BILL ANALYSIS �
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 369
AUTHOR: Pan
AMENDED: January 16, 2014
HEARING DATE: February 12, 2014
CONSULTANT: Boughton
SUBJECT : Continuity of Care. (Urgency)
SUMMARY : Allows, under certain circumstances, a new health plan
enrollee or insured to complete treatment from a
non-participating health care provider if his or her individual
health plan contract or insurance policy was terminated between
December 1, 2013 and March 31, 2014 and he or she was receiving
services from the non-participating provider for a specified
condition on the effective date of his or her new coverage.
Contains an urgency clause that will make this bill effective
upon enactment.
Existing law:
1.Establishes the California Department of Insurance (CDI) to
regulate health insurers and the Department of Managed Health
Care (DMHC) to regulate health plans.
2.Requires health plans and health insurers to cover the
completion of covered services by a terminated provider, if
requested by an enrollee or insured for the treatment of
certain conditions, and if the provider and plan agree on
terms and reimbursement, as specified. Requires health plans
to cover the completion of covered services by
non-participating providers for new enrollees under similar
circumstances.
3.Establishes the following conditions as eligible for
completion of services:
a. An acute condition, as specified. Requires completion
of covered services to be provided for the duration of the
acute condition;
b. A serious chronic condition, as specified. Requires
completion of covered services to be provided for a period
of time necessary to complete a course of treatment and to
arrange for a safe transfer to another provider, as
specified, not to exceed 12 months from the contract
termination or 12 months from the effective date of
Continued---
AB 369 | Page 2
coverage for a newly covered enrollee;
c. The three trimesters of pregnancy and the immediate
postpartum period. Requires the completion of covered
services to be provided for the duration of pregnancy;
d. A terminal illness, as specified. Requires completion
of covered services to be provided for the duration of the
terminal illness, which may exceed 12 months from the
contract termination date or 12 months from the effective
date of coverage for a new enrollee;
e. The care of a newborn child between birth and age 36
months. Concludes the completion of covered services at 12
months from the contract termination date or 12 months from
the effective date of coverage for a new enrollee; and,
f. Performance of a surgery or other procedure that has
been recommended and documented by the provider to occur
within 180 days of the contract's termination date or
within 180 days of the effective date of coverage for a
newly covered enrollee.
4.Permits a health plan or health insurer to require the
terminated provider (or non-participating provider in the case
of a health plan) to agree in writing to be subject to certain
contract terms and conditions including, but not limited to,
credentialing, hospital privileging, utilization review, peer
review, and quality assurance requirements, as specified. If
the terminated provider (or non-participating provider in the
case of a health plan) does not agree to comply or does not
comply with these contractual terms and conditions, the plan
or insurer is not required to continue the provider's
services.
5.Compensates, unless otherwise agreed to by the provider and
the health plan, the services at rates and methods similar to
those used by the plan or provider group for currently
contracting providers who are not capitated and who are
practicing in the same or similar geographic area. Neither
the plan nor the provider group is required to continue the
services if the provider does not accept the payment rates.
6.Requires, unless otherwise agreed to by the terminated
provider and the health insurer or provider group, the
agreement to be construed to require a rate and method of
payment that are the same as the rate and method of payment
for the same services while under contract with the insurer at
the time of termination. Requires the provider to accept the
reimbursement as payment in full and not bill the insured for
AB 369 | Page
3
any amount in excess of the reimbursement rate, with the
exception of copayments and deductibles, as specified.
7.Requires the payment of copayments, deductibles, or other
cost-sharing by the insured during the period of completion of
services with a terminated provider to be the same copayments,
deductibles, or other cost-sharing components that would be
paid by the insured when receiving care from a provider
currently contracting with the insurer. Applies substantially
similar provisions to health plan enrollees for completion of
services with a terminated or non-participating provider.
8.Requires a health insurer to provide a notice as to the
process by which an insured may request completion of covered
services in any insurer evidence of coverage and disclosure
form issued after March 31, 2004. Requires a written copy to
be provided to contracting providers and provider groups, and
an insured, upon request.
9.Defines, for health insurers, "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.
10.States that these continuity of care laws do not:
a. Require a health plan or health insurer to cover
services or provide benefits that are not otherwise covered
under the terms and conditions of the contract;
b. Apply to a newly covered health plan enrollee covered
under an individual subscriber agreement who is undergoing
a course of treatment on the effective date of his or her
coverage; or,
c. Apply to a newly covered health plan 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.
This bill:
1.Requires a health plan, at the request of a newly covered
enrollee under an individual contract, or a health insurer at
the request of a newly covered insured under an individual
AB 369 | Page 4
insurance policy, to arrange for the completion of covered
services by a non-participating provider for one of the
conditions specified in existing law, if the newly covered
enrollee or insured meets both of the following:
a. Had coverage that was terminated between December 1,
2013, and March 31, 2014, inclusive because the plan or
insurer ceased to provide or arrange health benefits or the
plan or insurer withdrew from the market; and,
b. At the time his or her coverage became effective, the
newly covered enrollee or insured was receiving services
from that provider for one of the specified conditions.
