Amended IN Senate July 03, 2018 Amended IN Senate June 18, 2018 Amended IN Senate June 13, 2018 Amended IN Assembly May 26, 2017 CALIFORNIA LEGISLATURE 20172018 REGULAR SESSION Assembly Bill No. 1092Introduced by Assembly Member Cooley(Principal coauthor: Senator Nielsen)February 17, 2017 An act to amend Section 1371 of the Health and Safety Code, relating to health care service plans.LEGISLATIVE COUNSEL'S DIGESTAB 1092, as amended, Cooley. Health care service plans: vision care services: provider claims: fraud.Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care, and makes a willful violation of the act a crime. Existing law requires a health care service plan doing business in this state to establish an antifraud plan to organize and implement an antifraud strategy to identify and reduce costs, and to protect consumers through the timely detection, investigation, and prosecution of suspected fraud. Existing law specifies required elements of an antifraud plan and requires a health care service plan to annually submit a written report to the department director describing the plans efforts to deter, detect, and investigate fraud, and to report cases of fraud to a law enforcement agency.Existing law requires a health care service plan to reimburse a claim or portion of a claim no later than 30 working days after receipt of the claim, unless the plan contests or denies the claim, in which case the plan is required to notify the claimant within 30 working days that the claim is contested or denied. Existing law extends these timelines to 45 working days for a health maintenance organization. Existing law provides for the accrual of interest after these 30- and 45-day periods. Existing law requires a health care service plan or health maintenance organization to comply with additional timelines when a claim is reasonably contested.This bill would specify that a specialized health care service plan that undertakes solely to arrange for the provision of vision care services may use a statistically reliable method to investigate suspected fraud and to recover overpayments made as a result of fraud, under designated circumstances. The bill would require the health care service plans statistically reliable method, and how the plan intends to utilize that method to determine recovery of overpayments made as a result of fraud, to be submitted to, and approved by, the department as elements of the plans antifraud plan. The bill would specify procedures and timelines for a provider to contest a plans notice of suspected fraud or to request a hearing, and the circumstances under which a plan may offset the amount the plan disclosed as overpaid to the provider in an uncontested notice of suspected fraud against a providers current claim submissions. Because a violation of these provisions by a health care service plan would be a crime, this bill would impose a state-mandated local program.The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.This bill would provide that no reimbursement is required by this act for a specified reason.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES Bill TextThe people of the State of California do enact as follows:SECTION 1. Section 1371 of the Health and Safety Code is amended to read:1371. (a) (1) A health care service plan, including a specialized health care service plan, shall reimburse claims or a portion of a claim, whether in state or out of state, as soon as practicable, but no later than 30 working days after receipt of the claim by the health care service plan, or if the health care service plan is a health maintenance organization, 45 working days after receipt of the claim by the health care service plan, unless the claim or portion thereof is contested by the plan, in which case the claimant shall be notified, in writing, that the claim is contested or denied, within 30 working days after receipt of the claim by the health care service plan, or if the health care service plan is a health maintenance organization, 45 working days after receipt of the claim by the health care service plan. The notice that a claim is being contested shall identify the portion of the claim that is contested and the specific reasons for contesting the claim.(2) If an uncontested claim is not reimbursed by delivery to the claimants address of record within the respective 30 or 45 working days after receipt, interest shall accrue at the rate of 15 percent per annum beginning with the first calendar day after the 30- or 45-working-day period. A health care service plan shall automatically include in its payment of the claim all interest that has accrued pursuant to this section without requiring the claimant to submit a request for the interest amount. A plan failing to comply with this requirement shall pay the claimant a ten dollar ($10) fee.(3) For the purposes of this section, a claim, or portion thereof, is reasonably contested if the plan has not received the completed claim and all information necessary to determine payer liability for the claim, or has not been granted reasonable access to information concerning provider services. Information necessary to determine payer liability for the claim includes, but is not limited to, reports of investigations concerning fraud and misrepresentation, and necessary consents, releases, and assignments, a claim on appeal, or other information necessary for the plan to determine the medical necessity for the health care services provided.(4) If a claim or portion thereof is contested on the basis that the plan has not received all information necessary to determine payer liability for the claim or portion thereof and notice has been provided pursuant to this section, the plan shall have 30 working days or, if the health care service plan is a health maintenance organization, 45 working days after receipt of this additional information to complete reconsideration of the claim. If a plan has received all of the information necessary to determine payer liability for a contested claim and has not reimbursed a claim it has determined to be payable within 30 working days of the receipt of that information, or if the plan is a health maintenance organization, within 45 working days of receipt of that information, interest shall accrue and be payable at a rate of 15 percent per annum beginning with the first calendar day after the 30- or 45-working-day period.(b) Notwithstanding any other law, a specialized health care service plan that undertakes solely to arrange for the provision of vision care services may use a statistically reliable method to investigate suspected fraud and to recover overpayments made as a result of fraud only if all of the requirements of this subdivision are met. the specialized health care service plan complies with this subdivision.(1) A health care service plans statistically reliable method, and how the plan intends to utilize that method to determine recovery of overpayments made as a result of fraud, shall be submitted to, and approved by, the department as elements of the plans antifraud plan established and approved pursuant to Section 1348. The plans utilization of a statistically reliable method shall help protect and promote the interests of enrollees and shall help ensure a stable health care delivery system. The statistically reliable method shall be consistent with direction provided by the International Standards for the Professional Practice of Internal Auditing and the guidance provided by the International Professional Practices Framework guide, which are both produced by the Institute of Internal Auditors.(2) Pursuant to its antifraud plan established and approved pursuant to Section 1348, a health care service plan shall provide a written notice of suspected fraud to a provider that includes, at a minimum, all of the following:(A) A clear description of the plans statistically reliable methodology that ensures that the sample size used to calculate the repayment amount is consistent with the professional guidance provided in the 2009 edition of the American Institute of Certified Public Accountants Audit Sampling Considerations of Circular A-133 Compliance Audits.(B) A clear description of the universe of claims from which the statistical random sample was drawn and, if different, the universe of claims upon which the statistical analysis was applied to generate the recovery amount.(C) A clear explanation of how the plans statistically reliable methodology was utilized in the plans findings of suspected fraud.(D) Notice that a provider may dispute the plans findings within 45 working days from the date of receipt of the notice of suspected fraud.(E) The following information for each of the claims in the statistical sample that was utilized in the plans findings:(i) The claim number.(ii) The name of the patient.(iii) The date of service.(iv) The date of payment.(v) A clear explanation of the basis upon which the plan suspects the claim is fraudulent.(3) A health care service plan may use a statistically reliable method to recover overpayments made as a result of suspected fraud under this subdivision only if, for the universe of claims upon which the statistical analysis was performed to generate the stated recovery amount, the difference between the date of payment of the earliest-in-time claim in the universe of claims and the date of payment of the latest-in-time claim in the universe of claims does not exceed 365 days. A health care service plan may use a statistically reliable method to recover overpayments made as a result of suspected fraud for a consecutive 365-day universe of claims period only if each individual period for recovering overpayments is no longer than the 365 days specified in this paragraph, the total time is consistent with the current statute of limitation for fraud, and each period independently complies with the requirements of this subdivision.