On September 27, 2024, two new bills were signed into law that will have an impact on California health care service plans and health insurers by shortening deadlines and imposing new requirements for health care coverage and records review.
Assembly Bill 3221 (AB 3221) – Department of Managed Health Care: Review of Records
AB 3221 amends existing law with changes that reflect advancements in technology by requiring plans to provide electronic records in a searchable digital format. The bill also clarifies the enforcement authority of the Department of Managed Health Care (DMHC) including its ability to take administrative actions when health care service plans fail to comply with DMHC record requests.
Under existing law
- Records, books, and papers of a health care service plan are required to be open to inspection by the DMHC during normal business hours.
- The DMHC is required to periodically conduct an onsite review of each plan’s health delivery system and then publicly report the results no later than 180 days following completion with a final report to be issued after public review of the results.
- The DMHC is required to conduct a follow-up review to determine and report on the status of the plan’s efforts to correct deficiencies no later than 18 months following the final report’s release.
Effective January 1, 2025
- Records, books, and papers of a health care service plan are required to be open to inspection by the DMHC, including in an electronic and digitally searchable format, to the greatest extent feasible.
- Records, books, and papers requested by the DMHC are to be preserved until furnished.
- In response to the initial plan review, the DMHC may act before the follow-up review is initiated or completed, including, but not limited to, taking enforcement actions and opening further investigations.
- The DMHC is authorized to seek relief in an administrative law proceeding if a plan fails to fully or timely respond to a duly authorized request for production of records, books, and papers.
- The bill will impose a state-mandated local program as a willful violation of these requirements would be a crime.
Assembly Bill 3275 (AB 3275) – Health Care Coverage: Claim Reimbursement
AB 3275 amends, repeals and adds to existing laws that regulate deadlines for claims payment and fees for failure to timely adjudicate claims.
Under existing law
- Health insurers or health care service plans are required to reimburse a claim or portion of a claim no later than 30 working days after receipt of the claim.
- If a plan contests or denies the claim, the plan is required to notify the claimant within 30 working days that the claim is contested or denied.
- If a claim or portion thereof is contested on the basis that all information necessary to determine payer liability for the claim or portion thereof was not received and notice was provided, the health care service plan or insurer has 30 working days after receipt of the additional information to reevaluate the claim.
- These timelines are extended to 45 working days for a health maintenance organization (HMO).
- If a claim is not timely reimbursed, contested, or denied, interest will accrue at a rate of 15% per annum for a health care service plan and 10% per annum for a health insurer. An additional $10 fee is assessed if interest is not paid automatically.
Effective January 1, 2026
- AB 3275 will instead require a health care service plan, including HMOs and a Medi-Cal managed care plan, or health insurer to reimburse claims within 30 calendar days after receipt of the claim and no later than 30 calendar days after receiving additional information in response to a contested claim.
- If a plan contests or denies the claim, the plan is required to notify the claimant as soon as practicable but no later than 30 calendar days of receipt of the claim
- If a plan or insurer fails to automatically pay interest on a claim that is neither contested nor denied, then the greater of an additional $15 or a fee of 10% of the accrued interest is owed to the claimant.
- A complaint made by an enrollee to a plan about a delay or denial of a payment of a claim should be treated as a grievance handled through a plan’s established grievance process.
- The California Department of Insurance is authorized to issue related guidance and regulations that would be exempt from the Administrative Procedure Act until December 31, 2027. This means additional rules and guidance may be issued without having to go through a formal process that includes notice and commentary.
Sequoia will continue to monitor these new laws and provide updates as necessary.
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