determination of whether an emergency exists. The California standard does not
require the consumer to be of “average knowledge”, a standard that is difficult to
assess in a state with the diversity of culture and language that California faces.
It does not require a consumer to behave with “average prudence”, something
that many consumers are ill-equipped to do in the midst of a true emergency.

Existing California law does not prevent the application of the provisions of
PPACA.: it is well settled law in California.

b. Balance Billing

Existing California law regarding health care service plans prohibits balance
billing. This case law does not prevent the application of the provisions of PPACA
regarding access to emergency care.

Health Access is dismayed by the proposed interim final rule that would allow
providers to charge consumer for the excess of the amount the out of network
provider charges over the amount the plan or insurer is required to pay. With
respect to health care service plans in California, this undercuts a California
Supreme Court case that is directly on point to this consumer protection issue.
Specifically, in Prospect Medical Group v. Northridge Emergency Medical Group
(2009) 45 Cal. 4" 497, in a unanimous decision, the California Supreme Court
found that:
For HMO members, it is always clear in advance who has to
provide emergency services — any emergency room doctor to
whom the member goes in an emergency — and who has to pay
for those services — the HMO. The conflict arises when there is no
advance agreement between the emergency room doctors and the
HMO regarding the amount of the required payment... The
resolution of such disputes can create difficult problems.
But the question of how to resolve disputes between the
doctors and the HMO over the amount due for emergency care is
not before us in this case. The issue here is narrow, although quite
important for emergency room doctors, HMO’s, and their
members: When the HMO submits a payment lower than the
amount billed, can the emergency room doctors directly bill the
patient for the difference between the bill submitted and the
payment received — i.e., engage in the practice called “balance
billing”?
Interpreting the applicable statutory scheme as a whole —
primarily the Knox-Keene Health Care Service Plan Act of 1975,
Health and Safety Code section 1340 et seq. (Knox-Keene Act) —
we conclude that billing disputes over emergency medical care
must be resolved solely between the emergency room doctors, who
are entitled to a reasonable payment for their services, and the
HMO, which is obligated to make that payment. A patient who is a
member of an HMO may not be injected into the dispute.

Health Access California Page 5 August 27, 2010


policies and policies that cover only generic drugs, even if there is no therapeutic
equivalent. The interim final rules state that insurers may place limits on specific
benefits that are not essential health benefits as defined in Sec. 1302 (b) of the
Patient Protection and Affordable Care Act. Policies that do not cover physician
visits or that do not cover brand-name prescription drugs appear to us to plainly
violate this rule. However, since insures disagree, we seek clarity and ask that
further guidance be given that such limited benefit policies violate the rule.

D. Rescissions

Sadly California has had considerable experience with rescissions. We are
pleased that as a result of action at the state and federal levels rescissions have
been reduced to a minimal number.

Any external review of a rescission must be a truly independent review by
experts competent in both the legal and clinical issues. It is not an independent
or external review if the insurer picks the reviewer and pays the reviewer: such a
review is simply an extension of the internal review process of the insurer. To be
independent, an external review must be conducted by an entity that is picked
and paid by the regulator, not the insurer. The entity must face strict conflict of
interest guidelines and have expertise in both legal and clinical issues. Also the
entire review must be available at no cost to the consumer: otherwise consumers
will be deterred from seeking reviews. Provision should be made for urgent
review in those instances in which severe financial or clinical harm will occur if
care is not provided promptly.

For over a decade, California has successfully implemented independent medical
review regarding determinations of medical necessity using just such a system of
independent review in which the regulator picks and pays the reviewing entity.
The reviewers are subject to strict conflict of interest requirements. The entire
process is available at no cost to consumers. Urgent reviews are available.

E. Patient Protections
1. Emergency Services:
a. Reasonable Person Standard

California law provides that health care service plans and health insurers:
may deny reimbursement to a provider for a medical screening examination in
cases when the plan enrollee did not require emergency services and the
enrollee reasonably should have known that an emergency did not exist
(emphasis added). Section 1371.4 of the Health and Safety Code

This provision is well settled law in California. It puts the burden on the insurer or

plan to demonstrate that the insured should have known that an emergency did
not exist. It does not put the burden on the consumer to make a clinical

Health Access California Page 4 August 27, 2010


Emergency room doctors may not bill the patient for the disputed
amount.

