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