Amended in Senate September 4, 2015

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 abegin insert health care serviceend insert 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 afterbegin delete Januaryend deletebegin insert Julyend insert 1, 2016, to provide that if an enrollee or insuredbegin delete obtains careend deletebegin insert receives covered servicesend insert 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 insuredbegin delete isend deletebegin insert would beend insert 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-networkbegin delete cost sharingend deletebegin insert cost-sharingend insert amount if the noncontracting individual health professional receives reimbursement for services provided to the enrollee or insured at a contracting health facility from thebegin insert health care serviceend insert plan or health insurer.begin insert However, the bill would make an exception from this prohibition if the enrollee or insured provides written consent that satisfies specified criteria.end insert 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 healthbegin delete facilityend deletebegin insert facility, or a plan or insurer,end insert to appeal a claim paymentbegin delete dispute with a plan or insurer,end deletebegin insert dispute,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.begin delete The bill would require a health care service plan to base reimbursement of a claim by a noncontracting individual health professional on statistically credible information with regard to the amount paid to contracted individual health professionals who provide similar services, are not capitated, and practice in the same or a similar geographic region, as specified.end delete The bill would requirebegin delete anend deletebegin insert a plan orend insert insurer to base reimbursementbegin delete 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.end deletebegin insert for covered services on the amount the individual health professional would have been reimbursed by Medicare for the same or similar services in the general geographic area in which the services were rendered.end insert 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.

begin delete

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

end delete
begin delete

This bill would make legislative findings to that effect.

end delete

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:

P4    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
5resolving a claim dispute between a health care service plan and
6a noncontracting individual health professional for services subject
7to Section 1371.9.

8(2) If either the noncontracting individual health professional
9or the plan appeals a claim to the department’s independent dispute
10resolution process, the other party shall participate in the appeal
11process as described in this section.

12(b) The departmentbegin delete and the Department of Insurance shall jointlyend delete
13begin insert shallend insert establish uniform written procedures for the submission,
14receipt, processing, and resolution of claim payment disputes
15pursuant to thisbegin delete section.end deletebegin insert section and any other guidelines for
16implementing this article.end insert

17(c) The department may contract with one or more independent
18organizationsbegin delete that specialize in dispute resolutionend delete to conduct the
19proceedings. The independent organization handling a dispute
20shall be independent of either party to the dispute. The department
21shall establish conflict-of-interest standards, consistent with the
22purposes of this section, that an organization shall meet in order
23to qualify for participation in the independent dispute resolution
24program. The department may contract with the same independent
25organization or organizations as the Department of Insurance.

26(d) The determination obtained through the department’s
27independent dispute resolution process shall be binding on both
28parties.

29(e) This section shall not apply to a Medi-Cal managed health
30care service plan or any entity that enters into a contract with the
31State Department of Health Care Services pursuant to Chapter 7
32(commencing with Section 14000) of, Chapter 8 (commencing
33with Section 14200) of, and Chapter 8.75 (commencing with
34Section 14591) of, Part 3 of Division 9 of the Welfare and
35Institutions Code.

36(f) If a health care service plan delegates payment functions to
37 a contracted entity, including, but not limited to, a medical group
P5    1or independent practice association, then the delegated entity shall
2comply with this section.

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

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) (1) The health care service plan shall maintain
8statistically credible information, updated at least annually,
9regarding rates paid to currently contracting individual health
10professionals or a group of professionals who provide similar
11services, are not capitated, and are practicing in the same or a
12similar geographic area as the noncontracting individual health
13professional.

14(2) If, based on the health care service plan’s model or payment
15arrangements, a health care service plan does not pay a statistically
16significant number or dollar amount of claims for covered services
17in order to maintain the statistically credible information required
18by paragraph (1), the health care service plan shall demonstrate to
19the department that it has access to a statistically credible database
20 reflecting reasonable rates paid to providers for services provided
21in the same or similar geographic area.

22(3) The statistically credible information required by paragraphs
23(1) and (2) shall be confidential and exempt from public disclosure.

