BILL ANALYSIS                                                                                                                                                                                                    



                                                                      AB 72


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          Date of Hearing:  August 30, 2016


                            ASSEMBLY COMMITTEE ON HEALTH


                                   Jim Wood, Chair


          AB 72  
          (Bonta) - As Amended August 25, 2016


          SUBJECT:  Health care coverage:  out-of-network coverage


          SUMMARY:  Establishes a payment rate, which is the greater of  
          the average of a health care service plan (health plan) or  
          health insurer's contracted rate, as specified, or 125% of the  
          amount Medicare reimburses for the same or similar services; and  
          an independent dispute resolution process (IDRP) for claims and  
          claim disputes related to covered services provided at a  
          contracted health facility by a noncontracting individual health  
          care professional for health plan contracts and health policies  
          issued, amended, or renewed on or after July 1, 2017.  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. 


          The Senate amendments delete the Assembly-approved version of  
          this bill, and instead:


          IDRP


          1)Requires the Department of Managed Health Care (DMHC) and  
            California Department of Insurance (CDI) to establish an IDRP,  








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            by September 1, 2017, for the purpose of processing and  
            resolving a claim dispute between a health plan or health  
            insurer and a noncontracting individual health professional  
            for covered services from a contracted health facility by a  
            noncontracting individual health professional, as specified.

          2)Requires the noncontracting individual health professional to  
            complete the health plan or health insurer's internal process  
            prior to initiating IDRP.

          3)Requires DMHC and CDI to establish uniform written procedures  
            and other guidelines, and reasonable and necessary fees to be  
            paid by both parties.  Permits the bundling of claims  
            submitted to the same health plan or health insurer or the  
            same delegated entity for the same or similar services by the  
            same noncontracting individual health professional.  Permits a  
            physician group, independent practice association (IPA), or  
            other entity authorized to act on behalf of a professional to  
            initiate and participate in the IDRP.  Requires DMHC and CDI  
            to contract with one or more independent organization to  
            conduct the proceedings.  Requires DMHC and CDI to establish  
            conflict-of-interest standards consistent with this bill and  
            existing law.  Permits DMHC and CDI to contract with the same  
            independent organization.

          4)Requires DMHC and CDI to provide, upon request of an  
            interested person, a copy of all nonproprietary information,  
            as specified, and permits DMHC or CDI to charge a nominal fee  
            to cover the costs of providing a copy.  

          5)Exempts IDRP contracts from the Public Contract Code, as  
            specified.

          6)Requires the IDRP decision to be binding on both parties and  
            requires the health plan or health insurer to implement the  
            IDRP determination.  Permits a dissatisfied party to pursue  
            any right, remedy, or penalty established under any other  
            applicable law.  









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          7)Exempts Medi-Cal managed care health plans or any entity that  
            contracts with the Department of Health Care Services (DHCS)  
            from this bill.

          8)Requires delegated entities, including medical groups and  
            IPAs, as specified, to comply with this bill.    

          9)Exempts emergency services and care, as defined, from this  
            bill.  

          10)Specifies that this bill does not alter the health plan or  
            health insurer's obligation of timely authorization of  
            post-stabilization services and time for reimbursement of  
            claims consistent with existing law.  

          11)Permits DMHC and CDI to implement and interpret the IDRP  
            process without taking regulatory action, until regulations  
            are adopted.  

          12)Requires DMHC and CDI to report, in a manner and format  
            specified by the Legislature, data and information provided in  
            the IDRP to the Governor and Legislature by January 1, 2019.

          Reimbursement Rate


          13)Requires, effective July 1, 2017, the health plan and health  
            insurer to reimburse the greater of the average contracted  
            rate or 125% of the amount Medicare reimburses on a  
            fee-for-service (FFS) basis for the same or similar services  
            in the general geographic region in which the services  
            specified in this bill are provided, unless otherwise agreed  
            to by the health plan or health insurer and noncontracting  
            individual health professional.  Defines average contracted  
            rate as the average of the contracted commercial rates paid by  
            the health plan or health insurer or delegated entity for the  
            same or similar services in the geographic region.

