Amended in Senate August 1, 2016

Amended in Senate June 15, 2016

Amended in Senate September 9, 2015

Amended in Senate September 4, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 72


Introduced by Assembly Members Bonta, Bonilla, Dahle, Gonzalez, Maienschein,begin insert Santiago,end insert and Wood

December 18, 2014


An act to add Sections 1371.30, 1371.31, and 1371.9 to the Health and Safety Code, and to add Sections 10112.8, 10112.81, and 10112.82 to the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

AB 72, as amended, Bonta. Health care coverage: out-of-network coverage.

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. A willful violation of the act is a crime. Existing law requires a health care service plan to reimburse providers for emergency services and care provided to its enrollees, until the care results in stabilization of the enrollee. Existing law prohibits a health care service plan from requiring a provider to obtain authorization prior to the provision of emergency services and care necessary to stabilize the enrollee’s emergency medical care, as specified.

Existing law also provides for the regulation of health insurers by the Insurance Commissioner. Existing law requires a health insurance policy issued, amended, or renewed on or after January 1, 2014, that provides or covers benefits with respect to services in an emergency department of a hospital to cover emergency services without the need for prior authorization, regardless of whether the provider is a participating provider, and subject to the same cost sharing required if the services were provided by a participating provider, as specified.

This bill would require a health care service plan contract or health insurance policy issued, amended, or renewed on or after July 1, 2017, to provide that if an enrollee or insured receives covered services from a contracting health facility, as defined, at which, or as a result of which, the enrollee or insured receives covered services provided by a noncontracting individual health professional, as defined, the enrollee or insured would be required to pay the noncontracting individual health professional only the same cost sharing required if the services were provided by a contracting individual health professional, which would be referred to as the “in-network cost-sharing amount.”begin delete The bill would require the in-network cost-sharing amount to be collected by the health care service plan or health insurer, as specified.end delete The bill would prohibit an enrollee or insured from owing the noncontracting individual health professional at the contracting health facility more than the in-network cost-sharing amount if the noncontracting individual health professional receives reimbursement for services provided to the enrollee or insured at a contracting health facility from the health care service plan or health insurer. However, the bill would make an exception from this prohibition if the enrollee or insured provides written consent that satisfies specified criteria. The bill would require a noncontracting individual health professional who collectsbegin delete anyend deletebegin insert more than the in-network cost-sharingend insert amount from the enrollee or insured to refundbegin delete the amountend deletebegin insert any overpaymentend insert to the enrollee or insured, as specified, and would provide that interest on any amount not refunded to the enrollee or insured shall accrue at 15% per annum, as specified.

Existing law requires a contract between a health care service plan and a provider, or a contract between an insurer and a provider, to contain provisions requiring a fast, fair, and cost-effective dispute resolution mechanism under which providers may submit disputes to the plan or insurer. Existing law requires that dispute resolution mechanism also be made accessible to a noncontracting provider for the purpose of resolving billing and claims disputes.

This bill would require the department and the commissioner to each establish an independent dispute resolution process that would allow a noncontracting individual health professional who rendered services at a contracting health facility, or a plan or insurer, to appeal a claim payment dispute, as specified. The bill would authorize the department and the commissioner to contract with one or more independent dispute resolution organizations to conduct the independent dispute resolution process, as specified. The bill would provide that the decision of the organization would be binding on the parties. The bill would require a plan or insurer to base reimbursement for covered services on the amount the individual health professional would have been reimbursed by Medicare for the same or similar services in the general geographic area in which the services were rendered. The plan or insurer would be required to provide specified information relating to the determination of the average contracted rate by July 1, 2017, and to adjust the rate each year thereafter, as prescribed. The bill would require the department and the commissioner to report the above information to the Governor and other specified recipients by January 1, 2020. The bill would require a noncontracting individual health professional who disputes that claim reimbursement to utilize the independent dispute resolution process. The bill would provide that these provisions do not apply to emergency services and care, as defined.

begin insert

Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

end insert
begin insert

This bill would make legislative findings to that effect.

end insert

Because a willful violation of the bill’s provisions relative to a health care service plan would be a crime, the bill would impose 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:

P4    1

SECTION 1.  

Section 1371.30 is added to the Health and Safety
2Code, immediately following Section 1371.3
, to read:

3

1371.30.  

(a) (1) The department shall establish an independent
4dispute resolution process for the purpose of processing and
5resolving a claim dispute between a health care service plan and
6a noncontracting individual health professional for services subject
7to subdivision (a) of Section 1371.9.

8(2) Prior to initiating the independent dispute resolution process,
9the parties shallbegin delete exhaustend deletebegin insert completeend insert the plan’s internal process.

10(3) If either the noncontracting individual health professional
11or the plan appeals a claim to the department’s independent dispute
12resolution process, the other party shall participate in the appeal
13process as described in this section.

14(b) (1) The department shall establish uniform written
15procedures for the submission, receipt, processing, and resolution
16of claim payment disputes pursuant to this section and any other
17guidelines for implementing this section.

18(2) The department shall establish reasonable and necessary
19fees for the purpose of administering this section, to be paid by
20both parties.

21(3) In establishing the independent dispute resolution process,
22the departmentbegin delete mayend deletebegin insert shallend insert permit the bundling of claims submitted
23to the same plan or the same delegated entity for the same or
24similar services by the same noncontracting individual health
25professional.

26(4) The department shall permit a physician group, independent
27practice association, or other entity authorized to act on behalf of
28a noncontracting individual health professional tobegin insert initiate andend insert
29 participate in the independent dispute resolution process.

