BILL NUMBER: SB 634 CHAPTERED
BILL TEXT
CHAPTER 441
FILED WITH SECRETARY OF STATE SEPTEMBER 30, 2005
APPROVED BY GOVERNOR SEPTEMBER 30, 2005
PASSED THE SENATE AUGUST 29, 2005
PASSED THE ASSEMBLY AUGUST 15, 2005
AMENDED IN ASSEMBLY JULY 12, 2005
AMENDED IN SENATE MAY 10, 2005
AMENDED IN SENATE APRIL 11, 2005
INTRODUCED BY Senator Speier
(Coauthors: Assembly Members Chan, Koretz, and Laird)
FEBRUARY 22, 2005
An act to add Section 511.4 to the Business and Professions Code,
and to amend Section 10123.12 of, and to add Section 10133.66 to, the
Insurance Code, relating to health insurance.
LEGISLATIVE COUNSEL'S DIGEST
SB 634, Speier Health insurance: claims practices.
Existing law provides for regulation of health insurers by the
Insurance Commissioner. Existing law, known as the Health Care
Providers Bill of Rights, imposes certain requirements and
prohibitions on the relationship between providers of health care
services and health insurers relative to alternative rates of payment
made by insurers on behalf of covered insureds. Existing law also
requires health insurance and self-insured employee welfare benefit
plan disclosure forms to be provided to insureds and enrollees, and
requires those disclosure forms to contain specified information.
This bill would impose additional requirements on health insurers
that enter into contracts with health care providers relative to the
processing and payment of claims including requiring the disclosure
of specified information in electronic format to providers annually
and, additionally, upon a contracted provider's request. The bill
would also require a contracting agent to disclose such specified
information in electronic format to providers annually and upon a
contracted provider's written request. The bill would require the
health insurance policy or self-insured employee welfare benefit plan
disclosure forms to insureds and enrollees to contain the nature and
extent of the financial liability that is or may be incurred by the
insured, enrollee, or his or her family, where care is furnished by a
provider that does not have a contract with the insurer or plan to
provide services at an alternative rate of payment.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) The billing by providers and the handling of claims by
insurers are essential components of the health care delivery
process.
(b) Health maintenance organizations and preferred provider
organizations regulated by the Department of Managed Health Care are
subject to regulations to prevent unfair payment practices against
health care providers. Preferred provider organizations and other
entities regulated by the Department of Insurance are not subject to
many of these regulations, leaving providers and their patients
without similar protections.
(c) To ensure the appropriate payment of claims and consistent
regulation of overpayment of health care services by third-party
payors, this act extends many of the current protections afforded by
the Legislature to providers who deliver care to health care service
plan enrollees to those who deliver care to insureds.
SEC. 2. Section 511.4 is added to the Business and Professions
Code, to read:
511.4. (a) A contracting agent, as defined in paragraph (2) of
subdivision (d) of Section 511.1, shall beginning July 1, 2006, prior
to contracting, annually thereafter on or before the contract
anniversary date, and, in addition, upon the contracted provider's
written request, disclose to contracting providers all of the
following information in an electronic format:
(1) The amount of payment for each service to be provided under
the contract, including any fee schedules or other factors or units
used in determining the fees for each service. To the extent that
reimbursement is made pursuant to a specified fee schedule, the
contract shall incorporate that fee schedule by reference, including
the year of the schedule. For any proprietary fee schedule, the
contract shall include sufficient detail that payment amounts related
to that fee schedule can be accurately predicted.
(2) The detailed payment policies and rules and nonstandard coding
methodologies used to adjudicate claims, which shall, unless
otherwise prohibited by state law, do all of the following:
(A) When available, be consistent with Current Procedural
Terminology (CPT), and standards accepted by nationally recognized
medical societies and organizations, federal regulatory bodies, and
major credentialing organizations.
(B) Clearly and accurately state what is covered by any global
payment provisions for both professional and institutional services,
any global payment provisions for all services necessary as part of a
course of treatment in an institutional setting, and any other
global arrangements, such as per diem hospital payments.
(C) At a minimum, clearly and accurately state the policies
regarding all of the following:
(i) Consolidation of multiple services or charges and payment
adjustments due to coding changes.
(ii) Reimbursement for multiple procedures.
(iii) Reimbursement for assistant surgeons.
(iv) Reimbursement for the administration of immunizations and
injectable medications.
(v) Recognition of CPT modifiers.
(b) The information disclosures required by this section shall be
in sufficient detail and in an understandable format that does not
disclose proprietary trade secret information or violate copyright
law or patented processes, so that a reasonable person with
sufficient training, experience, and competence in claims processing
can determine the payment to be made according to the terms of the
contract.
(c) A contracting agent may disclose the fee schedules mandated by
this section through the use of a Web site, so long as it provides
written notice to the contracted provider at least 45 days prior to
implementing a Web site transmission format or posting any changes to
the information on the Web site.
