BILL NUMBER: SB 559	ENROLLED
	BILL TEXT

	PASSED THE SENATE   SEPTEMBER 9, 1999
	PASSED THE ASSEMBLY   SEPTEMBER 8, 1999
	AMENDED IN ASSEMBLY   SEPTEMBER 3, 1999
	AMENDED IN ASSEMBLY   JULY 7, 1999

INTRODUCED BY   Senator Brulte

                        FEBRUARY 19, 1999

   An act to add Section 511.1 to the Business and Professions Code,
to add Section 1395.6 to the Health and Safety Code, to add Section
10178.3 to the Insurance Code, and to add Section 4609 to the Labor
Code, relating to health care coverage.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 559, Brulte.  Health care providers:  preferred rates.
   Existing law, the Knox-Keene Health Care Service Plan Act of 1975,
provides for the licensure and regulation of health care service
plans by the Department of Corporations.  Under existing law, a
willful violation of health care service plan requirements is a
crime.  Existing law also provides for the regulation of insurers by
the Department of Insurance.
   This bill, effective July 1, 2000, with respect to contracts
providing for the payment of preferred reimbursement rates by payors
for health care services rendered by health care providers, would
impose certain disclosure and related requirements on contracting
agents, as defined, who sell, lease, assign, transfer, or convey a
list of contracting providers and their contracted preferred
reimbursement rates to other payors or contracting agents.  This bill
would impose certain requirements on payors who seek to pay a
preferred reimbursement rate, and would provide that the failure to
comply with these requirements renders the payor liable to pay the
nonpreferred rate, as specified.  This bill would define "payor" for
these purposes to generally include a health care service plan, a
specialized health care service plan, a disability or liability
insurer, a workers' compensation insurer, an employer, or any other
3rd party that is responsible to pay for health care services
provided to beneficiaries by health care providers.  This bill would
enact other related provisions.
   Because a willful violation of the bill's requirements with
respect to health care service plans would be a crime, this bill
would impose a state-mandated local program by creating a new crime.

  The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 511.1 is added to the Business and Professions
Code, to read:
   511.1.  (a) In order to prevent the improper selling, leasing, or
transferring of a health care provider's contract, it is the intent
of the Legislature that every arrangement that results in any payor
paying a health care provider a reduced rate for health care services
based on the health care provider's participation in a network or
panel shall be disclosed to the provider in advance and shall
actively encourage patients to use the network, unless the health
care provider agrees to provide discounts without that active
encouragement.
   (b) Beginning July 1, 2000, every contracting agent that sells,
leases, assigns, transfers, or conveys its list of contracted health
care providers and their contracted reimbursement rates to a payor or
another contracting agent shall, upon entering or renewing a
provider contract, do all of the following:
   (1) Disclose whether the list of contracted providers may be sold,
leased, transferred, or conveyed to other payors or other
contracting agents, and specify whether those payors or contracting
agents include workers' compensation insurers or automobile insurers.

   (2) Disclose what specific practices, if any, payors utilize to
actively encourage a payor's beneficiaries to use the list of
contracted providers when obtaining medical care that entitles a
payor to claim a contracted rate.  For purposes of this paragraph, a
payor is deemed to have actively encouraged its beneficiaries to use
the list of contracted providers if one of the following occurs:
   (A) The payor offers its beneficiaries direct financial incentives
to use the list of contracted providers when obtaining medical care.
  "Financial incentives" means reduced copayments, reduced
deductibles, premium discounts directly attributable to the use of a
provider panel, or financial penalties directly attributable to the
nonuse of a provider panel.
   (B) The payor provides information directly to beneficiaries
advising them of the existence of the list of contracted providers
through the use of a variety of advertising or marketing approaches
that supply the names, addresses, and telephone numbers of contracted
providers to beneficiaries in advance of their selection of a health
care provider, which approaches may include, but are not limited to,
the use of provider directories, or the use of toll-free telephone
numbers or internet web site addresses supplied directly to every
beneficiary.  However, internet web site addresses alone shall not be
deemed to satisfy the requirements of this subparagraph.  Nothing in
this subparagraph shall prevent contracting agents or payors from
providing only listings of providers located within a reasonable
geographic range of a beneficiary.
