BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 1086


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          Date of Hearing:  April 28, 2015


                            ASSEMBLY COMMITTEE ON HEALTH


                                  Rob Bonta, Chair


          AB 1086  
          Dababneh - As Amended April 23, 2015


          SUBJECT:  Assignment of reimbursement rights.


          SUMMARY:  Requires health care service plans (plans) and health  
          insurers (insurers) that sell products in the individual market  
          to authorize and permit assignment of an enrollee or insured's  
          right to reimbursement (hereafter referred to as assignment of  
          benefits) for covered services to a non-contracting physician  
          who furnishes health care services.  Specifically, this bill:  


          1)Requires, on or after January 1, 2016, every plan or insurer  
            that provides out-of-pocket network service as a covered  
            benefit to authorize and permit assignment of the enrollee' or  
            insured's benefits for covered service to a non-contracting  
            provider who furnishes health care services.


          2)Specifies that a plan is not required to authorize or permit  
            an assignment of benefits for emergency, post-stabilization,  
            or urgent care services.


          3)Requires a non-contracting physician accepting an assignment  
            of reimbursement rights to provide the enrollee, a notice that  
            meets specified formatting requirements and that is to be  








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            signed by the enrollee attesting to an understanding of all of  
            the following:


             a)   The physician is not a part of the enrollee's health  
               plan or insurer's network;


             b)   The plan may pay some of the costs, or none at all, and  
               that the enrollee will be responsible for most of the cost;


             c)   The enrollee's health plan or insurer must help the  
               enrollee get care from an in-network physician, and that  
               the enrollee is likely to pay less by using a physician  
               that is in the enrollee's network;


             d)   The plan or insurer may not cover the costs of other  
               caser ordered by the physician, including lab tests,  
               imaging, and referrals to other providers;


             e)   State law does not require any payments made to the  
               non-contracting physician to count toward annual maximum  
               out-of-pocket limits, that the enrollee may call the plan  
               or insurer to find out how close he or she is to reaching  
               the out-of-pocket maximum, and that any out-of-network  
               costs do not counts toward premiums;


             f)   The enrollee received a written estimate of cost for  
               care, and that another notice and estimate will be provided  
               if the estimated costs changes by more than $100 or 10%,  
               whichever is higher;


             g)   The estimate provided may not include services from  
               other providers, such as facility charges; and,








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             h)   The enrollee has the right to confirm benefit  
               information from his or her plan or insurer before  
               beginning treatment.


          4)Requires the notice to be provided to the enrollee at least 24  
            hours prior to providing care, and, for same-day appointments,  
            requires the notice to be provided prior to providing care.  
            Requires a non-contracting physician to retain on file, and  
            provide upon request to the plan or insurer, documentation  
            showing the notice was provided in a timely manner.


          5)Requires the non-contracting physician to provide the enrollee  
            with a written estimate of the cost of care attached to the  
            notice, that includes each anticipated service to be provided  
            and the estimated cost of each service.


          6)Requires the non-contracting physician to provide a revised  
            written estimate of the cost of car as soon as practicable, if  
            upon further examination, the care costs $100 or 10% more than  
            initially estimated, whichever is higher.


          7)Prohibits a non-contracting provider from accepting an  
            assignment of reimbursement rights from a patient who  
            primarily communicates with the physician or an employee of  
            the physician in a language other than English, unless the  
            written notice is also provided in the enrollee's primary  
            language, as specified.


          8)Provides that a non-contracting physician accepting an  
            assignment of benefits may only collect from the enrollee no  
            more than the estimated cost of care.  









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          9)Requires physicians seeking payment from a health care service  
            plan pursuant to an assignment of reimbursement rights to  
            provide the plan or insurer with an itemized bill for service,  
            the name of the person to be reimbursed, and the name and  
            contract number of the enrollee.  


          10)Requires a non-contracting physician, after receiving the  
            direct payment from the enrollee's plan, to refund any  
            overpayment from the plan to an enrollee within 30 business  
            days if the payment from the plan is more than the estimated  
            payment.


