BILL ANALYSIS �
AB 369
Page 1
Date of Hearing: January 14, 2014
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
AB 369 (Pan) - As Amended: January 6, 2014
SUBJECT : Continuity of Care.
SUMMARY : Allows a person with health coverage in the individual
market whose health plan or policy was cancelled between January
1, 2013, and March 31, 2014, to request that his or her new
health plan or insurance policy cover the completion of services
for treatment of specified conditions, such as cancer or
pregnancy, from the person's existing provider who is not a
participating provider with the new health plan or policy.
Specifically, this bill :
1)Requires a health plan or insurer, at the request of a newly
covered enrollee under an individual health plan contract, to
arrange for the completion of covered services by a
nonparticipating provider for one of the conditions described
under existing law, if the newly covered enrollee meets both
of the following:
a) The newly covered enrollee's prior coverage was
terminated between January 1, 2013, and March 31, 2014,
inclusive; and,
b) At the time his or her coverage became effective, the
newly covered enrollee was receiving services from that
provider for one of the conditions described under existing
law.
2)Makes clear a violation of 1) above, as it relates to
Department of Managed Health Care (DMHC) regulated entities
(governed by the Health and Safety Code (H&SC)) is not a
crime.
3)Deletes a provision in H&SC that excludes from the continuity
of care law, a newly covered enrollee who is offered an
out-of-network option or a newly covered enrollee who had the
option to continue with his or her previous health plan or
provider and instead voluntarily chose to change health plans.
4)Defines "terminated provider" in H&SC as a provider whose
contract to provide services to enrollees is terminated or not
renewed by the plan or one of the plan's contracting provider
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groups.
5)Defines "nonparticipating provider," in the Insurance Code
(IC) and excludes a terminated provider from the definition of
"nonparticipating provider."
6)Requires a health insurer, at the request of a newly covered
insured under a group insurance policy, to arrange for the
completion of covered services by a nonparticipating provider
for one of the conditions described in existing law.
7)Authorizes a health insurer to require a nonparticipating
provider whose services are continued for a newly covered
insured to agree in writing to be subject to the same
contractual terms and conditions that are imposed upon
currently participating providers providing similar services
who are practicing in the same or a similar geographic area as
the nonparticipating provider.
8)Requires, unless otherwise agreed upon by the nonparticipating
provider and the health insurer or by the nonparticipating
provider and provider group, the services rendered to be
compensated at rates and methods of payment similar to those
used for currently participating providers providing similar
services who are practicing in the same or similar geographic
area as the nonparticipating provider.
9)Provides that neither the health insurer nor the provider
group is required to continue the services of a
nonparticipating provider if the provider does not accept the
payment rates provided in 8) above. Requires the provider to
accept the reimbursement as payment in full and not bill the
insured for any amount in excess of the reimbursement rate,
with the exception of copayments and deductibles.
EXISTING LAW :
1)Regulates health plans at the DMHC and health insurers at the
California Department of Insurance (CDI).
H&SC (applies to DMHC regulated entities)
1)Requires a health plan, at the request of an enrollee, to
provide the completion of covered services by a terminated
provider or by a nonparticipating provider for one of the
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following conditions:
a) An acute condition, for the duration of the condition.
(Defined as a medical condition that involves a sudden
onset of symptoms due to an illness, injury, or other
medical problem that requires prompt medical attention and
that has a limited duration.)
b) A serious chronic condition not to exceed 12 months.
(Defined as a medical condition due to a disease, illness,
or other medical problem or medical disorder that is
serious in nature and that persists without full cure or
worsens over an extended period of time or requires ongoing
treatment to maintain remission or prevent deterioration.)
c) A pregnancy. (Defined as the three trimesters of
pregnancy and the immediate postpartum period.)
d) A terminal illness which may exceed 12 months. (Defined
as an incurable or irreversible condition that has a high
probability of causing death within one year or less.)
e) The care of a newborn child between birth and 36 months,
completion of covered services may not exceed 12 months.
f) Performance of a surgery or other procedure that is
authorized by the plan as part of a documented course of
treatment and has been recommended and documented by the
provider to occur within 180 days.
2)Authorizes a plan to require a terminated provider whose
services are continued beyond the contract termination date to
agree in writing to be subject to the same contractual terms
and conditions that were imposed upon the provider prior to
termination.
3)Authorizes the plan to require a nonparticipating provider
whose services are continued for a newly covered enrollee to
agree in writing to be subject to the same contractual terms
and conditions that are imposed upon currently contracting
providers who are not capitated and who are practicing in the
same or a similar geographic area.