          14)Requires each health plan or health insurer and its delegated  








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            entities to provide to DMHC or CDI by July 1, 2017, all of the  
            following:

             a)   Data listing its average contracted rate for services  
               most frequently provided in contracted facilities by  
               noncontracting individual health professionals, as  
               specified, in each geographic region in which the services  
               are rendered for the calendar year 2015;
             b)   Its methodology for determining the average contracted  
               rate for services provided in contracted facilities by  
               noncontracting individual health professionals.  Requires  
               the average contracted rate methodology to include the  
               highest and lowest contracted rates for the calendar year  
               2015; and, 
             c)   The policies and procedures used to determine the  
               average contracted rates.

          15)Requires the health plan or health insurer and the delegated  
            entities, to adjust the rate initially submitted in this bill  
            by the Consumer Price Index (CPI) for Medical Care Services,  
            as published by the United States Bureau of Labor Statistics,  
            for each calendar year after the health plan and health  
            insurer's initial submission and until DMHC and CDI specify an  
            average contracted methodology.  

          16)Requires DMHC and CDI to specify an average contracted rate  
            methodology by January 1, 2019.  Requires the methodology to  
            take into account, at a minimum, information from IDRP, the  
            individual health professional's specialty, and the geographic  
            region in which the services are rendered.  Requires the  
            methodology to include the highest and lowest contracted  
            rates.  Requires health plans and health insurers to provide  
            its policies and procedures to DMHC or CDI.

          17)Permits a health plan that does not pay a statistically  
            significant number or dollar amount of claims for services  
            covered under this bill, to demonstrate to DMHC that it has  
            access and will use a statistically credible database  
            reflecting rates paid to noncontracting individual health  








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            professionals for services provided in a geographic region.  

          18)Requires DMHC or CDI to audit the accuracy of the filed  
            information and to keep the average contracted rate data  
            confidential and not subject to disclosure under the Public  
            Records Act.  

          19)Requires DMHC or CDI to consult with interested parties in  
            the development of the standardized methodology described in  
            16) above and to hold its first stakeholder meeting no later  
            than July 1, 2017.  

          20)Requires health plans or health insurers, in its network data  
            reporting submissions, to include the number of payments made  
            to noncontracting individual health professionals for services  
            described in this bill, 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.  Requires DMHC  
            and CDI to include a summary of this information and its  
            findings regarding the impact of this bill on health plan  
            contracting and network adequacy in its January 1, 2019  
            report, as described in 12) above.  

          21)Requires health plans and health insurers to meet existing  
            network adequacy requirements, including but not limited to,  
            inpatient hospital and specialist physician services, and  
            requires DMHC or CDI to adopt additional regulations related  
            to those services, if necessary.  Specifies that this bill  
            does not limit the director or commissioner's authority.  

          22)Defines, for purposes of Medicare FFS reimbursement,  
            geographic regions as those specified for physician  
            reimbursement for Medicare FFS by the United States Department  
            of Health and Human Services.  

          23)Requires a health plan or health insurer to authorize and  
            permit assignment of the enrollee or insured's right, if any,  
            to any reimbursement for health care services covered under  








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            the health plan or health policy to a noncontracting  
            individual health professional who furnishes the health care  
            services at a contracted facility.  

          24)Requires a noncontracting individual health professional,  
            health plan, or health insurer, or a delegated entity who  
            disputes the claims reimbursement to utilize IDRP.  

          25)Provides that the amount paid by the health plan or health  
            insurer for nonemergency services provided by a noncontracting  
            individual health professional to enrollees or insureds who  
            voluntarily choose to use his or her out-of-network benefit  
            for services covered by a health plan or health policy that  
            includes out-of-network benefits, be the amount set forth in  
            the enrollee or insured's evidence of coverage or policy,  
            unless otherwise agreed to by the health plan or health  
            insurer and the noncontracting individual health professional,  
            and prohibits the payment from the IDRP as described in this  
            bill.
          26)Requires the payment made by the health plan or health  
            insurer to the noncontracting health care professional for  
            nonemergency services as described in this bill, in addition  
            to the applicable cost sharing owed by the enrollee or  
            insured, to be payment in full for nonemergency services  
            rendered unless either party uses the IDRP or other lawful  
            means pursuant to this bill.

