Amended in Senate August 4, 2016

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, Santiago, 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.” 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 collects more than the in-network cost-sharing amount from the enrollee or insured to refund any overpayment 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 werebegin delete 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.end deletebegin insert rendered pursuant to a specified methodology.end insert 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.

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.

This bill would make legislative findings to that effect.

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 shall complete 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 department shall permit the bundling of claims submitted to
23the same plan or the same delegated entity for the same or similar
24services by the same noncontracting individual health professional.

25(4) The department shall permit a physician group, independent
26practice association, or other entity authorized to act on behalf of
27a noncontracting individual health professional to initiate and
28participate in the independent dispute resolution process.

begin insert

29
(5) In deciding the dispute, the independent organization shall
30base its decision regarding the appropriate reimbursement on all
31relevant information, including, but not limited to, the
32reimbursement amount suggested by either party.

end insert

33(c) (1) The department may contract with one or more
34independent organizations to conduct the proceedings. The
35independent organization handling a dispute shall be independent
36of either party to the dispute.

37(2) The department shall establish conflict-of-interest standards,
38consistent with the purposes of this section, that an organization
P5    1shall meet in order to qualify to administer the independent dispute
2resolution program. The conflict-of-interest standards shall be
3consistent with the standards pursuant to subdivisions (c) and (d)
4of Section 1374.32.

5(3) The department may contract with the same independent
6organization or organizations as the Department of Insurance.

7(4) The department shall provide, upon the request of an
8interested person, a copy of all nonproprietary information, as
9determined by the director, filed with the department by an
10independent organization seeking to contract with the department
11to administer the independent dispute resolution process pursuant
12to this section. The department may charge a nominal fee to cover
13the costs of providing a copy of the information pursuant to this
14paragraph.

begin insert

15
(5) The independent organization retained to conduct
16proceedings shall be deemed to be consultants for purposes of
17Section 43.98 of the Civil Code.

end insert

18(d) Thebegin delete determinationend deletebegin insert decisionend insert obtained through the
19department’s independent dispute resolution process shall be
20binding on both parties. The plan shall implement thebegin delete determinationend delete
21begin insert decisionend insert obtained through the independent dispute resolution
22process. If dissatisfied, either party may pursue any right, remedy,
23or penalty established under any other applicable law.

24(e) This section shall not apply to a Medi-Cal managed health
25care service plan or any entity that enters into a contract with the
26State Department of Health Care Services pursuant to Chapter 7
27(commencing with Section 14000), Chapter 8 (commencing with
28Section 14200), and Chapter 8.75 (commencing with Section
2914591) of Part 3 of Division 9 of the Welfare and Institutions Code.

30(f) If a health care service plan delegates payment functions to
31a contracted entity, including, but not limited to, a medical group
32or independent practice association, then the delegated entity shall
33comply with this section.

34(g) This section shall not apply to emergency services and care,
35as defined in Section 1317.1, or services required to be covered
36by a health care service plan pursuant to Section 1371.4.

37(h) The definitions in subdivision (f) of Section 1371.9 shall
38apply for purposes of this section.

39

SEC. 2.  

Section 1371.31 is added to the Health and Safety
40Code
, to read:

P6    1

1371.31.  

(a) (1) For services rendered subject to Section
21371.9, unless otherwise agreed to by the noncontracting individual
3health professional and the plan, the plan shall reimburse the
4greater of the average contracted rate or 125 percent of the amount
5Medicare reimburses on a fee-for-service basis for the same or
6similar services in the general geographic region in which the
7services were rendered. For the purposes of this section, “average
8contracted rate” means the average of the contracted commercial
9rates paid by the health plan or delegated entity for the same or
10similar services in the geographic region. This subdivision does
11not apply to subdivision (c) of Section 1371.9 or subdivision (b)
12of this section.

begin delete

13(2) (A) In a manner and format specified by the department,
14by July 1, 2017, each health care service plan shall provide to the
15department both of the following:

16(i) Data listing its average contracted rates for services most
17frequently subject to Section 1371.9 in each geographic region in
18which the services are rendered for the year 2015.

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 contracted rates for the year 2015.

23(B) In a manner and format specified by the department, by July
241, 2017, each health care service plan’s delegated entities shall
25provide to the department both of the following:

26(i) Data listing its average contracted rates for services most
27frequently subject to Section 1371.9 in each geographic region in
28which the services are rendered for the year 2015.

