BILL ANALYSIS
AB 684
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Date of Hearing: April 29, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 684 (Ma) - As Introduced: February 26, 2009
Policy Committee: HealthVote:15-1
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill increases the interest rates paid by dental health
plans regulated by the California Department of Managed Health
Care (DMHC) and insurers regulated by the California Department
of Insurance (CDI) for failing to pay uncontested claims in a
prompt manner. Specifically, this bill:
1)Requires penalties to accrue at a 20% annualized rate of
interest for claims paid 61-90 days after submission for
payment.
2)Requires penalties to accrue at a 25% annualized rate of
interest for claims paid more than 90 days after submission
for payment.
FISCAL EFFECT
1)Minor absorbable workload to DMHC and CDI to continue
oversight of requirements regarding prompt payment by health
plans and insurers.
2)According to data published by DMHC, which regulates a
majority of dental health coverage in California, only a
handful of specific dental payment claims of the kind
addressed in this bill have been made over the past few years.
According to the California Dental Association (CDA), the
sponsors of the bill, quantitative information from a
membership survey indicates late payments are an increasing
problem and far more common than what is reported to
regulators.
3)Any interest payments required by dental health plans and
AB 684
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insurers under provisions of this bill are minor, literally
pennies a day past certain accounts receivable time periods.
For example, a claim of $334 dollars not paid in a timely
manner would require interest payments of 18.5 cents per day
for a penalty for payment between 61 and 90 days and 23 cents
per day for a penalty of payment after 90 days.
COMMENTS
1)Rationale . This bill is sponsored by the California Dental
Association (CDA) to address late payments of uncontested
dental claims. Current prompt payment statutes require health
plans and insurers to pay dental claims within specified
timeframes. The current interest penalty of 10% for
CDI-regulated plans and 15% for DMHC-regulated plans apply to
claims paid after 30 days and 45 days, respectively. This bill
increases these penalties to 20% for claims paid between 61-90
days and to 25% for claims paid after 90 days.
According to DMHC data, from 2002 through the present, there
have been 54 enforcement actions involving late claims
payment. Of the 54, five involved dental plans with a
combined penalty of $74,000. Some portion of these DMHC
penalties may be attributable to civil or administrative
penalties authorized under other statutes for unfair payment
patterns. The DMHC Office of Provider Oversight reports 7,064
complaints received from all providers during 2008. Of the
7,064 complaints, 48 were from dental providers. Of those 48
complaints, 16 dental provider complaints involved an issue of
untimely payment.
2)Concerns . This bill is opposed by the California Association
of Dental Plans (CADP) and a number of specific dental plans
and insurers. Opponents indicate current law provides adequate
protections and enforcement with regard to late payment of
dental claims. In addition, opponents indicate there is little
evidence of the problem addressed in AB 684. The CADP
indicates more than 99% of claims are paid in a timely fashion
and therefore this bill not needed.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081