(4) (A)If the provider contests the health care service plans notice of suspected fraud, the provider, within 45 working days of the date of receipt of the notice of suspected fraud, shall do one of the following:(i)(A) Send written notice to the plan stating the basis upon which the provider believes that the claims are not fraudulent. The plan shall receive and process this contested notice of suspected fraud as a provider dispute pursuant to subdivision (a), paragraph (1) of subdivision (h) of Section 1367, and the regulations promulgated thereunder.(ii)(B) Send a written request to the plan for an in-person hearing before a panel of peers. A plan may establish a timeline and procedure that provides for an informal hearing before a panel of peers and a de novo review of a determination through binding arbitration before a single neutral arbitrator pursuant to Section 1348.(B)A timeline and procedure developed pursuant to this paragraph shall be exempt from the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340), Chapter 4 (commencing with Section 11370), and Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code), and shall not be subject to the review and approval of the Office of Administrative Law.(5) A health care service plan may offset the amount the plan disclosed as overpaid to the provider in an uncontested notice of suspected fraud against the providers current claim submissions only if all of the following requirements are met:(A) The provider fails to reimburse the plan within 45 working days from the date of receipt by the provider of the notice of suspected fraud.(B) The plan sends written notice to the provider no less than 10 working days prior to withholding current claim payments in which the plan, at a minimum, states its intent to withhold current claim payments and identifies the claim payments that the plan intends to withhold.(C) The withheld claim payments do not exceed the amount asserted by the plan to be owed to the plan in its notice of suspected fraud.(6) This section does not limit or remove a health care service plans obligation to comply with its antifraud plan established pursuant to Section 1348, or to limit or remove the plans obligation to comply with the requirements for claims subject to subdivision (a).(c) The obligation of a health care service plan to comply with this section is not waived when the plan requires its medical groups, independent practice associations, or other contracting entities to pay claims for covered services.SEC. 2. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
Amended IN Senate July 03, 2018 Amended IN Senate June 18, 2018 Amended IN Senate June 13, 2018 Amended IN Assembly May 26, 2017 CALIFORNIA LEGISLATURE 20172018 REGULAR SESSION Assembly Bill No. 1092Introduced by Assembly Member Cooley(Principal coauthor: Senator Nielsen)February 17, 2017 An act to amend Section 1371 of the Health and Safety Code, relating to health care service plans.LEGISLATIVE COUNSEL'S DIGESTAB 1092, as amended, Cooley. Health care service plans: vision care services: provider claims: fraud.Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care, and makes a willful violation of the act a crime. Existing law requires a health care service plan doing business in this state to establish an antifraud plan to organize and implement an antifraud strategy to identify and reduce costs, and to protect consumers through the timely detection, investigation, and prosecution of suspected fraud. Existing law specifies required elements of an antifraud plan and requires a health care service plan to annually submit a written report to the department director describing the plans efforts to deter, detect, and investigate fraud, and to report cases of fraud to a law enforcement agency.Existing law requires a health care service plan to reimburse a claim or portion of a claim no later than 30 working days after receipt of the claim, unless the plan contests or denies the claim, in which case the plan is required to notify the claimant within 30 working days that the claim is contested or denied. Existing law extends these timelines to 45 working days for a health maintenance organization. Existing law provides for the accrual of interest after these 30- and 45-day periods. Existing law requires a health care service plan or health maintenance organization to comply with additional timelines when a claim is reasonably contested.This bill would specify that a specialized health care service plan that undertakes solely to arrange for the provision of vision care services may use a statistically reliable method to investigate suspected fraud and to recover overpayments made as a result of fraud, under designated circumstances. The bill would require the health care service plans statistically reliable method, and how the plan intends to utilize that method to determine recovery of overpayments made as a result of fraud, to be submitted to, and approved by, the department as elements of the plans antifraud plan. The bill would specify procedures and timelines for a provider to contest a plans notice of suspected fraud or to request a hearing, and the circumstances under which a plan may offset the amount the plan disclosed as overpaid to the provider in an uncontested notice of suspected fraud against a providers current claim submissions. Because a violation of these provisions by a health care service plan would be a crime, this bill would impose a state-mandated local program.The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.This bill would provide that no reimbursement is required by this act for a specified reason.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES
Amended IN Senate July 03, 2018 Amended IN Senate June 18, 2018 Amended IN Senate June 13, 2018 Amended IN Assembly May 26, 2017
Amended IN Senate July 03, 2018
Amended IN Senate June 18, 2018
Amended IN Senate June 13, 2018
Amended IN Assembly May 26, 2017
CALIFORNIA LEGISLATURE 20172018 REGULAR SESSION
Assembly Bill No. 1092
Introduced by Assembly Member Cooley(Principal coauthor: Senator Nielsen)February 17, 2017
Introduced by Assembly Member Cooley(Principal coauthor: Senator Nielsen)
February 17, 2017
An act to amend Section 1371 of the Health and Safety Code, relating to health care service plans.
LEGISLATIVE COUNSEL'S DIGEST
## LEGISLATIVE COUNSEL'S DIGEST
AB 1092, as amended, Cooley. Health care service plans: vision care services: provider claims: fraud.
Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care, and makes a willful violation of the act a crime. Existing law requires a health care service plan doing business in this state to establish an antifraud plan to organize and implement an antifraud strategy to identify and reduce costs, and to protect consumers through the timely detection, investigation, and prosecution of suspected fraud. Existing law specifies required elements of an antifraud plan and requires a health care service plan to annually submit a written report to the department director describing the plans efforts to deter, detect, and investigate fraud, and to report cases of fraud to a law enforcement agency.Existing law requires a health care service plan to reimburse a claim or portion of a claim no later than 30 working days after receipt of the claim, unless the plan contests or denies the claim, in which case the plan is required to notify the claimant within 30 working days that the claim is contested or denied. Existing law extends these timelines to 45 working days for a health maintenance organization. Existing law provides for the accrual of interest after these 30- and 45-day periods. Existing law requires a health care service plan or health maintenance organization to comply with additional timelines when a claim is reasonably contested.This bill would specify that a specialized health care service plan that undertakes solely to arrange for the provision of vision care services may use a statistically reliable method to investigate suspected fraud and to recover overpayments made as a result of fraud, under designated circumstances. The bill would require the health care service plans statistically reliable method, and how the plan intends to utilize that method to determine recovery of overpayments made as a result of fraud, to be submitted to, and approved by, the department as elements of the plans antifraud plan. The bill would specify procedures and timelines for a provider to contest a plans notice of suspected fraud or to request a hearing, and the circumstances under which a plan may offset the amount the plan disclosed as overpaid to the provider in an uncontested notice of suspected fraud against a providers current claim submissions. Because a violation of these provisions by a health care service plan would be a crime, this bill would impose a state-mandated local program.The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care, and makes a willful violation of the act a crime. Existing law requires a health care service plan doing business in this state to establish an antifraud plan to organize and implement an antifraud strategy to identify and reduce costs, and to protect consumers through the timely detection, investigation, and prosecution of suspected fraud. Existing law specifies required elements of an antifraud plan and requires a health care service plan to annually submit a written report to the department director describing the plans efforts to deter, detect, and investigate fraud, and to report cases of fraud to a law enforcement agency.