24(b) (1) Unless otherwise provided in this section or otherwise
25agreed by the noncontracting individual health professional and
26the plan, the plan shall base reimbursement of noncontracted claims
27for services rendered according to Section 1371.9 on the average
28rates based on the statistically credible information with regard to
29the amount paid to contracted individual health professionals who
30are providing similar services, are not capitated, and practicing in
31the same or similar geographic area.

end delete
32begin insert

begin insert1371.31.end insert  

end insert
begin insert

(a) For services rendered subject to Section 1371.9,
33unless otherwise agreed to by the noncontracting individual health
34professional and the plan, the plan shall base reimbursement for
35covered services on the amount the individual health professional
36would have been reimbursed by Medicare for the same or similar
37services in the general geographic area in which the services were
38rendered.

end insert
begin delete

39(2)

end delete

P6    1begin insert(b)end insert If nonemergency services are provided by a noncontracting
2individual health professionalbegin insert pursuant to subdivision (d) of Section
31371.9,end insert
to an enrollee who has voluntarily chosen to use his or her
4out-of-network benefit for services covered by a preferred provider
5organization or a point of service plan, unless otherwise agreed to
6by the plan and the noncontracting individual health professional,
7the amount paid shall be the amount set forth in the enrollee’s
8evidence of coverage.

begin delete

9(3)

end delete

10begin insert(c)end insert A noncontracting individual health professional who disputes
11the claim reimbursement shall utilize the independent dispute
12resolution process described in Section 1371.30.

begin delete

13(c)

end delete

14begin insert(d)end insert If a health care service plan delegates by written contract
15 the responsibility for payment of claims to a contracted entity,
16including, but not limited to, a medical group or independent
17practice association, then the entity to which that responsibility is
18delegated shall comply with the requirements of this section.

begin delete

19(d)

end delete

20begin insert(e)end insert A payment made by the health care service plan to the
21noncontracting health care professional for nonemergency services
22as required by Section 1371.9 and this section, in addition to the
23applicable cost sharing owed by the enrollee, shall constitute
24payment in full for nonemergency services rendered.

begin delete

25(e)

end delete

26begin insert(f)end insert This section shall not apply to a Medi-Cal managed health
27care service plan or any other entity that enters into a contract with
28the State Department of Health Care Services pursuant to Chapter
297 (commencing with Section 14000) of, Chapter 8 (commencing
30with Section 14200) of, and Chapter 8.75 (commencing with
31Section 14591) of, Part 3 of Division 9 of the Welfare and
32Institutions Code.

begin delete

33(f)

end delete

34begin insert(g)end insert This section shall not apply to emergency services and care,
35as defined in Section 1317.1.

36

SEC. 3.  

Section 1371.9 is added to the Health and Safety Code,
37to read:

38

1371.9.  

(a) (1) A health care service plan contract issued,
39amended, or renewed on or afterbegin delete Januaryend deletebegin insert Julyend insert 1, 2016, shall provide
40begin delete thatend deletebegin insert that, except as provided in subdivision (d),end insert if an enrollee
P7    1begin delete obtains careend deletebegin insert receives covered servicesend insert from a contracting health
2facility at which, or as a result of which, the enrollee receives
3services provided by a noncontracting individual health
4professional, the enrollee shall pay the noncontracting individual
5health professional no more than the same cost sharing that the
6enrollee wouldbegin delete have paid end deletebegin insert payend insert for the same coveredbegin delete benefitsend delete
7begin insert servicesend insert received from a contracting individual health professional.
8This amount shall be referred to as the “in-network cost sharing.”

9(2) At the time of payment by the plan to the noncontracting
10individual health professional, the plan shall inform the
11noncontracting individual health professional of the in-network
12cost sharing owed by the enrollee.begin delete Ifend delete

13begin insert(3)end insertbegin insertend insertbegin insert Except as provided in subdivision (d), ifend insert a noncontracting
14individual health professional receives reimbursement for services
15provided to the enrollee at a contracting health facility from the
16plan, an enrollee shall not owe the noncontracting individual health
17professional at the contracting health facility more than the
18in-networkbegin delete cost sharing.end deletebegin insert costend insertbegin insert-sharing amount.end insert

begin delete

19(3) Except as provided in subdivision (d), if the noncontracting
20individual health professional collects more than the in-network
21cost sharing from the enrollee, the noncontracting individual health
22professional shall refund any overpayment to the enrollee within
2330 working days of receiving notice from the plan of the in-network
24cost sharing amount owed by the enrollee pursuant to paragraph
25(2). If the noncontracting individual health professional does not
26refund any overpayment within 30 working days after being
27informed of the enrollee’s in-network cost sharing, interest shall
28accrue at the rate of 15 percent per annum beginning with the first
29calendar day after the 30-working day period. A noncontracting
30individual health professional shall automatically include in his
31or her refund of the overpayment all interest that has accrued
32pursuant to this section without requiring the enrollee to submit a
33request for the interest amount.

