Amended in Senate August 18, 2015

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 add Sections 1371.30, 1371.31, and 1371.9 to the Health and Safety Code, and to add Sections 10112.8, 10112.81, and 10112.82 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-network cost-sharing 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.

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.

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 disputebegin delete that has completed the plan’s or the insurer’s internal dispute resolution mechanism,end deletebegin insert with a plan or insurer,end insert 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 planbegin delete or an insurerend delete to base reimbursement of a claim by a noncontracting individual health professional on statistically credible information with regard to the amount paid tobegin delete providersend deletebegin insert contracted individual health professionalsend insert who provide similar services, are not capitated, and practice in the same or a similar geographic region, as specified.begin insert The bill would require an insurer to base reimbursement of a claim by a noncontracting health professional on statistically credible information with regard to the amount paid to contracted individual health professionals who provide similar services and practice in the same or a similar geographic region, as specified. The bill would require a noncontracting individual health professional who disputes that claim reimbursement to utilize the independent dispute resolution process. The bill would provide that these provisions do not apply to emergency services and care, as defined.end 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.

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.

This bill would make legislative findings to that effect.

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    1

SECTION 1.  

Section 1371.30 is added to the Health and Safety
2Code
, immediately following Section 1371.3, to read:

3

1371.30.  

(a) (1) The department shall establish an independent
4dispute resolution process for the purpose of processing and
P4    1resolving a claim dispute between a health care service plan and
2a noncontracting individual health professional for services subject
3to Section 1371.9.

begin delete

4(2) A noncontracting individual health professional may appeal
5a claim to the independent dispute resolution process established
6pursuant to this section after the noncontracting individual health
7professional has completed the plan’s internal dispute resolution
8mechanism, as defined in subdivision (h) of Section 1367, or if 30
9days have elapsed since the noncontracting individual health
10professional initiated the plan’s internal dispute resolution
11 mechanism.

12(3) If either the noncontracting individual health professional
13or the plan appeals a claim to the department’s independent dispute
14resolution process, the other party shall participate in the appeal
15process as described in this section.

16(4) The disputed claim is limited to covered services rendered
17by a noncontracting individual health professional, as defined by
18paragraph (3) of subdivision (c) of Section 1371.9, at a contracting
19health facility, as defined by paragraph (2) of subdivision (c) of
20Section 1371.9.

end delete
begin insert

21(2) If either the noncontracting individual health professional
22or the plan appeals a claim to the department’s independent dispute
23resolution process, the other party shall participate in the appeal
24process as described in this section.

end insert

25(b) The department and the Department of Insurance shall jointly
26establish uniform written procedures for the submission, receipt,
27processing, and resolution of claim payment disputes pursuant to
28this section.

begin delete

29(1) A noncontracting individual health professional appealing
30to the independent dispute resolution process shall provide the
31department with a written justification for the appeal, which shall
32not exceed two pages.

33(2) The department shall respond to an appeal by a
34noncontracting individual health professional within 30 days of
35receipt of the written document described in paragraph (1).

36(3) The plan shall provide all documents submitted to the
37department for the independent dispute resolution process to the
38individual health professional appealing the claim. The statistically
39credible information on the average payments described in
P5    1subdivision (b) of Section 1371.31 shall be exempt from public
2disclosure.

3(c) A noncontracting individual health professional may dispute
4a claim for either of the following reasons:

5(1) The noncontracting individual health professional disputes
6that the payment received from the plan is the plan’s average
7contracted rate pursuant to Section 1371.31.

8(2) The noncontracting individual health professional seeks to
9be paid more than 150 percent of the amount that the plan otherwise
10would pay pursuant to Section 1371.31.

11(d) If the disputed claim is appealed pursuant to paragraph (1)
12of subdivision (c), the department shall determine whether the
13payment provided to the noncontracting individual health
14professional is the plan’s average contracted rate as defined in
15paragraph (1) of subdivision (c) of Section 1371.31. If the
16department determines that the payment is lower than the plan’s
17average contracted rate, the plan shall correct the statistically
18credible information required by Section 1371.31 and provide
19payment to the noncontracting individual health professional,
20consistent with subdivision (j).

21(e) If the disputed claim is appealed pursuant to paragraph (2)
22of subdivision (c), the department shall determine payment based
23on all of the following:

24(1) The provider's training, qualifications, and length of time
25in practice.

26(2) The nature of the services provided.

27(3) The fees usually charged by or paid to the provider.

28(4) Prevailing provider rates charged or paid in the general
29geographic area in which the services were rendered.

30(5) Other aspects of the economics of the medical provider's
31practice that are relevant.

32(6) Any unusual circumstances in the case.