2.Applies the completion of covered services to services
rendered to the newly covered enrollee or insured on or after
the effective date of his or her new coverage.
3.Authorizes a health insurer to require a non-participating
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 geographic area as the
non-participating provider, as specified. If the
non-participating provider does not agree to comply or does
not comply with these contractual terms and conditions, the
insurer is not required to continue the provider's services.
4.Requires, unless otherwise agreed upon by the
non-participating provider and the insurer, the services
rendered to be compensated at rates and methods of payment
similar to those used by the insurer for currently
participating providers providing similar services who are
practicing in the same or similar geographic areas as the
non-participating provider. Neither the insurer nor the
provider group is required to continue the services of a
non-participating provider if the provider does not accept
these payment rates.
5.States legislative intent that a non-participating provider
whose services are continued pursuant to this bill accept the
reimbursement provided under this bill 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, as specified.
6.Contains an urgency clause that will make this bill effective
AB 369 | Page
5
upon enactment.
FISCAL EFFECT : According to the Assembly Appropriations
Committee analysis, costs to the DMHC and CDI to enforce this
bill's provisions are likely to be minor. Even if a complaint
related to these provisions results in a trial, for example,
enforcement costs would likely be less than $100,000 (Managed
Care Fund or Insurance Fund).
PRIOR VOTES :
Assembly Health: 16- 0
Assembly Appropriations:16- 0
Assembly Floor: 78- 0
COMMENTS :
1.Author's statement. 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.
2.Health Insurance Market in Transition. 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 are required to maintain health
insurance or pay a penalty, with exceptions for financial
hardship (if health insurance premiums exceed 8 percent of
household adjusted gross income), religion, incarceration, and
immigration status. Several insurance market reforms are
required, such as prohibitions against health insurers
imposing pre-existing health condition exclusions.
AB 369 | Page 6
Pursuant to the ACA, 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.
On May 7, 2013, Covered California adopted model contract
requirements that require participating plans, also known as
Qualified Health Plans (QHPs), to terminate all of their
non-ACA compliant policies effective December 31, 2013. In
compliance with this requirement, QHPs began sending out
cancellation letters to their enrollees and insureds in late
September. However, 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, President Obama announced and the
federal Center for Consumer Information and Insurance
Oversight issued a policy giving insurers the option to offer
renewals to people in non-ACA compliant 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 could
be affected by these plan cancellations in California. Half of
these individuals are estimated to be able to obtain more
affordable and comprehensive coverage with premium rate
reductions. It is believed that 25 percent 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 due to insurance carriers withdrawing from California's
individual market. Approximately 20,000 of those individuals
are expected to be eligible for federal subsidies.
AB 369 | Page
7
In response to the November 2013 federal policy option to
allow for renewals of insurance coverage, Covered California's
governing board chose to maintain its policy to require the
cancellations (with the exception of the two CDI regulated
carriers) for a number of reasons including that the board
made a determination 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. An unknown but likely small subset
of the effected individuals will be in the midst of treatment
for a condition such as cancer or a scheduled surgery and may
not be enrolled in a new ACA plan that includes his or her
existing provider.
3.Related legislation.
a. SB 780 (Jackson) establishes consumer notice
requirements for health insurance preferred provider
organizations (PPOs) regulated by CDI and additional
consumer notice requirements for health plans regulated by
DMHC. SB 780 requires PPOs and DMHC-regulated health plans
to allow enrollees with authorized or scheduled services
from a terminated unassigned provider group or general
acute care hospital to receive those services at in network
cost-sharing until completion of the authorized or
scheduled service for at least 60 days from date of the
termination notice. SB 780 is pending in the Assembly.
b. AB 1507 (Logue) allows an individual or small employer
health benefit plan in effect on October 1, 2013 to be
renewed until October 1, 2014, and continue to be in force
until December 31, 2014. AB 1507 is pending in the
Assembly.
4.Prior legislation.
a. AB 1180 (Pan), Chapter 441, Statutes of 2013, makes
inoperative several provisions in existing law that
implement the health insurance laws of the federal Health
Insurance Portability and Accountability 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 AB 1180 of health insurance available in 2014.
b. SB X1 2 (Ed Hernandez), Chapter 2, Statutes 2013-14
First Extraordinary Session and AB X1 2 (Pan), Chapter 1,
AB 369 | Page 8
Statutes of 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 1596 (Frommer), Chapter 164, Statutes of 2004,
provides, regarding health plans arranging for the
completion of covered services by a terminated or
non-participating 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 non-participating 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.
d. AB 1286 (Frommer), Chapter 591, Statutes of 2003, and SB
244 (Speier), Chapter 590, Statutes of 2003, require a
health 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 DMHC at least 75 days prior to
the termination of its contract with a provider group or a
general acute care hospital, 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
non-participating 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.
e. AB 1522 (Thomson) of 2001 would have required a provider
organization to continue to provide health care 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
AB 369 | Page
9
amended on the Senate Floor to establish intent that
enrollees receive continuity of care. AB 1522 died in
Conference Committee in 2002.
f. 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.
g. 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.
h. AB 1152 (Bordonaro), Chapter 504, Statutes of 1995,
requires health care plan contracts, certain group
disability insurance policies, and certain non-profit
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.
