SECTIONS 510-512 - California Statutes

BUSINESS AND PROFESSIONS CODE

SECTION 510-512

510. (a) The purpose of this section is to provide protection
against retaliation for health care practitioners who advocate for
appropriate health care for their patients pursuant to Wickline v.
State of California 192 Cal. App. 3d 1630.
(b) It is the public policy of the State of California that a
health care practitioner be encouraged to advocate for appropriate
health care for his or her patients. For purposes of this section,
"to advocate for appropriate health care" means to appeal a payer's
decision to deny payment for a service pursuant to the reasonable
grievance or appeal procedure established by a medical group,
independent practice association, preferred provider organization,
foundation, hospital medical staff and governing body, or payer, or
to protest a decision, policy, or practice that the health care
practitioner, consistent with that degree of learning and skill
ordinarily possessed by reputable health care practitioners with the
same license or certification and practicing according to the
applicable legal standard of care, reasonably believes impairs the
health care practitioner's ability to provide appropriate health care
to his or her patients.
(c) The application and rendering by any individual, partnership,
corporation, or other organization of a decision to terminate an
employment or other contractual relationship with or otherwise
penalize a health care practitioner principally for advocating for
appropriate health care consistent with that degree of learning and
skill ordinarily possessed by reputable health care practitioners
with the same license or certification and practicing according to
the applicable legal standard of care violates the public policy of
this state.
(d) This section shall not be construed to prohibit a payer from
making a determination not to pay for a particular medical treatment
or service, or the services of a type of health care practitioner, or
to prohibit a medical group, independent practice association,
preferred provider organization, foundation, hospital medical staff,
hospital governing body acting pursuant to Section 809.05, or payer
from enforcing reasonable peer review or utilization review protocols
or determining whether a health care practitioner has complied with
those protocols.
(e) (1) Except as provided in paragraph (2), appropriate health
care in a hospital licensed pursuant to Section 1250 of the Health
and Safety Code shall be defined by the appropriate hospital
committee and approved by the hospital medical staff and the
governing body, consistent with that degree of learning and skill
ordinarily possessed by reputable health care practitioners with the
same license or certification and practicing according to the
applicable legal standard of care.
(2) To the extent the issue is under the jurisdiction of the
medical staff and its committees, appropriate health care in a
hospital licensed pursuant to Section 1250 of the Health and Safety
Code shall be defined by the hospital medical staff and approved by
the governing body, consistent with that degree of learning and skill
ordinarily possessed by reputable health care practitioners with the
same license or certification and practicing according to the
applicable legal standard of care.
(f) Nothing in this section shall be construed to prohibit the
governing body of a hospital from taking disciplinary actions against
a health care practitioner as authorized by Sections 809.05, 809.4,
and 809.5.
(g) Nothing in this section shall be construed to prohibit the
appropriate licensing authority from taking disciplinary actions
against a health care practitioner.
(h) For purposes of this section, "health care practitioner" means
a person who is described in subdivision (f) of Section 900 and who
is either (1) a licentiate as defined in Section 805, or (2) a party
to a contract with a payer whose decision, policy, or practice is
subject to the advocacy described in subdivision (b), or (3) an
individual designated in a contract with a payer whose decision,
policy, or practice is subject to the advocacy described in
subdivision (b), where the individual is granted the right to appeal
denials of payment or authorization for treatment under the contract.
(i) Nothing in this section shall be construed to revise or expand
the scope of practice of any health care practitioner, or to revise
or expand the types of health care practitioners who are authorized
to obtain medical staff privileges or to submit claims for
reimbursement to payers.
(j) The protections afforded health care practitioners by this
section shall be in addition to the protections available under any
other law of this state.

511. (a) No subcontract between a physician and surgeon, physician
and surgeon group, or other licensed health care practitioner who
contracts with a health care service plan or health insurance
carrier, and another physician and surgeon, physician and surgeon
group, or licensed health care practitioner, shall contain any
incentive plan that includes a specific payment made, in any type or
form, to a physician and surgeon, physician and surgeon group, or
other licensed health care practitioner as an inducement to deny,
reduce, limit, or delay specific, medically necessary, and
appropriate services covered under the contract with the health care
service plan or health insurance carrier and provided with respect to
a specific enrollee or groups of enrollees with similar medical
conditions.
(b) Nothing in this section shall be construed to prohibit
subcontracts that contain incentive plans that involve general
payments such as capitation payments or shared risk agreements that
are not tied to specific medical decisions involving specific
enrollees or groups of enrollees with similar medical conditions.

