BILL ANALYSIS �
SB 1100
Page A
Date of Hearing: June 24, 2014
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
SB 1100 (Ed Hernandez) - As Amended: April 3, 2014
SENATE VOTE : 25-10
SUBJECT : Continuity of care.
SUMMARY : Creates continuity of care protections for people who
change plans or become newly enrolled in plans in the individual
market. Specifically, this bill :
1)Requires health plans and insurers in the individual market,
at the request of a newly covered enrollee or insured, to
arrange 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 insurance
policy.
2)Requires health plans regulated by the Department of Managed
Health Care (DMHC) to provide notice as to the process for
requesting continuity of care in their currently required
disclosure forms and in evidence of coverage.
3)Requires health plans regulated by DMHC to provide a written
copy of this information to their contracting providers and
provider groups.
EXISTING LAW :
1)Regulates health plans at the DMHC and health insurers at the
California Department of Insurance (CDI).
2)Requires health plans and insurers to provide for completion
of covered services, also known as continuity of care, under
specified circumstances, for the following conditions and
durations:
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.)
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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. (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.
3)Creates different requirements for continuity of care for
plans and insurers depending on whether they are regulated by
DMHC or CDI and on whether the services are provided to an
existing enrollee or insured by a terminated provider or to a
newly covered enrollee or insured by a nonparticipating
provider.
4)For DMHC-regulated plans:
a) 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
the conditions cited in law.
b) Requires plan disclosure documents to include a
description as to how an enrollee may request continuity of
care under current law.
5)For DMHC-regulated plans, for terminated providers:
a) Allows the plan to require the provider to agree in
writing to be subject to the same contractual terms and
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conditions that were imposed upon the provider prior to
termination.
b) Requires, unless otherwise agreed to, rates and methods
of payment to be similar to those for currently contracting
providers providing similar services, as specified.
6)For DMHC-regulated plans, for nonparticipating providers:
a) Allows a plan to require the provider to agree in
writing to be subject to the same contractual terms and
conditions that are imposed upon currently contracting
providers providing similar services, as specified.
b) Requires, unless otherwise agreed to, rates and methods
of payment to be similar to those for currently contracting
providers providing similar services, as specified.
c) Excludes enrollees in the individual market, enrollees
who are offered an out-of-network option, and enrollees who
had the option to continue with their previous health plan
or provider and instead voluntarily chose to change plans.
d) Provides an exception to this exclusion for enrollees in
the individual market whose prior coverage was cancelled
during the implementation of the federal Patient Protection
and Affordable Care Act (ACA) between December 1, 2013, and
March 31, 2014.
7)For CDI-regulated health insurers:
a) 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.
b) Requires an insurer to provide a written copy of this
information to its contracting providers and provider
groups, and insured upon request.
8)For CDI-regulated health insurers, for terminated providers:
a) Allows the insurer to require the provider to agree in
writing to be subject to the same contractual terms and
conditions that were imposed upon the provider prior to
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termination.
b) Requires this agreement to be construed to require a
rate and method of payment that are the same as the rate
and method of payment under the terminated contract.
9)For CDI-regulated health insurers, for nonparticipating
providers:
a) Requires completion of covered services only in the
individual market for enrollees whose prior coverage was
terminated under specified conditions related to the
implementation of the ACA between December 1, 2013, and
March 31, 2014.
b) Allows the insurer to require the provider to agree in
writing to be subject to the same contractual terms and
conditions as currently participated providers providing
similar services, as specified.
c) Unless otherwise agreed upon by the nonparticipating
provider and the insurer, requires services to be
compensated at rates and methods of payment similar to
those for currently participating providers providing
similar services, as specified. Requires the provider who
agrees to provide completion of services to accept the
reimbursement as payment in full and not bill the insured,
with the exception of copayments and deductibles.
10)Creates several continuity-of-care-related requirements that
are common to DMHC and CDI, including:
a) Requires cost sharing components, as specified, during
the period of completion of covered services with a
terminated provider or a nonparticipating provider to be
the same as would be paid by the enrollee or insured if
receiving care from a provider currently contracting with
(or, for DMHC-regulated plans, employed by) the plan or
insurer.
b) Provides that a plan or insurer 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.
