BILL ANALYSIS Ó
AB 533
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Date of Hearing: April 21, 2015
ASSEMBLY COMMITTEE ON HEALTH
Rob Bonta, Chair
AB 533
(Bonta) - As Amended April 15, 2015
SUBJECT: Health care coverage: out-of-network coverage.
SUMMARY: This bill establishes requirements for the payment of
non-contracting individual health professionals when a health
care service plan enrollee obtains services from the
non-contracting professional in a contracting health facility,
as specified. Specifically, this bill:
1) Prohibits, when an enrollee or insured individual in a
health care service plan or health insurance policy, who
receives care at a contracting health facility from a
non-contracting individual health professional, to pay more
than the in-network cost sharing.
2) Requires a health plan or insurer to inform the
non-contracting individual health professional of the
in-network cost sharing of the enrollee or insured upon
time of payment.
3) Requires a non-contracting individual health
professional to refund any amount collected from the
enrollee or insured that is greater that the in-network
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cost sharing; and, requires the refundable amount to accrue
interest, as specified, if it is not returned to the
enrollee or insured within prescribed time limits.
4) Prohibits a health plan or insurer from paying a
non-contracting individual health professional if the
professional has advanced the amount owed by the enrollee
or insured to collections, prior to payment by the plan, as
specified.
5) Provides that any cost sharing paid by the enrollee or
insured provided by the non-contracting individual health
professional shall count towards the annual out-of-pocket
expenses limit and the enrollee's deductible.
6) Allows an enrollee or insured to voluntarily consent to
the use of a non-contracting individual health professional
contingent on specified consent and cost estimate
requirements.
EXISTING LAW:
1) Establishes the Knox-Keene Health Care Service Plan Act
of 1975 under the administration and enforcement of the
Department of Managed Health Care (DMHC), and requires a
health care service plan to reimburse claims, as specified.
2) Requires a health care service plan to reimburse
providers for emergency services and care until the care
results in the stabilization of the enrollee, and does not
require prior authorization as a prerequisite for the
provision of emergency services and care to stabilize the
enrollee's emergency medical condition.
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3) Prohibits a health care service plan subscriber or
enrollee from being liable to the provider for any sums
owed by the plan under contract with health care service
provider.
4) Requires DMHC to adopt regulations that ensure a health
care service plan has adopted a dispute resolution
mechanism for non-contracting providers for purposes of
resolving billing and claims disputes.
5) Provides for the regulation of health insurers by the
California Department of Insurance (CDI).
6) Requires a group or individual insurance policy issued,
amended or renewed on or after January 1, 2014, that
provides or covers any benefit with respect to services in
an emergency department of a hospital to cover emergency
services by a nonparticipating health care provider with or
without prior authorization.
FISCAL EFFECT: This bill has not yet been analyzed by a fiscal
committee.
COMMENTS:
1) PURPOSE OF THIS BILL. The author states that this bill
will protect patients who do the right thing by seeking
care in an in-network facility, only to later receive a
surprise bill from an out-of-network provider that had been
called in to provide service. The author states that
surprise bills cost consumers substantial sums of money,
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placing an undeserved and unreasonable financial burden
upon them. The author asserts that consumers should not be
placed in the middle of billing conflicts and disputes
between out-of-network providers and plans or insurers,
particularly when they sought in-network care but were seen
by an out-of-network provider through no fault of their
own. The author contends that while California has been at
the forefront of the federal Patient Protection and
Affordable Care Act implementation, we need to catch up to
other states like New York which have taken the lead in
fully protecting consumers from surprise bills. The author
concludes by stating that it is the state's responsibility
to ensure full consumer protection for all of our patients,
and this bill is a critical measure to ensure patients are
safeguarded from hidden costs unfairly imposed upon them
when they have followed the rules.