30(c) (1) The department may contract with one or more
31independent organizations to conduct the proceedings. The
32independent organization handling a dispute shall be independent
33of either party to the dispute.

34(2) The department shall establish conflict-of-interest standards,
35consistent with the purposes of this section, that an organization
36shall meet in order to qualify to administer the independent dispute
37resolution program. The conflict-of-interest standards shall be
P5    1consistent with the standards pursuant to subdivisions (c) and (d)
2of Section 1374.32.

3(3) The department may contract with the same independent
4organization or organizations as the Department of Insurance.

5(4) The department shall provide, upon the request of an
6interested person, a copy of all nonproprietary information, as
7determined by the director, filed with the department by an
8independent organization seeking to contract with the department
9to administer the independent dispute resolution process pursuant
10to this section. The department may charge a nominal fee to cover
11the costs of providing a copy of the information pursuant to this
12paragraph.

13(d) begin delete(1)end deletebegin deleteend deleteThe determination obtained through the department’s
14independent dispute resolution process shall be binding on both
15parties.begin insert The plan shall implement the determination obtained
16through the independent dispute resolution process. If dissatisfied,
17either party may pursue any right, remedy, or penalty established
18under any other applicable law.end insert

begin delete

19(2) Notwithstanding paragraph (1), this section does not preclude
20a dissatisfied party from pursuing any right, remedy, or penalty
21established under any other applicable law.

end delete

22(e) This section shall not apply to a Medi-Cal managed health
23care service plan or any entity that enters into a contract with the
24State Department of Health Care Services pursuant to Chapter 7
25(commencing with Section 14000), Chapter 8 (commencing with
26Section 14200), and Chapter 8.75 (commencing with Section
2714591) of Part 3 of Division 9 of the Welfare and Institutions Code.

28(f) If a health care service plan delegates payment functions to
29a contracted entity, including, but not limited to, a medical group
30or independent practice association, then the delegated entity shall
31comply with this section.

32(g) This section shall not apply to emergency services and care,
33as defined in Sectionbegin delete 1317.1.end deletebegin insert 1317.1, or services required to be
34covered by a health care service plan pursuant to Section 1371.4.end insert

35(h) The definitions in subdivision (f) of Section 1371.9 shall
36apply for purposes of this section.

37

SEC. 2.  

Section 1371.31 is added to the Health and Safety
38Code
, to read:

39

1371.31.  

(a) (1) For services rendered subject to Section
401371.9, unless otherwise agreed to by the noncontracting individual
P6    1health professional and the plan, the plan shall reimburse the
2greater of the average contracted rate or 125 percent of the amount
3Medicare reimburses on a fee-for-service basis for the same or
4similar services in the general geographic region in which the
5services were rendered. For the purposes of this section, “average
6contracted rate” means the average of the contractedbegin insert commercialend insert
7 rates paid by the health plan or delegated entity for the same or
8similar services in the geographic region. This subdivision does
9not apply to subdivision (c) of Section 1371.9 or subdivision (b)
10of this section.

11(2) (A) In a manner and format specified by the department,
12by July 1, 2017, each health care service plan shall provide to the
13department both of the following:

14(i) Data listing its average contracted rates for services most
15frequently subject to Section 1371.9 in each geographic region in
16which the services arebegin delete rendered, including the average contracted
17rates paid by the plan’s delegated entities.end delete
begin insert rendered for the year
182015.end insert

19(ii) Its methodology for determining the average contracted rate
20for services subject to Section 1371.9. The methodology to
21determine an average contracted rate shall assure that the plan
22includes the highest and lowest contractedbegin delete rates.end deletebegin insert rates for the year
232015.end insert

24(B) begin deleteEach end deletebegin insertIn a manner and format specified by the department,
25by July 1, 2017, each end insert
health care service plan’s delegated entities
26shall provide to the department begin delete data listing its average contracted
27rates for services most frequently subject to Section 1371.9 in each
28geographic region in which the services are rendered.end delete
begin insert both of the
29following:end insert

begin insert

30
(i) Data listing its average contracted rates for services most
31frequently subject to Section 1371.9 in each geographic region in
32which the services are rendered for the year 2015.

end insert
begin insert

33
(ii) Its methodology for determining the average contracted rate
34for services subject to Section 1371.9. The methodology to
35determine the average contracted rate shall ensure that the plan
36includes the highest and lowest contracted rates for the year 2015.

end insert

37(C) For each yearbegin delete thereafter,end deletebegin insert after 2015,end insert the health care service
38plan and the plan’s delegated entities shall adjust the rate initially
39established pursuant to this subdivision by the Consumer Price
P7    1Index for Medical Care Services, as published by the United States
2Bureau of Labor Statistics.

3(D) The department shall audit the accuracy of the information
4required under subparagraphs (A) and (B).

begin insert

5
(E) The data submitted pursuant to clause (i) of subparagraph
6(A) and clause (i) of subparagraph (B) shall be confidential and
7not subject to disclosure under the California Public Records Act
8(Chapter 3.5 (commencing with Section 6250) of Division 7 of
9Title 1 of the Government Code).

end insert
begin delete

10(E)

end delete

11begin insert(F)end insert By January 1, 2020, the department shall provide a report
12to the Governor, the President pro Tempore of the Senate, the
13Speaker of the Assembly, and the Senate and Assembly
14Committees on Health of the data provided in subparagraphs (A)
15and (B) in a manner and format specified by the Legislature.

