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September 01, 2016 12:00 AM

Passage of California surprise-bill legislation could spur other states to act

Harris Meyer
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    California medical consumers will enjoy strong new protection against surprise out-of-network medical bills starting next July, under a hard-fought bill overwhelmingly approved by the state legislature this week. It's widely expected that Democratic Gov. Jerry Brown will sign it.

    Under the bipartisan bill, AB 72 (PDF), authored by Democratic Assemblyman Rob Bonta, patients who received care in in-network facilities would have to pay only in-network cost sharing. This would apply just to non-emergency care, since emergency physicians in California already are barred from balance billing patients. The bill's provisions would not apply, however, to self-insured employer health plans, which are shielded from state regulations by the federal Employee Retirement Income Security Act.

    Health plans would pay non-contracting physicians the plan's average contracted rate or 125% of the Medicare rate, whichever is greater. Doctors could appeal that through a binding independent dispute resolution process, which the state Department of Managed Health Care will establish.

    The bill, passed by the General Assembly on the last day of the legislative session after months of tough negotiations, also tightens requirements on health plans to offer adequate provider networks. A similar bill that would have paid out-of-network doctors 100% of Medicare rates failed last year.

    Florida enacted a similar law this year, joining New York, while Georgia and other states are studying the issue or considering legislation. Observers predicted the bipartisan passage of the California law would boost legislative efforts in other states.

    A recent Consumers Union survey found that one-quarter of Californians who had hospital visits or surgery in the past two years were charged an out-of-network rate when they thought their provider was in-network.

    Insurers and other payers faced pressure to come up with a legislative solution because shocker out-of-network bills have undermined public support for narrow-network health plans, which have become a primary method of keeping premiums affordable. But physician groups continued to hold out for freedom to refuse to join networks and balance bill when they think plans aren't offering adequate rates.

    Earlier this week, the California Medical Association adopted a neutral rather than an adversarial position on the bill while still expressing concerns about whether it would reduce patients' access to physician services. Groups representing plastic surgeons, cardiologists and anesthesiologists strongly opposed the bill. The California Hospital Association and the California Association of Health Plans did not declare a position.

    “We understand that these are some of strongest consumer protections in the nation,” said Anthony Wright, executive director of Health Access California, which pushed for the bill.

    Wright said there was an urgent need for this consumer protection because more lower-income people are buying insurance and they can't afford a large unexpected bill. “A surprise medical bill is not just an injustice but it's financial destabilizing,” he said. “If you're making $30,000 or $40,000 a year, a surprise bill of $2,000 is next month's rent.”

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