34(4) If the noncontracting individual health professional has
35advanced to collections any amount owed by the enrollee, the plan
36shall not reimburse the noncontracting individual health
37professional for services provided to the enrollee by the
38noncontracting individual health professional at a contracting
39health facility. In submitting a claim to the plan, the noncontracting
40individual health professional at a contracting health facility shall
P8    1affirm in writing that he or she has not advanced to collections any
2payment owed by the enrollee. A noncontracting individual health
3professional shall not attempt to collect more than the in-network
4cost sharing from the enrollee after receiving payment from the
5plan. Once the noncontracting individual health professional
6receives payment from the plan, the noncontracting individual
7health professional may advance to collections any in-network
8cost sharing owed by the enrollee if the enrollee fails to pay the
9in-network cost sharing after the plan has informed the
10noncontracting individual health professional of the amount owed
11by the enrollee pursuant to paragraph (2).

end delete
begin insert

12(4) Except as provided in subdivision (d), a noncontracting
13individual health professional shall not bill or collect any amount
14from the enrollee except the in-network cost-sharing amount.

end insert
begin insert

15(5) A noncontracting individual health professional shall not
16bill or collect any amount from the enrollee until the
17noncontracting individual health professional is informed of the
18in-network cost-sharing amount pursuant to paragraph (2).

end insert
begin insert

19(6) In submitting a claim to the plan, the noncontracting
20individual health professional at a contracting health facility shall
21affirm in writing that he or she has not attempted to collect any
22payment other than in-network cost sharing owed by the enrollee.

end insert
begin insert

23(7) (A) If the noncontracting individual health professional has
24collected more from the enrollee than the in-network cost sharing,
25the noncontracting individual health professional shall refund any
26overpayment to the enrollee within 30 business days of receiving
27notice from the plan of the in-network cost-sharing amount owed
28by the enrollee pursuant to paragraph (2).

end insert
begin insert

29(B) If the noncontracting individual health professional does
30not refund an overpayment to the enrollee within 30 business days
31after being informed of the enrollee’s in-network cost sharing,
32interest shall accrue at the rate of 15 percent per annum beginning
33with the first calendar day after the 30-business day period.

end insert
begin insert

34(C) A noncontracting individual health professional shall
35automatically include in his or her overpayment refund to the
36enrollee all interest that has accrued pursuant to this section
37without requiring the enrollee to submit a request for the interest
38amount.

end insert
begin insert

39(8) A noncontracting individual health professional may advance
40to collections only the in-network cost sharing, as determined by
P9    1the plan pursuant to paragraph (2), that the enrollee has failed to
2pay.

end insert

3(b) (1) Any cost sharing paid by the enrollee for the services
4provided by a noncontracting individual health professional at the
5contracting health facility shall count toward the limit on annual
6out-of-pocket expenses established under Section 1367.006.

7(2) Cost sharing arising from services received by a
8noncontracting individual health professional at a contracting
9health facility shall be counted toward any deductible in the same
10manner as cost sharing would be attributed to a contracting
11individual health professional.

12(c) For purposes of this section, the following definitions shall
13apply:

14(1) “Cost sharing” includes any copayment, coinsurance, or
15deductible, or any other form of cost sharing paid by the enrollee
16other than premium or share of premium.

17(2) begin delete“Health facility” end deletebegin insert“Contracting health facility” end insertmeans a
18health facilitybegin delete provider who is licensed by this state to deliver or
19furnish health care services. A health facility shall includeend delete
begin insert that is
20contracted with the enrollee’s health care service plan to provide
21services under the enrollee’s plan contract. A contracting health
22care facility includes, but is not be limited to,end insert
the following
23providers:

24(A) Licensed hospital.

25(B) Skilled nursing facility.

26(C) Ambulatorybegin delete surgery.end deletebegin insert surgery or other outpatient setting, as
27described in Section 1248.1.end insert

28(D) Laboratory.

29(E) Radiology or imaging.

30(F) Facilities providing mental health or substance abuse
31treatment.

32(G) Any other provider as the department may by regulation
33define as a health facility for purposes of this section.

