BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 533
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|AUTHOR: |Bonta |
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|VERSION: |July 7, 2015 |
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|HEARING DATE: |July 15, 2015 | | |
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|CONSULTANT: |Teri Boughton |
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SUBJECT : Health care coverage: out-of-network coverage.
SUMMARY : Establishes a payment rate, which is the average of a health
plan or health insurer's contracted rate, as specified, and a
binding independent dispute resolution process for claims for
covered services provided at contracted health facilities by a
non-contracting health care professional. Limits enrollee and
insured cost sharing for these covered services to no more than
the cost sharing required had the services been provided by a
contracting health professional.
Existing law:
1)Provides for the regulation of health plans by the Department
of Managed Health Care (DMHC) under the Knox-Keene Act and for
health insurers by California Department of Insurance (CDI)
under the Insurance Code.
2)Requires contracts between providers and health plans to be in
writing and prohibits, except for applicable copayments and
deductibles, a provider from invoicing or balance billing a
plan's enrollee for the difference between the provider's
billed charges and the reimbursement paid by the plan or the
plan's capitated provider for any covered benefit.
3)Prohibits a provider, in the event that a contract has not
been reduced to writing, or does not contain the prohibition
above, from collecting or attempting to collect from the
subscriber or enrollee sums owed by the plan. Prohibits a
contracting provider, agent, trustee or assignee from taking
action at law against a subscriber or enrollee to collect sums
owed by the plan.
4)Establishes, pursuant to regulations, requirements that health
AB 533 (Bonta) Page 2 of ?
plans must implement in their claims settlement practice,
including the meaning of "reimbursement of a claim," such that
providers with a contract receive the contract rate. Claims
for contracted providers without a written contract and
non-contracted providers require payment of the reasonable and
customary value for the health care services rendered based
upon "statistically credible information" that is updated at
least annually and takes into consideration:
a) The provider's training, qualifications, and length of
time in practice;
b) The nature of the services provided;
c) The fees usually charged by the provider;
d) Prevailing provider rates charged in the
general geographic area in which the services were
rendered;
e) Other aspects of the economics of the medical
provider's practice that are relevant; and,
f) Any unusual circumstances in the case.
1)Allows a non-contracted provider to dispute the
appropriateness of a health plan's computation of the
reasonable and customary value and requires the health plan to
respond to the dispute through the plan's mandated provider
dispute resolution process.
2)Requires health plans to pay for medically necessary services
provided in a licensed acute care hospital, if the services
were related to authorized services and provided after the
plan's normal business hours, unless the plan has a system
whereby it can respond to authorization requests within 30
minutes.
3)Prohibits a health plan from engaging in an unfair payment
pattern, defined as, engaging in a demonstrable and unjust
pattern, of reviewing or processing complete and accurate
claims that results in payment delays; engaging in a
demonstrable and unjust pattern of reducing the amount of
payment or denying complete and accurate claims; failing on a
repeated basis to pay the uncontested portions of a claim
within specified timeframes; and failing on a repeated basis
to automatically include the interest due on claims, as
specified.
AB 533 (Bonta) Page 3 of ?
4)Prohibits a hospital which contracts with an insurer,
nonprofit hospital service plan, or health plan from
determining or conditioning medical staff membership or
clinical privileges upon the basis of a physician and
surgeon's or podiatrist's participation or nonparticipation in
a contract with that insurer, hospital service plan or health
plan.
This bill:
1)Requires, unless otherwise provided in this bill or otherwise
agreed by the non-contracting health professional and the plan
or insurer, the plan or insurer to base reimbursement of
non-contracted claims on the average rates based on the
statistically credible information, as specified in 8) below.
Requires, for nonemergency services covered by preferred
provider organization or a point of service plan, unless
otherwise agreed to between the parties, the amount paid to be
the amount set forth in the enrollee's evidence of coverage.
2)Requires DMHC and CDI to establish an independent dispute
resolution process (IDRP) for the purpose of processing and
resolving a claim dispute between a health plan or insurer and
a non-contracting individual health professional for services
provided at a contracting health facility. Makes the
determination obtained through IDRP binding on both parties,
and requires each party to bear its own costs and equally
share in the administrative fees. Requires, if additional
payment is awarded through IDRP, the payment to be made
consistent with existing law relating to timely reimbursement.
