Amended in Senate March 24, 2014

Senate BillNo. 1340


Introduced by Senator Hernandez

February 21, 2014


An act to amend Section 1367.49 of the Health and Safety Code, and to amend Section 10133.64 of the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

SB 1340, as amended, Hernandez. Health care coverage: provider 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. Existing law also provides for the regulation of health insurers by the Department of Insurance. Existing law prohibits a contract by or on behalf of a plan or insurer and a licensed hospital, as defined, or any other licensed health care facility owned by a licensed hospital to provide inpatient hospital services or ambulatory care services to subscribers and enrollees of the plan or policyholders and insureds of the insurer from containing a provision that restricts the ability of the plan or insurer to furnish information to subscribers or enrollees of the plan or policyholders or insureds of the insurer concerning the cost range of procedures at the hospital or facility or the quality of services performed by the hospital or facility. Existing law makes a contractual provision inconsistent with this requirement void and unenforceable. Existing law requires a plan or insurer to provide a hospital or facility at least 20 days to review the methodology and data used before cost or quality information is provided to subscribers or enrollees of the plan or to policyholders or insureds of the insurer, as specified. Existing law also establishes requirements applicable to information displayed on an Internet Web site pursuant to these provisions by, or on behalf of, a plan or insurer.

This bill would instead prohibit a contract between a plan or insurer and a provider or supplier, as defined, from containing a provision that restricts the ability of the plan or insurer to furnish information to consumers or purchasers, as defined, concerning the cost range of a procedure or full course of treatment or the quality of services performed by the provider or supplier. The bill would require a plan or insurer to provide a provider or supplier withbegin delete at leastend delete 30 days to review the methodology and data used and would make related, conforming changes.

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

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

P2    1

SECTION 1.  

Section 1367.49 of the Health and Safety Code
2 is amended to read:

3

1367.49.  

(a) A contract issued, amended, renewed, or delivered
4on or after January 1, 2015, by or on behalf of a health care service
5plan and a provider or supplier shall not contain any provision that
6restricts the ability of the health care service plan to furnish
7consumers or purchasers information concerning any of the
8following:

9(1) The cost range of a procedure or a full course of treatment,
10including, but not limited to, facility, professional, and diagnostic
11services, prescription drugs, durable medical equipment, and other
12items and services related to the treatment.

13(2) The quality of services performed by the provider or supplier.

14(b) Any contractual provision inconsistent with this section shall
15be void and unenforceable.

16(c) A health care service plan shall provide the provider or
17supplier an advance opportunity ofbegin delete at leastend delete 30 days to review the
18methodology and data developed and compiled by the health care
19service plan, and used pursuant to subdivision (a), before cost or
20quality information is provided to consumers or purchasers,
21including material revisions or additions of new information. At
22the time the health care service plan provides a provider or supplier
23with the opportunity to review the methodology and data, it shall
P3    1also notify the provider or supplier in writing of their opportunity
2to provide an Internet Web site link pursuant to subdivision (f).

3(d) If the information proposed to be furnished to enrollees and
4subscribers on the quality of services performed by a provider or
5supplier is data that the plan has developed and compiled, the plan
6shall utilize appropriate risk adjustment factors to account for
7different characteristics of the population, such as case mix,
8severity of patient’s condition, comorbidities, outlier episodes, and
9other factors to account for differences in the use of health care
10resources among providers and suppliers.

11(e) Any Internet Web site owned or controlled by a health care
12service plan, or operated by another person or entity under contract
13with or on behalf of a health care service plan, that displays the
14information developed and compiled by the health care service
15plan as referenced by this section shall prominently post the
16following statement:


18“Individual facilities or health care providers may disagree with
19the methodology used to define the cost ranges, the cost data, or
20quality measures. Many factors may influence cost or quality,
21including, but not limited to, the cost of uninsured and charity care,
22the type and severity of procedures, the case mix of abegin delete hospitalend delete
23begin insert facilityend insert, special services such as trauma centers, burn units, medical
24and other educational programs, research, transplant services,
25technology, payer mix, and other factors affecting individual
26 facilities and health care providers.”


28A health care service plan and a provider or supplier shall not
29be precluded from mutually agreeing in writing to an alternative
30method of conveying this statement.

