The California Department of Managed Healthcare (DMHC) on March 21, 2022 issued an All Plan Letter with guidance to All Full-Service Commercial Health Care Service Plans clarifying the enforcement rules that apply between relevant, specified state laws, primarily AB72 and the Knox-Keene Act, and the Federal No Surprises Act (NSA).
Implementation of the Federal NSA in States
The NSA went into effect, beginning January 1, 2022, prohibiting the balance billing of patients for certain out-of-network medical services and limits the cost-sharing amount patients must pay for care. The implementation rules for the NSA acknowledge that some states, such as California, have already enacted laws to address surprise billing, patient cost-sharing obligations, provider reimbursements and payment dispute resolution procedures. As such, the NSA rules stipulate that generally, state-specific laws will preempt the federal NSA for fully insured plans, if certain requirements are met.
OON Non-Emergency Services or Elective Surgery in California
For non-emergency services, or elective surgery, performed by an out-of-network (or non-participating) provider at an in-network facility, California’s law AB72 will continue to apply and DMHC plans to issue further guidance regarding a patient’s consent to be balance billed. AB72 requires health plans to reimburse out-of-network providers at the greater of:
- the average contracted rate (ACR) or
- 125% of the Medicare reimbursement rate
AB72, like the NSA, limits a patient’s financial liability to the in-network cost-sharing amount.
OON Emergency Services in California
The existing state laws in California apply for emergency services and post-stabilization care, thus for out-of-network emergency services health plans must continue to comply with California’s AB72 and the Knox-Keene Act (that again limits patient cost-sharing to the in-network benefit level), determining provider reimbursements as stated above and handling payment disputes between insurance companies and providers.
For providers in California, state law will prevail for both emergency and non-emergency services. We will continue to monitor any changes concerning notice and consent rules that reportedly are forthcoming.