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

34(1) A dispute concerning a claim that has completed the plan’s
35internal dispute resolution mechanism established pursuant to
36subdivision (h) of Section 1367, or a claim for which fewer than
3730 days have elapsed since the individual health professional
38initiated the plan’s internal dispute resolution mechanism.

39(2) A dispute concerning a claim that is currently in arbitration
40or litigation in state or federal court.

P6    1(3) A dispute concerning a late payment.

2(4) A dispute concerning an interest payment.

3(5) A claim dispute that is not subject to the department’s
4jurisdiction.

5(6) A claim dispute with a health plan licensed or regulated by
6another entity or state.

7(7) A dispute regarding a claim that does not involve covered
8benefits.

9(8) A claim denied on the basis that the services were not
10medically necessary or were experimental or investigational in
11nature.

12(g) (1) A noncontracting individual health professional may
13initiate an appeal to the department’s independent dispute
14resolution process by following the procedures specified by the
15department. A noncontracting individual health professional or
16group of noncontracting individual health professionals may
17 aggregate disputed claim amounts. An aggregated claim shall
18involve the same or similar services and the same health care
19service plan.

20(2) A health care service plan subject to a claim or claims
21appealed by a noncontracting individual health professional shall
22provide information requested by the department according to the
23department’s policies and procedures. If the requested information
24is not received in a timely manner, the department shall make a
25determination based on the information available to it.

end delete
begin delete

12 26(h)

end delete

27begin insert(c)end insert The department may contract with one or more independent
28organizations that specialize in dispute resolution to conduct the
29proceedings. The independent organization handling a dispute
30shall be independent of either party to the dispute. The department
31begin delete mayend deletebegin insert shallend insert establishbegin delete additional requirements, includingend delete
32 conflict-of-interest standards, consistent with the purposes of this
33 section, that an organization shall meet in order to qualify for
34participation in the independent dispute resolution program. The
35department may contract with the same independent organization
36or organizations as the Department of Insurance.

begin delete

37(i) The independent dispute resolution organization shall issue
38a decision within 60 days of the receipt of required documentation,
39according to the department’s written policies and procedures.

end delete
begin delete

25 40(j)

end delete

P7    1begin insert(d)end insert The determination obtained through the department’s
2independent dispute resolution process shall be binding on both
3parties. begin delete When making a decision, the independent dispute
4resolution organization shall prepare in writing and provide to the
5parties an award, including factual findings and the reasons on
6which the decision is based. If additional payment is awarded to
7a noncontracting individual health professional, it shall be made
8consistent with Section 1371.35.end delete

begin delete

9(k) Each party shall bear its own costs and expenses, and an
10equal share of the administrative fees for the independent dispute
11resolution process. The department shall establish fees to cover
12the actual cost of processing claims disputes pursuant to this
13section.

14(l) In determining what constitutes an “unfair payment pattern”
15as defined in Section 1371.37, the department shall take into
16consideration determinations of the independent dispute resolution
17process in order to determine whether a plan has engaged in an
18unfair payment pattern.

19(m) If a noncontracting individual health professional files
20multiple appeals pursuant to paragraph (2) of subdivision (c) and
21loses more than one third of those appeals within a one year period,
22he or she shall be prohibited from appealing to the department’s
23independent dispute resolution process pursuant to paragraph (2)
24of subdivision (c) for one year from the first appeal. For the
25purposes of this section, a noncontracting individual health
26professional shall be deemed to have lost an appeal when the
27department’s independent dispute resolution process awards the
28noncontracting individual health professional less than the amount
29sought by the noncontracting individual health professional.

end delete
begin delete

14 30(n)

end delete

31begin insert(e)end insert This section shall not apply to a Medi-Cal managed health
32care service plan or any entity that enters into a contract with the
33State Department of Health Care Services pursuant to Chapter 7
34(commencing with Section 14000) of, Chapter 8 (commencing
35with Sectionbegin delete 14200), andend deletebegin insert 14200)end insert of,begin insert andend insert Chapter 8.75
36(commencing with Section 14591)begin delete ofend deletebegin insert of,end insert Part 3 of Division 9 of
37the Welfare and Institutions Code.

begin delete

20 38(o)

end delete

39begin insert(f)end insert If a health care service plan delegates payment functions to
40 a contracted entity, including, but not limited to, a medical group
P8    1or independent practice association, then the delegated entity shall
2comply with this section.

begin insert

3(g) This section shall not apply to emergency services and care,
4as defined in Section 1317.1.

end insert
5

SEC. 2.  

Section 1371.31 is added to the Health and Safety
6Code
, immediately following Section 1371.30, to read:

begin delete
7

1371.31.  