31(f) If a provider or supplier chooses to provide an Internet Web
32site link where a response to the health care service plan’s posting
33may be found, it shall do so in a timely manner in order to satisfy
34the requirements of this section. If a provider or supplier chooses
35to provide a response, a plan shall post, in an easily identified
36manner, a prominent link to the provider’s or supplier’s Internet
37Web site where a response to the plan’s posting may be found. A
38health care service plan and a provider or supplier shall not be
39precluded from mutually agreeing in writing to an alternative
40method to convey a provider’s or supplier’s response.

P4    1(g) For the purposes of this section, the following definitions
2shall apply:

3(1) “Consumers” means enrollees or subscribers of the health
4care service plan or beneficiaries of a self-funded health coverage
5arrangement administered by the health care service plan or other
6persons entitled to access services through a network established
7by the health care service plan.

8(2) “Provider” has the same meaning as that term is defined in
9Section 1367.50.

10(3) “Purchasers” means the sponsors of a self-funded health
11coverage arrangement administered by the health care service plan.

12(4) “Supplier” has the same meaning as that term is defined in
13Section 1367.50.

14(h) Section 1390 shall not apply for purposes of this section.

15

SEC. 2.  

Section 10133.64 of the Insurance Code is amended
16to read:

17

10133.64.  

(a) A contract issued, amended, renewed, or
18delivered on or after January 1, 2015, by or on behalf of a health
19insurer and a provider or supplier shall not contain any provision
20that restricts the ability of the health insurer to furnish consumers
21or purchasers information concerning any of the following:

22(1) The cost range of a procedure or a full course of treatment,
23including, but not limited to, facility, professional, and diagnostic
24services, prescription drugs, durable medical equipment, and other
25items and services related to the treatment.

26(2) The quality of services performed by the provider or supplier.

27(b) Any contractual provision inconsistent with this section shall
28be void and unenforceable.

29(c) A health insurer shall provide the provider or supplier an
30advance opportunity ofbegin delete at leastend delete 30 days to review the methodology
31and data developed and compiled by the health insurer, and used
32pursuant to subdivision (a), before cost or quality information is
33provided to consumers or purchasers, including material revisions
34or additions of new information. At the time the health insurer
35provides a provider or supplier with the opportunity to review the
36methodology and data, it shall also notify the provider or supplier
37in writing of their opportunity to provide an Internet Web site link
38pursuant to subdivision (f).

39(d) If the information proposed to be furnished to policyholders
40and insureds on the quality of services performed by a provider or
P5    1supplier is data that the insurer has developed and compiled, the
2insurer shall utilize appropriate risk adjustment factors to account
3for different characteristics of the population, such as case mix,
4severity of patient’s condition, comorbidities, outlier episodes, and
5other factors to account for differences in the use of health care
6resources among providers and suppliers.

7(e) Any Internet Web site owned or controlled by a health
8insurer, or operated by another person or entity under contract with
9or on behalf of a health insurer, that displays the information
10developed and compiled by the health insurer as referenced by this
11section shall prominently post the following statement:


13“Individual health care facilities or providers may disagree with
14the methodology used to define the cost ranges, the cost data, or
15quality measures. Many factors may influence cost or quality,
16including, but not limited to, the cost of uninsured and charity care,
17the type and severity of procedures, the case mix of a facility,
18special services such as trauma centers, burn units, medical and
19other educational programs, research, transplant services,
20technology, payer mix, and other factors affecting individual health
21care facilities and providers.”


23A health insurer and a provider or supplier shall not be precluded
24from mutually agreeing in writing to an alternative method of
25 conveying this statement.

26(f) If a provider or supplier chooses to provide an Internet Web
27site link where a response to the health insurer’s posting may be
28found, it shall do so in a timely manner in order to satisfy the
29requirements of this section. If a provider or supplier chooses to
30provide a response, an insurer shall post, in an easily identified
31manner, a prominent link to the provider’s or supplier’s Internet
32Web site where a response to the health insurer’s posting may be
33found. A health insurer and a provider or supplier shall not be
34precluded from mutually agreeing in writing to an alternative
35method to convey a provider’s or supplier’s response.

36(g) For the purposes of this section, the following definitions
37shall apply:

38(1) “Consumers” means policyholders or insureds of the health
39insurer or beneficiaries of a self-funded health coverage
40arrangement administered by the health insurer or other persons
P6    1entitled to access services through a network established by the
2health insurer.

3(2) “Provider” has the same meaning as that term is defined in
4Section 10117.52.

5(3) “Purchasers” means the sponsors of a self-funded health
6coverage arrangement administered by the health insurer.

7(4) “Supplier” has the same meaning as that term is defined in
8Section 10117.52.



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