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

          Patient Obligations and Protections 


          28)Refers to the in-network cost sharing amount, for health plan  
            contracts or health policies issued, amended, or renewed on or  
            after July 1, 2017, as the amount no more than the same cost  








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            sharing that the enrollee or insured would pay for the same  
            covered services received from a contracting individual health  
            professional.  Limits enrollee or insured payment to no more  
            than the in-network cost sharing amount for services pursuant  
            to this bill.  Requires the health plan or health insurer to  
            inform the noncontracting individual health professional of  
            the in-network cost sharing owed by the enrollee or insured at  
            the time of payment by the health plan or health insurer.   
            Prohibits the noncontracting individual health professional  
            from billing or collecting any amount from the enrollee or  
            insured for services subject to this bill, except the  
            in-network cost sharing amount.  Requires any communication  
            from the noncontracting individual health professional to the  
            enrollee or insured prior to the receipt of information about  
            the in-network cost sharing include a notice in 12-point bold  
            type stating that the communication is not a bill and  
            informing the enrollee or insured that the enrollee or insured  
            will not pay until the enrollee or insured is informed of any  
            applicable cost sharing.  

          29)Requires the noncontracting individual health professional to  
            refund any overpayment to the enrollee or insured within 30  
            calendar days of receiving payment from the enrollee,  
            otherwise interest will accrue at the rate of 15% per annum  
            beginning with the date payment was received from the  
            enrollee.  

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

          31)Permits a noncontracting individual health professional to  
            bill or collect from the enrollee or insured with  
            out-of-network coverage, the out-of-network cost sharing, if  
            applicable, only when the enrollee or insured consents in  
            writing and that written consent satisfies all the following  
            criteria:

             a)   At least 24 hours in advance of care, the enrollee or  








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               insured consents in writing to receive services from the  
               identified noncontracting individual health professional; 
             b)   The consent is 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, 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)   At the time of consent, a written estimate of the  
               enrollee or insured's total out-of-pocket cost of care is  
               provided and based on the noncontracting individual health  
               professional's billed charges, and prohibits the  
               noncontracting individual health professional from  
               attempting to collect more than the estimate amount without  
               receiving separate written consent from the enrollee or  
               insured or authorized representative unless circumstances  
               arise during the delivery of services that was unforeseen  
               at the time the estimate was given that would require the  
               provider to change the estimate;
             d)   The consent must advise the enrollee or insured that he  
               or she may elect to seek care from a contracted provider or  
               may contact the health plan or health insurer in order to  
               arrange to receive the health service from a contracted  
               provider for lower out-of-pocket costs;
             e)   The consent and estimate will be provided to the  
               enrollee or insured in the language spoken by the enrollee  
               or insured if the language is a Medi-Cal threshold language  
               as defined in existing law; and,
             f)   The consent will also advise the enrollee or insured  
               that any costs incurred as a result of the out-of-network  
               benefit will be in addition to in-network cost sharing  
               amount and may not count toward the annual out-of-pocket  
               maximum on in-network benefits or a deductible, if any, for  
               in-network benefits.

          32)Provides that a professional who fails to comply with 31)  
            above has not obtained written consent and therefore other  
            provisions of this bill applies.








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          33)Permits the noncontracting individual health professional to  
            advance to collections only the in-network cost sharing amount  
            or the out-of-network cost sharing amount described in 31)  
            above, that the enrollee or insured failed to pay.  Prohibits  
            the noncontracting individual health professional, or any  
            entity acting on his or her behalf, including any assignee of  
            debt, from reporting adverse information to a consumer credit  
            reporting agency or commencing civil action against the  
            enrollee or insured for 150 days after the initial billing  
            regarding amounts owed by the enrollee or using wage  
            garnishments or liens on primary residences as a means of  
            collecting unpaid bills.



          Other Provisions and Definitions


          


          34)Defines a contracting health facility as a health facility  
            that is contracted with the enrollee or insured's health plan  
            or health insurer to provide services under the health plan or  
            health policy.  Includes, but is not limited to, the following  
            providers:

             a)   A licensed hospital;
             b)   An ambulatory surgery or other outpatient setting, as  
               described;
             c)   A laboratory; or,
             d)   A radiology or imaging center.