3)Permits a non-contracting health professional to appeal a
claim to the IDRP after completing an internal dispute
resolution mechanism, as defined, through the health plan or
insurer, or if 30 days have elapsed since initiating the
internal dispute resolution mechanism.
4)Requires both parties to participate in the IDRP if initiated
by either party.
5)Limits disputed claims to covered services rendered by a
non-contracting health professional at a contracting health
facility. Permits disputed claims to be aggregated, as
specified.
AB 533 (Bonta) Page 4 of ?
6)Requires DMHC and CDI to jointly establish uniform written
procedures for the submission, receipt, processing, and
resolution of claim payment disputes pursuant to this bill.
Permits DMHC and CDI to contract with one or more independent
organizations for the IDRP and permits the departments to
establish additional requirements, including
conflict-of-interest standards. Requires the independent
dispute resolution organization to issue a decision within 60
days of the receipt of required documentation.
7)Requires a non-contracting health professional appealing to
the IDRP to provide DMHC or CDI with a written justification,
which does not exceed two pages, for the appeal. Requires
DMHC or CDI to respond within 30 days of receipt of the
written justification.
8)Requires the plan or insurer to provide all documents
submitted to DMHC or CDI to the individual health professional
appealing the claim. Makes statistically credible information
exempt from public disclosure. Statistically credible
information is required to be maintained by the health plan or
insurer and updated at least annually, regarding rates paid to
currently contracting individual health professionals who
provide similar services, who are not capitated, and are
practicing in the same or a similar geographic area as the
non- contracting individual health professional. Requires the
statistically credible information to take into consideration
the determination of the IDRP.
9)Allows a non-contracting health professional to dispute a
claim that he or she believes is not the plan's average
contracted rate, or, if the non-contracting health
professional seeks to be paid more than 150% of the amount
that the plan otherwise would pay, as specified.
10)Requires DMHC or CDI to determine whether the payment is the
plan's or insured's average contracted rate, as specified.
Requires, if the payment is lower than the plan's or insured's
average rate, the plan to correct the statistically credible
information and provide payment consistent with 11) below.
11)Requires payment to be determined based upon the following:
a) The provider's training, qualifications, and
length of time in practice;
AB 533 (Bonta) Page 5 of ?
b) The nature of the services provided;
c) The fees usually charged by or paid to the
provider;
d) Prevailing provider rates charged or paid in
general geographic area in which the services were
rendered;
e) Other aspects of the economics of the medical
provider's practice that are relevant; and,
f) Any unusual circumstances in the case.
12)Indicates the following are not eligible claim disputes for
IDRP:
a) A claim that has completed the plan's internal
dispute resolution mechanism or a claim for which
fewer than 30 days have elapsed since the individual
health professional initiated the plan's internal
dispute resolution mechanism;
b) A claim that is currently in arbitration or
litigation in state or federal court;
c) A dispute concerning a late payment;
d) A dispute concerning an interest payment;
e) A claim dispute that is not subject to DMHC or
CDI jurisdiction;
f) A claim dispute with a health plan or insurer
by another entity or state;
g) A dispute regarding a claim that does not
involve covered benefits; or,
h) A claim denied on the basis that the services
were not medically necessary or were experimental or
investigational in nature.
13)Makes failure to pay a non-contracting individual health
professional pursuant to this bill, an "unfair payment
pattern." Requires DMHC to take into consideration decisions
of the IDRP in determining whether a plan has engaged in an
unfair payment pattern.
14)Prohibits a non-contracting health professional from
appealing to IDRP for one year from the first appeal if he or
she files multiple appeals and loses more than one third of
the time. A non-contracting health professional is deemed to
have lost if the IDRP awards him or her less than the amount
he or she sought.
AB 533 (Bonta) Page 6 of ?
15)Limits enrollee or insured cost sharing under a health plan
contract or health insurance policy issued, amended, or
renewed on or after January 1, 2016, when an enrollee or
insured obtains care from a contracting health facility at
which, or as a result of which, the enrollee or insured
receives services provided by a non-contracting professional,
to the same cost sharing that the enrollee or insured would
pay for the same covered benefits received from a contracting
professional.
16)Requires the plan or insurer to inform the non-contracting
health professional of the in-network cost sharing owed by the
enrollee or insured. Requires the non-contracting health
professional to refund any overpayment within 30 working days
of receiving the in-network cost sharing amount. Requires, if
overpayment is not refunded within 30 working days, interest
to accrue at the rate of 15% per annum beginning with the
first calendar day after the 30-working day period and the
health professional to automatically include the interest with
the refund.
