BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON HEALTH
                          Senator Ed Hernandez, O.D., Chair

          BILL NO:                    AB 72     
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          |AUTHOR:        |Bonta, Bonilla, Dahle, Gonzalez, Maienschein,  |
          |               |Wood                                           |
          |---------------+-----------------------------------------------|
          |VERSION:       |June 15, 2016                                  |
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          |HEARING DATE:  |June 29, 2016  |               |               |
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          |CONSULTANT:    |Teri Boughton                                  |
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           SUBJECT  :  Health care coverage: out-of-network coverage.

           SUMMARY  :  Establishes a payment rate, which is the greater of the  
          average of a health plan or health insurer's contracted rate, as  
          specified, or 125% of the amount Medicare reimburses for the  
          same or similar services, and a binding independent dispute  
          resolution process for claims and claim disputes related to  
          covered services provided at a contracted health facility by a  
          non-contracting health care professional.  Limits enrollee and  
          insured cost sharing for these covered services to no more than  
          the cost sharing required had the services been provided by a  
          contracting health professional. Requires health plans and  
          insurers to collect the enrollee/insured cost sharing and  
          requires the plan/insurer to permit the enrollee/insured to  
          assign payment of benefits to the health care professional.

          Existing law:
          1)Provides for the regulation of health plans by the Department  
            of Managed Health Care (DMHC) under the Knox-Keene Act and for  
            health insurers by California Department of Insurance (CDI)  
            under the Insurance Code.

          2)Requires contracts between providers and health plans to be in  
            writing and prohibits, except for applicable copayments and  
            deductibles, a provider from invoicing or balance billing a  
            plan's enrollee for the difference between the provider's  
            billed charges and the reimbursement paid by the plan or the  
            plan's capitated provider for any covered benefit.

          3)Prohibits a provider, in the event that a contract has not  
            been reduced to writing, or does not contain the prohibition  
            above, from collecting or attempting to collect from the  







          AB 72 (Bonta)                                       Page 2 of ?
          
          
            subscriber or enrollee sums owed by the plan.  Prohibits a  
            contracting provider, agent, trustee or assignee from taking  
            action at law against a subscriber or enrollee to collect sums  
            owed by the plan.

          4)Establishes, pursuant to regulations, requirements that health  
            plans must implement in their claims settlement practice,  
            including the meaning of "reimbursement of a claim," such that  
            providers with a contract receive the contract rate.  Claims  
            for contracted providers without a written contract and  
            non-contracted providers require payment of the reasonable and  
            customary value for the health care services rendered based  
            upon "statistically credible information" that is updated at  
            least annually and takes into consideration the following:

             a)   The provider's training, qualifications, and length of  
               time in practice; 
             b)   The nature of the services provided; 
             c)   The fees usually charged by the provider; 
                  d)        Prevailing provider rates charged in the  
                    general geographic area in which the   services were  
                    rendered; 
                  e)        Other aspects of the economics of the medical  
                    provider's practice that are  relevant; and,
             f)   Any unusual circumstances in the case.

          5)Allows a non-contracted provider to dispute the  
            appropriateness of a health plan's computation of the  
            reasonable and customary value and requires the health plan to  
            respond to the dispute through the plan's mandated provider  
            dispute resolution process.

          6)Requires health plans to pay for medically necessary services  
            provided in a licensed acute care hospital, if the services  
            were related to authorized services and provided after the  
            plan's normal business hours, unless the plan has a system  
            whereby it can respond to authorization requests within 30  
            minutes.  

          7)Prohibits a health plan from engaging in an unfair payment  
            pattern, defined as, engaging in a demonstrable and unjust  
            pattern, of reviewing or processing complete and accurate  
            claims that results in payment delays; engaging in a  
            demonstrable and unjust pattern of reducing the amount of  
            payment or denying complete and accurate claims; failing on a  








          AB 72 (Bonta)                                       Page 3 of ?
          
          
            repeated basis to pay the uncontested portions of a claim  
            within specified timeframes; and failing on a repeated basis  
            to automatically include the interest due on claims, as  
            specified.


          8)Prohibits a hospital which contracts with an insurer,  
            nonprofit hospital service plan, or health plan from  
            determining or conditioning medical staff membership or  
            clinical privileges upon the basis of a physician and  
            surgeon's or podiatrist's participation or non-participation  
            in a contract with that insurer, hospital service plan or  
            health plan.



          9)Defines 'emergency services and care" as medical screening,  
            examination, and evaluation by a physician and surgeon, or, to  
            the extent permitted by applicable law, by other appropriate  
            licensed persons under the supervision of a physician and  
            surgeon, to determine if an emergency medical condition or  
            active labor exists and, if it does, the care, treatment, and  
            surgery, if within the scope of that person's license,  
            necessary to relieve or eliminate the emergency medical  
            condition, within the capability of the facility; and to  
            determine if a psychiatric emergency medical condition exists,  
            and the care and treatment necessary to relieve or eliminate  
            the psychiatric emergency medical condition, within the  
            capability of the facility.



