California Legislation Protects Consumers From Unfair Health Care Practices

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Governor Arnold Schwarzenegger has signed legislation to increase consumer protections by further limiting the unfair practice of "balance billing," an anti-consumer tactic that puts patients in the middle of payment disputes between health plans and health care providers. He has also signed legislation to prevent certain health insurance rescissions and to redirect funds collected from HMO fines to aid those having difficulty paying health care bills and obtaining health care coverage. The Governor signed these bills because of the urgent need to protect consumers from unfair health care billing and plan practices, but he continues to believe that health care reform must be comprehensive and that fixing California's broken health care system will require more than a piecemeal approach and incremental solutions, which was reflected in the majority of bills sent to his desk this year on the issue.

"By further limiting unfair balance billing practices that target low-income consumers and prohibiting rescission of an entire family's health insurance policy when one family member is found to have misrepresented their health history, this legislation will improve consumer protections against unfair health care practices," Governor Schwarzenegger said. "These deplorable practices further highlight the need to reform our broken health care system. Californians deserve a financially sustainable and comprehensive health care reform plan that promotes prevention, shares responsibility, covers all Californians, contains costs and keeps our emergency rooms open and operating."

SB 697 by Senator Leland Yee (D-San Francisco) will explicitly prohibit all health care providers from seeking additional payment from Healthy Families Program and Access for Infants and Mothers subscribers for covered health care benefits to supplement reimbursement received from health plans or insurers, a practice also known as balance billing. This practice is already prohibited for Medicare and Medi-Cal enrollees under existing federal and state laws.

Governor Schwarzenegger is committed to taking the consumer out of the middle of billing disputes between providers and health plans, and most recently, the Governor directed his Administration's Department of Managed Health Care (DMHC) to issue new regulations that makes balance billing, which is an anti-consumer tactic that puts patients in the middle of payment disputes between health plans and providers, an unfair billing practice. These regulations have been approved by the Office of Administrative Law and will take effect on October 15, 2008. In 2006, the Governor issued Executive Order S-13-06 to protect insured Californians from balance billing. In addition, the Governor's comprehensive health care reform proposal calls for an end to balance billing by all providers, whether or not it is an emergency service.

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Another measure to prevent surprise medical bills signed by the Governor is AB 1203 by Assemblymember Mary Salas (D-Chula Vista) which requires a non-contracting hospital to obtain information from a patient covered by a health care service plan and provide that information to the patient's health plan or contracting medical group following a medical emergency but prior to providing post-stabilization care. This bill prohibits the non-contracting hospital from billing the patient for post-stabilization care, except for applicable co-payments, co-insurance and deductible, unless the patient or the patient's spouse or guardian assumes financial responsibility for care, or the hospital is unable to obtain the health plan's name and contact information.

Further implementing important consumer protections, the Governor signed AB 2569 by Assemblymember Kevin De León (D-Los Angeles) which prohibits health plans and insurers from revoking an entire family's coverage based on misinformation from a single family member and requires the health plan or insurer to continue health care coverage for family members covered prior to the rescission. This bill would also place a duty on insurance agents and brokers to assist applicants in answering health questions completely and accurately, and explain to applicants the risks and potential consequences of not providing complete and accurate information.

In July, the Governor signed AB 1150 by Assemblymember Ted Lieu (D-Torrance) which bans health insurance companies from rewarding their employees for canceling or limiting a patient's health insurance. The Governor and Speaker Núñez also worked together to pass AB x1 1, the Health Care Security and Reduction Act. This bill would have required that all Californians take responsibility for their health coverage while guaranteeing that no Californian is rescinded and turned away from buying insurance based on their age or medical history.

As part of the Governor's commitment to covering Californians and stopping unfair health care rescissions, his DMHC has reached groundbreaking agreements with all of California's major health plans over the last six months where they've agreed to reinstate coverage to California consumers whose health care coverage had been rescinded.

The Governor also signed SB 1379 by Senator Denise Ducheny (D-San Diego), and as a result, the fines the DMHC collects from California's major health plans will now go into a pool to help some of the persons who have been denied health insurance due to pre-existing medical conditions and to encourage new physicians to practice in underserved areas. The bill transfers $10 million to the Major Risk Medical Insurance Program (MRMIP) for uninsurable persons and in addition transfers $1 million in fines to the Steven M. Thompson Physician Corps Loan Repayment Program (STPCLRP). In following years, the DMHC will annually transfer the first $1 million in fines to the STPCLRP and any additional fines to the MRMIP.

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