Amended in Assembly May 6, 2014

Amended in Assembly April 22, 2014

Amended in Assembly March 28, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 2533

Introduced by Assembly Member Ammiano

February 21, 2014

An act to add Section 1367.031 to the Health and Safety Code, begin delete and to amend Section 10133.5 of, end delete and to add Section 10133.51 to begin delete , end delete the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

AB 2533, as amended, Ammiano. Health care coverage: noncontracting providers.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance. Existing law requires the Department of Managed Care and the Insurance Commissioner to adopt regulations to ensure that begin delete enrollee’s end delete begin insert enrollees end insert and insureds have access to needed health care services in a timely manner, as specified. Existing law authorizes the Department of Managed Care to assess administrative penalties for noncompliance with the requirements, which are paid into the Managed Care Administrative Fines and Penalties Fund.

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This bill would require the Department of Insurance, in developing the regulations, to develop indicators of timeliness of access to care considering specified indicators of timeliness of access to care, including waiting time for appointments with physicians. The bill would require contracts between health insurers that contract with providers for alternative rates and health care providers to assure compliance with the developed standards. The bill would authorize the Insurance Commissioner to investigate and take enforcement action against health insurers regarding noncompliance with the requirements of these provisions, including assessing administrative penalties that would be paid to the Health Insurance Administrative Fines and Penalties Account in the Insurance Fund, which the bill would establish.

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This bill would require a health care service plan or health insurer to arrange for the provision of a medically necessary service by a licensed noncontracting provider if the plan or insurer is unable to meet timely access standards established by the Department of Managed Care or the Insurance Commissioner. The bill would require the noncontracting provider to seek reimbursement for the covered service solely from the health care service plan or health insurer, except for allowable copayments, coinsurance, and deductibles. The bill would authorize the Director of Managed Care and the Insurance Commissioner to assess administrative penalties of a minimum of $1,000 per violation against a health care service plan or health insurer that fails to comply with these requirements. The bill would require that the penalties assessed against health care service plans be deposited into the Managed Care Administrative Fines and Penalties Fund. The bill would require penalties assessed against health insurers to be deposited into the Health Insurance Administrative Fines and Penalties Account, to be used, upon appropriation by the Legislature, to support the Department of Insurance.

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This bill would require a health care service plan or health insurer that contracts for alternative rates of payment to arrange for, or assist in arranging for, an enrollee or insured who is unable to obtain a medically necessary covered service to receive the care or service from a noncontracting provider in an accessible and timely manner. The bill would prohibit the health care service plan or health insurer from imposing copayments, coinsurance, or deductibles on an enrollee or insured that exceed what the enrollee or insured would pay for services from a contracting provider. The bill would require a health care service plan or health insurer to report annually to the respective department on the occurrences of denial of care and complaints received by the plan or insurer regarding accessible and timely access to care. The bill would require each department to review those complaints and any complaints received by the department regarding accessibility or timeliness of care and annually prepare and post on its Internet Web site a report of the information received.

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This bill would authorize the Insurance Commissioner to investigate and take enforcement action against insurers regarding noncompliance with these provisions and would authorize the commissioner to assess administrative penalties for violations, as specified. The bill would require the commissioner, on or before January 1, 2016, to promulgate related regulations and review the regulations every 3 years to determine if the regulations should be updated.

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Because a willful violation of these requirements with respect to health care service plans would be a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 1367.031 is added to the end insert begin insert Health and
Safety Code end insert begin insert , end insert immediately following Section 1367.03 begin insert , to read: end insert

begin insert

begin insert 1367.031. end insert   

(a) If an enrollee is unable to obtain a medically
necessary covered service in an accessible and timely manner, as
required under Section 1367.03, from a contracted provider, the
health care service plan shall arrange for, or assist the enrollee
in arranging for, the enrollee to receive the care or service in an
accessible and timely manner from a noncontracting provider,
and shall not impose copayments, coinsurance, or deductibles on
the enrollee that exceed what the enrollee would pay for services
from a contracting provider.

