BILL ANALYSIS Ó
AB 72
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CONCURRENCE IN SENATE AMENDMENTS
AB
72 (Bonta, et al.)
As Amended August 25, 2016
Majority vote
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|ASSEMBLY: |78-0 |(April 23, |SENATE: |35-1 |(August 29, |
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|COMMITTEE VOTE: | | (August 30, |RECOMMENDATION: |concur |
| |15-0 |2016) | | |
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(Health)
Original Committee Reference: HEALTH
SUMMARY: Establishes a payment rate, which is the greater of
the average of a health care service plan (health plan) or
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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.
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 the Department of
Managed Health Care (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).
3)One-time costs of about $600,000 for the development of
regulations and review of plan filings by the California
Department of Insurance (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: 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
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doctors they did not choose. Surprise medical bills wreak havoc
on people's finances and their ability to pay for basic
necessities.
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 a letter dated August 25, 2016, the DMHC provided its
understanding with respect to the Consumer Price Index (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:
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For each calendar year after the plan's initial
submission of the average contracted rate as specified in
subparagraph (A) and until the standardized methodology
under paragraph (3) is specified, a health care service
plan and the plan's delegated entities shall adjust the
rate initially established pursuant to this subdivision
by the Consumer Price Index for Medical Care Services, as
published by the United States Bureau of Labor
Statistics.
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
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timely access, 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 any other
provision of the Knox-Keene Act and its implementing
regulations.
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. 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.
The California Chapter of the American College of Cardiology
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. 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,
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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.
Analysis Prepared by:
Kristene Mapile / HEALTH / (916) 319-2097 FN:
0005001