29(ii) Its methodology for determining the average contracted rate
30for services subject to Section 1371.9. The methodology to
31determine the average contracted rate shall ensure that the plan
32includes the highest and lowest contracted rates for the year 2015.

end delete
begin insert

33
(2) (A) The department shall specify a methodology that plans
34and delegated entities shall use to determine the average
35contracted rates for services most frequently subject to Section
361371.9. This methodology shall take into account, at a minimum,
37the specialty of the individual health professional and the
38geographic region in which the services are rendered. The
39methodology to determine an average contracted rate shall ensure
40that the plan includes the highest and lowest contracted rates.

end insert
begin insert

P7    1
(B) Health care service plans and delegated entities shall
2annually provide to the department the policies and procedures
3used to determine the average contracted rates in compliance with
4subparagraph (A).

end insert
begin insert

5
(C) If, based on the health care service plan’s model, a health
6care service plan does not pay a statistically significant number
7or dollar amount of claims for services covered under Section
81371.9, the health care service plan shall demonstrate to the
9department that it has access to a statistically credible database
10reflecting rates paid to noncontracting individual health
11professionals for services provided in a geographic region.

end insert
begin delete

12(C)

end delete

13begin insert(D)end insert For each year after 2015, the health care service plan and
14the plan’s delegated entities shall adjust the rate initially established
15pursuant to this subdivision by the Consumer Price Index for
16Medical Care Services, as published by the United States Bureau
17 of Labor Statistics.

begin delete

18(D) The department shall audit the accuracy of the information
19required under subparagraphs (A) and (B).

end delete
begin insert

20
(E) The department shall review the information filed pursuant
21to this subdivision as part of its examination of fiscal and
22administrative affairs pursuant to Section 1382.

end insert
begin delete

23(E)

end delete

24begin insert(F)end insert Thebegin insert average contracted rateend insert data submitted pursuant to
25begin delete clause (i) of subparagraph (A) and clause (i) of subparagraph (B)end delete
26begin insert this paragraphend insert shall be confidential and not subject to disclosure
27under the California Public Records Act (Chapter 3.5 (commencing
28with Section 6250) of Division 7 of Title 1 of the Government
29Code).

begin delete

30(F)

end delete

31begin insert(G)end insert By January 1, 2020, the department shall provide a report
32to the Governor, the President pro Tempore of the Senate, the
33Speaker of the Assembly, and the Senate and Assembly
34Committees on Health of the databegin insert and informationend insert provided in
35subparagraphs (A) and (B) in a manner and format specified by
36the Legislature.

begin insert

37
(3) A health care service plan shall include in its reports
38submitted to the department pursuant to Section 1367.035 and
39regulations adopted pursuant to that section, in a manner specified
40by the department, the number of out-of-network payments made
P8    1for services subject to Section 1371.9, as well as other data
2sufficient to determine the prevalence of out-of-network individual
3health professionals at specific facilities for the types of facilities
4listed in subdivision (f) of Section 1371.9.

end insert
begin delete

5(3)

end delete

6begin insert(4)end insert For purposes of this section for Medicarebegin delete fee for serviceend delete
7begin insert fee-for-serviceend insert reimbursement, geographic regions shall be the
8geographic regions specified for physician reimbursement for
9Medicarebegin delete fee for serviceend deletebegin insert fee-for-serviceend insert by the United States
10Department of Health and Human Services.

begin delete

11(4)

end delete

12begin insert(5)end insert A health care service plan shall authorize and permit
13assignment of the enrollee’s right, if any, to any reimbursement
14for health care services covered under the plan contract to a
15noncontracting individual health professional who furnishes the
16health care services rendered subject to Section 1371.9.begin delete The plan
17shall provide a form approved by the department for this purpose.end delete

18
begin insert Lack of assignment pursuant to this paragraph shall not be
19construed to limit the applicability of this section, Section 1371.30,
20or Section 1371.9.end insert

begin delete

21(5)

end delete

22begin insert(6)end insert A noncontracting individual health professional who disputes
23the claim reimbursement under this section shall utilize the
24independent dispute resolution process described in Section
251371.30.

26(b) If nonemergency services are provided by a noncontracting
27individual health professional consistent with subdivision (c) of
28Sectionbegin delete 1371.9,end deletebegin insert 1371.9end insert to an enrollee who has voluntarily chosen
29to use his or her out-of-network benefit for services covered by a
30begin delete preferred provider organization or a point-of-service plan,end deletebegin insert plan
31that includes coverage for out-of-network benefits,end insert
unless otherwise
32agreed to by the plan and the noncontracting individual health
33professional, the amount paid by the health care service plan shall
34be the amount set forth in the enrollee’s evidence of coverage.
35This payment is not subject to the independent dispute resolution
36process described in Section 1371.30.

37(c) If a health care service plan delegates the responsibility for
38payment of claims to a contracted entity, including, but not limited
39to, a medical group or independent practice association, then the
P9    1entity to which that responsibility is delegated shall comply with
2the requirements of this section.

3(d) (1) A payment made by the health care service plan to the
4noncontracting health care professional for nonemergency services
5as required by Section 1371.9 and this section, in addition to the
6applicable cost sharing owed by the enrollee, shall constitute
7payment in full for nonemergency services rendered unless either
8party uses the independent dispute resolution process or other
9lawful means pursuant to Section 1371.30.