(a) This section shall apply to claim disputes between
8a noncontracting individual health professional subject to Section
91371.9 and a health care service plan. Claim disputes shall be
10limited to circumstances in which either of the following occurs:

11(1) The noncontracting individual health professional disputes
12that the payment received from the plan is the plan’s average
13contracted rate pursuant to paragraph (1) of subdivision (c) of
14Section 1371.30.

15(2) The noncontracting individual health professional seeks to
16be paid more than 150 percent of the amount that the plan would
17otherwise pay pursuant to paragraph (2) of subdivision (c) of
18Section 1371.30.

19(b)

end delete
20begin insert

begin insert1371.31.end insert  

end insert

begin insert(a)end insert (1) The health care service plan shall maintain
21statistically credible information, updated at least annually,
22regarding rates paid to currently contracting individual health
23professionalsbegin insert or a group of professionalsend insert who provide similar
24services, are not capitated, and are practicing in the same or a
25similar geographic area as the noncontracting individual health
26professional.

begin delete

27(2) The statistically credible information required by paragraph
28(1) shall take into consideration the determinations of the
29independent dispute resolution process for claims filed pursuant
30to paragraph (1) of subdivision (c) of 1371.30.

end delete
begin insert

31(2) If, based on the health care service plan’s model or payment
32arrangements, a health care service plan does not pay a
33statistically significant number or dollar amount of claims for
34covered services in order to maintain the statistically credible
35information required by paragraph (1), the health care service
36plan shall demonstrate to the department that it has access to a
37statistically credible database reflecting reasonable rates paid to
38providers for services provided in the same or similar geographic
39area.

end insert
begin insert

P9    1(3) The statistically credible information required by paragraphs
2(1) and (2) shall be confidential and exempt from public disclosure.

end insert
begin delete

3(c)

end delete

4begin insert(b)end insert (1) Unless otherwise provided in this section or otherwise
5agreed by the noncontracting individual health professional and
6the plan, the plan shall base reimbursement of noncontracted claims
7for services rendered according to Section 1371.9 on the average
8rates based on the statistically credible information with regard to
9the amount paid to contracted individual health professionals who
10are providing similar services, are not capitated, and practicing in
11the same or similar geographic area.

12(2) begin deleteFor end deletebegin insertIfend insert nonemergency servicesbegin insert areend insert provided bybegin delete theend deletebegin insert aend insert
13 noncontracting individual health professional to an enrolleebegin insert who
14has voluntarily chosen to use his or her out-of-network benefit for
15servicesend insert
covered by a preferred provider organization or a point
16of service plan, unless otherwise agreed to by the plan and the
17noncontracting individual health professional, the amount paid
18shall be the amount set forth in the enrollee’s evidence of coverage.

begin delete

19(d) (1) A health care service plan’s failure to pay a
20noncontracting individual health professional pursuant to this
21section shall constitute an “unfair payment pattern” within the
22meaning of Section 1371.37.

23(2) In determining whether a plan has engaged in an “unfair
24payment pattern” as defined in Section 1371.37, the department
25shall take into consideration decisions of the independent dispute
26resolution process.

end delete
begin insert

27(3) A noncontracting individual health professional who disputes
28the claim reimbursement shall utilize the independent dispute
29resolution process described in Section 1371.30.

end insert
begin insert

30(c) If a health care service plan delegates by written contract
31 the responsibility for payment of claims to a contracted entity,
32including, but not limited to, a medical group or independent
33practice association, then the entity to which that responsibility
34is delegated shall comply with the requirements of this section.

end insert
begin insert

35(d) A payment made by the health care service plan to the
36noncontracting health care professional for nonemergency services
37as required by Section 1371.9 and this section, in addition to the
38applicable cost sharing owed by the enrollee, shall constitute
39payment in full for nonemergency services rendered.

end insert
begin insert

P10   1(e) This section shall not apply to a Medi-Cal managed health
2care service plan or any other entity that enters into a contract
3with the State Department of Health Care Services pursuant to
4Chapter 7 (commencing with Section 14000) of, Chapter 8
5(commencing with Section 14200) of, and Chapter 8.75
6(commencing with Section 14591) of, Part 3 of Division 9 of the
7Welfare and Institutions Code.

end insert
begin insert

8(f) This section shall not apply to emergency services and care,
9as defined in Section 1317.1.

end insert
10

SEC. 3.  

Section 1371.9 is added to the Health and Safety Code,
11to read:

12

1371.9.  

(a) (1) A health care service plan contract issued,
13amended, or renewed on or after January 1, 2016, shall provide
14that if an enrollee obtains care from a contracting health facility
15at which, or as a result of which, the enrollee receives services
16provided by a noncontracting individual health professional, the
17enrollee shall pay the noncontracting individual health professional
18no more than the same cost sharing that the enrollee would have
19paid for the same covered benefits received from a contracting
20individual health professional. This amount shall be referred to as
21the “in-network cost sharing.”