34(3) “Individual health professional” means a physician or
35surgeon or other professional who is licensed by this state to deliver
36or furnish health care services.

begin delete

37(d) An enrollee may voluntarily consent to the use of a
38noncontracting individual health professional. For purposes of this
39section, consent shall be voluntary if at least 24 hours in advance
40of the receipt of services, the enrollee is provided a written estimate
P10   1of the cost of care by the noncontracting individual health
2professional and the enrollee consents in writing to both the use
3of a noncontracting individual health professional and payment of
4the estimated additional cost for the services to be provided by the
5noncontracting individual health professional. The consent shall
6inform the enrollee that the cost of the services of the
7noncontracting individual health professional will not accrue to
8the limit on annual out-of-pocket expenses or the enrollee’s
9deductible, if any.

end delete
begin insert

10(4) “Noncontracting individual health professional” means a
11physician and surgeon or other professional who is licensed by
12the state to deliver or furnish health care services and who is not
13contracted with the enrollee’s health care service plan.

end insert
begin insert

14(d) A noncontracting individual health professional may bill or
15collect from an enrollee the out of network cost sharing, if
16applicable, or more than the in-network cost sharing for
17nonemergency health services provided in a contracting health
18facility only when the enrollee consents in writing and the written
19consent demonstrates satisfaction of all of the following criteria:

end insert
begin insert

20(1) The enrollee initiated the request for the identified
21nonemergency health services from the identified noncontracting
22individual provider.

end insert
begin insert

23(2) At least three business days in advance of care, the enrollee
24consented in writing consistent with this subdivision to the use of
25the identified noncontracting individual health professional.

end insert
begin insert

26(3) At the time of consent under this subdivision, the
27noncontracting individual health professional gave the enrollee a
28written estimate of the enrollee’s total out-of-pocket cost of care.

end insert
begin insert

29(4) The written consent under this subdivision advises the
30enrollee that he or she may contact the enrollee’s health care
31service plan in order to arrange to receive the health service from
32a contracted provider for lower out-of-pocket costs.

end insert
begin insert

33(5) The written consent and estimate are provided to the enrollee
34in the language spoken by the enrollee.

end insert

35(e) This section shall not be construed to require a plan to cover
36servicesbegin delete or provide benefits that are not otherwise covered underend delete
37begin insert that are not required by law or byend insert the terms and conditions of the
38plan contract.

39(f) This section shall not be construed to exempt a plan or
40provider from the requirements under Section 1371.4 or 1373.96
P11   1nor abrogate the holding in Prospect Medical Group v. Northridge
2Emergency Medical Group et al., (2009) 45 Cal.4th 497, that an
3emergency room physician is prohibited from billing an enrollee
4of a health care service plan directly for sums that the health care
5service plan has failed to pay for the enrollee’s emergency room
6treatment.

7(g) If a health care service plan delegates payment functions to
8a contracted entity, including, but not limited to, a medical group
9or independent practice association, the delegated entity shall
10comply with this section.

11(h) This section shall not apply to a Medi-Cal managed health
12care service plan or any other entity that enters into a contract with
13the State Department of Health Care Services pursuant to Chapter
147 (commencing with Sectionbegin delete 14000) of,end deletebegin insert 14000),end insert Chapter 8
15(commencing with Sectionbegin delete 14200) of,end deletebegin insert 14200),end insert and Chapter 8.75
16(commencing with Section 14591) Part 3 of Division 9 of the
17Welfare and Institutions Code.

18(i) This section shall not apply to emergency services and care,
19as defined in Section 1317.1.

20

SEC. 4.  

Section 10112.8 is added to the Insurance Code, to
21read:

22

10112.8.  

(a) (1) A health insurance policy issued, amended,
23or renewed on or afterbegin delete Januaryend deletebegin insert Julyend insert 1, 2016, shall providebegin delete thatend delete
24begin insert that, except as provided in subdivision (d),end insert if an insured obtains
25care from a contracting health facility at which, or as a result of
26which, the insured receives services provided by a noncontracting
27individual health professional, the insured shall pay the
28 noncontracting individual health professional no more than the
29same cost sharing that the insured wouldbegin delete have paidend deletebegin insert payend insert for the
30same coveredbegin delete benefitsend deletebegin insert servicesend insert received from a contracting
31individual health professional. This amount shall be referred to as
32the “in-network cost sharing.”

