BILL ANALYSIS �
AB 1059
Page 1
ASSEMBLY THIRD READING
AB 1059 (Huffman)
As amended May 27, 2011
Majority vote
HEALTH 11-4 APPROPRIATIONS 12-5
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|Ayes:|Monning, Ammiano, Atkins, |Ayes:|Fuentes, Blumenfield, |
| |Bonilla, Eng, Gordon, | |Bradford, Charles |
| |Hayashi, | |Calderon, Campos, Davis, |
| |Roger Hern�ndez, | |Gatto, Hall, Hill, Lara, |
| |Mitchell, Pan, Williams | |Mitchell, Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Logue, Garrick, Silva, |Nays:|Harkey, Donnelly, |
| |Knight | |Nielsen, Norby, Wagner |
| | | | |
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SUMMARY : Requires the Director of the Department of Managed
Health Care (DMHC) to require a health care service plan (health
plan) to pay the provider the amount owed plus interest when the
Director makes a final determination that a health plan has
underpaid or failed to pay a provider in violation of applicable
provisions of the Knox-Keene Health Care Service Plan Act of
1975 (Knox-Keene), as specified. Specifically, this bill :
1)Requires the DMHC Director, upon a final determination that a
health plan has underpaid or failed to pay a provider in
violation of Knox-Keene requirements, to require the health
plan to pay the provider an amount not less than the amount
owed plus interest.
2)Permits the DMHC Director, if he or she determines that an
extraordinary circumstance exists, to require a provider to
resubmit a claim in order to receive payment, provided the
Director also requires the plan to add to the amount owed to
the provider a reasonable amount necessary to reimburse the
provider for the cost of resubmission. Otherwise, prohibits a
provider from being required to resubmit a claim to a health
plan in order to receive payment.
3)Makes the remedies provided by this section not exclusive, and
permits them to be sought and employed in any combination with
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civil, criminal, and other administrative remedies deemed
warranted by the DMHC Director to enforce the provisions of
this bill.
4)Requires the calculation of the amount of the penalty imposed
to be based on the date on which the plan committed the
violation.
5)Prohibits a health plan from being required to pay a provider
more than the amount owed plus interest on a claim, and
permits DMHC to take into account any other payments that have
been made on that same claim.
6)Prohibits a health plan from delegating a statutory liability
under this section.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, potential for increased staffing costs to DMHC,
estimated in the range of $1-2 million (special fund) to review
and assess provider complaints, and for increased enforcement to
ensure that penalties are assessed and providers are paid
according to the provisions of this bill. Staffing costs are
uncertain, due to unknown plan and provider behavior in response
to the bill's provisions.
COMMENTS : According to the author, DMHC has consistently failed
to take enforcement actions against health maintenance
organizations (HMOs) that violate the law intended to protect
providers. When it has taken action, the penalty amounts are
small in relation to the economic injury to physicians. The
author further states that DMHC also has been intolerably slow
to address provider complaints, often refuses to apply
enforcement actions to cover the entire period of underpayment,
and has not required HMOs to pay physicians even after it has
determined payment should have been made. Accordingly, HMOs
make economic decisions to violate the law, knowing that any
penalty amount that may be imposed will be outweighed by the
extra revenue the HMOs will generate by, for example,
underpaying for medical services in violation of the law.
AB 1455 (Scott), Chapter 827, Statutes of 2000, prohibits unfair
claims practices and the resulting regulations, which took
effect January 1, 2004, set forth detailed requirements that
plans must meet in processing and paying claims for both
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contracting and non-contracting providers. On September 20,
2004, DMHC introduced a Provider Complaint Unit (PCU) which
eventually included an automated Web-portal to allow health care
providers to electronically submit claim reimbursement
complaints. According to DMHC, through March 24 of this year,
the PCU received more than 5,400 complaints resulting in more
than $1.4 million in recovery payments to California doctors and
hospitals. According to DMHC, PCU generally does not review
complaints related to whether a plan is appropriately paying
usual and customary charges for noncontracted providers but DMHC
is in the process of amending the existing payment criteria to
facilitate such review.
In addition to recovering disputed payments for providers, DMHC
reports that through February of this year, the PCU levied more
than $650,000 in fines to plans which it determined had
improperly paid claims in violation of state law. DMHC reports
that the fines include two fines totaling $350,000 against
Health Net in 2005 for making incorrect payments to emergency
doctors and contracted health care facilities, $200,000 against
Blue Cross for failing to properly pay interest and penalties on
late claims, and $50,000 against Blue Shield for making payments
directly to patients instead of providers.
DMHC has established a six-month pilot Independent Dispute
Resolution Process (IDRP) to afford non-contracted providers of
emergency hospital and physician services for HMO enrollees what
DMHC refers to as "a fast, fair, and cost effective way to
resolve claim payment disputes with health care service plans
and their capitated providers." The Maximus Center for Health
Dispute Resolution (CHDR) has been selected by the DMHC to
conduct an independent review and render the decisions in
provider payment disputes during the pilot program. The CHDR, a
nationally accredited health appeals organization, serves more
than 25 other states in the role of reviewer of appeals made by
health plan enrollees, as well as performing reviews for the
Federal Centers for Medicare and Medicaid Services. By
submitting a claim dispute through the IDRP, the provider agrees
to not invoice, balance bill, or otherwise seek to collect any
payment from the health plan enrollee, except for applicable
co-payments and deductibles.
Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097
AB 1059
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FN:
0001115