16(3) For purposes of this section for Medicare fee for service
17reimbursement, geographic regions shall be the geographic regions
18specified for physician reimbursement for Medicare fee for service
19by the United States Department of Health and Human Services.

20(4) A health care service plan shall authorize and permit
21assignment of the enrollee’s right, if any, to any reimbursement
22for health care services covered under the plan contract to a
23noncontracting individual health professional who furnishes the
24health care services rendered subject to Section 1371.9. The plan
25shall provide a form approved by the department for this purpose.

26(5) A noncontracting individual health professional who disputes
27the claim reimbursement under this section shall utilize the
28independent dispute resolution process described in Section
291371.30.

30(b) If nonemergency services are provided by a noncontracting
31individual health professional consistent with subdivision (c) of
32Section 1371.9, to an enrollee who has voluntarily chosen to use
33his or her out-of-network benefit for services covered by a preferred
34provider organization or a point-of-service plan, unless otherwise
35agreed to by the plan and the noncontracting individual health
36professional, the amount paidbegin insert by the health care service planend insert shall
37be the amount set forth in the enrollee’s evidence of coverage.
38This payment is not subject to the independent dispute resolution
39process described in Section 1371.30.

P8    1(c) If a health care service plan delegates the responsibility for
2payment of claims to a contracted entity, including, but not limited
3to, a medical group or independent practice association, then the
4entity to which that responsibility is delegated shall comply with
5the requirements of this section.

6(d) (1) A payment made by the health care service plan to the
7noncontracting health care professional for nonemergency services
8as required by Section 1371.9 and this section, in addition to the
9applicable cost sharing owed by the enrollee, shall constitute
10payment in full for nonemergency servicesbegin delete rendered.end deletebegin insert rendered
11unless either party uses the independent dispute resolution process
12or other lawful means pursuant to Section 1371.30.end insert

13(2) Notwithstanding any other law, the amounts paid by a plan
14for services under this section shall not constitute the prevailing
15or customary charges, the usual fees to the general public, or other
16charges for other payers for an individual health professional.

17(3) This subdivision shall not preclude the use of the independent
18dispute resolution process pursuant to Section 1371.30.

19(e) This section shall not apply to a Medi-Cal managed health
20care service plan or any other entity that enters into a contract with
21the State Department of Health Care Services pursuant to Chapter
227 (commencing with Section 14000), Chapter 8 (commencing with
23Section 14200), and Chapter 8.75 (commencing with Section
2414591) of Part 3 of Division 9 of the Welfare and Institutions Code.

25(f) This section shall not apply to emergency services and care,
26as defined in Sectionbegin delete 1317.1.end deletebegin insert 1317.1, or to those services required
27to be covered by a health care service plan pursuant to Section
281371.4.end insert

29(g) The definitions in subdivision (f) of Section 1371.9 shall
30apply for purposes of this section.

31

SEC. 3.  

Section 1371.9 is added to the Health and Safety Code,
32to read:

33

1371.9.  

(a) (1) Except as provided in subdivision (c), a health
34care service plan contract issued, amended, or renewed on or after
35July 1, 2017, shall provide that if an enrollee receives covered
36services from a contracting health facility at which, or as a result
37of which, the enrollee receives services provided by a
38noncontracting individual health professional, the enrollee shall
39pay no more than the same cost sharing that the enrollee would
40pay for the same covered services received from a contracting
P9    1individual health professional. This amount shall be referred to as
2the “in-network cost-sharing amount.”

3(2) An enrollee shall not owebegin insert the noncontracting individual
4health professionalend insert
more than the in-network cost-sharing amount
5for services subject to this section. begin delete The health care service plan
6shall collect the in-network cost-sharing amount from the enrollee.end delete

7
begin insert At the time of payment by the plan to the noncontracting individual
8health professional, the plan shall inform the noncontracting
9individualend insert
begin insert health professional of the in-network costend insertbegin insert-sharing
10amount owed by the enrollee.end insert

11(3) A noncontracting individual health professional shall not
12bill or collect any amount from the enrollee for services subject
13to thisbegin delete section.end deletebegin insert section except for the in-network cost-sharing
14amount.end insert
Any communication from the noncontracting individual
15health professional to the enrolleebegin insert prior to the receipt of
16information about the in-network cost-sharing amount pursuant
17to paragraph (2)end insert
shall include a notice in 12-point bold type stating
18that the communication is not abegin delete bill.end deletebegin insert bill and informing the enrollee
19that the enrollee shall not pay until he or she is informed of any
20applicable cost sharing.end insert

21(4) In submitting a claim to the plan, the noncontracting
22individual health professional shall affirmbegin delete in writingend delete to the plan
23that he or she has not attempted to collect any payment from the
24enrollee.

25(5) (A) If the noncontracting individual health professional has
26receivedbegin delete anyend deletebegin insert more than the in-network cost-sharingend insert amount from
27the enrollee for services subject to this section, the noncontracting
28individual health professional shall refundbegin delete the amountend deletebegin insert any
29overpaymentend insert
to the enrolleebegin delete after receiving payment from the plan.end delete
30
begin insert within 30 calendar days after receiving notice from the plan of the
31in-network cost-sharing amount owed by the enrollee pursuant to
32paragraph (2).end insert

33(B) If the noncontracting individual health professional does
34not refundbegin delete the amount collected from the enrollee after receiving
35payment from the plan,end delete
begin insert any overpayment to the enrollee within 30
36business days after being informed of the enrollee’s in-network
37cost-sharing amount,end insert
interest shall accrue at the rate of 15 percent
38per annum beginning with the date payment was received from
39the enrollee.