(b) In addition to any reporting requirements in subdivision (f)
of Section 1367.03, a health care service plan shall report annually
to the department on any and all occurrences of denial of care
and on complaints received by the health care service plan
regarding accessible and timely access to care. The department
shall review these complaints and any complaints received by the
department regarding accessibility or timeliness of care and
annually prepare and post on the department’s Internet Web site
a report on the information received.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 10133.51 is added to the end insert begin insert Insurance Code end insert begin insert , to
read: end insert

begin insert

begin insert 10133.51. end insert   

(a) This section shall apply to insurers that contract
for alternative rates of payment pursuant to Section 10133.

(b) If an insured is unable to obtain a medically necessary
covered service in an accessible and timely manner, as required
under Section 10133.5, from a contracted provider, the health
insurer shall arrange for, or assist the insured in arranging for,
the insured to receive the care or service in an accessible and
timely manner from a noncontracting provider, and shall not
impose copayments, coinsurance, or deductibles on the insured
that exceed what an insured would pay for services from a
contracting provider.

(c) In addition to the reporting requirements in Section 10133.5,
health insurers shall report annually to the department on any and
all occurrences of denial of care and on complaints received by
the insurer regarding accessible and timely access to care. The
department shall review these complaints and any complaints
received by the department regarding accessibility or timeliness
of care and annually prepare and post on the department’s Internet
Web site a report on the information received.

(d) The commissioner shall, on or before January 1, 2016,
promulgate regulations pursuant to this section and Section
10133.5 to ensure that insureds have the opportunity to access
medically necessary health care services in an accessible and
timely manner. Every three years, the commissioner shall review
the latest version of the regulations adopted pursuant to this section
and determine if the regulations should be updated to further the
intent of this section.

(e) The commissioner may investigate and take enforcement
action against insurers regarding noncompliance with the
requirements of this section and Section 10133.5. The
commissioner may, by order, assess administrative penalties for
violations of this section and Section 10133.5, subject to
appropriate notice of, and the opportunity for, a hearing in
accordance with Chapter 5 (commencing with Section 11500) of
Part 1 of Division 3 of Title 2 of the Government Code. The insurer
may provide to the commissioner, and the commissioner may
consider, information regarding the insurer’s overall compliance
with the requirements of this section. The administrative penalties
available to the commissioner pursuant to this section are not
exclusive and may be sought and employed in any combination
with civil, criminal, and other administrative remedies as
determined by the commissioner.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert begin insert

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

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SECTION 1.  

Section 1367.031 is added to the Health and
Safety Code, immediately following Section 1367.03, to read:

1367.031.  

(a) If a health care service plan is unable to meet
timely access standards established pursuant to Section 1367.03,
and is thereby unable to ensure timely access by an enrollee to a
medically necessary covered service provided by a contracted
provider, the health care service plan shall arrange for the provision
of the service by a licensed noncontracting provider in the area of
practice appropriate to treat the enrollee’s condition.

(1) A health care service plan shall not impose copayments,
coinsurance, or deductibles for a noncontracting provider that
exceed those of contracting providers.

(2) A noncontracting provider providing a service to an enrollee
pursuant to subdivision (a) shall seek reimbursement for a covered
service solely from an enrollee’s health care service plan, and shall
not seek payment from the enrollee for the covered service, except
for allowable copayments, coinsurance, and deductibles.

(3) A health care service plan referring an enrollee to a
noncontracting provider shall ensure that the location of the
facilities of the noncontracting provider is within reasonable
proximity of the business or personal residence of the enrollee,
and that the hours of operation and provision for after-hours care
is reasonable so as not to result in barriers to accessibility.

(4) The health care service plan shall consider referral to a
specific noncontracting provider preferred by the enrollee. If the
health care service plan does not refer the enrollee to the enrollee’s
preferred noncontracting provider, the health care service plan
shall provide the enrollee with a written explanation outlining the
reasons why the enrollee’s preferred noncontracting provider was
not selected to provide the covered service.

(5) If an enrollee prefers to wait for a contracted provider to
provide the covered service, the health care service plan shall
accommodate the enrollee’s preference.

