BILL NUMBER: AB 684 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 18, 2009
INTRODUCED BY Assembly Member Ma
(Coauthors: Assembly Members Tom Berryhill and Skinner)
FEBRUARY 26, 2009
An act to amend Section 1371 of the Health and Safety Code, and to
amend Section 10123.13 of the Insurance Code, relating to health
care coverage.
LEGISLATIVE COUNSEL'S DIGEST
AB 684, as amended, Ma. Claim reimbursement: late payments: dental
services.
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 Managed Health Care and makes a willful
violation of that act a crime. Existing law provides for the
regulation of health insurers by the Department of Insurance. Under
existing law, health care service plans and health insurers are
required to reimburse uncontested claims no later than
claims within 30 or 45 working days, as
specified, after receipt of the claim, and if
specified. If a claim is not reimbursed within that time
period, existing law requires that interest accrue at the rate of 15%
per annum, for health care service plans, and 10% per annum, for
health insurers.
With respect to contracts or policies covering dental services,
this bill would increase the interest rate if uncontested
the claims are not reimbursed within 60 or 90
working days after receipt , as specified ,
and would require the additional interest to be paid to the
Department of Managed Health Care or the Department of Insurance to
be used for the purpose of enforcing specified cla im
practice provisions .
Existing law specifies that a claim is contested if the plan or
insurer has not received a completed claim and all information
necessary to determine payer liability. A plan is required to notify
a claimant of a contested claim within a specified period of time.
With respect to contracts or policies covering dental services,
this bill would require the plan or insurer to include a request for
the additional information in the contested claim notice. The bill
would also require the plan or insurer to acknowledge receipt of the
additional information within specified periods of time.
Because a willful violation of the bill's provisions with respect
to health care service plans would be a crime, the bill would impose
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.
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. Section 1371 of the Health and Safety Code is amended
to read:
1371. (a) A health care service plan, including a specialized
health care service plan, shall reimburse claims or any portion of
any claim, whether in state or out of state, as soon as practical,
but no later than 30 working days after receipt of the claim by the
health care service plan, or if the health care service plan is a
health maintenance organization, 45 working days after receipt of the
claim by the health care service plan, unless the claim or portion
thereof is contested by the plan in which case the claimant shall be
notified, in writing, that the claim is contested or denied, within
30 working days after receipt of the claim by the health care service
plan, or if the health care service plan is a health maintenance
organization, 45 working days after receipt of the claim by the
health care service plan. The notice that a claim is being contested
shall identify the portion of the claim that is contested and the
specific reasons for contesting the claim.
(b) If an uncontested claim is not reimbursed by delivery to the
claimant's address of record within the respective 30 or 45 working
days after receipt, interest shall accrue at the rate of 15 percent
per annum beginning with the first calendar day after the 30- or
45-working-day period.
(c) With respect to a health care service plan contract covering
dental services or a specialized health care service plan contract
covering dental services pursuant to this chapter, in addition to
subdivision (b), both of the following shall apply:
(1) If an uncontested claim is not reimbursed by delivery to the
claimant's address of record within 60 working days after receipt,
interest shall accrue at the rate of 20 percent per annum beginning
with the first calendar day after the 60-working-day period.
(2) If an uncontested claim is not reimbursed by delivery to the
claimant's address of record within 90 working days after receipt,
interest shall accrue at the rate of 25 percent per annum beginning
with the first calendar day after the 90-working-day period.
(d) The interest that accrues in excess of 15 percent per annum
pursuant to subdivision (c) and subparagraph (D) of paragraph (3) of
subdivision (g) shall be paid to the department and, notwithstanding
subdivision (b) of Section 1341.45, shall be deposited in the Managed
Care Fund. These moneys shall, upon appropriation, be used for the
purposes of enforcing Section 1371.37.
(d)
(e) A health care service plan shall automatically
include in its payment of the claim all interest that has
accrued payable to the claimant pursuant to this
section without requiring the claimant to submit a request for the
interest amount. Any plan failing to comply with this requirement
shall pay the claimant a ten dollar ($10) fee.
