BILL NUMBER: AB 72 CHAPTERED
BILL TEXT
CHAPTER 492
FILED WITH SECRETARY OF STATE SEPTEMBER 23, 2016
APPROVED BY GOVERNOR SEPTEMBER 23, 2016
PASSED THE SENATE AUGUST 29, 2016
PASSED THE ASSEMBLY AUGUST 31, 2016
AMENDED IN SENATE AUGUST 25, 2016
AMENDED IN SENATE AUGUST 19, 2016
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, 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, by September 1, 2017, 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. Contracts entered into pursuant to
these provisions would be exempt from specified statutory provisions
and related state agency review and approval requirements. 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 pursuant to a specified methodology and would
specify, among other responsibilities, the duties of health care
service plans, their delegated entities, and health insurers in
identifying and calculating the applicable reimbursement rates, as
well as various related duties of the department and the
commissioner. The bill would require the department and the
commissioner to report on the data and information provided in the
independent dispute resolution process to the Governor and other
specified recipients by January 1, 2019. The bill would require a
noncontracting individual health professional, health care service
plan or delegated entity, or health insurer that 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.
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) By September 1, 2017, 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.
(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.
(6) Contracts entered into pursuant to the authority in this
subdivision shall be exempt from Part 2 (commencing with Section
10100) of Division 2 of the Public Contract Code, Section 19130 of
the Government Code, and Chapter 6 (commencing with Section 14825) of
Part 5.5 of Division 3 of the Government Code and shall be exempt
from the review or approval of any division of the Department of
General Services.
(d) The decision obtained through the department's independent
dispute resolution process shall be binding on both parties. The plan
shall implement the 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.
(h) The definitions in subdivision (f) of Section 1371.9 shall
apply for purposes of this section.
(i) This section shall not be construed to alter a health care
service plan's obligations pursuant to Sections 1371 and 1371.4.
(j) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department may implement, interpret, or make specific this section by
means of all-plan letters or similar instructions, without taking
regulatory action, until the time regulations are adopted.
(k) By January 1, 2019, 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 the independent dispute
resolution process in a manner and format specified by the
Legislature.
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,
effective July 1, 2017, 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) By July 1, 2017, each health care service plan and its
delegated entities shall provide to the department all of the
following:
(i) Data listing its average contracted rates for the plan for
services most frequently subject to Section 1371.9 in each geographic
region in which the services are rendered for the calendar year
2015.
(ii) Its methodology for determining the average contracted rate
for the plan for services subject to Section 1371.9. The methodology
to determine an average contracted rate shall ensure that the plan
includes the highest and lowest contracted rates for the calendar
year 2015.
(iii) The policies and procedures used to determine the average
contracted rates under this subdivision.
(B) For each calendar year after the plan's initial submission of
the average contracted rate as specified in subparagraph (A) and
until the standardized methodology under paragraph (3) is specified,
a 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.
(3) (A) By January 1, 2019, 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, information from the independent dispute resolution process,
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 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 and shall use that database to
determine an average contracted rate required pursuant to paragraph
(1).
(D) 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) The average contracted rate data submitted pursuant to this
section 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) In developing the standardized methodology under this
subdivision, the department shall consult with interested parties
throughout the process of developing the standards, including the
Department of Insurance, representatives of health plans, insurers,
health care providers, hospitals, consumer advocates, and other
stakeholders it deems appropriate. The department shall hold the
first stakeholder meeting no later than July 1, 2017.
(4) 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 payments made to noncontracting
individual health professionals for services at a contracting health
facility and subject to Section 1371.9, as well as other data
sufficient to determine the proportion of noncontracting individual
health professionals to contracting individual health professionals
at contracting health facilities, as defined in subdivision (f) of
Section 1371.9. The department shall include a summary of this
information in its January 1, 2019, report required pursuant to
subdivision (k) of Section 1371.30 and its findings regarding the
impact of the act that added this section on health care service plan
contracting and network adequacy.
(5) A health care service plan that provides services subject to
Section 1371.9 shall meet the network adequacy requirements set forth
in this chapter, including, but not limited to, subdivisions (d) and
(e) of Section 1367 of this code and in Exhibits (H) and (I) of
subdivision (d) of Section 1300.51 of, and Sections 1300.67.2 and
1300.67.2.1 of, Title 28 of the California Code of Regulations,
including, but not limited to, inpatient hospital services and
specialist physician services, and if necessary, the department may
adopt additional regulations related to those services. This section
shall not be construed to limit the director's authority under this
chapter.
(6) 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 by
the United States Department of Health and Human Services.