(b) Pursuant to subdivision (f) of Section 1367.03, a health care
service plan shall report annually to the department on any and all
occurrences of denial of care and on compliance with the
requirements of this section. The department shall make this
information public on the department’s Internet Web site.

(c) (1) Pursuant to subdivision (g) of Section 1367.03, the
department may assess an administrative penalty of a minimum
of one thousand dollars ($1,000) per violation against any health
care service plan that fails to comply with this section.

(2) The administrative penalties available to the department
pursuant to this section are not exclusive, and may be sought and
employed in any combination with civil, criminal, and other
administrative remedies as determined by the director for purposes
of enforcing this chapter.

SEC. 2.  

Section 10133.5 of the Insurance Code is amended to
read:

10133.5.  

(a) The commissioner shall, on or before January 1,
2016, promulgate regulations applicable to health insurers that
contract with providers for alternative rates pursuant to Section
10133 to ensure that insureds have the opportunity to access needed
health care services in a timely manner.

(b) These regulations shall be designed to assure accessibility
of provider services in a timely manner to individuals comprising
the insured or contracted group, pursuant to benefits covered under
the policy or contract. In developing these regulations, the
department shall develop indicators of timeliness of access to care
and, in so doing, shall consider the following as indicators of
timeliness of access to care:

(1) Waiting times for appointments with physicians, including
primary care and specialty physicians.

(2) Timeliness of care in an episode of illness, including the
timeliness of referrals and obtaining other services, if needed.

(3) Waiting time to speak to a physician, registered nurse, or
other qualified health professional acting within his or her scope
of practice who is trained to screen or triage an enrollee who may
need care.

(4) Adequacy of number and locations of institutional facilities,
including hospitals, and professional providers, and consultants
in relationship to the size and location of the insured group and
that the services offered are available at reasonable times. The
department shall consider the nature of physician practices,
including individual and group practices, and the nature of the
provider network. The department shall also consider various
circumstances affecting the delivery of care, including urgent care,
care provided on the same day, and requests for specific providers.

(5) Adequacy of number of professional providers, and license
classifications of the providers, in relationship to the projected
demands for services covered under the group policy or plan. The
department shall consider the nature of the specialty in determining
the adequacy of professional providers. The department shall
consider the availability of primary care physicians, specialty
physicians, hospital care, and other health care.

(6) The policy or contract is not inconsistent with standards of
good health care and clinically appropriate care.

(7) All contracts including contracts with providers, and other
persons furnishing services, or facilities shall be fair and
reasonable.

(c) In developing these standards for timeliness of access, the
department shall consider all of the following:

(1) Clinical appropriateness.

(2) The nature of the specialty.

(3) The urgency of care.

(d) The department may adopt standards other than the time
elapsed between an enrollee seeking health care and obtaining
care. If the department adopts an alternative standard, it shall
demonstrate why that standard is more appropriate. In developing
standards pursuant to this subdivision, the department shall
consider the nature of the provider network.

(e) In developing standards under subdivision (a), the department
shall also consider requirements under federal law; requirements
under other state programs and law, including utilization review;
and standards adopted by other states, national accrediting
organizations and professional associations. The department shall
further consider the accessability to provider services in rural areas,
specifically those areas in which health facilities are more than 30
miles apart.

(f) In designing the regulations the commissioner shall consider
the regulations in Title 28, of the California Code of Regulations,
commencing with Section 1300.67.2, that are applicable to
Knox-Keene plans, and all other relevant guidelines in an effort
to accomplish maximum accessibility. The department shall consult
with the Department of Managed Health Care concerning
regulations developed by that department pursuant to Section
1367.03 of the Health and Safety Code and shall seek public input
from a wide range of interested parties.

(g) (1) Contracts between health insurers that contract with
providers for alternative rates and health care providers shall assure
compliance with the standards developed under this section. These
contracts shall require reporting by health care providers to health
insurers that contract with providers for alternative rates and by
health insurers that contract with providers for alternative rates to
the department to ensure compliance with the standards.