          35)Defines cost sharing as any copayment, coinsurance, or  
            deductible, or any other form of cost sharing paid by the  
            enrollee or insured other than premium or share of premium.

          36)Defines an individual health professional as a physician and  








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            surgeon or other professional who is California licensed to  
            deliver or furnish health care services and does not include a  
            dentist, licensed pursuant to the Dental Practice Act.   
            Defines noncontracting individual health professional as an  
            individual health professional not contracted with the  
            enrollee or insured's health plan or health insurer.  

          37)Defines in-network cost sharing amount as an amount no more  
            than the same cost sharing the enrollee or insured would pay  
            for the same covered service received from a contracting  
            health professional.  Specifies the in-network cost sharing  
            amount for enrollee's or insured's with coinsurance to be the  
            amount paid by the health plan or health insurer pursuant to  
            13) above.

          38)Provides that this bill shall not be construed to exempt a  
            health plan or health insurer or provider from the  
            requirements under existing law, nor abrogate the holding in  
            Prospect Medical Group, Inc. v. Northridge Emergency Medical  
            Group (2009) 45 Cal.4th 497.  

          EXISTING LAW:  


          1)Provides for the regulation of health plans by DMHC under the  
            Knox-Keene Health Care Service Plan Act of 1975 (Knox-Keene  
            Act) and for health insurers by 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 contracted provider from invoicing or balance  
            billing a health plan's enrollee for the difference between  
            the provider's billed charges and the reimbursement paid by  
            the health plan or the health 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  








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            subscriber or enrollee sums owed by the health 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 health 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 noncontracted 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 health 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  
            health plan's normal business hours, unless the health 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  








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            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  
            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,  








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            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.



          11)Requires a health plan to annually report network adequacy  
            data, as specified, to DMHC as a part of its annual timely  
            access compliance report, and requires DMHC to review the  
            network adequacy data for compliance with existing  
            requirements. 



          12)Requires DMHC to annually review health plan compliance with  
            timely access standards and to post its final findings from  
            the review, and any waivers or alternative standards approved  
            by DMHC, on its Website. 



          13)Authorizes DMHC to develop, and requires health plans to use,  
            standardized methodologies for timely access reporting. 


          FISCAL EFFECT:  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  








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            that DMHC would convene to settle a dispute between a provider  
            and a health plan (Managed Care Fund).


          3)One-time costs of about $600,000 for the development of  
            regulations and review of plan filings by the 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).


          COMMENTS:  


          1)PURPOSE OF THIS BILL.  According to the authors, this bill  
            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 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 Patient  
            Protection and 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'  








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            rules.



          2)BACKGROUND.  A March 2016 Kaiser Family Foundation Issue Brief  
            (Brief) defined "surprise medical bill" as a term commonly  
            used to describe charges arising when an insured individual  
            inadvertently receives care from an out-of-network provider.   
            This situation could arise in an emergency when the patient  
            has no ability to select the emergency room, treating  
            physicians, or ambulance providers.  Surprise medical bills  
            might also arise when a patient receives planned care from an  
            in-network provider (often, a hospital or ambulatory care  
            facility), but other treating providers brought in to  
            participate in the patient's care are not in the same network.  
             These can include anesthesiologists, radiologists,  
            pathologists, surgical assistants, and others.  In some cases,  
            entire departments within an in-network facility may be  
            operated by subcontractors who don't participate in the same  
            network.  In these non-emergency situations, too, the  
            in-network provider or facility generally arranges for the  
            other treating providers, not the patient.  The Brief reported  
            that a Kaiser Family Foundation survey found that among  
            insured, non-elderly adults struggling with medical bill  
            problems, charges from out-of-network providers were a  
            contributing factor about one-third of the time. Further,  
            nearly seven in 10 of individuals with unaffordable  
            out-of-network medical bills did not know the health care  
            provider was not in their health plan's network at the time  
            they received care.  