          10)Requires a health plan, or its contracting medical providers,  
            to provide 24-hour access for enrollees and providers,  
            including, but not limited to, non-contracting hospitals, to  
            obtain timely authorization for medically necessary care, for  
            circumstances where the enrollee has received emergency  
            services, and is stabilized, but the treating provider  
            believes that the enrollee may not be discharged safely.   
            Establishes additional requirements associated with treatment  
            or transfer post stabilization.



          This bill:  








          AB 72 (Bonta)                                       Page 4 of ?
          
          

           Independent Dispute Resolution Process (IDRP)
          1)Requires DMHC and CDI to establish an independent dispute  
            resolution process (IDRP) for the purpose of resoling a claim  
            dispute between a health plan or insurer and a non-contracting  
            individual health professional, as specified, who has provided  
            non-emergency services or treatment for an enrollee or insured  
            at a contracted health facility, as specified.  Requires both  
            parties to participate in the IDRP and the decision to be  
            binding on both parties. 

          2)Requires the parties to exhaust the plan's or insurer's  
            internal process prior to initiating IDRP.

          3)Permits the bundling of claims for the same or similar  
            services provided by the individual health professional.

          4)Permits, notwithstanding 1) above, a dissatisfied party to  
            pursue any right, remedy, or penalty established under any  
            applicable law.

          5)Requires DMHC and CDI to establish conflict-of-interest  
            standards for an IDRP contractor consistent with this bill and  
            existing law, as specified.

          6)Requires DMHC and CDI to provide, upon request of an  
            interested person, a copy of all non-proprietary information,  
            as determined by the director, or insurance commissioner,  
            filed with DMHC or CDI by an independent organization seeking  
            to contract to administer the IDRP.

          7)Exempts Medi-Cal managed care health plans or any entity that  
            enters into a contract with the Department of Health Care  
            Services, as specified, from this bill.

          8)Requires delegated entities to comply with this bill if a  
            health plan or health insurer delegates payment functions, as  
            specified.

          9)Exempts emergency services and care from this bill.

          Payment Standard
          10)Requires the plan or insurer to reimburse the greater of the  
            average contracted rate or 125% of the amount Medicare  
            reimburses on a fee-for-service basis for the same or similar  








          AB 72 (Bonta)                                       Page 5 of ?
          
          
            services in the general geographic region in which the  
            services were rendered to a non-contracting individual health  
            professional for services, as specified, unless otherwise  
            agreed to by the parties.

          11)Defines "average contracted rate" as the average of the  
            contracted rates paid by the health plan, its delegated  
            entity, or an insurer for the same or similar services in the  
            geographic regions.

          12)Requires each plan or insurer to provide to DMHC or CDI by  
            July 1, 2017 in a manner and format specified by DMHC or CDI  
            both of the following:

                  a)        Data listing its average contracted rates for  
                    non-emergency services most frequently provided in  
                    contracted facilities by non-contracting individual  
                    health professionals, as specified, in each geographic  
                    region in which the services are rendered, including  
                    the average contracted rates paid by the plan's  
                    delegated entities.
                  b)        Its methodology for determining the average  
                    contracted rates for these services.  Requires the  
                    methodology to determine an average contracted rate to  
                    assure that the plan or insurer includes the highest  
                    and lowest contracted rates for these services.

          13)Requires each plan's delegated entities to provide data  
            listing its average contracted rates for these types of  
            services in each geographic region in which the services are  
            rendered.

          14)Requires for each year thereafter, the plans, delegated  
            entities and insurers to adjust the rate initially established  
            in 10) - 13) above by the Consumer Price Index (CPI) for  
            Medical Care Services, as published by the United States  
            Bureau of Labor Statistics.

          15)Requires DMHC and CDI to audit the accuracy of the  
            information in 12) above.

          16)Require DMHC and CDI to report by January 1, 2020 on data  
            provided in 12) and 13) above to the Governor and Legislature,  
            as specified.









          AB 72 (Bonta)                                       Page 6 of ?
          
          
          17)Requires a health plan or insurer to authorize and permit  
            assignment of the enrollee's or insured's right, if any, to  
            any reimbursement for health care services covered under the  
            plan contract or insurance policy to a non-contracting  
            individual health professional for these services.

          18)Requires the plan or insurer to provide a form approved by  
            DMHC or CDI for the purpose of 17) above.

          19)Requires the payment made by the health plan or insurer and  
            applicable cost sharing owed by the enrollee or insured to be  
            payment in full for nonemergency services rendered, as  
            specified, in this bill.

          20)Prohibits the amount paid by a plan or insurer for services  
            pursuant to this bill from constituting the prevailing or  
            customary charges, for usual fees to the general public, or  
            other charges for other payers for an individual health  
            professional.