   (3) Disclose whether payors to which the list of contracted
providers may be sold, leased, transferred, or conveyed may be
permitted to pay a provider's contracted rate without actively
encouraging the payors' beneficiaries to use the list of contracted
providers when obtaining medical care.
   (4) Disclose, upon the initial signing of a contract, and within
30 calendar days of receipt of a written request from a provider or
provider panel, a payor summary of all payors currently eligible to
claim a provider's contracted rate due to the provider's and payor's
respective written agreements with any contracting agent.
   Nothing in this subdivision shall be construed to require a payor
to actively encourage the payor's beneficiaries to use the list of
contracted providers when obtaining medical care in the case of an
emergency.
   (c) A contracting agent shall allow providers, upon the initial
signing, renewal, or amendment of a provider contract, to decline to
be included in any list of contracted providers that is sold, leased,
transferred, or conveyed to payors that do not actively encourage
the payors' beneficiaries to use the list of contracted providers
when obtaining medical care as described in paragraph (2) of
subdivision (b).  Each provider's election under this subdivision
shall be binding on every contracting agent or payor that buys,
leases, or otherwise obtains a list of contracted providers.
   (d) A provider shall not be excluded from any list of contracted
providers that is sold, leased, transferred, or conveyed to payors
that actively encourage the payors' beneficiaries to use the list of
contracted providers when obtaining medical care, based upon the
provider's refusal to be included on any list of contracted providers
that is sold, leased, transferred, or conveyed to payors that do not
actively encourage the payors' beneficiaries to use the list of
contracted providers when obtaining medical care.
   (e) A payor shall provide an explanation of benefits or
explanation of review that identifies the name of the plan or network
that has a written agreement signed by the provider whereby the
payor is entitled, directly or indirectly, to pay a preferred rate
for the services rendered.
   (f) A payor shall demonstrate that it is entitled to pay a
contracted rate within 30 business days of receipt of a written
request from a provider who has received a claim payment from the
payor.  The failure of a payor to do so shall render the payor liable
for the amount that the payor would have been required to pay
pursuant to the contract between the payor and the beneficiary, which
amount shall be due and payable within 10 days of receipt of written
notice from the provider, and shall bar the payor from taking any
future discounts from that provider without the provider's express
written consent until the payor can demonstrate to the provider that
it is entitled to pay a contracted rate as provided in this
subdivision.  A payor shall be deemed to have demonstrated that it is
entitled to pay a contracted rate if it complies with either of the
following:
   (1) Discloses the name of the network that has a written agreement
with the provider whereby the provider agrees to accept discounted
rates, and describes the specific practices the payor utilizes to
comply with paragraph (2) of subdivision (b).
   (2) Identifies the provider's written agreement with a contracting
agent whereby the provider agrees to be included on lists of
contracted providers sold, leased, transferred, or conveyed to payors
that do not actively encourage beneficiaries to use the list of
contracted providers pursuant to subdivision (c).
   (g) For the purposes of this section, the following terms have the
following meanings:
   (1) "Beneficiary" means:
   (A) For workers' compensation, an employee seeking health care
services for a work-related injury.
   (B) For automobile insurance, a named insured.
   (C) For group or individual health care coverage through a health
care service plan or a disability insurer, a subscriber or an
insured.
   (2) "Contracting agent" means an individual or entity, including,
but not limited to, a third-party administrator or trust, a preferred
provider organization, or an independent practice association, while
engaged, for monetary or other consideration, in the act of selling,
leasing, transferring, assigning, conveying, or arranging the
availability of a provider or provider panel to provide health care
services to beneficiaries.  For purposes of this section, a
contracting agent shall not include a health care service plan, a
specialized health care service plan, an insurer licensed under the
Insurance Code to provide disability, life, automobile, or workers'
compensation insurance, or a self-insured employer.
   (3) Except as otherwise provided in this paragraph, "payor" means
a health care service plan, a specialized health care service plan,
an insurer licensed under the Insurance Code to provide disability,
life, automobile, or workers' compensation insurance, a self-insured
employer, a third-party administrator or trust, or any other third
party that is responsible to pay for health care services provided to
beneficiaries.  However, for purposes of subdivisions (e) and (f), a
payor shall not include a health care service plan, a specialized
health care service plan, an insurer licensed under the Insurance
Code to provide disability, life, automobile, or worker's
compensation insurance, or a self-insured employer.