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FISCAL EFFECT : According to the Senate Appropriations
Committee:
1)Likely costs in the tens of thousands to low hundreds of
thousands per year for review of insurance plan documents,
responding to consumer complaints, and taking enforcement
actions by CDI (Insurance Fund).
2)One-time costs of about $160,000 in 2014-15 and $80,000 in
2015-16, and ongoing costs of about $40,000 per year
thereafter for review of health plan documents, responding to
consumer complaints, and taking enforcement actions by DMHC
(Managed Care Fund).
3)No anticipated impact on the Medi-Cal program. Under current
law and practice, Medi-Cal managed care plans are already
required to provide continuity of care for new enrollees as
would be required under this bill.
COMMENTS :
1)PURPOSE OF THIS BILL . The author writes that disruptions in
care for some conditions can lead to major setbacks in
treatment, bad outcomes, and increased cost. Millions of
people are accessing insurance coverage in the private market
and through Covered California, some for the first time,
others transitioning to new ACA plans. Some will move from
individual market coverage to group coverage and others will
move off Covered California or on Covered California.
Furthermore, as the insurance market adjusts to the
transformation brought about by the ACA, many new products are
being developed at different premium price points with
different provider networks. Individuals may find provider
networks changing or insurance company participation in
Covered California changing, which could impact their ability
to continue treatment with a current provider. The author
suggests, in these situations, continuity of care protections
that are currently limited to the group market may be
warranted for people who switch plans in the individual
market.
2)BACKGROUND . The current requirements related to continuity of
care generally apply to situations where a person loses access
to their provider, either because the provider's contract is
terminated or because the person is forced to change
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coverage-for example, if the person's employer no longer
offers coverage by their current plan or insurer.
Accordingly, continuity of care applies broadly-in HMOs and
PPOs and in the individual and group markets-for terminated
providers. When a provider is terminated, the eligible
enrollee stays in the same plan, and the plan and terminated
provider abide by the same terms and conditions they were
subject to under their now-terminated contract (though,
somewhat idiosyncratically, the payment rates required for the
terminated provider are different for the terminated provider
in a DMHC plan vs. a CDI-regulated insurer).
However, for nonparticipating providers, where continuity of
care applies when a person switches from one plan to another,
current law creates restrictions on the application of
continuity of care. It is generally not available in the
individual market. It is also not available when a person
switches to a plan with an out-of-network option (this
includes PPOs in the DMHC-regulated market and all plans in
the CDI-regulated market), where enrollees can continue to see
their provider, but they have to pay more than they would for
an in-network provider. Finally, continuity of care law also
does not apply when a person has the option to continue with
their previous health plan and voluntarily chooses to switch
plans.
This bill expands continuity of care law with no restrictions
to the individual market, but leaves them in place in the
group market. The following table shows the applicability of
continuity of care in the various market segments under
current law, with the arrows (') indicating changes that are
proposed by this bill.
-----------------------------------------------------------
| |DMHC plans |CDI |
| | |insurers |
|-------------------------------+----------------+----------|
|Terminated provider, |Yes |Yes |
|individual market | | |
|-------------------------------+----------------+----------|
|Terminated provider, group |Yes |Yes |
|market | | |
|-------------------------------+----------------+----------|
|Nonparticipating provider, |No ' Yes |No ' Yes |
|individual market | | |
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|-------------------------------+----------------+----------|
|Nonparticipating provider, |Yes (except if |No |
|group market |switch is | |
| |voluntary or | |
| |out-of-network | |
| |option exists) | |
-----------------------------------------------------------
3)SUPPORT . Health Access California, the sponsor of this bill,
writes that for more than a decade, Californians with group
coverage who have serious or chronic health needs have been
given continuity of care protections that allow them to
complete care or transition to another provider when their
coverage changes. Health Access asserts that these
protections did not apply in the individual market because
consumers with individual coverage could not buy coverage if
they had a pre-existing condition that required completion of
care or transition of care. No longer do pre-existing
conditions mean that consumers cannot buy coverage at any
price. Californians who buy coverage in the individual market
deserve the same consumer protections as those who are covered
through their employer. Health Access writes that, in
particular, consumers who choose to change policies in order
to get a better deal on coverage have no continuity
protections, even in a world in which premiums have climbed
185% since 2003.
