New CA Legislation on Surprise Medical Bills

A new California bill, AB 510 by Assemblymember Jim Wood, will strengthen California’s already historic protections against surprise medical bills. California’s AB 72 (2016) already protected most Californians from receiving costly medical bills for out-of-network care unknowingly received at an in-network facility. Congress recently passed the No Surprises Act, which fills in most of the gaps that remained. The No Surprises Act, which will go into effect January 1, 2022, will cover over 6 million Californians with coverage regulated at the federal level who were not protected under AB 72. While the state law is stronger in many areas, the new federal law includes some reforms that are even more consumer-friendly than state law. AB 510 will conform state law with federal law, particularly regarding a patients’ ability to consent to go out-of-network.

“Closing loopholes that allowed consumers to receive huge out-of-network surprise bills has only grown more urgent during this pandemic...Aligning state and federal law will codify powerful consumer protections and keep Californians from falling into traps that might lead to a costly bill,” said Yasmin Peled, policy and legislative advocate for Health Access California, a sponsor of AB 510.

Under the federal No Surprises Act, a patient can consent  72 hours in advance for care from certain types of out-of-network providers. However, this provision does not apply to emergency care or certain providers including anesthesiologists, radiologists, pathologists, neonatologists, or if there is no in-network doctor at the in-network hospital. Current California law allows consent only 24 hours in advance if given in writing and does not include any exemptions. AB 510 will adopt these stronger provisions that will reduce the number of potential out-of-network providers and give patients more time to consider their options when deciding whether or not to consent to out-of-network care.

California will retain one of the most important provisions of AB 72 ˗ its payment standard for out-of-network physicians. It’s better for consumers than what’s in the federal No Surprises Act. In California, the payment between physicians and insurers is the average contracted rate for providers in the region or 125 percent of Medicare’s rate. This payment standard prevents inflated rates that may occur under the new federal law while ensuring that providers are paid fairly. Providers or insurers can appeal through an independent dispute resolution process. 
 
The federal act does not include a benchmark payment standard like California’s but relies on voluntary negotiations between insurers and providers, backed by arbitration if negotiations fail. “We have absolutely no interest in changing California’s current payment structure because it provides the most effective patient protections and serves us well in controlling health care costs,” said Assemblymember Wood, author of AB 510.”