A Closer Look AT AB 72 

A Closer Look AT AB 72 

AB 72 is new California state legislation aimed at reducing “surprise medical bills” for patients seen by out-of-network providers in in-network facilities. The legislation is designed to help patients avoid large medical bills they weren’t expecting or able to handle. The bill amends the Health and Safety Code of California law and goes into effect July 1, 2017. The full bill can be viewed here:

https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160AB72

What is the impact on out-of-network providers, though? It limits the ability of out-of-network providers to balance bill patients without an upfront agreement between the provider and the patient. It requires the insurance company to pay the physician at the payer’s average in-network rate or 125% of Medicare, whichever is greater. The legislation will create a binding independent dispute resolution process at some point in the future. The details on that are not yet established.

Providers who are out of network cannot bill or collect anything beyond the allowed amount, and cannot balance bill the patient beyond their deductible and coinsurance. The only exception is if the plan in question includes out of network benefits and the insured party agrees – in writing – to receive services from the out of network provider. This must be done at least 24 hours in advance of the treatment. The provider must also give a written estimate of the total amount that the insured party will be responsible for paying at the time they give consent.

It’s important to note that AB 72 only applies to nonemergency care – but this is because balance billing for emergency medical professionals has been illegal for years thanks to a previous law. Balance billing is also already prohibited in public coverage, which means that AB 72 applies to commercial coverage that is provided by HMOs and PPOs. It doesn’t apply to self-insured employer plans, worker’s compensation claims, auto accident plans, or to Medicaid and Medicare since these types of coverage don’t fall under state regulations.

While the legislation is specific about the rates providers will be paid, there is still plenty of ambiguity for the payers and the providers to fight over for some time to come. It will still be difficult for providers to know what plans are self-insured vs. commercial coverage. It doesn’t address to what extent out of network providers must conform to payer policies. That dispute resolution process is going to get a lot of use!!!

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