an insurer to  
               provide services to insureds   is 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--








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