          11)Specifies that its provisions apply only to plans or insurers  
            that offer out-of-network covered benefits, and that none of  
            its provisions shall be construed to apply to specialized  
            plans or policies, or to require a plan or insurer to cover  
            out-of-network benefits not otherwise required.  


          12)Specifies that its provisions shall not be construed to  
            exempt a plan from existing requirements related to billing  
            and claim dispute resolution mechanisms, continuity of care,  
            emergency services reimbursement, fair billing, and balance  
            billing prohibitions.  Also specifies that its provisions  
            shall not be construed to exempt an insurer from timely  
            payment requirements, and billing dispute resolution  
            mechanisms.


          EXISTING LAW:  

          1)Establishes the Knox-Keene Health Care Service Plan Act of  
            1975 (Knox-Keene), the body of law governing plans in the  
            state, and provides for the licensure and regulation of plans  
            by the Department of Managed Health Care (DMHC).









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          2)Provides for the regulation of health insurers, and health  
            insurance agents and brokers, by the California Department of  
            Insurance (CDI).
          3)Requires group contracts administered by health plans licensed  
            under Knox-Keene to authorize and permit assignment of  
            enrollee's or subscriber's right to reimbursement to the  
            Department of Health Care Services (DHCS) when services are  
            provided to a Medi-Cal beneficiary.

          4)Requires health insurers to pay group insurance benefits, for  
            or contingent upon hospitalization or medical or surgical aid,  
            upon written consent of the insured, to the person or persons  
            having provided or having paid for the services, if the person  
            qualifies for reimbursement by submitting specified  
            information about the service and the insured person or  
            dependent is covered by the policy.

          5)Requires a health insurer to pay group insurance benefits to  
            DHCS, in the case of a Medi-Cal beneficiary, where DHCS has  
            paid for hospital, medical, or surgical services, as  
            specified.

          6)Requires health plans licensed under Knox-Keene to cover  
            emergency services as a basic health care service and to  
            directly reimburse providers within specified timeframes for  
            emergency services and care provided to plan enrollees for the  
            purpose of stabilizing the enrollee, unless the plan enrollee  
            did not require emergency services and the enrollee should  
            have known that an emergency did not exist, as specified.  

          7)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.

          8)Requires each contract between an issuer and a provider to  
            contain provisions requiring a fast, fair, and cost-effective  








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            dispute resolution mechanism under which providers may submit  
            disputes to the issuer and requires plans and insurers to  
            notify providers of the procedures for processing and  
            resolving disputes, including the location and telephone  
            number where information regarding disputes may be submitted.

          9)Allows a non-contracted provider to dispute the  
            appropriateness of a Knox-Keene health plan's computation of  
            the reasonable and customary value and requires the health  
            plan to respond to the dispute through the health plan's  
            mandated provider dispute resolution process.

          10)Establishes, pursuant to regulations adopted by the DMHC and  
            the CDI, similar but not identical requirements issuers must  
            implement in their claims settlement practices with providers.

          11)Permits an enrollee, an insured or a health care provider to  
            file a written complaint with DMHC or CDI with respect to the  
            handling of a claim or other obligation under a health plan  
            contract or health insurance policy, as specified, and  
            requires DMHC and CDI to respond to the complaint in a  
            specified manner within specified timeframes.

          12)Provides under the Patient Protection and Affordable Care  
            Act, that a qualified health plan (participating in a state  
            Health Benefits Exchange) shall not be treated as covering  
            essential health benefits unless the plan provides that  
            coverage for emergency department services will be provided  
            without imposing any requirement under the plan for prior  
            authorization of services or any limitation on coverage where  
            the provider of services does not have a contractual  
            relationship with the plan that is more restrictive than the  
            requirements or limitations that apply for in network  
            providers; and, if such services are provided out-of-network,  
            the cost-sharing requirement is the same requirement that  
            would apply if such services were provided in-network.

          13)Prohibits a licensed healing arts practitioner from  
            establishing credit or a loan for a patient with whom the  








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            practitioner, or an employee or agent of that practitioner,  
            communicates primarily in a language other than English that  
            is one of the Medi-Cal threshold language, unless specified  
            written notice is also provided in that language.

          FISCAL EFFECT:  This bill has not yet been analyzed by a fiscal  
          committee.