22(2) At the time of payment by the plan to the noncontracting
23individual health professional, the plan shall inform the
24noncontracting individual health professional of the in-network
25cost sharing owed by the enrollee. If a noncontracting individual
26health professional receives reimbursement for services provided
27to the enrollee at a contracting health facility from the plan, an
28enrollee shall not owe the noncontracting individual health
29professional at the contracting health facility more than the
30in-network cost sharing.

31(3) Except as provided in subdivision (d), if the noncontracting
32individual health professional collects more than the in-network
33cost sharing from the enrollee, the noncontracting individual health
34professional shall refund any overpayment to the enrollee within
3530 working days of receiving notice from the plan of the in-network
36cost sharing amount owed by the enrollee pursuant to paragraph
37(2). If the noncontracting individual health professional does not
38refund any overpayment within 30 working days after being
39informed of the enrollee’s in-network cost sharing, interest shall
40accrue at the rate of 15 percent per annum beginning with the first
P11   1calendar day after the 30-working day period. A noncontracting
2individual health professional shall automatically include in his
3or her refund of the overpayment all interest that has accrued
4pursuant to this section without requiring the enrollee to submit a
5request for the interest amount.

6(4) If the noncontracting individual health professional has
7advanced to collections any amount owed by the enrollee, the plan
8shall not reimburse the noncontracting individual health
9professional for services provided to the enrollee by the
10noncontracting individual health professional at a contracting
11health facility. In submitting a claim to the plan, the noncontracting
12individual health professional at a contracting health facility shall
13affirm in writing that he or she has not advanced to collections any
14payment owed by the enrollee. A noncontracting individual health
15professional shall not attempt to collect more than the in-network
16cost sharing from the enrollee after receiving payment from the
17plan. Once the noncontracting individual health professional
18receives payment from the plan, the noncontracting individual
19health professional may advance to collections any in-network
20cost sharing owed by the enrollee if the enrollee fails to pay the
21in-network cost sharing after the plan has informed the
22noncontracting individual health professional of the amount owed
23by the enrollee pursuant to paragraph (2).

24(b) (1) Any cost sharing paid by the enrollee for the services
25provided by a noncontracting individual health professional at the
26contracting health facility shall count toward the limit on annual
27out-of-pocket expenses established under Section 1367.006.

28(2) Cost sharing arising from services received by a
29noncontracting individual health professional at a contracting
30health facility shall be counted toward any deductible in the same
31manner as cost sharing would be attributed to a contracting
32individual health professional.

33(c) For purposes of this section, the following definitions shall
34apply:

35(1) “Cost sharing” includes any copayment, coinsurance, or
36deductible, or any other form of cost sharing paid by the enrollee
37other than premium or share of premium.

38(2) “Health facility” means a health facility provider who is
39licensed by this state to deliver or furnish health care services. A
40health facility shall include the following providers:

P12   1(A) Licensed hospital.

2(B) Skilled nursing facility.

3(C) Ambulatory surgery.

4(D) Laboratory.

5(E) Radiology or imaging.

6(F) Facilities providing mental health or substance abuse
7treatment.

8(G) Any other provider as the department may by regulation
9define as a health facility for purposes of this section.

10(3) “Individual health professional” means a physician or
11surgeon or other professional who is licensed by this state to deliver
12or furnish health care services.

13(d) An enrollee may voluntarily consent to the use of a
14noncontracting individual health professional. For purposes of this
15section, consent shall be voluntary if at least 24 hours in advance
16of the receipt of services, the enrollee is provided a written estimate
17of the cost of care by the noncontracting individual health
18professional and the enrollee consents in writing to both the use
19of a noncontracting individual health professional and payment of
20the estimated additional cost for the services to be provided by the
21noncontracting individual health professional. The consent shall
22inform the enrollee that the cost of the services of the
23noncontracting individual health professional will not accrue to
24the limit on annual out-of-pocket expenses or the enrollee’s
25deductible, if any.

26(e) This section shall not be construed to require a plan to cover
27services or provide benefits that are not otherwise covered under
28the terms and conditions of the plan contract.

29(f) This section shall not be construed to exempt a planbegin insert or
30providerend insert
from the requirements under Section 1371.4 or 1373.96
31nor abrogate the holding in Prospect Medical Group v. Northridge
32Emergency Medical Group et al., (2009) 45 Cal.4th 497, that an
33emergency room physician is prohibited from billing an enrollee
34of a health care service plan directly for sums that the health care
35service plan has failed to pay for the enrollee’s emergency room
36treatment.

37(g) If a health care service plan delegates payment functions to
38a contracted entity, including, but not limited to, a medical group
39or independent practice association, the delegated entity shall
40comply with this section.

