BILL ANALYSIS                                                                                                                                                                                                    



                                                                     AB 533


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          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          533 (Bonta)


          As Amended  September 4, 2015


          Majority vote


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          Original Committee Reference:  HEALTH


          SUMMARY:  Establishes requirements for the payment of  
          non-contracting individual health professionals when a health  
          care service plan enrollee obtains services from the  
          non-contracting individual health professional in a contracting  
          health facility, as specified.


          The Senate amendments:


          1)Require the Department of Managed Health Care (DMHC) and the  
            Commissioner of the Department of Insurance (DOI)  
            (Commissioner) to establish a mandatory and binding  
            independent dispute resolution process (IDRP) to review and  
            resolve claim disputes between a health care service plan or  
            insurer and a noncontracting individual health professional.










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          2)Require DMHC and the Commissioner to jointly establish uniform  
            criteria for the IDRP, including conflict-of-interest  
            standards that an organization are required to meet in order  
            to participate in the IDRP.


          3)Authorize DMHC and the Commissioner to contract with one or  
            more independent organizations that specialize in dispute  
            resolution to conduct the IDRP.


          4)Exclude Medi-Cal managed health care service plans, Medicare,  
            and emergency services and care from the requirements of this  
            bill.


          5)Require medical groups, independent practice associations, and  
            other entities delegated payment functions by a health care  
            service plan or insurer, to comply with the provisions of this  
            bill.


          6)Require a health care service plan or insurer, unless  
            otherwise provided in this bill or agreed to by the  
            noncontracting individual health professional and the plan, to  
            base reimbursement of noncontracted claims for services  
            rendered 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 the services  
            were rendered.  If an enrollee voluntarily chooses to use his  
            or her out-of-network benefits, requires the amount paid by  
            the health care service plan to be the amount set forth in the  
            enrollee's evidence of coverage, unless otherwise agreed to by  
            the plan and the noncontracting individual health  
            professional.  Requires a noncontracting individual health  
            professional who disputes the claim to use the IDRP  
            established under this bill.


          7)Require the payment made by the health care service plan or  
            insurer to the noncontracting health care professional for  
            nonemergency services, in addition to the applicable cost  








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            sharing owed by the enrollee or insured, to constitute payment  
            in full for nonemergency services rendered.


          8)Delay implementation of the prohibition on balance billing by  
            six months, to July 1, 2016.


          9)Require the health care service plan and insurer to inform the  
            noncontracting individual health professional of the  
            in-network cost sharing owed by the enrollee or insured at the  
            time of payment by the plan to the noncontracting individual  
            health professional.


          10) Prohibit a noncontracting individual health professional  
            from billing or collecting any amount from the enrollee or  
            insured except the in-network cost-sharing amount, and  
            prohibit him or her from billing until he or she is informed  
            of the in-network cost-sharing amount.  Also require the  
            noncontracting individual health professional to affirm that  
            he or she has not attempted to collect any payment other than  
            the in-network cost-sharing owed by the enrollee or insured in  
            writing.


          11)Allow a noncontracting individual health professional to bill  
            or collect from an enrollee or insured the out-of-network cost  
            sharing, if applicable, or more than the in-network  
            cost-sharing for nonemergency health services provided in a  
            contracting health facility only when the enrollee consents in  
            writing at least three business days prior to receipt of care.


          12)Require medical groups, independent practice associations and  
            other contracted entities of health care service plans to  
            comply with this bill.


          13)Exempt Medi-Cal managed health care service plans from this  
            bill.









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          14)Make technical changes.


          FISCAL EFFECT:  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 the DMHC (Managed  
            Care Fund).


          2)Annual costs of $1.5 million to $3 million per year for the  
            independent dispute resolution process that the 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 the Department of  
            Insurance (DOI) (Insurance Fund).


          4)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).


          COMMENTS:  The author states that 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.  The author states that surprise bills cost consumers  
          substantial sums of money, placing an undeserved and  
          unreasonable financial burden upon them.  The author asserts  
          that 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.  The author contends that while California has been  








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          at the forefront of the federal Patient Protection and  
          Affordable Care Act implementation, we need to catch up to other  
          states which have taken the lead in fully protecting consumers  
          from surprise bills.  The author concludes that it is the  
          state's responsibility to ensure full consumer protection for  
          all of our patients, and this bill ensures patients are  
          safeguarded from hidden costs unfairly imposed upon them when  
          they have followed the rules. 


          Health Access California, the sponsor of this bill, and other  
          supporters state that surprise billing practices are a result of  
          both inadequate provider networks and a lack of disclosure  
          regarding provider status and billing to consumers prior to  
          procedures taking place, and asserts that health plans and  
          providers should not involve consumers in business disputes.   
          Supporters state that consumers who follow their plan's rules  
          and use in-network facilities should not be surprised by  
          out-of-network charges from providers who grant care at  
          in-network facilities.  The California Association of Health  
          Plans, the Association of California Life and Health Insurance  
          Companies and other health plans support this bill, stating that  
          out-of-network physicians who charge exorbitant prices,  
          sometimes nearly 100 times more than Medicare pays, drive up  
          consumer costs of coverage and leave patients with unexpected  
          and sometimes significant medical bills despite their best  
          efforts to receive care within the confines of their respective  
          network.  The California Chamber of Commerce supports this bill  
          stating that it furthers the goals of employers to provide  
          high-value health care coverage and minimize out-of-pocket costs  
          for their employees by protecting employee-patients who  
          purposefully seek care at in-network facilities and allowing  
          them to count any out-of-pocket costs they do pay to  
          out-of-network providers towards their annual out-of-pocket  
          limit for health care expenses.


          Some specialty provider groups are opposed to this bill, stating  
          that patients and providers should be protected from health  
          plans and insurers who do not have adequate networks, by  
          imposing a payment standard on health plans and insurers set by  
          an independent, unbiased, non-profit entity.  The opposition  








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          argues this bill provides health plans and insurers more  
          opportunities to collect premiums from patients, not provide the  
          care they have agreed give.  The California Medical Association  
          and California Society of Anesthesiologists oppose this bill,  
          stating that it creates government rate setting for physician  
          services in commercial plans and establishes a payment standard  
          that is below existing contract rates and will result in health  
          plans dropping contracts or reducing contract rates.


          Analysis Prepared by:                     An-Chi Tsou / HEALTH /  
          (916) 319-2097                                   FN: 0002401