10(2) Notwithstanding any other law, the amounts paid by a plan
11for services under this section shall not constitute the prevailing
12or customary charges, the usual fees to the general public, or other
13charges for other payers for an individual health professional.

14(3) This subdivision shall not preclude the use of the independent
15dispute resolution process pursuant to Section 1371.30.

16(e) 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(f) This section shall not apply to emergency services and care,
23as defined in Section 1317.1, or to those services required to be
24covered by a health care service plan pursuant to Section 1371.4.

25(g) The definitions in subdivision (f) of Section 1371.9 shall
26apply for purposes of this section.

27

SEC. 3.  

Section 1371.9 is added to the Health and Safety Code,
28to read:

29

1371.9.  

(a) (1) Except as provided in subdivision (c), a health
30care service plan contract issued, amended, or renewed on or after
31July 1, 2017, shall provide that if an enrollee receives covered
32services from a contracting health facility at which, or as a result
33of which, the enrollee receives services provided by a
34noncontracting individual health professional, the enrollee shall
35pay no more than the same cost sharing that the enrollee would
36pay for the same covered services received from a contracting
37individual health professional. This amount shall be referred to as
38the “in-network cost-sharing amount.”

39(2) An enrollee shall not owe the noncontracting individual
40health professional more than the in-network cost-sharing amount
P10   1for services subject to this section. At the time of payment by the
2plan to the noncontracting individual health professional, the plan
3shall inform thebegin insert enrollee and theend insert noncontracting individual health
4professional of the in-network cost-sharing amount owed by the
5enrollee.

6(3) A noncontracting individual health professional shall not
7bill or collect any amount from the enrollee for services subject
8to this section except for the in-network cost-sharing amount. Any
9communication from the noncontracting individual health
10professional to the enrollee prior to the receipt of information about
11the in-network cost-sharing amount pursuant to paragraph (2) shall
12include a notice in 12-point bold type stating that the
13communication is not a bill and informing the enrollee that the
14enrollee shall not pay until he or she is informedbegin insert by his or her
15health care service planend insert
of any applicable cost sharing.

16(4) In submitting a claim to the plan, the noncontracting
17individual health professional shall affirm to the plan that he or
18she has not attempted to collect any payment from the enrollee.

19(5) (A) If the noncontracting individual health professional has
20received more than the in-network cost-sharing amount from the
21enrollee for services subject to this section, the noncontracting
22individual health professional shall refund any overpayment to the
23enrollee within 30 calendar days after receiving notice from the
24plan of the in-network cost-sharing amount owed by the enrollee
25pursuant to paragraph (2).

26(B) If the noncontracting individual health professional does
27not refund any overpayment to the enrollee within 30 business
28days after being informed of the enrollee’s in-network cost-sharing
29amount, interest shall accrue at the rate of 15 percent per annum
30beginning with thebegin delete date payment was received from the enrollee.end delete
31
begin insert first day after the 30-business-end insertbegin insertday period has elapsed.end insert

32(C) A noncontracting individual health professional shall
33automatically include in his or her refund to the enrollee all interest
34that has accrued pursuant to this section without requiring the
35enrollee to submit a request for the interest amount.

36(b) Except for services subject to subdivision (c), the following
37shall apply:

38(1) Any cost sharing paid by the enrollee for the services
39begin delete provided by a noncontracting individual health professional at the
40contracting health facilityend delete
begin insert subject to this sectionend insert shall count toward
P11   1the limit on annual out-of-pocket expenses established under
2Section 1367.006.

3(2) Cost sharing arising from servicesbegin delete received by a
4noncontracting individual health professional at a contracting
5health facilityend delete
begin insert subject to this sectionend insert shall be counted toward any
6deductible in the same manner as cost sharing would be attributed
7to a contracting individual health professional.

8(3) The cost sharing paid by the enrollee pursuant to this section
9shall satisfy the enrollee’s obligation to pay cost sharing for the
10health service and shall constitute “applicable cost sharing owed
11by thebegin delete enrollee” for the purpose of subdivision (e) of Section
121371.31.end delete
begin insert enrollee.”end insert

13(c) For services subject to this section, if an enrollee has a health
14care service plan that includes coverage for out-of-network benefits,
15a noncontracting individual health professional may bill or collect
16from the enrollee the out-of-network cost sharing, if applicable,
17only when the enrollee consents in writing and that written consent
18begin delete satisfiesend deletebegin insert demonstrates satisfaction ofend insert all the following criteria:

19(1) At least 24 hours in advance of care, the enrollee shall
20consent in writing to receive services from the identified
21noncontracting individual health professional.

22(2) The consent shall be obtained by the noncontracting
23individual health professional in a document that is separate from
24the document used to obtain the consent for any other part of the
25care or procedure. The consent shall not be obtained by the facility
26or any representative of the facility. The consent shall not be
27obtained at the time of admission or at any time when the enrollee
28is being prepared for surgery or any other procedure.