P10   1(C) A noncontracting individual health professional shall
2automatically include in his or her refund to the enrollee all interest
3that has accrued pursuant to this section without requiring the
4enrollee to submit a request for the interest amount.

5(b) Except for services subject to subdivision (c), the following
6shall apply:

7(1) Any cost sharing paid by the enrollee for the services
8provided by a noncontracting individual health professional at the
9contracting health facility shall count toward the limit on annual
10out-of-pocket expenses established under Section 1367.006.

11(2) Cost sharing arising from services received by a
12noncontracting individual health professional at a contracting
13health facility shall be counted toward any deductible in the same
14manner as cost sharing would be attributed to a contracting
15individual health professional.

16(3) The cost sharing paid by the enrollee pursuant to this section
17shall satisfy the enrollee’s obligation to pay cost sharing for the
18health service and shall constitute “applicable cost sharing owed
19by the enrollee” for the purpose of subdivision (e) of Section
201371.31.

21(c) For services subject to this section, if an enrollee has a health
22care service plan that includes coverage for out-of-network benefits,
23a noncontracting individual health professional may bill or collect
24from the enrollee the out-of-network cost sharing, if applicable,
25only when the enrollee consents in writing and that written consent
26satisfies all the following criteria:

27(1) At least 24 hours in advance of care, the enrollee shall
28consent in writing to receive services from the identified
29noncontracting individual health professional.

30(2) The consent shall be obtained by the noncontracting
31individual health professionalbegin delete separately fromend deletebegin insert in a document that
32is separate from the document used to obtainend insert
the consent for any
33other part of the care or procedure. The consent shall not be
34obtained by the facility or any representative of the facility. The
35consent shall not be obtained at the time of admission or at any
36time when the enrollee is being prepared for surgery or any other
37procedure.

38(3) At the time consent is provided, the noncontracting
39individual health professional shall give the enrollee a written
40estimate of the enrollee’s total out-of-pocket cost of care. The
P11   1written estimate shall be based on the professional’s billed charges
2for the service to be provided. The noncontracting individual health
3 professional shall not attempt to collect more than the estimated
4amount without receiving separate written consent from the
5enrollee or the enrollee’s authorizedbegin delete representative.end deletebegin insert representative,
6unless circumstances arise during delivery of services that were
7unforeseen at the time the estimate was given that would require
8the provider to change the estimate.end insert

9(4) The consent shall advise the enrollee that he or she may
10elect to seek care from a contracted provider or may contact the
11enrollee’s health care service plan in order to arrange to receive
12the health service from a contracted provider for
13lower-out-of-pocket costs.

14(5) The consent and estimate shall be provided to the enrollee
15in the language spoken by thebegin delete enrollee.end deletebegin insert enrollee, if the language
16is a Medi-Cal threshold language, as defined in subdivision (d) of
17Section 128552.end insert

18(6) The consent shall also advise the enrollee that any costs
19incurred as a result of the enrollee’s use of the out-of-network
20benefit shall be in addition to in-network cost-sharing amounts
21and may not count toward the annual out-of-pocket maximum on
22in-network benefits or a deductible, if any, for in-network benefits.

23(d) A noncontracting individual health professional who fails
24to comply with the requirements of subdivision (c) has not obtained
25written consent for purposes of this section. Under those
26circumstances, subdivisions (a) and (b) shall apply and subdivision
27(c) shall not apply.

28(e) (1) A noncontracting individual health professional may
29advance to collections only the in-network cost-sharing amount,
30as determined by the plan pursuant to subdivision (a) or the
31out-of-network cost-sharing amount owed pursuant to subdivision
32(c), that the enrollee has failed to pay.

33(2) The noncontracting individual health professional, or any
34entity acting on his or her behalf, including any assignee of the
35debt, shall not report adverse information to a consumer credit
36reporting agency or commence civil action against the enrollee for
37150 days after the initial billing regarding amounts owed by the
38enrollee under subdivision (a) or (c).

39(3) With respect to an enrollee, the noncontracting individual
40health professional, or any entity acting on his or her behalf,
P12   1including any assignee of the debt, shall not use wage garnishments
2or liens on primary residences as a means of collecting unpaid bills
3under this section.

4(f) For purposes of this section and Sections 1371.30 and
51371.31, the following definitions shall apply:

6(1) “Contracting health facility” means a health facility that is
7contracted with the enrollee’s health care service plan to provide
8services under the enrollee’s plan contract. A contracting health
9care facility includes, but is not limited to, the following providers:

10(A) A licensed hospital.

11(B) An ambulatory surgery or other outpatient setting, as
12described in subdivision (a), (d), (e), (g), or (h) of Section 1248.1.

13(C) A laboratory.

14(D) A radiology or imaging center.

begin delete

15(E) Any other similar provider as the department may define,
16by regulation, as a health facility for purposes of this section.

end delete

17(2) “Cost sharing” includes any copayment, coinsurance, or
18deductible, or any other form of cost sharing paid by the enrollee
19other than premium or share of premium.

20(3) “Individual health professional” means a physician and
21surgeon or other professional who is licensed by this state to deliver
22or furnish health care services. For this purpose, an “individual
23health professional” shall not include a dentist, licensed pursuant
24to the Dental Practice Act (Chapter 4 (commencing with Section
251600) of Division 2 of the Business and Professions Code).

