BILL ANALYSIS Ó
AB 41
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Date of Hearing: May 6, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
41 (Chau) - As Introduced December 1, 2014
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill codifies a federal law requirement that prohibits
health plans and insurers from discriminating, with respect to
provider participation or coverage under the plan or policy,
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against any health care provider who is acting within the scope
of that provider's license or certification. Additionally, this
bill:
1)Specifies plans and insurers are not required to contract with
"any willing provider" (any provider willing to abide by the
terms and conditions for participation established by the plan
or insurer).
2)Specifies it shall not be construed as preventing a health
care service plan from establishing varying reimbursement
rates based on quality or performance measures.
3)Requires implementation only to the extent required by the
provider nondiscrimination provisions established in Section
2706 of the federal Public Health Service Act (42 U.S.C. Sec.
300gg-5), and any federal rules or regulations issued under
that section.
FISCAL EFFECT:
1)One-time special fund costs to the Department of Managed
Health Care (DMHC) in the range of $50,000-$100,000 (Managed
Care Fund) to issue regulations, if necessary, and $50,000 to
verify that plan filings reflect the provider
nondiscrimination requirements enacted by this bill, to the
extent required by federal law. The cost for the California
Department of Insurance (CDI) to similarly review policies
under their jurisdiction is expected to be similar, in the
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range of $50,000-$100,000 (Insurance Fund). Although the
provisions of the bill do not exceed what is required by
federal law, in the absence of this bill there would be no
specific state requirement for DMHC and CDI to verify
compliance with the provider nondiscrimination provision of
federal law.
2)Enforcement costs would likely be minor, under $100,000
annually combined for CDI and DMHC (Managed Care
Fund/Insurance Fund). However, given the uncertainty
surrounding federal interpretation of the provider
nondiscrimination provision of the ACA and how it may interact
with this bill, it is difficult to project the necessity,
type, and extent of any enforcement actions.
3)Increased costs to DMHC's legal services unit to respond to
complaints related to provider discrimination and to process
Public Records Act (PRA) requests, potentially in the hundreds
of thousands of dollars annually (Managed Care Fund). CDI's
costs for similar activities are expected to be in the low
hundreds of thousands of dollars annually. These costs may
decrease in future years as plans and providers adjust to the
new rules.
COMMENTS:
1)Purpose. According to the author, this bill is needed to
eliminate the harmful practice of health plan discrimination
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against whole classes of healthcare providers. The author
believes that licensed health care providers who have
contracted with plans and insurers should be reimbursed for
covered services they are qualified to perform, as long as
they are working within their scopes of practice. This bill
is sponsored by the California Chiropractic Association which
states that codifying the ACA provisions in this bill will
help guarantee that patients have access to the health care
providers of their choice. The bill is supported by numerous
nonphysician health care provider groups.
2)Background. Though the extent to which health plans and
insurers include "discriminatory" provisions in their
contracts is unclear, commonly cited cases include, for
example, optometrists who contract with plans and insurers but
are not eligible to be reimbursed for delivering certain
covered services that are within their scope of practice.
Similarly, a plan may contract with chiropractors for
chiropractic services, but may not reimburse a chiropractor
for primary care office visits.
The federal government may be considering further action on
this front. The federal ACA includes a provider
nondiscrimination provision similar to the one enacted by this
bill. No formal federal guidance has been released on this
provision. However, in an April 2013 "Frequently Asked
Questions"(FAQ) document, relevant federal agencies described
the provider nondiscrimination language as self-implementing,
stating that the departments did not intend to issue
regulations, but allowing for discrimination in reimbursement
rates based on "broad market considerations." Subsequently,
the US Senate issued a report that directed the departments to
correct the FAQ to hew more closely to the law and to reflect
congressional intent that any allowable discrimination in
reimbursement rates be more narrowly defined. As a result of
this report, the departments issued a Request for Information
on the provider nondiscrimination issue and are considering
comments submitted until June 10, 2014. The US Senate issued
another report in June 2014, directing the departments to
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correct its FAQ by November 3, 2014.
At this time, there has been no further federal action as a
result of the 2014 RFI. The federal government has not
adopted specific federal rules to implement PHSA Section
2706(a). It is unclear if additional federal rules will be
forthcoming.
3)Prior Legislation. AB 2015 (Chau) from 2014, and SB 690 (Ed
Hernandez) from 2012, were identical to this bill. Both bills
were held on the Suspense File of this committee.
Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081