29(3) At the time consent is provided, the noncontracting
30individual health professional shall give the enrollee a written
31estimate of the enrollee’s total out-of-pocket cost of care. The
32written estimate shall be based on the professional’s billed charges
33for the service to be provided. The noncontracting individual health
34 professional shall not attempt to collect more than the estimated
35amount without receiving separate written consent from the
36enrollee or the enrollee’s authorized representative, unless
37circumstances arise during delivery of services that were
38begin delete unforeseenend deletebegin insert unforeseeableend insert at the time the estimate was given that
39would require the provider to change the estimate.

P12   1(4) The consent shall advise the enrollee that he or she may
2elect to seek care from a contracted provider or may contact the
3enrollee’s health care service plan in order to arrange to receive
4the health service from a contracted provider for
5begin delete lower-out-of-pocketend deletebegin insert lower out-of-pocketend insert costs.

6(5) The consent and estimate shall be provided to the enrollee
7in the language spoken by the enrollee, if the language is a
8Medi-Cal threshold language, as defined in subdivision (d) of
9Section 128552.

10(6) The consent shall also advise the enrollee that any costs
11incurred as a result of the enrollee’s use of the out-of-network
12benefit shall be in addition to in-network cost-sharing amounts
13and may not count toward the annual out-of-pocket maximum on
14in-network benefits or a deductible, if any, for in-network benefits.

15(d) A noncontracting individual health professional who fails
16to comply with the requirements of subdivision (c) has not obtained
17written consent for purposes of this section. Under those
18circumstances, subdivisions (a) and (b) shall apply and subdivision
19(c) shall not apply.

20(e) (1) A noncontracting individual health professional may
21advance to collections only the in-network cost-sharing amount,
22as determined by the plan pursuant to subdivision (a) or the
23out-of-network cost-sharing amount owed pursuant to subdivision
24(c), that the enrollee has failed to pay.

25(2) The noncontracting individual health professional, or any
26entity acting on his or her behalf, including any assignee of the
27debt, shall not report adverse information to a consumer credit
28reporting agency or commence civil action against the enrollee for
29begin insert a minimum ofend insert 150 days after the initial billing regarding amounts
30owed by the enrollee under subdivision (a) or (c).

31(3) With respect to an enrollee, the noncontracting individual
32health professional, or any entity acting on his or her behalf,
33including any assignee of the debt, shall not use wage garnishments
34or liens on primary residences as a means of collecting unpaid bills
35under this section.

36(f) For purposes of this section and Sections 1371.30 and
371371.31, the following definitions shall apply:

38(1) “Contracting health facility” means a health facility that is
39contracted with the enrollee’s health care service plan to provide
P13   1services under the enrollee’s plan contract. A contracting health
2care facility includes, but is not limited to, the following providers:

3(A) A licensed hospital.

4(B) An ambulatory surgery or other outpatient setting, as
5described in subdivision (a), (d), (e), (g), or (h) of Section 1248.1.

6(C) A laboratory.

7(D) A radiology or imaging center.

8(2) “Cost sharing” includes any copayment, coinsurance, or
9deductible, or any other form of cost sharing paid by the enrollee
10other than premium or share of premium.

11(3) “Individual health professional” means a physician and
12surgeon or other professional who is licensed by this state to deliver
13or furnish health care services. For this purpose, an “individual
14health professional” shall not include a dentist, licensed pursuant
15to the Dental Practice Act (Chapter 4 (commencing with Section
161600) of Division 2 of the Business and Professions Code).

17(4) “In-network cost-sharing amount” means an amount no more
18than the same cost sharing the enrollee would pay for the same
19covered service received from a contracting health professional.
20The in-network cost-sharing amount with respect to an enrollee
21with coinsurance shall be based on the amount paid by the plan
22pursuant to paragraph (1) of subdivision (a) of Section 1371.31.

23(5) “Noncontracting individual health professional” means a
24physician and surgeon or other professional who is licensed by the
25state to deliver or furnish health care services and who is not
26contracted with the enrollee’s health care service product. For this
27purpose, a “noncontracting individual health professional” shall
28not include a dentist, licensed pursuant to the Dental Practice Act
29(Chapter 4 (commencing with Section 1600) of Division 2 of the
30Business and Professions Code).begin insert Application of this definition is
31not precluded by a noncontracting individual health professional’s
32affiliation with a group.end insert

33(g) This section shall not be construed to require a health care
34service plan to cover services not required by law or by the terms
35and conditions of the health care service plan contract.

36(h) This section shall not be construed to exempt a plan or
37provider from the requirements under Section 1371.4 or 1373.96,
38nor abrogate the holding in Prospect Medical Group, Inc. v.
39Northridge Emergency Medical Group (2009) 45 Cal.4th 497.

P14   1(i) If a health care service plan delegates payment functions to
2a contracted entity, including, but not limited to, a medical group
3or independent practice association, the delegated entity shall
4comply with this section.

