Senate Bill No. 1340

Introduced by Senator Hernandez

February 21, 2014

An act to amend Section 1367.49 of the Health and Safety Code, and to amend Section 10133.64 of the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

SB 1340, as introduced, Hernandez. Health care coverage: provider contracts.

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. Existing law also provides for the regulation of health insurers by the Department of Insurance. Existing law prohibits a contract by or on behalf of a plan or insurer and a licensed hospital, as defined, or any other licensed health care facility owned by a licensed hospital to provide inpatient hospital services or ambulatory care services to subscribers and enrollees of the plan or policyholders and insureds of the insurer from containing a provision that restricts the ability of the plan or insurer to furnish information to subscribers or enrollees of the plan or policyholders or insureds of the insurer concerning the cost range of procedures at the hospital or facility or the quality of services performed by the hospital or facility. Existing law makes a contractual provision inconsistent with this requirement void and unenforceable. Existing law requires a plan or insurer to provide a hospital or facility at least 20 days to review the methodology and data used before cost or quality information is provided to subscribers or enrollees of the plan or to policyholders or insureds of the insurer, as specified. Existing law also establishes requirements applicable to information displayed on an Internet Web site pursuant to these provisions by, or on behalf of, a plan or insurer.

This bill would instead prohibit a contract between a plan or insurer and a provider or supplier, as defined, from containing a provision that restricts the ability of the plan or insurer to furnish information to consumers or purchasers, as defined, concerning the cost range of a procedure or full course of treatment or the quality of services performed by the provider or supplier. The bill would require a plan or insurer to provide a provider or supplier with at least 30 days to review the methodology and data used and would make related, conforming changes.

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

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

SECTION 1.  

Section 1367.49 of the Health and Safety Code
is amended to read:

1367.49.  

(a) A contract issued, amended, renewed, or delivered
on or after January 1, begin delete 2012, end delete begin insert 2015, end insert by or on behalf of a health care
service plan and a begin delete licensed hospital or any other licensed health
care facility owned by a licensed hospital to provide inpatient
hospital services or ambulatory care services to subscribers and
enrollees of the plan end delete begin insert provider or supplier end insert shall not contain any
provision that restricts the ability of the health care service plan
to furnish begin delete information to subscribers or enrollees of the plan
concerning the cost range of procedures at the hospital or facility
or the quality of services performed by the hospital or facility. end delete
begin insert consumers or purchasers information concerning any of the
following: end insert

begin insert

(1) The cost range of a procedure or a full course of treatment,
including, but not limited to, facility, professional, and diagnostic
services, prescription drugs, durable medical equipment, and other
items and services related to the treatment.

end insert begin insert

(2) The quality of services performed by the provider or supplier.

end insert

(b) Any contractual provision inconsistent with this section shall
be void and unenforceable.

(c) A health care service plan shall provide the begin delete hospital or
facility end delete begin insert provider or supplier end insert an advance opportunity of at least begin delete 20 end delete
begin insert 30 end insert days to review the methodology and data developed and
compiled by the health care service plan, and used pursuant to
subdivision (a), before cost or quality information is provided to
begin delete subscribers or enrollees, end delete begin insert consumers or purchasers, end insert including
material revisions or begin delete the addition end delete begin insert additions end insert of new information.
At the time the health care service plan provides a begin delete hospital or
facility end delete begin insert provider or supplier end insert with the opportunity to review the
methodology and data, it shall also notify the begin delete hospital or facility end delete
begin insert provider or supplier end insert in writing of their opportunity to provide an
Internet Web site link pursuant to subdivision (f).

(d) If the information proposed to be furnished to enrollees and
subscribers on the quality of services performed by a begin delete hospital or
facility end delete begin insert provider or supplier end insert is data that the plan has developed
and compiled, the plan shall utilize appropriate risk adjustment
factors to account for different characteristics of the population,
such as case mix, severity of patient’s condition, comorbidities,
outlier episodes, and other factors to account for differences in the
use of health care resources among begin delete hospitals and facilities end delete
begin insert providers and suppliers end insert .

(e) Any Internet Web site owned or controlled by a health care
service plan, or operated by another person or entity under contract
with or on behalf of a health care service plan, that displays the
information developed and compiled by the health care service
plan as referenced by this section shall prominently post the
following statement:

“Individual begin delete hospitals end delete begin insert facilities or health care providers end insert may
disagree with the methodology used to define the cost ranges, the
cost data, or quality measures. Many factors may influence cost
or quality, including, but not limited to, the cost of uninsured and
charity care, the type and severity of procedures, the case mix of
a hospital, special services such as trauma centers, burn units,
medical and other educational programs, research, transplant
services, technology, payer mix, and other factors affecting
individual begin delete hospitals end delete begin insert facilities and health care providers end insert .”

A health care service plan and a begin delete hospital end delete begin insert provider or supplier end insert
shall not be precluded from mutually agreeing in writing to an
alternative method of conveying this statement.

(f) If a begin delete hospital or facility end delete begin insert provider or supplier end insert chooses to
provide an Internet Web site link where a response to the health
care service plan’s posting may be found, it shall do so in a timely
manner in order to satisfy the requirements of this section. If a
begin delete hospital or facility end delete begin insert provider or supplier end insert chooses to provide a
response, a plan shall post, in an easily identified manner, a
prominent link to the begin delete hospital’s or facility’s end delete begin insert provider’s or supplier’s end insert
Internet Web site where a response to the plan’s posting may be
found. A health care service plan and a begin delete hospital end delete begin insert provider or
supplier end insert shall not be precluded from mutually agreeing in writing
to an alternative method to convey a begin delete hospital’s end delete begin insert provider’s or
supplier’s end insert response.

