BILL NUMBER: AB 72 AMENDED
BILL TEXT
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
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 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.
rendered pursuant to a specified methodology. 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:
SECTION 1. Section 1371.30 is added to the Health and Safety Code,
immediately following Section 1371.3, to read:
1371.30. (a) (1) The department shall establish an independent
dispute resolution process for the purpose of processing and
resolving a claim dispute between a health care service plan and a
noncontracting individual health professional for services subject to
subdivision (a) of Section 1371.9.
(2) Prior to initiating the independent dispute resolution
process, the parties shall complete the plan's internal process.
(3) If either the noncontracting individual health professional or
the plan appeals a claim to the department's independent dispute
resolution process, the other party shall participate in the appeal
process as described in this section.
(b) (1) The department shall establish uniform written procedures
for the submission, receipt, processing, and resolution of claim
payment disputes pursuant to this section and any other guidelines
for implementing this section.
(2) The department shall establish reasonable and necessary fees
for the purpose of administering this section, to be paid by both
parties.
(3) In establishing the independent dispute resolution process,
the department shall permit the bundling of claims submitted to the
same plan or the same delegated entity for the same or similar
services by the same noncontracting individual health professional.
(4) The department shall permit a physician group, independent
practice association, or other entity authorized to act on behalf of
a noncontracting individual health professional to initiate and
participate in the independent dispute resolution process.
(5) In deciding the dispute, the independent organization shall
base its decision regarding the appropriate reimbursement on all
relevant information, including, but not limited to, the
reimbursement amount suggested by either party.
(c) (1) The department may contract with one or more independent
organizations to conduct the proceedings. The independent
organization handling a dispute shall be independent of either party
to the dispute.
(2) The department shall establish conflict-of-interest standards,
consistent with the purposes of this section, that an organization
shall meet in order to qualify to administer the independent dispute
resolution program. The conflict-of-interest standards shall be
consistent with the standards pursuant to subdivisions (c) and (d) of
Section 1374.32.
(3) The department may contract with the same independent
organization or organizations as the Department of Insurance.
(4) The department shall provide, upon the request of an
interested person, a copy of all nonproprietary information, as
determined by the director, filed with the department by an
independent organization seeking to contract with the department to
administer the independent dispute resolution process pursuant to
this section. The department may charge a nominal fee to cover the
costs of providing a copy of the information pursuant to this
paragraph.
(5) The independent organization retained to conduct proceedings
shall be deemed to be consultants for purposes of Section 43.98 of
the Civil Code.
(d) The determination decision
obtained through the department's independent dispute resolution
process shall be binding on both parties. The plan shall implement
the determination decision obtained
through the independent dispute resolution process. If dissatisfied,
either party may pursue any right, remedy, or penalty established
under any other applicable law.
(e) This section shall not apply to a Medi-Cal managed health care
service plan or any entity that enters into a contract with the
State Department of Health Care Services pursuant to Chapter 7
(commencing with Section 14000), Chapter 8 (commencing with Section
14200), and Chapter 8.75 (commencing with Section 14591) of Part 3 of
Division 9 of the Welfare and Institutions Code.
(f) If a health care service plan delegates payment functions to a
contracted entity, including, but not limited to, a medical group or
independent practice association, then the delegated entity shall
comply with this section.
(g) This section shall not apply to emergency services and care,
as defined in Section 1317.1, or services required to be covered by a
health care service plan pursuant to Section 1371.4.
(h) The definitions in subdivision (f) of Section 1371.9 shall
apply for purposes of this section.
SEC. 2. Section 1371.31 is added to the Health and Safety Code, to
read:
1371.31. (a) (1) For services rendered subject to Section 1371.9,
unless otherwise agreed to by the noncontracting individual health
professional and the plan, the plan shall reimburse the greater of
the average contracted rate or 125 percent of the amount Medicare
reimburses on a fee-for-service basis for the same or similar
services in the general geographic region in which the services were
rendered. For the purposes of this section, "average contracted rate"
means the average of the contracted commercial rates paid by the
health plan or delegated entity for the same or similar services in
the geographic region. This subdivision does not apply to subdivision
(c) of Section 1371.9 or subdivision (b) of this section.
(2) (A) In a manner and format specified by the department, by
July 1, 2017, each health care service plan shall provide to the
department both of the following:
(i) Data listing its average contracted rates for services most
frequently subject to Section 1371.9 in each geographic region in
which the services are rendered for the year 2015.
(ii) Its methodology for determining the average contracted rate
for services subject to Section 1371.9. The methodology to determine
an average contracted rate shall assure that the plan includes the
highest and lowest contracted rates for the year 2015.
