BILL NUMBER: AB 533 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 18, 2015
AMENDED IN SENATE JULY 7, 2015
AMENDED IN ASSEMBLY APRIL 23, 2015
AMENDED IN ASSEMBLY APRIL 15, 2015
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
dispute that has completed the plan's or the insurer's
internal dispute resolution mechanism, with a plan or
insurer, 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
contracted individual health professionals who provide similar
services, are not capitated, and practice in the same or a similar
geographic region, as specified. 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.
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:
SECTION 1. Section 1371.30 is added to the Health and Safety Code,
immediately following Section 1371.3, to read:
1371.30. (a) (1) The department shall establish an independent
dispute resolution process for the purpose of processing and
resolving a claim dispute between a health care service plan and a
noncontracting individual health professional for services subject to
Section 1371.9.
(2) A noncontracting individual health professional may appeal a
claim to the independent dispute resolution process established
pursuant to this section after the noncontracting individual health
professional has completed the plan's internal dispute resolution
mechanism, as defined in subdivision (h) of Section 1367, or if 30
days have elapsed since the noncontracting individual health
professional initiated the plan's internal dispute resolution
mechanism.
(3) If either the noncontracting individual health professional or
the plan appeals a claim to the department's independent dispute
resolution process, the other party shall participate in the appeal
process as described in this section.
(4) The disputed claim is limited to covered services rendered by
a noncontracting individual health professional, as defined by
paragraph (3) of subdivision (c) of Section 1371.9, at a contracting
health facility, as defined by paragraph (2) of subdivision (c) of
Section 1371.9.
(2) If either the noncontracting individual health professional or
the plan appeals a claim to the department's independent dispute
resolution process, the other party shall participate in the appeal
process as described in this section.
(b) The department and the Department of Insurance shall jointly
establish uniform written procedures for the submission, receipt,
processing, and resolution of claim payment disputes pursuant to this
section.
(1) A noncontracting individual health professional appealing to
the independent dispute resolution process shall provide the
department with a written justification for the appeal, which shall
not exceed two pages.
(2) The department shall respond to an appeal by a noncontracting
individual health professional within 30 days of receipt of the
written document described in paragraph (1).
(3) The plan shall provide all documents submitted to the
department for the independent dispute resolution process to the
individual health professional appealing the claim. The statistically
credible information on the average payments described in
subdivision (b) of Section 1371.31 shall be exempt from public
disclosure.
(c) A noncontracting individual health professional may dispute a
claim for either of the following reasons:
(1) The noncontracting individual health professional disputes
that the payment received from the plan is the plan's average
contracted rate pursuant to Section 1371.31.
(2) The noncontracting individual health professional seeks to be
paid more than 150 percent of the amount that the plan otherwise
would pay pursuant to Section 1371.31.
(d) If the disputed claim is appealed pursuant to paragraph (1) of
subdivision (c), the department shall determine whether the payment
provided to the noncontracting individual health professional is the
plan's average contracted rate as defined in paragraph (1) of
subdivision (c) of Section 1371.31. If the department determines that
the payment is lower than the plan's average contracted rate, the
plan shall correct the statistically credible information required by
Section 1371.31 and provide payment to the noncontracting individual
health professional, consistent with subdivision (j).
(e) If the disputed claim is appealed pursuant to paragraph (2) of
subdivision (c), the department shall determine payment based on all
of the following:
(1) The provider's training, qualifications, and length of time in
practice.
(2) The nature of the services provided.
(3) The fees usually charged by or paid to the provider.
(4) Prevailing provider rates charged or paid in the general
geographic area in which the services were rendered.
(5) Other aspects of the economics of the medical provider's
practice that are relevant.
(6) Any unusual circumstances in the case.
(f) An eligible claim does not include any of the following:
(1) A dispute concerning a claim that has completed the plan's
internal dispute resolution mechanism established pursuant to
subdivision (h) of Section 1367, or a claim for which fewer than 30
days have elapsed since the individual health professional initiated
the plan's internal dispute resolution mechanism.
