Wednesday, January 9, 2019


Under the direction of Insurance Commissioner Dave Jones the Department of Insurance has adopted new regulations intended to implement the provisions of Assembly Bill 72 (Bonta). For the legislative wonks among us, that means that Chapter 492, Statutes of 2016, now govern how "surprise billing" will be done. 

That means that AB 72 which is supposed to protect us from high medical bills when we get care from out-of-network providers has new hurdles to implement. For review, an out-of-network provider may be the doctor your Medical Provider Network (MPN) calls in to provide care for you when the MPN does not have a particular provider's specialty in the MPN. That's when the out-of-network provider may bill more than the MPN's subscribers expect. As of 1 January 2019 there are new regulations, e.g., average contracted rates approved by the Office of Administrative Law (OAL).

Here's how it'll work: let's say you, as a subscriber to Blah Blah MPN, get sick and require specialized medical care not available in your provider network. That circumstance is the cue for the MPN to call in non-contracted physicians. Under this circumstance the non-contracted or out-of-network physician is allowed to bill more than would be allowed if the service were prescribed by an in-network physician. Sometimes a whole lot more! Therein lies the mighty consumer squawk!

Under the new law the out-of-network provider may charge 125% of Medicare or the average contracted rate for the particular geographic area involved, whichever is more. The new regulations per Insurance Commissioner Jones set up methodolgy for this calculation. The resulting figure is the "average contracted rate."

The idea is to standardize rates and avoid disputes. Rate adjustment to recognize inflation will be taken into account. 

At the same time insurance plans and MPNs will supposedly be obliged to have adequate networks of in-network physicians so that calling in out-of-network physicians will be minimized. In theory it'll be the obligation of the network to provide timely care via in-network contractors. That's where the real rub is -- the statement we have from the insurance commissioner says "insurers are required to maintain an adequate provider network to ensure timely access to care for their policyholders." The statement also says that "when patients are forced to go to out-of-network at an in-network facility, the patient should not have to pay more for their care and the providers should be reimbursed fairly (italics added)."

Aye, and there's the rub! The language we want to see in law on this matter should not say "should," it should say "shall." This one 
word would convert a wishy-washy statement into a firm statute. 

Under AB 72 we already have language to establish an Independent Dispute Resolution (IDR) mechanism. This item could be the vehicle that establishes fair and equitable reimbursement compliant with the aforementioned Chapter 492.

Governor Newsom has already signed an Executive Order that establishes a state-run purchasing program for prescription medications. Now it's time for follow-up. 

The Weinmann Report ( calls upon Governor Newsom to sign an executive order to require MPNs and insurance providers to be fully staffed with all specialties. Otherwise we've left a huge loophole open for provider networks to skimp on staffing and be obliged to use out-of-network providers. 

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