Existing law requires a health care service plan to reimburse a claim or portion of a claim no later than 30 working days after receipt of the claim, unless the plan contests or denies the claim, in which case the plan is required to notify the claimant within 30 working days that the claim is contested or denied. Existing law extends these timelines to 45 working days for a health maintenance organization. Existing law provides for the accrual of interest after these 30- and 45-day periods. Existing law requires a health care service plan or health maintenance organization to comply with additional timelines when a claim is reasonably contested.
This bill would specify that a specialized health care service plan that undertakes solely to arrange for the provision of vision care services may use a statistically reliable method to investigate suspected fraud and to recover overpayments made as a result of fraud, under designated circumstances. The bill would require the health care service plans statistically reliable method, and how the plan intends to utilize that method to determine recovery of overpayments made as a result of fraud, to be submitted to, and approved by, the department as elements of the plans antifraud plan. The bill would specify procedures and timelines for a provider to contest a plans notice of suspected fraud or to request a hearing, and the circumstances under which a plan may offset the amount the plan disclosed as overpaid to the provider in an uncontested notice of suspected fraud against a providers current claim submissions. Because a violation of these provisions by a health care service plan would be a crime, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
## Digest Key
## Bill Text
The people of the State of California do enact as follows:SECTION 1. Section 1371 of the Health and Safety Code is amended to read:1371. (a) (1) A health care service plan, including a specialized health care service plan, shall reimburse claims or a portion of a claim, whether in state or out of state, as soon as practicable, but no later than 30 working days after receipt of the claim by the health care service plan, or if the health care service plan is a health maintenance organization, 45 working days after receipt of the claim by the health care service plan, unless the claim or portion thereof is contested by the plan, in which case the claimant shall be notified, in writing, that the claim is contested or denied, within 30 working days after receipt of the claim by the health care service plan, or if the health care service plan is a health maintenance organization, 45 working days after receipt of the claim by the health care service plan. The notice that a claim is being contested shall identify the portion of the claim that is contested and the specific reasons for contesting the claim.(2) If an uncontested claim is not reimbursed by delivery to the claimants address of record within the respective 30 or 45 working days after receipt, interest shall accrue at the rate of 15 percent per annum beginning with the first calendar day after the 30- or 45-working-day period. A health care service plan shall automatically include in its payment of the claim all interest that has accrued pursuant to this section without requiring the claimant to submit a request for the interest amount. A plan failing to comply with this requirement shall pay the claimant a ten dollar ($10) fee.(3) For the purposes of this section, a claim, or portion thereof, is reasonably contested if the plan has not received the completed claim and all information necessary to determine payer liability for the claim, or has not been granted reasonable access to information concerning provider services. Information necessary to determine payer liability for the claim includes, but is not limited to, reports of investigations concerning fraud and misrepresentation, and necessary consents, releases, and assignments, a claim on appeal, or other information necessary for the plan to determine the medical necessity for the health care services provided.(4) If a claim or portion thereof is contested on the basis that the plan has not received all information necessary to determine payer liability for the claim or portion thereof and notice has been provided pursuant to this section, the plan shall have 30 working days or, if the health care service plan is a health maintenance organization, 45 working days after receipt of this additional information to complete reconsideration of the claim. If a plan has received all of the information necessary to determine payer liability for a contested claim and has not reimbursed a claim it has determined to be payable within 30 working days of the receipt of that information, or if the plan is a health maintenance organization, within 45 working days of receipt of that information, interest shall accrue and be payable at a rate of 15 percent per annum beginning with the first calendar day after the 30- or 45-working-day period.(b) Notwithstanding any other law, a specialized health care service plan that undertakes solely to arrange for the provision of vision care services may use a statistically reliable method to investigate suspected fraud and to recover overpayments made as a result of fraud only if all of the requirements of this subdivision are met. the specialized health care service plan complies with this subdivision.(1) A health care service plans statistically reliable method, and how the plan intends to utilize that method to determine recovery of overpayments made as a result of fraud, shall be submitted to, and approved by, the department as elements of the plans antifraud plan established and approved pursuant to Section 1348. The plans utilization of a statistically reliable method shall help protect and promote the interests of enrollees and shall help ensure a stable health care delivery system. The statistically reliable method shall be consistent with direction provided by the International Standards for the Professional Practice of Internal Auditing and the guidance provided by the International Professional Practices Framework guide, which are both produced by the Institute of Internal Auditors.(2) Pursuant to its antifraud plan established and approved pursuant to Section 1348, a health care service plan shall provide a written notice of suspected fraud to a provider that includes, at a minimum, all of the following:(A) A clear description of the plans statistically reliable methodology that ensures that the sample size used to calculate the repayment amount is consistent with the professional guidance provided in the 2009 edition of the American Institute of Certified Public Accountants Audit Sampling Considerations of Circular A-133 Compliance Audits.(B) A clear description of the universe of claims from which the statistical random sample was drawn and, if different, the universe of claims upon which the statistical analysis was applied to generate the recovery amount.(C) A clear explanation of how the plans statistically reliable methodology was utilized in the plans findings of suspected fraud.(D) Notice that a provider may dispute the plans findings within 45 working days from the date of receipt of the notice of suspected fraud.(E) The following information for each of the claims in the statistical sample that was utilized in the plans findings:(i) The claim number.(ii) The name of the patient.(iii) The date of service.(iv) The date of payment.(v) A clear explanation of the basis upon which the plan suspects the claim is fraudulent.(3) A health care service plan may use a statistically reliable method to recover overpayments made as a result of suspected fraud under this subdivision only if, for the universe of claims upon which the statistical analysis was performed to generate the stated recovery amount, the difference between the date of payment of the earliest-in-time claim in the universe of claims and the date of payment of the latest-in-time claim in the universe of claims does not exceed 365 days. A health care service plan may use a statistically reliable method to recover overpayments made as a result of suspected fraud for a consecutive 365-day universe of claims period only if each individual period for recovering overpayments is no longer than the 365 days specified in this paragraph, the total time is consistent with the current statute of limitation for fraud, and each period independently complies with the requirements of this subdivision.(4) (A)If the provider contests the health care service plans notice of suspected fraud, the provider, within 45 working days of the date of receipt of the notice of suspected fraud, shall do one of the following:(i)(A) Send written notice to the plan stating the basis upon which the provider believes that the claims are not fraudulent. The plan shall receive and process this contested notice of suspected fraud as a provider dispute pursuant to subdivision (a), paragraph (1) of subdivision (h) of Section 1367, and the regulations promulgated thereunder.(ii)(B) Send a written request to the plan for an in-person hearing before a panel of peers. A plan may establish a timeline and procedure that provides for an informal hearing before a panel of peers and a de novo review of a determination through binding arbitration before a single neutral arbitrator pursuant to Section 1348.(B)A timeline and procedure developed pursuant to this paragraph shall be exempt from the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340), Chapter 4 (commencing with Section 11370), and Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code), and shall not be subject to the review and approval of the Office of Administrative Law.(5) A health care service plan may offset the amount the plan disclosed as overpaid to the provider in an uncontested notice of suspected fraud against the providers current claim submissions only if all of the following requirements are met:(A) The provider fails to reimburse the plan within 45 working days from the date of receipt by the provider of the notice of suspected fraud.(B) The plan sends written notice to the provider no less than 10 working days prior to withholding current claim payments in which the plan, at a minimum, states its intent to withhold current claim payments and identifies the claim payments that the plan intends to withhold.(C) The withheld claim payments do not exceed the amount asserted by the plan to be owed to the plan in its notice of suspected fraud.(6) This section does not limit or remove a health care service plans obligation to comply with its antifraud plan established pursuant to Section 1348, or to limit or remove the plans obligation to comply with the requirements for claims subject to subdivision (a).(c) The obligation of a health care service plan to comply with this section is not waived when the plan requires its medical groups, independent practice associations, or other contracting entities to pay claims for covered services.SEC. 2. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