5(j) This section shall not apply to a Medi-Cal managed health
6care service plan or any other entity that enters into a contract with
7the State Department of Health Care Services pursuant to Chapter
87 (commencing with Section 14000), Chapter 8 (commencing with
9Section 14200), and Chapter 8.75 (commencing with Section
1014591) of Part 3 of Division 9 of the Welfare and Institutions Code.

11(k) This section shall not apply to emergency services and care,
12as defined in Section 1317.1, or to those services required to be
13covered by a health care service plan pursuant to Section 1371.4.

14

SEC. 4.  

Section 10112.8 is added to the Insurance Code, to
15read:

16

10112.8.  

(a) (1) Except as provided in subdivision (c), a health
17insurance policy issued, amended, or renewed on or after July 1,
182017, that provides benefits through contracts with providers at
19alternative rates of payment pursuant to Section 10133, shall
20provide that if an insured receives covered services from a
21contracting health facility at which, or as a result of which, the
22insured receives services provided by a noncontracting individual
23health professional, the insured shall pay no more than the same
24cost sharing that the insured would pay for the same covered
25services received from a contracting individual health professional.
26This amount shall be referred to as the “in-network cost-sharing
27amount.”

28(2) Except as provided in subdivision (c), an insured shall not
29owe the noncontracting individual health professional more than
30the in-network cost-sharing amount for services subject to this
31section. At the time of payment by the insurer to the noncontracting
32individual health professional, the insurer shall inform thebegin insert insured
33and theend insert
noncontracting individual health professional of the
34in-network cost-sharing amount owed by the insured.

35(3) A noncontracting individual health professional shall not
36bill or collect any amount from the insured for services subject to
37this section except the in-network cost-sharing amount. Any
38communication from the noncontracting individual health
39professional to the insured prior to the receipt of information about
40the in-network cost-sharing amount pursuant to paragraph (2) shall
P15   1include a notice in 12-point bold type stating that the
2communication is not a bill and informing the insured that the
3insured shall not pay until he or she is informedbegin insert by his or her
4insurerend insert
of any applicable cost sharing.

5(4) In submitting a claim to the insurer, the noncontracting
6individual health professional shall affirm to the insurer that he or
7she has not attempted to collect any payment from the insured.

8(5) (A) If the noncontracting individual health professional has
9received more than the in-network cost-sharing amount from the
10 insured for services subject to this section, the noncontracting
11individual health professional shall refund any overpayment to the
12insured within 30 calendar days after receiving notice from the
13insurer of the in-network cost-sharing amount owed by the insured
14pursuant to paragraph (2).

15(B) If the noncontracting individual health professional does
16not refund any overpayment to the insured within 30 business days
17after being informed of the insured’s in-network cost-sharing
18amount, interest shall accrue at the rate of 15 percent per annum
19beginning with thebegin delete date payment was received from the insured.end delete
20
begin insert first day after the 30end insertbegin insert-end insertbegin insertbusinessend insertbegin insert-end insertbegin insertday period has elapsed.end insert

21(C) A noncontracting individual health professional shall
22automatically include in his or her refund to the insured all interest
23that has accrued pursuant to this section without requiring the
24insured to submit a request for the interest amount.

25(b) Except for services subject to subdivision (c), the following
26shall apply:

27(1) Any cost sharing paid by the insured for the services
28begin delete provided by a noncontracting individual health professional at the
29contracting health facilityend delete
begin insert subject to this sectionend insert shall count toward
30the limit on annual out-of-pocket expenses established under
31Section 10112.28.

32(2) Cost sharing arising from servicesbegin delete received by a
33noncontracting individual health professional at a contracting
34health facilityend delete
begin insert subject to this sectionend insert shall be counted toward any
35deductible in the same manner as cost sharing would be attributed
36to a contracting individual health professional.

37(3) The cost sharing paid by the insured pursuant to this section
38shall satisfy the insured’s obligation to pay cost sharing for the
39health service and shall constitute “applicable cost sharing owed
P16   1by thebegin delete insured” for the purpose of subdivision (e) of Section
210112.82.end delete
begin insert insured.”end insert

3(c) For services subject to this section, if an insured has an
4insurance contract that includes coverage for out-of-network
5benefits, a noncontracting individual health professional may bill
6or collect from the insured the out-of-network cost sharing, if
7applicable, only when the insured consents in writing and that
8written consentbegin delete satisfiesend deletebegin insert demonstrates satisfaction ofend insert all the
9following criteria:

10(1) At least 24 hours in advance of care, the insured shall consent
11in writing to receive services from the identified noncontracting
12individual health professional.

13(2) The consent shall be obtained by the noncontracting
14individual health professional in a document that is separate from
15the document used to obtain the consent for any other part of the
16 care or procedure. The consent shall not be obtained by the facility
17or any representative of the facility. The consent shall not be
18obtained at the time of admission or at any time when the enrollee
19is being prepared for surgery or any other procedure.

