BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 533|
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THIRD READING
Bill No: AB 533
Author: Bonta (D)
Amended: 9/4/15 in Senate
Vote: 21
SENATE HEALTH COMMITTEE: 6-2, 7/15/15
AYES: Hernandez, Hall, Mitchell, Monning, Roth, Wolk
NOES: Nguyen, Nielsen
NO VOTE RECORDED: Pan
SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/27/15
AYES: Lara, Beall, Hill, Leyva, Mendoza
NOES: Bates, Nielsen
SENATE HEALTH COMMITTEE: 7-1, 9/9/15 (pursuant to Senate Rule
29.10)
AYES: Hernandez, Hall, Mitchell, Monning, Nielsen, Roth, Wolk
NOES: Pan
NO VOTE RECORDED: Nguyen
ASSEMBLY FLOOR: 74-1, 6/2/15 - See last page for vote
SUBJECT: Health care coverage: out-of-network coverage
SOURCE: Health Access California
DIGEST: This bill requires the Department of Managed Health
Care (DMHC) and the California Department of Insurance (CDI) to
establish a binding independent dispute resolution process
(IDRP) for claims for non-emergency covered services provided at
contracted health facilities by a non-contracting health care
professional. This bill limits enrollee and insured cost
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sharing for these covered services to no more than the cost
sharing required had the services been provided by a contracting
health professional.
Senate Floor Amendments of 9/4/15 1) delete the requirement that
the DMHC and CDI jointly establish written procedure, 2) delete
the provision which would have required the plan or insurer to
base reimbursement of non-contracted claims, as specified, on
the average rates based on the statistically credible
information, as specified. Instead, requires reimbursement to
be based on the amount the individual health professional would
have been reimbursed by Medicare for the same or similar
services in the general geographic area in which services were
rendered, 3) delete a requirement that plans maintain
statistically credible information, 4) delay until July 1, 2016,
the implementation of the provisions to limit an enrollee or
insureds cost sharing to in-network cost sharing, as specified,
5) revise the provision which allows an enrollee or insured to
voluntarily agree to charges of a noncontracting provider that
are more than the in-network cost sharing, specifically by
requiring the enrollee or insured to consent in writing at least
three business days in advance of care (instead of 24 hours), 6)
delete a disclosure 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, and 7) make other clarifying
changes to the bill.
ANALYSIS:
Existing law:
1) Provides for the regulation of health plans by the DMHC
under the Knox-Keene Act and for health insurers by the 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
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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) 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.
5) 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 DMHC and CDI to each establish an 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 non-emergency services provided at a
contracting health facility. Makes the determination
obtained through IDRP binding on both parties.
2) Requires both parties to participate in the IDRP if
initiated by either party.
3) Permits DMHC and CDI to contract with one or more
independent organizations for the IDRP and requires the
departments to establish additional requirements, including
conflict-of-interest standards.
4) 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 for covered services on the amount the
individual health professional would have been reimbursed by
Medicare for the same or similar services in the geographic
area in which the services were rendered.
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5) Requires, if non-emergency services are provided by a
noncontracting individual health professional to an enrollee
who has voluntarily chosen to use his or her out-of-network
benefit for services covered by a preferred provider
organization or a point of service plan, unless otherwise
agreed to by the plan and the health professional, the amount
paid shall be the amount set forth in the enrollee's evidence
of coverage.
6) Limits enrollee or insured cost sharing under a health plan
contract or health insurance policy issued, amended, or
renewed on or after July 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 health professional,
to the same cost sharing that the enrollee or insured would
pay for the same covered benefits received from a contracting
health professional.
7) 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.
8) 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.
9) 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
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annual out-of-pocket expenses and any deductible in the same
manner as cost sharing would be attributed to a contracting
health professional.
10)Defines "contracted health facility" as a health facility
that is contracted to provide services under the enrollee's
health plan contract or insured's health insurance policy and
includes: hospital, skilled nursing facility, ambulatory
services or other outpatient settings, as specified,
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.
11)Defines "individual health professional" as a California
licensed physician or surgeon.
12)Permits an enrollee or insured to voluntarily consent to the
use of a non-contracting individual health professional if,
in at least three business days 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.
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 implementation, the state
needs 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
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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. 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)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,
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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."
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee:
1)One-time costs of about $500,000 for the development of
regulations and review of plan filings by DMHC (Managed Care
Fund).
2)Annual costs of $1.5 million to $3 million per year for the
IDRP that DMHC convenes to settle a dispute between a provider
and a health plan (Managed Care Fund).
3)One-time costs of about $550,000 for the development of
regulations and review of plan filings by CDI (Insurance
Fund).
4)Annual costs of $900,000 per year for the IDRP that CDI
convenes to settle a dispute between a provider and a health
plan (Insurance Fund).
SUPPORT: (Verified9/9/15)
Health Access California (source)
AARP
America's Health Insurance Plans
American Cancer Society Cancer Action Network
American Federation of State, County and Municipal Employees
Anthem Blue Cross
Association of California Life and Health Insurance Companies
California Association of Health Plans
California Association of Health Underwriters
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California Association of Physician Groups
California Black Health Network
California Labor Federation
California Pan-Ethnic Health Network
California Primary Care Association
California Professional Firefighters
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
Cigna
City of Oakland
Community Clinic Association of Los Angeles County
Consumers Union
International Alliance of Theatrical Stage Employees Local 80
Leukemia & Lymphoma Society
LIUNA Local 777
LIUNA Local 792
NAMI California
National Health Law Program
National Multiple Sclerosis Society - California Action Network
SEIU California
The Children's Partnership
Western Center on Law and Poverty
OPPOSITION: (Verified9/4/15)
California Chapter of the American College of Cardiology
California Chapter of the American College of Emergency
Physicians
California Medical Association
California Orthopaedic Association
California Radiological Society
California Society of Anesthesiologists
California Society of Pathologists
California Society of Plastic Surgeons
Osteopathic Physicians and Surgeons of California
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ARGUMENTS IN 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. 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.
ARGUMENTS IN 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 Chapter of the
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American College of Emergency Physicians writes even if
emergency physicians are exempt, they remain opposed because it
is bad policy to adopt a framework that hands all the power to
insurers and leaves providers at their mercy for payment. The
California Medical Association (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.
ASSEMBLY FLOOR: 74-1, 6/2/15
AYES: Achadjian, Alejo, Baker, Bigelow, Bloom, Bonilla, Bonta,
Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chiu,
Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman,
Frazier, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto,
Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper,
Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim,
Lackey, Levine, Linder, Lopez, Low, Mathis, Mayes, McCarty,
Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell,
Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas,
Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond,
Ting, Wagner, Waldron, Weber, Wilk, Atkins
NOES: Travis Allen
NO VOTE RECORDED: Chávez, Beth Gaines, Maienschein, Williams,
Wood
Prepared by:Teri Boughton / HEALTH /
9/9/15 13:23:49
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