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Narrow-network controversy spurs tougher rules for California plans


By Paul Demko
Posted: September 2, 2014 - 5:45 pm ET
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California health plans would face new requirements designed to ensure they offer adequate provider networks under legislation the state Legislature approved last week. The issue of network adequacy has sparked controversy since the state's exchange opened last year with many narrow-network products.

Under a bill now awaiting the governor's signature, insurers would have to provide annual reports to the California Department of Managed Health Care about their provider networks, and the agency's assessment of that data would be posted on its website.

Lawsuits have been filed against both Anthem Blue Cross and Blue Shield of California alleging they misled consumers about their provider networks. Those two firms attracted the largest share of customers during the first open-enrollment period, accounting for nearly 60% of Covered California signups. California regulators are also investigating network-related complaints against the insurers.

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Anthony Wright, executive director of the statewide consumer advocacy group Health Access California, which sponsored the legislation, said that there have been long-standing questions about network adequacy for Medi-Cal managed-care plans and private coverage options. The bill was supported by many healthcare and consumer groups, including the California Medical Association, the National Health Law Program and AARP.

“We thought it was crucial that there be scrutiny that people, once covered, have access to the care that they were promised,” Wright said. “The conversation around Covered California narrow networks only made that more urgent.”

But the California Association of Health Plans, a trade group for health insurers, opposed the measure, arguing that there are already sufficient safeguards in place to ensure network adequacy. “We think this bill is redundant and unnecessary because of the existing surveys that are done by state regulators,” said Nicole Kasabian Evans, the association's vice president for communications.

The California Department of Finance, which is part of Democratic Gov. Jerry Brown's administration, opposed the bill on similar grounds. In a financial analysis, the agency warned that it could cause financial problems for the Medi-Cal program and would overlap with existing surveys designed to monitor timely access for patients.

The reporting requirement wasn't the only bill dealing with network adequacy considered during the legislative session, which ended on Saturday. Democratic Assemblyman Tom Ammiano put forth a bill that would have required insurers to cover procedures by out-of-network providers at no additional cost if care could not be accessed from in-network providers within a certain time frame. That legislation, which was also opposed by the health plans, passed the Assembly but didn't clear the Senate.

“Challenging inadequate networks is something that needs to be done, and it will take patients and health providers working together to make it happen,” said Ammiano, who is prohibited from seeking re-election because of term limits.

A spokesman for Brown said the governor's office would not comment on pending legislation. The governor has until the end of September to decide whether he will sign the network adequacy law.

“We believe that we're in good shape for him to sign it,” Wright said.

Follow Paul Demko on Twitter: @MHpdemko


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