(2) A dispute concerning a claim that is currently in arbitration
or litigation in state or federal court.
(3) A dispute concerning a late payment.
(4) A dispute concerning an interest payment.
(5) A claim dispute that is not subject to the department's
jurisdiction.
(6) A claim dispute with a health plan licensed or regulated by
another entity or state.
(7) A dispute regarding a claim that does not involve covered
benefits.
(8) A claim denied on the basis that the services were not
medically necessary or were experimental or investigational in
nature.
(g) (1) A noncontracting individual health professional may
initiate an appeal to the department's independent dispute resolution
process by following the procedures specified by the department. A
noncontracting individual health professional or group of
noncontracting individual health professionals may aggregate disputed
claim amounts. An aggregated claim shall involve the same or similar
services and the same health care service plan.
(2) A health care service plan subject to a claim or claims
appealed by a noncontracting individual health professional shall
provide information requested by the department according to the
department's policies and procedures. If the requested information is
not received in a timely manner, the department shall make a
determination based on the information available to it.
(h)
(c) The department may contract with one or more
independent organizations that specialize in dispute resolution to
conduct the proceedings. The independent organization handling a
dispute shall be independent of either party to the dispute. The
department may shall establish
additional requirements, including conflict-of-interest
standards, consistent with the purposes of this section, that an
organization shall meet in order to qualify for participation in the
independent dispute resolution program. The department may contract
with the same independent organization or organizations as the
Department of Insurance.
(i) The independent dispute resolution organization shall issue a
decision within 60 days of the receipt of required documentation,
according to the department's written policies and procedures.
(j)
(d) The determination obtained through the department's
independent dispute resolution process shall be binding on both
parties. When making a decision, the independent dispute
resolution organization shall prepare in writing and provide to the
parties an award, including factual findings and the reasons on which
the decision is based. If additional payment is awarded to a
noncontracting individual health professional, it shall be made
consistent with Section 1371.35.
(k) Each party shall bear its own costs and expenses, and an equal
share of the administrative fees for the independent dispute
resolution process. The department shall establish fees to cover the
actual cost of processing claims disputes pursuant to this section.
(l) In determining what constitutes an "unfair payment pattern" as
defined in Section 1371.37, the department shall take into
consideration determinations of the independent dispute resolution
process in order to determine whether a plan has engaged in an unfair
payment pattern.
(m) If a noncontracting individual health professional files
multiple appeals pursuant to paragraph (2) of subdivision (c) and
loses more than one third of those appeals within a one year period,
he or she shall be prohibited from appealing to the department's
independent dispute resolution process pursuant to paragraph (2) of
subdivision (c) for one year from the first appeal. For the purposes
of this section, a noncontracting individual health professional
shall be deemed to have lost an appeal when the department's
independent dispute resolution process awards the noncontracting
individual health professional less than the amount sought by the
noncontracting individual health professional.
(n)
(e) This section shall not apply to a Medi-Cal managed
health care service plan or any entity that enters into a contract
with the State Department of Health Care Services pursuant to Chapter
7 (commencing with Section 14000) of, Chapter 8 (commencing with
Section 14200), and 14200) of, and
Chapter 8.75 (commencing with Section 14591) of
of, Part 3 of Division 9 of the Welfare and
Institutions Code.
(o)
(f) If a health care service plan delegates payment
functions to a contracted entity, including, but not limited to, a
medical group or independent practice association, then the delegated
entity shall comply with this section.
(g) This section shall not apply to emergency services and care,
as defined in Section 1317.1.
SEC. 2. Section 1371.31 is added to the Health and Safety Code,
immediately following Section 1371.30, to read:
1371.31. (a) This section shall apply to claim disputes between a
noncontracting individual health professional subject to Section
1371.9 and a health care service plan. Claim disputes shall be
limited to circumstances in which either of the following occurs:
(1) The noncontracting individual health professional disputes
that the payment received from the plan is the plan's average
contracted rate pursuant to paragraph (1) of subdivision (c) of
Section 1371.30.