And further in their decision:

The only reasonable interpretation of a statutory scheme that
(1) intends to transfer the financial risk of health care from patients
to providers; (2) requires emergency care patients to agree to pay
for the services or to supply insurance information; (3) requires
HMO's to pay doctors for emergency services rendered to their
subscribers; (4) prohibits balance billing when the HMO, and not
the patient, is contractually required to pay; (5) requires adoption of
mechanisms to resolve billing disputes between emergency room
doctors and HMO’s; and (6) permits emergency room doctors to
sue HMO’s directly to resolve billing disputes, is that emergency
room doctors may not bill patients directly for amounts in dispute.
Emergency room doctors must resolve their differences with HMO’s
and not inject patients into the dispute. Interpreting the statutory
scheme as a whole, we conclude that the doctors may not bill a
patient for emergency services that the HMO is obligated to pay.
Balance billing is not permitted.

We seek provisions in the interim final rule that assure that state law regarding
balance billing of consumers prevails if it is based on a specific statutory
construct as is the case with respect to health care service plans in California.

2. Obstetrician-Gynecologist as Primary Provider

For over a decade, California law has provided that California consumers may
rely upon their obstetrician and gynecologist as a primary care provider. While
the precise language of the California statute is somewhat different since it takes
into account the network requirements, from a consumer perspective the impact
is similar.

We respectfully seek these changes and clarifications of the interim final rule.

Health Access California Page 6 August 27, 2010


BOARD OF DIRECTORS

ANN-MARIE BENITEZ
Planned Parenthood Affiliates of CA

NANCY "NAN" BRASMER
CA Alliance for Retired Americans

RONALD COLEMAN
Alliance of Californians.
‘or Community Empowerment

CRYSTAL CRAWFORD.
CA Black Women’s Health Project

LORI EASTERLING
CA Teachers Association

ROMA GUY
CA Women’s Agenda

MARTY HITTELMAN
CA Federation of Teachers

BETSY IMHOLZ
‘Consumers Union

KATHY LIM KO
Asian & Pacific Islander
American Health Forum

GRETCHEN KOERNER:
Screen Actors Guild

HENRY "HANK" LAGAYO
Congress of CA Seniors

TED LEMPERT
Children Now

BILL LLOYD
SEIU State Council

MARTY MARTINEZ
(CA Pan-Ethnic Health Network

WILLIE PELOTE

AFSCME

BETTY PERRY

Older Women's League of CA

ART PULASKI
CA Labor Federation

MICHAEL RUSSO

CCALPIRG

THOMAS SAENZ

‘Mexican American

Legal Defense & Education Fund

REV. RICK SCHLOSSER
CA Council of Churches

RESHMA SHAMASUNDER
CA Immigrant Policy Center

JOAN PIRKLE SMITH
Americans for Democratic Action

HORACE WILLIAMS
CA Black Health Network

ANTHONY WRIGHT
Executive Director

ORGANIZATION LISTED
FoR IDENTIFICATION PURPOSES

[os

CALIFORNIA

August 27, 2010

Secretary Timothy Geithner
Department of the Treasury

Secretary Hilda Solis
Department of Labor

Secretary Kathleen Sebelius
Department of Health and Human Services

Office of Health Plan Standards and Compliance Assistance
Employee Benefits Security Administration

Room N-563

U.S. Department of Labor

200 Constitution Avenue NW

Washington, D.C. 20210

Attention: RIN 1210-AB43

Re: Interim Final Rules for 26 CFR Part 54 and 602, 29CFR Part 2590, and 45
CFR Parts 144, 146, and 147: Requirements for Group Health Plans and
Health Insurance Issuers under the Patient Protection and Affordable Care
Act Relating to Pre-Existing Condition Exclusions, Lifetime Annual Limits,
Rescissions and Patient Protections.

Dear Secretaries Geithner, Solis and Sebelius:

Health Access California, a coalition of more than a hundred consumer,
community, labor and other organizations committed to quality, affordable health
care for all Californians, offers comments on the new Patient Bill of Rights
included as part of the Affordable Care Act.

Health Access California was the organizational sponsor of the package of
legislation that constituted the HMO Patient Bill of Rights enacted in California
between 1996 and 1999. For the last decade, we have been actively engaged in
the implementation of the HMO Patient Bill of Rights, including the creation of a
new regulator to oversee HMOs and PPOs, the Department of Managed Health
Care. We have participated in numerous regulatory processes at that department
and at the California Department of Insurance.

Unfortunately, the federal law as enacted with respect to patient rights is in many
respects less advantageous to consumers than existing California law. We
respect the reality that the new federal law is a significant improvement for
consumers in most states. We seek to assure that California law is not pre-

sabldacel@th Styaet Suite 450, Oa 94612-2608 PH: 510.8 ‘prt: iG 4.G73.8789

Sirah aieass Catt? Suite 234, agent. CA osBia me Sled BOS Gi “316497 0921

LOS ANGELES: 1930 Wilshire Blvd., Suite 916, Los Angeles, CA 90057 px: 213.413.3587, fuk: 213.413.9631
www.health-access.org


empted in those instances in which it provides better protections for consumers
than federal law.

