BILL NUMBER: AB 1600 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 30, 2001
AMENDED IN ASSEMBLY APRIL 23, 2001
INTRODUCED BY Assembly Member Keeley
(Coauthor: Assembly Member Richman)
FEBRUARY 23, 2001
An act to add Title 9.6 (commencing with Section 1299.20)
to Part 3 of the Code of Civil Procedure, to amend Section 1367 of,
and to add Section 1367.001 to, the Health and Safety Code, and to
add Section 10178.4 to the Insurance Code, relating to arbitration.
An act to add Section 1373.22 to the Health and Safety
Code, relating to health care service plans.
LEGISLATIVE COUNSEL'S DIGEST
AB 1600, as amended, Keeley. Arbitration: health care
provider disputes Health care service plans: provider
contracts .
Existing law, the Knox-Keene Health Care Service Plan Act of 1975,
provides for the regulation and licensure of health care service
plans by the Department of Managed Health Care and makes a willful
violation of the act's provisions a crime. The act, among other
matters, requires that a plan's contracts with providers be fair,
reasonable, and consistent with the act's objectives, which include
ensuring that high-quality health care coverage is provided in the
most efficient and cost-effective manner possible.
This bill would authorize health care providers on a class basis
and health care service plans to negotiate any contract term or
condition and upon an impasse, as defined, to submit the dispute to
mediation and, if unsuccessful, to refer the matter to arbitration.
The bill would require the department to adopt regulations prior to
July 1, 2002, pertaining to these mediation and arbitration
processes.
Because this bill would specify requirements for the mediation and
arbitration processes, the violation of which would be punishable as
a misdemeanor offense, it would expand the scope of an existing
crime, thereby imposing a state-mandated local program.
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.
Existing law provides, in general, for contract arbitration, and
establishes special provisions for the arbitration of certain issues.
This bill would establish special provisions for the arbitration
of health care provider disputes and would set forth the findings and
declarations of the Legislature in this regard.
Existing law, contained in the Knox-Keene Health Care Service Plan
Act of 1975, sets forth the process for the review of disputes with
a health care service plan by health care providers concerning health
care services provided to plan enrollees, as specified. A violation
of the provisions of that act is a misdemeanor.
This bill would revise various requirements for the operation of a
dispute resolution process to deal with provider disputes concerning
matters arising out of plan-provider contracts and to conform with
the bill's arbitration provisions. The bill would make certain
conduct by a health care service plan directed at providers unlawful.
Existing law provides for the regulation of disability insurers by
the Insurance Commissioner.
This bill would establish parallel dispute resolution provisions
to govern a dispute between providers and insurers issuing policies
of disability insurance, and would make health care provider disputes
with disability insurers subject to the bill's arbitration
provisions. This bill would make certain conduct by a disability
insurer directed at providers unlawful.
Because this bill would revise the requirements for the
establishment and operation of a dispute resolution procedure by a
health care service plan and would make certain actions by a plan
directed at providers unlawful, this bill would create a
state-mandated local program by creating new crimes and changing the
definitions of existing crimes.
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.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Title 9.6 (commencing with Section 1299.20) is
SECTION 1. (a) The Legislature finds and declares the following:
(1) The principal priorities of the Legislature for health care
are the following:
(A) The citizens of this state have access to the highest quality
health care.
(B) Patients have the opportunity for continuing access to their
own health care providers.
(C) Health care costs be reasonable and affordable.
(D) Administrative costs in the health care service plan and
health care provider relationship be as low as possible in order to
keep health care costs affordable.
(E) Health care service plans and health care providers remain
financially solvent in order to provide the highest quality care and
to retain patients' continuing access to their own health care
providers.
(2) The current health care service plan and health care provider
relationship is not satisfactorily meeting the state's health care
priorities for the following reasons:
(A) There is evidence that some health care providers are choosing
not to practice in California because of this relationship, thereby
threatening the quality of, and access to, health care in this state.