17)Prohibits payment of a non-contracting health professional if
any amount owed by the enrollee or insured has advanced to
collections. Requires a non-contracting health professional
to affirm in writing that he or she has not advanced to
collections any payment owed by the enrollee or insured when
submitting a claim to the plan or insurer. Permits any
in-network cost sharing to advance to collections after
payment by the plan or insurer if the enrollee or insured
fails to pay the amount owed.
18)Requires enrollee or insured cost sharing arising from
services received by a non-contracting health professional at
a contracting facility to be counted toward any limit on
annual out-of-pocket expenses and any deductible in the same
manner as cost sharing would be attributed to a contracting
health professional.
19)Defines "health facility" as a California licensed health
facility provider and includes the following providers:
hospital, skilled nursing facility, ambulatory surgery,
laboratory, radiology or imaging, facilities providing mental
health or substance abuse treatment, and any other provider as
the DMHC or CDI may by regulation define as a health facility
for purpose of this bill.
AB 533 (Bonta) Page 7 of ?
20)Defines "individual health professional" as a California
licensed physician or surgeon.
21)Permits an enrollee or insured to voluntarily consent to the
use of a non-contracting individual health professional if, in
at least 24 hours in advance of the receipt of services, the
enrollee or insured is provided a written estimate of the cost
of care and consents in writing to both the use of a
non-contracting individual health professional and payment of
the estimated additional cost. Requires the enrollee or
insured to be informed that the cost of the services will not
accrue to the limit on annual out-of-pocket expense or the
enrollee's or insured's deductible.
22)Provides that this bill does not exempt a health plan from
existing law related to completion of covered services by a
terminated or nonparticipating provider or emergency services
provided at non-contracting hospitals, nor abrogate the
holding in Prospect Medical Group v. Northridge Emergency
Medical Group, as specified, that an emergency room physician
is prohibited from billing an enrollee of a health plan
directly for sums that the health care service plan has failed
to pay for emergency room treatment. Provides that this bill
does not exempt a health insurer from existing law related to
completion of covered services by a terminated provider or
emergency services provided at non-contracting hospitals.
23)Requires a delegated entity to comply if a health plan
delegates payment functions to a contracted entity, such as a
medical group or independent practice association.
24)Exempts Medi-Cal managed care plans, as specified and
emergency services and care, as defined in existing law from
the provisions of this bill.
FISCAL
EFFECT : According to the Assembly Appropriations Committee
based on a prior version of this bill that did not include an
IDRP:
1)One-time costs, in the range of $300,000 (Managed Care Fund),
to the DMHC for plan review, legal services, technical
assistance, and regulations.
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2)Ongoing annual costs potentially in the hundreds of thousands
of dollars (Managed Care Fund), to the DMHC Help Center to
assist consumers, and investigate and resolve complaints and
disputes.
3)One-time costs of $300,000 (Insurance Fund), to CDI for policy
review and regulations.
4)Ongoing annual costs, in the range of $50,000 (Insurance
Fund), to CDI to assist consumers, and investigate and resolve
complaints and disputes.
PRIOR
VOTES :
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|Assembly Floor: |74 - 1 |
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|Assembly Appropriations Committee: |17 - 0 |
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|Assembly Health Committee: |17 - 0 |
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COMMENTS :
1)Author's statement. According to the author, 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. Surprise bills cost consumers substantial
sums of money, placing an undeserved and unreasonable
financial burden upon them. 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. While
California has been at the forefront of the federal Patient
Protection and Affordable Care Act (ACA) implementation, we
need to catch up to other states that have taken the lead in
fully protecting consumers from surprise bills. It is the
state's responsibility to ensure full consumer protection for
all of our patients, and this bill is a critical measure to
AB 533 (Bonta) Page 9 of ?
ensure patients are safeguarded from hidden costs unfairly
imposed upon them when they have followed the rules.
2)Out-of-Network Services and Surprise bills. According to Fair
Health, a plan contracts with a wide range of doctors
including specialist, hospitals, labs, radiology facilities,
and pharmacies. These in-network providers agree to the
contracted rate which includes the plan payment and the
patient's share of cost. If a patient goes to a provider
outside the network, there is no contract or agreed upon rate.
