BILL ANALYSIS
AB 1140
Page 1
ASSEMBLY THIRD READING
AB 1140 (Niello)
As Amended April 14, 2009
Majority vote
BUSINESS & PROFESSIONS 11-0
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|Ayes:|Hayashi, Emmerson, | | |
| |Conway, Eng, Hernandez, | | |
| |Nava, Niello, | | |
| |John A. Perez, Price, | | |
| |Ruskin, Smyth | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Revises the definition of "responsible third-party
payer" to include a person or entity who contracts with
insurance carriers, self-insured employers, third-party
administrators, or any other person or entity who, pursuant to a
contract, is responsible to pay for Computerized Tomography
(CT), Positron Emission Tomography (PET), or Magnetic Resonance
Imaging (MRI) diagnostic imaging services provided to a patient
covered by that contract.
FISCAL EFFECT : Unknown. This bill is keyed non-fiscal.
COMMENTS : According to the author's office, "The intent of AB
1140 is to clarify the definition of 'responsible third-party
payer' to ensure that legitimate contracting entities are not
prohibited from providing services to the Health and Workers'
Compensation insurance communities. A vague definition of
'responsible third-party payer' was included in last year's AB
2794 (Blakeslee), Chapter 469, Statutes of 2008, which led some
to believe that AB 2794 actually barred contracting entities
from entering into contracts with their networks for their
diagnostic imaging needs."
AB 2794's primary purpose, as evidenced by the author's intent
statement, was to eliminate the practice of physicians
over-referring for imaging services due to financial incentives
created by lease arrangements with radiological vendors. The
bill explicitly prohibited healthcare licensees from billing for
services that were not actually provided by the licensee. The
AB 1140
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bill also required radiological facilities to directly bill
either the patient or a responsible third-party payer for
diagnostic imaging services rendered by those facilities. The
bill defined "responsible third-party payer" as "any person or
entity who is responsible to pay for CT, PET, or MRI services
provided to a patient."
AB 2794 specifically exempted radiological facilities that
contract with health care service plans, and thus did not intend
for the "responsible third-party payer" to be traditional health
insurers. The bill also exempted health care programs operated
by public entities, private educational institutions, and any
person or clinic that contracts with an employer to provide
diagnostic imaging services.
This bill's sponsors, the California Self-Insurers Association,
seeks to explicitly include in the definition of "responsible
third-party payer" a person or entity who contracts with
insurance carriers, self-insured employers, and third-party
administrators (TPAs) for the management and payment of
diagnostic imaging services. This category of payer is not
specifically exempted under current law, and may not be covered
under the present definition of "third-party payer."
The sponsor's concern with current law is that although such
entities are responsible for paying for diagnostic imaging
services provided to a patient, in certain situations, they are
effectively "fourth-party payers." This is because some
networks are effectively subcontracting from an employer's third
party-payer.
This bill would explicitly permit such entities (networks) to
continue their services under state law. These networks
assemble diagnostic imaging facilities and contract their
services to insurance companies, self-insured employers, union
trusts, TPAs, business coalitions, and associations at a reduced
price. The network pays the imaging facilities directly and
provides administrative functions related to scheduling and
logistical support services. These entities do not cause a
referral to be made, but instead react to a physician's referral
for diagnostic imaging and direct the patient to a provider of
those services.
There are conflicting opinions at the state level regarding
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these contractual arrangements; a 2000 Attorney General
opinion determined that such network services were
effectively violating the prohibition against the corporate
practice of medicine, while a 2003 letter from the Medical
Board of California concluded the opposite, based on a 1991
counsel opinion from the Department of Consumer Affairs.
Analysis Prepared by : Sarah Huchel / B. & P. / (916) 319-3301
FN: 0000677