New Department of Insurance Rules on Doctor and Hospital “Network Adequacy” Proposed to Prevent Surprise Medical Bills

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Sacramento, CA — New regulations proposed by the California Department of Insurance (“CDI”) will help address dramatic shortfalls in the availability of doctors and hospitals under Obamacare health plans, Consumer Watchdog will testify in Sacramento today. Yet changes to the regulations are necessary to provide public disclosure and ensure effective enforcement, said the group. California’s other health insurance regulator, the Department of Managed Health Care (“DMHC”), had similar rules on the books for six years that have been largely ignored.

DMHC, which oversees health plans sold in the state insurance exchange, Covered California, has had network adequacy rules also known as “Timely Access” regulations in place since 2009.  The rules are designed to ensure that insurance company networks contain sufficient numbers of participating doctors and hospitals to provide access to health care services in a timely manner.

“We welcome the Department of Insurance’s new regulations, but as Californians have learned the hard way, it’s enforcement that matters.  Similar rules enacted six years ago by the Department of Managed Health Care didn’t protect hundreds of thousands of Californians from millions of dollars in unjustified out-of-network charges,” said Consumer Watchdog attorney Laura Antonini.  

Consumer Watchdog noted that additional provisions were needed to ensure consumers are not subject to unexpected out-of-network costs and delays in needed medical care. In particular, Consumer Watchdog called on the CDI to revise the regulations to require that “network adequacy” reports and other information is available to the public.

The problems that the new CDI regulations seek to address, and that the DMHC regulations should have prevented, arose in the first year of Obamacare when major California health insurers provided inadequate networks of hospitals and doctors participating in the companies’ networks.  Recent studies have found that inadequate provider networks lead to worse health outcomes for consumers and delay the diagnosis of disease.

Consumer Watchdog attorneys are currently litigating four class action lawsuits against major California health insurance companies—Blue Shield, Anthem Blue Cross, Health Net, and Cigna—regarding significant misrepresentations concerning those companies’ provider networks. Patients were stuck with big medical bills as a result of receiving treatments from doctors and hospitals these companies represented were part of their networks but subsequently billed as out-of-network.

In addition to making information regarding the adequacy of insurers’ provider networks available to the public, Consumer Watchdog called on the CDI to make the following revisions to the proposed regulations:

·      Improve disclosures to consumers of their right to receive medical care at in-network rates when they are forced to go out-of-network due to inadequate networks;

·      Require insurers to cover out-of-network care received at an in-network facility at in-network rates when the insured did not give written consent to be treated by an out-of-network provider;

·      Add warnings to consumers in policy materials of terms significantly limiting network coverage, such as out-of-network deductibles or “tiered” networks;

·      Provide for audits and review of all information submitted to CDI in network adequacy reports;

·      Mandate that all forms of provider directories be updated weekly and include essential information about a provider’s network status; and

·      Require insurers who are granted an exemption from the network standards to always provide coverage at in-network rates when a consumer is forced to go out-of-network due to inadequate networks.

Consumer Watchdog’s comments on the proposed CDI regulations are available here:

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Consumer Watchdog is a nonprofit, nonpartisan consumer protection organization. Visit our website at:

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