Amended in Senate July 7, 2015

Amended in Assembly April 23, 2015

Amended in Assembly April 15, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 533


Introduced by Assembly Member Bonta

February 23, 2015


An act to addbegin delete Sectionend deletebegin insert end insertbegin insertSections 1371.30, 1371.31, andend insert 1371.9 to the Health and Safety Code, and to addbegin delete Section 10112.8end deletebegin insert end insertbegin insertSections 10112.8, 10112.81, and 10112.82end insert to the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

AB 533, as amended, Bonta. Health care coverage: out-of-network coverage.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care. A willful violation of the act is a crime. Existing law requires a health care service plan to reimburse providers for emergency services and care provided to its enrollees, until the care results in stabilization of the enrollee. Existing law prohibits a plan from requiring a provider to obtain authorization prior to the provision of emergency services and care necessary to stabilize the enrollee’s emergency medical care, as specified.

Existing law also provides for the regulation of health insurers by the Insurance Commissioner. Existing law requires a health insurance policy issued, amended, or renewed on or after January 1, 2014, that provides or covers benefits with respect to services in an emergency department of a hospital to cover emergency services without the need for prior authorization, regardless of whether the provider is a participating provider, and subject to the same cost sharing required if the services were provided by a participating provider, as specified.

This bill would require a health care service plan contract or health insurance policy issued, amended, or renewed on or after January 1, 2016, to provide that if an enrollee or insured obtains care from a contracting health facility, as defined, at which, or as a result of which, the enrollee or insured receives covered services provided by a noncontracting individual health professional, as defined, the enrollee or insured is required to pay the noncontracting individual health professional only the same cost sharing required if the services were provided by a contracting individual health professional. The bill would prohibit an enrollee or insured from owing the noncontracting individual health professional at the contracting health facility more than the in-network cost sharing amount if the noncontracting individual health professional receives reimbursement for services provided to the enrollee or insured at a contracting health facility from the plan or health insurer. The bill would require a noncontracting individual health professional who collects more than the in-networkbegin delete cost sharingend deletebegin insert cost-sharingend insert amount from the enrollee or insured to refund any overpayment to the enrollee or insured, as specified, and would provide that interest on any amount overpaid by, and not refunded to, the enrollee or insured shall accrue at 15% per annum, as specified.begin delete Because a willful violation of the bill’s provisions by a health care service plan would be a crime, this bill would impose a state-mandated local program.end delete

begin insert

Existing law requires a contract between a health care service plan and a provider, or a contract between an insurer and a provider, to contain provisions requiring a fast, fair, and cost-effective dispute resolution mechanism under which providers may submit disputes to the plan or insurer. Existing law requires that dispute resolution mechanism also be made accessible to a noncontracting provider for the purpose of resolving billing and claims disputes.

end insert
begin insert

This bill would require the department and the commissioner to each establish an independent dispute resolution process that would allow a noncontracting individual health professional who rendered services at a contracting health facility to appeal a claim payment dispute that has completed the plan’s or the insurer’s internal dispute resolution mechanism, as specified. The bill would authorize the department and the commissioner to contract with one or more independent dispute resolution organizations to conduct the independent dispute resolution process, as specified. The bill would provide that the decision of the organization would be binding on the parties. The bill would require a health care service plan or an insurer to base reimbursement of a claim by a noncontracting individual health professional on statistically credible information with regard to the amount paid to providers who provide similar services, are not capitated, and practice in the same or a similar geographic region, as specified.

end insert
begin insert

Because a willful violation of the bill’s provisions relative to a health care service plan would be a crime, the bill would impose a state-mandated local program.

end insert
begin insert

Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

end insert
begin insert

This bill would make legislative findings to that effect.

end insert

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

P3    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 1371.30 is added to the end insertbegin insertHealth and Safety
2Code
end insert
begin insert, end insertimmediately following Section 1371.3begin insert, to read:end insert

begin insert
3

begin insert1371.30.end insert  

(a) (1) The department shall establish an independent
4dispute resolution process for the purpose of processing and
5resolving a claim dispute between a health care service plan and
6a noncontracting individual health professional for services subject
7to Section 1371.9.

8(2) A noncontracting individual health professional may appeal
9a claim to the independent dispute resolution process established
10pursuant to this section after the noncontracting individual health
11professional has completed the plan’s internal dispute resolution
12mechanism, as defined in subdivision (h) of Section 1367, or if 30
13days have elapsed since the noncontracting individual health
P4    1professional initiated the plan’s internal dispute resolution
2 mechanism.