20(3) At the time consent is provided the noncontracting individual
21health professional shall give the insured a written estimate of the
22insured’s total out-of-pocket cost of care. The written estimate
23shall be based on the professional’s billed charges for the service
24to be provided. The noncontracting individual health professional
25shall not attempt to collect more than the estimated amount without
26receiving separate written consent from the insured or the insured’s
27authorized representative, unless circumstances arise during
28delivery of services that werebegin delete unforeseenend deletebegin insert unforeseeableend insert at the time
29the estimate was given that would require the provider to change
30the estimate.

31(4) The consent shall advise the insured that he or she may elect
32to seek care from a contracted provider or may contact the insured’s
33health care service plan in order to arrange to receive the health
34service from a contracted provider forbegin delete lower-out-of-pocketend deletebegin insert lower
35out-of-pocketend insert
costs.

36(5) The consent and estimate shall be provided to the insured
37in the language spoken by the insured, if the language is a Medi-Cal
38threshold language, as defined in subdivision (d) of Section 128552
39of the Health and Safety Code.

P17   1(6) The consent shall also advise the insured that any costs
2incurred as a result of the insured’s use of the out-of-network
3benefit shall be in addition to in-network cost-sharing amounts
4and may not count toward the annual out-of-pocket maximum on
5in-network benefits or a deductible, if any, for in-network benefits.

6(d) A noncontracting individual health professional who fails
7to comply with provisions of this subdivision has not obtained
8written consent for purposes of this section. Under those
9circumstances, subdivisions (a) and (b) shall apply and subdivision
10(c) shall not apply.

11(e) (1) A noncontracting individual health professional may
12advance to collections only the in-network cost-sharing amount,
13as determined by the insurer pursuant to subdivision (a) or the
14out-of-network cost-sharing amount owed pursuant to subdivision
15(c), that the insured has failed to pay.

16(2) The noncontracting individual health professional, or any
17entity acting on his or her behalf, including any assignee of the
18debt, shall not report adverse information to a consumer credit
19reporting agency or commence civil action against the insured for
20begin insert a minimum ofend insert 150 days after the initial billing regarding amounts
21owed by the insured under subdivision (a) or (c).

22(3) With respect to an insured, a noncontracting individual health
23professional, or any entity acting on his or her behalf, including
24any assignee of the debt, shall not use wage garnishments or liens
25on primary residences as a means of collecting unpaid bills under
26this section.

27(f) For purposes of this section and Sections 10112.81 and
2810112.82, the following definitions shall apply:

29(1) “Contracting health facility” means a health facility that is
30contracted with the insured’s health insurer to provide services
31under the insured’s policy. A contracting health care facility
32includes, but is not limited to, the following providers:

33(A) A licensed hospital.

34(B) An ambulatory surgery or other outpatient setting, as
35described in subdivision (a), (d), (e), (g), or (h) of Section 1248.1
36of the Health and Safety Code.

37(C) A laboratory.

38(D) A radiology or imaging center.

P18   1(2) “Cost sharing” includes any copayment, coinsurance, or
2deductible, or any other form of cost sharing paid by the insured
3other than premium or share of premium.

4(3) “Individual health professional” means a physician and
5surgeon or other professional who is licensed by the state to deliver
6or furnish health care services. For this purpose, an “individual
7health professional” shall not include a dentist, licensed pursuant
8to the Dental Practice Act (Chapter 4 (commencing with Section
91600) of Division 2 of the Business and Professions Code).

10(4) “In-network cost-sharing amount” means an amount no more
11than the same cost sharing the insured would pay for the same
12covered service received from a contracting health professional.
13The in-network cost-sharing amount with respect to an insured
14with coinsurance shall be based on the amount paid by the insurer
15pursuant to paragraph (1) of subdivision (a) of Section 10112.82.

16(5) “Noncontracting individual health professional” means a
17physician and surgeon or other professional who is licensed by the
18state to deliver or furnish health care services and who is not
19contracted with the insured’s health insurance product. For this
20purpose, a “noncontracting individual health professional” shall
21not include a dentist, licensed pursuant to the Dental Practice Act
22(Chapter 4 (commencing with Section 1600) of Division 2 of the
23Business and Professions Code).begin insert Application of this definition is
24not precluded by a noncontracting individual health professional’s
25affiliation with a group.end insert

26(g) This section shall not be construed to require an insurer to
27cover services not required by law or by the terms and conditions
28of the health insurance policy.

29(h) If a health insurer delegates payment functions to a
30contracted entity, including, but not limited to, a medical group or
31independent practice association, the delegated entity shall comply
32with this section.

33(i) This section shall not apply to emergency services and care,
34as defined in Section 1317.1 of the Health and Safety Code.

35

SEC. 5.  

Section 10112.81 is added to the Insurance Code, to
36read:

37

10112.81.  