(2) The noncontracting individual health professional seeks to be
paid more than 150 percent of the amount that the plan would
otherwise pay pursuant to paragraph (2) of subdivision (c) of Section
1371.30.
(b)
1371.31. (a) (1) The health care service
plan shall maintain statistically credible information, updated at
least annually, regarding rates paid to currently contracting
individual health professionals or a group of professionals
who provide similar services, are not capitated, and are
practicing in the same or a similar geographic area as the
noncontracting individual health professional.
(2) The statistically credible information required by paragraph
(1) shall take into consideration the determinations of the
independent dispute resolution process for claims filed pursuant to
paragraph (1) of subdivision (c) of 1371.30.
(2) If, based on the health care service plan's model or payment
arrangements, a health care service plan does not pay a statistically
significant number or dollar amount of claims for covered services
in order to maintain the statistically credible information required
by paragraph (1), the health care service plan shall demonstrate to
the department that it has access to a statistically credible
database reflecting reasonable rates paid to providers for services
provided in the same or similar geographic area.
(3) The statistically credible information required by paragraphs
(1) and (2) shall be confidential and exempt from public disclosure.
(c)
(b) (1) Unless otherwise provided in this section or
otherwise agreed by the noncontracting individual health professional
and the plan, the plan shall base reimbursement of noncontracted
claims for services rendered according to Section 1371.9 on the
average rates based on the statistically credible information with
regard to the amount paid to contracted individual health
professionals who are providing similar services, are not capitated,
and practicing in the same or similar geographic area.
(2) For If nonemergency services
are provided by the a
noncontracting individual health professional to an enrollee who
has voluntarily chosen to use his or her out-of-network benefit for
services covered by a preferred provider organization or a
point of service plan, unless otherwise agreed to by the plan and the
noncontracting individual health professional, the amount paid shall
be the amount set forth in the enrollee's evidence of coverage.
(d) (1) A health care service plan's failure to pay a
noncontracting individual health professional pursuant to this
section shall constitute an "unfair payment pattern" within the
meaning of Section 1371.37.
(2) In determining whether a plan has engaged in an "unfair
payment pattern" as defined in Section 1371.37, the department shall
take into consideration decisions of the independent dispute
resolution process.
(3) A noncontracting individual health professional who disputes
the claim reimbursement shall utilize the independent dispute
resolution process described in Section 1371.30.
(c) If a health care service plan delegates by written contract
the responsibility for payment of claims to a contracted entity,
including, but not limited to, a medical group or independent
practice association, then the entity to which that responsibility is
delegated shall comply with the requirements of this section.
(d) A payment made by the health care service plan to the
noncontracting health care professional for nonemergency services as
required by Section 1371.9 and this section, in addition to the
applicable cost sharing owed by the enrollee, shall constitute
payment in full for nonemergency services rendered.
(e) This section shall not apply to a Medi-Cal managed health care
service plan or any other entity that enters into a contract with
the State Department of Health Care Services pursuant to Chapter 7
(commencing with Section 14000) of, Chapter 8 (commencing with
Section 14200) of, and Chapter 8.75 (commencing with Section 14591)
of, Part 3 of Division 9 of the Welfare and Institutions Code.
(f) This section shall not apply to emergency services and care,
as defined in Section 1317.1.
SEC. 3. Section 1371.9 is added to the Health and Safety Code, to
read:
1371.9. (a) (1) A health care service plan contract issued,
amended, or renewed on or after January 1, 2016, shall provide that
if an enrollee obtains care from a contracting health facility at
which, or as a result of which, the enrollee receives services
provided by a noncontracting individual health professional, the
enrollee shall pay the noncontracting individual health professional
no more than the same cost sharing that the enrollee would have paid
for the same covered benefits received from a contracting individual
health professional. This amount shall be referred to as the
"in-network cost sharing."
(2) At the time of payment by the plan to the noncontracting
individual health professional, the plan shall inform the
noncontracting individual health professional of the in-network cost
sharing owed by the enrollee. If a noncontracting individual health
professional receives reimbursement for services provided to the
enrollee at a contracting health facility from the plan, an enrollee
shall not owe the noncontracting individual health professional at
the contracting health facility more than the in-network cost
sharing.