3(3) If either the noncontracting individual health professional
4or the plan appeals a claim to the department’s independent dispute
5resolution process, the other party shall participate in the appeal
6process as described in this section.

7(4) The disputed claim is limited to covered services rendered
8by a noncontracting individual health professional, as defined by
9paragraph (3) of subdivision (c) of Section 1371.9, at a contracting
10health facility, as defined by paragraph (2) of subdivision (c) of
11Section 1371.9.

12(b) The department and the Department of Insurance shall
13jointly establish uniform written procedures for the submission,
14receipt, processing, and resolution of claim payment disputes
15pursuant to this section.

16(1) A noncontracting individual health professional appealing
17to the independent dispute resolution process shall provide the
18department with a written justification for the appeal, which shall
19not exceed two pages.

20(2) The department shall respond to an appeal by a
21noncontracting individual health professional within 30 days of
22receipt of the written document described in paragraph (1).

23(3) The plan shall provide all documents submitted to the
24department for the independent dispute resolution process to the
25individual health professional appealing the claim. The statistically
26credible information on the average payments described in
27subdivision (b) of Section 1371.31 shall be exempt from public
28disclosure.

29(c) A noncontracting individual health professional may dispute
30a claim for either of the following reasons:

31(1) The noncontracting individual health professional disputes
32that the payment received from the plan is the plan’s average
33contracted rate pursuant to Section 1371.31.

34(2) The noncontracting individual health professional seeks to
35be paid more than 150 percent of the amount that the plan
36otherwise would pay pursuant to Section 1371.31.

37(d) If the disputed claim is appealed pursuant to paragraph (1)
38of subdivision (c), the department shall determine whether the
39payment provided to the noncontracting individual health
40professional is the plan’s average contracted rate as defined in
P5    1paragraph (1) of subdivision (c) of Section 1371.31. If the
2department determines that the payment is lower than the plan’s
3average contracted rate, the plan shall correct the statistically
4credible information required by Section 1371.31 and provide
5payment to the noncontracting individual health professional,
6consistent with subdivision (j).

7(e) If the disputed claim is appealed pursuant to paragraph (2)
8of subdivision (c), the department shall determine payment based
9on all of the following:

10(1) The provider's training, qualifications, and length of time
11in practice.

12(2) The nature of the services provided.

13(3) The fees usually charged by or paid to the provider.

14(4) Prevailing provider rates charged or paid in the general
15geographic area in which the services were rendered.

16(5) Other aspects of the economics of the medical provider's
17practice that are relevant.

18(6) Any unusual circumstances in the case.

19(f) An eligible claim does not include any of the following:

20(1) A dispute concerning a claim that has completed the plan’s
21internal dispute resolution mechanism established pursuant to
22subdivision (h) of Section 1367, or a claim for which fewer than
2330 days have elapsed since the individual health professional
24initiated the plan’s internal dispute resolution mechanism.

25(2) A dispute concerning a claim that is currently in arbitration
26or litigation in state or federal court.

27(3) A dispute concerning a late payment.

28(4) A dispute concerning an interest payment.

29(5) A claim dispute that is not subject to the department’s
30jurisdiction.

31(6) A claim dispute with a health plan licensed or regulated by
32another entity or state.

33(7) A dispute regarding a claim that does not involve covered
34benefits.

35(8) A claim denied on the basis that the services were not
36medically necessary or were experimental or investigational in
37nature.

38(g) (1) A noncontracting individual health professional may
39initiate an appeal to the department’s independent dispute
40resolution process by following the procedures specified by the
P6    1department. A noncontracting individual health professional or
2group of noncontracting individual health professionals may
3 aggregate disputed claim amounts. An aggregated claim shall
4involve the same or similar services and the same health care
5service plan.

6(2) A health care service plan subject to a claim or claims
7appealed by a noncontracting individual health professional shall
8provide information requested by the department according to the
9department’s policies and procedures. If the requested information
10is not received in a timely manner, the department shall make a
11determination based on the information available to it.

12(h) The department may contract with one or more independent
13organizations that specialize in dispute resolution to conduct the
14proceedings. The independent organization handling a dispute
15shall be independent of either party to the dispute. The department
16may establish additional requirements, including
17conflict-of-interest standards, consistent with the purposes of this
18 section, that an organization shall meet in order to qualify for
19participation in the independent dispute resolution program. The
20department may contract with the same independent organization
21or organizations as the Department of Insurance.

