Last week, the California Department of Managed Health Care (DMHC) issued an All-Plan Letter (APL) stating that California case law and the Knox-Keene Health Care Service Plan Act of 1975 (the Knox-Keene Act) constitute “specified state laws” within the meaning of the No Surprises Act. DMHC’s interpretation of California law is a notable expansion of the scope of California specified state law identified in CMS’s letter published earlier this year. DMHC confirmed this interpretation with CMS and it is expected that CMS will issue an updated letter providing guidance on the interaction between the federal No Surprises Act and the expanded scope of California’s specified state laws.

The No Surprises Act limits a provider’s ability to balance bill consumers in certain nonemergency, emergency, and air ambulance situations and sets forth guidelines for enrollee cost-sharing, dispute resolution, and provider reimbursement. However, the No Surprises Act defers to states when the state has a “specified state law” that addresses the same topics. CMS has previously issued several state-specific letters detailing how certain provisions of the No Surprises Act interact with state law, including California law, where CMS indicated that California only had a state law that applied to non-emergency services provided by an out-of-network provider at an in-network facility.
In this recent APL, DMHC clarifies whether California has a specified state law in three situations: (1) a non-contracted provider providing non-emergency services at a contracted facility; (2) an out-of-network provider providing emergency services; and (3) a non-contracted provider providing air ambulance services.

NON-CONTRACTED PROVIDER PROVIDING NON-EMERGENCY SERVICES AT A CONTRACTED FACILITY

DMHC confirmed that the laws enacted by AB 72 are specified state laws that apply when a non-contracted provider provides non-emergency services at a contracted facility in California. Under AB 72, the out-of-network reimbursement rate must be greater than the average contracted rate or 125% of Medicare. The specified state law also limits the enrollee’s cost-sharing amount to his or her in-network rate. Furthermore, California’s definition of in-network facilities is broader than the No Surprises Act and encompasses not only hospitals and ambulatory surgery centers, but also radiology and imaging centers, and other outpatient centers. Provider-plan disputes governing these services are to be resolved using DMHC’s Independent Dispute Resolution Process instead of the federal No Surprises Act dispute resolution mechanism.

OUT-OF-NETWORK PROVIDER PROVIDING EMERGENCY SERVICES

DMHC states that California case law and Knox-Keene Act provisions governing balance billing enrollees for out-of-network emergency services including post-stabilization services are specified state laws. This means that DMHC-licensed plans must continue to comply with California laws regarding out-of-network balance billing, cost-sharing, dispute resolution, and provider reimbursement.

NON-CONTRACTED PROVIDER PROVIDING AIR AMBULANCE SERVICES

DMHC confirmed that California does not have a specified state law for non-contracted providers providing air ambulance services.

Other states are also broadening the scope of their current specified state laws and may be updating their submissions to CMS. With the rapidly changing movement in the state and federal landscape, providers should frequently check state and federal legislation and guidance.

The DMHC APL is available here.