BILL ANALYSIS Ó
SB 137
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Date of Hearing: August 19, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
SB 137
(Hernandez) - As Amended July 16, 2015
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Urgency: No State Mandated Local Program: Yes
Reimbursable: No
SUMMARY:
This bill specifies detailed procedures health plans and
insurers must follow to maintain accurate provider directories,
and requires both the Department of Managed Health Care (DMHC)
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and California Department of Insurance (CDI) to develop uniform
provider directory standards for plans and insurers,
respectively, that are regulated by each department.
Specifically, this bill:
1)Exempts the development uniform provider directories from the
Administrative Procedures Act until 2021, but requires
departments to seek public input and hold at least one public
meeting during the development.
2)Requires plans and insurers to submit, and DMHC and CDI to
review and approve, policies and procedures related to
regularly updating provider directories.
3)Repeals an existing Health and Safety Code section related to
plan requirements to provide lists of contracted providers to
enrollees or prospective enrollees.
4)Requires directories for full-service plans and policies, and
mental health plans and policies, to include specified
information for 16 provider types, and 11 or more facility
types, as follows: name, location, contact information,
admitting privileges, type, relevant provider and license
numbers, language spoken, and whether the provider accepts new
patients.
5)Includes similar, but narrower, provider directory
requirements for vision, dental, and other specialized health
care service plans and policies.
6)Details standard policies and procedures plans and insurers
must follow to update directories, including a requirement for
quarterly, affirmative updates from providers that they are
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still contracted with a plan in order to remain on the
provider directory; a requirement for a process to allow
providers to submit changes or updates; specification of time
frames for updating, including weekly, quarterly, and annual
updates; and a requirement to reimburse enrollees or
policyholders who over-paid for covered services based on
inaccurate provider directories.
7)Requires providers to verify or submit changes using the
process required by the plan or insurer, and allows plans and
insurers to delay payment or terminate contracts based on
provider non-response.
FISCAL EFFECT:
1)One-time costs to DMHC in the hundreds of thousands (Managed
Care Fund), and in the range of $100,000 for CDI (Insurance
Fund) for development of complex regulations related to
standard provider directories. Who contracts with whom in
health care, and for which product, is fluid, nuanced, and
complex. Any regulations will be of high interest to health
plans and insurers, as well as numerous provider types.
2)Enforcement costs are unknown but are likely significant for
both departments. Most costs would fall on DMHC, as they now
regulate the vast majority of the marketplace. Enforcement
and complaint resolution costs would depend on compliance and
level of consumer complaints.
3)Although not a direct state cost, health plans indicate the
complex and prescriptive nature of the requirements translate
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into several million dollars in one-time infrastructure costs
per plan, and significant costs ongoing. Increased
administrative costs can be passed on to consumers and
purchasers, including the state, as higher premiums and
cost-sharing and lower benefits.
COMMENTS:
1)Purpose. This bill intends to improve provider directory
information available to consumers shopping for health care
coverage and looking for providers. The author cites low
levels of accuracy in provider directories consumers rely on
when making purchasing health care coverage. A secondary
purpose is to standardize the data elements included in a
provider directory, in order to facilitate the future creation
of integrated provider directories by Covered California or
other third parties.
2)Background. Over the last two years, the public, advocates,
regulators, and oversight agencies have become more concerned
about patient access to providers and the accuracy of provider
directories. Pursuant to the Patient Protection and Affordable
Care Act (ACA) and California's recent expansion of Medi-Cal,
more people are insured, and are using insurance for the first
time, raising questions about adequate access. Pressure to
keep premiums down has resulted in some "narrow network"
offerings, where higher-cost providers are often excluded and
fewer providers are available, as compared to consumer
expectations. In November 2014, DMHC audits of two large
health plans found significant inaccuracies in provider
directories. In January 2015, CDI issued emergency regulations
addressing network adequacy, and required provider directories
to include specified elements. A June 2015 California State
Auditor report found the Department of Health Care Services
(DHCS) oversight process for reviewing provider directories in
Medi-Cal managed care was insufficient.