22(i) The independent dispute resolution organization shall issue
23a decision within 60 days of the receipt of required documentation,
24according to the department’s written policies and procedures.

25(j) The determination obtained through the department’s
26independent dispute resolution process shall be binding on both
27parties. When making a decision, the independent dispute
28resolution organization shall prepare in writing and provide to
29the parties an award, including factual findings and the reasons
30on which the decision is based. If additional payment is awarded
31to a noncontracting individual health professional, it shall be made
32consistent with Section 1371.35.

33(k) Each party shall bear its own costs and expenses, and an
34equal share of the administrative fees for the independent dispute
35resolution process. The department shall establish fees to cover
36the actual cost of processing claims disputes pursuant to this
37section.

38(l) In determining what constitutes an “unfair payment pattern”
39as defined in Section 1371.37, the department shall take into
40consideration determinations of the independent dispute resolution
P7    1process in order to determine whether a plan has engaged in an
2unfair payment pattern.

3(m) If a noncontracting individual health professional files
4multiple appeals pursuant to paragraph (2) of subdivision (c) and
5loses more than one third of those appeals within a one year
6period, he or she shall be prohibited from appealing to the
7department’s independent dispute resolution process pursuant to
8paragraph (2) of subdivision (c) for one year from the first appeal.
9For the purposes of this section, a noncontracting individual health
10professional shall be deemed to have lost an appeal when the
11department’s independent dispute resolution process awards the
12noncontracting individual health professional less than the amount
13sought by the noncontracting individual health professional.

14(n) This section shall not apply to a Medi-Cal managed health
15care service plan or any entity that enters into a contract with the
16State Department of Health Care Services pursuant to Chapter 7
17(commencing with Section 14000) of, Chapter 8 (commencing with
18Section 14200), and of, Chapter 8.75 (commencing with Section
1914591) of Part 3 of Division 9 of the Welfare and Institutions Code.

20(o) If a health care service plan delegates payment functions to
21 a contracted entity, including, but not limited to, a medical group
22or independent practice association, then the delegated entity shall
23comply with this section.

end insert
24begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 1371.31 is added to the end insertbegin insertHealth and Safety
25Code
end insert
begin insert, end insertimmediately following Section 1371.30begin insert, to read:end insert

begin insert
26

begin insert1371.31.end insert  

(a) This section shall apply to claim disputes between
27a noncontracting individual health professional subject to Section
281371.9 and a health care service plan. Claim disputes shall be
29limited to circumstances in which either of the following occurs:

30(1) The noncontracting individual health professional disputes
31that the payment received from the plan is the plan’s average
32contracted rate pursuant to paragraph (1) of subdivision (c) of
33Section 1371.30.

34(2) The noncontracting individual health professional seeks to
35be paid more than 150 percent of the amount that the plan would
36otherwise pay pursuant to paragraph (2) of subdivision (c) of
37Section 1371.30.

38(b) (1) The health care service plan shall maintain statistically
39credible information, updated at least annually, regarding rates
40paid to currently contracting individual health professionals who
P8    1provide similar services, are not capitated, and are practicing in
2the same or a similar geographic area as the noncontracting
3individual health professional.

4(2) The statistically credible information required by paragraph
5(1) shall take into consideration the determinations of the
6independent dispute resolution process for claims filed pursuant
7to paragraph (1) of subdivision (c) of 1371.30.

8(c) (1) Unless otherwise provided in this section or otherwise
9agreed by the noncontracting individual health professional and
10the plan, the plan shall base reimbursement of noncontracted
11 claims for services rendered according to Section 1371.9 on the
12average rates based on the statistically credible information with
13regard to the amount paid to contracted individual health
14professionals who are providing similar services, are not capitated,
15and practicing in the same or similar geographic area.

16(2) For nonemergency services provided by the noncontracting
17individual health professional to an enrollee covered by a preferred
18provider organization or a point of service plan, unless otherwise
19agreed to by the plan and the noncontracting individual health
20professional, the amount paid shall be the amount set forth in the
21enrollee’s evidence of coverage.

22(d) (1) A health care service plan’s failure to pay a
23noncontracting individual health professional pursuant to this
24section shall constitute an “unfair payment pattern” within the
25meaning of Section 1371.37.