The people of the State of California do enact as follows:
## The people of the State of California do enact as follows:
SECTION 1. Section 1371 of the Health and Safety Code is amended to read:1371. (a) (1) A health care service plan, including a specialized health care service plan, shall reimburse claims or a portion of a claim, whether in state or out of state, as soon as practicable, but no later than 30 working days after receipt of the claim by the health care service plan, or if the health care service plan is a health maintenance organization, 45 working days after receipt of the claim by the health care service plan, unless the claim or portion thereof is contested by the plan, in which case the claimant shall be notified, in writing, that the claim is contested or denied, within 30 working days after receipt of the claim by the health care service plan, or if the health care service plan is a health maintenance organization, 45 working days after receipt of the claim by the health care service plan. The notice that a claim is being contested shall identify the portion of the claim that is contested and the specific reasons for contesting the claim.(2) If an uncontested claim is not reimbursed by delivery to the claimants address of record within the respective 30 or 45 working days after receipt, interest shall accrue at the rate of 15 percent per annum beginning with the first calendar day after the 30- or 45-working-day period. A health care service plan shall automatically include in its payment of the claim all interest that has accrued pursuant to this section without requiring the claimant to submit a request for the interest amount. A plan failing to comply with this requirement shall pay the claimant a ten dollar ($10) fee.(3) For the purposes of this section, a claim, or portion thereof, is reasonably contested if the plan has not received the completed claim and all information necessary to determine payer liability for the claim, or has not been granted reasonable access to information concerning provider services. Information necessary to determine payer liability for the claim includes, but is not limited to, reports of investigations concerning fraud and misrepresentation, and necessary consents, releases, and assignments, a claim on appeal, or other information necessary for the plan to determine the medical necessity for the health care services provided.(4) If a claim or portion thereof is contested on the basis that the plan has not received all information necessary to determine payer liability for the claim or portion thereof and notice has been provided pursuant to this section, the plan shall have 30 working days or, if the health care service plan is a health maintenance organization, 45 working days after receipt of this additional information to complete reconsideration of the claim. If a plan has received all of the information necessary to determine payer liability for a contested claim and has not reimbursed a claim it has determined to be payable within 30 working days of the receipt of that information, or if the plan is a health maintenance organization, within 45 working days of receipt of that information, interest shall accrue and be payable at a rate of 15 percent per annum beginning with the first calendar day after the 30- or 45-working-day period.(b) Notwithstanding any other law, a specialized health care service plan that undertakes solely to arrange for the provision of vision care services may use a statistically reliable method to investigate suspected fraud and to recover overpayments made as a result of fraud only if all of the requirements of this subdivision are met. the specialized health care service plan complies with this subdivision.(1) A health care service plans statistically reliable method, and how the plan intends to utilize that method to determine recovery of overpayments made as a result of fraud, shall be submitted to, and approved by, the department as elements of the plans antifraud plan established and approved pursuant to Section 1348. The plans utilization of a statistically reliable method shall help protect and promote the interests of enrollees and shall help ensure a stable health care delivery system. The statistically reliable method shall be consistent with direction provided by the International Standards for the Professional Practice of Internal Auditing and the guidance provided by the International Professional Practices Framework guide, which are both produced by the Institute of Internal Auditors.(2) Pursuant to its antifraud plan established and approved pursuant to Section 1348, a health care service plan shall provide a written notice of suspected fraud to a provider that includes, at a minimum, all of the following:(A) A clear description of the plans statistically reliable methodology that ensures that the sample size used to calculate the repayment amount is consistent with the professional guidance provided in the 2009 edition of the American Institute of Certified Public Accountants Audit Sampling Considerations of Circular A-133 Compliance Audits.(B) A clear description of the universe of claims from which the statistical random sample was drawn and, if different, the universe of claims upon which the statistical analysis was applied to generate the recovery amount.(C) A clear explanation of how the plans statistically reliable methodology was utilized in the plans findings of suspected fraud.(D) Notice that a provider may dispute the plans findings within 45 working days from the date of receipt of the notice of suspected fraud.(E) The following information for each of the claims in the statistical sample that was utilized in the plans findings:(i) The claim number.(ii) The name of the patient.(iii) The date of service.(iv) The date of payment.(v) A clear explanation of the basis upon which the plan suspects the claim is fraudulent.(3) A health care service plan may use a statistically reliable method to recover overpayments made as a result of suspected fraud under this subdivision only if, for the universe of claims upon which the statistical analysis was performed to generate the stated recovery amount, the difference between the date of payment of the earliest-in-time claim in the universe of claims and the date of payment of the latest-in-time claim in the universe of claims does not exceed 365 days. A health care service plan may use a statistically reliable method to recover overpayments made as a result of suspected fraud for a consecutive 365-day universe of claims period only if each individual period for recovering overpayments is no longer than the 365 days specified in this paragraph, the total time is consistent with the current statute of limitation for fraud, and each period independently complies with the requirements of this subdivision.(4) (A)If the provider contests the health care service plans notice of suspected fraud, the provider, within 45 working days of the date of receipt of the notice of suspected fraud, shall do one of the following:(i)(A) Send written notice to the plan stating the basis upon which the provider believes that the claims are not fraudulent. The plan shall receive and process this contested notice of suspected fraud as a provider dispute pursuant to subdivision (a), paragraph (1) of subdivision (h) of Section 1367, and the regulations promulgated thereunder.(ii)(B) Send a written request to the plan for an in-person hearing before a panel of peers. A plan may establish a timeline and procedure that provides for an informal hearing before a panel of peers and a de novo review of a determination through binding arbitration before a single neutral arbitrator pursuant to Section 1348.(B)A timeline and procedure developed pursuant to this paragraph shall be exempt from the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340), Chapter 4 (commencing with Section 11370), and Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code), and shall not be subject to the review and approval of the Office of Administrative Law.(5) A health care service plan may offset the amount the plan disclosed as overpaid to the provider in an uncontested notice of suspected fraud against the providers current claim submissions only if all of the following requirements are met:(A) The provider fails to reimburse the plan within 45 working days from the date of receipt by the provider of the notice of suspected fraud.(B) The plan sends written notice to the provider no less than 10 working days prior to withholding current claim payments in which the plan, at a minimum, states its intent to withhold current claim payments and identifies the claim payments that the plan intends to withhold.(C) The withheld claim payments do not exceed the amount asserted by the plan to be owed to the plan in its notice of suspected fraud.(6) This section does not limit or remove a health care service plans obligation to comply with its antifraud plan established pursuant to Section 1348, or to limit or remove the plans obligation to comply with the requirements for claims subject to subdivision (a).(c) The obligation of a health care service plan to comply with this section is not waived when the plan requires its medical groups, independent practice associations, or other contracting entities to pay claims for covered services.