(3) Except as provided in subdivision (d), if the noncontracting
individual health professional collects more than the in-network cost
sharing from the enrollee, the noncontracting individual health
professional shall refund any overpayment to the enrollee within 30
working days of receiving notice from the plan of the in-network cost
sharing amount owed by the enrollee pursuant to paragraph (2). If
the noncontracting individual health professional does not refund any
overpayment within 30 working days after being informed of the
enrollee's in-network cost sharing, interest shall accrue at the rate
of 15 percent per annum beginning with the first calendar day after
the 30-working day period. A noncontracting individual health
professional shall automatically include in his or her refund of the
overpayment all interest that has accrued pursuant to this section
without requiring the enrollee to submit a request for the interest
amount.
(4) If the noncontracting individual health professional has
advanced to collections any amount owed by the enrollee, the plan
shall not reimburse the noncontracting individual health professional
for services provided to the enrollee by the noncontracting
individual health professional at a contracting health facility. In
submitting a claim to the plan, the noncontracting individual health
professional at a contracting health facility shall affirm in writing
that he or she has not advanced to collections any payment owed by
the enrollee. A noncontracting individual health professional shall
not attempt to collect more than the in-network cost sharing from the
enrollee after receiving payment from the plan. Once the
noncontracting individual health professional receives payment from
the plan, the noncontracting individual health professional may
advance to collections any in-network cost sharing owed by the
enrollee if the enrollee fails to pay the in-network cost sharing
after the plan has informed the noncontracting individual health
professional of the amount owed by the enrollee pursuant to paragraph
(2).
(b) (1) Any cost sharing paid by the enrollee for the services
provided by a noncontracting individual health professional at the
contracting health facility shall count toward the limit on annual
out-of-pocket expenses established under Section 1367.006.
(2) Cost sharing arising from services received by a
noncontracting individual health professional at a contracting health
facility shall be counted toward any deductible in the same manner
as cost sharing would be attributed to a contracting individual
health professional.
(c) For purposes of this section, the following definitions shall
apply:
(1) "Cost sharing" includes any copayment, coinsurance, or
deductible, or any other form of cost sharing paid by the enrollee
other than premium or share of premium.
(2) "Health facility" means a health facility provider who is
licensed by this state to deliver or furnish health care services. A
health facility shall include the following providers:
(A) Licensed hospital.
(B) Skilled nursing facility.
(C) Ambulatory surgery.
(D) Laboratory.
(E) Radiology or imaging.
(F) Facilities providing mental health or substance abuse
treatment.
(G) Any other provider as the department may by regulation define
as a health facility for purposes of this section.
(3) "Individual health professional" means a physician or surgeon
or other professional who is licensed by this state to deliver or
furnish health care services.
(d) An enrollee may voluntarily consent to the use of a
noncontracting individual health professional. For purposes of this
section, consent shall be voluntary if at least 24 hours in advance
of the receipt of services, the enrollee is provided a written
estimate of the cost of care by the noncontracting individual health
professional and the enrollee consents in writing to both the use of
a noncontracting individual health professional and payment of the
estimated additional cost for the services to be provided by the
noncontracting individual health professional. The consent shall
inform the enrollee that the cost of the services of the
noncontracting individual health professional will not accrue to the
limit on annual out-of-pocket expenses or the enrollee's deductible,
if any.
(e) This section shall not be construed to require a plan to cover
services or provide benefits that are not otherwise covered under
the terms and conditions of the plan contract.
(f) This section shall not be construed to exempt a plan or
provider from the requirements under Section 1371.4 or 1373.96
nor abrogate the holding in Prospect Medical Group v. Northridge
Emergency Medical Group et al., (2009) 45 Cal.4th 497, that an
emergency room physician is prohibited from billing an enrollee of a
health care service plan directly for sums that the health care
service plan has failed to pay for the enrollee's emergency room
treatment.
(g) If a health care service plan delegates payment functions to a
contracted entity, including, but not limited to, a medical group or
independent practice association, the delegated entity shall comply
with this section.