The Western Center on Law and Poverty, in support, writes that,
as more and more Californians have access to affordable
coverage as a result of the ACA and the opening of the
California Health Benefit Exchange, it is critical that they
should be able to keep in place services or courses of care
they had scheduled if they were getting coverage through a
group or other individual plan and moved to a new individual
plan. Consumers Union suggests that this bill will help
ensure that consumers are not forced to choose between
interrupting treatment and paying high out-of-network costs.
Children Now, the Children's Partnership, and Children's
Defense Fund, in a joint letter of support, writes that
California must ensure the well-being of enrollees who need
continuous care and are not responsible for changes in their
health coverage options. The American Federation of State,
County and Municipal Employees, in support, argues that this
bill will improve patient care by allowing patients receiving
long-term care to continue treatment with the longstanding
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health care provider who is most familiar with their specific
medical and personal needs. The Pharmaceutical Research and
Manufacturers of America writes that with so many of the
parameters in our health care delivery system subject to
change, this bill underscores certainty and sunshine for
patients and providers alike.
The March of Dimes, in support, argues that this bill will
increase awareness of current continuity of care protections
and help ensure seamless coverage for pregnant women from the
providers they trust, minimizing potentially harmful gaps in
care. March of Dimes also requests an amendment to clarify
that the postpartum period, for purposes of pregnancy coverage
under this bill, is the 60 day period beginning on the last
day of pregnancy.
4)OPPOSITION . The Association of California Life and Health
Insurance Companies (ACLHIC), in opposition, writes that the
original continuity of care statutes provided a remedy for
people who were forced to change employer-based coverage due
to changes in the marketplace that were beyond their
individual control. In contrast, ACLHIC argues that in
today's market, consumers have more choice and more access
than ever. ACLHIC writes that the availability of a PPO
product in every region of the state, it is hard to imagine a
case where the provider is not available to the consumer or
within one of the many available network options. ACLHIC
further argues that this measure could have the negative
effect of increasing costs due to increased administrative
burden. The California Association of Health Plans (CAHP)
suggests that this bill's notification and administrative
requirements are a distraction from plans' strict focus on
ensuring that Covered California and health reform are a
success.
Kaiser Permanente, in opposition, argues that this bill dilutes
the many benefits of contracted networks and could be costly
to all plans and insurers, and ultimately to the state and
consumers if these costs are reflected in premium increases.
Kaiser asserts that this bill would force Kaiser to arrange
for care with providers outside of its integrated system,
which would inhibit its ability to coordinate services and
assure quality care for its members, including the use of its
electronic medical records system. Kaiser writes that,
because this law is more open-ended than current law for
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groups, it is difficult to assess how many requests for
continuity of care would be received.
5)RELATED LEGISLATION .
a) AB 369 (Pan), Chapter 4, Statutes of 2014, requires
health plans and insurers to provide continuity of care, as
specified, to a newly covered person in the individual
market whose health plan or policy was cancelled between
December 1, 2013, and March 31, 2014.
b) SB 780 (Jackson) establishes notice requirements for
PPOs and requires health plans and insurers to allow
enrollees with authorized or scheduled services from a
terminated provider group or hospital, as specified, 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 set to be heard in this Committee on June 24, 2014.
6)PREVIOUS LEGISLATION .
a) SB 2 X1 (Ed Hernandez), Chapter 2, Statutes of 2013-14
First Extraordinary Session, and AB 2 X1 (Pan), Chapter 1,
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 pre-existing 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.
b) AB 1596 (Frommer), Chapter 164, Statutes of 2004, allows
duration of continuity of care for a terminal illness to
exceed 12 months; exempts a health plan from continuity of
care requirements 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. This exemption was created
because AB 1286 (Frommer), Chapter 591, Statutes of 2003
was intended to allow a patient undergoing a course of
treatment for serious conditions to remain with a provider
if his or her plan no longer contracted with that provider.
