June 16, 2017


Final State Budget Has Hope for
Medi-Cal Supplemental Payments

The Legislature has adopted and sent to the Governor the 2017-18 state budget that includes some increases in spending for Medi-Cal physician payments. Last year the voters approved Prop 56 to increase the tax on a pack of cigarettes by $2 and dedicate a large portion of those funds to increasing reimbursement rates for physician and dentists. The new tax revenues should provide about $1 billion in new Medi-Cal funds. Though the initiative clearly stated that these funds could not be used to "supplant" existing Medi-Cal spending the Governor surprised most observers by taking those funds and backfilling other Medi-Cal expenses and providing no increases in Medi-Ca rates. The claim was that the restriction on use only applied to existing Medi-Cal expenses and those dollars could be used for other purposes in this and future budget years.
The Legislature pushed back in numerous budget hearings claiming that the Governor was subverting the will of the people. Finally a compromise was reached and incorporated into the final budget version sent to the Governor for signature. The final amounts of $325 M for doctors, $140M for dentists, and $55M for family planning services was much less then what both the Assembly and Senate had recommended.  It is conditioned upon federal approval and does allow for larger amounts in the fiscal year 2018-19 if state finances are solid. It is not yet clear how these supplemental payments will be calculated but the intent is to promote access to Medi-Cal patients and enhanced access by physicians increasing their Medi-Cal caseload. DHCS will issue those guidelines and CMA had proposed some specific recommendations. These will be supplemental payments and not adjustments to actual reimbursement rates. CRS will be involved in those discussions and we will communicate information as it becomes available.  

New Out of Network Billing Law Takes Effect on 7/1/17

AB 72 the new law on out of network billing will take effect for any services on or after 7/1/17. It does apply to policies renewed or issued on or after that date but if a provider is out of network it does set the rate of reimbursement by the plan. The interim payment amount for an out of network physician is now the greater of 125% of Medicare or the average contracted rate of the plan. The law does contain an Independent Dispute Resolution Process (IDRP) whereby a physician/group could appeal for a higher level of payment above the interim payment amount. Both the Department of Managed Health Care and the Department of Insurance will be establishing IDRPs which either a physician or plan could use with participation being mandatory and binding on the parties. The specifics of the IDRP process are not yet available. The IDRP will include a cost for use, allows providers to bundle claims and the decision can be appealed to a Court.
AB 72 does not apply to;
  • Medi-Cal
  • Medicare or Medicare Advantage Plans
  • ERISA plans
  • Out of State Health Plans
AB 72 does contain a mandatory assignment of benefits meaning that the out of network payment goes to the physician and not the patient.  Out of network providers can only bill the patient for applicable co-insurance and deductibles and must refund any overpayment. The plan will inform the provider of those amounts when the interim payment is provided. The current state law on plan requirements for timely processing of claims also apply to out of network claims. The bill does include some provisions to address the network adequacy requirements for plans that we believe contribute in large part to the out of network billing issue.   Plans will begin to report average contracted rates and also the incidence or volume of out of network billing in hospital settings. We encourage members to contact the CSP with any issues or problems they encounter.  

Bill to Fix Work Comp Issue for Physicians as
"Owners" Clears Senate

SB 189 (Bradford) is the CSP supported bill to fix a provision in law passed last year that made many pathologist owners in groups employees, thus subject to mandatory Work Comp coverage, unless they had at least a 15% ownership interest in the group. SB 189 would exempt from that ownership threshold if;
  • The individual is an owner of a professional corporation,
  • Is a practitioner rendering professional services
  • He or she executes a waiver indicating they are insured under a health plan
  • It remains effective until a notice of withdrawal is filed
SB 189 has passed the Senate and is awaiting hearing in the Assembly Insurance Committee. It is likely to take effect on 1/1/18 when signed by the Governor.  

CSP 70th Annual Meeting 

November 28 - December 2, 2017
Hyatt Regency San Francisco
5 Embarcadero Center, San Francisco, CA 94111


California Society of Pathologists
One Capitol Mall Suite 800
Sacramento, CA 95814 
Tel : 916-446-6001
Fax :  916-444-7462