   (4) "Payor summary" means a written summary that includes the
payor's name and the type of plan, including, but not limited to, a
group health plan, an automobile insurance plan, and a workers'
compensation insurance plan.
   (5) "Provider" means any of the following:
   (A) Any person licensed or certified pursuant to this division.
   (B) Any person licensed pursuant to the Chiropractic Initiative
Act or the Osteopathic Initiative Act.
   (C) Any person licensed pursuant to Chapter 2.5 (commencing with
Section 1440) of Division 2 of the Health and Safety Code.
   (D) A clinic, health dispensary, or health facility licensed
pursuant to Division 2 (commencing with Section 1200) of the Health
and Safety Code.
   (E) Any entity exempt from licensure pursuant to Section 1206 of
the Health and Safety Code.
   (i) This section shall become operative on July 1, 2000.
  SEC. 2.  Section 1395.6 is added to the Health and Safety Code, to
read:
   1395.6.  (a) In order to prevent the improper selling, leasing, or
transferring of a health care provider's contract, it is the intent
of the Legislature that every arrangement that results in any payor
paying a health care provider a reduced rate for health care services
based on the health care provider's participation in a network or
panel shall be disclosed to the provider in advance and shall
actively encourage patients to use the network, unless the health
care provider agrees to provide discounts without that active
encouragement.
   (b) Beginning July 1, 2000, every contracting agent that sells,
leases, assigns, transfers, or conveys its list of contracted health
care providers and their contracted reimbursement rates to a payor or
another contracting agent shall, upon entering or renewing a
provider contract, do all of the following:
   (1) Disclose to the provider whether the list of contracted
providers may be sold, leased, transferred, or conveyed to other
payors or other contracting agents, and specify whether those payors
or contracting agents include workers' compensation insurers or
automobile insurers.
   (2) Disclose what specific practices, if any, payors utilize to
actively encourage a payor's subscribers to use the list of
contracted providers when obtaining medical care that entitles a
payor to claim a contracted rate.  For purposes of this paragraph, a
payor is deemed to have actively encouraged its subscribers to use
the list of contracted providers if one of the following occurs:
   (A) The payor offers its subscribers direct financial incentives
to use the list of contracted providers when obtaining medical care.
"Financial incentives" means reduced copayments, reduced
deductibles, premium discounts directly attributable to the use of a
provider panel, or financial penalties directly attributable to the
nonuse of a provider panel.
   (B) The payor provides information to subscribers advising them of
the existence of the list of contracted providers through the use of
a variety of advertising or marketing approaches that supply the
names, addresses, and telephone numbers of contracted providers to
subscribers in advance of their selection of a health care provider,
which approaches may include, but are not limited to, the use of
provider directories, or the use of toll-free telephone numbers or
internet web site addresses supplied directly to every subscriber.
However, internet web site addresses alone shall not be deemed to
satisfy the requirements of this subparagraph.  Nothing in this
subparagraph shall prevent contracting agents or payors from
providing only listings of providers located within a reasonable
geographic range of a subscriber.
   (3) Disclose whether payors to which the list of contracted
providers may be sold, leased, transferred, or conveyed may be
permitted to pay a provider's contracted rate without actively
encouraging the payors' subscribers to use the list of contracted
providers when obtaining medical care.
   (4) Disclose, upon the initial signing of a contract, and within
30 calendar days of receipt of a written request from a provider or
provider panel, a payor summary of all payors currently eligible to
claim a provider's contracted rate due to the provider's and payor's
respective written agreement with any contracting agent.
   Nothing in this subdivision shall be construed to require a payor
to actively encourage the payor's subscribers to use the list of
contracted providers when obtaining medical care in the case of an
emergency.