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However, AB 1286 was drafted in a way that would allow
patients who don't have to switch plans, in order to remain
with their provider, to demand that a new plan arrange for
services with a provider who may not be within the network
of the new plan.
c) AB 2759 (Levine), Chapter 489, Statutes of 2004,
preserves individual health care coverage to subscribers of
health plans and policyholders of insurance plans that
withdraw from a California service area.
d) AB 1286 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 create block transfer filing and notice
requirements prior to the termination of a health plan's
contract with a provider group or a hospital and create
continuity of care 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.
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
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
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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 plans, certain group disability insurers,
and certain non-profit hospital service plans 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.
7)POLICY COMMENTS .
a) Parity with group market. The sponsor of this bill
asserts it is intended to give people who buy coverage in
the individual market the same consumer protections as
those who are covered through their employer in the group
market. However, this bill gives people in the individual
market significantly broader continuity rights than people
in the group market. In the group market, continuity
protections for individuals who change from one plan to
another only apply if the individual is forced to change
coverage, and only if the individual finds herself in a new
plan with no coverage for out-of-network services. This
bill creates those protections in the individual market for
an individual any time they enroll in a new or different
health plan, regardless of whether that plan allows the
individual to go out of network or whether the individual
had a choice to remain with their existing plan.
b) Magnitude of expansion. According to estimates by the
California Health Benefits Review Program, the individual
market in California in 2014 includes about 2.9 million
covered lives, or about 16% of the private health insurance
market in California. The commercial group market, with
15.6 million covered lives, is over five times larger.
However, the increase in utilization of continuity of care
under this bill may be significantly greater than those
numbers would suggest, given the bill's creation of
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continuity of care protections in the individual market
that are significantly broader than the protections in the
group market. An increase in the number of individuals
applying to receive out-of-network services under this bill
could reduce the effectiveness of integrated health care
systems, which are intended to bring together delivery,
management and organization of services to improve quality,
user satisfaction, and efficiency.
c) Chronic conditions. A recent study used data from the
2012 National Health Interview Survey to estimate the
prevalence of chronic conditions for adults in the U.S.
and found approximately half (117 million) of U.S. adults
have at least one of the 10 chronic conditions examined
(hypertension, coronary heart disease, stroke, diabetes,
cancer, arthritis, hepatitis, weak or failing kidneys,
current asthma, or chronic obstructive pulmonary
disease).<1> For adults age 18 - 44, about 27% had one or
more of these conditions; for adults age 44 - 64, about 63%
had one or more of these conditions. Under current law,
individuals in the group market can access continuity of
care for several different conditions, including a serious
chronic condition, 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." This definition would include many
of the people with one of the 10 conditions listed above
that, together, affect about half the population. Research
has suggested that coordination of care is especially
important in the treatment of chronic conditions; to the
extent that this bill allows the care of people with
chronic conditions to be fragmented across multiple health
systems, it could undermine the coordination of care for
these people.
REGISTERED SUPPORT / OPPOSITION :
Support
---------------------------
<1> Ward, Brian W., Jeannine S. Schiller, and Richard A.
Goodman. "Multiple Chronic Conditions Among U.S. Adults: A 2012
Update." Preventing chronic disease 11 (2014).
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Health Access California (sponsor)
AFSCME, AFL-CIO
American Cancer Society Cancer Action Network
California Council of Community Mental Health Agencies
California Healthcare Institute
California Primary Care Association
Congress of California Seniors
March of Dimes
Mental Health America of California
Pharmaceutical Research and Manufacturers of America
Western Center on Law and Poverty
Opposition
Association of California Life and Health Insurance Companies
California Association of Health Plans
Kaiser Permanente
Analysis Prepared by : Ben Russell / HEALTH / (916) 319-2097