Depending upon the type of plan, a patient may have to pay a
higher co-payment or coinsurance, and those costs may or may
not apply to the plan's deductible, if there is a deductible.
If the plan is an HMO, a patient may have to pay the full
cost, unless it's an emergency situation. A patient may go
out-of-network knowingly, in order to consult with or be
treated by a prominent specialist, or they may accidentally
obtain services from an out-of-network provider. This could
happen when a primary care physician refers the patient to a
specialist or if a patient has surgery or a procedure in a
hospital. For example, while a hospital may be in the
network, the anesthesiologist, radiologist or surgeon who
provided professional services may not. In any case, going
out-of-network could cost patients hundreds or thousands of
dollars. The focus of this bill is the situation facing
consumers in a hospital or facility type setting.
A recent survey commissioned by the Consumer Reports National
Research Center found that nearly one third of privately
insured Americans received a surprise medical bill where their
health plan paid less than expected in the past two years.
Among the 2,200 adult U.S. respondents, nearly one out of four
got a bill from a doctor they did not expect to get a bill
from. Survey findings also suggest that consumers overall seem
largely confused when it comes to their rights to fight
surprise bills. Based on the California respondents to this
survey, one in four privately insured Californians faced
surprise medical bills. One quarter of Californians who had
hospital visits or surgery in the past two years were charged
an out-of-network rate when they thought the provider was
in-network. Sixty-three percent assume doctors at an
in-network hospital are also in-network.
3)CA Efforts to Eliminate Balance Billing. In the past 20 or
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more years, there have been several attempts to address
payment disputes between physicians and health plans aimed at
getting patients out of the middle of these disputes. Some of
these are described in this analysis under prior legislation.
There have been attempts to explicitly ban the practice of
balance billing, which is the practice of consumer's being
charged the balance of a physician's bill above what the plan
pays. Few have been successful. California's current ban as
it relates to non-contracted providers is based upon laws and
litigation and is limited in its applicability to emergency
services covered by DMHC regulated health plans. The same ban
does not currently exist on CDI regulated insurers.
4)Unfair Claims Practices. AB 1455 (Scott, Chapter 1827,
Statutes of 2000), prohibits unfair claims practices, and the
resulting regulations detailed requirements health plans must
meet in processing and paying claims for both contracting and
non-contracting providers. The AB 1455 regulations define
reimbursement of a claim for non-contracting providers as the
"reasonable and customary value," based on statistically
credible information that is updated at least annually, and
that takes into consideration the following specified
criteria: a) the provider's training, qualifications, and
length of time in practice; b) the nature of the services
provided; c) the fees usually charged by the provider; d)
prevailing provider rates charged in the general geographic
area in which the services were rendered; e) other aspects of
the economics of the medical provider's practice that are
relevant; and, f) any unusual circumstances in the case.
These regulations codified the factors for determining
non-contracted provider reimbursement as outlined in Gould v.
Workers' Compensation Appeals Board, City of Los Angeles ,
(1992) 4 Cal.App.4th 1059, 1071. Consequently, the AB 1455
regulations are often referred to as requiring payments for
non-contracting providers according to the "Gould criteria."
More recently in Children's Hospital Central California v.
Blue Cross of California et.al, (2014) 226 Cal.App4th 1260,
172. the appellate court determined that the Gould criteria
includes more than the charges billed by the provider.
Charges are just one data point and payments and rates
accepted by other payors could also be considered. Because of
this decision, the criteria proposed in this bill are slightly
modified from the Gould criteria in that they include
"prevailing provider rates charged or paid in the general
geographic area in which the services were rendered."
AB 533 (Bonta) Page 11 of ?
5)IDRP. Both CDI and DMHC have IDRPs. CDI advises providers to
first attempt to resolve disputes with the insurance company.
According to CDI the insurer is required to resolve each
provider dispute consistent with applicable law and issue a
written determination within 45 working days after the date of
receipt of the provider dispute. CDI requires the following
information to be included with a disputed claim: 1) the
patient's Assignment of Benefits, if applicable, 2) claim
forms submitted to the insurance company, 3) all
correspondence between the provider and the insurance company
(including all related Explanation of Benefits (EOBs) and
Dispute Resolution Process determination letter), 4) the
patient's insurance identification card - both sides, and 5)
the provider's contract with the insurance company, if any.
