Amended in Assembly April 22, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 2400

Introduced by Assembly Member Ridley-Thomas

February 21, 2014

An act to begin insert amend Section 1375.7 of, and to end insert add Section 1375.65 to begin insert , end insert the Health and Safety Code, and to add Section 10133.651 to the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

AB 2400, as amended, Ridley-Thomas. Health care coverage: begin delete physician end delete begin insert provider end insert contracts.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance. Existing law begin insert , known as the Health Care Providers’ Bill of Rights, end insert prescribes restrictions on the types of contractual provisions that may be included in agreements between health care service plans begin delete or health insurers end delete and health care providers. begin insert Under existing law, if a change is made by amending a manual, policy, or procedure document referenced in the contract between a plan and a provider, the plan is required to provide at least 45 business days’ notice to the provider, as specified. end insert

begin insert

Existing law establishes the California Health Benefit Exchange within state government, specifies the powers and duties of the board governing the Exchange, and requires the board to facilitate the purchase of qualified health plans through the Exchange by qualified individuals and small employers. Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services.

end insert

This bill would begin delete prohibit a contract between a physician or physician group with a health care service plan or health insurer, that is issued, amended, delivered, or renewed in this state on or after January 1, 2015, end delete begin insert require a health care service plan to provide at least 90 business days’ notice to a contracting provider if a change is made by amending a manual, policy, or procedure document referenced in the contract. The bill would also prohibit a contract between a plan and a provider that is issued, amended, or renewed on or after January 1, 2015, from including any provision that would require a provider to accept or participate in any additional products or product networks, except as specified, or that would terminate the health care provider’s contract, or the provider’s eligibility to participate in other product networks, when the provider exercises the right to negotiate, accept, or refuse a material change to the contract. With respect to a physician or physician group that maintains, pursuant to a contract with a health care service plan or health insurer, an unspecified percentage of subscribers in either the Exchange or the Medi-Cal program, the bill would prohibit the contract between the physician or physician group and the plan or insurer end insert from including any provision that requires begin delete a end delete begin insert the end insert physician begin insert or physician group end insert , as a condition of entering into the contract, to participate in any product that provides different rates, methods of payment, or lines of business unless that participation is negotiated and agreed to between the health care service plan or health insurer and the physician begin insert or physician group end insert . The bill would require begin delete any end delete begin insert a end insert contract that contains a provision attempting to obligate the physician begin insert or physician group end insert to participate in any product that provides different rates, methods of payment, or lines of business to contain a provision for each product permitting the physician begin insert or physician group end insert to affirmatively agree to participate in each product. begin delete The bill would state findings and declarations of the Legislature with respect to these provisions. end delete

By expanding the scope of a crime begin insert with respect to health care service plans end insert , this bill would create a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

Section 1375.65 is added to the Health and Safety
Code, to read:

begin delete

1375.65.  

(a) The Legislature finds and declares that prohibiting
health care service plans from executing agreements with
physicians that contain provisions requiring physicians to
participate in all networks or products that are currently offered
or that may be offered by the health plan without allowing
physicians to affirmatively agree and opt-in to participate in each
network or product will assist in maintaining patient access to
adequate physician networks. The Legislature further finds and
declares that the ability of physicians to exercise this choice will
further protect patients as physicians will be able to decide on the
merits of the product being offered and whether participation, in
their reasonable professional judgment, would further patients’
access to continuous quality of medical care.

(b)

end delete

begin insert

begin insert 1375.65. end insert   

end insert

begin insert (a) end insert  A contract between a physician or physician
group and a health care service plan that is issued, amended,
delivered, or renewed in this state on or after January 1, 2015, shall
not include any provision that requires begin delete a end delete begin insert the end insert physician begin insert or physician
group end insert , as a condition of entering into the contract, to participate
in any product that provides different rates, methods of payment,
or lines of business unless that participation is negotiated and
agreed to between the health care service plan and the physician
begin insert or physician group end insert . Any contract that contains a provision
attempting to obligate the physician begin insert or physician group end insert to
participate in any product that provides different rates, methods
of payment, or lines of business shall contain a provision for each
product permitting the physician begin insert or physician group end insert to
affirmatively agree to participate in each product. The status of a
physician begin insert or physician group end insert as a member of, or as being eligible
for, other existing or new provider panels shall not be adversely
affected by the physician’s begin insert or physician group’s end insert exercise of his
or her begin insert or its end insert right to not participate pursuant to this section.

begin insert

(b) This section applies only to a physician or physician group
that maintains, for the duration of the agreement, ____ percent of
subscribers through either the Exchange or Medi-Cal.

end insert begin insert

(c) This section shall not apply to employee welfare benefit
plans established pursuant to Section 302(c)(5) of the Taft-Hartley
Act (29 U.S.C. Sec. 186(c)(5)).

end insert begin insert

(d) For purposes of this section, “Exchange” means the
California Health Benefit Exchange established pursuant to Section
100500 of the Government Code.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 1375.7 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

1375.7.  

(a) This section shall be known and may be cited as
the Health Care Providers’ Bill of Rights.