26(4) “In-network cost-sharing amount” means an amount no more
27than the same cost sharing the enrollee would pay for the same
28covered service received from a contracting health professional.
29The in-network cost-sharing amount with respect to an enrollee
30with coinsurance shall be based on the amount paid by the plan
31pursuant to paragraph (1) of subdivision (a) of Section 1371.31.

32(5) “Noncontracting individual health professional” means a
33physician and surgeon or other professional who is licensed by the
34state to deliver or furnish health care services and who is not
35contracted with the enrollee’s health care servicebegin delete plan.end deletebegin insert product.end insert
36 For this purpose, a “noncontracting individual health professional”
37shall not include a dentist, licensed pursuant to the Dental Practice
38Act (Chapter 4 (commencing with Section 1600) of Division 2 of
39the Business and Professions Code).

P13   1(g) This section shall not be construed to require a health care
2service plan to cover services not required by law or by the terms
3and conditions of the health care service plan contract.

4(h) This section shall not be construed to exempt a plan or
5provider from the requirements under Section 1371.4 or 1373.96,
6nor abrogate the holding in Prospect Medical Group, Inc. v.
7Northridge Emergency Medical Group (2009) 45 Cal.4thbegin delete 497, that
8an emergency room physician is prohibited from billing an enrollee
9of a health care service plan directly for sums that the health care
10service plan has failed to pay for the enrollee’s emergency room
11treatment.end delete
begin insert 497.end insert

12(i) If a health care service plan delegates payment functions to
13a contracted entity, including, but not limited to, a medical group
14or independent practice association, the delegated entity shall
15comply with this section.

16(j) This section shall not apply to a Medi-Cal managed health
17care service plan or any other entity that enters into a contract with
18the State Department of Health Care Services pursuant to Chapter
197 (commencing with Section 14000), Chapter 8 (commencing with
20Section 14200), and Chapter 8.75 (commencing with Section
2114591) of Part 3 of Division 9 of the Welfare and Institutions Code.

22(k) This section shall not apply to emergency services and care,
23as defined in Sectionbegin delete 1317.1.end deletebegin insert 1317.1end insertbegin insert, or to those services required
24to be covered by a health care service plan pursuant to Section
251371.4.end insert

26

SEC. 4.  

Section 10112.8 is added to the Insurance Code, to
27read:

28

10112.8.  

(a) (1) Except as provided in subdivision (c), a health
29insurance policy issued, amended, or renewed on or after July 1,
302017,begin insert end insertbegin insertthat provides benefits through contracts with providers at
31alternative rates of payment pursuant to Section 10133,end insert
shall
32provide that if an insured receives covered services from a
33contracting health facility at which, or as a result of which, the
34insured receives services provided by a noncontracting individual
35health professional, the insured shall pay no more than the same
36cost sharing that the insured would pay for the same covered
37services received from a contracting individual health professional.
38This amount shall be referred to as the “in-network cost-sharing
39amount.”

P14   1(2) Except as provided in subdivision (c), an insured shall not
2owebegin insert the noncontracting individualend insertbegin insert health professionalend insert more than
3the in-network cost-sharing amount for services subject to this
4section.begin delete The insurer shall collect the in-network cost-sharing
5amount from the insured.end delete
begin insert At the time of payment by the insurer to
6the noncontracting individual health professional, the insurer shall
7inform the noncontracting individualend insert
begin insert health professional of the
8in-network costend insert
begin insert-sharing amount owed by the insured.end insert

9(3) A noncontracting individual health professional shall not
10bill or collect any amount from the insured for services subject to
11thisbegin delete section.end deletebegin insert section except the in-network cost-sharing amount.end insert
12 Any communication from the noncontracting individual health
13professional to the insuredbegin insert prior to the receipt of information about
14the in-network cost-sharing amount pursuant to paragraph (2)end insert

15 shall include a notice in 12-point bold type stating that the
16communication is not abegin delete bill.end deletebegin insert bill and informing the insured that
17the insured shall not pay until he or she is informed of any
18applicable cost sharing.end insert

19(4) In submitting a claim to the insurer, the noncontracting
20individual health professional shall affirmbegin delete in writingend delete to the insurer
21that he or she has not attempted to collect any payment from the
22insured.

23(5) (A) If the noncontracting individual health professional has
24receivedbegin delete anyend deletebegin insert more end insertbegin insertthan the in-network cost-sharingend insert amount from
25the insured for services subject to this section, the noncontracting
26individual health professional shall refundbegin delete the amountend deletebegin insert any
27overpaymentend insert
to the insuredbegin delete after receiving payment from the
28insurer.end delete
begin insert within 30 calendar days after receiving notice from the
29insurer of the in-network cost-sharing amount owed by the insured
30pursuant to paragraph (2).end insert

31(B) If the noncontracting individual health professional does
32not refundbegin delete the amount collected from the insured after receiving
33payment from the insurer,end delete
begin insert any overpayment to the insured within
3430 business days after being informed of the insured’s in-network
35cost-sharing amount,end insert
interest shall accrue at the rate of 15 percent
36per annum beginning with the date payment was received from
37the insured.

38(C) A noncontracting individual health professional shall
39automatically include in his or her refund to the insured all interest
P15   1that has accrued pursuant to this section without requiring the
2insured to submit a request for the interest amount.

3(b) Except for services subject to subdivision (c), the following
4shall apply:

5(1) Any cost sharing paid by the insured for the services
6provided by a noncontracting individual health professional at the
7contracting health facility shall count toward the limit on annual
8out-of-pocket expenses established under Section 10112.28.

