BILL ANALYSIS Ó
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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