According to the DMHC, participation in IDRP is voluntary and
non-binding. Parties are encouraged to comply with the
decision issued by the IDRP External Reviewer. Non-contracted
providers who deliver EMTALA-required emergency services
("Providers") working with health plans or capitated providers
("Payers") are eligible to submit a IDRP concerning the
"reasonable and customary" value of services rendered. A
provider may request review through the IDRP for an individual
claim or for multiple claims (up to a total of 50
substantially similar claims.) Eligible claim disputes are
those disputes that are subject to DMHC jurisdiction and meet
each of the following four criteria: 1) the disputed claim is
limited to emergency services rendered by non-contracted
physicians or hospitals, 2) the services were rendered within
the last four years, 3) the dispute is limited to disagreement
concerning the reasonable and customary value of the services
rendered, and 4) the Provider has completed the Payer's
dispute resolution process.
6)Related legislation. SB 137 (Hernandez) would require health
plans and health insurers to have accurate health care
provider directories. SB 137 is pending in the Assembly
Health Committee.
7)Prior legislation. AB 1579 (Campos, 2012) would have required
issuers to pay a non-contracting dental provider directly for
covered services rendered to an enrollee or insured in certain
circumstances. AB 1579 was set for hearing in the Senate
Health Committee, but not heard per the request of the author.
AB 533 (Bonta) Page 12 of ?
SB 1373 (Lieu, 2012), would have required, when an enrollee or
insured seeks care from a non-contracting provider, the
provider to provide a specified written notice to the enrollee
or insured informing the enrollee or insured that the provider
is not in the enrollee's or insured's plan or provider
network, as specified. Would have prohibited a health
facility or a provider group from holding itself out as being
within a plan network unless all of the individual providers
providing services at the facility or with the provider group
are within the plan network. This bill failed passage by the
Senate Health Committee.
SB 981 (Perata, 2008), would have prohibited non-contracting
hospital ER physicians from directly billing enrollees of
health plans licensed by DMHC under the Knox-Keene Health Care
Service Plan Act of 1975, other than allowable copayments and
deductibles, and would have established statutory standards
and requirements for claims payment and dispute resolution
related to non-contracting ER physician claims, including an
IDRP. SB 981 was vetoed by Governor Schwarzenegger. The veto
message is below:
This bill does not solve the problem facing California
patients and only serves to highlight one of the many
reasons I introduced my comprehensive health care
reform proposal. Californians are paying a hidden tax
on their health care which subsidizes care for the
uninsured and allows providers to shift costs when
they are not fully reimbursed by their payers. The
insured population bears the brunt of this hidden tax
and the larger it gets, fewer people are able to
afford coverage.
This bill, in essence, asks for California to embrace
this cost-shift, reward non-contracting physicians by
assuring their continued financial slice of the pie,
and allow the status quo to continue. I cannot agree
to a measure that is a piecemeal approach to our
broken health care system.
Our health care system relies on physicians, hospitals
and health plans to work together. The patient that
pays health insurance premiums should not be part of a
payment dispute between these sophisticated market
AB 533 (Bonta) Page 13 of ?
players. It is unfortunate that this bill takes sides
in the dispute within the health care industry instead
of taking the side of patients.
Until the Legislature can send me legislation that
removes that patient from all disputes involving these
parties, I direct my Department of Managed Health Care
to aggressively continue in its efforts to identify
unfair payment practices and keep patients from being
caught in the middle.
AB 1203 (Salas, Chapter 603, Statutes of 2008), established
uniform requirements governing communications between health
plans and non-contracting hospitals related to
post-stabilization care following an emergency, and prohibits
a non-contracting hospital from billing a patient who is a
health plan enrollee for post-stabilization services, except
as specified.
AB 2220 (Jones, 2008), would have allowed parties to a
contract negotiation between ER physicians and health care
service plans or their contracting risk bearing organization
to, on a one-time basis per contract negotiation, invoke a
mandatory mediation process to assist in resolving any
remaining issues in the contract negotiations, as specified.
AB 2220 was vetoed by Governor Schwarzenegger. The veto
message is below:
I applaud the author for seeking to address one of the
most important consumer issues facing patients today.
This bill attempts to change the market dynamic in a
way that encourages contracts between health plans and
providers. It is a good starting point. Unfortunately,
it does not contain the comprehensive solution that
patients need and deserve when it comes to addressing
the disgraceful practice of balance billing.