9(2) Cost sharing arising from services received by a
10noncontracting individual health professional at a contracting
11health facility shall be counted toward any deductible in the same
12manner as cost sharing would be attributed to a contracting
13individual health professional.

14(3) The cost sharing paid by the insured pursuant to this section
15shall satisfy the insured’s obligation to pay cost sharing for the
16health service and shall constitute “applicable cost sharing owed
17by the insured” for the purpose of subdivision (e) of Section
1810112.82.

19(c) For services subject to this section, if an insured has an
20insurance contract that includes coverage for out-of-network
21benefits, a noncontracting individual health professional may bill
22or collect from the insured the out-of-network cost sharing, if
23applicable, only when the insured consents in writing and that
24written consent satisfies all the following criteria:

25(1) At least 24 hours in advance of care, the insured shall consent
26in writing to receive services from the identified noncontracting
27individual health professional.

28(2) The consent shall be obtained by the noncontracting
29individual health professionalbegin delete separately fromend deletebegin insert in a document that
30is separate from the document used to obtainend insert
the consent for any
31other part of the care or procedure. The consent shall not be
32obtained by the facility or any representative of the facility. The
33consent shall not be obtained at the time of admission or at any
34time when the enrollee is being prepared for surgery or any other
35procedure.

36(3) At the time consent is provided the noncontracting individual
37health professional shall give the insured a written estimate of the
38insured’s total out-of-pocket cost of care. The written estimate
39shall be based on the professional’s billed charges for the service
40to be provided. The noncontracting individual health professional
P16   1shall not attempt to collect more than the estimated amount without
2receiving separate written consent from the insured or the insured’s
3authorizedbegin delete representative.end deletebegin insert representative, unless circumstances
4arise during delivery of services that were unforeseen at the time
5the estimate was given that would require the provider to change
6the estimate.end insert

7(4) The consent shall advise the insured that he or she may elect
8to seek care from a contracted provider or may contact the insured’s
9health care service plan in order to arrange to receive the health
10service from a contracted provider for lower-out-of-pocket costs.

11(5) The consent and estimate shall be provided to the insured
12in the language spoken by thebegin delete insured.end deletebegin insert insured, if the language is
13a Medi-Cal threshold language, as defined in subdivision (d) of
14Section 128552 of the Health and Safety Code.end insert

15(6) The consent shall also advise the insured that any costs
16incurred as a result of the insured’s use of the out-of-network
17benefit shall be in addition to in-network cost-sharing amounts
18and may not count toward the annual out-of-pocket maximum on
19in-network benefits or a deductible, if any, for in-network benefits.

20(d) A noncontracting individual health professional who fails
21to comply with provisions of this subdivision has not obtained
22written consent for purposes of this section. Under those
23circumstances, subdivisions (a) and (b) shall apply and subdivision
24(c) shall not apply.

25(e) (1) A noncontracting individual health professional may
26advance to collections only the in-network cost-sharing amount,
27as determined by the insurer pursuant to subdivision (a) or the
28out-of-network cost-sharing amount owed pursuant to subdivision
29(c), that the insured has failed to pay.

30(2) The noncontracting individual health professional, or any
31entity acting on his or her behalf, including any assignee of the
32debt, shall not report adverse information to a consumer credit
33reporting agency or commence civil action against the insured for
34150 days after the initial billing regarding amounts owed by the
35insured under subdivision (a) or (c).

36(3) With respect to an insured, a noncontracting individual health
37professional, or any entity acting on his or her behalf, including
38any assignee of the debt, shall not use wage garnishments or liens
39on primary residences as a means of collecting unpaid bills under
40this section.

P17   1(f) For purposes of this section and Sections 10112.81 and
210112.82, the following definitions shall apply:

3(1) “Contracting health facility” means a health facility that is
4contracted with the insured’s healthbegin delete care service planend deletebegin insert insurerend insert to
5provide services under the insured’s policy. A contracting health
6care facility includes, but is not limited to, the following providers:

7(A) A licensed hospital.

8(B) An ambulatory surgery or other outpatient setting, as
9described in subdivision (a), (d), (e), (g), or (h) of Section 1248.1
10of the Health and Safety Code.

11(C) A laboratory.

12(D) A radiology or imaging center.

begin delete

13(E) Any other provider as the department may define, by
14regulation, as a health facility for purposes of this section.

end delete

15(2) “Cost sharing” includes any copayment, coinsurance, or
16deductible, or any other form of cost sharing paid by the insured
17other than premium or share of premium.

18(3) “Individual health professional” means a physician and
19surgeon or other professional who is licensed by the state to deliver
20or furnish health care services. For this purpose, an “individual
21health professional” shall not include a dentist, licensed pursuant
22to the Dental Practice Act (Chapter 4 (commencing with Section
231600) of Division 2 of the Business and Professions Code).

24(4) “In-network cost-sharing amount” means an amount no more
25than the same cost sharing the insured would pay for the same
26covered service received from a contracting health professional.
27The in-network cost-sharing amount with respect to an insured
28with coinsurance shall be based on the amount paid by the insurer
29pursuant to paragraph (1) of subdivision (a) of Section 10112.82.

30(5) “Noncontracting individual health professional” means a
31physician and surgeon or other professional who is licensed by the
32state to deliver or furnish health care services and who is not
33contracted with the insured’s healthbegin delete insurer.end deletebegin insert insurance product.end insert
34 For this purpose, a “noncontracting individual health professional”
35shall not include a dentist, licensed pursuant to the Dental Practice
36Act (Chapter 4 (commencing with Section 1600) of Division 2 of
37the Business and Professions Code).