SECTION 1. Section 1371 of the Health and Safety Code is amended to read:
### SECTION 1.
1371. (a) (1) A health care service plan, including a specialized health care service plan, shall reimburse claims or a portion of a claim, whether in state or out of state, as soon as practicable, but no later than 30 working days after receipt of the claim by the health care service plan, or if the health care service plan is a health maintenance organization, 45 working days after receipt of the claim by the health care service plan, unless the claim or portion thereof is contested by the plan, in which case the claimant shall be notified, in writing, that the claim is contested or denied, within 30 working days after receipt of the claim by the health care service plan, or if the health care service plan is a health maintenance organization, 45 working days after receipt of the claim by the health care service plan. The notice that a claim is being contested shall identify the portion of the claim that is contested and the specific reasons for contesting the claim.(2) If an uncontested claim is not reimbursed by delivery to the claimants address of record within the respective 30 or 45 working days after receipt, interest shall accrue at the rate of 15 percent per annum beginning with the first calendar day after the 30- or 45-working-day period. A health care service plan shall automatically include in its payment of the claim all interest that has accrued pursuant to this section without requiring the claimant to submit a request for the interest amount. A plan failing to comply with this requirement shall pay the claimant a ten dollar ($10) fee.(3) For the purposes of this section, a claim, or portion thereof, is reasonably contested if the plan has not received the completed claim and all information necessary to determine payer liability for the claim, or has not been granted reasonable access to information concerning provider services. Information necessary to determine payer liability for the claim includes, but is not limited to, reports of investigations concerning fraud and misrepresentation, and necessary consents, releases, and assignments, a claim on appeal, or other information necessary for the plan to determine the medical necessity for the health care services provided.(4) If a claim or portion thereof is contested on the basis that the plan has not received all information necessary to determine payer liability for the claim or portion thereof and notice has been provided pursuant to this section, the plan shall have 30 working days or, if the health care service plan is a health maintenance organization, 45 working days after receipt of this additional information to complete reconsideration of the claim. If a plan has received all of the information necessary to determine payer liability for a contested claim and has not reimbursed a claim it has determined to be payable within 30 working days of the receipt of that information, or if the plan is a health maintenance organization, within 45 working days of receipt of that information, interest shall accrue and be payable at a rate of 15 percent per annum beginning with the first calendar day after the 30- or 45-working-day period.(b) Notwithstanding any other law, a specialized health care service plan that undertakes solely to arrange for the provision of vision care services may use a statistically reliable method to investigate suspected fraud and to recover overpayments made as a result of fraud only if all of the requirements of this subdivision are met. the specialized health care service plan complies with this subdivision.(1) A health care service plans statistically reliable method, and how the plan intends to utilize that method to determine recovery of overpayments made as a result of fraud, shall be submitted to, and approved by, the department as elements of the plans antifraud plan established and approved pursuant to Section 1348. The plans utilization of a statistically reliable method shall help protect and promote the interests of enrollees and shall help ensure a stable health care delivery system. The statistically reliable method shall be consistent with direction provided by the International Standards for the Professional Practice of Internal Auditing and the guidance provided by the International Professional Practices Framework guide, which are both produced by the Institute of Internal Auditors.(2) Pursuant to its antifraud plan established and approved pursuant to Section 1348, a health care service plan shall provide a written notice of suspected fraud to a provider that includes, at a minimum, all of the following:(A) A clear description of the plans statistically reliable methodology that ensures that the sample size used to calculate the repayment amount is consistent with the professional guidance provided in the 2009 edition of the American Institute of Certified Public Accountants Audit Sampling Considerations of Circular A-133 Compliance Audits.(B) A clear description of the universe of claims from which the statistical random sample was drawn and, if different, the universe of claims upon which the statistical analysis was applied to generate the recovery amount.(C) A clear explanation of how the plans statistically reliable methodology was utilized in the plans findings of suspected fraud.(D) Notice that a provider may dispute the plans findings within 45 working days from the date of receipt of the notice of suspected fraud.(E) The following information for each of the claims in the statistical sample that was utilized in the plans findings:(i) The claim number.(ii) The name of the patient.(iii) The date of service.(iv) The date of payment.(v) A clear explanation of the basis upon which the plan suspects the claim is fraudulent.(3) A health care service plan may use a statistically reliable method to recover overpayments made as a result of suspected fraud under this subdivision only if, for the universe of claims upon which the statistical analysis was performed to generate the stated recovery amount, the difference between the date of payment of the earliest-in-time claim in the universe of claims and the date of payment of the latest-in-time claim in the universe of claims does not exceed 365 days. A health care service plan may use a statistically reliable method to recover overpayments made as a result of suspected fraud for a consecutive 365-day universe of claims period only if each individual period for recovering overpayments is no longer than the 365 days specified in this paragraph, the total time is consistent with the current statute of limitation for fraud, and each period independently complies with the requirements of this subdivision.(4) (A)If the provider contests the health care service plans notice of suspected fraud, the provider, within 45 working days of the date of receipt of the notice of suspected fraud, shall do one of the following:(i)(A) Send written notice to the plan stating the basis upon which the provider believes that the claims are not fraudulent. The plan shall receive and process this contested notice of suspected fraud as a provider dispute pursuant to subdivision (a), paragraph (1) of subdivision (h) of Section 1367, and the regulations promulgated thereunder.(ii)(B) Send a written request to the plan for an in-person hearing before a panel of peers. A plan may establish a timeline and procedure that provides for an informal hearing before a panel of peers and a de novo review of a determination through binding arbitration before a single neutral arbitrator pursuant to Section 1348.(B)A timeline and procedure developed pursuant to this paragraph shall be exempt from the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340), Chapter 4 (commencing with Section 11370), and Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code), and shall not be subject to the review and approval of the Office of Administrative Law.(5) A health care service plan may offset the amount the plan disclosed as overpaid to the provider in an uncontested notice of suspected fraud against the providers current claim submissions only if all of the following requirements are met:(A) The provider fails to reimburse the plan within 45 working days from the date of receipt by the provider of the notice of suspected fraud.(B) The plan sends written notice to the provider no less than 10 working days prior to withholding current claim payments in which the plan, at a minimum, states its intent to withhold current claim payments and identifies the claim payments that the plan intends to withhold.(C) The withheld claim payments do not exceed the amount asserted by the plan to be owed to the plan in its notice of suspected fraud.(6) This section does not limit or remove a health care service plans obligation to comply with its antifraud plan established pursuant to Section 1348, or to limit or remove the plans obligation to comply with the requirements for claims subject to subdivision (a).(c) The obligation of a health care service plan to comply with this section is not waived when the plan requires its medical groups, independent practice associations, or other contracting entities to pay claims for covered services.