(b)  begin delete No end delete begin insert A end insert contract issued, amended, or renewed on or after
January 1, begin delete 2003 end delete begin insert 2015 end insert , between a plan and a health care provider
for the provision of health care services to a plan enrollee or
subscriber shall begin insert not end insert contain any of the following terms:

(1) (A) Authority for the plan to change a material term of the
contract, unless the change has first been negotiated and agreed
to by the provider and the plan or the change is necessary to comply
with state or federal law or regulations or any accreditation
requirements of a private sector accreditation organization. If a
change is made by amending a manual, policy, or procedure
document referenced in the contract, the plan shall provide begin delete 45 end delete begin insert 90 end insert
business days’ notice to the provider, and the provider has the right
to negotiate and agree to the change. If the plan and the provider
cannot agree to the change to a manual, policy, or procedure
document, the provider has the right to terminate the contract prior
to the implementation of the change. In any event, the plan shall
provide at least begin delete 45 end delete begin insert 90 end insert business days’ notice of its intent to change
a material term, unless a change in state or federal law or
regulations or any accreditation requirements of a private sector
accreditation organization requires a shorter timeframe for
compliance. However, if the parties mutually agree, the begin delete 45-business end delete
begin insert 90-business end insert day notice requirement may be waived. Nothing in
this subparagraph limits the ability of the parties to mutually agree
to the proposed change at any time after the provider has received
notice of the proposed change.

begin delete

(B) If a contract between a provider and a plan provides benefits
to enrollees or subscribers through a preferred provider
arrangement, the contract may contain provisions permitting a
material change to the contract by the plan if the plan provides at
least 45 business days’ notice to the provider of the change and
the provider has the right to terminate the contract prior to the
implementation of the change.

end delete begin delete

(C)

end delete

begin insert (B) end insert  If a contract between a noninstitutional provider and a plan
provides benefits to enrollees or subscribers covered under the
Medi-Cal or Healthy Families Program and compensates the
provider on a fee-for-service basis, the contract may contain
provisions permitting a material change to the contract by the plan,
if the following requirements are met:

(i) The plan gives the provider a minimum of 90 business days’
notice of its intent to change a material term of the contract.

(ii) The plan clearly gives the provider the right to exercise his
or her intent to negotiate and agree to the change within 30 business
days of the provider’s receipt of the notice described in clause (i).

(iii) The plan clearly gives the provider the right to terminate
the contract within 90 business days from the date of the provider’s
receipt of the notice described in clause (i) if the provider does not
exercise the right to negotiate the change or no agreement is
reached, as described in clause (ii).

(iv) The material change becomes effective 90 business days
from the date of the notice described in clause (i) if the provider
does not exercise his or her right to negotiate the change, as
described in clause (ii), or to terminate the contract, as described
in clause (iii).

(2) A provision that requires a health care provider to accept
additional patients begin insert or product networks end insert beyond the contracted
number or in the absence of a number if, in the reasonable
professional judgment of the provider, accepting additional patients
begin insert or product networks end insert would endanger patients’ access to, or
continuity of, care.

(3) A requirement to comply with quality improvement or
utilization management programs or procedures of a plan, unless
the requirement is fully disclosed to the health care provider at
least 15 business days prior to the provider executing the contract.
However, the plan may make a change to the quality improvement
or utilization management programs or procedures at any time if
the change is necessary to comply with state or federal law or
regulations or any accreditation requirements of a private sector
accreditation organization. A change to the quality improvement
or utilization management programs or procedures shall be made
pursuant to paragraph (1).

(4) A provision that waives or conflicts with any provision of
this chapter. A provision in the contract that allows the plan to
provide professional liability or other coverage or to assume the
cost of defending the provider in an action relating to professional
liability or other action is not in conflict with, or in violation of,
this chapter.

(5) A requirement to permit access to patient information in
violation of federal or state laws concerning the confidentiality of
patient information.

begin insert

(6) A requirement or provision that terminates the health care
provider’s contract or participation status in the contract, or the
provider’s eligibility to participate in other product networks,
when the provider exercises the right to negotiate, accept, or refuse
a material change to the contract pursuant to this section.

end insert begin insert

(7) A requirement that a health care provider agree to accept
or participate in other products or product networks, including
future products that have not yet been developed or adopted by
the plan, without disclosing the reimbursement rate, method of
payment, and any other materially different contract terms for
those products from the underlying agreement and giving the
provider the right to negotiate, accept, or refuse participation in
each product or product network.

end insert

(c) With respect to a health care service plan contract covering
dental services or a specialized health care service plan contract
covering dental services, all of the following shall apply:

(1) If a material change is made to the health care service plan’s
rules, guidelines, policies, or procedures concerning dental provider
contracting or coverage of or payment for dental services, the plan
shall provide at least 45 business days’ written notice to the dentists
contracting with the health care service plan to provide services
under the plan’s individual or group plan contracts, including
specialized health care service plan contracts, unless a change in
state or federal law or regulations or any accreditation requirements
of a private sector accreditation organization requires a shorter
timeframe for compliance. For purposes of this paragraph, written
notice shall include notice by electronic mail or facsimile
transmission. This paragraph shall apply in addition to the other
applicable requirements imposed under this section, except that it
shall not apply where notice of the proposed change is required to
be provided pursuant to subparagraph (C) of paragraph (1) of
subdivision (b).

