BILL ANALYSIS
AB 2586
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Date of Hearing: May 5, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2586 (Chesbro) - As Amended: April 28, 2010
Policy Committee: Health Vote:11-6
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill requires the Department of Managed Health Care (DMHC)
and the California Department of Insurance (CDI) to review
network adequacy, geographic accessibility, and
physician-to-patient ratio standards. Specifically, this bill:
1)Requires carriers to receive approval from DMHC or CDI prior
to implementing a network modification. Defines network
modification to mean a change impacting more than 2,000
enrollees by reducing the number of contracted physicians in a
service area, or by terminating, renegotiating, or otherwise
impacting a provider contract in the network. Requires
regulators to judge carriers by Title 28 standards under the
Knox-Keene Act.
2)Requires carriers to expand and increase the specificity of
information provided to consumers about contracting providers,
including hospital-based physicians and specialists.
3)Requires carriers to post information about several types of
providers either in writing or on company websites and update
the information quarterly.
4)Requires DMHC and CDI to approve a standard format by which
carriers submit data addressed in this bill to regulators.
5)Requires carriers to provide a mechanism by which enrollees
and providers are able to easily report provider directory
errors through a website or a toll-free number, for example.
6)Requires health carrier surveys conducted by regulators to
include provisions established by this bill and specified
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provisions contained in Title 28 of the Knox-Keene Act.
FISCAL EFFECT
Annual fee-supported (Health plan fees) special fund costs of
$600,000 to the Department of Managed Health Care (DMHC) and the
California Department of Insurance (CDI), combined, to increase
oversight of health carrier network adequacy, including approval
or denial of network changes, and carrier compliance with
requirements established by this bill.
COMMENTS
1)Rationale . This bill is sponsored by the California Medical
Association (CMA) to help maintain and protect access to
health coverage by providing patients with complete
information about provider networks. According to the author
and sponsor, provider directories are frequently incorrect.
Directories frequently list providers who are no longer in a
carrier's network, including professionals who may have
retired, passed away, or moved away. This bill increases the
amount and specificity of information available to consumers
and regulators. The author states this bill will also help the
state prevent health plans and insurers from promising
consumers a fully-staffed physician network but giving them a
phantom network and incorrect provider directories.
2)Precipitating Network Incident . According to both supporters
and opponents of this bill, this legislation is in response to
actions in 2009 by Blue Cross of California, the largest
Healthy Families Program (HFP) health plan. Blue Cross
provides coverage to more than 200,000 HFP children.
According to CMA, Blue Cross HFP enrollees early in 2009 had
been accessing physician services throughout California
through the Blue Cross Prudent Buyer network. Following
several HFP rate reductions, Blue Cross in March 2009,
cancelled all HFP provider contracts and offered providers
new, lower paying contracts. According to supporters of this
bill adequate noticed was provided to neither providers nor
patients.
Many patients and providers were significantly impacted.
Patients were not provided notice about network changes, and
patients in some parts of the state, including Humboldt
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County, had difficulty accessing health services. Since this
contract cancellation incident numerous actions have been
taken to attempt to remedy the situation, including
substantial actions and efforts by DMHC. This bill is designed
to avoid these kind of network and contracting predicaments in
the future by increasing the transparency of network adequacy.
3)Concerns . This bill is opposed by health plans and insurers.
Opponents are concerned this bill establishes unnecessary
administrative processes and drives up costs. Health plans
indicate many network modifications are due to provider
decisions, not health plan decisions. One health plan
indicates up to 70% network modifications are driven by
providers, not the health plan.
Carriers share a concern about the definition of "network
modification" with regard to the threshold of impacting more
than 2,000 enrollees. Opponents indicate 2,000 enrollees is a
very low threshold. Health insurers are concerned about the
delays that may be created by carriers having to receive
approval prior to a network change. Carriers indicate similar
regulatory decisions under current law have taken between 60
and 180 days.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081