P13   1(h) This sectionbegin delete doesend deletebegin insert shallend insert not apply to a Medi-Cal managed
2health care service plan or any other entity that enters into a
3contract with the State Department of Health Care Services
4pursuant to Chapter 7 (commencing with Section 14000) of,
5Chapter 8 (commencing with Section 14200)begin delete andend delete of,begin insert andend insert Chapter
68.75 (commencing with Section 14591)begin delete ofend delete Part 3 of Division 9 of
7the Welfare and Institutions Code.

8(i) This sectionbegin delete doesend deletebegin insert shallend insert not apply to emergency services and
9care, as defined in Sectionbegin delete 1317.1 of the Health and Safety Code.end delete
10begin insert 1317.1.end insert

11

SEC. 4.  

Section 10112.8 is added to the Insurance Code, to
12read:

13

10112.8.  

(a) (1) A health insurance policy issued, amended,
14or renewed on or after January 1, 2016, shall provide that if an
15insured obtains care from a contracting health facility at which, or
16as a result of which, the insured receives services provided by a
17noncontracting individual health professional, the insured shall
18pay the noncontracting individual health professional no more than
19the same cost sharing that the insured would have paid for the
20same covered benefits received from a contracting individual health
21professional. This amount shall be referred to as the “in-network
22cost sharing.”

23(2) At the time of payment by the health insurer to the
24 noncontracting individual health professional, the health insurer
25shall inform the noncontracting individual health professional of
26the in-network cost sharing owed by the insured. If a
27noncontracting individual health professional receives
28reimbursement for services provided to the insured at a contracting
29health facility from the health insurer, an insured shall not owe the
30noncontracting individual health professional at the contracting
31health facility more than the in-network cost sharing.

32(3) Except as provided in subdivision (d), if the noncontracting
33individual health professional collects more than the in-network
34cost sharing from the insured, the noncontracting individual health
35professional shall refund any overpayment to the insured within
3630 working days of receiving notice from the health insurer of the
37in-network cost sharing amount owed by the insured pursuant to
38paragraph (2). If the noncontracting individual health professional
39does not refund any overpayment within 30 working days after
40being informed of the insured’s in-network cost sharing, interest
P14   1shall accrue at the rate of 15 percent per annum beginning with
2the first calendar day after the 30-working day period. A
3noncontracting individual health professional shall automatically
4include in his or her refund of the overpayment all interest that has
5accrued pursuant to this section without requiring the insured to
6submit a request for the interest amount.

7(4) If the noncontracting individual health professional has
8advanced to collections any amount owed by the insured, the health
9insurer shall not reimburse the noncontracting individual health
10professional for services provided to the insured by the
11noncontracting individual health professional at a contracting
12health facility. In submitting a claim to the health insurer, the
13noncontracting individual health professional at a contracting
14health facility shall affirm in writing that he or she has not
15advanced to collections any payment owed by the insured. A
16noncontracting individual health professional shall not attempt to
17collect more than the in-network cost sharing from the insured
18after receiving payment from the health insurer. Once the
19noncontracting individual health professional receives payment
20from the health insurer, the noncontracting individual health
21professional may advance to collections any in-network cost
22sharing owed by the insured if the insured fails to pay the
23in-network cost sharing after the health insurer has informed the
24noncontracting individual health professional of the amount owed
25by the insured pursuant to paragraph (2).

26(5) This section shall only apply to a health insurer that enters
27into a contract with a professional or institutional provider to
28provide services at alternative rates of payment pursuant to Section
2910133.

30(b) (1) Any cost sharing paid by the insured for the services
31provided by a noncontracting individual health professional at the
32contracting health facility shall count toward the limit on annual
33out-of-pocket expenses established under Section 10112.28.

34(2) Cost sharing arising from services received by a
35noncontracting individual health professional at a contracting
36health facility shall be counted toward any deductible in the same
37manner as cost sharing would be attributed to a contracting
38individual health professional.

39(c) For purposes of this section, the following definitions shall
40apply:

P15   1(1) “Cost sharing” includes any copayment, coinsurance, or
2deductible, or any other form of cost sharing paid by the insured
3other than premium or share of premium.

4 (2) “Health facility” means a health facility provider who is
5 licensed by this state to deliver or furnish health care services. A
6health facility shall include the following providers:

7(A) Licensed hospital.

8(B) Skilled nursing facility.

9(C) Ambulatory surgery.

10(D) Laboratory.

11(E) Radiology or imaging.

12(F) Facilities providing mental health or substance abuse
13treatment.

14(G) Any other provider as the commissioner may by regulation
15define as a health facility for purposes of this section.

16(3) “Individual health professional” means a physician or
17surgeon or other professional who is licensed by this state to deliver
18or furnish health care services.