33(2) At the time of payment by the health insurer to the
34 noncontracting individual health professional, the health insurer
35shall inform the noncontracting individual health professional of
36the in-network cost sharing owed by the insured.begin delete Ifend delete

37begin insert(3)end insertbegin insertend insertbegin insertExcept as provided in subdivision (d), ifend insert a noncontracting
38individual health professional receives reimbursement for services
39provided to the insured at a contracting health facility from the
40health insurer, an insured shall not owe the noncontracting
P12   1individual health professional at the contracting health facility
2more than the in-networkbegin delete cost sharing.end deletebegin insert costend insertbegin insert-sharing amount.end insert

begin delete

3(3) Except as provided in subdivision (d), if the noncontracting
4individual health professional collects more than the in-network
5cost sharing from the insured, the noncontracting individual health
6professional shall refund any overpayment to the insured within
730 working days of receiving notice from the health insurer of the
8in-network cost sharing amount owed by the insured pursuant to
9paragraph (2). If the noncontracting individual health professional
10does not refund any overpayment within 30 working days after
11being informed of the insured’s in-network cost sharing, interest
12shall accrue at the rate of 15 percent per annum beginning with
13the first calendar day after the 30-working day period. A
14noncontracting individual health professional shall automatically
15include in his or her refund of the overpayment all interest that has
16accrued pursuant to this section without requiring the insured to
17submit a request for the interest amount.

18(4) If the noncontracting individual health professional has
19advanced to collections any amount owed by the insured, the health
20insurer shall not reimburse the noncontracting individual health
21professional for services provided to the insured by the
22noncontracting individual health professional at a contracting
23health facility. In submitting a claim to the health insurer, the
24noncontracting individual health professional at a contracting
25health facility shall affirm in writing that he or she has not
26advanced to collections any payment owed by the insured. A
27noncontracting individual health professional shall not attempt to
28collect more than the in-network cost sharing from the insured
29after receiving payment from the health insurer. Once the
30noncontracting individual health professional receives payment
31from the health insurer, the noncontracting individual health
32professional may advance to collections any in-network cost
33sharing owed by the insured if the insured fails to pay the
34in-network cost sharing after the health insurer has informed the
35noncontracting individual health professional of the amount owed
36by the insured pursuant to paragraph (2).

37(5)

end delete

38begin insert(4)end insert This section shall only apply to a health insurer that enters
39into a contract with a professional or institutional provider to
P13   1provide services at alternative rates of payment pursuant to Section
210133.

begin insert

3(5) Except as provided in subdivision (d), a noncontracting
4individual health professional shall not bill or collect any amount
5from the insured except the in-network cost-sharing amount.

end insert
begin insert

6(6) A noncontracting individual health professional shall not
7bill or collect any amount from the insured until the noncontracting
8individual health professional is informed of the in-network
9cost-sharing amount pursuant to paragraph (2).

end insert
begin insert

10(7) In submitting a claim to the insurer, the noncontracting
11individual health professional at a contracting health facility shall
12affirm in writing that he or she has not attempted to collect any
13payment other than in-network cost sharing owed by the insured.

end insert
begin insert

14(8) (A) If the noncontracting individual health professional has
15collected more from the insured than the in-network cost sharing,
16the noncontracting individual health professional shall refund any
17overpayment to the insured within 30 business days of receiving
18notice from the plan of the in-network cost-sharing amount owed
19by the insured pursuant to paragraph (2).

end insert
begin insert

20(B) If the noncontracting individual health professional does
21not refund an overpayment to the insured within 30 business days
22after being informed of the insured’s in-network cost sharing,
23interest shall accrue at the rate of 15 percent per annum beginning
24with the first calendar day after the 30-business day period.

end insert
begin insert

25(C) A noncontracting individual health professional shall
26automatically include in his or her overpayment refund to the
27insured all interest that has accrued pursuant to this section
28without requiring the insured to submit a request for the interest
29amount.

end insert
begin insert

30(9) A noncontracting individual health professional may advance
31to collections only the in-network cost sharing, as determined by
32the plan pursuant to paragraph (2), that the insured has failed to
33pay.

end insert

34(b) (1) Any cost sharing paid by the insured for the services
35provided by a noncontracting individual health professional at the
36contracting health facility shall count toward the limit on annual
37out-of-pocket expenses established under Section 10112.28.

38(2) Cost sharing arising from services received by a
39noncontracting individual health professional at a contracting
40health facility shall be counted toward any deductible in the same
P14   1manner as cost sharing would be attributed to a contracting
2individual health professional.