2) BACKGROUND
a) Balance billing and regulations. Balance billing is
the provider practice of billing a patient for the
difference between the provider's charge and the amount
allowed by the patient's health plan or insurer. Current
state and federal regulations prohibit providers from
balance billing qualified Medicare and Medicaid (known as
Medi-Cal in California) beneficiaries. In addition,
in-network providers may not balance bill patients who
receive services within the network of their health care
service plan or health insurance. Out-of-network
emergency service physicians are a special case; they may
balance bill if the patient is enrolled in a plan managed
by CDI, however they may not balance bill managed care
enrollees, which are patients enrolled in DMHC-regulated
plans. This discrepancy is based on executive action
ordered by the Administration.
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In 2006, Governor Schwarzenegger signed Executive Order
S-13-06, requiring DMHC to protect consumers from balance
billing. The DMHC regulations were established in 2008
and have been heavily debated in court. In the landmark
case of Prospect Medical Group, Inc. vs. Northridge
Emergency Medical Group of 2009, the Supreme Court
unanimously ruled that billing disputes over emergency
medical care must be resolved solely between the
emergency room doctors and the managed care plan, and
that emergency room doctors may not bill a patient for
the disputed amount. Since then, DMHC has fined
individual providers and taken legal actions against
others on the grounds they balance billed consumers
illegally.
b) Independent Dispute Resolution Process (IDRP).
Executive Order S-13-06 also required DMHC to implement a
"fair, fast and, inexpensive IDRP to avoid placing
enrollees in the middle of payment disputes between
health plans and providers" and ensure non-contracted
providers are reimbursed at the reasonable and customary
level for the services they provided. These dispute
resolution processes are currently nonbinding and use a
decision process that is similar to the "baseball style"
model of arbitration, which does not provide a process to
compromise on a rate, but rather requires one rate or
another to be granted their claim by the arbitrator.
During the IDRP process, an External Reviewer is required
to decide whether the provider's billed amount or the
payer's paid amount, is most representative of the
reasonable and customary value of the emergency services
that were rendered. The IDRP External Reviewer cannot
split the difference between the amounts proposed by the
two parties or choose an amount outside them. The IDRP
does allow a hospital provider to elect to lower its
billed amount in connection with the hospital's IDRP
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submission.
c) Reasonable and customary rates. DMHC regulations
establish a six-prong test, known as the "Gould criteria"
(based on Gould vs. Workers' Compensation Appeals Board,
1992), for determining the reasonable and customary value
for non-contracted parties in claims settlements. These
criteria include: the provider's training,
qualifications, and length of time in practice; the
nature of the services provided; the fees usually charged
by the provider; prevailing provider rates charged in the
general geographic area in which the services were
rendered; other aspects of the economics of the medical
provider's practice that are relevant; and any unusual
circumstances in the case. However, the regulations are
silent on setting specific reimbursement rates.
d) Policies in other states. A 2013 study done by the
Kaiser Family Foundation identifies 13 states which have
prohibited out-of-network providers from balance billing
managed care enrollees<1>. Protections vary
significantly from one state to another. For example,
some states, such as Maryland and Connecticut, provide
state protections for all covered benefits, whereas
others provide limited protection, such as Pennsylvania
and Illinois, which cover only emergency services and
ambulatory services, respectively. Delaware and Florida
both have a formal dispute resolution system available to
resolve billing conflicts and disputes between providers
and plans.
New York has the most comprehensive regulations regarding
balance billing. The state's 2014 legislation bans
balance bills for out-of-network emergency care, requires
------------------------
<1> "State Restriction Against Providers Balance Billing Managed
Care Enrollees," Kaiser Family Foundation, 2015.
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insurers to allow patients see out-of-network doctors at
regular costs when the network is unable meet a patient's
needs, and sets new rules for insurers and providers to
disclose network status online or before a procedure.
The New York law also allows for an independent
arbitration on payment disputes and requests to see
out-of-network providers.
1) SUPPORT. Health Access California, the sponsor of the
bill, states surprise medical bills are contributing to the
growing problem of consumer medical debt, a significant
cause of personal bankruptcy. The sponsor maintains that
surprise billing practices are a result of both inadequate
provider networks and a lack of disclosure regarding
provider status and billing to consumers prior to
procedures taking place. The sponsor asserts that health
plans and providers should not involve consumers in
business disputes.