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3)Related Legislation. AB 533 (Bonta), pending in the Senate
Appropriations Committee, protects a consumer from higher
out-of-network cost-sharing when a consumer seeks care at an
in-network facility, regardless of whether an individual
provider at the facility is out-of-network.
4)Prior Legislation. SB 964 (Ed Hernandez), Chapter 573,
Statutes of 2014, increases the oversight of health plans with
respect to network adequacy and timely access, including
separate reviews of Medi-Cal managed care and commercial
networks.
5)Support. Consumers Union (CU), California Pan-Ethnic Health
Network (CPEHN) and Health Access California (HAC) are
co-sponsors of this bill, and argue that this bill provides
critical improvements to provider directories, which are a
crucial tool for consumers choosing and using a health plan.
Supporters say only accurate directories can avoid exposure to
unexpected medical bills by inadvertently obtaining care from
out-of-network providers.
6)Opposed, seeking amendments. California Advocates for Nursing
Home Reform, California Association of Physician Groups, Delta
Dental all seek different amendments to this bill.
7)Concerns. Health plans and insurers have a number of
concerns, including implementation timeline and ensuring
providers are held accountable for updating plans when
information changes or they do not wish to renew contracts or
accept new patients.
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The author is in active discussion with concerned and
opposed parties about amendments.
8)Comments. In principle, data in provider directories could
serve a dual role, providing consumers information they need
to make informed choices, as well as allowing regulators to
verify networks meet adequacy and timely access requirements.
The data required for regulatory purposes seems very similar
to that required to be included in the provider directory.
This may result in some duplicative administrative work on the
part of health plans, and may result in a mismatch between the
directories being provided to the public, and the data used
for regulatory purposes, with no verification that these two
match at a given point in time. Ideally, as this bill is
implemented and requirements are developed, regulators will
seek efficiencies to minimize administrative burden and ensure
quality control and conformity in data being provided to the
departments for regulatory purposes and to the public.
In addition, this bill requires a great deal of specificity,
which health plans indicate result in significant
administrative costs on an ongoing basis for verification and
update of massive amounts of data. Administrative costs
translate into higher premiums for consumers. Staff suggests
a critical review be conducted of necessity and value of each
requirement, with a focus on providing high-value information.
Any high-effort, low-value requirements should be considered
for removal or, at the very least, should be considered for
modification to reduce administrative burden. Erring on the
side of less burdensome requirements will allow the state to
measure and reassess performance in a couple years while
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maintaining lower administrative costs for health plans.
Health plans appear aware that provider directories are a
source of concern among their enrollees, the public, and their
regulators. Further adjustments can be made in future years if
accuracy remains elusive.
There are many ways to consider adjusting the bill's
requirements. The author could consider, for example, an
approach where the standards only apply to physicians and
hospitals, for which accuracy is likely of the highest value
to consumers. This could allow many potential problems to be
ironed out before applying such standards to every single
contracted provider. Collecting and updating quarterly 9 data
elements for 16 provider types and 11 facility types, taking
into account the complex relationships and sub-contracting
arrangements that exist, is of uncertain benefit in relation
to cost, including opportunity costs.
Health plans' concerns about provider responsiveness appear
legitimate. If provides are non-responsive and not properly
incentivized to provide information, it will be more costly
and burdensome to follow up to ensure accuracy. Making these
updates less frequent would likely help, but it will be
difficult to meet the goals of the legislation without
providing adequate incentives for providers to provide plans
and insurers with status updates.
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Finally, the provider directory standards CDI and DMHC are
required to develop should be better-defined. As drafted, the
departments are exempt from the Administrative Procedures Act
with respect to these regulations, and the bill is unclear
about the intent of the standards.
Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081