Senate Bill No. 781

Introduced by Senator Allen

February 27, 2015

An act to amend Section 10123.147 of the Insurance Code, relating to insurance.

LEGISLATIVE COUNSEL’S DIGEST

SB 781, as introduced, Allen. Health insurance: claims.

Exiting law requires insurers issuing group or individual policies of health insurance that covers hospital, medical, or surgical expenses to reimburse each complete claim, as specified, as soon as practical but no later than 30 working days after receipt of the complete claim. Within 30 working days after receipt of the claim, an insurer can contest or deny a claim, as specified. An insurer is required to pay the greater of $15 per year or interest, as specified, on a claim that is not contested or denied and that has not been delivered to the claimant within 30 working days after receipt. Existing law also authorizes the insurer to request reasonable additional information about the claim, and requires the service provider making the claim to submit the relevant information requested to the insurer within 15 working days. Existing law allows the insurer 30 working days after receipt of the additional information to reconsider the claim, and requires the insurer to pay the greater of $15 per year, or interest, as specified, on a claim that is undergoing reconsideration and that has not been delivered to the claimant within 30 working days after receipt of the additional information. Under existing law these requirements are not applicable to claims to which specified exceptions apply, and the insurer is required to give written notice to the provider if any of those exceptions apply within 30 working days of receipt of the claim.

This bill would require an insurer, under those circumstances, to instead pay to the claimant the greater of $25 per year or the interest, as specified.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 10123.147 of the Insurance Code is
amended to read:

10123.147.  

(a)  begin delete Every end delete begin insert (1) end insert begin insert   end insert begin insert An end insert begin insert end insert insurer begin delete issuing end delete begin insert that issues a end insert group
or individual begin delete policies end delete begin insert policy end insert of health insurance that covers
hospital, medical, or surgical expenses, including those telehealth
services covered by the insurer as defined in subdivision (a) of
Section 2290.5 of the Business and Professions Code, shall
reimburse each complete claim, or portion begin delete thereof, end delete begin insert of a claim, end insert
whether in state or out of state, as soon as practical, but no later
than 30 working days after receipt of the complete claim by the
insurer. begin delete However, end delete

begin insert (2) end insert begin insert   end insert begin insert However, end insert an insurer may contest or deny a claim, or portion
begin delete thereof, end delete begin insert of the claim, end insert by notifying the claimant, in writing, that the
claim is contested or denied, within 30 working days after receipt
of the complete claim by the insurer. The notice that a claim, or
portion begin delete thereof, end delete begin insert of a claim, end insert is contested shall identify the portion
of the claim that is contested, by revenue code, and the specific
information needed from the provider to reconsider the claim. The
notice that a claim, or portion begin delete thereof, end delete begin insert of a claim, end insert is denied shall
identify the portion of the claim that is denied, by revenue code,
and the specific reasons for the denial, including the factual and
legal basis known at that time by the insurer for each reason. If
the reason is based solely on facts or solely on law, the insurer begin delete is
required to end delete begin insert shall end insert provide only the factual or legal basis for its
reason to deny the claim. begin delete The end delete

begin insert (3) end insert begin insert   end insert begin insert The end insert insurer shall provide a copy of the notice required by
this subdivision to each insured who received services pursuant
to the claim that was contested or denied and to the insured’s health
care provider that provided the services at issue. The notice
required by this subdivision shall include a statement advising the
provider who submitted the claim on behalf of the insured or
pursuant to a contract for alternative rates of payment and the
insured that either may seek review by the department of a claim
that was contested or denied by the insurer and the address, Internet
Web site address, and telephone number of the unit within the
department that performs this review function. The notice to the
provider may be included on either the explanation of benefits or
remittance advice and shall also contain a statement advising the
provider of its right to enter into the dispute resolution process
described in Section 10123.137. begin delete An end delete

begin insert (4) end insert begin insert   end insert begin insert An end insert insurer may delay payment of an uncontested portion of
a complete claim for reconsideration of a contested portion of that
claim so long as the insurer pays those charges specified in
subdivision (b).