(h) This section does shall not
apply to a Medi-Cal managed health care service plan or any other
entity that enters into a contract with the State Department of
Health Care Services pursuant to Chapter 7 (commencing with Section
14000) of, Chapter 8 (commencing with Section 14200) and
of, and Chapter 8.75 (commencing with Section
14591) of Part 3 of Division 9 of the Welfare and
Institutions Code.
(i) This section does shall not
apply to emergency services and care, as defined in Section
1317.1 of the Health and Safety Code. 1317.1.
SEC. 4. Section 10112.8 is added to the Insurance Code, to read:
10112.8. (a) (1) A health insurance policy issued, amended, or
renewed on or after January 1, 2016, shall provide that if an insured
obtains care from a contracting health facility at which, or as a
result of which, the insured receives services provided by a
noncontracting individual health professional, the insured shall pay
the noncontracting individual health professional no more than the
same cost sharing that the insured would have paid for the same
covered benefits received from a contracting individual health
professional. This amount shall be referred to as the "in-network
cost sharing."
(2) At the time of payment by the health insurer to the
noncontracting individual health professional, the health insurer
shall inform the noncontracting individual health professional of the
in-network cost sharing owed by the insured. If a noncontracting
individual health professional receives reimbursement for services
provided to the insured at a contracting health facility from the
health insurer, an insured shall not owe the noncontracting
individual health professional at the contracting health facility
more than the in-network cost sharing.
(3) Except as provided in subdivision (d), if the noncontracting
individual health professional collects more than the in-network cost
sharing from the insured, the noncontracting individual health
professional shall refund any overpayment to the insured within 30
working days of receiving notice from the health insurer of the
in-network cost sharing amount owed by the insured pursuant to
paragraph (2). If the noncontracting individual health professional
does not refund any overpayment within 30 working days after being
informed of the insured's in-network cost sharing, interest shall
accrue at the rate of 15 percent per annum beginning with the first
calendar day after the 30-working day period. A noncontracting
individual health professional shall automatically include in his or
her refund of the overpayment all interest that has accrued pursuant
to this section without requiring the insured to submit a request for
the interest amount.
(4) If the noncontracting individual health professional has
advanced to collections any amount owed by the insured, the health
insurer shall not reimburse the noncontracting individual health
professional for services provided to the insured by the
noncontracting individual health professional at a contracting health
facility. In submitting a claim to the health insurer, the
noncontracting individual health professional at a contracting health
facility shall affirm in writing that he or she has not advanced to
collections any payment owed by the insured. A noncontracting
individual health professional shall not attempt to collect more than
the in-network cost sharing from the insured after receiving payment
from the health insurer. Once the noncontracting individual health
professional receives payment from the health insurer, the
noncontracting individual health professional may advance to
collections any in-network cost sharing owed by the insured if the
insured fails to pay the in-network cost sharing after the health
insurer has informed the noncontracting individual health
professional of the amount owed by the insured pursuant to paragraph
(2).
(5) This section shall only apply to a health insurer that enters
into a contract with a professional or institutional provider to
provide services at alternative rates of payment pursuant to Section
10133.
(b) (1) Any cost sharing paid by the insured for the services
provided by a noncontracting individual health professional at the
contracting health facility shall count toward the limit on annual
out-of-pocket expenses established under Section 10112.28.
(2) Cost sharing arising from services received by a
noncontracting individual health professional at a contracting health
facility shall be counted toward
any deductible in the same manner as cost sharing
would be attributed to a contracting individual health professional.
(c) For purposes of this section, the following definitions shall
apply:
(1) "Cost sharing" includes any copayment, coinsurance, or
deductible, or any other form of cost sharing paid by the insured
other than premium or share of premium.
(2) "Health facility" means a health facility provider who is
licensed by this state to deliver or furnish health care services. A
health facility shall include the following providers:
(A) Licensed hospital.
(B) Skilled nursing facility.
(C) Ambulatory surgery.
(D) Laboratory.
(E) Radiology or imaging.