SEC. 3. Section 10123.12 of the Insurance Code is amended to read:
10123.12. Every health insurer, including those insurers that
contract for alternative rates of payment pursuant to Section 10133,
and every self-insured employee welfare benefit plan that will affect
the choice of physician, hospital, or other health care providers
shall include within its disclosure form and within its evidence or
certificate of coverage a statement clearly describing how
participation in the policy or plan may affect the choice of
physician, hospital, or other health care providers, and describing
the nature and extent of the financial liability that is, or that may
be, incurred by the insured, enrollee, or covered dependents if care
is furnished by a provider that does not have a contract with the
insurer or plan to provide service at alternative rates of payment
pursuant to Section 10133. The form shall clearly inform prospective
insureds or plan enrollees that participation in the policy or plan
will affect the person's choice in this regard by placing the
following statement in a conspicuous place on all material required
to be given to prospective insureds or plan enrollees including
promotional and descriptive material, disclosure forms, and
certificates and evidences of coverage:
PLEASE READ THE FOLLOWING INFORMATION SO YOU WILL KNOW FROM
WHOM OR WHAT GROUP OF PROVIDERS HEALTH CARE MAY BE OBTAINED
It is not the intent of this section to require that the names of
individual health care providers be enumerated to prospective
insureds or enrollees.
If a health insurer providing coverage for hospital, medical, or
surgical expenses provides a list of facilities to patients or
contracting providers, the insurer shall include within the provider
listing a notification that insureds or enrollees may contact the
insurer in order to obtain a list of the facilities with which the
health insurer is contracting for subacute care and/or transitional
inpatient care.
SEC. 4. Section 10133.66 is added to the Insurance Code, to read:
10133.66. A health insurer shall comply with all the following:
(a) Deadlines shall not be imposed for the receipt of a claim
from a professional provider who submits a claim on behalf of an
insured or pursuant to a professional provider's contract with a
health insurer that is less than 90 days for contracted providers and
180 days for noncontracted providers after the date of service,
except as required by any state or federal law or regulation. If a
health insurer is not the primary payor under coordination of
benefits, the insurer shall not impose a deadline for submitting
supplemental or coordination of benefits claims to any secondary
payor that is less than 90 days from the date of payment or date of
contest, denial, or notice from the primary payor. A health insurer
that denies a claim because it was filed beyond the claim filing
deadline shall, upon provider's demonstration of good cause for the
delay, accept and adjudicate the claim according to Section 10123.13
or 10123.147, whichever is applicable. This subdivision shall not
alter or affect any rights providers may have under any applicable
statute of limitations or antiforfeiture provisions available under
the laws of the State of California.
(b) Reimbursement requests for the overpayment of a claim shall
not be made, including requests made pursuant to Section 10123.145,
unless a written request for reimbursement is sent to the provider
within 365 days of the date of payment on the overpaid claim. The
written notice shall clearly identify the claim, the name of the
patient, and the date of service, and shall include a clear
explanation of the basis upon which it is believed the amount paid on
the claim was in excess of the amount due, including interest and
penalties on the claim. The 365-day time limit shall not apply if the
overpayment was caused in whole or in part by fraud or
misrepresentation on the part of the provider.
(c) The receipt of each claim shall be identified and
acknowledged, whether or not complete, and the recorded date of
receipt shall be disclosed in the same manner as the claim was
submitted or provided through an electronic means, by telephone, Web
site, or another mutually agreeable accessible method of
notification, by which the provider may readily confirm the insurer's
receipt of the claim and the recorded date of receipt within 15
working days of the date of receipt of the claim by the office
designated to receive the claim.
If a claimant submits a claim to a health insurer using a claims
clearinghouse, its identification and acknowledgment to the
clearinghouse within the timeframes set forth above shall constitute
compliance with this section.
(d) Beginning July 1, 2006, prior to contracting, annually
thereafter on or before the contract anniversary date, and in
addition, upon the contracted provider's written request, the health
insurer shall disclose to contracting providers all of the following
information in an electronic format:
(1) The amount of payment for each service to be provided under
the contract, including any fee schedules or other factors or units
used in determining the fees for each service. To the extent that
reimbursement is made pursuant to a specified fee schedule, the
contract shall incorporate that fee schedule by reference, including
the year of the schedule. For any proprietary fee schedule, the
contract shall include sufficient detail that payment amounts related
to that fee schedule can be accurately predicted.
(2) The detailed payment policies and rules and nonstandard coding
methodologies used to adjudicate claims, that shall, unless
otherwise prohibited by state law do all of the following:
(A) When available, be consistent with Current Procedural
Terminology (CPT), and standards accepted by nationally recognized
medical societies and organizations, federal regulatory bodies, and
major credentialing organizations.
(B) Clearly and accurately state what is covered by any global
payment provisions for both professional and institutional services,
any global payment provisions for all services necessary as part of a
course of treatment in an institutional setting, and any other
global arrangements such as per diem hospital payments.
(C) At a minimum, clearly and accurately state the policies
regarding all of the following:
(i) Consolidation of multiple services or charges, and payment
adjustments due to coding changes.
(ii) Reimbursement for multiple procedures.
(iii) Reimbursement for assistant surgeons.
(iv) Reimbursement for the administration of immunizations and
injectable medications.
(v) Recognition of CPT modifiers.
The information disclosures required by this section shall be in
sufficient detail and in an understandable format that does not
disclose proprietary trade secret information or violate copyright
law or patented processes, so that a reasonable person with
sufficient training, experience, and competence in claims processing
can determine the payment to be made according to the terms of the
contract.
A health insurer may disclose the fee schedules mandated by this
section through the use of a Web site so long as it provides written
notice to the contracted provider at least 45 days prior to
implementing a Web site transmission format or posting any changes to
the information on the Web site.