(B) In a manner and format specified by the department, by July 1,
2017, each health care service plan's delegated entities shall
provide to the department both of the following:
(i) Data listing its average contracted rates for services most
frequently subject to Section 1371.9 in each geographic region in
which the services are rendered for the year 2015.
(ii) Its methodology for determining the average contracted rate
for services subject to Section 1371.9. The methodology to determine
the average contracted rate shall ensure that the plan includes the
highest and lowest contracted rates for the year 2015.
(2) (A) The department shall specify a methodology that plans and
delegated entities shall use to determine the average contracted
rates for services most frequently subject to Section 1371.9. This
methodology shall take into account, at a minimum, the specialty of
the individual health professional and the geographic region in which
the services are rendered. The methodology to determine an average
contracted rate shall ensure that the plan includes the highest and
lowest contracted rates.
(B) Health care service plans and delegated entities shall
annually provide to the department the policies and procedures used
to determine the average contracted rates in compliance with
subparagraph (A).
(C) If, based on the health care service plan's model, a health
care service plan does not pay a statistically significant number or
dollar amount of claims for services covered under Section 1371.9,
the health care service plan shall demonstrate to the department that
it has access to a statistically credible database reflecting rates
paid to noncontracting individual health professionals for services
provided in a geographic region.
(C)
(D) For each year after 2015, the health care service
plan and the plan's delegated entities shall adjust the rate
initially established pursuant to this subdivision by the Consumer
Price Index for Medical Care Services, as published by the United
States Bureau of Labor Statistics.
(D) The department shall audit the accuracy of the information
required under subparagraphs (A) and (B).
(E) The department shall review the information filed pursuant to
this subdivision as part of its examination of fiscal and
administrative affairs pursuant to Section 1382.
(E)
(F) The average contracted rate data
submitted pursuant to clause (i) of subparagraph (A) and
clause (i) of subparagraph (B) this paragraph
shall be confidential and not subject to disclosure under the
California Public Records Act (Chapter 3.5 (commencing with Section
6250) of Division 7 of Title 1 of the Government Code).
(F)
(G) By January 1, 2020, the department shall provide a
report to the Governor, the President pro Tempore of the Senate, the
Speaker of the Assembly, and the Senate and Assembly Committees on
Health of the data and information provided in
subparagraphs (A) and (B) in a manner and format specified by the
Legislature.
(3) A health care service plan shall include in its reports
submitted to the department pursuant to Section 1367.035 and
regulations adopted pursuant to that section, in a manner specified
by the department, the number of out-of-network payments made for
services subject to Section 1371.9, as well as other data sufficient
to determine the prevalence of out-of-network individual health
professionals at specific facilities for the types of facilities
listed in subdivision (f) of Section 1371.9.
(3)
(4) For purposes of this section for Medicare
fee for service fee-for-service reimbursement,
geographic regions shall be the geographic regions specified for
physician reimbursement for Medicare fee for service
fee-for-service by the United States Department
of Health and Human Services.
(4)
(5) A health care service plan shall authorize and
permit assignment of the enrollee's right, if any, to any
reimbursement for health care services covered under the plan
contract to a noncontracting individual health professional who
furnishes the health care services rendered subject to Section
1371.9. The plan shall provide a form approved by the
department for this purpose. Lack of assignment
pursuant to this para graph shall not be construed to limit
the applicability of this section, Section 1371.30, or Section
1371.9.
(5)
(6) A noncontracting individual health professional who
disputes the claim reimbursement under this section shall utilize
the independent dispute resolution process described in Section
1371.30.
(b) If nonemergency services are provided by a noncontracting
individual health professional consistent with subdivision (c) of
Section 1371.9, 1371.9 to an enrollee
who has voluntarily chosen to use his or her out-of-network benefit
for services covered by a preferred provider organization or
a point-of-service plan, plan that includes coverage
for out-of-network benefits, unless otherwise agreed to by the
plan and the noncontracting individual health professional, the
amount paid by the health care service plan shall be the amount set
forth in the enrollee's evidence of coverage. This payment is not
subject to the independent dispute resolution process described in
Section 1371.30.
(c) If a health care service plan delegates the responsibility for
payment of claims to a contracted entity, including, but not limited
to, a medical group or independent practice association, then the
entity to which that responsibility is delegated shall comply with
the requirements of this section.