I believe the author and Administration can work
together to solve this issue next year. I look forward
to our combined efforts that will take the patient out
of the middle of these payment disputes.
AB 2839 (Huffman, 2008), would have prohibited a health plan
or health insurer from requiring providers to execute unfair
AB 533 (Bonta) Page 14 of ?
and unreasonable contracts, as specified, as a condition of
entering into negotiations with the health plan or insurer.
AB 2839 was held on the Assembly Appropriations Committee
Suspense file.
SB 389 (Yee, 2008), would have prohibited a hospital-based
physician, as defined, from seeking payment from individual
enrollees for services rendered and would have required such
physicians to seek reimbursement solely from the enrollee's
health care service plan or the contracting risk-bearing
organization. Also the bill would have required DMHC and CDI,
on or before March 1, 2008, to implement an independent
provider dispute resolution system, in consultation with
representatives of health plans or insurers, providers, and
consumer representatives. SB 389 died in the Senate without a
committee hearing.
SB 697 (Yee, Chapter 606, Statutes of 2008), prohibits a
health care service provider from seeking reimbursement for
services furnished to a person enrolled in the Healthy
Families Program or the Access for Infants and Mothers Program
from other than the participating health plan covering that
person.
AB 1X 1 (Nunez, 2008), would have enacted the Health Care
Security and Cost Reduction Act, a comprehensive health reform
proposal. Among other provisions related to health insurance
markets and hospital financing, AB 1X 1 would have prohibited
a non-contracting hospital from billing any patient, who has
coverage for emergency and poststabilization health care
services, for those services, as defined, except for
applicable copayments and cost sharing. AB 1X 1 died in the
Senate Health Committee.
SB 417 (Ortiz, 2005), would have prohibited a hospital-based
physician, as defined, from engaging in a pattern of billing a
patient for covered services in excess of applicable
co-payments, deductibles or coinsurance, unless specified
conditions are met, and required providers to provide specific
notice requirements when they send a bill or statement to a
patient. SB 417 died in Assembly Health Committee.
SB 364 (Perata, 2005), would have allowed an emergency
physician who has a contract with a health plan, but does not
have a contract with a medical group or other entity that has
AB 533 (Bonta) Page 15 of ?
been assigned responsibility for paying claims by the health
plan, to submit a claim to the plan, and requires the plan to
pay the claim to the terms of the contract. SB 364 died on
Assembly floor.
AB 1321 (Yee, 2005), would have prohibited hospital-based
anesthesiologists, radiologists, pathologists, and emergency
room physicians, or a group of such physicians, from seeking
payment for services, other than allowable copayments and
deductibles; from individual enrollees of a health plan. AB
1321 was held on the Assembly Appropriations Suspense File.
SB 367 (Speier, Chapter 723, Statutes of 2005), enacted the
Patient and Provider Protection Act in the Insurance Code and
revises the way complaints from health care providers about
health insurers are handled by CDI.
AB 755 (Chan, 2005), would have required provider contracts
entered into with contracting agents, as defined, to include
specific provisions and would have prohibited contracting
agents from selling, leasing, assigning, transferring, or
conveying a list of contracted providers and their discounted
rates to any entity that is not a payer. AB 757 died on the
Assembly Appropriations Suspense file.
AB 1686 (Pacheco, 2004), would have encouraged county medical
societies to establish a process to resolve billing disputes
between a contracting provider group and a non-contracting
provider group. AB 1686 died in the Assembly.
AB 2389 (Koretz, 2003), would have required a health plan or
health insurer that owns a preferred provider organization to
pay non-contracting physicians a reasonable and customary fee
for hospital-based anesthesiology, radiology, or pathology
services provided to the plan's enrollees. Would have
prohibited those physicians from balance billing an enrollee
for any charge that exceeds the reasonable and customary fee.
AB 2389 died in the Senate.
AB 2907 (Cohn, Chapter 925, Statutes of 2002), established the
Health Care Providers Bill of Rights and prohibits certain
provisions in contracts between a health plan or a health
insurer and a health care provider.
AB 1455 (Scott, 2000), bars health plans from engaging in
AB 533 (Bonta) Page 16 of ?
unfair payment patterns in the reimbursement of providers. AB
1455 also includes a number of other provisions regarding
payment practices of health plans, including requiring health
plans to make their dispute resolution process available to
non-contracting providers.