511.1. (a) In order to prevent the improper selling, leasing, or
transferring of a health care provider's contract, it is the intent
of the Legislature that every arrangement that results in a payor
paying a health care provider a reduced rate for health care services
based on the health care provider's participation in a network or
panel shall be disclosed to the provider in advance and that the
payor shall actively encourage beneficiaries to use the network,
unless the health care provider agrees to provide discounts without
that active encouragement.
(b) Beginning July 1, 2000, every contracting agent that sells,
leases, assigns, transfers, or conveys its list of contracted health
care providers and their contracted reimbursement rates to a payor,
as defined in subparagraph (A) of paragraph (3) of subdivision (d),
or another contracting agent shall, upon entering or renewing a
provider contract, do all of the following:
(1) Disclose whether the list of contracted providers may be sold,
leased, transferred, or conveyed to other payors or other
contracting agents, and specify whether those payors or contracting
agents include workers' compensation insurers or automobile insurers.
(2) Disclose what specific practices, if any, payors utilize to
actively encourage a payor's beneficiaries to use the list of
contracted providers when obtaining medical care that entitles a
payor to claim a contracted rate. For purposes of this paragraph, a
payor is deemed to have actively encouraged its beneficiaries to use
the list of contracted providers if one of the following occurs:
(A) The payor's contract with subscribers or insureds offers
beneficiaries direct financial incentives to use the list of
contracted providers when obtaining medical care. "Financial
incentives" means reduced copayments, reduced deductibles, premium
discounts directly attributable to the use of a provider panel, or
financial penalties directly attributable to the nonuse of a provider
panel.
(B) The payor provides information directly to its beneficiaries,
who are parties to the contract, or, in the case of workers'
compensation insurance, the employer, advising them of the existence
of the list of contracted providers through the use of a variety of
advertising or marketing approaches that supply the names, addresses,
and telephone numbers of contracted providers to beneficiaries in
advance of their selection of a health care provider, which
approaches may include, but are not limited to, the use of provider
directories, or the use of toll-free telephone numbers or internet
web site addresses supplied directly to every beneficiary. However,
internet web site addresses alone shall not be deemed to satisfy the
requirements of this subparagraph. Nothing in this subparagraph shall
prevent contracting agents or payors from providing only listings of
providers located within a reasonable geographic range of a
beneficiary.
(3) Disclose whether payors to which the list of contracted
providers may be sold, leased, transferred, or conveyed may be
permitted to pay a provider's contracted rate without actively
encouraging the payors' beneficiaries to use the list of contracted
providers when obtaining medical care. Nothing in this subdivision
shall be construed to require a payor to actively encourage the payor'
s beneficiaries to use the list of contracted providers when
obtaining medical care in the case of an emergency.
(4) Disclose, upon the initial signing of a contract, and within
30 calendar days of receipt of a written request from a provider or
provider panel, a payor summary of all payors currently eligible to
claim a provider's contracted rate due to the provider's and payor's
respective written agreements with any contracting agent.
(5) Allow providers, upon the initial signing, renewal, or
amendment of a provider contract, to decline to be included in any
list of contracted providers that is sold, leased, transferred, or
conveyed to payors that do not actively encourage the payors'
beneficiaries to use the list of contracted providers when obtaining
medical care as described in paragraph (2). Each provider's election
under this paragraph shall be binding on the contracting agent with
which the provider has the contract and on any other contracting
agent that buys, leases, or otherwise obtains the list of contracted
providers. A provider shall not be excluded from any list of
contracted providers that is sold, leased, transferred, or conveyed
to payors that actively encourage the payors' beneficiaries to use
the list of contracted providers when obtaining medical care, based
upon the provider's refusal to be included on any list of contracted
providers that is sold, leased, transferred, or conveyed to payors
that do not actively encourage the payors' beneficiaries to use the
list of contracted providers when obtaining medical care.
(6) Nothing in this subdivision shall be construed to impose