38(g) This section shall not be construed to require an insurer to
39cover services not required by law or by the terms and conditions
40of the health insurance policy.

P18   1(h) If a health insurer delegates payment functions to a
2contracted entity, including, but not limited to, a medical group or
3independent practice association, the delegated entity shall comply
4with this section.

5(i) This section shall not apply to emergency services and care,
6as defined in Section 1317.1 of the Health and Safety Code.

7

SEC. 5.  

Section 10112.81 is added to the Insurance Code, to
8read:

9

10112.81.  

(a) (1) The commissioner shall establish an
10independent dispute resolution process for the purpose of
11processing and resolving a claim dispute between a health insurer
12and a noncontracting individual health professional for services
13subject to subdivision (a) of Section 10112.8.

14(2) Prior to initiating the independent dispute resolution process,
15the parties shallbegin delete exhaustend deletebegin insert completeend insert the insurer’s internal process.

16(3) If either the noncontracting individual health professional
17or the insurer appeals a claim to the department’s independent
18dispute resolution process, the other party shall participate in the
19appeal process as described in this section.

20(b) (1) The commissioner shall establish uniform written
21procedures for the submission, receipt, processing, and resolution
22of claim payment disputes pursuant to this section and any other
23guidelines for implementing this section.

24(2) The commissioner shall establish reasonable and necessary
25fees for the purpose of administering this section, to be paid by
26both parties.

27(3) In establishing the independent dispute resolution process,
28the commissionerbegin delete mayend deletebegin insert shallend insert permit the bundling of claims
29submitted to the same insurer or the same delegated entity for the
30same or similar services by the same noncontracting individual
31health professional.

32(4) The commissioner shall permit a physician group,
33independent practice association, or other entity authorized to act
34on behalf of a noncontracting individual health professional to
35begin insert initiate andend insert participate in the independent dispute resolution
36process.

37(c) (1) The commissioner may contract with one or more
38independent organizations to conduct the proceedings. The
39independent organization handling a dispute shall be independent
40of either party to the dispute.

P19   1(2) The commissioner shall establish conflict-of-interest
2standards, consistent with the purposes of this section, that an
3organization shall meet in order to qualify to administer the
4independent dispute resolution program. The conflict-of-interest
5standards shall be consistent with the standards pursuant to
6subdivisions (c) and (d) of Section 10169.2.

7(3) The commissioner may contract with the same independent
8organization or organizations as the State Department of Managed
9Health Care.

10(4) The commissioner shall provide, upon the request of an
11interested person, a copy of all nonproprietary information, as
12determined by the commissioner, filed with the department by an
13independent organization seeking to contract with the department
14to administer the independent dispute resolution process pursuant
15to this section. The department may charge a nominal fee to cover
16 the costs of providing a copy of the information pursuant to this
17paragraph.

18(d) begin delete(1)end deletebegin deleteend deleteThe determination obtained through the commissioner’s
19independent dispute resolution process shall be binding on both
20parties.begin insert The insurer shall implement the determination obtained
21through the independent dispute resolution process. If dissatisfied,
22either party may pursue any right, remedy, or penalty established
23under any other applicable law.end insert

begin delete

24(2) Notwithstanding paragraph (1), this section does not preclude
25a dissatisfied party from pursuing any right, remedy, or penalty
26established under any other applicable law.

end delete

27(e) If a health insurer delegates payment functions to a
28contracted entity, including, but not limited to, a medical group or
29independent practice association, then the delegated entity shall
30comply with this section.

31(f) This section shall not apply to emergency services and care,
32as defined in Section 1317.1 of the Health and Safety Code.

33(g) The definitions in subdivision (f) of Section 10112.8 shall
34apply for purposes of this section.

35

SEC. 6.  

Section 10112.82 is added to the Insurance Code, to
36read:

37

10112.82.  

(a) (1) For services rendered subject to Section
3810112.8, unless otherwise agreed to by the noncontracting
39individual health professional and the insurer, the insurer shall
40reimburse the greater of the average contracted rate or 125 percent
P20   1of the amount Medicare reimburses on a fee-for-service basis for
2the same or similar services in the general geographic region in
3which the services were rendered. For the purposes of this section,
4“average contracted rate” means the average of the contracted
5begin insert commercialend insert rates paid by the health insurerbegin delete or delegated entityend delete for
6the same or similar services in the geographic region. This
7subdivision does not apply to subdivision (c) of Section 10112.8
8or subdivision (b) of this section.

9(2) (A) In a manner and format specified by the commissioner,
10by July 1, 2017, each health insurer shall provide to the department
11both of the following:

12(i) Data listing its average contracted rates for services most
13frequently subject to Section 10112.8 in each geographic region
14in which the services arebegin delete rendered, including the average contracted
15rates paid by the insurer’s delegated entities.end delete
begin insert rendered for the year
162015.end insert

17(ii) Its methodology for determining the average contracted rate
18for services subject to Section 10112.8. The methodology to
19determine an average contracted rate shall assure that the insurer
20includes the highest and lowest contractedbegin delete rates.end deletebegin insert rates for the year
212015.end insert

22(B) begin deleteEach end deletebegin insertIn a manner and format specified by the commissioner,
23by July 1, 2017, each end insert
health insurer’s delegated entities shall
24provide to the department begin delete data listing its average contracted rates
25 for services most frequently subject to Section 10112.8 in each
26geographic region in which the services are rendered.end delete
begin insert both of the
27following:end insert

begin insert

28
(i) Data listing its average contracted rates for services most
29frequently subject to Section 10112.8 in each geographic region
30in which the services are rendered for the year 2015.

end insert
begin insert

31
(ii) Its methodology for determining the average contracted rate
32for services subject to Section 10112.8. The methodology to
33determine the average contracted rate shall ensure that the insurer
34includes the highest and lowest contracted rates for the year 2015.

end insert

35(C) For each yearbegin delete thereafter,end deletebegin insert after 2015,end insert the health insurer and
36its delegated entities shall adjust the rate initially established
37pursuant to this subdivision by the Consumer Price Index for
38Medical Care Services, as published by the United States Bureau
39of Labor Statistics.