(d) (1) A payment made by the health care service plan to the
noncontracting health care professional for nonemergency services as
required by Section 1371.9 and this section, in addition to the
applicable cost sharing owed by the enrollee, shall constitute
payment in full for nonemergency services rendered unless either
party uses the independent dispute resolution process or other lawful
means pursuant to Section 1371.30.
(2) Notwithstanding any other law, the amounts paid by a plan for
services under this section shall not constitute the prevailing or
customary charges, the usual fees to the general public, or other
charges for other payers for an individual health professional.
(3) This subdivision shall not preclude the use of the independent
dispute resolution process pursuant to Section 1371.30.
(e) This section shall not apply to a Medi-Cal managed health care
service plan or any other entity that enters into a contract with
the State Department of Health Care Services pursuant to Chapter 7
(commencing with Section 14000), Chapter 8 (commencing with Section
14200), and Chapter 8.75 (commencing with Section 14591) of Part 3 of
Division 9 of the Welfare and Institutions Code.
(f) This section shall not apply to emergency services and care,
as defined in Section 1317.1, or to those services required to be
covered by a health care service plan pursuant to Section 1371.4.
(g) The definitions in subdivision (f) of Section 1371.9 shall
apply for purposes of this section.
SEC. 3. Section 1371.9 is added to the Health and Safety Code, to
read:
1371.9. (a) (1) Except as provided in subdivision (c), a health
care service plan contract issued, amended, or renewed on or after
July 1, 2017, shall provide that if an enrollee receives covered
services from a contracting health facility at which, or as a result
of which, the enrollee receives services provided by a noncontracting
individual health professional, the enrollee shall pay no more than
the same cost sharing that the enrollee would pay for the same
covered services received from a contracting individual health
professional. This amount shall be referred to as the "in-network
cost-sharing amount."
(2) An enrollee shall not owe the noncontracting individual health
professional more than the in-network cost-sharing amount for
services subject to this section. At the time of payment by the plan
to the noncontracting individual health professional, the plan shall
inform the enrollee and the noncontracting individual
health professional of the in-network cost-sharing amount owed by the
enrollee.
(3) A noncontracting individual health professional shall not bill
or collect any amount from the enrollee for services subject to this
section except for the in-network cost-sharing amount. Any
communication from the noncontracting individual health professional
to the enrollee prior to the receipt of information about the
in-network cost-sharing amount pursuant to paragraph (2) shall
include a notice in 12-point bold type stating that the communication
is not a bill and informing the enrollee that the enrollee shall not
pay until he or she is informed by his or her health care
service plan of any applicable cost sharing.
(4) In submitting a claim to the plan, the noncontracting
individual health professional shall affirm to the plan that he or
she has not attempted to collect any payment from the enrollee.
(5) (A) If the noncontracting individual health professional has
received more than the in-network cost-sharing amount from the
enrollee for services subject to this section, the noncontracting
individual health professional shall refund any overpayment to the
enrollee within 30 calendar days after receiving notice from the plan
of the in-network cost-sharing amount owed by the enrollee pursuant
to paragraph (2).
(B) If the noncontracting individual health professional does not
refund any overpayment to the enrollee within 30 business days after
being informed of the enrollee's in-network cost-sharing amount,
interest shall accrue at the rate of 15 percent per annum beginning
with the date payment was received from the enrollee.
first day after the 30-business- day period
has elapsed.
(C) A noncontracting individual health professional shall
automatically include in his or her refund to the enrollee all
interest that has accrued pursuant to this section without requiring
the enrollee to submit a request for the interest amount.
(b) Except for services subject to subdivision (c), the following
shall apply:
(1) Any cost sharing paid by the enrollee for the services
provided by a noncontracting individual health professional
at the contracting health facility subject to this
section shall count toward the limit on annual out-of-pocket
expenses established under Section 1367.006.
(2) Cost sharing arising from services received by a
noncontracting individual health professional at a contracting health
facility subject to this section shall be
counted toward any deductible in the same manner as cost sharing
would be attributed to a contracting individual health professional.
(3) The cost sharing paid by the enrollee pursuant to this section
shall satisfy the enrollee's obligation to pay cost sharing for the
health service and shall constitute "applicable cost sharing owed by
the enrollee" for the purpose of subdivision (e) of Section
1371.31. enrollee."
(c) For services subject to this section, if an enrollee has a
health care service plan that includes coverage for out-of-network
benefits, a noncontracting individual health professional may bill or
collect from the enrollee the out-of-network cost sharing, if
applicable, only when the enrollee consents in writing and that
written consent satisfies demonstrates
satisfaction of all the following criteria:
(1) At least 24 hours in advance of care, the enrollee shall
consent in writing to receive services from the identified
noncontracting individual health professional.