          Patient Out of the Middle
          21)Limits enrollee or insured cost sharing to no more than the  
            same cost sharing that the enrollee or insured would pay for  
            the same covered services received from a contracting  
            individual health professional (in-network cost sharing  
            amount), if the enrollee or insured receives covered services  
            from a contracting health facility at which, or as a result of  
            which, the enrollee or insured receives services provided by a  
            non-contracting individual health professional.  Applies this  
            provision to health plan contracts and insurance policies  
            issued, amended, or renewed on or after January 1, 2017.

          22)Requires the health plan or insurer to collect the in-network  
            cost-sharing amount from the enrollee or insured. 

          23)Prohibits a non-contracting individual health professional  
            from billing or collecting any amount from the enrollee or  
            insured.  Requires any communication to include in 12-point  
            bold type that the communication is not a bill.

          24)Requires the non-contracting individual health professional  
            to affirm in writing that he or she has not attempted to  
            collect payment from the enrollee or insured when submitting a  
            claim to the plan or insurer.









          AB 72 (Bonta)                                       Page 7 of ?
          
          
          25)Requires a refund to the enrollee or insured with interest  
            accruing at a rate 15% per annum after receiving payment from  
            the plan or insurer, if non-contracting individual health  
            professional has received any amount from the enrollee or  
            insured for these services.

          26)Requires cost sharing paid by the enrollee or insured to  
            count toward the limit on annual out-of-pocket expenses, as  
            specified, and any deductible.

          Voluntary Choice of Non-contracting Individual Health  
          Professional
          27)Requires the amount paid when nonemergency services are  
            provided by a non-contracting individual health professional  
            to an enrollee or 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, to  
            be the amount set forth in the enrollee's or insured's  
            evidence of coverage, unless otherwise agreed to by the  
            parties.  Excludes this payment from the IDRP.

          28)Permits a non-contracting individual health professional from  
            billing or collecting from the enrollee or insured the  
            out-of-network cost sharing, if applicable, only when the  
            enrollee or insured consents in writing and the written  
            consent satisfies the following:

                  a)        The enrollee or insured consents in writing at  
                    least 24 hours in advance of care; 
                  b)        The consent is obtained separately from the  
                    consent for any other part of the care or procedure,  
                    and not obtained by the facility or its  
                    representative, at the same time as admission or at  
                    any time when the enrollee or insured is being  
                    prepared for surgery or any other procedure; 
                  c)        A written estimate is provided at the time of  
                    consent of the enrollee's or insured's total  
                    out-of-pocket cost of care, based on the  
                    professional's billed charges, and the collection of  
                    more than the estimate without enrollee's or insured's  
                    consent is not allowed; 
                  d)        The consent also must advise the enrollee or  
                    insured that he or she may seek care from a contracted  
                    provider or contact the plan or insurer to arrange to  
                    receive care from a contracted provider for lower  








          AB 72 (Bonta)                                       Page 8 of ?
          
          
                    out-of-pocket costs; 
                  e)        The consent and estimate is provided in the  
                    language spoken by the enrollee or insured; and, 
                  f)        The consent advises the enrollee or insured  
                    that cost sharing may not count toward annual  
                    out-of-pocket maximum or deductible.

          29)Provides that a non-contracting individual health  
            professional who fails to comply with 27) and 28) above has  
            not obtained written consent and therefore 21) - 25) above  
            applies.

          30)Establishes requirements on non-contracting individual health  
            professionals on collections from enrollees and insureds and  
            assignment of debt.

          31)Defines "contracting health facility" to include but not be  
            limited to a licensed hospital, an ambulatory surgery or other  
            outpatient setting, a laboratory, a radiology or imaging  
            center, or any other similar provider as DMHC or CDI may  
            define, by regulation, as specified.

          32)Defines a "non-contracting individual health professional" as  
            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 plan, but not  
            a dentist, licensed pursuant to the Dental Practice Act.

          33)Provides that 21) - 31) above shall not be construed to  
            exempt a plan or provider from specified requirements  
            including the holding in Prospect Medical Group, Inc., v.  
            Northridge Emergency Medical Group (2009), that an emergency  
            room physician is prohibited form billing an enrollee of a  
            health plan directly for sums that the health plan failed to  
            pay for the enrollee's emergency room treatment.

           FISCAL  
          EFFECT  :  This bill has not been analyzed by a fiscal committee.

           PRIOR  
          VOTES  :  
          
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          |Assembly Floor:                     |Not relevant                |
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          AB 72 (Bonta)                                       Page 9 of ?
          
          
          |Assembly Appropriations Committee:  |Not Relevant                |
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          |Assembly Health Committee:          |Not Relevant                |
          |                                    |                            |
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          COMMENTS  :
          1)Author's statement.  According to the author, AB 72 protects  
            patients from surprise medical bills when they follow the rules of  
            their health plan by going to an in-network hospital, lab, imaging  
            center or other health care facility. Patients would only be  
            responsible for their in-network cost sharing and would be  
            prohibited from getting outrageous out-of-network bills from  
            doctors they did not choose. Surprise medical bills wreak havoc on  
            people's finances and their ability to pay for basic necessities.  
            The bill also provides certainty for doctors and insurers and  
            keeps our health care costs under control. Insurers must reimburse  
            doctors a fair rate for their services, and doctors are assured a  
            minimum payment in statute. The Affordable Care Act requires all  
            consumers to have health coverage, and it is the state's  
            responsibility to ensure patients are safeguarded from hidden  
            costs unfairly imposed upon them when they have followed their  
            insurers' rules.