(2) For purposes of paragraph (1), a material change made to a
health care service plan’s rules, guidelines, policies, or procedures
concerning dental provider contracting or coverage of or payment
for dental services is a change to the system by which the plan
adjudicates and pays claims for treatment that would reasonably
be expected to cause delays or disruptions in processing claims or
making eligibility determinations, or a change to the general
coverage or general policies of the plan that affect rates and fees
paid to providers.

(3) A plan that automatically renews a contract with a dental
provider shall annually make available to the provider, within 60
days following a request by the provider, either online, via email,
or in paper form, a copy of its current contract and a summary of
the changes described in paragraph (1) of subdivision (b) that have
been made since the contract was issued or last renewed.

(4) This subdivision shall not apply to a health care service plan
that exclusively contracts with no more than two medical groups
in the state to provide or arrange for the provision of professional
medical services to the enrollees of the plan.

(d) (1) When a contracting agent sells, leases, or transfers a
health provider’s contract to a payor, the rights and obligations of
the provider shall be governed by the underlying contract between
the health care provider and the contracting agent.

(2) For purposes of this subdivision, the following terms shall
have the following meanings:

(A) “Contracting agent” has the meaning set forth in paragraph
(2) of subdivision (d) of Section 1395.6.

(B) “Payor” has the meaning set forth in paragraph (3) of
subdivision (d) of Section 1395.6.

(e) Any contract provision that violates subdivision (b), (c), or
(d) shall be void, unlawful, and unenforceable.

(f) The department shall compile the information submitted by
plans pursuant to subdivision (h) of Section 1367 into a report and
submit the report to the Governor and the Legislature by March
15 of each calendar year.

(g) Nothing in this section shall be construed or applied as
setting the rate of payment to be included in contracts between
plans and health care providers.

begin insert

(h) The changes made to this section by the act adding this
subdivision shall not apply to employee welfare benefit plans
established pursuant to Section 302(c)(5) of the Taft-Hartley Act
(29 U.S.C. Sec. 186(c)(5)).

end insert begin delete

(h)

end delete

begin insert (i) end insert  For purposes of this section the following definitions apply:

(1) “Health care provider” means any professional person,
medical group, independent practice association, organization,
health care facility, or other person or institution licensed or
authorized by the state to deliver or furnish health services.

(2) “Material” means a provision in a contract to which a
reasonable person would attach importance in determining the
action to be taken upon the provision.

begin delete SEC. 2. end delete
begin insert SEC. 3. end insert   

Section 10133.651 is added to the Insurance Code, to
read:

begin delete

10133.651.  

(a) The Legislature finds and declares that
prohibiting health insurers from executing agreements with
physicians or physician groups that contain provisions requiring
physicians to participate in all networks or products that are
currently offered or that may be offered by the health insurer
without allowing physicians to affirmatively agree and opt-in to
participate in each network or product will assist in maintaining
patient access to adequate physician networks. The Legislature
further finds and declares that the ability of physicians to exercise
this choice will further protect patients as physicians will be able
to decide on the merits of the product being offered and whether
participation, in their reasonable professional judgment, would
further patients’ access to continuous quality of medical care.

(b) 

end delete

begin insert

begin insert 10133.651. end insert   

end insert

begin insert (a) end insert begin insert   end insert A contract between a physician or physician
group and a health insurer that is issued, amended, delivered, or
renewed in this state on or after January 1, 2015, shall not include
any provision that requires begin delete a end delete begin insert the end insert physician begin insert or physician group end insert , as
a condition of entering into the contract, to participate in any
product that provides different rates, methods of payment, or lines
of business unless that participation is negotiated and agreed to
between the health insurer and the physician begin insert or physician group end insert .
Any contract that contains a provision attempting to obligate the
physician begin insert or physician group end insert to participate in any product that
provides different rates, methods of payment, or lines of business
shall contain a provision for each product permitting the physician
begin insert or physician group end insert to affirmatively agree to participate in each
product. The status of a physician begin insert or physician group end insert as a member
of, or as being eligible for, other existing or new provider panels
shall not be adversely affected by the physician’s begin insert or physician
group’s end insert exercise of his or her begin insert or its end insert right to not participate pursuant
to this section.

begin insert

(b) This section applies only to a physician or physician group
that maintains, for the duration of the agreement, ____ percent of
subscribers through either the Exchange or Medi-Cal.

end insert begin insert

(c) This section shall not apply to employee welfare benefit
plans established pursuant to Section 302(c)(5) of the Taft-Hartley
Act (29 U.S.C. Sec. 186(c)(5)).

end insert begin insert

(d) For purposes of this section, “Exchange” means the
California Health Benefit Exchange established pursuant to Section
100500 of the Government Code.

end insert

begin delete SEC. 3. end delete
begin insert SEC. 4. end insert   

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.