   (c) A contracting agent shall allow providers, upon the initial
signing, renewal, or amendment of a provider contract, to decline to
be included in any list of contracted providers that is sold, leased,
transferred, or conveyed to payors that do not actively encourage
the payors' subscribers to use the list of contracted providers when
obtaining medical care as described in paragraph (2) of subdivision
(b).  Each provider's election under this subdivision shall be
binding on every contracting agent or payor that buys, leases, or
otherwise obtains a list of contracted providers.
   (d) A provider shall not be excluded from any list of contracted
providers that is sold, leased, transferred, or conveyed to payors
that actively encourage the payors' subscribers to use the list of
contracted providers when obtaining medical care, based upon the
provider's refusal to be included on any list of contracted providers
that is sold, leased, transferred, or conveyed to payors that do not
actively encourage the payors' subscribers to use the list of
contracted providers when obtaining medical care.
   (e) A payor shall provide an explanation of benefits or
explanation of review that identifies the name of the network that
has a written agreement signed by the provider whereby the payor is
entitled, directly or indirectly, to pay a preferred rate for the
services rendered.
   (f) A payor shall demonstrate that it is entitled to pay a
contracted rate within 30 business days of receipt of a written
request from a provider who has received a claim payment from the
payor.  The failure of a payor to do so shall render the payor liable
for the amount that the payor would have been required to pay
pursuant to the applicable health care service plan contract covering
the enrollee, which amount shall be due and payable within 10 days
of receipt of written notice from the provider, and shall bar the
payor from taking any future discounts from that provider without the
provider's express written consent until the payor can demonstrate
to the provider that it is entitled to pay a contracted rate as
provided in this subdivision.  A payor shall be deemed to have
demonstrated that it is entitled to pay a contracted rate if it
complies with either of the following:
   (1) Discloses the name of the network that has a written agreement
with the provider whereby the provider agrees to accept discounted
rates, and describes the specific practices the payor utilizes to
comply with paragraph (2) of subdivision (b).
   (2) Identifies the provider's written agreement with a contracting
agent whereby the provider agrees to be included on lists of
contracted providers sold, leased, transferred, or conveyed to payors
that do not actively encourage beneficiaries to use the list of
contracted providers pursuant to subdivision (c).
   (g) For the purposes of this section, the following terms have the
following meanings:
   (1) "Contracting agent" means a health care service plan or a
specialized health care service plan, while engaged, for monetary or
other consideration, in the act of selling, leasing, transferring,
assigning, conveying, or arranging the availability of a provider or
provider panel to provide health care services to subscribers.
   (3) "Payor" means a health care service plan or a specialized
health care service plan.
   (4) "Payor summary" means a written summary that includes the
payor's name and the type of plan, including, but not limited to, a
group health plan, an automobile insurance plan, and a workers'
compensation insurance plan.
   (5) "Provider" means any of the following:
   (A) Any person licensed or certified pursuant to Division 2
(commencing with Section 500) of the Business and Professions Code.
   (B) Any person licensed pursuant to the Chiropractic Initiative
Act or the Osteopathic Initiative Act.
   (C) Any person licensed pursuant to Chapter 2.5 (commencing with
Section 1440) of Division 2.
   (D) A clinic, health dispensary, or health facility licensed
pursuant to Division 2 (commencing with Section 1200).
   (E) Any entity exempt from licensure pursuant to Section 1206.
   (i) This section shall become operative on July 1, 2000.
  SEC. 3.  Section 10178.3 is added to the Insurance Code, to read:
   10178.3.  (a) In order to prevent the improper selling, leasing,
or transferring of a health care provider's contract, it is the
intent of the Legislature that every arrangement that results in any
payor paying a health care provider a reduced rate for health care
services based on the health care provider's participation in a
network or panel shall be disclosed to the provider in advance and
shall actively encourage patients to use the network, unless the
health care provider agrees to provide discounts without that active
encouragement.
   (b) Beginning July 1, 2000, every contracting agent that sells,
leases, assigns, transfers, or conveys its list of contracted health
care providers and their contracted reimbursement rates to a payor or
another contracting agent shall, upon entering or renewing a
provider contract, do all of the following:
   (1) Disclose whether the list of contracted providers may be sold,
leased, transferred, or conveyed to other payors or other
contracting agents, and specify whether those payors or contracting
agents include workers' compensation insurers or automobile insurers.