          2)Out-of-network services and surprise bills.  A recent survey  
            commissioned by the Consumer Reports National Research Center  
            found that nearly one third of privately insured Americans  
            received a surprise medical bill where their health plan paid  
            less than expected in the past two years. Among the 2,200  
            adult U.S. respondents, nearly one out of four got a bill from  
            a doctor that was unexpected. Survey findings also suggest  
            that consumers overall seem largely confused when it comes to  
            their rights to fight surprise bills.  Based on the California  
            respondents to this survey, one in four privately insured  
            Californians faced surprise medical bills.  One quarter of  
            Californians who had hospital visits or surgery in the past  
            two years were charged an out-of-network rate when they  
            thought the provider was in-network.  63% assume doctors at an  
            in-network hospital are also in-network.

          3)Unfair claims practices.  AB 1455 (Scott, Chapter 1827,  
            Statutes of 2000) prohibits unfair claims practices, and the  
            resulting regulations detailed requirements health plans must  
            meet in processing and paying claims for both contracting and  
            non-contracting providers.  The AB 1455 regulations define  








          AB 72 (Bonta)                                       Page 10 of ?
          
          
            reimbursement of a claim for non-contracting providers as the  
            "reasonable and customary value," based on statistically  
            credible information that is updated at least annually, and  
            that takes into consideration the following specified  
            criteria:  a) the provider's training, qualifications, and  
            length of time in practice; b) the nature of the services  
            provided; c) the fees usually charged by the provider; d)  
            prevailing provider rates charged in the general geographic  
            area in which the services were rendered; e) other aspects of  
            the economics of the medical provider's practice that are  
            relevant; and, f) any unusual circumstances in the case.   
            These regulations codified the factors for determining  
            non-contracted provider reimbursement as outlined in Gould v.  
            Workers' Compensation Appeals Board, City of Los Angeles,  
            (1992) 4 Cal.App.4th 1059, 1071.  Consequently, the AB 1455  
            regulations are often referred to as requiring payments for  
            non-contracting providers according to the "Gould criteria."   
            More recently in Children's Hospital Central California v.  
            Blue Cross of California et.al, (2014) 226 Cal.App4th 1260,  
            172. the appellate court determined that the Gould criteria  
            includes more than the charges billed by the provider.   
            Charges are just one data point and payments and rates  
            accepted by other payors could also be considered.  

          4)IDRP.  Both CDI and DMHC have voluntary IDRPs.  CDI advises  
            providers to first attempt to resolve disputes with the  
            insurance company.  According to CDI the insurer is required  
            to resolve each provider dispute consistent with applicable  
            law and issue a written determination within 45 working days  
            after the date of receipt of the provider dispute.  
          According to the DMHC, participation in IDRP is voluntary and  
            non-binding.  Parties are encouraged to comply with the  
            decision issued by the IDRP External Reviewer.  Non-contracted  
            providers who deliver EMTALA-required emergency services  
                                                                         ("Providers") working with health plans or capitated providers  
            ("Payers") are eligible to submit a IDRP concerning the  
            "reasonable and customary" value of services rendered.  A  
            provider may request review through the IDRP for an individual  
            claim or for multiple claims (up to a total of 50  
            substantially similar claims.)  Eligible claim disputes are  
            those disputes that are subject to DMHC jurisdiction and meet  
            each of the following four criteria: 1) the disputed claim is  
            limited to emergency services rendered by non-contracted  
            physicians or hospitals, 2) the services were rendered within  
            the last four years, 3) the dispute is limited to disagreement  








          AB 72 (Bonta)                                       Page 11 of ?
          
          
            concerning the reasonable and customary value of the services  
            rendered, and 4) the Provider has completed the Payer's  
            dispute resolution process.

          5)Related legislation.  AB 533 (Bonta) would have required DMHC  
            and CDI to establish a binding IDRP for claims for  
            non-emergency covered services provided at contracted health  
            facilities by a non-contracting health care professional.  AB  
            533 limits enrollee and insured cost sharing for these covered  
            services to no more than the cost sharing required had the  
            services been provided by a contracting health professional;  
            and requires the 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 geographic area in which the  
            services were rendered.  AB 533 failed passage on the Assembly  
            Floor.