3(c) For purposes of this section, the following definitions shall
4apply:

5(1) “Cost sharing” includes any copayment, coinsurance, or
6deductible, or any other form of cost sharing paid by the insured
7other than premium or share of premium.

8 (2) begin delete“Health facility” end deletebegin insert“Contracting health facility” end insertmeans a
9health facility begin delete provider who is licensed by this state to deliver or
10furnish health care services. A health facility shall includeend delete
begin insert that is
11contracted with the insured’s health insurer to provide services
12under the insured’s policy. A contracting health facility includes,
13but is not limited to,end insert
the following providers:

14(A) Licensed hospital.

15(B) Skilled nursing facility.

16(C) Ambulatorybegin delete surgery.end deletebegin insert surgery or other outpatient setting, as
17described in Section 1248.1 of the Health and Safety Code.end insert

18(D) Laboratory.

19(E) Radiology or imaging.

20(F) Facilities providing mental health or substance abuse
21treatment.

22(G) Any other provider as the commissioner may by regulation
23define as a health facility for purposes of this section.

24(3) “Individual health professional” means a physicianbegin delete orend deletebegin insert andend insert
25 surgeon or other professional who is licensed by this state to deliver
26or furnish health care services.

begin delete

27(d) An insured may voluntarily consent to the use of a
28 noncontracting individual health professional. For purposes of this
29section, consent shall be voluntary if at least 24 hours in advance
30of the receipt of services, the insured is provided a written estimate
31of the cost of care by the noncontracting individual health
32professional and the insured consents in writing to both the use of
33a noncontracting individual health professional and payment of
34the estimated additional cost for the services to be provided by the
35noncontracting individual health professional. The consent shall
36inform the insured that the cost of the services of the
37noncontracting individual health professional will not accrue to
38the limit on annual out-of-pocket expenses or the insured’s
39deductible, if any.

end delete
begin insert

P15   1(4) “Noncontracting individual health professional” means a
2physician or surgeon or other professional who is licensed by the
3state to deliver or furnish health care services and who is not
4contracted with the insured’s health insurer.

end insert
begin insert

5(d) A noncontracting individual health professional may bill or
6collect from an insurer the out of network cost sharing, if
7applicable, or more than the in-network cost sharing for
8nonemergency health services provided in a contracting health
9facility only when the insured consents in writing and the written
10consent demonstrates satisfaction of all of the following criteria:

end insert
begin insert

11(1) The insured initiated the request for the identified
12nonemergency health services from the identified noncontracting
13individual provider.

end insert
begin insert

14(2) At least three business days in advance of care, the insured
15consented in writing consistent with this subdivision to the use of
16the identified noncontracting individual health professional.

end insert
begin insert

17(3) At the time of consent under this subdivision, the
18noncontracting individual health professional gave the insured a
19written estimate of the enrollee’s total out-of-pocket cost of care.

end insert
begin insert

20(4) The written consent under this subdivision advises the
21insured that he or she may contact the insured’s health care service
22plan in order to arrange to receive the health service from a
23contracted provider for lower out-of-pocket costs.

end insert
begin insert

24(5) The written consent and estimate are provided to the insured
25in the language spoken by the insured.

end insert

26(e) This section shall not be construed to require an insurer to
27cover services begin delete or provide benefits that are not otherwise covered
28underend delete
begin insert not required by law or byend insert the terms and conditions of the
29policy.

30(f) This section shall not be construed to exempt a health insurer
31from the requirements under Section 10112.7 or Section 10133.56.

32(g) This section shall not apply to emergency services and care,
33as defined in Section 1317.1.

34

SEC. 5.  

Section 10112.81 is added to the Insurance Code, to
35read:

36

10112.81.  

(a) (1) The commissioner shall establish an
37independent dispute resolution process for the purpose of
38processing and resolving a claim dispute between an insurer and
39a noncontracting individual health professional for services subject
40to Section 10112.8.

P16   1(2) If either the noncontracting individual health professional
2or the insurer appeals a claim to the department’s independent
3dispute resolution process, the other party shall participate in the
4appeal process as described in this section.