19(d) An insured may voluntarily consent to the use of a
20 noncontracting individual health professional. For purposes of this
21section, consent shall be voluntary if at least 24 hours in advance
22of the receipt of services, the insured is provided a written estimate
23of the cost of care by the noncontracting individual health
24professional and the insured consents in writing to both the use of
25a noncontracting individual health professional and payment of
26the estimated additional cost for the services to be provided by the
27noncontracting individual health professional. The consent shall
28inform the insured that the cost of the services of the
29noncontracting individual health professional will not accrue to
30the limit on annual out-of-pocket expenses or the insured’s
31deductible, if any.

32(e) This section shall not be construed to require an insurer to
33cover services or provide benefits that are not otherwise covered
34under the terms and conditions of the policy.

35(f) This section shall not be construed to exempt a health insurer
36from the requirements under Section 10112.7 or Section 10133.56.

begin insert

37(g) This section shall not apply to emergency services and care,
38as defined in Section 1317.1.

end insert
39

SEC. 5.  

Section 10112.81 is added to the Insurance Code, to
40read:

P16   1

10112.81.  

(a) (1) The commissioner shall establish an
2independent dispute resolution process for the purpose of
3processing and resolving a claim dispute between an insurer and
4a noncontracting individual health professional for services subject
5to Section 10112.8.

begin delete

6(2) A noncontracting individual health professional may appeal
7a claim to the independent dispute resolution process established
8pursuant to this section after the noncontracting individual health
9professional has completed the insurer’s internal dispute resolution
10process, as defined in subdivision (b) of Section 10123.137 or if
1130 days have elapsed since the noncontracting individual health
12professional initiated the insurer’s internal dispute resolution
13 mechanism.

14(3) If either the noncontracting individual health professional
15or the insurer appeals a claim to the department’s independent
16dispute resolution process, the other party shall participate in the
17appeal process as described in this section.

18(4) The disputed claim is limited to covered services rendered
19by a noncontracting individual health professional, as defined by
20paragraph (3) of subdivision (c) of Section 10112.8, at a contracting
21health facility, as defined by paragraph (2) of subdivision (c) of
22Section 10112.8.

end delete
begin insert

23(2) If either the noncontracting individual health professional
24or the insurer appeals a claim to the department’s independent
25dispute resolution process, the other party shall participate in the
26appeal process as described in this section.

end insert

27(b) The commissioner and the Department of Managed Health
28Care shall jointly establish uniform written procedures for the
29submission, receipt, processing, and resolution of claim payment
30disputes pursuant to this section.

begin delete

31(1) A noncontracting individual health professional appealing
32to the independent dispute resolution process shall provide the
33commissioner with a written justification for the appeal, which
34shall not exceed two pages.

35(2) The commissioner shall respond to an appeal by a
36noncontracting individual health professional within 30 days of
37receipt of the written documentation described in paragraph (1).

38(3) The insurer shall provide all documents submitted to the
39commissioner for the independent dispute resolution process to
40the individual health professional appealing the claim. The
P17   1statistically credible information on the average payments described
2in subdivision (b) of Section 10112.82 shall be exempt from the
3disclosure required by this paragraph.

4(c) A noncontracting individual health professional may dispute
5a claim for either of the following reasons:

6(1) The noncontracting individual health professional disputes
7that the payment received from the insurer is the insurer’s average
8contracted rate pursuant to Section 10112.82.

9(2) The noncontracting individual health professional seeks to
10be paid more than 150 percent of the amount that the insurer
11otherwise would pay pursuant to Section 10112.82.

12(d) If the disputed claim is appealed pursuant to paragraph (1)
13of subdivision (c), the department shall determine whether the
14payment provided to the noncontracting individual health
15professional is the insurer’s average contracted rate as defined in
16paragraph (1) of subdivision (c) of Section 10112.82. If the
17commissioner determines that the payment is lower than the
18insurer’s average contracted rate, the insurer shall correct the
19 statistically credible information required by Section 10112.82
20and provide payment to the noncontracting individual health
21professional, consistent with subdivision (j).

22(e) If the disputed claim is appealed pursuant to paragraph (2)
23of subdivision (c), the commissioner shall determine payment
24based on all of the following:

25(1) The provider's training, qualifications, and length of time
26in practice.

27(2) The nature of the services provided.

28(3) The fees usually charged by or paid to the provider.

29(4) Prevailing provider rates charged or paid in the general
30geographic area in which the services were rendered.

31(5) Other aspects of the economics of the medical provider's
32practice that are relevant.

33(6) Any unusual circumstances in the case.

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

35(1) A dispute concerning a claim that has not previously been
36submitted to the insurer’s dispute resolution mechanism established
37pursuant to subdivision (b) of Section 10123.137, or a claim for
38which fewer than 30 days have elapsed since the individual health
39professional initiated the insurer’s internal dispute resolution
40process.