(2) The consent shall be obtained by the noncontracting individual
health professional in a document that is separate from the document
used to obtain the consent for any other part of the care or
procedure. The consent shall not be obtained by the facility or any
representative of the facility. The consent shall not be obtained at
the time of admission or at any time when the enrollee is being
prepared for surgery or any other procedure.
(3) At the time consent is provided, the noncontracting individual
health professional shall give the enrollee a written estimate of
the enrollee's total out-of-pocket cost of care. The written estimate
shall be based on the professional's billed charges for the service
to be provided. The noncontracting individual health professional
shall not attempt to collect more than the estimated amount without
receiving separate written consent from the enrollee or the enrollee'
s authorized representative, unless circumstances arise during
delivery of services that were unforeseen
unforeseeable at the time the estimate was given that would
require the provider to change the estimate.
(4) The consent shall advise the enrollee that he or she may elect
to seek care from a contracted provider or may contact the enrollee'
s health care service plan in order to arrange to receive the health
service from a contracted provider for lower-out-of-pocket
lower out-of-pocket costs.
(5) The consent and estimate shall be provided to the enrollee in
the language spoken by the enrollee, if the language is a Medi-Cal
threshold language, as defined in subdivision (d) of Section 128552.
(6) The consent shall also advise the enrollee that any costs
incurred as a result of the enrollee's use of the out-of-network
benefit shall be in addition to in-network cost-sharing amounts and
may not count toward the annual out-of-pocket maximum on in-network
benefits or a deductible, if any, for in-network benefits.
(d) A noncontracting individual health professional who fails to
comply with the requirements of subdivision (c) has not obtained
written consent for purposes of this section. Under those
circumstances, subdivisions (a) and (b) shall apply and subdivision
(c) shall not apply.
(e) (1) A noncontracting individual health professional may
advance to collections only the in-network cost-sharing amount, as
determined by the plan pursuant to subdivision (a) or the
out-of-network cost-sharing amount owed pursuant to subdivision (c),
that the enrollee has failed to pay.
(2) The noncontracting individual health professional, or any
entity acting on his or her behalf, including any assignee of the
debt, shall not report adverse information to a consumer credit
reporting agency or commence civil action against the enrollee for
a minimum of 150 days after the initial billing
regarding amounts owed by the enrollee under subdivision (a) or (c).
(3) With respect to an enrollee, the noncontracting individual
health professional, or any entity acting on his or her behalf,
including any assignee of the debt, shall not use wage garnishments
or liens on primary residences as a means of collecting unpaid bills
under this section.
(f) For purposes of this section and Sections 1371.30 and 1371.31,
the following definitions shall apply:
(1) "Contracting health facility" means a health facility that is
contracted with the enrollee's health care service plan to provide
services under the enrollee's plan contract. A contracting health
care facility includes, but is not limited to, the following
providers:
(A) A licensed hospital.
(B) An ambulatory surgery or other outpatient setting, as
described in subdivision (a), (d), (e), (g), or (h) of Section
1248.1.
(C) A laboratory.
(D) A radiology or imaging center.
(2) "Cost sharing" includes any copayment, coinsurance, or
deductible, or any other form of cost sharing paid by the enrollee
other than premium or share of premium.
(3) "Individual health professional" means a physician and surgeon
or other professional who is licensed by this state to deliver or
furnish health care services. For this purpose, an "individual health
professional" shall not include a dentist, licensed pursuant to the
Dental Practice Act (Chapter 4 (commencing with Section 1600) of
Division 2 of the Business and Professions Code).
(4) "In-network cost-sharing amount" means an amount no more than
the same cost sharing the enrollee would pay for the same covered
service received from a contracting health professional. The
in-network cost-sharing amount with respect to an enrollee with
coinsurance shall be based on the amount paid by the plan pursuant to
paragraph (1) of subdivision (a) of Section 1371.31.
(5) "Noncontracting individual health professional" means a
physician and surgeon or other professional who is licensed by the
state to deliver or furnish health care services and who is not
contracted with the enrollee's health care service product. For this
purpose, a "noncontracting individual health professional" shall not
include a dentist, licensed pursuant to the Dental Practice Act
(Chapter 4 (commencing with Section 1600) of Division 2 of the
Business and Professions Code). Application of this definition
is not precluded by a noncontracting individual health professional's
affiliation with a group.
(g) This section shall not be construed to require a health care
service plan to cover services not required by law or by the terms
and conditions of the health care service plan contract.