(F) Facilities providing mental health or substance abuse
treatment.
(G) Any other provider as the commissioner may by regulation
define as a health facility for purposes of this section.
(3) "Individual health professional" means a physician or surgeon
or other professional who is licensed by this state to deliver or
furnish health care services.
(d) An insured may voluntarily consent to the use of a
noncontracting individual health professional. For purposes of this
section, consent shall be voluntary if at least 24 hours in advance
of the receipt of services, the insured is provided a written
estimate of the cost of care by the noncontracting individual health
professional and the insured consents in writing to both the use of a
noncontracting individual health professional and payment of the
estimated additional cost for the services to be provided by the
noncontracting individual health professional. The consent shall
inform the insured that the cost of the services of the
noncontracting individual health professional will not accrue to the
limit on annual out-of-pocket expenses or the insured's deductible,
if any.
(e) This section shall not be construed to require an insurer to
cover services or provide benefits that are not otherwise covered
under the terms and conditions of the policy.
(f) This section shall not be construed to exempt a health insurer
from the requirements under Section 10112.7 or Section 10133.56.
(g) This section shall not apply to emergency services and care,
as defined in Section 1317.1.
SEC. 5. Section 10112.81 is added to the Insurance Code, to read:
10112.81. (a) (1) The commissioner shall establish an independent
dispute resolution process for the purpose of processing and
resolving a claim dispute between an insurer and a noncontracting
individual health professional for services subject to Section
10112.8.
(2) A noncontracting individual health professional may appeal a
claim to the independent dispute resolution process established
pursuant to this section after the noncontracting individual health
professional has completed the insurer's internal dispute resolution
process, as defined in subdivision (b) of Section 10123.137 or if 30
days have elapsed since the noncontracting individual health
professional initiated the insurer's internal dispute resolution
mechanism.
(3) If either the noncontracting individual health professional or
the insurer appeals a claim to the department's independent dispute
resolution process, the other party shall participate in the appeal
process as described in this section.
(4) The disputed claim is limited to covered services rendered by
a noncontracting individual health professional, as defined by
paragraph (3) of subdivision (c) of Section 10112.8, at a contracting
health facility, as defined by paragraph (2) of subdivision (c) of
Section 10112.8.
(2) If either the noncontracting individual health professional or
the insurer appeals a claim to the department's independent dispute
resolution process, the other party shall participate in the appeal
process as described in this section.
(b) The commissioner and the Department of Managed Health Care
shall jointly establish uniform written procedures for the
submission, receipt, processing, and resolution of claim payment
disputes pursuant to this section.
(1) A noncontracting individual health professional appealing to
the independent dispute resolution process shall provide the
commissioner with a written justification for the appeal, which shall
not exceed two pages.
(2) The commissioner shall respond to an appeal by a
noncontracting individual health professional within 30 days of
receipt of the written documentation described in paragraph (1).
(3) The insurer shall provide all documents submitted to the
commissioner for the independent dispute resolution process to the
individual health professional appealing the claim. The statistically
credible information on the average payments described in
subdivision (b) of Section 10112.82 shall be exempt from the
disclosure required by this paragraph.
(c) A noncontracting individual health professional may dispute a
claim for either of the following reasons:
(1) The noncontracting individual health professional disputes
that the payment received from the insurer is the insurer's average
contracted rate pursuant to Section 10112.82.
(2) The noncontracting individual health professional seeks to be
paid more than 150 percent of the amount that the insurer otherwise
would pay pursuant to Section 10112.82.
(d) If the disputed claim is appealed pursuant to paragraph (1) of
subdivision (c), the department shall determine whether the payment
provided to the noncontracting individual health professional is the
insurer's average contracted rate as defined in paragraph (1) of
subdivision (c) of Section 10112.82. If the commissioner determines
that the payment is lower than the insurer's average contracted rate,
the insurer shall correct the statistically credible information
required by Section 10112.82 and provide payment to the
noncontracting individual health professional, consistent with
subdivision (j).