1371. (a) (1) A health care service plan, including a specialized health care service plan, shall reimburse claims or a portion of a claim, whether in state or out of state, as soon as practicable, but no later than 30 working days after receipt of the claim by the health care service plan, or if the health care service plan is a health maintenance organization, 45 working days after receipt of the claim by the health care service plan, unless the claim or portion thereof is contested by the plan, in which case the claimant shall be notified, in writing, that the claim is contested or denied, within 30 working days after receipt of the claim by the health care service plan, or if the health care service plan is a health maintenance organization, 45 working days after receipt of the claim by the health care service plan. The notice that a claim is being contested shall identify the portion of the claim that is contested and the specific reasons for contesting the claim.(2) If an uncontested claim is not reimbursed by delivery to the claimants address of record within the respective 30 or 45 working days after receipt, interest shall accrue at the rate of 15 percent per annum beginning with the first calendar day after the 30- or 45-working-day period. A health care service plan shall automatically include in its payment of the claim all interest that has accrued pursuant to this section without requiring the claimant to submit a request for the interest amount. A plan failing to comply with this requirement shall pay the claimant a ten dollar ($10) fee.(3) For the purposes of this section, a claim, or portion thereof, is reasonably contested if the plan has not received the completed claim and all information necessary to determine payer liability for the claim, or has not been granted reasonable access to information concerning provider services. Information necessary to determine payer liability for the claim includes, but is not limited to, reports of investigations concerning fraud and misrepresentation, and necessary consents, releases, and assignments, a claim on appeal, or other information necessary for the plan to determine the medical necessity for the health care services provided.(4) If a claim or portion thereof is contested on the basis that the plan has not received all information necessary to determine payer liability for the claim or portion thereof and notice has been provided pursuant to this section, the plan shall have 30 working days or, if the health care service plan is a health maintenance organization, 45 working days after receipt of this additional information to complete reconsideration of the claim. If a plan has received all of the information necessary to determine payer liability for a contested claim and has not reimbursed a claim it has determined to be payable within 30 working days of the receipt of that information, or if the plan is a health maintenance organization, within 45 working days of receipt of that information, interest shall accrue and be payable at a rate of 15 percent per annum beginning with the first calendar day after the 30- or 45-working-day period.(b) Notwithstanding any other law, a specialized health care service plan that undertakes solely to arrange for the provision of vision care services may use a statistically reliable method to investigate suspected fraud and to recover overpayments made as a result of fraud only if all of the requirements of this subdivision are met. the specialized health care service plan complies with this subdivision.(1) A health care service plans statistically reliable method, and how the plan intends to utilize that method to determine recovery of overpayments made as a result of fraud, shall be submitted to, and approved by, the department as elements of the plans antifraud plan established and approved pursuant to Section 1348. The plans utilization of a statistically reliable method shall help protect and promote the interests of enrollees and shall help ensure a stable health care delivery system. The statistically reliable method shall be consistent with direction provided by the International Standards for the Professional Practice of Internal Auditing and the guidance provided by the International Professional Practices Framework guide, which are both produced by the Institute of Internal Auditors.(2) Pursuant to its antifraud plan established and approved pursuant to Section 1348, a health care service plan shall provide a written notice of suspected fraud to a provider that includes, at a minimum, all of the following:(A) A clear description of the plans statistically reliable methodology that ensures that the sample size used to calculate the repayment amount is consistent with the professional guidance provided in the 2009 edition of the American Institute of Certified Public Accountants Audit Sampling Considerations of Circular A-133 Compliance Audits.(B) A clear description of the universe of claims from which the statistical random sample was drawn and, if different, the universe of claims upon which the statistical analysis was applied to generate the recovery amount.(C) A clear explanation of how the plans statistically reliable methodology was utilized in the plans findings of suspected fraud.(D) Notice that a provider may dispute the plans findings within 45 working days from the date of receipt of the notice of suspected fraud.(E) The following information for each of the claims in the statistical sample that was utilized in the plans findings:(i) The claim number.(ii) The name of the patient.(iii) The date of service.(iv) The date of payment.(v) A clear explanation of the basis upon which the plan suspects the claim is fraudulent.(3) A health care service plan may use a statistically reliable method to recover overpayments made as a result of suspected fraud under this subdivision only if, for the universe of claims upon which the statistical analysis was performed to generate the stated recovery amount, the difference between the date of payment of the earliest-in-time claim in the universe of claims and the date of payment of the latest-in-time claim in the universe of claims does not exceed 365 days. A health care service plan may use a statistically reliable method to recover overpayments made as a result of suspected fraud for a consecutive 365-day universe of claims period only if each individual period for recovering overpayments is no longer than the 365 days specified in this paragraph, the total time is consistent with the current statute of limitation for fraud, and each period independently complies with the requirements of this subdivision.(4) (A)If the provider contests the health care service plans notice of suspected fraud, the provider, within 45 working days of the date of receipt of the notice of suspected fraud, shall do one of the following:(i)(A) Send written notice to the plan stating the basis upon which the provider believes that the claims are not fraudulent. The plan shall receive and process this contested notice of suspected fraud as a provider dispute pursuant to subdivision (a), paragraph (1) of subdivision (h) of Section 1367, and the regulations promulgated thereunder.(ii)(B) Send a written request to the plan for an in-person hearing before a panel of peers. A plan may establish a timeline and procedure that provides for an informal hearing before a panel of peers and a de novo review of a determination through binding arbitration before a single neutral arbitrator pursuant to Section 1348.(B)A timeline and procedure developed pursuant to this paragraph shall be exempt from the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340), Chapter 4 (commencing with Section 11370), and Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code), and shall not be subject to the review and approval of the Office of Administrative Law.(5) A health care service plan may offset the amount the plan disclosed as overpaid to the provider in an uncontested notice of suspected fraud against the providers current claim submissions only if all of the following requirements are met:(A) The provider fails to reimburse the plan within 45 working days from the date of receipt by the provider of the notice of suspected fraud.(B) The plan sends written notice to the provider no less than 10 working days prior to withholding current claim payments in which the plan, at a minimum, states its intent to withhold current claim payments and identifies the claim payments that the plan intends to withhold.(C) The withheld claim payments do not exceed the amount asserted by the plan to be owed to the plan in its notice of suspected fraud.(6) This section does not limit or remove a health care service plans obligation to comply with its antifraud plan established pursuant to Section 1348, or to limit or remove the plans obligation to comply with the requirements for claims subject to subdivision (a).(c) The obligation of a health care service plan to comply with this section is not waived when the plan requires its medical groups, independent practice associations, or other contracting entities to pay claims for covered services.