5.Support. Health Access California is the sponsor of this bill
to extend existing continuity of care protections to
individuals in cancelled plans terminated before March 31,
2014. The California Association of Physician Groups (CAPG)
supports this update to the continuity of care laws for the
specific purpose of ensuring that newly-covered individual in
the Covered California health benefit exchange will be
guaranteed the same rights to continuity of care that existing
managed care patients under employer-sponsored group health
plan have enjoyed for the past decade. CAPG points out that
these enrollees face an involuntary disruption of their
patient-provider relationship. The California School
Employees Association believes this bill is greatly needed and
provides continuity of care for the patients at their request,
during transition to new health care policies. The Congress
of California Seniors supports this bill indicating that
AB 369 | Page 10
disruptions in care because of policy transitions could cause
distress and a potential medical setback.
6.Neutral. The Association of Northern California Oncologists
(ANCO) strongly supports the intent of this legislation
indicating any disruption in a given cancer treatment can have
disastrous effects. But ANCO writes that the legislation is
unclear regarding how non-contracting physicians would be
reimbursed for providing services to this population, and how
the agreement between the physician and the plan would work.
This is especially important to oncologists since they buy and
bill for the extremely expensive anti-cancer medicines used to
treat cancer patients. With this lack of clarity, the
legislation could have unintended consequences that would
actually hamper access to cancer care.
7.Amendments. The author requests the Committee adopt the
following amendments which are reflective of negotiations
between health plan, provider and consumer stakeholders:
a. 1373.96 (j) Subdivision (b) does Except as provided in
subdivision (l), this section shall not apply to a newly
covered enrollee who is offered an out-of-network?
b. 1373.96(l)(1) A health care service plan shall, at the
request of a newly covered enrollee under an individual
health care service plan contract, arrange for the
completion of covered services as set forth in this section
by?.
c. 1373.96(l)(1)(A) The newly covered enrollee's prior
coverage was terminated under paragraph (5) or (6) of
subdivision (a) of Section 1365 or subdivision (d) or (e)
of Section 10273.6 of the Insurance Code between December
1, 2013, and March 31, 2014, inclusive.
d. 1373.96(m)(2) "Non-participating provider" means a
provider who is not contracted with the enrollee's health
care service plan to provide services under the enrollee's
health plan contract.
e. 10133.56 (a)(1)(B)?. Completion of covered services
under this paragraph shall not exceed 12 months from the
contract termination date or 12 months from the effective
date of coverage for a newly covered insured.
f. 10133.56 (a)(1)(D)?Completion of covered services shall
be provided for the duration of a terminal illness, which
may exceed 12 months from contract termination date or 12
months from the effective date of coverage or a new
insured.
g. 10133.56 (a)(1)(E)?.Completion of covered services under
AB 369 | Page
11
this paragraph shall not exceed 12 months from the contract
termination date or 12 months from the effective date of
coverage for a newly covered insured.
h. 10133.56(a)(1)(F) Performance of a surgery or other
procedure that has been recommended and documented by the
provider to occur within 180 days of the contract's
termination date or within 180 days of the effective date
of coverage for a newly covered insured.
i. 10133.56 (e)(3) "Non-participating provider" means a
provider who does not have a contract with an insurer to
provide services to insureds is not contracted with the
insured's health insurer to provide services under the
insured's policy. A non-participating provider does not
include a terminated provider.
j. 10133.56(i)(l)?.covered services as set forth in this
section by a non-participating provider?
aa. 10133.56(i)(1)(A) The newly covered insured's prior
coverage was terminated under subdivision (d) or (e) of
section 10273.6 or paragraph (5) or (6) of subdivision (a)
of Section 1365 of the Health and Safety Code between
December 1, 2013, and March 31, 2014, inclusive.
SUPPORT AND OPPOSITION :
Support: Health Access California (sponsor)
American Federation of State, County and Municipal
Employees, AFL-CIO
California Association of Physician Groups
California Pan-Ethnic Health Network
California Primary Care Association
California School Employees Association
Congress of California Seniors
Consumers Union
SEIU California
Western Center on Law and Poverty
Oppose: None received.
--END--
AB 369 | Page 12