P18   1(2) A dispute concerning a claim that is currently in arbitration
2or litigation in state or federal court.

3(3) A dispute concerning a late payment.

4(4) A dispute concerning an interest payment.

5(5) A Medi-Cal claim dispute for which a fair hearing pursuant
6to Chapter 7 (commencing with Section 10950) of Part 2 of
7Division 9 of the Welfare and Institutions Code has commenced.

8(6) A claim dispute that is not subject to the commissioner’s
9jurisdiction.

10(7) A claim dispute with a health insurer licensed or regulated
11by another entity or state.

12(8) A dispute regarding a claim that does not involve covered
13benefits.

14(9) A claim denied on the basis that the services were not
15medically necessary or were experimental or investigational in
16nature.

17(g) (1) A noncontracting individual health professional may
18initiate an appeal to the independent dispute resolution process
19established pursuant to this section by following the procedures
20specified by the commissioner. A noncontracting individual health
21professional may aggregate disputed claim amounts. An aggregated
22claim shall involve the same or similar services and the same
23insurer.

24(2) An insurer subject to a claim or claims appealed by a
25noncontracting individual health professional shall provide
26information requested by the commissioner according to the
27commissioner’s policies and procedures. If the requested
28information is not received in a timely manner, the commissioner
29shall make a determination based on the information available to
30him or her.

end delete
begin delete

8 31(h)

end delete

32begin insert(c)end insert The commissioner may contract with one or more
33independent organizations that specialize in dispute resolution to
34conduct the proceedings. The independent organization handling
35a dispute shall be independent of either party to the dispute. The
36commissionerbegin delete mayend deletebegin insert shallend insert establishbegin delete additional requirements,
37includingend delete
conflict-of-interest standards, consistent with the
38purposes of this section, that an organization shall meet in order
39to qualify for participation in the independent dispute resolution
40program. The commissioner may contract with the same
P19   1independent organization or organizations as the Department of
2Managed Health Care.

begin delete

3(i) The independent dispute resolution organization shall issue
4a decision within 60 days of receipt of required documentation,
5according to the commissioner’s written policies and procedures.

end delete
begin delete

22 6(j)

end delete

7begin insert(d)end insert The determination obtained through the independent dispute
8resolution process shall be binding on both parties.begin delete When making
9a decision, the independent dispute resolution organization shall
10prepare in writing and provide to the parties an award including
11factual findings and the reasons upon which the decision is based.
12If additional payment is awarded to a noncontracting individual
13health professional, it shall be made consistent with the
14requirements of Section 10123.13.end delete

begin delete

15(k) Each party shall bear its own costs and expenses and an
16equal share of the administrative fees for the independent dispute
17resolution process. The commissioner shall establish fees to cover
18the actual cost of processing claims disputes pursuant to this
19section.

20(l) In determining what constitutes an “unfair payment pattern”
21as defined in Section 1371.37 of the Health and Safety Code, the
22commissioner shall take into consideration determinations of the
23independent dispute resolution process established pursuant to
24subdivision (a) in determining whether an insurer has engaged in
25an unfair payment pattern.

26(m) If a noncontracting individual health professional files
27multiple appeals pursuant to paragraph (2) of subdivision (c) and
28loses more than one third of those appeals within a one year period,
29he or she shall be prohibited from appealing to the commissioner’s
30independent dispute resolution process pursuant to paragraph (2)
31of subdivision (c) for one year from the first appeal. For the
32purposes of this section, a noncontracting individual health
33professional shall be deemed to have lost an appeal when the
34commissioner’s independent dispute resolution process awards
35the noncontracting individual health professional less than the
36amount sought by the noncontracting individual health professional.

37(n) If an insurer delegates payment functions to a contracted
38entity, including, but not limited to, a medical group of independent
39practice association, then the delegated entity shall comply with
40this section.

end delete
begin insert

P20   1(e) This section shall not apply to emergency services and care,
2as defined in Section 1317.1 of the Health and Safety Code.

end insert
3

SEC. 6.  

Section 10112.82 is added to the Insurance Code, to
4read:

begin delete
5

10112.82.  

(a) This section shall apply to a claim dispute
6between a noncontracting individual health professional subject
7to Section 10112.8 and a health insurer. Claim disputes shall be
8limited to circumstances in which either of the following occurs:

9(1) The noncontracting individual health professional disputes
10that the payment received from the insurer is the insurer’s average
11contracted rate pursuant to paragraph (1) of subdivision (c) of
12Section 10112.81.

13(2) The noncontracting individual health professional seeks to
14be paid more than 150 percent of the amount that the insurer
15otherwise would pay pursuant to paragraph (2) of subdivision (c)
16of Section 10112.81.