requirements or regulations upon payors, as defined in subparagraph
(A) of paragraph (3) of subdivision (d).
(c) Beginning July 1, 2000, a payor, as defined in subparagraph
(B) of paragraph (3) of subdivision (d), shall do all of the
following:
(1) Provide an explanation of benefits or explanation of review
that identifies the name of the plan or network that has a written
agreement signed by the provider whereby the payor is entitled,
directly or indirectly, to pay a preferred rate for the services
rendered.
(2) Demonstrate that it is entitled to pay a contracted rate
within 30 business days of receipt of a written request from a
provider who has received a claim payment from the payor. The failure
of a payor to make the demonstration within 30 business days shall
render the payor responsible for the amount that the payor would have
been required to pay pursuant to the contract between the payor and
the beneficiary, which amount shall be due and payable within 10
business days of receipt of written notice from the provider, and
shall bar the payor from taking any future discounts from that
provider without the provider's express written consent until the
payor can demonstrate to the provider that it is entitled to pay a
contracted rate as provided in this paragraph. A payor shall be
deemed to have demonstrated that it is entitled to pay a contracted
rate if it complies with either of the following:
(A) Discloses the name of the network that has a written agreement
with the provider whereby the provider agrees to accept discounted
rates, and describes the specific practices the payor utilizes to
comply with paragraph (2) of subdivision (b).
(B) Identifies the provider's written agreement with a contracting
agent whereby the provider agrees to be included on lists of
contracted providers sold, leased, transferred, or conveyed to payors
that do not actively encourage beneficiaries to use the list of
contracted providers pursuant to paragraph (5) of subdivision (b).
(d) For the purposes of this section, the following terms have the
following meanings:
(1) "Beneficiary" means:
(A) For workers' compensation insurance, an employee seeking
health care services for a work-related injury.
(B) For automobile insurance, those persons covered under the
medical payments portion of the insurance contract.
(C) For group or individual health services covered through a
health care service plan contract, including a specialized health
care service plan contract, or a policy of disability insurance that
covers hospital, medical, or surgical benefits, a subscriber, an
enrollee, a policyholder, or an insured.
(2) "Contracting agent" means a third-party administrator or trust
not licensed under the Health and Safety Code, the Insurance Code,
or the Labor Code, a self-insured employer, a preferred provider
organization, or an independent practice association, while engaged,
for monetary or other consideration, in the act of selling, leasing,
transferring, assigning, or conveying, a provider or provider panel
to provide health care services to beneficiaries. For purposes of
this section, a contracting agent shall not include a health care
service plan, including a specialized health care service plan, an
insurer licensed under the Insurance Code to provide disability
insurance that covers hospital, medical, or surgical benefits,
automobile insurance, or workers' compensation insurance, or a
self-insured employer.
(3) (A) For purposes of subdivision (b), "payor" means a health
care service plan, including a specialized health care service plan,
an insurer licensed under the Insurance Code to provide disability
insurance that covers hospital, medical, or surgical benefits,
automobile insurance, workers' compensation insurance, or a
self-insured employer that is responsible to pay for health care
services provided to beneficiaries.
(B) For purposes of subdivision (c), "payor" means only those
entities that provide coverage for hospital, medical, or surgical
benefits that are not regulated under the Health and Safety Code, the
Insurance Code, or the Labor Code.
(4) "Payor summary" means a written summary that includes the
payor's name and the type of plan, including, but not limited to, a
group health plan, an automobile insurance plan, and a workers'
compensation insurance plan.
(5) "Provider" means any of the following:
(A) Any person licensed or certified pursuant to this division.
(B) Any person licensed pursuant to the Chiropractic Initiative
Act or the Osteopathic Initiative Act.
(C) Any person licensed pursuant to Chapter 2.5 (commencing with
Section 1440) of Division 2 of the Health and Safety Code.
(D) A clinic, health dispensary, or health facility licensed
pursuant to Division 2 (commencing with Section 1200) of the Health
and Safety Code.
(E) Any entity exempt from licensure pursuant to Section 1206 of
the Health and Safety Code.
(e) This section shall become operative on July 1, 2000.