   (2) Disclose what specific practices, if any, payors utilize to
actively encourage a payor's beneficiaries to use the list of
contracted providers when obtaining medical care that entitles a
payor to claim a contracted rate.  For purposes of this paragraph, a
payor is deemed to have actively encouraged its beneficiaries to use
the list of contracted providers if one of the following occurs:
   (A) The payor offers its beneficiaries direct financial incentives
to use the list of contracted providers when obtaining medical care.
  "Financial incentives" means reduced copayments, reduced
deductibles, premium discounts directly attributable to the use of a
provider panel, or financial penalties directly attributable to the
nonuse of a provider panel.
   (B) The payor provides information to beneficiaries advising them
of the existence of the list of contracted providers through the use
of a variety of advertising or marketing approaches that supply the
names, addresses, and telephone numbers of contracted providers to
beneficiaries in advance of their selection of a health care
provider, which approaches may include, but are not limited to, the
use of provider directories, or the use of toll-free telephone
numbers or internet web site addresses supplied directly to every
beneficiary. However, internet web site addresses alone shall not be
deemed to satisfy the requirements of this subparagraph.  Nothing in
this subparagraph shall prevent contracting agents or payors from
providing only listings of providers located within a reasonable
geographic range of a beneficiary.
   (3) Disclose whether payors to which the list of contracted
providers may be sold, leased, transferred, or conveyed may be
permitted to pay a provider's contracted rate without actively
encouraging the payors' beneficiaries to use the list of contracted
providers when obtaining medical care.
   (4) Disclose, upon the initial signing of a contract, and within
30 calendar days of receipt of a written request from a provider or
provider panel, a payor summary of all payors currently eligible to
claim a provider's contracted rate due to the provider's and payor's
respective written agreements with any contracting agent.
   Nothing in this subdivision shall be construed to require a payor
to actively encourage the payor's beneficiaries to use the list of
contracted providers when obtaining medical care in the case of an
emergency.
   (c) A contracting agent shall allow providers, upon the initial
signing, renewal, or amendment of a provider contract, to decline to
be included in any list of contracted providers that is sold, leased,
transferred, or conveyed to payors that do not actively encourage
the payors' beneficiaries to use the list of contracted providers
when obtaining medical care as described in paragraph (2) of
subdivision (b).  Each provider's election under this subdivision
shall be binding on every contracting agent or payor that buys,
leases, or otherwise obtains a list of contracted providers.
   (d) A provider shall not be excluded from any list of contracted
providers that is sold, leased, transferred, or conveyed to payors
that actively encourage the payors' beneficiaries to use the list of
contracted providers when obtaining medical care, based upon the
provider's refusal to be included on any list of contracted providers
that is sold, leased, transferred, or conveyed to payors that do not
actively encourage the payors' beneficiaries to use the list of
contracted providers when obtaining medical care.
   (e) A payor shall provide an explanation of benefits or
explanation of review that identifies the name of the network that
has a written agreement signed by the provider whereby the payor is
entitled, directly or indirectly, to pay a preferred rate for the
services rendered.
   (f) A payor shall demonstrate that it is entitled to pay a
contracted rate within 30 business days of receipt of a written
request from a provider who has received a claim payment from the
payor.  The failure of a payor to do so shall render the payor liable
for the amount that the payor would have been required to pay
pursuant to the beneficiary's policy with the payor, which amount
shall be due and payable within 10 days of receipt of written notice
from the provider, and shall bar the payor from taking any future
discounts from that provider without the provider's express written
consent until the payor can demonstrate to the provider that it is
entitled to pay a contracted rate as provided in this subdivision.  A
payor shall be deemed to have demonstrated that it is entitled to
pay a contracted rate if it complies with either of the following:
   (1) Discloses the name of the network that has a written agreement
with the provider whereby the provider agrees to accept discounted
rates, and describes the specific practices the payor utilizes to
comply with paragraph (2) of subdivision (b).
   (2) Identifies the provider's written agreement with a contracting
agent whereby the provider agrees to be included on lists of
contracted providers sold, leased, transferred, or conveyed to payors
that do not actively encourage beneficiaries to use the list of
contracted providers pursuant to subdivision (c).
