BILL ANALYSIS Ó
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THIRD READING
Bill No: AB 369
Author: Pan (D)
Amended: 2/18/14 in Senate
Vote: 27 - Urgency
SENATE HEALTH COMMITTEE : 7-0, 2/12/14
AYES: Hernandez, Beall, De León, DeSaulnier, Evans, Monning,
Wolk
NO VOTE RECORDED: Anderson, Nielsen
SENATE APPROPRIATIONS COMMITTEE : 5-0, 2/24/14
AYES: De León, Gaines, Hill, Lara, Steinberg
NO VOTE RECORDED: Walters, Padilla
ASSEMBLY FLOOR : 78-0, 1/30/14 - See last page for vote
SUBJECT : Continuity of care
SOURCE : Health Access California
DIGEST : This bill allows, under certain circumstances, a new
health plan enrollee or insured to complete treatment from a
non-participating health care provider if the individual health
plan contract or insurance policy was terminated between
December 1, 2013, and March 31, 2014, and the individual was
receiving services from the non-participating provider for a
specified condition on the effective date of new coverage.
ANALYSIS : Existing law:
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1. Establishes the 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;
B. A serious chronic condition, as specified;
C. The three trimesters of pregnancy and the immediate
postpartum period;
D. A terminal illness, as specified;
E. The care of a newborn child between birth and age 36
months; or
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.
1. 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.
2. Compensates, unless otherwise agreed to by the provider and
the health plan, the services at rates and methods similar to
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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.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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 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/her
previous health plan or provider and instead voluntarily
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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
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 coverage became effective, the newly covered
enrollee or insured was receiving services from that
provider for one of the specified conditions.
1.Applies the completion of covered services to services
rendered to the newly covered enrollee or insured on or after
the effective date of his/her new coverage.
2.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.
3.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
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provider group is required to continue the services of a
non-participating provider if the provider does not accept
these payment rates.
4.Requires the provider who agrees to provide services, as
specified, to accept the reimbursement as payment in full and
is prohibited from billing the insured for any amount in
excess of the reimbursement rate, with the exception of
copayments and deductibles, as specified.
5.Clarifies that a provider's agreement to contractual terms and
conditions and acceptance of payment rates to provide the
completion of covered services to an insured, as specified,
will not be construed as an agreement to contractual terms and
conditions or acceptance of payment rates for any other
insureds or for any services other than covered services, as
specified, nor shall it be construed as agreement to any other
contract.
Background
On March 23, 2010, the federal Affordable Care Act (ACA) became
law. Among many other provisions, the 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% 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.
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
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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% 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.
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
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scheduled surgery and may not be enrolled in a new ACA plan that
includes his/her existing provider.
Related/Prior Legislation
SB 780 (Jackson) establishes consumer notice requirements for
health insurance preferred provider organizations regulated by
CDI and additional consumer notice requirements for health plans
regulated by DMHC. SB 780 requires preferred provider
organizations 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.
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.
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.
SB X1 2 (Ed Hernandez, Chapter 2, Statutes 2013-14 First
Extraordinary Session) and AB X1 2 (Pan, Chapter 1, 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.
AB 1596 (Frommer, Chapter 164, Statutes of 2004) provides,
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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.
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.
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 amended on the
Senate Floor to establish intent that enrollees receive
continuity of care. AB 1522 died in Conference Committee in
2002.
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
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in Conference Committee in 2002.
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.
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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
One-time costs of about $120,000 in 2013-14 and $110,000 in
2014-15 to the Department of Insurance for enforcement and
consumer assistance (Insurance Fund).
One-time costs of about $15,000 in 2013-14 and $80,000 in
2014-15 to DMHC for enforcement and consumer assistance
(Managed Care Fund).
No anticipated impact on the Medi-Cal program. Under current
law and practice, Medi-Cal managed care plans are already
required to provide continuity of care for new enrollees as
would be required under this bill.
SUPPORT : (Verified 2/25/14)
Health Access California (source)
American Cancer Society Cancer Action Network
American Federation of State, County and Municipal Employees,
AFL-CIO
Association of Northern California Oncologists
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California Association of Physician Groups
California Pan-Ethnic Health Network
California Primary Care Association
California School Employees Association
Congress of California Seniors
Consumers Union
March of Dimes California Chapter
SEIU California
Western Center on Law and Poverty
ARGUMENTS IN SUPPORT : Health Access California is the sponsor
of this bill to extend existing continuity of care protections
to individuals in canceled 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 individuals 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
plans 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
disruptions in care because of policy transitions could cause
distress and a potential medical setback.
ASSEMBLY FLOOR : 78-0, 1/30/14
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hernández,
Holden, Jones, Jones-Sawyer, Levine, Linder, Lowenthal,
Maienschein, Mansoor, Medina, Morrell, Mullin, Muratsuchi,
Nazarian,
Nestande, Olsen, Pan, Patterson, Perea, V. Manuel Pérez, Quirk,
Quirk-Silva, Rendon, Ridley-Thomas, Rodriguez, Salas, Skinner,
Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk,
Williams, Yamada, John A. Pérez
NO VOTE RECORDED: Logue, Melendez
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JL:nl 2/25/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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