4)Requires, unless otherwise agreed to by the terminated or
nonparticipating provider and the plan or individual provider
and provider group, completion of covered services to be
compensated at rates and methods of payment similar to those
used by the plan or provider group for currently contracting
providers who are not capitated. States that neither the plan
nor the provider group is required to continue the services of
a terminated provider if the provider does not accept these
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payment rates.
5)Provides that the amount of, and the requirement for payment
of, copayments, deductibles, or other cost sharing components
during the period of completion of covered services with a
terminated provider or a nonparticipating provider are the
same as would be paid by the enrollee if receiving care from a
provider currently contracting with or employed by the plan.
6)Provides that a plan is not required to provide completion of
services by a provider who is terminated or not renewed for
reasons related to a medical disciplinary cause, fraud, or
other criminal activity.
7)Provides a plan is not required to cover services or provide
benefits that are not otherwise covered under the terms and
conditions of the plan contract and that 1) through 6) do not
apply to a newly covered enrollee covered under an individual
subscriber agreement who is undergoing a course of treatment
on the effective date of his or her coverage for a condition
in 1) above.
8)Provides that 1) through 6) do not apply to a newly covered
enrollee who is offered an out-of-network option or to a newly
covered enrollee who had the option to continue with his or
her previous health plan or provider and instead voluntarily
chose to change health plans.
9)Defines "nonparticipating provider" as a provider who is not
contracted with a health plan.
IC (which applies to CDI regulated entities)
1)Requires, at the request of an insured, a health insurer that
enters into a contract with a professional or institutional
provider at alternative rates of payment (otherwise known as a
preferred provider organization), to arrange for the
completion of covered services by a terminated provider, if
the insured is undergoing a course of treatment as described
in 1a) through 1)e) above.
2)Authorizes the insurer to require the terminated provider
whose services are continued beyond the contract termination
date to agree in writing to be subject to the same contractual
terms and conditions that were imposed upon the provider prior
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to termination.
3)Requires, unless otherwise agreed upon between the terminated
provider and the insurer or between the terminated provider
and the provider group, the agreement to be construed to
require a rate and method of payment to the terminated
provider, for the services rendered, that is the same as the
rate and method of payment for the same services while under
contract with the insurer and at the time of termination.
Requires the provider to accept the reimbursement as payment
in full and precludes billing for any amount in excess of the
reimbursement rate, with the exception of copayments and
deductibles.
4)Requires notice as to the process by which an insured may
request completion of covered services to be provided in any
insurer evidence of coverage and disclosure form. Requires an
insurer to provide a written copy of this information to its
contracting providers and provider groups, and insured upon
request.
5)Provides that the payment of copayments, deductibles, or other
cost-sharing components by the insured during the period of
completion of covered services with a terminated provider to
be the same copayments, deductibles, or other cost-sharing
components that would be paid by the insurer.
6)Defines "terminated provider" as a provider whose contract to
provide services to insureds is terminated or not renewed by
the insurer or one of the insurer's contracting provider
groups. A terminated provider is not a provider who
voluntarily leaves the insurer or contracting provider group.
7)Provides that an insurer or provider group is not required to
provide for the completion of covered services by a provider
whose contract has been terminated or not renewed for reasons
relating to medical disciplinary cause, fraud, or other
criminal activity.
8)Provides that an insurer is not required to cover services or
provide benefits that are not otherwise covered under the
contract.
9)Provides that the provisions are in addition to any other
responsibilities of insurers to provide continuity of care, as
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specified.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, California's
continuity of care laws, which create an opportunity for a
patient to complete treatment with their existing provider
under certain conditions when the provider's contract is
terminated with a health plan/insurer or when a health plan
enrollee is forced to choose a new plan, leave out people who
lose plans/policies of health insurance coverage in the
individual market, including people whose policies have been
cancelled because the policies are not compliant with the
Patient Protection and Affordable Care Act (ACA). This bill
is intended to fix deficiencies in the existing law as soon as
possible so that people currently undergoing treatments have
the opportunity to maintain access to their providers during
this transition to new coverage under the ACA. This bill also
makes consistent continuity of care provisions in the H&SC,
which governs DMHC regulated entities and the IC, which
governs CDI regulated entities.
2)BACKGROUND . On March 23, 2010, the federal ACA (Public Law
(P.L.) 111-148), as amended by the Health Care and Education
Reconciliation Act of 2010 (P.L. 111-152) became law. Among
many other provisions, the new law makes statutory changes
affecting the regulation of and payment for certain types of
private health insurance. Beginning in 2014, individuals will
be required to maintain health insurance or pay a penalty,
with exceptions for financial hardship (if health insurance
premiums exceed 8% of household adjusted gross income),
religion, incarceration, and immigration status. Several
insurance market reforms are required, such as prohibitions
against health insurers imposing preexisting health condition
exclusions. Many of these reforms took effect January 1,
2014, including the imposition of nondiscrimination
requirements, requirements that health plans and insurers
offer coverage on a guaranteed issue and renewal basis, and
determine premiums based on adjusted community rating (age,
family, geography, and tobacco use).