   (g) For the purposes of this section, the following terms have the
following meanings:
   (1) "Beneficiary" means:
   (A) For automobile insurance, a named insured.
   (B) For group or individual health care coverage through a
disability insurer, an insured.
   (C) For workers' compensation insurance, an employee seeking
health care services for a work-related injury.
   (2) "Contracting agent" means a self-insured employer or an
insurer licensed under this code to provide disability, life,
automobile, or workers' compensation insurance, while engaged, for
monetary or other consideration, in the act of selling, leasing,
transferring, assigning, conveying, or arranging the availability of
a provider or provider panel to provide health care services to
beneficiaries.
   (3) "Payor" means a self-insured employer or an insurer licensed
under this code to provide disability, life, automobile, or workers'
compensation insurance, that is responsible to pay for health care
services provided to beneficiaries.
   (4) "Payor summary" means a written summary that includes the
payor's name and the type of plan, including, but not limited to, a
group health plan, an automobile insurance plan, and a workers'
compensation insurance plan.
   (5) "Provider" means any of the following:
   (A) Any person licensed or certified pursuant to Division 2
(commencing with Section 500) of the Business and Professions Code.
   (B) Any person licensed pursuant to the Chiropractic Initiative
Act or the Osteopathic Initiative Act.
   (C) Any person licensed pursuant to Chapter 2.5 (commencing with
Section 1440) of Division 2 of the Health and Safety Code.
   (D) A clinic, health dispensary, or health facility licensed
pursuant to Division 2 (commencing with Section 1200) of the Health
and Safety Code.
   (E) Any entity exempt from licensure pursuant to Section 1206 of
the Health and Safety Code.
   (i) This section shall become operative on July 1, 2000.
  SEC. 4.  Section 4609 is added to the Labor Code, to read:
   4609.  (a) In order to prevent the improper selling, leasing, or
transferring of a health care provider's contract, it is the intent
of the Legislature that every arrangement that results in any payor
paying a health care provider a reduced rate for health care services
based on the health care provider's participation in a network or
panel shall be disclosed to the provider in advance and shall
actively encourage patients to use the network, unless the health
care provider agrees to provide discounts without that active
encouragement.
   (b) Beginning July 1, 2000, every contracting agent that sells,
leases, assigns, transfers, or conveys its list of contracted health
care providers and their contracted reimbursement rates to a payor or
another contracting agent shall, upon entering or renewing a
provider contract, do all of the following:
   (1) Disclose whether the list of contracted providers may be sold,
leased, transferred, or conveyed to other payors or other
contracting agents, and specify whether those payors or contracting
agents include workers' compensation insurers or automobile insurers.

   (2) Disclose what specific practices, if any, payors utilize to
actively encourage beneficiaries to use the list of contracted
providers when obtaining
medical care that entitles a payor to claim a contracted rate.  For
purposes of this paragraph, a payor is deemed to have actively
encouraged beneficiaries to use the list of contracted providers if
the employer of the beneficiaries provides information directly to
beneficiaries advising them of the existence of the list of
contracted providers through the use of a variety of advertising or
marketing approaches that supply the names, addresses, and telephone
numbers of contracted providers to beneficiaries in advance of
sustaining a workplace injury, which approaches may include, but are
not limited to, the use of provider directories, the use of a posted
list of all contracted providers in an area geographically accessible
to the posting site, the use of wall cards that direct beneficiaries
to a readily accessible listing of those providers at the same
location as the wall cards, the use of wall cards that direct
beneficiaries to a toll-free telephone number or internet web site
address, or the use of toll-free telephone numbers or internet web
site addresses supplied directly to every beneficiary.  However,
internet web site addresses alone shall not be deemed to satisfy the
requirements of this subparagraph.  Nothing in this subparagraph
shall prevent contracting agents or employers from providing only
listings of providers located within a reasonable geographic range of
a beneficiary.
   (3) Disclose whether payors to which the list of contracted
providers may be sold, leased, transferred, or conveyed may be
permitted to pay a provider's contracted rate without actively
encouraging the payors' beneficiaries to use the list of contracted
providers when obtaining medical care.