            In 2011, the New York Department of Financial Services  studied   
            more than 2,000 complaints involving surprise medical bills,  
            and found the average out-of-network emergency bill was  
            $7,006.  Insurers paid an average of $3,228 leaving consumers,  
            on average, "to pay $3,778 for an emergency in which they had  
            no choice."  The same New York study found that 90% of  








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            surprise medical bills were not for emergency services, but  
            for other in-hospital care.  The specialty areas of physicians  
            most often submitting such bills were anesthesiology, lab  
            services, surgery, and radiology.  Out-of-network assistant  
            surgeons, who often were called in without the patient's  
            knowledge, on average billed $13,914, while insurers paid  
            $1,794 on average.  Surprise bills by out-of-network  
            radiologists averaged $5,406, of which insurers paid $2,497 on  
            average.





            According to the National Academy for State Health Policy, 49  
            states have enacted some consumer protections against balance  
            billing for managed care enrollees.  Of these, 27 states apply  
            protections against out-of-network providers in PPO plans and  
            13 apply them for HMO plans.  Usually protections relate to  
            care delivered in emergency settings.  Other state legislation  
            is aimed at enabling independent legal resolution between  
            providers and providers without involving the consumer, as in  
            Illinois, and laws that empower consumers to dispute billing  
            issues, like in Texas.  New York's law, enacted in April 2015,  
            includes some of the most comprehensive protections to date.  
            The New York law protects consumers from owing more than their  
            in-network copayment, coinsurance, or deductible when  
            receiving emergency care even from out-of-network providers.   
            It also enables consumers to sign an "assignment of benefits  
            form" that allows providers to pursue payment directly from  
            insurers in the case of a dispute.  





            Several states are considering actions to address surprise  
            billing.  Proposals range from improving the processes by  
            which patients are notified about the receipt of  








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            out-of-network services to setting cost limits on charges  
            assessed for out-of-network care.  Florida recently passed  
            legislation that will exempt patients from having to pay  
            balance bills from out-of-network providers in certain  
            situations.  The Florida legislation will apply to patients  
            who go to a healthcare facility in their health plan network  
            and inadvertently receive services from a noncontracted  
            provider.  Patients would only be responsible for paying their  
            usual in-network cost-sharing.  Plans and noncontracted  
            providers would have to work out payment for those services  
            through a state-arranged, voluntary dispute resolution  
            process, with a penalty assessed to the party that refused to  
            accept an offer that was close to the final arbitration order.  
             The negotiation would be based on the usual and customary  
            rate for the particular geographic area.  Disputes could be  
            taken to court. Florida's law would only apply to PPO-type  
            plans, since it already bars balance-billing patients in HMOs.



          3)DMHC LETTER.  In a letter dated August 25, 2016, the DMHC  
            provided its understanding with respect to the CPI and network  
            adequacy provisions in this bill and how these provisions  
            would impact the Director's authority under the Knox-Keene  
            Act.  DMHC states the following:
            


               Proposed Health & Safety Code section 1371.31(a)(2)(B)  
                 provides the following:

               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  








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               Statistics.


            DMHC interprets this proposed language to require health  
            plans and their delegated entities, for the calendar year  
            after the initial submission, to adjust their 2015 average  
            contracted rates for the services subject to this bill, by  
            the CPI for Medical Care Services, as published by the United  
            States Bureau of Labor Statistics for the 2017 calendar year.




               Proposed Health & Safety Code section 1371.31(a)(5)  
               provides the following:


               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, in 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 Section


               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.
            DMHC interprets this proposed language to reaffirm the DMHC's  
            existing authority to require health plans to have an adequate  
            provider network, including adequate geographic access and  
            timely acess, and clarify that this bill neither relieves  
            health plans of their existing obligations under the  
            Knox-Keene Act to maintain an adequate provider network nor in  
            any way constrains DMHC's existing authority with respect to  








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            any other provision of the Knox-Keene Act and its implementing  
            regulations.



          4)RELATED LEGISLATION. 





             a)   AB 533 (Bonta) of 2015 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 noncontracting health care professional.  AB 533 would  
               have limited 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, required 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.





             b)   SB 1252 (Stone) of 2016 would have required 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, when a medical procedure  
               is scheduled to be performed on a patient; and, would have  
               required disclosure, in writing, if any of the physicians  
               providing medical services to the patient are not  
               contracted with the patient's health plan or health insurer  
               and the costs for which the patient would be responsible as  








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               a result.  SB 1252 was set for hearing in the Senate Health  
               Committee, but not heard per the request of the author.


