BILL ANALYSIS �
AB 2400
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ASSEMBLY THIRD READING
AB 2400 (Ridley-Thomas)
As Amended May 6, 2014
Majority vote
HEALTH 17-1 APPROPRIATIONS 12-1
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|Ayes:|Pan, Maienschein, |Ayes:|Gatto, Bocanegra, |
| |Ammiano, Chau, Bonilla, | |Bradford, |
| |Bonta, Ch�vez, Chesbro, | |Ian Calderon, Campos, |
| |Gomez, Gonzalez, Roger | |Eggman, Gomez, Holden, |
| |Hern�ndez, Lowenthal, | |Pan, Quirk, |
| |Nazarian, Nestande, | |Ridley-Thomas, Weber |
| |Patterson, Ridley-Thomas, | | |
| |Wieckowski | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Wagner |Nays:|Wagner |
| | | | |
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SUMMARY : Revises the Health Care Providers' Bill of Rights for
health plan and insurer provider contracts issued, amended and
renewed on or after January 1, 2015. Specifically, this bill :
1)Increases from 45 to 90 days the advance notice a health plan or
insurer must give a provider for a material change to the
provider's contract, as specified, where the changes are made by
amending a manual, policy, or procedure document referenced in the
contract (other than a change necessary to comply with state or
federal law or regulations or requirements of an accrediting body)
which, under existing law, triggers the provider's right to
negotiate and agree to the change or, if agreement is not reached,
the right to terminate the contract.
2)Extends to health plan provider contracts in a preferred provider
arrangement (PPO) the existing prohibition on contract provisions
allowing for material changes without the changes first having
been negotiated and agreed to by the provider, as specified. This
bill does not make the same change to health insurer provider
contracts in PPOs.
3)Prohibits health plan and insurer contracts from containing any of
the following terms:
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a) Termination of the health care provider's contract or
participation status in the contract, or the provider's
eligibility to participate in other product networks, when the
provider exercises the right to negotiate, accept, or refuse a
material change to an existing contract; and,
b) Requirement that a health care provider agree to accept or
participate in other products or product networks, including
future products that have not yet been developed or adopted by
the health plan or insurer, unless the health plan or insurer
discloses the reimbursement rate, method of payment, and any
other materially different contract terms for those products
from the underlying agreement.
EXISTING LAW :
1)Establishes the Department of Managed Health Care (DMHC) to
regulate health plans and the California Department of Insurance
(CDI) to regulate health insurers.
2)Establishes the Health Care Providers' Bill of Rights, which,
among other things:
a) Requires provider contracts with health plans and insurers
to provide timely notice and disclosure regarding material
changes to the contract and prohibits specific provisions in
such contracts including:
i) Authority for the health plan or insurer to modify a
material term of a contract unless the health plan or insurer
provides a 45 business day notice to the provider and the
parties negotiate and agree to the change, or if the health
plan and provider cannot agree to the change, the provider
has the right to terminate the contract; and
ii) Requirement for the contracted provider to accept
additional patients beyond the contracted number or, in the
absence of a number, additional patients that, in the
reasonable judgment of the provider, would endanger patient
access or continuity of care.
b) Authorizes a provider contract, which provides benefits
through a PPO arrangement to contain provisions permitting a
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material change to the contract if the health plan or insurer
provides at least a 45 business day notice to the provider and
the provider has the right to terminate the contract prior to
the implementation of the change.
FISCAL EFFECT : According to the Assembly Appropriations Committee,
this bill results in the following costs:
1)Costs of $30,000 annually to CDI (Insurance Fund) associated with
complaints and enforcement.
2)Costs of $30,000 one-time and approximately $150,000 annually to
DMHC (Managed Care Fund) associated with complaints and
enforcement.
COMMENTS : According to the sponsor, the California Medical
Association, this bill is intended to help improve network adequacy
and reduce consumer confusion by providing physicians and physician
groups with more time and additional information so they can decide
whether to continue contracts after health plans and insurers notify
them of a material change to the contract.
Health plans and insurers, in opposition to a prior version of this
bill, argue that this bill interferes with the contractual
relationship between physicians and insurers and this bill is not
needed since current law already ensures that providers are
affirmatively notified prior to material changes in their contracts
and given the opportunity to re-negotiate or terminate the contract.
The California Chamber of Commerce, also in opposition to a prior
version, argues that employers are increasingly concerned about
having options for affordable plans with meaningful access, and that
this bill will ensure the opposite.
Analysis Prepared by : Deborah Kelch and Ben Russell/ HEALTH / (916)
319-2097
FN: 0003811