31 17(b)

end delete
18begin insert

begin insert10112.82.end insert  

end insert

begin insert(a)end insert (1) begin deleteThe end deletebegin insertA health end insertinsurer shall maintain
19statistically credible information, updated at least annually,
20regarding rates paid to currently contracting individual health
21professionalsbegin insert or a group of professionalsend insert who provide similar
22begin delete services, are not capitated,end deletebegin insert servicesend insert and are practicing in the same
23or a similar geographic area as the noncontracting individual health
24professional.

begin delete

25(2) The statistically credible information required by paragraph
26(1) shall take into consideration the determinations of the
27independent dispute resolution process for claims filed pursuant
28to Section 10112.81.

end delete
begin insert

29(2) If a health insurer does not pay a statistically significant
30number or dollar amount of claims for covered services in order
31to maintain the statistically credible information required by
32paragraph (1), the health insurer shall demonstrate to the
33 department that it has access to a statistically credible database
34reflecting reasonable rates paid to providers for services provided
35in the same or a similar geographic area.

end insert

36(3) The statistically credible information required bybegin delete paragraphend delete
37begin insert paragraphsend insert (1)begin insert and (2)end insert shall be confidential and shall be exempt
38from public disclosure.

begin delete

4 39(c)

end delete

P21   1begin insert(b)end insert (1) Unless otherwise provided in this section or otherwise
2agreed to by the noncontracting individual health professional and
3the insurer, the insurer shall base reimbursement ofbegin insert noncontractedend insert
4 claimsbegin insert for services rendered according to Section 10112.81 on the
5average rates basedend insert
on the statistically credible information with
6regard to the amount paid tobegin delete providersend deletebegin insert contracted individual health
7professionalsend insert
who are providing similarbegin delete services, are not capitated,end delete
8begin insert servicesend insert and practicing in the same or similar geographic area.

9(2) begin deleteFor end deletebegin insertIf end insertnonemergency servicesbegin insert areend insert provided bybegin delete theend deletebegin insert aend insert
10 noncontracting individual health professional to an insuredbegin insert who
11has voluntarily chosen to use his or her out-of-network benefit for
12servicesend insert
covered by a preferred provider organization or a
13point-of-service plan, unless otherwise agreed to by the insurer
14and the noncontracting individual health professional, the amount
15paid shall be the amount set forth in the insured’s evidence of
16coverage.

begin delete

17(d) (1) An insurer’s failure to pay a noncontracting individual
18health professional consistent with this section shall constitute an
19“unfair payment pattern” within the meaning of Section 1371.37
20of the Health and Safety Code.

end delete
begin delete

21(2) In determining whether an insurer has engaged in an “unfair
22payment pattern” as defined in Section 1371.37 of the Health and
23Safety Code, the commissioner shall take into consideration
24decisions of the independent dispute resolution process established
25pursuant to subdivision (a) of Section 10112.81.

end delete
begin insert

26(3) A noncontracting individual health professional who disputes
27the claim reimbursement shall utilize the independent dispute
28resolution process described in Section 10112.81.

end insert
begin insert

29(c) A payment made by a health insurer to a noncontracting
30health care professional for nonemergency services as required
31by Section 10112.81 and this section, in addition to the applicable
32cost sharing owed by the insured, shall constitute payment in full
33for the nonemergency services rendered.

end insert
begin insert

34(d) This section shall not apply to a Medicare plan or a
35Medicare supplemental plan.

end insert
begin insert

36(e) This section shall not apply to emergency services and care,
37as defined in Section 1317.1 of the Health and Safety Code.

end insert
38

SEC. 7.  

The Legislature finds and declares that Sections 2 and
396 of this act, which add Section 1371.31 to the Health and Safety
40Code and Section 10112.82 to the Insurance Code, impose a
P22   1limitation on the public’s right of access to the meetings of public
2bodies or the writings of public officials and agencies within the
3meaning of Section 3 of Article I of the California Constitution.
4Pursuant to that constitutional provision, the Legislature makes
5the following findings to demonstrate the interest protected by this
6limitation and the need for protecting that interest:

7In order to protect confidential and proprietary information, it
8is necessary for that information to remain confidential.

9

SEC. 8.  

No reimbursement is required by this act pursuant to
10Section 6 of Article XIII B of the California Constitution because
11the only costs that may be incurred by a local agency or school
12district will be incurred because this act creates a new crime or
13infraction, eliminates a crime or infraction, or changes the penalty
14for a crime or infraction, within the meaning of Section 17556 of
15the Government Code, or changes the definition of a crime within
16the meaning of Section 6 of Article XIII B of the California
17Constitution.



O

    95