            SB 1252 (Stone) would have required when a medical procedure  
            is scheduled to be performed on a patient, the general acute  
            care hospital, surgical clinic, and the attending physician,  
            as applicable, to notify the patient, in writing, of the net  
            costs to the patient for the medical procedure being done, as  
            provided, and requires disclosure, in writing, if any of the  
            physicians providing medical services to the patient are not  
            contracted with the patient's health care service plan or  
            health insurer and the costs for which the patient would be  
            responsible as a result. SB 1252 was held in the Senate Health  
            Committee was set for hearing in the Senate Health Committee,  
            but not heard per the request of the author.

          6)Prior legislation. AB 1579 (Campos of 2012), would have  
            required issuers to pay a non-contracting dental provider  
            directly for covered services rendered to an enrollee or  
            insured in certain circumstances.  AB 1579 was set for hearing  
            in the Senate Health Committee, but not heard per the request  
            of the author.

            SB 1373 (Lieu of 2012), would have required, when an enrollee  
            or insured seeks care from a non-contracting provider, the  
            provider to provide a specified written notice to the enrollee  
            or insured informing the enrollee or insured that the provider  
            is not in the enrollee's or insured's plan or provider  
            network, as specified.  Would have prohibited a health  
            facility or a provider group from holding itself out as being  








          AB 72 (Bonta)                                       Page 12 of ?
          
          
            within a plan network unless all of the individual providers  
            providing services at the facility or with the provider group  
            are within the plan network.  This bill failed passage by the  
            Senate Health Committee.

            SB 981 (Perata of 2008), would have prohibited non-contracting  
            hospital ER physicians from directly billing enrollees of  
            health plans licensed by DMHC under the Knox-Keene Health Care  
            Service Plan Act of 1975, other than allowable copayments and  
            deductibles, and would have established statutory standards  
            and requirements for claims payment and dispute resolution  
            related to non-contracting ER physician claims, including an  
            IDRP.  SB 981 was vetoed by Governor Schwarzenegger.  The veto  
            message is below: 

                    This bill does not solve the problem facing California  
                    patients and only serves to highlight one of the many  
                    reasons I introduced my comprehensive health care  
                    reform proposal. Californians are paying a hidden tax  
                    on their health care which subsidizes care for the  
                    uninsured and allows providers to shift costs when  
                    they are not fully reimbursed by their payers. The  
                    insured population bears the brunt of this hidden tax  
                    and the larger it gets, fewer people are able to  
                    afford coverage.

                    This bill, in essence, asks for California to embrace  
                    this cost-shift, reward non-contracting physicians by  
                    assuring their continued financial slice of the pie,  
                    and allow the status quo to continue. I cannot agree  
                    to a measure that is a piecemeal approach to our  
                    broken health care system. 

                    Our health care system relies on physicians, hospitals  
                    and health plans to work together. The patient that  
                    pays health insurance premiums should not be part of a  
                    payment dispute between these sophisticated market  
                    players. It is unfortunate that this bill takes sides  
                    in the dispute within the health care industry instead  
                    of taking the side of patients.

                    Until the Legislature can send me legislation that  
                    removes that patient from all disputes involving these  
                    parties, I direct my Department of Managed Health Care  
                    to aggressively continue in its efforts to identify  








          AB 72 (Bonta)                                       Page 13 of ?
          
          
                    unfair payment practices and keep patients from being  
                    caught in the middle.


            AB 1203 (Salas, Chapter 603, Statutes of 2008), established  
            uniform requirements governing communications between health  
            plans and non-contracting hospitals related to  
            post-stabilization care following an emergency, and prohibits  
            a non-contracting hospital from billing a patient who is a  
            health plan enrollee for post-stabilization services, except  
            as specified.

            AB 2220 (Jones, 2008), would have allowed parties to a  
            contract negotiation between ER physicians and health care  
            service plans or their contracting risk bearing organization  
            to, on a one-time basis per contract negotiation, invoke a  
            mandatory mediation process to assist in resolving any  
            remaining issues in the contract negotiations, as specified.   
            AB 2220 was vetoed by Governor Schwarzenegger.  The veto  
            message is below:

                    "I applaud the author for seeking to address one of  
                    the most important consumer issues facing patients  
                    today. This bill attempts to change the market dynamic  
                    in a way that encourages contracts between health  
                    plans and providers. It is a good starting point.  
                    Unfortunately, it does not contain the comprehensive  
                    solution that patients need and deserve when it comes  
                    to addressing the disgraceful practice of balance  
                    billing.

                    I believe the author and Administration can work  
                    together to solve this issue next year. I look forward  
                    to our combined efforts that will take the patient out  
                    of the middle of these payment disputes."

            AB 2839 (Huffman of 2008), would have prohibited a health plan  
            or health insurer from requiring providers to execute unfair  
            and unreasonable contracts, as specified, as a condition of  
            entering into negotiations with the health plan or insurer.   
            AB 2839 was held on the Assembly Appropriations Committee  
            Suspense file.  

