BILL ANALYSIS Ó SB 137 Page 1 Date of Hearing: August 19, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair SB 137 (Hernandez) - As Amended July 16, 2015 ----------------------------------------------------------------- |Policy |Health |Vote:|17 - 2 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- 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) SB 137 Page 2 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 SB 137 Page 3 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 SB 137 Page 4 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. SB 137 Page 5 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. SB 137 Page 6 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 SB 137 Page 7 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. SB 137 Page 8 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