26(2) In determining whether a plan has engaged in an “unfair
27payment pattern” as defined in Section 1371.37, the department
28shall take into consideration decisions of the independent dispute
29resolution process.

end insert
30

begin deleteSECTION 1.end delete
31begin insertSEC. 3.end insert  

Section 1371.9 is added to the Health and Safety Code,
32to read:

33

1371.9.  

(a) (1) A health care service plan contract issued,
34amended, or renewed on or after January 1, 2016, shall provide
35that if an enrollee obtains care from a contracting health facility
36at which, or as a result of which, the enrollee receives services
37provided by a noncontracting individual health professional, the
38enrollee shall pay the noncontracting individual health professional
39no more than the same cost sharing that the enrollee would have
40paid for the same covered benefits received from a contracting
P9    1individual health professional. This amount shall be referred to as
2the “in-network cost sharing.”

3(2) At the time of payment by the plan to the noncontracting
4individual health professional, the plan shall inform the
5noncontracting individual health professional of the in-network
6cost sharing owed by the enrollee. If a noncontracting individual
7health professional receives reimbursement for services provided
8to the enrollee at a contracting health facility from the plan, an
9enrollee shall not owe the noncontracting individual health
10professional at the contracting health facility more than the
11in-network cost sharing.

12(3) Except as provided in subdivision (d), if the noncontracting
13individual health professional collects more than the in-network
14cost sharing from the enrollee, the noncontracting individual health
15professional shall refund any overpayment to the enrollee within
1630 working days of receiving notice from the plan of the in-network
17cost sharing amount owed by the enrollee pursuant to paragraph
18(2). If the noncontracting individual health professional does not
19refund any overpayment within 30 working days after being
20informed of the enrollee’s in-network cost sharing, interest shall
21accrue at the rate of 15 percent per annum beginning with the first
22calendar day after the 30-working day period. A noncontracting
23individual health professional shall automatically include in his
24or her refund of the overpayment all interest that has accrued
25pursuant to this section without requiring the enrollee to submit a
26request for the interest amount.

27(4) If the noncontracting individual health professional has
28advanced to collections any amount owed by the enrollee, the plan
29shall not reimburse the noncontracting individual health
30professional for services provided to the enrollee by the
31noncontracting individual health professional at a contracting
32health facility. In submitting a claim to the plan, the noncontracting
33individual health professional at a contracting health facility shall
34affirm in writing that he or she has not advanced to collections any
35payment owed by the enrollee. A noncontracting individual health
36professional shall not attempt to collect more than the in-network
37cost sharing from the enrollee after receiving payment from the
38plan. Once the noncontracting individual health professional
39receives payment from the plan, the noncontracting individual
40health professional may advance to collections any in-network
P10   1cost sharing owed by the enrollee if the enrollee fails to pay the
2in-network cost sharing after the plan has informed the
3noncontracting individual health professional of the amount owed
4by the enrollee pursuant to paragraph (2).

5(b) (1) Any cost sharing paid by the enrollee for the services
6provided by a noncontracting individual health professional at the
7contracting health facility shall count toward the limit on annual
8out-of-pocket expenses established under Section 1367.006.

9(2) Cost sharing arising from services received by a
10noncontracting individual health professional at a contracting
11health facility shall be counted toward any deductible in the same
12manner as cost sharing would be attributed to a contracting
13individual health professional.

14(c) For purposes of this section, the following definitions shall
15apply:

16(1) “Cost sharing” includes any copayment, coinsurance, or
17deductible, or any other form of cost sharing paid by the enrollee
18other than premium or share of premium.

19(2) “Health facility” means a health facility provider who is
20licensed by this state to deliver or furnish health care services. A
21health facility shall include the following providers:

22(A) Licensed hospital.

23(B) Skilled nursing facility.

24(C) Ambulatory surgery.

25(D) Laboratory.

26(E) Radiology or imaging.

27(F) Facilities providing mental health or substance abuse
28treatment.

29(G) Any other provider as the department may by regulation
30define as a health facility for purposes of this section.

31(3) “Individual health professional” means a physician or
32surgeon or other professional who is licensed by this state to deliver
33or furnish health care services.

34(d) An enrollee may voluntarily consent to the use of a
35noncontracting individual health professional. For purposes of this
36section, consent shall be voluntary if at least 24 hours in advance
37of the receipt of services, the enrollee is provided a written estimate
38of the cost of care by the noncontracting individual health
39professional and the enrollee consents in writing to both the use
40of a noncontracting individual health professional and payment of
P11   1the estimated additional cost for the services to be provided by the
2noncontracting individual health professional. The consent shall
3inform the enrollee that the cost of the services of the
4noncontracting individual health professional will not accrue to
5the limit on annual out-of-pocket expenses or the enrollee’s
6deductible, if any.