(a) (1) The commissioner shall establish an
38independent dispute resolution process for the purpose of
39processing and resolving a claim dispute between a health insurer
P19   1and a noncontracting individual health professional for services
2subject to subdivision (a) of Section 10112.8.

3(2) Prior to initiating the independent dispute resolution process,
4the parties shall complete the insurer’s internal process.

5(3) If either the noncontracting individual health professional
6or the insurer appeals a claim to the department’s independent
7dispute resolution process, the other party shall participate in the
8appeal process as described in this section.

9(b) (1) The commissioner shall establish uniform written
10procedures for the submission, receipt, processing, and resolution
11of claim payment disputes pursuant to this section and any other
12guidelines for implementing this section.

13(2) The commissioner shall establish reasonable and necessary
14fees for the purpose of administering this section, to be paid by
15both parties.

16(3) In establishing the independent dispute resolution process,
17the commissioner shall permit the bundling of claims submitted
18to the same insurer or the same delegated entity for the same or
19similar services by the same noncontracting individual health
20professional.

21(4) The commissioner shall permit a physician group,
22independent practice association, or other entity authorized to act
23on behalf of a noncontracting individual health professional to
24initiate and participate in the independent dispute resolution
25process.

begin insert

26
(5) In deciding the dispute, the independent organization shall
27base its decision regarding the appropriate reimbursement on all
28relevant information, including, but not limited to, the
29reimbursement amount suggested by either party.

end insert

30(c) (1) The commissioner 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 commissioner shall establish conflict-of-interest
35standards, consistent with the purposes of this section, that an
36organization shall meet in order to qualify to administer the
37independent dispute resolution program. The conflict-of-interest
38standards shall be consistent with the standards pursuant to
39subdivisions (c) and (d) of Section 10169.2.

P20   1(3) The commissioner may contract with the same independent
2organization or organizations as the State Department of Managed
3Health Care.

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

begin insert

12
(5) The independent organization retained to conduct
13proceedings shall be deemed to be consultants for purposes of
14Section 43.98 of the Civil Code.

end insert

15(d) Thebegin delete determinationend deletebegin insert decisionend insert obtained through the
16commissioner’s independent dispute resolution process shall be
17binding on both parties. The insurer shall implement the
18begin delete determinationend deletebegin insert decisionend insert obtained through the independent dispute
19resolution process. If dissatisfied, either party may pursue any
20right, remedy, or penalty established under any other applicable
21law.

22(e) If a health insurer delegates payment functions to a
23contracted entity, including, but not limited to, a medical group or
24independent practice association, then the delegated entity shall
25comply with this section.

26(f) This section shall not apply to emergency services and care,
27as defined in Section 1317.1 of the Health and Safety Code.

28(g) The definitions in subdivision (f) of Section 10112.8 shall
29apply for purposes of this section.

30

SEC. 6.  

Section 10112.82 is added to the Insurance Code, to
31read:

32

10112.82.  

(a) (1) For services rendered subject to Section
3310112.8, unless otherwise agreed to by the noncontracting
34individual health professional and the insurer, the insurer shall
35reimburse the greater of the average contracted rate or 125 percent
36of the amount Medicare reimburses on a fee-for-service basis for
37the same or similar services in the general geographic region in
38which the services were rendered. For the purposes of this section,
39“average contracted rate” means the average of the contracted
40commercial rates paid by the health insurer for the same or similar
P21   1services in the geographic region. This subdivision does not apply
2to subdivision (c) of Section 10112.8 or subdivision (b) of this
3 section.

begin delete

4(2) (A) In a manner and format specified by the commissioner,
5by July 1, 2017, each health insurer shall provide to the department
6both of the following:

7(i) Data listing its average contracted rates for services most
8frequently subject to Section 10112.8 in each geographic region
9in which the services are rendered for the year 2015.

10(ii) Its methodology for determining the average contracted rate
11for services subject to Section 10112.8. The methodology to
12determine an average contracted rate shall assure that the insurer
13includes the highest and lowest contracted rates for the year 2015.

14(B) In a manner and format specified by the commissioner, by
15July 1, 2017, each health insurer’s delegated entities shall provide
16to the department both of the following:

17(i) Data listing its average contracted rates for services most
18frequently subject to Section 10112.8 in each geographic region
19in which the services are rendered for the year 2015.