(h) This section shall not be construed to exempt a plan or
provider from the requirements under Section 1371.4 or 1373.96, nor
abrogate the holding in Prospect Medical Group, Inc. v. Northridge
Emergency Medical Group (2009) 45 Cal.4th 497.
(i) If a health care service plan delegates payment functions to a
contracted entity, including, but not limited to, a medical group or
independent practice association, the delegated entity shall comply
with this section.
(j) This section shall not apply to a Medi-Cal managed health care
service plan or any other entity that enters into a contract with
the State Department of Health Care Services pursuant to Chapter 7
(commencing with Section 14000), Chapter 8 (commencing with Section
14200), and Chapter 8.75 (commencing with Section 14591) of Part 3 of
Division 9 of the Welfare and Institutions Code.
(k) This section shall not apply to emergency services and care,
as defined in Section 1317.1, or to those services required to be
covered by a health care service plan pursuant to Section 1371.4.
SEC. 4. Section 10112.8 is added to the Insurance Code, to read:
10112.8. (a) (1) Except as provided in subdivision (c), a health
insurance policy issued, amended, or renewed on or after July 1,
2017, that provides benefits through contracts with providers at
alternative rates of payment pursuant to Section 10133, shall provide
that if an insured receives covered services from a contracting
health facility at which, or as a result of which, the insured
receives services provided by a noncontracting individual health
professional, the insured shall pay no more than the same cost
sharing that the insured would pay for the same covered services
received from a contracting individual health professional. This
amount shall be referred to as the "in-network cost-sharing amount."
(2) Except as provided in subdivision (c), an insured shall not
owe the noncontracting individual health professional more than the
in-network cost-sharing amount for services subject to this section.
At the time of payment by the insurer to the noncontracting
individual health professional, the insurer shall inform the
insured and the noncontracting individual health professional
of the in-network cost-sharing amount owed by the insured.
(3) A noncontracting individual health professional shall not bill
or collect any amount from the insured for services subject to this
section except the in-network cost-sharing amount. Any communication
from the noncontracting individual health professional to the insured
prior to the receipt of information about the in-network
cost-sharing amount pursuant to paragraph (2) shall include a notice
in 12-point bold type stating that the communication is not a bill
and informing the insured that the insured shall not pay until he or
she is informed by his or her insurer of any applicable
cost sharing.
(4) In submitting a claim to the
insurer, the noncontracting individual health professional shall
affirm to the insurer that he or she has not attempted to collect any
payment from the insured.
(5) (A) If the noncontracting individual health professional has
received more than the in-network cost-sharing amount from the
insured for services subject to this section, the noncontracting
individual health professional shall refund any overpayment to the
insured within 30 calendar days after receiving notice from the
insurer of the in-network cost-sharing amount owed by the insured
pursuant to paragraph (2).
(B) If the noncontracting individual health professional does not
refund any overpayment to the insured within 30 business days after
being informed of the insured's in-network cost-sharing amount,
interest shall accrue at the rate of 15 percent per annum beginning
with the date payment was received from the insured.
first day after the 30 -
business - day period has elapsed.
(C) A noncontracting individual health professional shall
automatically include in his or her refund to the insured all
interest that has accrued pursuant to this section without requiring
the insured to submit a request for the interest amount.
(b) Except for services subject to subdivision (c), the following
shall apply:
(1) Any cost sharing paid by the insured for the services
provided by a noncontracting individual health professional at the
contracting health facility subject to this section
shall count toward the limit on annual out-of-pocket expenses
established under Section 10112.28.
(2) Cost sharing arising from services received by a
noncontracting individual health professional at a contracting health
facility subject to this section shall be
counted toward any deductible in the same manner as cost sharing
would be attributed to a contracting individual health professional.
(3) The cost sharing paid by the insured pursuant to this section
shall satisfy the insured's obligation to pay cost sharing for the
health service and shall constitute "applicable cost sharing owed by
the insured" for the purpose of subdivision (e) of Section
10112.82. insured."
(c) For services subject to this section, if an insured has an
insurance contract that includes coverage for out-of-network
benefits, a noncontracting individual health professional may bill or
collect from the insured the out-of-network cost sharing, if
applicable, only when the insured consents in writing and that
written consent satisfies demonstrates
satisfaction of all the following criteria:
(1) At least 24 hours in advance of care, the insured shall
consent in writing to receive services from the identified
noncontracting individual health professional.
(2) The consent shall be obtained by the noncontracting individual
health professional in a document that is separate from the document
used to obtain the consent for any other part of the care or
procedure. The consent shall not be obtained by the facility or any
representative of the facility. The consent shall not be obtained at
the time of admission or at any time when the enrollee is being
prepared for surgery or any other procedure.
