New Rules To Limit Narrow Networks

New regulations requiring California health care insurers to follow stricter guidelines for provider network adequacy, out-of-network notifications and accuracy of provider lists when dealing with the state Department of Insurance went into effect on Monday.

California Insurance Commissioner Dave Jones (D), who was re-elected in November, used the occasion of his Jan. 5 inauguration to file for the stronger set of regulations. The state Office of Administrative Law approved the new rules Friday.

Regulation of the state’s health care insurance market is bifurcated between the DOI and the Department of Managed Health Care. The new rules apply only to policies regulated by DOI.

“It’s fair to say this places new and stronger regulations on health insurers,” Jones said. In addition to the network adequacy and provider list accuracy provisions, the regulation also requires insurers to notify consumers ahead of time if any of their clinicians are not in-network.

“I believe this is one of the first regulations in the nation to address the surprise bill issue,” Jones said. “Some people have been led to believe that all of their clinicians were in-network, and then they receive a bill for services and that’s a big surprise.”

Since Jones’ new rules were proposed as emergency regulation, they go into effect immediately following OAL approval. The new regulations require insurers to:

  • Adhere to new standards for appointment wait times;
  • Offer an adequate number of physicians, clinics and hospitals to patients who live in certain areas;
  • Provide an accurate list of in-network providers;
  • Provide out-of-network care options for the same price as in-network care when the number of in-network providers is insufficient; and
  • Report to DOI information about their networks and any changes.

A bill before the Legislature this session seeks to codify a similar provision within that regulation for all health insurance plans in California. SB 137 by Sen. Ed Hernandez (D-West Covina) would require health plans and insurers to post accurate health care provider directories on their websites.

“Enforcing the list accuracy is pretty straightforward,” Jones said. “We intend to do periodic checks, and we also can receive consumer complaints if the spot checks don’t catch everything.”

Jones said the department also intends to monitor network adequacy for both timeliness and geographic access.

“We’ll use every mechanism at our disposal to hold them accountable,” Jones said.

The gains California has made to enroll more people into coverage through Medi-Cal expansion and Covered California is the first half of delivery of care, Jones said.

“We’ve all collectively focused a lot on a whole set of insurance market reforms over the last four years [to boost enrollment in health plans],” he said. “If there aren’t sufficient providers, then we’ve fallen short.”

Jones said health maintenance organizations have been reducing the number of providers in their networks over the past two years, and the introduction of EPOs — exclusive provider organizations — severely limits consumers from straying out of network.

“That only makes it more imperative that regulators hold them to standards. It’s even more critical for the network to be adequate,” Jones said. “As the health insurers and HMOs gravitate to narrow and more exclusive networks, what you’re getting is a defined set of providers and you can’t go elsewhere, so that makes it more important that the networks are adequate.”

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