BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 72|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: AB 72
Author: Bonta (D), Bonilla (D), Dahle (R), Gonzalez (D),
Maienschein (R), Santiago (D), and Wood (D)
Amended: 8/4/16 in Senate
Vote: 21
PRIOR VOTES NOT RELEVANT
SENATE HEALTH COMMITTEE: 7-1, 6/29/16 (Pursuant to Senate Rule
29.10)
AYES: Hernandez, Hall, Mitchell, Monning, Nielsen, Pan, Roth
NOES: Nguyen
NO VOTE RECORDED: Wolk
SENATE APPROPRIATIONS COMMITTEE: 6-0, 8/17/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza
NO VOTE RECORDED: Nielsen
SUBJECT: Health care coverage: out-of-network coverage
SOURCE: California Labor Federation
Health Access California
DIGEST: This bill 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
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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.
ANALYSIS:
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) 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 six specified criteria.
3) 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.
This bill:
1) Requires DMHC and CDI to establish an independent dispute
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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 independent organization to base its decision
regarding the appropriate reimbursement on all relevant
information, including, but not limited to, the reimbursement
amount suggested by either party.
3) 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
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.
4) 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.
5) Requires CDI and DMHC to specify a methodology that plans
and delegated entities shall use to determine the average
contracted rates for the services subject to this bill,
taking into account the specialty of the individual health
professional and the geographic region in which the services
are rendered. Requires the methodology to include the
highest and lowest contracted rates.
6) Requires for each year thereafter, the plans, delegated
entities and insurers to adjust the rate by the Consumer
Price Index (CPI) for Medical Care Services, as published by
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the United States Bureau of Labor Statistics.
7) Requires health plans and insurers to report the number of
out-of-network payments made for services subject to this
bill, as well as other data sufficient to determine the
prevalence of out-of-network individual health professionals
at specific facilities, as specified.
8) 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.
9) Prohibits a non-contracting individual health professional
from billing or collecting any amount from the enrollee or
insured.
10) 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
plan that includes coverage for out-of-network benefits, 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.
11)Permits a non-contracting individual health professional to
bill or collect 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
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consent satisfies specified requirements.
12)Provides that a non-contracting individual health
professional who fails to comply with 11) above has not
obtained written consent and therefore 8) above applies.
13)Establishes requirements on non-contracting individual
health professionals on collections from enrollees and
insureds and assignment of debt.
14)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.
15) 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.
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. This bill also provides certainty for
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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. Sixty-three percent
assume doctors at an in-network hospital are also in-network.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee:
1)One-time costs of about $500,000 for the development of
regulations and review of plan filings by DMHC (Managed Care
Fund).
2)Annual costs of $1.5 million to $3 million per year for IDRP
that DMHC would convene to settle a dispute between a provider
and a health plan (Managed Care Fund).
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3)One-time costs of about $600,000 for the development of
regulations and review of plan filings by CDI (Insurance
Fund).
4)Ongoing costs of $1 million per year for the IDRP that CDI
would convene to settle a dispute between a provider and a
health insurer (Insurance Fund).
SUPPORT: (Verified 8/11/16)
California Labor Federation (co-source)
Health Access California (co-source)
American Cancer Society Cancer Action Network
Americans for Democratic Action, Southern California
Association of California State Supervisors
California Alliance for Retired Americans
California Association of Health Underwriters
California Black Health Network
California Coverage and Health Initiatives
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
Los Angeles County Professional Peace Officers Association
NAMI California
National Health Law Program
National Multiple Sclerosis Society California Action Network
The Children's Partnership
United Way of California
USW Local 675
Western Center on Law and Poverty
OPPOSITION: (Verified8/11/16)
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California Chapter of the American College of Cardiology
California Medical Association
California Society of Anesthesiologists
ARGUMENTS IN SUPPORT: Health Access California writes that
patients know 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.
ARGUMENTS IN 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. CMA believes
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requiring health plans to collect copays is essential in
providing balance between the physicians and health insurance
companies as well as clearly details for the consumer 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 of their business. CMA has great concerns about the
methodology to determine what average contracted rates should
be. 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 (Bonta, 2015)
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.
Prepared by:Teri Boughton / HEALTH / (916) 651-4111
8/15/16 20:01:51
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