California AB 716 will end “surprise” billing for ground ambulance services. As a state law, it applies to fully-insured plans written in the state of California. However, because of the ERISA pre-emption, it does not apply to self-funded plans.
Background
The federal No Surprises Act was passed by Congress in December 2020. In a nutshell, the law prohibits most surprise billing situations. Surprise billing situations can include: a patient who receives out-of-network services during an emergency room visit or while receiving care at an in-network hospital, as well as air ambulance charges. However, the protections in the No Surprises Act (as passed) do not extend to ground ambulance services.
What does the law require?
Payment Cap of In-Network Amount: The new law limits the amount that a non-network ambulance provider can charge, limiting charges to the amount a patient would pay for an in-network ambulance.
Must Count Toward Out-of-Pocket Max: The in-network cost-sharing amount paid by the insured must count toward the out-of-pocket maximum and count toward any deductible in an equivalent manner as for other in-network services.
No Balance Billing: Ambulance providers may not balance bill any portion of fees in excess of the in-network contracted payment amount.
Uninsured Individual Protections: The law also caps ambulance bills for uninsured individuals. Specifically, providers may not charge more than the Medi-Cal or Medicare rate, whichever is greater.
Payment Amount for Ambulance Providers: The bill specifies that if an ambulance provider does not have a contract agreement with the patient’s insurer, the health plan will pay the ambulance providers at rates negotiated and set locally through city or regional governments (also known as the Local Emergency Medical Authority or LEMSA rate).
Collections Restrictions: The law prohibits ambulance providers and debt collectors from reporting patients to a credit rating agency or taking legal action against them for at least 12 months after the initial ambulance bill (and then collection action is limited to the in-network contracted fee amount). In addition, wage garnishments or liens on primary residences may not be used as a means of collecting unpaid ambulance bills.
Is there an arbitration process?
The federal No Surprises Act included a process by which providers and insurers can enter into binding arbitration when an agreed-upon reimbursement rate cannot be achieved. The No Surprises Act arbitration process has been the subject of much effort, debate, and legal challenge since the inception of the act. Notably, there is NO equivalent clause in California’s AB 716. Rather, the bill simply states the amount insurers are to pay out-of-network ambulance providers.
So, are there no surprise ambulance bills anymore?
Not quite. The new law is projected to protect approximately 14 million individuals covered by fully insured health plans. Existing laws already protect Medicare and Medi-Cal beneficiaries from surprise ground ambulance bills. However, AB 716 does not apply to the nearly 6 million Californians enrolled in self-funded health plans. Recall that self-funded plans are exempt from state regulation and subject only to federal regulation under ERISA.
Effective Date
The law becomes effective for health insurance policies issued, amended, or renewed on or after January 1st, 2024.
References
AB 726 Ground Medical Transportation