Supporters of the introduced version of the bill state that
consumers who follow their plan's rules and use in-network
facilities should not be surprised by out-of-network
charges from providers who grant care at in-network
facilities; the patient should only be responsible for what
he or she would have paid for in-network care.
The California Association of Health Plans, Aetna, and
Association of California Life & Health Insurance Companies
have a support if amended position based on an older
version of the bill, and state that the easiest solution
for balance billing is for doctors to contract with health
plans and carriers; at the very least, the consumer should
not be put in the middle when providers do not contact.
These entities state they will support the bill if amended
to include language expressly prohibiting balance billing,
which will strengthen consumer protection.
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2) OPPOSITION. The California American College of
Emergency Physicians and some specialty provider groups are
opposed to the bill, based on the introduced language of
the bill, stating that patients and providers should be
protected from health plans and insurers who do not have
adequate networks, by imposing a payment standard on health
plans and insurers set by an independent, unbiased,
non-profit entity. The opposition further states a fair
dispute resolution system should be established for parties
to appeal payment amounts. The opposition argues the bill
provides health plans and insurers more opportunities to
collect premiums from patients, not provide the care they
have agreed give, and pay physicians arbitrary amounts.
The California Medical Association and California Society
of Anesthesiologists have an opposed unless amended
position based on a previous version of the bill, and state
the bill undermines current law which requires insurers and
plans to provide adequate provider networks because the
provisions create disincentives for plans and insurers from
negotiating fair payment arrangements and creating robust
networks. These opposing groups state an efficient,
equitable dispute resolution mechanism will guide parties
towards a reasonable rate of services and are opposed
unless the bill is amended to establish a such a process.
3) POLICY CONSIDERATIONS. This bill removes the patient
from circumstances in which there is a disagreement between
the out-of-network individual health professional and the
plan or insurer on the fair amount for payment; however the
bill is silent on how the two parties should come to an
agreement on that amount. In order to be more consistent
with current DMHC regulations on a similar issue, the
committee may wish to consider the establishment of a
binding, independent dispute resolution process that is
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similar to the current structure set forth by DMHC for
non-contracting providers for emergency services. A
binding process would reduce litigation on billing
conflicts and disputes. In addition, the Committee may
wish to establish specified criteria in statute for the
independent arbitrator to use that will be equal and fair
to the health care professional and the health care service
plan or insurer.
The author and sponsor state that the goal of the
legislation is to keep consumers out of business disputes
between health plans or insurers and individual health
professionals. The most recent amendments require any
overpayment by the provider to be refunded however the way
the language is written, the onus remains on the patient to
realize that they have been balanced bill and that the
individual health professional has been overpaid by the
health plan or insurer. The author may wish to amend the
bill later in the legislative process such that the
responsibility lies solely between the health plan or
insurer and the provider.
4) SUGGESTED TECHNICAL AMENDMENT. This bill allows for
voluntary consent to the use of a non-contracting
individual health professional, if the insured or enrollee
consents to both the use of the non-contracting individual
health professional and the estimated additional cost for
the services provided. The language is currently vague as
to whether the enrollee or insured must agree to actual
payment of the estimated cost or simply its value. The
bill should be amended to clarify. The Committee may
suggest to the author the following language:
Section 1371.9 of the Health and Safety Code:
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(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.
Section 10112.8 of the Insurance Code:
(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.
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REGISTERED SUPPORT / OPPOSITION:
Support
Health Access California (sponsor)
AARP (prior version)
AFSCME (prior version)
America's Health Insurance Plans (prior version)
Anthem Blue Cross (prior version)
California Black Health Network (prior version)
California Labor Federation (prior version)
California Pan-Ethnic Health Network (prior version)
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California Primary Care Association (prior version)
California School Employees Association (prior version)
California Teachers Association (prior version)
CALPIRG (prior version)
Consumers Union (prior version)
LIUNA Locals 777 and 792 (prior version)
National Health Law Program (prior version)
SEIU California (prior version)
Opposition
California Academy of Emergency Physicians (prior version)
California Radiological Society (prior version)
California Society of Pathologists (prior version)
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Analysis Prepared by:An-Chi Tsou / HEALTH / (916) 319-2097