          COMMENTS:  


          1)PURPOSE OF THIS BILL.  According to the author, some health  
            plans view out-of-network providers, who are not bound by  
            contracted rates, as a risk to their bottom line.  As such,  
            the author states that some plans implement policies that  
            refuse to honor the patient's assignment of benefits to a  
            non-contracting provider, and send payment directly to the  
            patient rather than the provider.  The author asserts that  
            refusing to honor assignment of benefit agreements between  
            patients and providers strains provider-patient relationships,  
            diverts health care dollars outside of the system when  
            patients misappropriate those funds for personal use, and put  
            patients at risk for higher out-of-pocket expenses.  The  
            author states that this bill would require plans and insurers  
            to honor assignment of benefit agreements, consequently  
            sending any payment directly to an out-of-network provider who  
            furnishes services.  The author concludes by stating that this  
            bill does not, in any way, mandate a patient or a provider to  
            enter into an assignment of benefit agreement, and would bring  
            parity with existing law requiring small group insurers and  
            Medi-Cal to honor assignment of benefits.


          2)BACKGROUND.  Regulation and oversight of health insurance in  
            California is split between two state departments.  DMHC  
            regulates health plans under Knox-Keene, including health  
            maintenance organizations (HMOs) and some Preferred Provider  
            Organization (PPO) plans.  CDI regulates disability insurers  








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            offering health insurance, which includes PPO plans and  
            traditional indemnity insurance.  An HMO is a managed care  
            arrangement that provides and arranges for health care through  
            contracted or employed providers and generally only covers  
            health services provided by network providers, except in an  
            emergency.  In a PPO arrangement, the plan or insurer  
            contracts with a network of medical providers who agree to  
            accept lower fees and/or to control utilization.  Enrollees in  
            a preferred provider organization (PPO) plan have the option  
            to obtain care from a provider that is out of the PPO network,  
            but generally pay a higher cost in doing so.  
            


             a)   Assignment of benefits. Assignment of benefits refers to  
               an arrangement where a patient requests that his or her  
               health benefit payments be made directly to a designated  
               person or facility, such as a physician or hospital.  All  
               health plans under Knox-Keene, HMOs and the PPOs subject to  
               DMHC jurisdiction, are required to directly reimburse  
               providers for emergency care and services, providing  
               certain statutory and regulatory conditions are met.   
               Otherwise, HMO model plans would generally have no legal  
               obligation to reimburse non-contracted providers, except in  
               an emergency, since the plan contract provides that  
               enrollees must get services from network providers in order  
               for the benefits to be covered.  

               PPO plan enrollees may seek services from non-contracted  
               providers.  PPO, have historically reimbursed the patients  
               directly for covered services but have generally allowed  
               for assignment of benefits to network providers, and even  
               for out-of-network providers.  If a patient signs a written  
               authorization, the provider may seek, and the insurer must  
               pay, the provider directly.  Patients would still be liable  
               for their share of costs, which can be substantial for a  
               provider outside the PPO network.  For example, a PPO  
               policy might pay 80% of the negotiated rate for contracted  
               providers and the patient pays the remaining 20% of that  








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               negotiated rate.  For non-contracted providers, the policy  
               might only pay 60% of what the carrier determines is the  
               usual and customary fee and the patient is liable for the  
               difference between what the insurer paid and the provider's  
               billed charges, which might be higher than usual and  
               customary fees.  Even where the patient assigns the  
               benefits to the provider, unless the provider waives the  
               right to payment, the patient remains liable for full  
               payment to the provider.  

               In addition to the added cost to the patient for going to  
               an out-of-network provider, a PPO may exclude amounts the  
               patient pays to out-of-network providers for covered  
               services from application toward the deductible and annual  
               maximum copayment limits.


             b)   Consumer Protections.  As a licensed health plan and if  
               applicable, specialized health plan, under Knox-Keene  
               certain standards are required such as that services be  
               furnished in a manner providing continuity of care and  
               ready referral of patients to other providers consistent  
               with good professional practice.  Additionally, all  
               services shall be readily available at reasonable times to  
               each enrollee consistent with good professional practice.   
               Further, regulations require services to be within  
               reasonable proximity of enrollees' homes or workplaces, and  
               distance may not be an unreasonable barrier to  
               accessibility.  Plans must monitor accessibility and have a  
               system designed for correcting problems, if they develop.   
               Regulations also require each plan to ensure contracted  
               provider networks have adequate capacity and availability  
               to offer enrollees appointments for covered services  
               according to specified time frames.  