(2) Health insurers that contract for alternative rates of payment
with providers shall report annually on the number of occurrences
of denial of care and on complaints received by the insurer
regarding timely access to care. The department shall review these
complaints and any complaints received by the department
regarding timeliness of care and shall make public this information
on the department’s Internet Web site.

(h) Every three years, the commissioner shall review the latest
version of the regulations adopted pursuant to subdivision (a) and
shall determine if the regulations should be updated to further the
intent of this section.

(i) (1) The commissioner may investigate and take enforcement
action against plans regarding noncompliance with the
requirements of this section. When substantial harm to an insured
has occurred as a result of plan noncompliance, the commissioner
may, by order, assess administrative penalties subject to appropriate
notice of, and the opportunity for, a hearing in accordance with
Chapter 5 (commencing with Section 11500) of Part 1 of Division
3 of Title 2 of the Government Code. The health insurer may
provide to the commissioner, and the commissioner may consider,
information regarding the health insurer’s overall compliance with
the requirements of this section.

(2) The administrative penalties available to the commissioner
pursuant to this section are not exclusive, and may be sought and
employed in any combination with civil, criminal, and other
administrative remedies as determined by the commissioner for
purposes of enforcing this chapter.

(3) The administrative penalties shall be paid to the Health
Insurance Administrative Fines and Penalties Account in the
Insurance Fund.

(j) There is hereby created the Health Insurance Administrative
Fines and Penalties Account in the Insurance Fund established
pursuant to Section 12975.7. All moneys in the account shall be
subject to annual appropriation each fiscal year for the support of
the Department of Insurance.

SEC. 3.  

Section 10133.51 is added to the Insurance Code, immediately following Section 10133.5, to read:

10133.51.  

(a) If a health insurer that contracts with providers
for alternative rates pursuant to Section 10133 is unable to meet
timely access standards established pursuant to Section 10133.5,
and is thereby unable to ensure timely access by an insured to a
medically necessary covered service provided by a contracted
provider, the health insurer shall arrange for the provision of the
service by a licensed noncontracting provider in the area of practice
appropriate to treat the insured’s condition.

(1) A health insurer shall not impose copayments, coinsurance,
or deductibles for a noncontracting provider that exceed those of
contracting providers in the event that an insured receives services
from a noncontracting provider because a health insurer was unable
to ensure timely access to a medically necessary, covered service
by a contracted provider.

(2) A noncontracting provider providing a service to an insured
pursuant to subdivision (a) shall seek reimbursement for the
covered service solely from the insured’s health insurer, and shall
not seek payment from the insured for the covered service, except
for allowable copayments, coinsurance, and deductibles.

(3) A health insurer referring an insured to a noncontracting
provider shall ensure that the location of the facilities of the
noncontracting provider is within reasonable proximity of the
business or personal residence of the insured, and that the hours
of operation and provision for after-hours care is reasonable so as
not to result in barriers to accessibility.

(4) The health insurer shall consider referral to a specific
noncontracting provider preferred by the insured. If the health
insurer does not refer the insured to the insured’s preferred
noncontracting provider, the health insurer shall provide the insured
with a written explanation outlining the reasons why the insured’s
preferred noncontracting provider was not selected to provide the
covered service.

(5) If an insured prefers to wait for a contracted provider to
provide the covered service, the health insurer shall accommodate
the insured’s preference.

(b) (1) The commissioner may investigate and take enforcement
action against health insurers regarding noncompliance with the
requirements of this section.

(2) The commissioner may, by order, assess an administrative
penalty of a minimum of one thousand dollars ($1,000) per
violation against a health insurer that fails to comply with this
section, subject to appropriate notice and the opportunity for a
hearing in accordance with Chapter 5 (commencing with Section
11500) of Part 1 of Division 3 of Title 2 of the Government Code.
The health insurer may provide to the commissioner, and the
commissioner may consider, information regarding the health
insurer’s overall compliance with the requirements of this section.
The administrative penalties shall not be deemed an exclusive
remedy available to the commissioner.

SEC. 4.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district are the result of a program for which legislative authority
was requested by that local agency or school district, within the
meaning of Section 17556 of the Government Code and Section
6 of Article XIII B of the California Constitution.

end delete