          5)SUPPORT.  Health Access California writes that patients know  
            they have to follow their health plan or health 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.  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.  Surprise bills threaten to undo  
            that work by subjecting patients to astronomically high bills  
            they were not expecting.  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.  Anthem Blue Cross (Anthem)  
            writes that while there are provisions of this bill that are  
            still of concern, Anthem supports this bill as it protects  
            consumers from balance billing by noncontracting providers.   
            Anthem states that balance billing is the largest grievance  
            Anthem receives from its enrollees.  


          6)NEUTRAL.  The California Medical Association's position on  
            this bill is neutral and states that it still has serious  
            concerns about how this legislation will affect access to  
            specialty care and incentivize health plans to carry narrow  
            provider networks.  


          7)CONCERNS.  The America's Health Insurance Plans, Association  
            of California Life and Health Insurance Companies, and  








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            California Association of Health Plans, write that while they  
            laud the authors' efforts to protect consumers from balance  
            billing, they believe some provisions of this bill may  
            increase costs for families and employers through higher  
            premiums and cost-sharing.  Specifically, they state that  
            adjusting the annual contracted rate formula using the CPI no  
            longer reflects average contracted rates and distorts real  
            market prices.  Additionally, they state that current  
            provisions, including the IDRP language, may increase  
            litigation between providers and health plans and health  
            insurers, and drive up costs in the system.  


          8)OPPOSITION.  The California Chapter of the American College of  
            Cardiology (CA-ACC) states that while they agree with this  
            bill's intent to protect patients from surprise balance  
            billing, the average contracted rate methodology is largely  
            undefined and empowers the health plans and health insurers to  
            ratchet down existing contract rates with physicians.  CA-ACC  
            is concerned that health plans and health insurers will offer  
            low ball contract rates and that physician networks will  
            continue to narrow making it more difficult for patients to  
            find in-network physicians to obtain quality care.  The  
            American College of Surgeons writes that mandating payment  
            incentivizes health insurers to drive down contracting rates,  
            making it less likely that physicians will contract with them  
            to be participating providers in the network.  

          This bill was substantially amended in the Senate and the  
          Assembly-approved version of this bill was deleted.  This bill,  
          as amended in the Senate, is inconsistent with Assembly actions  
          and the provisions of this bill, as amended by the Senate, have  
          not been heard in an Assembly policy committee.  














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          REGISTERED SUPPORT / OPPOSITION:





          Support





          California Labor Federation (co-sponsor)


          Health Access California (co-sponsor)


          American Cancer Society - Cancer Action Network


          Americans for Democratic Action, Southern California


          Anthem Blue Cross


          Blue Shield of California 


          California Alliance for Retired Americans


          California Association of Health Underwriters


          California Black Health Network









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          California Coverage & Health Initiatives


          California Pan-Ethnic Health Network


          California Professional Firefighters


          CALPIRG


          Children's Partnership


          Congress of California Seniors


          Consumers Union


          National Health Law Program


          National MS Society CA Action Network


          SEIU California 


          Western Center on Law & Poverty





          Opposition









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          American College of Cardiology - California Chapter


          American College of Surgeons


          American College of Physicians - California Chapters


          American Congress of Obstetricians and Gynecologists, District  
          IX


          American Society of Plastic Surgeons


          California Academy of Eye Physicians and Surgeons


          California Association of Neurological Surgeons


          California Chapter of the American College of Cardiology


          California Neurology Society


          California Orthopaedic Association


          California Otolaryngology Society


          California Society of Facial Plastic Surgery








                                                                      AB 72


                                                                    Page  25







          California Society of Physical Medicine & Rehabilitation


          California Society of Plastic Surgeons


          California Thoracic Society


          California Urological Association


          Medical Oncology Association of Southern California


          The Plastic Surgery Foundation




          Analysis Prepared by:Kristene Mapile / HEALTH / (916) 319-2097