(7) 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. Lack of
assignment pursuant to this paragraph shall not be construed to limit
the applicability of this section, Section 1371.30, or Section
1371.9.
(8) A noncontracting individual health professional, health care
service plan, or health care service plan's delegated entity 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 to an enrollee who has voluntarily chosen to use his
or her out-of-network benefit for services covered by a 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.
(g) The definitions in subdivision (f) of Section 1371.9 shall
apply for purposes of this section.
(h) This section shall not be construed to alter a health care
service plan's obligations pursuant to Sections 1371 and 1371.4.
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) (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 payment from the
enrollee.
(B) If the noncontracting individual health professional does not
refund any overpayment to the enrollee within 30 calendar 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.
(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 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 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."
(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 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 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 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.
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) (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 payment from the
insured.
(B) If the noncontracting individual health professional does not
refund any overpayment to the insured within 30 calendar 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.
(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 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 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."
(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 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 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
insurer in order to arrange to receive the health service from a
contracted provider for 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) By September 1, 2017, 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.
(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) Contracts entered into pursuant to the authority in this
subdivision shall be exempt from Part 2 (commencing with Section
10100) of Division 2 of the Public Contract Code, Section 19130 of
the Government Code, and Chapter 6 (commencing with Section 14825) of
Part 5.5 of Division 3 of the Government Code and shall be exempt
from the review or approval of any division of the Department of
General Services.
(d) The decision obtained through the commissioner's independent
dispute resolution process shall be binding on both parties. The
insurer shall implement the 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.
(h) This section shall not be construed to alter a health insurer'
s obligations pursuant to Section 10123.13.
(i) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
commissioner may implement, interpret, or make specific this section
by issuing guidance, without taking regulatory action, until the time
regulations are adopted.
(j) By January 1, 2019, the commissioner 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 the independent dispute
resolution process in a manner and format specified by the
Legislature.
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, effective July 1, 2017, 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) By July 1, 2017, each health insurer shall provide to the
commissioner all of the following:
(i) Data listing its average contracted rates for the insurer for
services most frequently subject to Section 10112.8 in each
geographic region in which the services are rendered for the calendar
year 2015.
(ii) Its methodology for determining the average contracted rate
for the insurer for services subject to Section 10112.8. The
methodology to determine an average contracted rate shall ensure that
the insurer includes the highest and lowest contracted rates for the
calendar year 2015.
(iii) The policies and procedures used to determine the average
contracted rates under this subdivision.
(B) For each calendar year after the health insurer's initial
submission of the average contracted rate as specified in
subparagraph (A) and until the standardized methodology under
paragraph (3) is specified, a health insurer 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.
(3) (A) By January 1, 2019, 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,
information from the independent dispute resolution process, 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 provide to the commissioner the policies and
procedures used to determine the average contracted rates in
compliance with subparagraph (A).
(C) The average contracted rate data submitted pursuant to this
section 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).
(D) In developing the standardized methodology under this
subdivision, the commissioner shall consult with interested parties
throughout the process of developing the standards, including the
Department of Managed Health Care, representatives of health plans,
insurers, health care providers, hospitals, consumer advocates, and
other stakeholders it deems appropriate. The commissioner shall hold
the first stakeholder meeting no later than July 1, 2017.
(4) A health insurer shall include in its reports submitted to the
commissioner pursuant to Section 10133.5 and regulations adopted
pursuant to that section, in a manner specified by the department,
the number of payments made to noncontracting individual health
professionals for services at a contracting health facility and
subject to Section 10112.8, as well as other data sufficient to
determine the proportion of noncontracting individual health
professionals to contracting individual health professionals at
contracting health facilities, as defined in subdivision (f) of
Section 10112.8. The commissioner shall include a summary of this
information in its January 1, 2019, report required pursuant to
subdivision (j) of Section 10112.81 and its findings regarding the
impact of the act that added this section on health insurer
contracting and network adequacy.
(5) A health insurer that provides services subject to Section
10112.8 shall meet the network adequacy requirements set forth in
this chapter, including, but not limited to, Section 10133.5 of this
code and Sections 2240.1 and 2240.7 of Title 10 of the California
Code of Regulations, including, but not limited to, inpatient
hospital services and specialist physician services, and if
necessary, the commissioner may adopt additional regulations related
to those services. This section shall not be construed to limit the
commissioner's authority under this chapter.
(6) 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 10753.14. 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 by the United States Department of Health
and Human Services.
(7) 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. 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.
(8) A noncontracting individual health professional or health
insurer 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 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 policy. 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.
(g) This section shall not be construed to alter a health insurer'
s obligations pursuant to Section 10123.13.
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.