(e) If the disputed claim is appealed pursuant to paragraph (2) of
subdivision (c), the commissioner shall determine payment based on
all of the following:
(1) The provider's training, qualifications, and length of time in
practice.
(2) The nature of the services provided.
(3) The fees usually charged by or paid to the provider.
(4) Prevailing provider rates charged or paid in the general
geographic area in which the services were rendered.
(5) Other aspects of the economics of the medical provider's
practice that are relevant.
(6) Any unusual circumstances in the case.
(f) An eligible claim does not include the following:
(1) A dispute concerning a claim that has not previously been
submitted to the insurer's dispute resolution mechanism established
pursuant to subdivision (b) of Section 10123.137, or a claim for
which fewer than 30 days have elapsed since the individual health
professional initiated the insurer's internal dispute resolution
process.
(2) A dispute concerning a claim that is currently in arbitration
or litigation in state or federal court.
(3) A dispute concerning a late payment.
(4) A dispute concerning an interest payment.
(5) A Medi-Cal claim dispute for which a fair hearing pursuant to
Chapter 7 (commencing with Section 10950) of Part 2 of Division 9 of
the Welfare and Institutions Code has commenced.
(6) A claim dispute that is not subject to the commissioner's
jurisdiction.
(7) A claim dispute with a health insurer licensed or regulated by
another entity or state.
(8) A dispute regarding a claim that does not involve covered
benefits.
(9) A claim denied on the basis that the services were not
medically necessary or were experimental or investigational in
nature.
(g) (1) A noncontracting individual health professional may
initiate an appeal to the independent dispute resolution process
established pursuant to this section by following the procedures
specified by the commissioner. A noncontracting individual health
professional may aggregate disputed claim amounts. An aggregated
claim shall involve the same or similar services and the same
insurer.
(2) An insurer subject to a claim or claims appealed by a
noncontracting individual health professional shall provide
information requested by the commissioner according to the
commissioner's policies and procedures. If the requested information
is not received in a timely manner, the commissioner shall make a
determination based on the information available to him or her.
(h)
(c) The commissioner may contract with one or more
independent organizations that specialize in dispute resolution to
conduct the proceedings. The independent organization handling a
dispute shall be independent of either party to the dispute. The
commissioner may shall establish
additional requirements, including
conflict-of-interest standards, consistent with the purposes of this
section, that an organization shall meet in order to qualify for
participation in the independent dispute resolution program. The
commissioner may contract with the same independent organization or
organizations as the Department of Managed Health Care.
(i) The independent dispute resolution organization shall issue a
decision within 60 days of receipt of required documentation,
according to the commissioner's written policies and procedures.
(j)
(d) The determination obtained through the independent
dispute resolution process shall be binding on both parties.
When making a decision, the independent dispute resolution
organization shall prepare in writing and provide to the parties an
award including factual findings and the reasons upon which the
decision is based. If additional payment is awarded to a
noncontracting individual health professional, it shall be made
consistent with the requirements of Section 10123.13.
(k) Each party shall bear its own costs and expenses and an equal
share of the administrative fees for the independent dispute
resolution process. The commissioner shall establish fees to cover
the actual cost of processing claims disputes pursuant to this
section.
(l) In determining what constitutes an "unfair payment pattern" as
defined in Section 1371.37 of the Health and Safety Code, the
commissioner shall take into consideration determinations of the
independent dispute resolution process established pursuant to
subdivision (a) in determining whether an insurer has engaged in an
unfair payment pattern.
(m) If a noncontracting individual health professional files
multiple appeals pursuant to paragraph (2) of subdivision (c) and
loses more than one third of those appeals within a one year period,
he or she shall be prohibited from appealing to the commissioner's
independent dispute resolution process pursuant to paragraph (2) of
subdivision (c) for one year from the first appeal. For the purposes
of this section, a noncontracting individual health professional
shall be deemed to have lost an appeal when the commissioner's
independent dispute resolution process awards the noncontracting
individual health professional less than the amount sought by the
noncontracting individual health professional.
(n) If an insurer delegates payment functions to a contracted
entity, including, but not limited to, a medical group of independent
practice association, then the delegated entity shall comply with
this section.