(b) If a complete claim, or portion begin delete thereof, end delete begin insert of the claim, end insert that is
neither contested nor denied, is not reimbursed by delivery to the
claimant’s address of record within the 30 working days after
receipt, the insurer shall pay the greater of begin delete fifteen end delete begin insert twenty-five end insert
dollars begin delete ($15) end delete begin insert ($25) end insert per year or interest at the rate of 10 percent per
annum beginning with the first calendar day after the 30-working
day period. An insurer shall automatically include the begin delete fifteen end delete
begin insert twenty-five end insert dollars begin delete ($15) end delete begin insert ($25) end insert per year or interest due in the
payment made to the claimant, without requiring a begin delete request therefor. end delete
begin insert request. end insert

(c)  begin insert (1) end insert begin insert   end insert For the purposes of this section, a claim, or portion
begin delete thereof, end delete begin insert of the claim, end insert is reasonably contested if the insurer has not
received the completed claim. A paper claim from an institutional
provider shall be deemed complete upon submission of a legible
emergency department report and a completed UB 92 or other
format adopted by the National Uniform Billing Committee, and
reasonable relevant information requested by the insurer within
30 working days of receipt of the claim. An electronic claim from
an institutional provider shall be deemed complete upon submission
of an electronic equivalent to the UB 92 or other format adopted
by the National Uniform Billing Committee, and reasonable
relevant information requested by the insurer within 30 working
days of receipt of the claim. begin delete However, end delete

begin insert (2) end insert begin insert   end insert begin insert However, end insert if the insurer requests a copy of the emergency
department report within the 30 working days after receipt of the
electronic claim from the institutional provider, the insurer may
also request additional reasonable relevant information within 30
working days of receipt of the emergency department report, at
which time the claim shall be deemed complete. A claim from a
professional provider shall be deemed complete upon submission
of a completed HCFA 1500 or its electronic equivalent or other
format adopted by the National Uniform Billing Committee, and
reasonable relevant information requested by the insurer within
30 working days of receipt of the claim. The provider shall provide
the insurer reasonable relevant information within 15 working
days of receipt of a written request that is clear and specific
regarding the information sought. begin delete If, end delete

begin insert (3) end insert begin insert   end insert begin insert If, end insert as a result of reviewing the reasonable relevant
information, the insurer requires further information, the insurer
shall have an additional 15 working days after receipt of the
reasonable relevant information to request the further information,
notwithstanding any time limit to the contrary in this section, at
which time the claim shall be deemed complete.

(d) This section begin delete shall end delete begin insert does end insert not apply to begin delete claims end delete begin insert a claim end insert about
which there is evidence of fraud and misrepresentation, to
eligibility determinations, or in instances begin delete where end delete begin insert that end insert the plan has
not been granted reasonable access to information under the
provider’s control. An insurer shall specify, in a written notice to
the provider within 30 working days of receipt of the claim, begin delete which, end delete
begin insert the exceptions, end insert if any, of these begin delete exceptions applies end delete begin insert that apply end insert to a
claim.

(e) If a claim or portion begin delete thereof end delete begin insert of a claim end insert is contested on the
basis that the insurer has not received information reasonably
necessary to determine payer liability for the claim or portion
begin delete thereof, end delete begin insert of the claim, end insert then the insurer shall have 30 working days
after receipt of this additional information to complete
reconsideration of the claim. If a claim, or portion begin delete thereof, end delete begin insert of a
claim, end insert undergoing reconsideration is not reimbursed by delivery
to the claimant’s address of record within the 30 working days
after receipt of the additional information, the insurer shall pay
the greater of begin delete fifteen end delete begin insert twenty-five end insert dollars begin delete ($15) end delete begin insert ($25) end insert per year or
interest at the rate of 10 percent per annum beginning with the first
calendar day after the 30-working day period. An insurer shall
automatically include the begin delete fifteen end delete begin insert twenty-five end insert dollars begin delete ($15) end delete begin insert ($25) end insert
per year or interest due in the payment made to the claimant,
without requiring a begin delete request therefor. end delete begin insert request. end insert

(f) An insurer shall not delay payment on a claim from a
physician begin insert and surgeon end insert or other begin insert health care end insert provider to await the
submission of a claim from a hospital or other provider, without
citing specific rationale as to why the delay was necessary and
providing a monthly update regarding the status of the claim and
the insurer’s actions to resolve the claim, to the provider that
submitted the claim.

(g) An insurer shall not request or require that a provider waive
its rights pursuant to this section.

(h) This section begin delete shall apply end delete begin insert applies end insert only to claims for services
rendered to a patient who was provided emergency services and
care as defined in Section 1317.1 of the Health and Safety Code
in the United States on or after September 1, 1999.

(i) This section begin delete shall not be construed to end delete begin insert does not end insert affect the
rights or obligations of begin delete any end delete begin insert a end insert person pursuant to Section 10123.13.

(j) This section begin delete shall not be construed to end delete begin insert does not end insert affect a written
agreement, if any, of a provider to submit bills within a specified
time period.