BILL ANALYSIS Ó SENATE COMMITTEE ON HEALTH Senator Ed Hernandez, O.D., Chair BILL NO: AB 533 --------------------------------------------------------------- |AUTHOR: |Bonta | |---------------+-----------------------------------------------| |VERSION: |July 7, 2015 | --------------------------------------------------------------- --------------------------------------------------------------- |HEARING DATE: |July 15, 2015 | | | --------------------------------------------------------------- --------------------------------------------------------------- |CONSULTANT: |Teri Boughton | --------------------------------------------------------------- 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. AB 533 (Bonta) Page 8 of ? 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 : ----------------------------------------------------------------- |Assembly Floor: |74 - 1 | |------------------------------------+----------------------------| |Assembly Appropriations Committee: |17 - 0 | |------------------------------------+----------------------------| |Assembly Health Committee: |17 - 0 | | | | ----------------------------------------------------------------- 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 AB 533 (Bonta) Page 10 of ? 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 -- END --