7(e) This section shall not be construed to require a plan to cover
8services or provide benefits that are not otherwise covered under
9the terms and conditions of the plan contract.

10(f) This section shall not be construed to exempt a plan from
11the requirements under Sectionbegin delete 1373.96 or Section 1371.4,end deletebegin insert 1371.4
12or 1373.96end insert
nor abrogate the holding in Prospect Medical Group
13v. Northridge Emergency Medical Group et al., (2009) 45 Cal.4th
14497, that an emergency room physician is prohibited from billing
15an enrollee of a health care service plan directly for sums that the
16health care service plan has failed to pay for the enrollee’s
17emergency room treatment.

begin insert

18(g) If a health care service plan delegates payment functions to
19a contracted entity, including, but not limited to, a medical group
20or independent practice association, the delegated entity shall
21comply with this section.

end insert
begin insert

22(h) This section does not apply to a Medi-Cal managed health
23care service plan or any other entity that enters into a contract
24with the State Department of Health Care Services pursuant to
25Chapter 7 (commencing with Section 14000) of, Chapter 8
26(commencing with Section 14200) and of, Chapter 8.75
27(commencing with Section 14591) of Part 3 of Division 9 of the
28Welfare and Institutions Code.

end insert
begin insert

29(i) This section does not apply to emergency services and care,
30as defined in Section 1317.1 of the Health and Safety Code.

end insert
31

begin deleteSEC. 2.end delete
32begin insertSEC. 4.end insert  

Section 10112.8 is added to the Insurance Code, to
33read:

34

10112.8.  

(a) (1) A health insurance policy issued, amended,
35or renewed on or after January 1, 2016, shall provide that if an
36insured obtains care from a contracting health facility at which, or
37as a result of which, the insured receives services provided by a
38noncontracting individual health professional, the insured shall
39pay the noncontracting individual health professional no more than
40the same cost sharing that the insured would have paid for the
P12   1same covered benefits received from a contracting individual health
2professional. This amount shall be referred to as the “in-network
3cost sharing.”

4(2) At the time of payment by the health insurer to the
5noncontracting individual health professional, the health insurer
6shall inform the noncontracting individual health professional of
7the in-network cost sharing owed by the insured. If a
8noncontracting individual health professional receives
9reimbursement for services provided to the insured at a contracting
10health facility from the health insurer, an insured shall not owe the
11noncontracting individual health professional at the contracting
12health facility more than the in-network cost sharing.

13(3) Except as provided in subdivision (d), if the noncontracting
14individual health professional collects more than the in-network
15cost sharing from the insured, the noncontracting individual health
16professional shall refund any overpayment to the insured within
1730 working days of receiving notice from the health insurer of the
18in-network cost sharing amount owed by the insured pursuant to
19paragraph (2). If the noncontracting individual health professional
20does not refund any overpayment within 30 working days after
21being informed of the insured’s in-network cost sharing, interest
22shall accrue at the rate of 15 percent per annum beginning with
23the first calendar day after the 30-working day period. A
24noncontracting individual health professional shall automatically
25include in his or her refund of the overpayment all interest that has
26accrued pursuant to this section without requiring the insured to
27submit a request for the interest amount.

28(4) If the noncontracting individual health professional has
29advanced to collections any amount owed by the insured, the health
30insurer shall not reimburse the noncontracting individual health
31professional for services provided to the insured by the
32noncontracting individual health professional at a contracting
33health facility. In submitting a claim to the health insurer, the
34noncontracting individual health professional at a contracting
35health facility shall affirm in writing that he or she has not
36advanced to collections any payment owed by the insured. A
37noncontracting individual health professional shall not attempt to
38collect more than the in-network cost sharing from the insured
39after receiving payment from the health insurer. Once the
40noncontracting individual health professional receives payment
P13   1from the health insurer, the noncontracting individual health
2professional may advance to collections any in-network cost
3sharing owed by the insured if the insured fails to pay the
4in-network cost sharing after the health insurer has informed the
5noncontracting individual health professional of the amount owed
6by the insured pursuant to paragraph (2).

7(5) This section shall only apply to a health insurer that enters
8into a contract with a professional or institutional provider to
9provide services at alternative rates of payment pursuant to Section
1010133.