20(ii) Its methodology for determining the average contracted rate
21for services subject to Section 10112.8. The methodology to
22determine the average contracted rate shall ensure that the insurer
23includes the highest and lowest contracted rates for the year 2015.

end delete
begin insert

24
(2) (A) The commissioner shall specify a methodology that
25insurers shall use to determine the average contracted rates for
26services most frequently subject to Section 10112.8. This
27methodology shall take into account, at a minimum, the specialty
28of the individual health professional and the geographic region
29in which the services are rendered. The methodology to determine
30an average contracted rate shall ensure that the insurer includes
31the highest and lowest contracted rates.

end insert
begin insert

32
(B) Insurers shall annually provide to the commissioner the
33policies and procedures used to determine the average contracted
34rates in compliance with subparagraph (A).

end insert

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

begin delete

P22   1(D) The commissioner shall audit the accuracy of the
2information required under subparagraphs (A) and (B).

end delete
begin delete

3(E)

end delete

4begin insert(D)end insert Thebegin insert average contracted rateend insert data submitted pursuant to begin delete5 clause (i) of subparagraph (A) and clause (i) of subparagraph (B)end delete
6begin insert this paragraphend insert shall be confidential and not subject to disclosure
7under the California Public Records Act (Chapter 3.5 (commencing
8with Section 6250) of Division 7 of Title 1 of the Government
9Code).

begin delete

10(F)

end delete

11begin insert(E)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 databegin insert and informationend insert provided in
15subparagraphs (A) and (B) in a manner and format specified by
16the Legislature.

17(3) For the purposes of this section, for average contracted rates
18for individual and small group coverage, geographic region shall
19be the geographic regions listed in subparagraph (A) of paragraph
20(2) of subdivision (a) of Section 1357.512 of the Health and Safety
21Code. For purposes of this section for Medicare fee-for-service
22reimbursement, geographic regions shall be the geographic regions
23specified for physician reimbursement for Medicarebegin delete fee for serviceend delete
24begin insert fee-for-serviceend insert by the United States Department of Health and
25Human Services.

26(4) A health insurer shall authorize and permit assignment of
27the insured’s right, if any, to any reimbursement for health care
28services covered under the health insurance policy to a
29noncontracting individual health professional who furnishes the
30health care services rendered subject to Section 10112.8.begin delete The
31insurer shall provide a form approved by the commissioner for
32this purpose.end delete
begin insert Lack of assignment pursuant to this paragraph shall
33not be construed to limit the applicability of this section, Section
3410112.8, or Section 10112.81.end insert

35(5) A noncontracting individual health professional who disputes
36the claim reimbursement under this section shall utilize the
37independent dispute resolution process described in Section
3810112.81.

39(b) If nonemergency services are provided by a noncontracting
40individual health professional consistent with subdivision (c) of
P23   1Section 10112.8 to an insured who has voluntarily chosen to use
2his or her out-of-network benefit for services covered bybegin delete a preferred
3provider organization or a point-of-service plan,end delete
begin insert an insurer that
4includes coverage for out-of-network benefits,end insert
unless otherwise
5agreed to by the insurer and the noncontracting individual health
6professional, the amount paid by the insurer shall be the amount
7set forth in the insured’s evidence of coverage. This payment is
8not subject to the independent dispute resolution process described
9in Section 10112.81.

10(c) If a health insurer delegates the responsibility for payment
11of claims to a contracted entity, including, but not limited to, a
12medical group or independent practice association, then the entity
13to which that responsibility is delegated shall comply with the
14requirements of this section.

15(d) (1) A payment made by the health insurer to the
16noncontracting health care professional for nonemergency services
17as required by Section 10112.8 and this section, in addition to the
18applicable cost sharing owed by the insured, shall constitute
19payment in full for nonemergency services rendered unless either
20party uses the dispute resolution process or other lawful means
21pursuant to Section 10112.81.

22(2) Notwithstanding any other law, the amounts paid by an
23insurer for services under this section shall not constitute the
24prevailing or customary charges, the usual fees to the general
25public, or other charges for other payers for an individual health
26professional.

27(3) This subdivision shall not preclude the use of the independent
28dispute resolution process pursuant to Section 10112.81.

29(e) This section shall not apply to emergency services and care,
30as defined in Section 1317.1 of the Health and Safety Code.

31(f) The definitions in subdivision (f) of Section 10112.8 shall
32apply for purposes of this section.

33

SEC. 7.  

The Legislature finds and declares that Sections 2 and
346 of this act, which add Section 1371.31 to the Health and Safety
35Code and Section 10112.82 to the Insurance Code, respectively,
36impose a limitation on the public’s right of access to the meetings
37of public bodies or the writings of public officials and agencies
38within the meaning of Section 3 of Article I of the California
39Constitution. Pursuant to that constitutional provision, the
P24   1Legislature makes the following findings to demonstrate the interest
2protected by this limitation and the need for protecting that interest:

3In order to protect confidential rate information used by health
4care service plans and health insurers and to protect the integrity
5of the competitive market, it is necessary that this act limit the
6public’s right of access to that information.

7

SEC. 8.  

No reimbursement is required by this act pursuant to
8Section 6 of Article XIII B of the California Constitution because
9the only costs that may be incurred by a local agency or school
10district will be incurred because this act creates a new crime or
11infraction, eliminates a crime or infraction, or changes the penalty
12for a crime or infraction, within the meaning of Section 17556 of
13the Government Code, or changes the definition of a crime within
14 the meaning of Section 6 of Article XIII B of the California
15Constitution.



O

    94