(e) This section shall not apply to emergency services and care,
as defined in Section 1317.1 of the Health and Safety Code.
SEC. 6. Section 10112.82 is added to the Insurance Code, to read:
10112.82. (a) This section shall apply to a claim dispute between
a noncontracting individual health professional subject to Section
10112.8 and a health insurer. Claim disputes shall be limited to
circumstances in which either of the following occurs:
(1) The noncontracting individual health professional disputes
that the payment received from the insurer is the insurer's average
contracted rate pursuant to paragraph (1) of subdivision (c) of
Section 10112.81.
(2) The noncontracting individual health professional seeks to be
paid more than 150 percent of the amount that the insurer otherwise
would pay pursuant to paragraph (2) of subdivision (c) of Section
10112.81.
(b)
10112.82. (a) (1) The
A health insurer shall maintain statistically credible
information, updated at least annually, regarding rates paid to
currently contracting individual health professionals or a group
of professionals who provide similar services, are
not capitated, services and are practicing in
the same or a similar geographic area as the noncontracting
individual health professional.
(2) The statistically credible information required by paragraph
(1) shall take into consideration the determinations of the
independent dispute resolution process for claims filed pursuant to
Section 10112.81.
(2) If a health insurer does not pay a statistically significant
number or dollar amount of claims for covered services in order to
maintain the statistically credible information required by paragraph
(1), the health insurer shall demonstrate to the department that it
has access to a statistically credible database reflecting reasonable
rates paid to providers for services provided in the same or a
similar geographic area.
(3) The statistically credible information required by
paragraph paragraphs (1) and (2)
shall be confidential and shall be exempt from public disclosure.
(c)
(b) (1) Unless otherwise provided in this section or
otherwise agreed to by the noncontracting individual health
professional and the insurer, the insurer shall base reimbursement of
noncontracted claims for services rendered according
to Section 10112.81 on the average rates based on the
statistically credible information with regard to the amount paid to
providers contracted individual health
professionals who are providing similar services, are
not capitated, services and practicing in the
same or similar geographic area.
(2) For If nonemergency services
are provided by the a
noncontracting individual health professional to an insured who
has voluntarily chosen to use his or her out-of-network benefit for
services covered by a preferred provider organization or a
point-of-service plan, unless otherwise agreed to by the insurer and
the noncontracting individual health professional, the amount paid
shall be the amount set forth in the insured's evidence of coverage.
(d) (1) An insurer's failure to pay a noncontracting individual
health professional consistent with this section shall constitute an
"unfair payment pattern" within the meaning of Section 1371.37 of the
Health and Safety Code.
(2) In determining whether an insurer has engaged in an "unfair
payment pattern" as defined in Section 1371.37 of the Health and
Safety Code, the commissioner shall take into consideration decisions
of the independent dispute resolution process established pursuant
to subdivision (a) of Section 10112.81.
(3) A noncontracting individual health professional who disputes
the claim reimbursement shall utilize the independent dispute
resolution process described in Section 10112.81.
(c) A payment made by a health insurer to a noncontracting health
care professional for nonemergency services as required by Section
10112.81 and this section, in addition to the applicable cost sharing
owed by the insured, shall constitute payment in full for the
nonemergency services rendered.
(d) This section shall not apply to a Medicare plan or a Medicare
supplemental plan.
(e) This section shall not apply to emergency services and care,
as defined in Section 1317.1 of the Health and Safety Code.
SEC. 7. The Legislature finds and declares that Sections 2 and 6
of this act, which add Section 1371.31 to the Health and Safety Code
and Section 10112.82 to the Insurance Code, impose a limitation on
the public's right of access to the meetings of public bodies or the
writings of public officials and agencies within the meaning of
Section 3 of Article I of the California Constitution. Pursuant to
that constitutional provision, the Legislature makes the following
findings to demonstrate the interest protected by this limitation and
the need for protecting that interest:
In order to protect confidential and proprietary information, it
is necessary for that information to remain confidential.
SEC. 8. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.