Tomorrow, July 1, California begins the process of implementing AB 72, which was signed into law last year. We have included below a timeline of key dates and trigger points as the law takes effect. As you may recall, AB 72 was designed to protect patients from costs associated with out-of-network health services. The legislation caps a patient’s cost-sharing at the in-network amount when he or she receives services in an in-network facility by an out-of-network provider. It also requires that an interim payment be made to physicians, which could be challenged if either the provider or the insurer disagrees on that amount.
AB 72 applies to non-emergency services provided on or after July 1, 2017 and implements a series of changes:
- Prevents patients from paying more than the in-network amount for services if they were delivered in an in-network facility by an out-of-network provider.
- Establishes an Average Contracted Rate (ACR), determined by California’s insurance regulators, to be used when physicians and insurers do not agree on the rate for out-of-network services.
- Requires the payment for out-of-network services from an insurer to a physician to be the higher of the ACR or 125% of the Medicare rate.
- Establishes an Independent Dispute Resolution Process (IDRP) when physicians and insurers do not agree on the ACR payment.
The legislation only applies to individual or group insurance policies. It does not apply to Medicare, Medi-Cal, out-of-state plans, self-insured employer plans or other products regulated by federal law. A contracting health facility includes a licensed hospital, laboratory, radiology or imaging center, and an ambulatory surgery or other outpatient setting.
CSA has been working closely with the California Medical Association, the American Society of Anesthesiologists, the Department of Managed Health Care, and the Department of Insurance to implement AB 72 in a way that does not result in the creation of narrower networks and maintains a patient’s ability to receive services from an out-of-network provider if they so choose.
The timeline for implementation is as follows:
July 1, 2017
- Patients will no longer be liable for charges above the in-network cost-sharing amount for services obtained at an in-network facility from an out-of-network health provider.
- An interim ACR goes into effect. This interim rate is being determined by health insurers’ filings with regulators that will take into account the anesthesia conversion factor.
- For services subject to AB 72, the provider will receive the higher of the ACR or 125% of Medicare.
September 1, 2017
- The IDRP starts and physicians will be able to file with regulators to enter into a process for arbitration if the physician believes the ACR payment was insufficient or inappropriate.
October 2017-December 2018
- Insurance regulators will work with stakeholders to determine the default ACR as well as prepare other regulations.
January 1, 2019
- The default ACR goes into effect.
CSA was very engaged in the legislative process and continuously maintained that consumers should not be put in the middle of medical billing disputes that are created when insurers fail to create adequate networks. CSA leaders and lobbyists have been working tirelessly on this issue and continue to advocate for fair and adequate insurance networks so that patients have access to in-network, affordable care from the physicians and specialists they desire and deserve.
Please contact Bryce Docherty and Vanessa Cajina, CSA’s lobbyists, at (916) 448-2162 if you have questions or are having issues regarding this legislation.