1371. (a) (1) A health care service plan, including a specialized health care service plan, shall reimburse claims or a portion of a claim, whether in state or out of state, as soon as practicable, but no later than 30 working days after receipt of the claim by the health care service plan, or if the health care service plan is a health maintenance organization, 45 working days after receipt of the claim by the health care service plan, unless the claim or portion thereof is contested by the plan, in which case the claimant shall be notified, in writing, that the claim is contested or denied, within 30 working days after receipt of the claim by the health care service plan, or if the health care service plan is a health maintenance organization, 45 working days after receipt of the claim by the health care service plan. The notice that a claim is being contested shall identify the portion of the claim that is contested and the specific reasons for contesting the claim.(2) If an uncontested claim is not reimbursed by delivery to the claimants address of record within the respective 30 or 45 working days after receipt, interest shall accrue at the rate of 15 percent per annum beginning with the first calendar day after the 30- or 45-working-day period. A health care service plan shall automatically include in its payment of the claim all interest that has accrued pursuant to this section without requiring the claimant to submit a request for the interest amount. A plan failing to comply with this requirement shall pay the claimant a ten dollar ($10) fee.(3) For the purposes of this section, a claim, or portion thereof, is reasonably contested if the plan has not received the completed claim and all information necessary to determine payer liability for the claim, or has not been granted reasonable access to information concerning provider services. Information necessary to determine payer liability for the claim includes, but is not limited to, reports of investigations concerning fraud and misrepresentation, and necessary consents, releases, and assignments, a claim on appeal, or other information necessary for the plan to determine the medical necessity for the health care services provided.(4) If a claim or portion thereof is contested on the basis that the plan has not received all information necessary to determine payer liability for the claim or portion thereof and notice has been provided pursuant to this section, the plan shall have 30 working days or, if the health care service plan is a health maintenance organization, 45 working days after receipt of this additional information to complete reconsideration of the claim. If a plan has received all of the information necessary to determine payer liability for a contested claim and has not reimbursed a claim it has determined to be payable within 30 working days of the receipt of that information, or if the plan is a health maintenance organization, within 45 working days of receipt of that information, interest shall accrue and be payable at a rate of 15 percent per annum beginning with the first calendar day after the 30- or 45-working-day period.(b) Notwithstanding any other law, a specialized health care service plan that undertakes solely to arrange for the provision of vision care services may use a statistically reliable method to investigate suspected fraud and to recover overpayments made as a result of fraud only if all of the requirements of this subdivision are met. the specialized health care service plan complies with this subdivision.(1) A health care service plans statistically reliable method, and how the plan intends to utilize that method to determine recovery of overpayments made as a result of fraud, shall be submitted to, and approved by, the department as elements of the plans antifraud plan established and approved pursuant to Section 1348. The plans utilization of a statistically reliable method shall help protect and promote the interests of enrollees and shall help ensure a stable health care delivery system. The statistically reliable method shall be consistent with direction provided by the International Standards for the Professional Practice of Internal Auditing and the guidance provided by the International Professional Practices Framework guide, which are both produced by the Institute of Internal Auditors.(2) Pursuant to its antifraud plan established and approved pursuant to Section 1348, a health care service plan shall provide a written notice of suspected fraud to a provider that includes, at a minimum, all of the following:(A) A clear description of the plans statistically reliable methodology that ensures that the sample size used to calculate the repayment amount is consistent with the professional guidance provided in the 2009 edition of the American Institute of Certified Public Accountants Audit Sampling Considerations of Circular A-133 Compliance Audits.(B) A clear description of the universe of claims from which the statistical random sample was drawn and, if different, the universe of claims upon which the statistical analysis was applied to generate the recovery amount.(C) A clear explanation of how the plans statistically reliable methodology was utilized in the plans findings of suspected fraud.(D) Notice that a provider may dispute the plans findings within 45 working days from the date of receipt of the notice of suspected fraud.(E) The following information for each of the claims in the statistical sample that was utilized in the plans findings:(i) The claim number.(ii) The name of the patient.(iii) The date of service.(iv) The date of payment.(v) A clear explanation of the basis upon which the plan suspects the claim is fraudulent.(3) A health care service plan may use a statistically reliable method to recover overpayments made as a result of suspected fraud under this subdivision only if, for the universe of claims upon which the statistical analysis was performed to generate the stated recovery amount, the difference between the date of payment of the earliest-in-time claim in the universe of claims and the date of payment of the latest-in-time claim in the universe of claims does not exceed 365 days. A health care service plan may use a statistically reliable method to recover overpayments made as a result of suspected fraud for a consecutive 365-day universe of claims period only if each individual period for recovering overpayments is no longer than the 365 days specified in this paragraph, the total time is consistent with the current statute of limitation for fraud, and each period independently complies with the requirements of this subdivision.(4) (A)If the provider contests the health care service plans notice of suspected fraud, the provider, within 45 working days of the date of receipt of the notice of suspected fraud, shall do one of the following:(i)(A) Send written notice to the plan stating the basis upon which the provider believes that the claims are not fraudulent. The plan shall receive and process this contested notice of suspected fraud as a provider dispute pursuant to subdivision (a), paragraph (1) of subdivision (h) of Section 1367, and the regulations promulgated thereunder.(ii)(B) Send a written request to the plan for an in-person hearing before a panel of peers. A plan may establish a timeline and procedure that provides for an informal hearing before a panel of peers and a de novo review of a determination through binding arbitration before a single neutral arbitrator pursuant to Section 1348.(B)A timeline and procedure developed pursuant to this paragraph shall be exempt from the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340), Chapter 4 (commencing with Section 11370), and Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code), and shall not be subject to the review and approval of the Office of Administrative Law.(5) A health care service plan may offset the amount the plan disclosed as overpaid to the provider in an uncontested notice of suspected fraud against the providers current claim submissions only if all of the following requirements are met:(A) The provider fails to reimburse the plan within 45 working days from the date of receipt by the provider of the notice of suspected fraud.(B) The plan sends written notice to the provider no less than 10 working days prior to withholding current claim payments in which the plan, at a minimum, states its intent to withhold current claim payments and identifies the claim payments that the plan intends to withhold.(C) The withheld claim payments do not exceed the amount asserted by the plan to be owed to the plan in its notice of suspected fraud.(6) This section does not limit or remove a health care service plans obligation to comply with its antifraud plan established pursuant to Section 1348, or to limit or remove the plans obligation to comply with the requirements for claims subject to subdivision (a).(c) The obligation of a health care service plan to comply with this section is not waived when the plan requires its medical groups, independent practice associations, or other contracting entities to pay claims for covered services.