8)Support. According to Health Access California, even the most
careful consumers can end up being treated by an
out-of-network provider and then receiving a surprise bill for
the difference between the provider's charge and what the
health plan is willing to pay. The difference can be hundreds
and sometimes thousands of dollars. A consumer who goes to an
in-network imaging center, only to discover that a
non-contracting radiologist the consumer never met and did not
select was responsible for reviewing the consumer's imaging or
a consumer who selects an in-network surgeon for surgery at an
in-network hospital or surgery center but discovers that the
anesthesiologist is a non-contracting provider only when they
get the bill from the anesthesiologist. This bill holds
consumers harmless for surprise bills from out-of-network
charges that were outside of their control. Consumers should
not get stuck in the middle of business disputes between
health plans and providers. Consumers Union writes that
consumers should not have to pay the price for the complicated
relationships between doctors, facilities and health plans.
Consumer should not be responsible for costs from in-network
facilities due to contracting disputes, low reimbursements, or
unclear network participation. The National Multiple
Sclerosis Society - California Action Network supports this
bill because health care consumers, particularly, those who
are living with a chronic condition and are frequent users of
the health care system, should not be subjected to unexpected
high out of pocket costs if they have followed the rules of
their health plan. The California Association of Health
Underwriters writes that agents and brokers act as advocates
for policyholders when disputes arise and supports a strict
prohibition on balance billing. CalPERS believes this bill
provides an important consumer protection by preventing
CalPERS members and other insured Californians that use
in-network health facilities from being balance billed by
out-of-network health professionals.
9)Support if Amended. America's Health Insurance Plans (AHIP)
supports the intent of this legislation and believes it is a
first step in protecting and empowering consumers. AHIP
AB 533 (Bonta) Page 17 of ?
requests the dispute process address the problem as it occurs
in the capitated medical group environment, treat emergency
room services in the Insurance Code the same as they are
handled in the Knox-Keene Act, create a payment structure for
out-of-network claims that does not destabilize provider
contracts, and ensure a fast, effective, and low cost IDRP.
10)Opposition. The California Orthopaedic Association writes
that the issue of patients who unknowingly receive care which
will not be paid for by their health plan needs to be
addressed on the front end. Insurers and plans must maintain
adequate networks of providers, and pay rates that are
adequate to sustain those networks. This bill will penalize
those providers who cannot accept inadequate rates and will
provide no incentive for plans to negotiate fair contracts.
The California Radiological Society and California Society of
Pathologists indicate that they would prefer to contract with
plans and insurers but the absence of contracts may be due to
plans that provide contract terms on a "take it or leave it"
attitude. They do not oppose protections on patient cost
exposure but would suggest that plans be required to create a
process to treat this similarly to an out-of-network referral
for medically necessary services. The California Society of
Anesthesiologists writes that this bill undermines a
physician's right to negotiate a fair contract with health
plans and insurers by statutorily imposing payments agreed to
by some physicians but not others as the value of their
services. Contracted rates of payment already represent
substantial discounts to usual and customary market rates. To
statutorily impose payments that some physicians have agreed
to but not others will rapidly force a spiral of even lower
rates leading to even more restricted provider networks. The
California Chapter of the American College of Emergency
Physicians writes that the most recent amendments do not
exempt emergency care and services from the Insurance Code,
which they assume is a drafting error. However, even if the
bill is amended to exempt emergency physicians, they remain
opposed. CalACEP believes it is bad policy to adopt a
framework that hands all the power to insurers and leaves
providers at their mercy for payment.
11)Opposition Unless Amended. The California Medical
Association (CMA) writes that this bill as it currently stands
has a high probability of causing major problems across the
healthcare delivery system much more significant than those it
AB 533 (Bonta) Page 18 of ?
aims to solve. CMA prefers an approach focused on reducing or
eliminating surprise billing in the first place, as well as
ensuring a process for fair compensation for physician
services. According to CMA, this bill will hinder PPO
beneficiaries' ability to use those products' out-of-network
benefits and change contracting dynamics, creating significant
uncertainty in the relationships among payors and providers.
CMA writes that this bill includes a convoluted and unworkable
IDRP that ostensibly aims to solve payment disputes between
out-of-network providers and health plans.