            SB 389 (Yee of 2008), would have prohibited a hospital-based  
            physician, as defined, from seeking payment from individual  








          AB 72 (Bonta)                                       Page 14 of ?
          
          
            enrollees for services rendered and would have required such  
            physicians to seek reimbursement solely from the enrollee's  
            health care service plan or the contracting risk-bearing  
            organization.  Also the bill would have required DMHC and CDI,  
            on or before March 1, 2008, to implement an independent  
            provider dispute resolution system, in consultation with  
            representatives of health plans or insurers, providers, and  
            consumer representatives.  SB 389 died in the Senate without a  
            committee hearing.

            SB 697 (Yee, Chapter 606, Statutes of 2008), prohibits a  
            health care service provider from seeking reimbursement for  
            services furnished to a person enrolled in the Healthy  
            Families Program or the Access for Infants and Mothers Program  
            from other than the participating health plan covering that  
            person.  

            AB 1X 1 (Nunez of 2008), would have enacted the Health Care  
            Security and Cost Reduction Act, a comprehensive health reform  
            proposal.  Among other provisions related to health insurance  
            markets and hospital financing, AB 1X 1 would have prohibited  
            a non-contracting hospital from billing any patient, who has  
            coverage for emergency and post stabilization health care  
            services, for those services, as defined, except for  
            applicable copayments and cost sharing.  AB 1X 1 died in the  
            Senate Health Committee.

            SB 417 (Ortiz of 2005), would have prohibited a hospital-based  
            physician, as defined, from engaging in a pattern of billing a  
            patient for covered services in excess of applicable  
            co-payments, deductibles or coinsurance, unless specified  
            conditions are met, and required providers to provide specific  
            notice requirements when they send a bill or statement to a  
            patient.  SB 417 died in Assembly Health Committee.

            SB 364 (Perata of 2005), would have allowed an emergency  
            physician who has a contract with a health plan, but does not  
            have a contract with a medical group or other entity that has  
            been assigned responsibility for paying claims by the health  
            plan, to submit a claim to the plan, and requires the plan to  
            pay the claim to the terms of the contract.  SB 364 died on  
            Assembly floor.

            AB 1321 (Yee of 2005), would have prohibited hospital-based  
            anesthesiologists, radiologists, pathologists, and emergency  








          AB 72 (Bonta)                                       Page 15 of ?
          
          
            room physicians, or a group of such physicians, from seeking  
            payment for services, other than allowable copayments and  
            deductibles; from individual enrollees of a health plan.  AB  
            1321 was held on the Assembly Appropriations Suspense File.

            SB 367 (Speier, Chapter 723, Statutes of 2005), enacted the  
            Patient and Provider Protection Act in the Insurance Code and  
            revises the way complaints from health care providers about  
            health insurers are handled by CDI. 

            AB 755 (Chan of 2005), would have required provider contracts  
            entered into with contracting agents, as defined, to include  
            specific provisions and would have prohibited contracting  
            agents from selling, leasing, assigning, transferring, or  
            conveying a list of contracted providers and their discounted  
            rates to any entity that is not a payer.  AB 757 died on the  
            Assembly Appropriations Suspense file.

            AB 1686 (Pacheco of 2004), would have encouraged county  
            medical societies to establish a process to resolve billing  
            disputes between a contracting provider group and a  
            non-contracting provider group.  AB 1686 died in the Assembly.

            AB 2389 (Koretz of 2003), would have required a health plan or  
            health insurer that owns a preferred provider organization to  
            pay non-contracting physicians a reasonable and customary fee  
            for hospital-based anesthesiology, radiology, or pathology  
            services provided to the plan's enrollees. Would have  
            prohibited those physicians from balance billing an enrollee  
            for any charge that exceeds the reasonable and customary fee.   
            AB 2389 died in the Senate.

            AB 2907 (Cohn, Chapter 925, Statutes of 2002), established the  
            Health Care Providers Bill of Rights and prohibits certain  
            provisions in contracts between a health plan or a health  
            insurer and a health care provider.

            AB 1455 (Scott of 2000), bars health plans from engaging in  
            unfair payment patterns in the reimbursement of providers.  AB  
            1455 also includes a number of other provisions regarding  
            payment practices of health plans, including requiring health  
            plans to make their dispute resolution process available to  
            non-contracting providers.