(B) Some patients have not been able to have continuing access to
their own health care providers because health care service plans and
health care providers have been unable to reach agreement on
contract extensions.
(C) Administrative costs in the health care service plan and
health care provider relationship are still high, resulting in higher
health care costs for both health care service plans and health care
providers.
(D) A large number of providers have been economically failing,
threatening the quality of, and access to, health care in this state
and the continuity of care for patients.
(E) Too much of a health care provider's time is spent in the
administrative aspects of the relationship, determining what care may
be provided to patients and settling claims, thereby reducing the
amount of time that providers spend with patients, increasing the
cost of health care, reducing patient access to health care, and
impairing the quality of care available.
(F) The negotiating relationship between health care service plans
and health care providers is imbalanced.
(b) It is the intent of the Legislature to implement a solution to
achieve the state's health care priorities, given the unsatisfactory
relationship between health care service plans and health care
providers. This solution would allow competing health care providers
to renegotiate contracts with health care service plans, thereby
allowing an improved balance in the contracting relationship that
should result in improvements in the state's priorities because of
the interests of health care service plans and health care providers
to resolve issues that are consistent with the interests of the
state. This solution would displace unfair competitive practices and
have an actively supervised state program to ensure that health care
service plan contracts with health care providers are fair,
reasonable, and provide appropriate reimbursement, consistent with
the best interests of the patients and this act. The Legislature
intends that this solution is consistent with the state action
immunity doctrine, which establishes immunity from federal antitrust
laws for conduct taken or supervised by a state.
SEC. 2. Section 1373.22 is added to the Health and Safety Code, to
read:
1373.22. (a) Health care providers, on a class basis, and health
care service plans may agree to negotiate and mediate any contract
term or condition upon renewal of a contract or during the contract
term, if there is no provision for renegotiation.
(b) In the event the parties reach an impasse during the
negotiations, the parties, upon mutual agreement, may submit the
issues in dispute to mediation. For the purposes of this
subdivision, an "impasse" means that the parties to a dispute have
reached a point in meeting and negotiating where their differences in
position are so substantial or prolonged that future meetings would
be futile.
(c) In the event mediation is unsuccessful, the matter shall be
referred by the parties to arbitration. No arbitration conducted
pursuant to this section shall limit the rights and remedies
otherwise available to the parties under common or statutory law. In
addition, the arbitrator may order a party, the party's attorney, or
both, to pay reasonable expenses, including attorney's fees,
incurred by another party as a result of bad faith actions or tactics
that are frivolous or that are solely intended to cause unnecessary
delay.
(d) The Department of Managed Health Care shall adopt regulations
by July 1, 2002, that ensure that the mediation and arbitration
processes described in this section are fair and effective. These
regulations shall include a provision requiring that the mediator and
arbitrator be neutral and specify factors to be considered by the
mediator or arbitrator when resolving the issues that shall include,
but not be limited to, the following:
(1) The stipulations of the parties.
(2) The interest and welfare of patients.
(3) The patient's access to care.
(4) The ability of health care providers to render quality health
care services.
(5) The cost of providing the services, taking into consideration
the increasing age of the population, new pharmaceuticals, the
increasing sophistication of medical technology, and the medical
demographics of the population of the plan's enrollees.
(6) The reasonableness of the reimbursement rates.
(e) Upon reaching the decision, the mediator, or if mediation is
unsuccessful, the arbitrator, shall file a copy of the mediation
decision or arbitration award, a statement of reasons, and submitted
evidence with the department for review and to confirm, modify, or
vacate the decision or award. When considering the award, the
department shall consider whether it is supported by substantial
evidence consistent with the factors described in subdivision (d).
SEC. 3. 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.
_____________________________________ All matter omitted in this
version of the bill appears in the bill as amended in the
Assembly, April 23, 2001 (JR 11)
____________________________________