(e)
(f) For the purposes of this section, a claim, or
portion thereof, is reasonably contested where the plan has not
received the completed claim and all information necessary to
determine payer liability for the claim, or has not been granted
reasonable access to information concerning provider services.
Information necessary to determine payer liability for the claim
includes, but is not limited to, reports of investigations concerning
fraud and misrepresentation, and necessary consents, releases, and
assignments, a claim on appeal, or other information necessary for
the plan to determine the medical necessity for the health care
services provided.
(f)
(g) (1) If a claim or portion
thereof is contested on the basis that the plan has not received all
information necessary to determine payer liability for the claim or
portion thereof and notice has been provided pursuant to this
section, then the plan shall have 30 working days or, if the health
care service plan is a health maintenance organization, 45 working
days after receipt of this additional information to complete
reconsideration of the claim. If
(2) If a plan has received all of
the information necessary to determine payer liability for a
contested claim and has not reimbursed a claim it has determined to
be payable within 30 working days of the receipt of that information,
or if the plan is a health maintenance organization, within 45
working days of receipt of that information, interest shall accrue
and be payable at a rate of 15 percent per annum beginning with the
first calendar day after the 30- or 45-working day period.
(3) With respect to a health care service plan contract covering
dental services or a specialized health care service plan contract
covering dental services pursuant to this chapter, if a claim or
portion thereof is contested on the basis that the plan has not
received all information necessary to determine payer liability for
the claim or portion thereof, all of the following shall apply:
(A) The notice required under this section that the claim or
portion thereof is being contested shall include a written request
for the necessary information and a clear and accurate explanation of
the necessity for that information.
(B) The plan shall acknowledge receipt of any information
requested pursuant to this paragraph as follows:
(i) In the case of information that the claimant submits
electronically, the plan shall acknowledge receipt of the information
within two working days of receipt of the information by the office
designated to receive the claim.
(ii) In the case of information that the claimant submits in paper
form, the plan shall acknowledge receipt of the information within
15 working days of receipt of the information by the office
designated to receive the claim.
(C) Upon receipt of all of the information requested pursuant to
this paragraph, the plan shall process or deny the claim or portion
thereof within the timeframes specified in paragraph (1).
(D) In addition to paragraph (2), both of the following shall
apply:
(i) If the plan has received all of the information necessary to
determine payer liability for a contested claim and has not
reimbursed a claim it has determined to be payable within 60 working
days of the receipt of that information, interest shall accrue and be
payable at a rate of 20 percent per annum beginning with the first
calendar day after the 60-working day period.
(ii) If the plan has received all of the information necessary to
determine payer liability for a contested claim and has not
reimbursed a claim it has determined to be payable within 90 working
days of the receipt of that information, interest shall accrue and be
payable at a rate of 25 percent per annum beginning with the first
calendar day after the 90-working day period.
(g)
(h) The obligation of the plan to comply with this
section shall not be deemed to be waived when the plan requires its
medical groups, independent practice associations, or other
contracting entities to pay claims for covered services.
SEC. 2. Section 10123.13 of the Insurance Code is amended to read:
10123.13. (a) Every insurer issuing group or individual policies
of health insurance that covers hospital, medical, or surgical
expenses, including those telemedicine services covered by the
insurer as defined in subdivision (a) of Section 2290.5 of the
Business and Professions Code, shall reimburse claims or any portion
of any claim, whether in state or out of state, for those expenses as
soon as practical, but no later than 30 working days after receipt
of the claim by the insurer unless the claim or portion thereof is
contested by the insurer, in which case the claimant shall be
notified, in writing, that the claim is contested or denied, within
30 working days after receipt of the claim by the insurer. The notice
that a claim is being contested or denied shall identify the portion
of the claim that is contested or denied and the specific reasons
including for each reason the factual and legal basis known at that
time by the insurer for contesting or denying the claim. If the
reason is based solely on facts or solely on law, the insurer is
required to provide only the factual or the legal basis for its
reason for contesting or denying the claim. The insurer shall provide
a copy of the notice 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 shall
advise 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
the insurer contested or denied, and the notice shall include 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. The notice to the insured may also be
included on the explanation of benefits.