          7)Support.  Health Access California writes that patients know  








          AB 72 (Bonta)                                       Page 16 of ?
          
          
            they have to follow their health plan or insurer's rules and  
            go to in-network providers and facilities to keep their  
            out-of-pocket costs low.  Unfortunately, many patients end up  
            getting a surprise medical bill for hundreds or thousands of  
            dollars from an anesthesiologist, radiologist, pathologist or  
            other specialist who turns out to be out-of-network, one the  
            patient never met, did not choose, and often has no control  
            over selecting.  These surprise bills do not count toward the  
            annual out-of-pocket maximum so a consumer can find themselves  
            exposed to costs well in excess of $6,600 a year.  The  
            California Labor Federation indicates patients may not even be  
            able to rely on their hospitals to tell them if they will be  
            treated by an out-of-network doctor, since doctors are not  
            direct employees of most hospitals, they are independent  
            contractors and not all necessarily in the same network as the  
            hospital.  The Affordable Care Act was supposed to reduce  
            medical debt and bankruptcies.  Surprise bills threaten to  
            undo that work by subjecting patients to astronomically high  
            bills they were not expecting.  This bill takes the burden off  
            of patients of dealing with surprise bills and negotiating  
            with the provider.  Consumers Union writes health insurance  
            coverage should provide protection against overwhelming  
            medical bills and debt.  Consumers should not pay the price  
            for the complicated relationships between doctors, facilities  
            and health plans.  This bill is a balanced solution that  
            protects patients from unfair surprises, while also requiring  
            insurers to reimburse out-of-network doctors at in-network  
            facilities fairly, at a minimum, the greater of the average  
            contracted rate or 125% of Medicare.  It also allows doctors  
            to appeal for a higher payment through a streamlined IDRP.
          
          8)Opposition.  The California Medical Association (CMA) writes  
            that this bill does provide a framework for a comprehensive,  
            fair solution to the surprise billing issue, but amendments  
            are needed to complete the legislation.  In order to provide  
            some balance, CMA indicates this bill contains a provision  
            whereby the health insurance plan shall collect any in-network  
            cost sharing amount a patient is responsible for if they  
            receive out of network care pursuant to this bill. CMA  
            believes this provision is essential in providing balance  
            between the physicians and health insurance companies as well  
            as clearly details for the consumer to what portion of the  
            care they are required to pay.  Health plans and insurers  
            collect premiums and pay claims according to contracts they  
            sign with enrollees and medical providers, billing is the core  








          AB 72 (Bonta)                                       Page 17 of ?
          
          
            of their business. CMA has great concerns about the health  
            plans and insurers using their own methodology to determine  
            what their average contracted rate should be as each plan  
            could create their own metrics in determining the average  
            contracted rate.  CMA asks that a consistent standard be  
            applied to all health insurance plans that actually reflects  
            the average rate paid for each in-network service in a given  
            year and have provided the authors and the committee with  
            language to that effect.  CMA believes that on-call  
            specialists who provide post stabilization service should be  
            exempted from this bill.  Physicians volunteer to participate  
            in on-call panels and provide care to all patients regardless  
            of ability to pay or insurance coverage similar to emergency  
            room physicians.  One unintended consequence of this bill  
            would be to limit access to on-call specialists who will  
            become more reticent to volunteer.  The California Chapter of  
            the American College of Cardiology believes this bill is an  
            improvement over AB 533 but has a number of concerns that the  
            bill may adversely affect the ability of patients to receive  
            quality care in a time fashion.  The determination of average  
            contract rates is problematic.  The geographic regions are way  
            too broad and may not reflect the local cost of care or local  
            reimbursement levels.  Contracted rates with the largest  
            physician groups would be averaged with contract rates from  
            solo physicians and both lead to lower reimbursements rates  
            for non-contracted physicians.  This will lead to a high  
            volume of IDRP claims, and the IDRP process remains largely  
            undefined.  No payment standard is set (recommend Gould), no  
            fees are established and both parties are required to pay.  If  
            the fees are too high it will be a barrier to physician  
            participation.  The losing party should pay the fees.  The  
            consent and estimate process is problematic and they support  
            CMA's amendments to fix language spoken and updating the  
            estimate if complications occur.
          
          9)Policy comments.

               a)     Differences between AB 533 and AB 72. The most  
                 significant difference between AB 533 and AB 72 is the  
                 payment standard.  AB 533 would have set the payment  
                 standard at the Medicare payment rate.  AB 72 sets it at  
                 the greater of 125% of Medicare or average contracted  
                 rates of each health plan based on a single benchmark  
                 year with an annual adjustment equal to the consumer  
                 price index for medical care services. In addition to  








          AB 72 (Bonta)                                       Page 18 of ?
          
          
                 this higher payment standard, AB 72 allows non-contracted  
                 individual health professionals to receive assignment of  
                 benefits, which requires the health plan or insurer to  
                 make payment directly to the provider rather than issuing  
                 payment to the patient who in turn pays the provider.  AB  
                 72 allows either party to pursue legal remedies if  
                 dissatisfied with the IDRP. AB 72 requires the health  
                 plan or insurer to collect the copays from the patient,  
                 instead of the provider.  The burden of collecting  
                 copayment would remain on contracting providers.   
                 Amendments drafted by the authors would delete this  
                 provision from the bill. AB 72 allows for a 24 hour  
                 consent period prior to a patient voluntarily choosing a  
                 non-contracted individual health professional, rather  
                 than the "at least three business days" required in AB  
                 533.  AB 72 limits the reporting of adverse information  
                 to consumer credit reporting agencies and prohibits wage  
                 garnishment or liens on primary residences.
               
