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 ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: August 18, 2015 |Policy Vote: HEALTH 6 - 2 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: Yes | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 24, 2015 |Consultant: Brendan McCarthy | | | | ----------------------------------------------------------------- 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 ? 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 AB 533 (Bonta) Page 2 of ? 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 AB 533 (Bonta) Page 3 of ? 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. -- END --