BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 533 (Bonta) - Health care coverage: out-of-network coverage
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|Version: August 18, 2015 |Policy Vote: HEALTH 6 - 2 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: August 24, 2015 |Consultant: Brendan McCarthy |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 533 would establish the cost sharing requirements
for patients who receive covered health care services provided
by a non-contracting provider at a contracting facility. The
bill would establish the process for establishing the rate at
which the non-contracting provider would be paid by a health
plan or insurer.
Fiscal
Impact:
One-time costs of about $500,000 for the development of
regulations and review of plan filings by the Department of
Managed Health Care (Managed Care Fund).
Annual costs of $1.5 million to $3 million per year for the
independent dispute resolution process that the Department of
Managed Health Care convenes to settle a dispute between a
provider and a health plan (Managed Care Fund).
One-time costs of about $550,000 for the development of
AB 533 (Bonta) Page 1 of
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regulations and review of plan filings by the Department of
Insurance (Insurance Fund).
Annual costs of $900,000 per year for the independent dispute
resolution process that the Department of Insurance convenes
to settle a dispute between a provider and a health plan
(Insurance Fund).
Background: Under current law, health insurers are regulated by the
Department of Insurance and health plans are regulated by the
Department of Managed Health Care. Under current practice,
health insurers and health plans contract with a wide range of
primary care and specialty care providers as well as facilities
such as hospitals and pharmacies. Enrollees usually have a
copayment or coinsurance requirement when receiving care and
they may also have a deductible that must be met before coverage
begins. Typically, if an enrollee receives care from a provider
that is not in his or her health insurance or health plan
network, the enrollee will have a higher copayment or
coinsurance requirement. In some cases, the enrollee may have to
pay the entire billed amount and the plan does not cover the
service. Because a non-contracted provider does not have an
agreement with a health insurer or health plan specifying the
rate the provider will be paid, disputes between providers and
health insurers and health plans are common.
Generally, an enrollee would be able to find out in advance
whether a provider (such as a surgeon) or a facility (such as a
hospital) is in his or her insurance or health plan network. If
a provider is not in the network, the enrollee can decide
whether he or she is willing to accept higher cost sharing
required when seeing an out of network provider. However, there
are situations when an enrollee unknowingly receives care from
an out-of-network provider. A common example occurs when an
enrollee arranges to have a surgical procedure. In such a case,
the enrollee is usually able to determine whether the surgeon
and/or the hospital are in-network. However, an enrollee likely
has no way of knowing whether other specialists (such as an
anesthesiologist or pathologist) is in his or her network in
advance of the surgery. If one of those specialists provides
services and is not in the enrollee's network, the enrollee may
experience significantly higher costs than anticipated. First,
the patient may be subject to higher cost sharing requirements.
Second, because the provider is not in-network and does not have
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a contract with the insurer or health plan, the provider is not
prohibited from billing the patient for the difference between
the provider's charged rate and the payment made by the health
insurer or health plan (this is referred to as balance billing).
Because the provider, in this case, does not have a contract
with the health insurer or health plan, there is no agreed upon
rate for the services provided. The provider can bill the
insurer or health plan for the amount the provider believes is a
reasonable fee, but the insurer or health plan is not obligated
to pay that rate.
Current law prohibits hospitals from requiring admitting
physicians to participate in a health insurance or health plan
network.
Proposed Law:
AB 533 would establish the cost sharing requirements for
patients who receive covered health care services at a
contracting facility provided by a non-contracting provider. The
bill would establish the rate at which the non-contracting
provider would be paid by a health plan or insurer.
Specific provisions of the bill would:
Require the Department of Managed Health Care and the
Department of Insurance to establish an independent dispute
resolution process to be used when a non-contracting
provider and a health plan or health insurer have a dispute
over the payment rate made for services;
Specify the requirements for determining payments from
health plans and health insurers to non-contracting
providers (based on average contracted rates);
Require that payments made to non-contracting providers
as required under the bill shall constitute payment in full
(prohibiting balance billing of enrollees);
Require that enrollees receiving covered health care
services from a non-contracting provider at a contracting
facility shall be required to pay the same cost sharing as
would apply if the provide were in-network;
The requirements of the bill would generally not apply
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to Medi-Cal managed care plans or for emergency services.
Related
Legislation: SB 1373 (Lieu, 2012) would have required
non-contracting providers to provide specified information to an
enrollee when the enrollee sought care. The bill would have
prohibited a facility from indicating that it was in a health
insurance or health plan network unless all the individual
providers were in the specific network. That bill failed passage
in the Senate Health Committee.
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