Additionally, by 2014 either a state established a separate
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health insurance exchange to offer individual and small-group
coverage or a state relies on a new federal exchange.
California has established Covered California, as a
state-based exchange that is operating as an independent
government entity with a five-member Board of Directors.
California has also enacted legislation to incorporate most of
the federal insurance market reforms into state law, including
a requirement that coverage issued, amended, or renewed on or
after January 1, 2014 be compliant with ACA reforms such as
guaranteed issue, premium limits, and use of a single risk
pool for determining rates.
3)CANCELLED PLANS . On May 7, 2013, Covered California adopted
model contract requirements that require participating plans,
also known as Qualified Health Plans (QHPs), to terminate all
non-ACA compliant policies effective December 31, 2013. QHPs
began sending out cancellation letters to their enrollees and
insureds in late September. The Commissioner of CDI did not
approve the termination of policies of two companies under
CDI's jurisdiction indicating that the cancellations were not
in compliance with notice requirements of existing law. For
people insured by these companies cancellation periods were
extended to allow for adequate notice. As such these policy
cancellations are permitted to take place by February and
March of 2014.
On November 14, 2013, the President announced and the federal
Center for Consumer Information and Insurance Oversight issued
a policy giving insurers the option to offer renewals to
people in noncompliant plans who were enrolled on October 1,
2013. However, implementation was deferred to states and is
subject to state law.
It is estimated that approximately 900,000 individuals will be
affected by these plan cancellations in California. However,
half will be able to obtain more affordable, more
comprehensive coverage with premium rate reductions. It is
believed that 25% of these individuals will be able to obtain
more comprehensive coverage at premium rates comparable to
what they would have paid for comprehensive coverage without
the ACA. Another 50,000 people will be losing access to their
existing plans because of insurance carriers withdrawing from
California's individual market. Approximately 20,000 of those
individuals are expected to be eligible for federal subsidies.
Covered California's governing board chose to maintain its
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policy (with the exception of the two CDI regulated carriers)
because they determined that for the vast majority of
Californians ACA coverage is better coverage. A special
consumer assistance unit was established to help consumers
through this transition.
4)SUPPORT . Health Access California supports this bill because
it provides continuity of care protections to Californians
facing cancellation of health insurance as a result of the
implementation of the consumer protections in the ACA. In the
world prior to the ACA, consumers obtaining coverage as
individuals were subjected to medical underwriting which made
it unlikely that someone receiving care for a serious or acute
condition or in the midst of pregnancy would be able to obtain
coverage at any price. The new rules prohibiting denials of
coverage based on pre-existing conditions mean that consumers
in the midst of care can change individual coverage without
fear of being locked out of coverage. This bill broadens
existing protections by applying them to plan cancellations as
a result of termination of coverage before March 31, 2014.
The California Association of Physician Groups supports this
bill based on amendments under discussion to extend continuity
of care rights to individuals whose coverage changes from
December 1, 2013 through March 31, 2014. By doing this, the
California Legislature, health plans, and providers will
create a mechanism to ensure that these affected Californians
maintain their active course of treatment through their
transition into the newly created Covered California QHPs.
Without this bill, these patients will not have continuity of
care rights. Simply put, it will ensure that people won't
fall through the cracks in the system. Western Center on Law
and Poverty supports this bill because it is critical that
treatment not be interrupted for enrollees during these
transitions to new coverage. Consumers Union supports this
bill as proposed to be amended. According to Consumers Union,
the ACA created a sea change for consumers obtaining non-group
coverage. These important continuity of care protections also
should apply to the newly reformed individual market.
5)PREVIOUS LEGISLATION .
a) AB 1180 (Pan), Chapter 441, Statutes of 2013, makes
inoperative because of the ACA several provisions in
existing law that implement the health insurance laws of
the federal Health Insurance Portability and Accountability
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Act of 1996 and additional provisions that provide former
employees rights to convert their group health insurance
coverage to individual market coverage without medical
underwriting. Establishes notification requirements
informing individuals affected by this bill of health
insurance available in 2014.
b) AB 2 X1 (Pan), Chapter 1, Statutes of 2013-14 First
Extraordinary Session, and SB 2 X1 (Ed Hernandez), Chapter
2, Statutes 2013-14 First Extraordinary Session, conform
California law to the ACA as it relates to the ability to
sell and purchase individual health insurance by
prohibiting preexisting condition exclusions, establishing
modified community rating, requiring the guaranteed issue
and renewal of health insurance, and ending the practice of
carriers conditioning health insurance on health status,
medical condition, claims experience, genetic information,
or other factors.