11(b) (1) Any cost sharing paid by the insured for the services
12provided by a noncontracting individual health professional at the
13contracting health facility shall count toward the limit on annual
14out-of-pocket expenses established under Section 10112.28.

15(2) Cost sharing arising from services received by a
16noncontracting individual health professional at a contracting
17health facility shall be counted toward any deductible in the same
18manner as cost sharing would be attributed to a contracting
19individual health professional.

20(c) For purposes of this section, the following definitions shall
21apply:

22(1) “Cost sharing” includes any copayment, coinsurance, or
23deductible, or any other form of cost sharing paid by the insured
24other than premium or share of premium.

25 (2) “Health facility” means a health facility provider who is
26 licensed by this state to deliver or furnish health care services. A
27health facility shall include the following providers:

28(A) Licensed hospital.

29(B) Skilled nursing facility.

30(C) Ambulatory surgery.

31(D) Laboratory.

32(E) Radiology or imaging.

33(F) Facilities providing mental health or substance abuse
34treatment.

35(G) Any other provider as the commissioner may by regulation
36define as a health facility for purposes of this section.

37(3) “Individual health professional” means a physician or
38surgeon or other professional who is licensed by this state to deliver
39or furnish health care services.

P14   1(d) An insured may voluntarily consent to the use of a
2 noncontracting individual health professional. For purposes of this
3section, consent shall be voluntary if at least 24 hours in advance
4of the receipt of services, the insured is provided a written estimate
5of the cost of care by the noncontracting individual health
6professional and the insured consents in writing to both the use of
7a noncontracting individual health professional and payment of
8the estimated additional cost for the services to be provided by the
9noncontracting individual health professional. The consent shall
10inform the insured that the cost of the services of the
11noncontracting individual health professional will not accrue to
12the limit on annual out-of-pocket expenses or the insured’s
13deductible, if any.

14(e) This section shall not be construed to require an insurer to
15cover services or provide benefits that are not otherwise covered
16under the terms and conditions of the policy.

17(f) This section shall not be construed to exempt a health insurer
18from the requirements under Section 10112.7 or Section 10133.56.

19begin insert

begin insertSEC. 5.end insert  

end insert

begin insertSection 10112.81 is added to the end insertbegin insertInsurance Codeend insertbegin insert, to
20read:end insert

begin insert
21

begin insert10112.81.end insert  

(a) (1) The commissioner shall establish an
22independent dispute resolution process for the purpose of
23processing and resolving a claim dispute between an insurer and
24a noncontracting individual health professional for services subject
25to Section 10112.8.

26(2) A noncontracting individual health professional may appeal
27a claim to the independent dispute resolution process established
28pursuant to this section after the noncontracting individual health
29professional has completed the insurer’s internal dispute resolution
30process, as defined in subdivision (b) of Section 10123.137 or if
3130 days have elapsed since the noncontracting individual health
32professional initiated the insurer’s internal dispute resolution
33 mechanism.

34(3) If either the noncontracting individual health professional
35or the insurer appeals a claim to the department’s independent
36dispute resolution process, the other party shall participate in the
37appeal process as described in this section.

38(4) The disputed claim is limited to covered services rendered
39by a noncontracting individual health professional, as defined by
40paragraph (3) of subdivision (c) of Section 10112.8, at a
P15   1contracting health facility, as defined by paragraph (2) of
2subdivision (c) of Section 10112.8.

3(b) The commissioner and the Department of Managed Health
4Care shall jointly establish uniform written procedures for the
5submission, receipt, processing, and resolution of claim payment
6disputes pursuant to this section.

7(1) A noncontracting individual health professional appealing
8to the independent dispute resolution process shall provide the
9commissioner with a written justification for the appeal, which
10shall not exceed two pages.

11(2) The commissioner shall respond to an appeal by a
12noncontracting individual health professional within 30 days of
13receipt of the written documentation described in paragraph (1).

14(3) The insurer shall provide all documents submitted to the
15commissioner for the independent dispute resolution process to
16the individual health professional appealing the claim. The
17statistically credible information on the average payments
18described in subdivision (b) of Section 10112.82 shall be exempt
19from the disclosure required by this paragraph.

20(c) A noncontracting individual health professional may dispute
21a claim for either of the following reasons:

22(1) The noncontracting individual health professional disputes
23that the payment received from the insurer is the insurer’s average
24contracted rate pursuant to Section 10112.82.