12)Drafting Issues.
a) IDRP eligible claims. On page 3, lines 12-13 allows
a claim to be appealed to the IDRP if 30 days have
elapsed since the plan's internal dispute resolution
process has been initiated. This does not require that
process to have been complete. Additionally, on page 5,
lines 20-24 the bill indicates that an ineligible claim
is one that has completed the plan's internal dispute
resolution, or a claim for which fewer than 30 days have
elapsed since the internal process was initiated. The
parallel provisions in the Insurance Code, page 16, lines
11-16 indicate that an ineligible claim is a dispute that
has not previously been submitted to the insurer's
dispute resolution process or a claim which fewer than 30
days have elapsed since the internal process was
initiated. These provisions need to be reconciled.
Additionally, the bill sets up two triggers for a non
contracted individual health professional to appeal a
claim to an IDRP. The first is if there is doubt that the
paid amount is based on the average contracted rate, as
specified. The second trigger is if the non contracted
health professional seeks to be paid more than 150% of
the amount that the plan would otherwise pay pursuant to
a section of this bill (see page 4, lines 34-36). This
cross reference is confusing and should be clarified. It
appears the intent is to allow a provider to utilize IDRP
if he or she seeks to be paid more than 150% of the
average contracted rate, which is required under Section
1371.31. But also required under that section is payment
based on the EOC for PPOs and point of service plans.
b) IDRP department response. On page 4, lines 20-22
says The department shall respond to an appeal by a
AB 533 (Bonta) Page 19 of ?
non-contracting individual health professional within 30
days of receipt of the written document described in
paragraph (1). It is not clear what is intended by this
requirement. Is it intended to require resolution in 30
days or just an acknowledgement that the request was
received? Presumably the latter is the intent because
the bill also authorizes the departments to contract with
an independent dispute resolution organization, which is
required to issue a decision in 60 days.
c) Delegation. Unlike health plans, health insurers do
not delegate payment functions to medical groups and
independent practice associations. On page 18, lines
13-16 should be deleted.
d) ER physician exemption. Page 11, lines 29-30
indicate that the section of the bill ensuring patients
are limited to in-network cost sharing does not apply to
emergency services and care. It is not clear why
emergency services would be exempt from this section.
These provisions are consistent with existing law which
bans balancing billing on emergency services.
13)Policy Comment. The main objective of this bill as
articulated in the author's statement is to protect consumers
from being placed in the middle of payment disputes between
health plans and providers. Sections three and four, as
passed by the Assembly, set up explicit protections for
patients from cost sharing that is higher than what is
expected. The remainder of this bill, as recently amended,
sets up payment rates and appeals processes to address payment
issues between plans and non-contracted providers for services
provided to enrollees. The details of these provisions have
major significance for both plans and providers. Finding the
right balance of a fair payment that does not create a
disincentive for providers to contract is the challenge. It
is difficult to know what impact there will be on provider
payments if balance billing is banned as proposed in this
bill. A 2014 study on California's balance billing ban for
California emergency providers concluded that payment rates by
subcontracted risk-bearing organizations for non-contracted
emergency department professional services declined
significantly following the ban, whereas payment rates by
health plans remained relatively stable. Based on this study,
it is unclear if the ban will have an impact on provider rates
AB 533 (Bonta) Page 20 of ?
paid by health plans, or if as in the case of emergency room
physicians, rates will be significantly reduced from
risk-bearing organizations.
SUPPORT AND OPPOSITION :
Support: Health Access California (sponsor)
AARP
American Cancer Society Cancer Action Network
American Federation of State, County and Municipal
Employees
California Association of Health Underwriters
California Association of Physician Groups
California Black Health Network
California Labor Federation
California Pan-Ethnic Health Network
California Public Employees Retirement System Board of
Administration
California School Employees Association
California State Council of the Service Employees
International Union
California Teachers Association
CALPIRG
Children Now
Children's Defense Fund California
City of Oakland
Community Clinic Association of Los Angeles County
Consumers Union
Leukemia & Lymphoma Society
LIUNA Local 777
LIUNA Local 792
NAMI California
National Multiple Sclerosis Society - CA Action
Network
The Children's Partnership
Western Center on Law and Poverty
Oppose: California Chapter of the American College of
Cardiology
California Chapter of the American College of
Emergency Physicians
California Medical Association (unless amended)
California Orthopaedic Association
California Radiological Society
AB 533 (Bonta) Page 21 of ?
California Society of Anesthesiologists
California Society of Pathologists
California Society of Plastic Surgeons
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