P21   1(D) The commissioner shall audit the accuracy ofbegin delete this
2information.end delete
begin insert end insertbegin insertthe information required under subparagraphs (A)
3and (B).end insert

begin insert

4
(E) The data submitted pursuant to clause (i) of subparagraph
5(A) and clause (i) of subparagraph (B) shall be confidential and
6not subject to disclosure under the California Public Records Act
7(Chapter 3.5 (commencing with Section 6250) of Division 7 of
8Title 1 of the Government Code).

end insert
begin delete

9(E)

end delete

10begin insert(F)end insert By January 1, 2020, the department shall provide a report
11to the Governor, the President pro Tempore of the Senate, the
12Speaker of the Assembly, and the Senate and Assembly
13Committees on Health of the data provided in subparagraphs (A)
14and (B) in a manner and format specified by the Legislature.

15(3) For the purposes of this section, for average contracted rates
16for individual and small group coverage, geographic region shall
17be the geographic regions listed in subparagraph (A) of paragraph
18(2) of subdivision (a) of Section 1357.512 of the Health and Safety
19Code. For purposes of this section for Medicare fee-for-service
20reimbursement, geographic regions shall be the geographic regions
21specified for physician reimbursement for Medicare fee for service
22by the United States Department of Health and Human Services.

23(4) A health insurer shall authorize and permit assignment of
24the insured’s right, if any, to any reimbursement for health care
25services covered under the health insurance policy to a
26noncontracting individual health professional who furnishes the
27health care services rendered subject to Section 10112.8. The
28insurer shall provide a form approved by the commissioner for
29this purpose.

30(5) A noncontracting individual health professional who disputes
31the claim reimbursement under this section shall utilize the
32independent dispute resolution process described in Section
3310112.81.

34(b) If nonemergency services are provided by a noncontracting
35individual health professional consistent with subdivision (c) of
36Section 10112.8 to an insured who has voluntarily chosen to use
37his or her out-of-network benefit for services covered by a preferred
38provider organization or a point-of-service plan, unless otherwise
39agreed to by the insurer and the noncontracting individual health
40professional, the amount paidbegin insert by the insurerend insert shall be the amount
P22   1set forth in the insured’s evidence of coverage. This payment is
2not subject to the independent dispute resolution process described
3in Section 10112.81.

4(c) If a health insurer delegates the responsibility for payment
5of claims to a contracted entity, including, but not limited to, a
6medical group or independent practice association, then the entity
7to which that responsibility is delegated shall comply with the
8requirements of this section.

9(d) (1) A payment made by the health insurer to the
10noncontracting health care professional for nonemergency services
11as required by Section 10112.8 and this section, in addition to the
12applicable cost sharing owed by the insured, shall constitute
13payment in full for nonemergency servicesbegin delete rendered.end deletebegin insert rendered
14unless either party uses the dispute resolution process or other
15lawful means pursuant to Section 10112.81.end insert

16(2) Notwithstanding any other law, the amounts paid by an
17insurer for services under this section shall not constitute the
18prevailing or customary charges, the usual fees to the general
19public, or other charges for other payers for an individual health
20professional.

21(3) This subdivision shall not preclude the use of the independent
22dispute resolution process pursuant to Section 10112.81.

23(e) This section shall not apply to emergency services and care,
24as defined in Section 1317.1 of the Health and Safety Code.

25(f) The definitions in subdivision (f) of Section 10112.8 shall
26apply for purposes of this section.

27begin insert

begin insertSEC. 7.end insert  

end insert
begin insert

The Legislature finds and declares that Sections 2 and
286 of this act, which add Section 1371.31 to the Health and Safety
29Code and Section 10112.82 to the Insurance Code, respectively,
30impose a limitation on the public’s right of access to the meetings
31of public bodies or the writings of public officials and agencies
32within the meaning of Section 3 of Article I of the California
33Constitution. Pursuant to that constitutional provision, the
34Legislature makes the following findings to demonstrate the interest
35protected by this limitation and the need for protecting that
36interest:

end insert
begin insert

37
In order to protect confidential rate information used by health
38care service plans and health insurers and to protect the integrity
39of the competitive market, it is necessary that this act limit the
40public’s right of access to that information.

end insert
P23   1

begin deleteSEC. 7.end delete
2
begin insertSEC. 8.end insert  

No reimbursement is required by this act pursuant to
3Section 6 of Article XIII B of the California Constitution because
4the only costs that may be incurred by a local agency or school
5district will be incurred because this act creates a new crime or
6infraction, eliminates a crime or infraction, or changes the penalty
7for a crime or infraction, within the meaning of Section 17556 of
8the Government Code, or changes the definition of a crime within
9the meaning of Section 6 of Article XIII B of the California
10Constitution.



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