c) AB 1083 (Monning), Chapter 852, Statutes of 2012,
reforms California's small group health insurance laws to
enact the ACA. Eliminates preexisting condition
requirements and establishes premium rating factors based
only on age, family size, and 19 geographic regions, except
for grandfathered plans. New guaranteed issue provisions
and the rating provisions are tied to those provisions in
the ACA. Should guaranteed issue and rating factors be
repealed in the ACA, California's existing small group
guaranteed issue and rating law pre-ACA would become
operative.
d) AB 1596 (Frommer), Chapter 164, Statutes of 2004,
provides, regarding health plans arranging for the
completion of covered services by a terminated or
nonparticipating provider, that the duration of covered
services for a terminal illness may exceed 12 months from
the contract termination date or 12 months from the
effective date of coverage for a new employee. Exempts a
health plan from arranging for the completion of covered
services by terminated or nonparticipating providers if the
newly covered enrollee is either offered an out-of-network
option or had the option to continue with a health plan or
provider and voluntarily chose to change health plans.
e) AB 1286 (Frommer), Chapter 591, Statutes of 2003, and SB
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244 (Speier), Chapter 590, Statutes of 2003, require a
health care service plan and a provider to include in any
written, printed, or electronic communication to an
enrollee a specific statement concerning continuity of care
rights. These bills require that a health care service
plan submit a block transfer filing to the department at
least 75 days prior to the termination of its contract with
a provider group or a general acute care hospital and
provide 60 days' notice of the contract's termination to
enrollees assigned to the terminated provider and specify
the requirements for an insurer to provide completion of
covered services by a terminated provider and for a plan to
provide those services either by a terminated provider or
by a nonparticipating provider to a newly covered enrollee.
In addition, these bills also require a plan and a health
insurer to provide completion of covered services for a
surgery or procedure recommended and documented by a
provider under specified circumstances.
f) AB 1522 (Thomson) of 2001 would have required a provider
organization to continue to provide healthcare services to
patients for one year after its contract is not renewed
with a health care service plan or health insurer or be
subject to disciplinary action and fines. AB 1522 was
amended on the Senate Floor to establish intent that
enrollees receive continuity of care. AB 1522 died in
Conference Committee in 2002.
g) SB 103 (Speier) of 2001 would have required every health
plan to ensure the continuation of covered services to an
enrollee by a terminated provider, instead of existing law,
which requires every health plan to, at the request of the
enrollee, arrange for the continuation of covered services.
SB 103 was amended to establish intent with regard to
continuity of care. SB 103 died in Conference Committee in
2002.
h) SB 1129 (Sher), Chapter 180, Statutes of 1998, requires
health plans and disability insurers to provide continuity
of care, at the request of an enrollee, who is currently
being treated for an acute or serious condition or a
pregnancy by a provider terminated by the plan.
i) AB 1152 (Bordonaro), Chapter 504, Statutes of 1995,
requires health care plan contracts, certain group
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disability insurance policies, and certain nonprofit
hospital service plan contracts to file a policy with CDI
or the Department of Corporations (predecessor to DMHC)
describing coverage for new subscribers, enrollees, or
insureds receiving services during a current episode of
care from a non-contracting provider. AB 1152 also
requires that this policy be provided to enrollees,
subscribers, or insureds on request, as well as to all new
enrollees, insureds, or subscribers, except those who are
not eligible.
6)PROPOSED AMENDMENTS .
a) The author requests amendments be adopted in committee
to add an urgency clause to this bill so that its
provisions can take effect immediately upon enactment.
b) Additionally, the author requests the following
amendments:
i) Narrow the qualifying period to the period between
December 1, 2013, and March 31, 2014, and specify that
coverage termination is because of cancellations and
withdrawals of products.
ii) Reinstate a provision in existing law that excludes
from continuity of care a newly covered enrollee who is
offered an out-of-network option or a new enrollee who
had the option to continue with his or her previous
health plan or provider and instead voluntarily chose to
change plans.
iii) Restore definition of "terminated provider".
iv) Delete IC provisions providing new continuity of
care rights for newly covered insureds under a group
insurance policy.
v) Clarify a requirement that the nonparticipating
provider accept as payment in full with exception of
copayments and deductibles the reimbursement applies only
for purposes of a subdivision in this bill.
REGISTERED SUPPORT / OPPOSITION :
Support
Health Access California
American Federation of State, County and Municipal Employees,
AFL-CIO
California Association of Physician Groups
Western Center on Law and Poverty
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Opposition
None on file.
Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097