               b)     How is average contracted rate determined?  The bill  
                 requires the methodology to include the highest and  
                 lowest contracted rates in order to prevent the rates  
                 from being weighted in favor of large, dominant provider  
                 groups who can command higher prices. The bill also  
                 requires the methodology to be provided to the  
                 departments along with data listing average contracted  
                 rates for services most frequently subject to the bill.  
                 The departments are given authority to audit the  
                 information provided by the plans and insurers.  
                 Amendments requested by the opposition and accepted by  
                 the authors clarify that the rates are based on  
                 contracted commercial rates.  However, it is not clear  
                 what authority the departments will have to require use  
                 of a consistent methodology, if necessary.
               
               c)     Is a guaranteed raise in rates appropriate and if  
                 so, by how much? The bill includes an adjustor to the  
                 average contracted rate benchmark of the CPI for Medical  
                 Care Services.  Medical Care Services is organized into  
                 three components: Professional Services, Hospital and  
                 Related Services, and Health Insurance.  Some have  
                 suggested it would be more appropriate to use the CPI for  
                 Professional Services, which is more specific to  
                 physicians, dentists, eye care providers, and other  
                 medical providers. 








          AB 72 (Bonta)                                       Page 19 of ?
          
          
               
          10)Amendments requested by the authors. The Assemblymembers  
            authoring this bill request the Senate Health Committee adopt  
            amendments contained in the attached mock-up.  The amendments  
            would:

               a)     Require the plan and insurer to implement the  
                 determination obtained through the IDRP.
               b)     Clarify that the payment standard is based on the  
                 average of the contracted commercial rates paid by the  
                 health plan or insurer.
               c)     Clarify that the base payment year for the average  
                 contracted rates is 2015 and that the CPI for medical  
                 care services adjuster be applied for each year after  
                 December 31, 2015.
               d)     Require data on average contracted rates provided to  
                 DMHC and CDI to be confidential and not subject to the  
                 Public Records Act.
               e)     State that the payment made pursuant to this bill is  
                 payment in full unless either party uses the IDRP or  
                 other lawful means pursuant to 4) above in the bill  
                 summary.
               f)     Clarify that this bill does not apply to emergency  
                 services and stabilization, as specified.
               g)     Delete the requirement that the health plan or  
                 insurer collects the copayment.
               h)     Require the plan or insurer to notify the  
                 non-contracting individual health professional of the  
                 in-network cost sharing owed by the enrollee or insured.
               i)     Permit the non-contracting individual health  
                                                                                 professional to collect only the in-network cost sharing  
                 owed by the enrollee or insured.
               j)     Permit the non-contracting individual health  
                 professional to affirm that she or he has not attempted  
                 to collect any payment from the enrollee or insured other  
                 than in writing.
               aa)    Require any overpayment from the enrollee or insured  
                 to be refunded within 30 days of receiving notice from  
                 the plan of the in-network cost-sharing amount.
               bb)    Permit the collection of more than the written  
                 estimate of the enrollee or insureds total out-of-pocket  
                 cost of care when voluntarily choosing the services of  
                 the non-contracting individual health professional if  
                 circumstances arise during the delivery of services that  
                 were unforeseen at the time the estimate was given that  








          AB 72 (Bonta)                                       Page 20 of ?
          
          
                 would require the provider to change the estimate.
               cc)    Require the consent and estimate for voluntary  
                 services to be provided in the language spoken by the  
                 enrollee if the language is a Medi-Cal threshold  
                 language, as specified.
               dd)    Delete "any other similar provider as DMHC or CDI  
                 may define, by regulation, as a  health facility for  
                 purposes of this bill," in the definition of contracted  
                 health facility.
               ee)    Delete "that an emergency room physician is  
                 prohibited from billing an enrollee of a health care  
                 service plan directly for sums that the health care  
                 service plan has failed to pay for the enrollee's  
                 emergency room treatment," from the reference to Prospect  
                 v. Northridge.
               ff)    Make several other clarifying changes.

           SUPPORT AND OPPOSITION  :
          Support:  California Labor Federation (cosponsor) 
                    Health Access California (cosponsor)
                    Association of California State Supervisors
                    California Alliance for Retired Americans
                    California Black Health Network
                    California Pan-Ethnic Health Network
                    California Professional Firefighters
                    California State Retirees
                    CALPIRG
                    Children Now
                    Congress of California Seniors
                    Consumers Union
                    Hunger Action Los Angeles
                    Inland Empire Immigrant Youth Coalition
                    NAMI California 
                    National Health Law Program
                    National Multiple Sclerosis Society CA Action Network
                    The Children's Partnership
                    USW Local 675
          
          Oppose:California Society of Anesthesiologists (oppose unless  
          amended)
                    California Chapter of the American College of  
                    Cardiology
                    California Medical Association

                                      -- END --








          AB 72 (Bonta)                                       Page 21 of ?