511.3. (a) When a contracting agent sells, leases, or transfers a
health provider's contract to a payor, the rights and obligations of
the provider shall be governed by the underlying contract between the
health care provider and the contracting agent.
(b) For purposes of this section, the following terms shall have
the following meanings:
(1) "Contracting agent" has the meaning set forth in paragraph (2)
of subdivision (d) of Section 511.1.
(2) "Payor" has the meaning set forth in paragraph (3) of
subdivision (d) of Section 511.1.

511.4. (a) A contracting agent, as defined in paragraph (2) of
subdivision (d) of Section 511.1, shall beginning July 1, 2006, prior
to contracting, annually thereafter on or before the contract
anniversary date, and, in addition, upon the contracted provider's
written request, disclose to contracting providers all of the
following information in an electronic format:
(1) The amount of payment for each service to be provided under
the contract, including any fee schedules or other factors or units
used in determining the fees for each service. To the extent that
reimbursement is made pursuant to a specified fee schedule, the
contract shall incorporate that fee schedule by reference, including
the year of the schedule. For any proprietary fee schedule, the
contract shall include sufficient detail that payment amounts related
to that fee schedule can be accurately predicted.
(2) The detailed payment policies and rules and nonstandard coding
methodologies used to adjudicate claims, which shall, unless
otherwise prohibited by state law, do all of the following:
(A) When available, be consistent with Current Procedural
Terminology (CPT), and standards accepted by nationally recognized
medical societies and organizations, federal regulatory bodies, and
major credentialing organizations.
(B) Clearly and accurately state what is covered by any global
payment provisions for both professional and institutional services,
any global payment provisions for all services necessary as part of a
course of treatment in an institutional setting, and any other
global arrangements, such as per diem hospital payments.
(C) At a minimum, clearly and accurately state the policies
regarding all of the following:
(i) Consolidation of multiple services or charges and payment
adjustments due to coding changes.
(ii) Reimbursement for multiple procedures.
(iii) Reimbursement for assistant surgeons.
(iv) Reimbursement for the administration of immunizations and
injectable medications.
(v) Recognition of CPT modifiers.
(b) The information disclosures required by this section shall be
in sufficient detail and in an understandable format that does not
disclose proprietary trade secret information or violate copyright
law or patented processes, so that a reasonable person with
sufficient training, experience, and competence in claims processing
can determine the payment to be made according to the terms of the
contract.
(c) A contracting agent may disclose the fee schedules mandated by
this section through the use of a Web site, so long as it provides
written notice to the contracted provider at least 45 days prior to
implementing a Web site transmission format or posting any changes to
the information on the Web site.

512. (a) Except as provided in subdivisions (b) and (c), no
contract that is issued, amended, renewed, or delivered on or after
January 1, 1999, between any person or entity, including, but not
limited to, any group of physicians and surgeons, any medical group,
any independent practice association (IPA), or any preferred provider
organization (PPO), and a health care provider shall contain
provisions that prohibit, restrict, or limit the health care provider
from advertising.
(b) Nothing in this section shall be construed to prohibit the
establishment of reasonable guidelines in connection with the
activities regulated pursuant to this division, including those to
prevent advertising that is, in whole or in part, untrue, misleading,
deceptive, or otherwise inconsistent with this division or the rules
and regulations promulgated thereunder. For advertisements
mentioning a provider's participation in a plan or product line of
any person or entity, nothing in this section shall be construed to
prohibit requiring each advertisement to contain a disclaimer to the
effect that the provider's services may be covered for some, but not
all, plans or product lines of that person or entity, or that the
person or entity may cover some, but not all, provider services.
(c) Nothing in this section is intended to prohibit provisions or
agreements intended to protect service marks, trademarks, trade
secrets, or other confidential information or property. If a health
care provider participates on a provider panel or network as a result
of a direct contractual arrangement with a person or entity,
including, but not limited to, any group of physicians and surgeons,
any medical group, any independent practice association, or any
preferred provider organization, that, in turn, has entered into a
direct contractual arrangement with another person or entity,
pursuant to which enrollees, subscribers, insureds, and other
beneficiaries of that other person or entity may receive covered
services from the health care provider, then nothing in this section
is intended to prohibit reasonable provisions or agreements in the
direct contractual arrangement between the health care provider and
the person or entity that protect the name or trade name of the other
person or entity or require that the health care provider obtain the
consent of the person or entity prior to the use of the name or
trade name of the person or entity in any advertising by the health
care provider.
(d) Nothing in this section shall be construed to impair or impede
the authority of any state department to regulate advertising,
disclosure, or solicitation pursuant to this division.