25(2) The noncontracting individual health professional seeks to
26be paid more than 150 percent of the amount that the insurer
27otherwise would pay pursuant to Section 10112.82.

28(d) If the disputed claim is appealed pursuant to paragraph (1)
29of subdivision (c), the department shall determine whether the
30payment provided to the noncontracting individual health
31professional is the insurer’s average contracted rate as defined
32in paragraph (1) of subdivision (c) of Section 10112.82. If the
33commissioner determines that the payment is lower than the
34insurer’s average contracted rate, the insurer shall correct the
35 statistically credible information required by Section 10112.82
36and provide payment to the noncontracting individual health
37professional, consistent with subdivision (j).

38(e) If the disputed claim is appealed pursuant to paragraph (2)
39of subdivision (c), the commissioner shall determine payment based
40on all of the following:

P16   1(1) The provider's training, qualifications, and length of time
2in practice.

3(2) The nature of the services provided.

4(3) The fees usually charged by or paid to the provider.

5(4) Prevailing provider rates charged or paid in the general
6geographic area in which the services were rendered.

7(5) Other aspects of the economics of the medical provider's
8practice that are relevant.

9(6) Any unusual circumstances in the case.

10(f) An eligible claim does not include the following:

11(1) A dispute concerning a claim that has not previously been
12submitted to the insurer’s dispute resolution mechanism established
13pursuant to subdivision (b) of Section 10123.137, or a claim for
14which fewer than 30 days have elapsed since the individual health
15professional initiated the insurer’s internal dispute resolution
16process.

17(2) A dispute concerning a claim that is currently in arbitration
18or litigation in state or federal court.

19(3) A dispute concerning a late payment.

20(4) A dispute concerning an interest payment.

21(5) A Medi-Cal claim dispute for which a fair hearing pursuant
22to Chapter 7 (commencing with Section 10950) of Part 2 of
23Division 9 of the Welfare and Institutions Code has commenced.

24(6) A claim dispute that is not subject to the commissioner’s
25jurisdiction.

26(7) A claim dispute with a health insurer licensed or regulated
27 by another entity or state.

28(8) A dispute regarding a claim that does not involve covered
29benefits.

30(9) A claim denied on the basis that the services were not
31medically necessary or were experimental or investigational in
32nature.

33(g) (1) A noncontracting individual health professional may
34initiate an appeal to the independent dispute resolution process
35established pursuant to this section by following the procedures
36specified by the commissioner. A noncontracting individual health
37professional may aggregate disputed claim amounts. An
38aggregated claim shall involve the same or similar services and
39the same insurer.

P17   1(2) An insurer subject to a claim or claims appealed by a
2noncontracting individual health professional shall provide
3information requested by the commissioner according to the
4commissioner’s policies and procedures. If the requested
5information is not received in a timely manner, the commissioner
6shall make a determination based on the information available to
7him or her.

8(h) The commissioner may contract with one or more
9independent organizations that specialize in dispute resolution to
10conduct the proceedings. The independent organization handling
11a dispute shall be independent of either party to the dispute. The
12commissioner may establish additional requirements, including
13conflict-of-interest standards, consistent with the purposes of this
14section, that an organization shall meet in order to qualify for
15participation in the independent dispute resolution program. The
16commissioner may contract with the same independent
17organization or organizations as the Department of Managed
18Health Care.

19(i) The independent dispute resolution organization shall issue
20a decision within 60 days of receipt of required documentation,
21according to the commissioner’s written policies and procedures.

22(j) The determination obtained through the independent dispute
23resolution process shall be binding on both parties. When making
24a decision, the independent dispute resolution organization shall
25prepare in writing and provide to the parties an award including
26factual findings and the reasons upon which the decision is based.
27If additional payment is awarded to a noncontracting individual
28health professional, it shall be made consistent with the
29requirements of Section 10123.13.

30(k) Each party shall bear its own costs and expenses and an
31equal share of the administrative fees for the independent dispute
32resolution process. The commissioner shall establish fees to cover
33the actual cost of processing claims disputes pursuant to this
34section.

35(l) In determining what constitutes an “unfair payment pattern”
36as defined in Section 1371.37 of the Health and Safety Code, the
37commissioner shall take into consideration determinations of the
38independent dispute resolution process established pursuant to
39subdivision (a) in determining whether an insurer has engaged in
40an unfair payment pattern.