(3) At the time consent is provided the noncontracting individual
health professional shall give the insured a written estimate of the
insured's total out-of-pocket cost of care. The written estimate
shall be based on the professional's billed charges for the service
to be provided. The noncontracting individual health professional
shall not attempt to collect more than the estimated amount without
receiving separate written consent from the insured or the insured's
authorized representative, unless circumstances arise during delivery
of services that were unforeseen
unforeseeable at the time the estimate was given that would
require the provider to change the estimate.
(4) The consent shall advise the insured that he or she may elect
to seek care from a contracted provider or may contact the insured's
health care service plan in order to arrange to receive the health
service from a contracted provider for lower-out-of-pocket
lower out-of-pocket costs.
(5) The consent and estimate shall be provided to the insured in
the language spoken by the insured, if the language is a Medi-Cal
threshold language, as defined in subdivision (d) of Section 128552
of the Health and Safety Code.
(6) The consent shall also advise the insured that any costs
incurred as a result of the insured's use of the out-of-network
benefit shall be in addition to in-network cost-sharing amounts and
may not count toward the annual out-of-pocket maximum on in-network
benefits or a deductible, if any, for in-network benefits.
(d) A noncontracting individual health professional who fails to
comply with provisions of this subdivision has not obtained written
consent for purposes of this section. Under those circumstances,
subdivisions (a) and (b) shall apply and subdivision (c) shall not
apply.
(e) (1) A noncontracting individual health professional may
advance to collections only the in-network cost-sharing amount, as
determined by the insurer pursuant to subdivision (a) or the
out-of-network cost-sharing amount owed pursuant to subdivision (c),
that the insured has failed to pay.
(2) The noncontracting individual health professional, or any
entity acting on his or her behalf, including any assignee of the
debt, shall not report adverse information to a consumer credit
reporting agency or commence civil action against the insured for
a minimum of 150 days after the initial billing regarding
amounts owed by the insured under subdivision (a) or (c).
(3) With respect to an insured, a noncontracting individual health
professional, or any entity acting on his or her behalf, including
any assignee of the debt, shall not use wage garnishments or liens on
primary residences as a means of collecting unpaid bills under this
section.
(f) For purposes of this section and Sections 10112.81 and
10112.82, the following definitions shall apply:
(1) "Contracting health facility" means a health facility that is
contracted with the insured's health insurer to provide services
under the insured's policy. A contracting health care facility
includes, but is not limited to, the following providers:
(A) A licensed hospital.
(B) An ambulatory surgery or other outpatient setting, as
described in subdivision (a), (d), (e), (g), or (h) of Section 1248.1
of the Health and Safety Code.
(C) A laboratory.
(D) A radiology or imaging center.
(2) "Cost sharing" includes any copayment, coinsurance, or
deductible, or any other form of cost sharing paid by the insured
other than premium or share of premium.
(3) "Individual health professional" means a physician and surgeon
or other professional who is licensed by the state to deliver or
furnish health care services. For this purpose, an "individual health
professional" shall not include a dentist, licensed pursuant to the
Dental Practice Act (Chapter 4 (commencing with Section 1600) of
Division 2 of the Business and Professions Code).
(4) "In-network cost-sharing amount" means an amount no more than
the same cost sharing the insured would pay for the same covered
service received from a contracting health professional. The
in-network cost-sharing amount with respect to an insured with
coinsurance shall be based on the amount paid by the insurer pursuant
to paragraph (1) of subdivision (a) of Section 10112.82.
(5) "Noncontracting individual health professional" means a
physician and surgeon or other professional who is licensed by the
state to deliver or furnish health care services and who is not
contracted with the insured's health insurance product. For this
purpose, a "noncontracting individual health professional" shall not
include a dentist, licensed pursuant to the Dental Practice Act
(Chapter 4 (commencing with Section 1600) of Division 2 of the
Business and Professions Code). Application of this definition
is not precluded by a noncontracting individual health professional's
affiliation with a group.
(g) This section shall not be construed to require an insurer to
cover services not required by law or by the terms and conditions of
the health insurance policy.
(h) If a health insurer delegates payment functions to a
contracted entity, including, but not limited to, a medical group or
independent practice association, the delegated entity shall comply
with this section.
(i) This section shall not apply to emergency services and care,
as defined in Section 1317.1 of the Health and Safety Code.
SEC. 5. Section 10112.81 is added to the Insurance Code, to read:
10112.81. (a) (1) The commissioner shall establish an independent
dispute resolution process for the purpose of processing and
resolving a claim dispute between a health insurer and a
noncontracting individual health professional for services subject to
subdivision (a) of Section 10112.8.