(g) For the purposes of this section, begin delete “licensed hospital” means
those hospitals as defined in subdivisions (a), (b), and (f) of Section
1250. end delete begin insert the following definitions shall apply: end insert

begin insert

(1) “Consumers” means enrollees or subscribers of the health
care service plan or beneficiaries of a self-funded health coverage
arrangement administered by the health care service plan or other
persons entitled to access services through a network established
by the health care service plan.

end insert begin insert

(2) “Provider” has the same meaning as that term is defined
in Section 1367.50.

end insert begin insert

(3) “Purchasers” means the sponsors of a self-funded health
coverage arrangement administered by the health care service
plan.

end insert begin insert

(4) “Supplier” has the same meaning as that term is defined in
Section 1367.50.

end insert

(h) Section 1390 shall not apply for purposes of this section.

SEC. 2.  

Section 10133.64 of the Insurance Code is amended
to read:

10133.64.  

(a) A contract issued, amended, renewed, or
delivered on or after January 1, begin delete 2012, end delete begin insert 2015, end insert by or on behalf of a
health insurer and a begin delete licensed hospital or any other licensed health
care facility owned by a licensed hospital to provide inpatient
hospital services or ambulatory care services to policyholders and
insureds of the insurer end delete begin insert provider or supplier end insert shall not contain any
provision that restricts the ability of the health insurer to furnish
begin delete information to policyholders or insureds concerning the cost range
of procedures at the hospital or facility or the quality of services
provided by the hospital or facility. end delete begin insert consumers or purchasers
information concerning any of the following: end insert

begin insert

(1) The cost range of a procedure or a full course of treatment,
including, but not limited to, facility, professional, and diagnostic
services, prescription drugs, durable medical equipment, and other
items and services related to the treatment.

end insert begin insert

(2) The quality of services performed by the provider or supplier.

end insert

(b) Any contractual provision inconsistent with this section shall
be void and unenforceable.

(c) A health insurer shall provide the begin delete hospital or facility end delete begin insert provider
or supplier end insert an advance opportunity of at least begin delete 20 end delete begin insert 30 end insert days to review
the methodology and data developed and compiled by the health
insurer, and used pursuant to subdivision (a), before cost or quality
information is provided to begin delete policyholders or insureds, end delete begin insert consumers
or purchasers, end insert including material revisions or begin delete the addition end delete
begin insert additions end insert of new information. At the time the health insurer
provides a begin delete hospital or facility end delete begin insert provider or supplier end insert with the
opportunity to review the methodology and data, it shall also notify
the begin delete hospital or facility end delete begin insert provider or supplier end insert in writing of their
opportunity to provide an Internet Web site link pursuant to
subdivision (f).

(d) If the information proposed to be furnished to policyholders
and insureds on the quality of services performed by a begin delete hospital or
facility end delete begin insert provider or supplier end insert is data that the insurer has developed
and compiled, the insurer shall utilize appropriate risk adjustment
factors to account for different characteristics of the population,
such as case mix, severity of patient’s condition, comorbidities,
outlier episodes, and other factors to account for differences in the
use of health care resources among begin delete hospitals and facilities end delete
begin insert providers and suppliers end insert .

(e) Any Internet Web site owned or controlled by a health
insurer, or operated by another person or entity under contract with
or on behalf of a health insurer, that displays the information
developed and compiled by the health insurer as referenced by this
section shall prominently post the following statement:

“Individual begin delete hospitals end delete begin insert health care facilities or providers end insert may
disagree with the methodology used to define the cost ranges, the
cost data, or quality measures. Many factors may influence cost
or quality, including, but not limited to, the cost of uninsured and
charity care, the type and severity of procedures, the case mix of
a begin delete hospital end delete begin insert facility end insert , special services such as trauma centers, burn
units, medical and other educational programs, research, transplant
services, technology, payer mix, and other factors affecting
individual begin delete hospitals end delete begin insert health care facilities and providers end insert .”

A health insurer and a begin delete hospital end delete begin insert provider or supplier end insert shall not be
precluded from mutually agreeing in writing to an alternative
method of conveying this statement.

(f) If a begin delete hospital or facility end delete begin insert provider or supplier end insert chooses to
provide an Internet Web site link where a response to the health
insurer’s posting may be found, it shall do so in a timely manner
in order to satisfy the requirements of this section. If a begin delete hospital or
facility end delete begin insert provider or supplier end insert chooses to provide a response, an
insurer shall post, in an easily identified manner, a prominent link
to the begin delete hospital’s or facility’s end delete begin insert provider’s or supplier’s end insert Internet Web
site where a response to the health insurer’s posting may be found.
A health insurer and a begin delete hospital end delete begin insert provider or supplier end insert shall not be
precluded from mutually agreeing in writing to an alternative
method to convey a begin delete hospital’s end delete begin insert provider’s or supplier’s end insert response.

(g) For the purposes of this section, begin delete “licensed hospital” means
those hospitals as defined in subdivisions (a), (b), and (f) of Section
1250 of the Health and Safety Code. end delete begin insert the following definitions shall
apply: end insert

begin insert

(1) “Consumers” means policyholders or insureds of the health
insurer or beneficiaries of a self-funded health coverage
arrangement administered by the health insurer or other persons
entitled to access services through a network established by the
health insurer.

end insert begin insert

(2) “Provider” has the same meaning as that term is defined
in Section 10117.52.

end insert begin insert

(3) “Purchasers” means the sponsors of a self-funded health
coverage arrangement administered by the health insurer.

end insert begin insert

(4) “Supplier” has the same meaning as that term is defined in
Section 10117.52.

end insert