             c)   Balance billing protections.  The California Supreme  
               Court decision in Prospect Medical Group v. Northridge  
               Emergency Medical Group, 45 Cal. 4th 497 (2009) concluded  
               that billing disputes over emergency medical care must be  








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               resolved solely between the emergency room physician, who  
               is entitled to a reasonable payment for his or her  
               services, and the health plan, which is obligated to make  
               the payment.  The physician can't inject the patient into  
               the dispute by billing for the remaining balance of what is  
               not paid for by the plan.  This is referred to as "balance  
               billing."  This case ended a long standing practice of  
               emergency physicians attempting to bring collection actions  
               against plan enrollees when they disputed the rate paid by  
               the plan.  The balance billing prohibition applies only to  
               plans licensed under DMHC.  

          3)SUPPORT.  The California Medical Association (CMA), the  
            sponsor of this bill, states that, in practice, assignment of  
            benefit amounts to little more than an agreement between the  
            patient and provider to have any insurer or health plan  
            payments sent directly to the provider.  CMA states that  
            existing requires group plans to authorize and permit an  
            assignment of benefits by Medi-Cal beneficiaries, and also  
            requires group insurance to authorize assignment of benefits,  
            and that this bill will create parity among all PPOs by  
            extending these requirements to plans regulated by DMHC and  
            individual market PPOs under CDI.  


          4)OPPOSITION.  Health Access California (HAC) and Consumers  
            Union (CU) oppose the bill unless amended to strengthen  
            consumer protections.  The organizations state that the bill  
            does not contain strong enough language to provide advance  
            disclosure to patients seeking same-day appointments.  HAC  
            seeks to limit assignment of benefits for services provided  
            during same-day appointments to situations with relatively low  
            cost exposure, and only provided when the provider also offers  
            same day appointments to enrollees in Medi-Cal, Medicare, and  
            Covered California plans if the provider contracts with these  
            plans.  HAC and CU state the bill would not ensure patients  
            are adequately notified that their out-of-network expenses do  
            not apply toward the annual out-of-pocket limit on cost  
            sharing, and that the bill should require providers to  








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            immediately notify a patient when a revision in a cost  
            estimate for services is made.  Finally, HAC states that the  
            bill should be amended to reference existing law that seeks to  
            provide consumers are not put in the middle of payments  
            between doctors and health plans.   


            Health plans and insurers oppose the prior version of the bill  
            stating that it will weaken provider networks and increase  
            balance billing of consumers.  Specifically, the plans and  
            insurers state that provider networks are critically important  
            to enrollees, and allowing physicians to obtain the statutory  
            right to receive direct reimbursement from a plan removes  
            incentives for providers to join provider networks.  The plans  
            and insurers state that when providers don't join the network,  
            they have not agreed to valuable discounts that are negotiated  
            with providers, leaving physicians free to charge whatever  
            rate they want, making consumers pay more for services.  Plans  
            and insurers argue that provider contracts prohibit providers  
            from balance billing patients, and that this bill not only  
            fails to protect patients from balance billing by  
            out-of-network providers, but incent providers to leave  
            networks in order to obtain the right to collect higher  
            payments for the same services.  Plans and insurers state that  
            out-of-network physicians do not need to meet the same  
            consumer protections required in provider contracts, thus  
            eroding consumer protections for patients.


          5)RELATED LEGISLATION.   AB 533 (Bonta) requires a health plan  
            contract or health insurance policy issued, amended, or  
            renewed on or after January 1, 2016, to provide that if an  
            enrollee or insured obtains care from a participating  
            facility, as defined, at which, or as a result of which, the  
            enrollee or insured receives covered services provided by a  
            nonparticipating provider, as defined, the enrollee or insured  
            is required to pay the nonparticipating provider only the same  
            cost sharing required if the services were provided by a  
            participating provider.   AB 533 is pending in the Assembly  








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            Appropriations Committee.