P18   1(m) If a noncontracting individual health professional files
2multiple appeals pursuant to paragraph (2) of subdivision (c) and
3loses more than one third of those appeals within a one year
4period, he or she shall be prohibited from appealing to the
5commissioner’s independent dispute resolution process pursuant
6to paragraph (2) of subdivision (c) for one year from the first
7appeal. For the purposes of this section, a noncontracting
8individual health professional shall be deemed to have lost an
9appeal when the commissioner’s independent dispute resolution
10process awards the noncontracting individual health professional
11less than the amount sought by the noncontracting individual
12health professional.

13(n) If an insurer delegates payment functions to a contracted
14entity, including, but not limited to, a medical group of independent
15practice association, then the delegated entity shall comply with
16this section.

end insert
17begin insert

begin insertSEC. 6.end insert  

end insert

begin insertSection 10112.82 is added to the end insertbegin insertInsurance Codeend insertbegin insert, to
18read:end insert

begin insert
19

begin insert10112.82.end insert  

(a) This section shall apply to a claim dispute
20between a noncontracting individual health professional subject
21to Section 10112.8 and a health insurer. Claim disputes shall be
22limited to circumstances in which either of the following occurs:

23(1) The noncontracting individual health professional disputes
24that the payment received from the insurer is the insurer’s average
25contracted rate pursuant to paragraph (1) of subdivision (c) of
26Section 10112.81.

27(2) The noncontracting individual health professional seeks to
28be paid more than 150 percent of the amount that the insurer
29otherwise would pay pursuant to paragraph (2) of subdivision (c)
30of Section 10112.81.

31(b) (1) The insurer shall maintain statistically credible
32information, updated at least annually, regarding rates paid to
33currently contracting individual health professionals who provide
34similar services, are not capitated, and are practicing in the same
35or a similar geographic area as the noncontracting individual
36health professional.

37(2) The statistically credible information required by paragraph
38(1) shall take into consideration the determinations of the
39independent dispute resolution process for claims filed pursuant
40to Section 10112.81.

P19   1(3) The statistically credible information required by paragraph
2(1) shall be confidential and shall be exempt from public
3disclosure.

4(c) (1) Unless otherwise provided in this section or otherwise
5agreed to by the noncontracting individual health professional
6and the insurer, the insurer shall base reimbursement of claims
7on the statistically credible information with regard to the amount
8paid to providers who are providing similar services, are not
9capitated, and practicing in the same or similar geographic area.

10(2) For nonemergency services provided by the noncontracting
11individual health professional to an insured covered by a preferred
12provider organization or a point-of-service plan, unless otherwise
13agreed to by the insurer and the noncontracting individual health
14professional, the amount paid shall be the amount set forth in the
15insured’s evidence of coverage.

16(d) (1) An insurer’s failure to pay a noncontracting individual
17health professional consistent with this section shall constitute an
18“unfair payment pattern” within the meaning of Section 1371.37
19of the Health and Safety Code.

20(2) In determining whether an insurer has engaged in an “unfair
21payment pattern” as defined in Section 1371.37 of the Health and
22Safety Code, the commissioner shall take into consideration
23decisions of the independent dispute resolution process established
24pursuant to subdivision (a) of Section 10112.81.

end insert
25begin insert

begin insertSEC. 7.end insert  

end insert
begin insert

The Legislature finds and declares that Sections 2 and
266 of this act, which add Section 1371.31 to the Health and Safety
27Code and Section 10112.82 to the Insurance Code, impose a
28limitation on the public’s right of access to the meetings of public
29bodies or the writings of public officials and agencies within the
30meaning of Section 3 of Article I of the California Constitution.
31Pursuant to that constitutional provision, the Legislature makes
32the following findings to demonstrate the interest protected by this
33limitation and the need for protecting that interest:

end insert
begin insert

34In order to protect confidential and proprietary information, it
35is necessary for that information to remain confidential.

end insert
36

begin deleteSEC. 3.end delete
37begin insertSEC. 8.end insert  

No reimbursement is required by this act pursuant to
38Section 6 of Article XIII B of the California Constitution because
39the only costs that may be incurred by a local agency or school
40district will be incurred because this act creates a new crime or
P20   1infraction, eliminates a crime or infraction, or changes the penalty
2for a crime or infraction, within the meaning of Section 17556 of
3the Government Code, or changes the definition of a crime within
4the meaning of Section 6 of Article XIII B of the California
5Constitution.



O

    96