(2) Prior to initiating the independent dispute resolution
process, the parties shall complete the insurer's internal process.
(3) If either the noncontracting individual health professional or
the insurer appeals a claim to the department's independent dispute
resolution process, the other party shall participate in the appeal
process as described in this section.
(b) (1) The commissioner shall establish uniform written
procedures for the submission, receipt, processing, and resolution of
claim payment disputes pursuant to this section and any other
guidelines for implementing this section.
(2) The commissioner shall establish reasonable and necessary fees
for the purpose of administering this section, to be paid by both
parties.
(3) In establishing the independent dispute resolution process,
the commissioner shall permit the bundling of claims submitted to the
same insurer or the same delegated entity for the same or similar
services by the same noncontracting individual health professional.
(4) The commissioner shall permit a physician group, independent
practice association, or other entity authorized to act on behalf of
a noncontracting individual health professional to initiate and
participate in the independent dispute resolution process.
(5) In deciding the dispute, the independent organization shall
base its decision regarding the appropriate reimbursement on all
relevant information, including, but not limited to, the
reimbursement amount suggested by either party.
(c) (1) The commissioner may contract with one or more independent
organizations to conduct the proceedings. The independent
organization handling a dispute shall be independent of either party
to the dispute.
(2) The commissioner shall establish conflict-of-interest
standards, consistent with the purposes of this section, that an
organization shall meet in order to qualify to administer the
independent dispute resolution program. The conflict-of-interest
standards shall be consistent with the standards pursuant to
subdivisions (c) and (d) of Section 10169.2.
(3) The commissioner may contract with the same independent
organization or organizations as the State Department of Managed
Health Care.
(4) The commissioner shall provide, upon the request of an
interested person, a copy of all nonproprietary information, as
determined by the commissioner, filed with the department by an
independent organization seeking to contract with the department to
administer the independent dispute resolution process pursuant to
this section. The department may charge a nominal fee to cover the
costs of providing a copy of the information pursuant to this
paragraph.
(5) The independent organization retained to conduct proceedings
shall be deemed to be consultants for purposes of Section 43.98 of
the Civil Code.
(d) The determination decision
obtained through the commissioner's independent dispute resolution
process shall be binding on both parties. The insurer shall implement
the determination decision obtained
through the independent dispute resolution process. If dissatisfied,
either party may pursue any right, remedy, or penalty established
under any other applicable law.
(e) If a health insurer delegates payment functions to a
contracted entity, including, but not limited to, a medical group or
independent practice association, then the delegated entity shall
comply with this section.
(f) This section shall not apply to emergency services and care,
as defined in Section 1317.1 of the Health and Safety Code.
(g) The definitions in subdivision (f) of Section 10112.8 shall
apply for purposes of this section.
SEC. 6. Section 10112.82 is added to the Insurance Code, to read:
10112.82. (a) (1) For services rendered subject to Section
10112.8, unless otherwise agreed to by the noncontracting individual
health professional and the insurer, the insurer shall reimburse the
greater of the average contracted rate or 125 percent of the amount
Medicare reimburses on a fee-for-service basis for the same or
similar services in the general geographic region in which the
services were rendered. For the purposes of this section, "average
contracted rate" means the average of the contracted commercial rates
paid by the health insurer for the same or similar services in the
geographic region. This subdivision does not apply to subdivision (c)
of Section 10112.8 or subdivision (b) of this section.
(2) (A) In a manner and format specified by the commissioner, by
July 1, 2017, each health insurer shall provide to the department
both of the following:
(i) Data listing its average contracted rates for services most
frequently subject to Section 10112.8 in each geographic region in
which the services are rendered for the year 2015.
(ii) Its methodology for determining the average contracted rate
for services subject to Section 10112.8. The methodology to determine
an average contracted rate shall assure that the insurer includes
the highest and lowest contracted rates for the year 2015.
(B) In a manner and format specified by the commissioner, by July
1, 2017, each health insurer's delegated entities shall provide to
the department both of the following:
(i) Data listing its average contracted rates for services most
frequently subject to Section 10112.8 in each geographic region in
which the services are rendered for the year 2015.
(ii) Its methodology for determining the average contracted rate
for services subject to Section 10112.8. The methodology to determine
the average contracted rate shall ensure that the insurer includes
the highest and lowest contracted rates for the year 2015.