1371. (a) (1) A health care service plan, including a specialized health care service plan, shall reimburse claims or a portion of a claim, whether in state or out of state, as soon as practicable, but no later than 30 working days after receipt of the claim by the health care service plan, or if the health care service plan is a health maintenance organization, 45 working days after receipt of the claim by the health care service plan, unless the claim or portion thereof is contested by the plan, in which case the claimant shall be notified, in writing, that the claim is contested or denied, within 30 working days after receipt of the claim by the health care service plan, or if the health care service plan is a health maintenance organization, 45 working days after receipt of the claim by the health care service plan. The notice that a claim is being contested shall identify the portion of the claim that is contested and the specific reasons for contesting the claim.
(2) If an uncontested claim is not reimbursed by delivery to the claimants address of record within the respective 30 or 45 working days after receipt, interest shall accrue at the rate of 15 percent per annum beginning with the first calendar day after the 30- or 45-working-day period. A health care service plan shall automatically include in its payment of the claim all interest that has accrued pursuant to this section without requiring the claimant to submit a request for the interest amount. A plan failing to comply with this requirement shall pay the claimant a ten dollar ($10) fee.
(3) For the purposes of this section, a claim, or portion thereof, is reasonably contested if the plan has not received the completed claim and all information necessary to determine payer liability for the claim, or has not been granted reasonable access to information concerning provider services. Information necessary to determine payer liability for the claim includes, but is not limited to, reports of investigations concerning fraud and misrepresentation, and necessary consents, releases, and assignments, a claim on appeal, or other information necessary for the plan to determine the medical necessity for the health care services provided.
(4) If a claim or portion thereof is contested on the basis that the plan has not received all information necessary to determine payer liability for the claim or portion thereof and notice has been provided pursuant to this section, the plan shall have 30 working days or, if the health care service plan is a health maintenance organization, 45 working days after receipt of this additional information to complete reconsideration of the claim. If a plan has received all of the information necessary to determine payer liability for a contested claim and has not reimbursed a claim it has determined to be payable within 30 working days of the receipt of that information, or if the plan is a health maintenance organization, within 45 working days of receipt of that information, interest shall accrue and be payable at a rate of 15 percent per annum beginning with the first calendar day after the 30- or 45-working-day period.
(b) Notwithstanding any other law, a specialized health care service plan that undertakes solely to arrange for the provision of vision care services may use a statistically reliable method to investigate suspected fraud and to recover overpayments made as a result of fraud only if all of the requirements of this subdivision are met. the specialized health care service plan complies with this subdivision.
(1) A health care service plans statistically reliable method, and how the plan intends to utilize that method to determine recovery of overpayments made as a result of fraud, shall be submitted to, and approved by, the department as elements of the plans antifraud plan established and approved pursuant to Section 1348. The plans utilization of a statistically reliable method shall help protect and promote the interests of enrollees and shall help ensure a stable health care delivery system. The statistically reliable method shall be consistent with direction provided by the International Standards for the Professional Practice of Internal Auditing and the guidance provided by the International Professional Practices Framework guide, which are both produced by the Institute of Internal Auditors.
(2) Pursuant to its antifraud plan established and approved pursuant to Section 1348, a health care service plan shall provide a written notice of suspected fraud to a provider that includes, at a minimum, all of the following:
(A) A clear description of the plans statistically reliable methodology that ensures that the sample size used to calculate the repayment amount is consistent with the professional guidance provided in the 2009 edition of the American Institute of Certified Public Accountants Audit Sampling Considerations of Circular A-133 Compliance Audits.
(B) A clear description of the universe of claims from which the statistical random sample was drawn and, if different, the universe of claims upon which the statistical analysis was applied to generate the recovery amount.
(C) A clear explanation of how the plans statistically reliable methodology was utilized in the plans findings of suspected fraud.
(D) Notice that a provider may dispute the plans findings within 45 working days from the date of receipt of the notice of suspected fraud.
(E) The following information for each of the claims in the statistical sample that was utilized in the plans findings:
(i) The claim number.
(ii) The name of the patient.
(iii) The date of service.
(iv) The date of payment.
(v) A clear explanation of the basis upon which the plan suspects the claim is fraudulent.
(3) A health care service plan may use a statistically reliable method to recover overpayments made as a result of suspected fraud under this subdivision only if, for the universe of claims upon which the statistical analysis was performed to generate the stated recovery amount, the difference between the date of payment of the earliest-in-time claim in the universe of claims and the date of payment of the latest-in-time claim in the universe of claims does not exceed 365 days. A health care service plan may use a statistically reliable method to recover overpayments made as a result of suspected fraud for a consecutive 365-day universe of claims period only if each individual period for recovering overpayments is no longer than the 365 days specified in this paragraph, the total time is consistent with the current statute of limitation for fraud, and each period independently complies with the requirements of this subdivision.
(4) (A)If the provider contests the health care service plans notice of suspected fraud, the provider, within 45 working days of the date of receipt of the notice of suspected fraud, shall do one of the following:
(i)
(A) Send written notice to the plan stating the basis upon which the provider believes that the claims are not fraudulent. The plan shall receive and process this contested notice of suspected fraud as a provider dispute pursuant to subdivision (a), paragraph (1) of subdivision (h) of Section 1367, and the regulations promulgated thereunder.
(ii)
(B) Send a written request to the plan for an in-person hearing before a panel of peers. A plan may establish a timeline and procedure that provides for an informal hearing before a panel of peers and a de novo review of a determination through binding arbitration before a single neutral arbitrator pursuant to Section 1348.
(B)A timeline and procedure developed pursuant to this paragraph shall be exempt from the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340), Chapter 4 (commencing with Section 11370), and Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code), and shall not be subject to the review and approval of the Office of Administrative Law.
(5) A health care service plan may offset the amount the plan disclosed as overpaid to the provider in an uncontested notice of suspected fraud against the providers current claim submissions only if all of the following requirements are met:
(A) The provider fails to reimburse the plan within 45 working days from the date of receipt by the provider of the notice of suspected fraud.
(B) The plan sends written notice to the provider no less than 10 working days prior to withholding current claim payments in which the plan, at a minimum, states its intent to withhold current claim payments and identifies the claim payments that the plan intends to withhold.
(C) The withheld claim payments do not exceed the amount asserted by the plan to be owed to the plan in its notice of suspected fraud.
(6) This section does not limit or remove a health care service plans obligation to comply with its antifraud plan established pursuant to Section 1348, or to limit or remove the plans obligation to comply with the requirements for claims subject to subdivision (a).
(c) The obligation of a health care service plan to comply with this section is not waived when the plan requires its medical groups, independent practice associations, or other contracting entities to pay claims for covered services.
SEC. 2. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
SEC. 2. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
SEC. 2. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
### SEC. 2.