(b) If an uncontested claim is not reimbursed by delivery to the
claimant's address of record within 30 working days after receipt,
interest shall accrue and shall be payable at the rate of 10 percent
per annum beginning with the first calendar day after the 30-working
day period.
(c) With respect to a health insurance policy covering dental
services or a specialized health insurance policy covering dental
services, in addition to subdivision (b), both of the following shall
apply:
(1) If an uncontested claim is not reimbursed by delivery to the
claimant's address of record within 60 working days after receipt,
interest shall accrue at the rate of 20 percent per annum beginning
with the first calendar day after the 60-working day period.
(2) If an uncontested claim is not reimbursed by delivery to the
claimant's address of record within 90 working days after receipt,
interest shall accrue at the rate of 25 percent per annum beginning
with the first calendar day after the 90-working day period.
(d) The interest that accrues in excess of 10 percent per annum
pursuant to subdivision (c) and subparagraph (D) of paragraph (3) of
subdivision (e) shall be paid to the department and deposited in the
Insurance Fund. Notwithstanding Section 12975.7, these moneys shall,
upon appropriation, be used for the purposes of enforcing Section
10133.66.
(d)
(e) (1) For purposes of this
section, a claim, or portion thereof, is reasonably contested when
the insurer has not received a completed claim and all information
necessary to determine payer liability for the claim, or has not been
granted reasonable access to information concerning provider
services. Information necessary to determine liability for the claims
includes, but is not limited to, reports of investigations
concerning fraud and misrepresentation, and necessary consents,
releases, and assignments, a claim on appeal, or other information
necessary for the insurer to determine the medical necessity for the
health care services provided to the claimant. If
(2) If an insurer has received
all of the information necessary to determine payer liability for a
contested claim and has not reimbursed a claim determined to be
payable within 30 working days of receipt of that information,
interest shall accrue and be payable at a rate of 10 percent per
annum beginning with the first calendar day after the 30-working day
period.
(3) With respect to a health insurance policy covering dental
services or a specialized health insurance policy covering dental
services, if a claim or portion thereof is contested on the basis
that the insurer has not received all information necessary to
determine payer liability for the claim or portion thereof, all of
the following shall apply:
(A) The notice required under this section that the claim or
portion thereof is being contested shall include a written request
for the necessary information and a clear and accurate explanation of
the necessity for that information.
(B) The insurer shall acknowledge receipt of any information
requested pursuant to this paragraph as follows:
(i) In the case of information that the claimant submits
electronically, the insurer shall acknowledge receipt of the
information within two working days of receipt of the information by
the office designated to receive the claim.
(ii) In the case of information that the claimant submits in paper
form, the insurer shall acknowledge receipt of the information
within 15 working days of receipt of the information by the office
designated to receive the claim.
(C) Upon receipt of all of the information requested pursuant to
this paragraph, the insurer shall process or deny the claim within
the timeframe specified in paragraph (2).
(D) In addition to paragraph (2), both of the following shall
apply:
(i) If the insurer has received all of the information necessary
to determine payer liability for a contested claim and has not
reimbursed a claim it has determined to be payable within 60 working
days of the receipt of that information, interest shall accrue and be
payable at a rate of 20 percent per annum beginning with the first
calendar day after the 60-working day period.
(ii) If the insurer has received all of the information necessary
to determine payer liability for a contested claim and has not
reimbursed a claim it has determined to be payable within 90 working
days of the receipt of that information, interest shall accrue and be
payable at a rate of 25 percent per annum beginning with the first
calendar day after the 90-working day period.
(e)
(f) The obligation of the insurer to comply with this
section shall not be deemed to be waived when the insurer requires
its contracting entities to pay claims for covered services.
SEC. 3. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B 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 XIII B of the California
Constitution.