A. Pre-Existing Condition Exclusions: Children

Health Access strongly supports guaranteed issue of insurance with no pre-
existing condition exclusions for children under age 19.

As the organizational sponsor of implementing legislation at the state level,
AB2244 by Assemblymember Mike Feuer in the 2010 California legislative
session, we have been in the midst of struggling with how to implement this
principle at the state level.

Open Enrollment Periods: We support guaranteed issue with no pre-existing
condition exclusions at all times during the year. Unfortunately, the recent federal
guidance with respect to open enrollment periods does not specifically state
whether guaranteed issue is available only during the open enrollment period or
all twelve months of the year. There has been considerable disagreement at the
state level between consumer advocates and insurers about the correct
interpretation of federal law. AB2244 as currently amended defers to federal
interpretation of federal law, rules, regulations and guidance on this point.

Affordability: During our negotiations with insurers over children’s coverage
over the last few weeks, insurers and health plans in California have stated that if
left unregulated, premiums for sick children could be as much as ten or even
twenty times as high as premiums for healthy children. They base this estimate
on the cost of the children that have been denied coverage. No good data is
available since virtually everything about denials of coverage is currently treated
as proprietary information, even the number of denials and the rate of denials.

AB2244 as currently amended provides that sick kids can only be rated up twice
as much as healthy kids during the open enrollment period. However, it allows
unlimited pricing if there is guaranteed issue outside the open enrollment period.
This is odious to us but we were unable to reach any other compromise with the
insurers and Governor Schwarzenegger. This odious compromise is better than
existing California law under which sick kids can be denied at any time and there
is no limit at any time on pricing of premiums. We are unclear as to what federal
law permits prior to 2014 in terms of capping premiums for sick kids.

Rate disclosure: We ask that HHS ask the states to monitor rates for children,
including any increase in rates, changes in benefit design, and the range
between the lowest risk and the highest risk. Given the threat that rates for sick
kids will be as much as ten or twenty times the premiums for healthy kids, it is
essential that at a minimum this market-driven pricing be made public. In
California, unless corrected by pending legislation, the notice of rate increases
for individual coverage is “private and confidential’.

Health Access California Page 2 August 27, 2010


B. Pre-Existing Condition Exclusions: Exclusion of an entire condition:
Maternity, HIV/AIDS

The IFR states that all treatment for a condition may be excluded. Here is what
this means in California: 80% of the individual health coverage excludes
maternity care. That means that of the two million plus Californians with
individual health coverage, perhaps as many as two million have coverage that
does not include maternity coverage.

We are also troubled that the provision could be interpreted to exclude all care
for HIV/AIDS

We strongly encourage that the rule be amended to require inclusion of all
conditions and not to allow exclusion of any specific condition.

C. Lifetime and Annual Limits

Limitation on benefits: We join other consumer organizations in opposing other
limits on benefits that are an attempt to circumvent the requirement to end
lifetime limits and phase out annual limits. In California, literally hundreds of
thousands are covered by hospital only coverage that may include one or two
doctor visits or none. Other so-called health insurance policies cover the second
day of hospitalization but not the first and most expensive day. Hundreds of
thousands of policies cover only a limited list of generic prescription drugs and
provide no coverage for brand-name drugs even when there is no therapeutic
equivalent.

These limited benefit policies do real harm to real people. On turning 50, Susan
Braig, Altadena, CA, thought she would do the responsible thing so she bought
what she thought was catastrophic health coverage. When she got breast
cancer, almost none of her costs were covered because almost all of her care
was done on an outpatient basis but her policy was a hospital-only policy.
Another woman, an early retiree bought what she was told was comprehensive
coverage comparable to what was offered to large employers only to discover
after she was bitten by a rattlesnake while clearing out her backyard that the first
day of hospitalization, costing $98,000, was not covered.

These limited benefit policies also increase the cost of premiums for those who
buy comprehensive coverage: insurers assume that those who buy
comprehensive coverage have higher medical costs than those who buy limited
benefit policies and appear to price the premiums to drive most consumers to the
limited benefit policies. Premium costs are not the only consideration: costs to
consumers for necessary medical care that is not covered by limited benefit
policies are also real costs to the health system and to the financial security of
individuals.

In our negotiations with insurers here in California, we have been dismayed to
discover that at least some of them intend to continue to offer hospital-only

Health Access California Page 3 August 27, 2010