(2) (A) The commissioner shall specify a methodology that insurers
shall use to determine the average contracted rates for services
most frequently subject to Section 10112.8. This methodology shall
take into account, at a minimum, the specialty of the individual
health professional and the geographic region in which the services
are rendered. The methodology to determine an average contracted rate
shall ensure that the insurer includes the highest and lowest
contracted rates.
(B) Insurers shall annually provide to the commissioner the
policies and procedures used to determine the average contracted
rates in compliance with subparagraph (A).
(C) For each year after 2015, the health insurer and its delegated
entities shall adjust the rate initially established pursuant to
this subdivision by the Consumer Price Index for Medical Care
Services, as published by the United States Bureau of Labor
Statistics.
(D) The commissioner shall audit the accuracy of the information
required under subparagraphs (A) and (B).
(E)
(D) The average contracted rate data
submitted pursuant to clause (i) of subparagraph (A) and
clause (i) of subparagraph (B) this paragraph
shall be confidential and not subject to disclosure under the
California Public Records Act (Chapter 3.5 (commencing with Section
6250) of Division 7 of Title 1 of the Government Code).
(F)
(E) By January 1, 2020, the department shall provide a
report to the Governor, the President pro Tempore of the Senate, the
Speaker of the Assembly, and the Senate and Assembly Committees on
Health of the data and information provided in
subparagraphs (A) and (B) in a manner and format specified by the
Legislature.
(3) For the purposes of this section, for average contracted rates
for individual and small group coverage, geographic region shall be
the geographic regions listed in subparagraph (A) of paragraph (2) of
subdivision (a) of Section 1357.512 of the Health and Safety Code.
For purposes of this section for Medicare fee-for-service
reimbursement, geographic regions shall be the geographic regions
specified for physician reimbursement for Medicare fee for
service fee-for-service by the United States
Department of Health and Human Services.
(4) A health insurer shall authorize and permit assignment of the
insured's right, if any, to any reimbursement for health care
services covered under the health insurance policy to a
noncontracting individual health professional who furnishes the
health care services rendered subject to Section 10112.8.
The insurer shall provide a form approved by the commissioner for
this purpose. Lack of assignment pursuant to this
paragraph shall not be construed to limit the applicability of this
section, Section 10112.8, or Section 10112.81.
(5) A noncontracting individual health professional who disputes
the claim reimbursement under this section shall utilize the
independent dispute resolution process described in Section 10112.81.
(b) If nonemergency services are provided by a noncontracting
individual health professional consistent with subdivision (c) of
Section 10112.8 to an insured who has voluntarily chosen to use his
or her out-of-network benefit for services covered by a
preferred provider organization or a point-of-service plan,
an insurer that includes coverage for out-of-network benefits,
unless otherwise agreed to by the insurer and the
noncontracting individual health professional, the amount paid by the
insurer shall be the amount set forth in the insured's evidence of
coverage. This payment is not subject to the independent dispute
resolution process described in Section 10112.81.
(c) If a health insurer delegates the responsibility for payment
of claims to a contracted entity, including, but not limited to, a
medical group or independent practice association, then the entity to
which that responsibility is delegated shall comply with the
requirements of this section.
(d) (1) A payment made by the health insurer to the noncontracting
health care professional for nonemergency services as required by
Section 10112.8 and this section, in addition to the applicable cost
sharing owed by the insured, shall constitute payment in full for
nonemergency services rendered unless either party uses the dispute
resolution process or other lawful means pursuant to Section
10112.81.
(2) Notwithstanding any other law, the amounts paid by an insurer
for services under this section shall not constitute the prevailing
or customary charges, the usual fees to the general public, or other
charges for other payers for an individual health professional.
(3) This subdivision shall not preclude the use of the independent
dispute resolution process pursuant to Section 10112.81.
(e) This section shall not apply to emergency services and care,
as defined in Section 1317.1 of the Health and Safety Code.
(f) The definitions in subdivision (f) of Section 10112.8 shall
apply for purposes of this section.
SEC. 7. The Legislature finds and declares that Sections 2 and 6
of this act, which add Section 1371.31 to the Health and Safety Code
and Section 10112.82 to the Insurance Code, respectively, impose a
limitation on the public's right of access to the meetings of public
bodies or the writings of public officials and agencies within the
meaning of Section 3 of Article I of the California Constitution.
Pursuant to that constitutional provision, the Legislature makes the
following findings to demonstrate the interest protected by this
limitation and the need for protecting that interest:
In order to protect confidential rate information used by health
care service plans and health insurers and to protect the integrity
of the competitive market, it is necessary that this act limit the
public's right of access to that information.
SEC. 8. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.