5(b) The commissionerbegin delete and the Department of Managed Health
6Care shall jointlyend delete
begin insert shallend insert establish uniform written procedures for
7the submission, receipt, processing, and resolution of claim
8payment disputes pursuant to thisbegin delete section.end deletebegin insert section, and any other
9guideline for implementing this article.end insert

10(c) The commissioner may contract with one or more
11independent organizationsbegin delete that specialize in dispute resolutionend delete to
12conduct the proceedings. The independent organization handling
13a dispute shall be independent of either party to the dispute. The
14commissioner shall establish conflict-of-interest standards,
15consistent with the purposes of this section, that an organization
16shall meet in order to qualify for participation in the independent
17dispute resolution program. The commissioner may contract with
18the same independent organization or organizations as the
19Department of Managed Health Care.

20(d) The determination obtained through the independent dispute
21resolution process shall be binding on both parties.

22(e) This section shall not apply to emergency services and care,
23as defined in Section 1317.1 of the Health and Safety Code.

24

SEC. 6.  

Section 10112.82 is added to the Insurance Code, to
25read:

begin delete
26

10112.82.  

(a) (1) A health insurer shall maintain statistically
27credible information, updated at least annually, regarding rates
28paid to currently contracting individual health professionals or a
29group of professionals who provide similar services and are
30practicing in the same or a similar geographic area as the
31noncontracting individual health professional.

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

P17   1(3) The statistically credible information required by paragraphs
2(1) and (2) shall be confidential and shall be exempt from public
3disclosure.

4(b) (1) Unless otherwise provided in this section or otherwise
5agreed to by the noncontracting individual health professional and
6the insurer, the insurer shall base reimbursement of noncontracted
7claims for services rendered according to Section 10112.81 on the
8average rates based on the statistically credible information with
9regard to the amount paid to contracted individual health
10professionals who are providing similar services and practicing in
11the same or similar geographic area.

end delete
12begin insert

begin insert10112.82.end insert  

end insert
begin insert

(a) For services rendered subject to Section
1310112.8, unless otherwise agreed to by the noncontracting
14individual health professional and the insurer, the insurer shall
15base reimbursement for covered services on the amount the
16individual health professional would have been reimbursed by
17Medicare for the same or similar services in the general
18geographic area in which the services were rendered.

end insert
begin delete

19(2)

end delete

20begin insert(b)end insert If nonemergency services are provided by a noncontracting
21individual healthbegin delete professionalend deletebegin insert professional, pursuant to subdivision
22(d) of Section 10112.8,end insert
to an insured who has voluntarily chosen
23to use his or her out-of-network benefit for services covered by a
24preferred provider organization or a point-of-service plan, unless
25otherwise agreed to by the insurer and the noncontracting
26individual health professional, the amount paid shall be the amount
27set forth in the insured’s evidence of coverage.

begin delete

28(3)

end delete

29begin insert(c)end insert A noncontracting individual health professional who disputes
30the claim reimbursement shall utilize the independent dispute
31resolution process described in Section 10112.81.

begin delete

32(c)

end delete

33begin insert(d)end insert A payment made by a health insurer to a noncontracting
34health care professional for nonemergency services as required by
35Section 10112.81 and this section, in addition to the applicable
36cost sharing owed by the insured, shall constitute payment in full
37for the nonemergency services rendered.

begin delete

38(d)

end delete

39begin insert(e)end insert This section shall not apply to a Medicare plan or a Medicare
40supplemental plan.

begin delete

P18   1(e)

end delete

2begin insert(f)end insert This section shall not apply to emergency services and care,
3as defined in Section 1317.1 of the Health and Safety Code.

begin delete
4

SEC. 7.  

The Legislature finds and declares that Sections 2 and
56 of this act, which add Section 1371.31 to the Health and Safety
6Code and Section 10112.82 to the Insurance Code, impose a
7limitation on the public’s right of access to the meetings of public
8bodies or the writings of public officials and agencies within the
9meaning of Section 3 of Article I of the California Constitution.
10Pursuant to that constitutional provision, the Legislature makes
11the following findings to demonstrate the interest protected by this
12limitation and the need for protecting that interest:

13In order to protect confidential and proprietary information, it
14is necessary for that information to remain confidential.

end delete
15

begin deleteSEC. 8.end delete
16begin insertSEC. 7.end insert  

No reimbursement is required by this act pursuant to
17Section 6 of Article XIII B of the California Constitution because
18the only costs that may be incurred by a local agency or school
19district will be incurred because this act creates a new crime or
20infraction, eliminates a crime or infraction, or changes the penalty
21for a crime or infraction, within the meaning of Section 17556 of
22the Government Code, or changes the definition of a crime within
23the meaning of Section 6 of Article XIII B of the California
24Constitution.



O

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