          6)PREVIOUS LEGISLATION.  

             a)   AB 1579 (Campos) of 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.

             b)   SB 1373 (Lieu) of 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.

             c)   AB 2805 (Ma) of 2008, would have required issuers to  
               permit enrollees to assign benefits directly to health care  
               providers, or pay providers directly, respectively, for  
               health care services in the same way that existing law  
               requires such benefits be assigned or paid directly to  
               providers of beneficiaries of the Medi-Cal program.  AB  
               2805 failed passage on the Assembly floor.  

          7)POLICY COMMENTS.  This bill would require in law a business  
            practice (assignment of benefits) which would make it easier  
            for out-of-network providers to obtain payment from an plan or  
            insurer.  Even with an assignment of benefit requirement,  
            unless the provider waives some of his or her fee, he or she  
            will still have to collect cost-sharing obligation from the  








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            patient.  If opponents are correct in their assertion that  
            direct payment is one of the most significant reasons  
            providers agree to join a network, often at discounted rates,  
            then California could see an erosion of managed care networks.  
             The adequacy of provider networks is critical for enrollees  
            to realize the promise of health coverage and have timely  
            access to needed care and services. 

            However, when a consumer chooses a PPO, he or she is usually  
            making a conscious choice to pick a plan type that may cost  
            more out-of-pocket, but that gives him or her flexibility to  
            go to providers outside of the plan or insurer's network.  To  
            go even further, many consumers choose a PPO for the specific  
            purpose of seeing out-of-network providers, despite financial  
            risk.  Additionally, under PPO arrangements, an out-of-network  
            provider is reimbursed by the plan, whether the payment is  
            direct or indirect, without limits on what he or she can bill.


            What seems to be most important in this arrangement is what  
            information the patient has to make an informed choice about  
            seeing an out-of-network provider and the added financial  
            responsibility the patient may incur in doing so.  This bill,  
            as currently drafted, aims to provide the patient with written  
            notice and information, including cost estimates, to make an  
            informed choice about seeing an out-of-network provider and  
            agreeing to an assignment of benefits, and includes other  
            provisions designed to protect the patient risk and minimize  
            unfair or undue financial risk.  Many of these provisions are  
            the result of productive discussions between the sponsor and  
            consumer advocates.  


            There are areas of the bill that could be improved upon to  
            tighten consumer protections even further.  As such, the  
            committee may wish to consider the following issues:


             a)   Amount of payment collected from the enrollee.  This  








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               bill would prohibit a physician who accepts an assignment  
               of benefit to collect no more than the estimated cost of  
               care from the enrollee.  However, if the actual cost of  
               care is less than what the physician estimated, this  
               language could be interpreted to allow the physician to  
               collect more than the actual cost, up to the amount  
               originally estimated.  The Committee may wish to amend the  
               bill to clarify that the physician may collect from the  
               enrollee no more than the actual or estimated cost of care,  
               whichever is lower.



             b)   Same-day appointments.  For services provided pursuant  
               to a same-day appointment, this bill would require a  
               physician to provide the notice and cost-estimate to the  
               patient prior to providing care, providing little time for  
               a patient to review notice regarding an assignment of  
               benefits in order to make an informed decision.  The  
               Committee may wish to amend the bill to ensure the patient  
               is sufficiently made aware of the content of the notice,  
               and has an opportunity to review the cost estimate prior to  
               service.  One suggestion is for the bill to require a  
               verbal explanation of the content of the notice and the  
               cost-estimate prior to the patient signing the notice and  
               consenting to an assignment of benefit, when assignment of  
               benefit is sought for a service provided during a same-day  
               appointment.
          REGISTERED SUPPORT / OPPOSITION:


          


          Support












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          California Medical Association (sponsor)


          California Society of Anesthesiologists


          CalNET




          Opposition


          Anthem Blue Cross


          Association of California Life and Health Insurance Companies


          Blue Shield of California


          California Association of Health Plans


          Consumers Union (unless amended)


          Health Access California (unless amended)







          Analysis Prepared by:Kelly Green / HEALTH / (916) 319-2097








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