   (4) Disclose, upon the initial signing of a contract, and within
30 calendar days of receipt of a written request from a provider or
provider panel, a payor summary of all payors currently eligible to
claim a provider's contracted rate due to the provider's and payor's
respective written agreements with any contracting agent.
   Nothing in this subdivision shall be construed to require a payor
to actively encourage the payor's beneficiaries to use the list of
contracted providers when obtaining medical care in the case of an
emergency.
   (c) A contracting agent shall allow providers, upon the initial
signing, renewal, or amendment of a provider contract, to decline to
be included in any list of contracted providers that is sold, leased,
transferred, or conveyed to payors that do not actively encourage
the payors' beneficiaries to use the list of contracted providers
when obtaining medical care as described in paragraph (2) of
subdivision (b).  Each provider's election under this subdivision
shall be binding on every contracting agent or payor that buys,
leases, or otherwise obtains a list of contracted providers.
   (d) A provider shall not be excluded from any list of contracted
providers that is sold, leased, transferred, or conveyed to payors
that actively encourage the payors' beneficiaries to use the list of
contracted providers when obtaining medical care, based upon the
provider's refusal to be included on any list of contracted providers
that is sold, leased, transferred, or conveyed to payors that do not
actively encourage the payors' beneficiaries to use the list of
contracted providers when obtaining medical care.
   (e) A payor shall provide an explanation of benefits or
explanation of review that identifies the name of the network that
has a written agreement signed by the provider whereby the payor is
entitled, directly or indirectly, to pay a preferred rate for the
services rendered.
   (f) A payor shall demonstrate that it is entitled to pay a
contracted rate within 30 business days of receipt of a written
request from a provider who has received a claim payment from the
payor.  The failure of a payor to do so shall render the payor liable
for the lesser of the provider's actual fee or, as applicable, the
official medical fee schedule, the official medical-legal fee
schedule, or the in-patient fee schedule, which amount shall be due
and payable within 10 days of receipt of written notice from the
provider, and shall bar the payor from taking any future discounts
from that provider without the provider's express written consent
until the payor can demonstrate to the provider that it is entitled
to pay a contracted rate as provided in this subdivision.  A payor
shall be deemed to have demonstrated that it is entitled to pay a
contracted rate if it complies with either of the following:
   (1) Discloses the name of the network that has a written agreement
with the provider whereby the provide agrees to accept discounted
rates, and describes the specific practices the payor utilizes to
comply with paragraph (2) of subdivision (b).
   (2) Identifies the provider's written agreement with a contracting
agent whereby the provider agrees to be included on lists of
contracted providers sold, leased, transferred, or conveyed to payors
that do not actively encourage beneficiaries to use the list of
contracted providers pursuant to subdivision (c).
   (g) For the purposes of this section, the following terms have the
following meanings:
   (1) "Beneficiary" means an employee seeking health care services
for a work-related injury.
   (2) "Contracting agent" means a self-insured employer or an
insurer licensed under the Insurance Code to provide workers'
compensation insurance, while engaged, for monetary or other
consideration, in the act of selling, leasing, transferring,
assigning, conveying, or arranging the availability of a provider or
provider panel to provide health care services to beneficiaries.
   (3) "Payor" means a self-insured employer or an insurer licensed
under the Insurance Code to provide workers' compensation insurance.

   (4) "Payor summary" means a written summary that includes the
payor's name and the type of plan, including, but not limited to, a
group health plan, an automobile insurance plan, and a workers'
compensation insurance plan.
   (5) "Provider" means any of the following:
   (A) Any person licensed or certified pursuant to Division 2
(commencing with Section 500) of the Business and Professions Code.
   (B) Any person licensed pursuant to the Chiropractic Initiative
Act or the Osteopathic Initiative Act.
   (C) Any person licensed pursuant to Chapter 2.5 (commencing with
Section 1440) of Division 2 of the Health and Safety Code.
   (D) A clinic, health dispensary, or health facility licensed
pursuant to Division 2 (commencing with Section 1200) of the Health
and Safety Code.
   (E) Any entity exempt from licensure pursuant to Section 1206 of
the Health and Safety Code.
   (h) This section shall become operative on July 1, 2000.
  SEC. 5.  No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.