Assemblymember Chris Holden’s Assembly Bill 236 would give state regulators authority to fine insurers if their lists of in-network doctors, hospitals, mental health workers, labs and imaging centers aren’t up-to-date and accurate.

According to the author, “despite California having one of the nation’s strongest laws on health plan provider directories, compliance is at an unbelievable low. Recent studies have found that some health plans have inaccuracy rates as high as 80%, and major plans like Anthem and Kaiser have inaccurate information for 20%-38% of providers.”

“These inaccuracies in provider referral lists are often referred to as ‘ghost networks’ because the referrals simply do not exist. As a result, consumers bear the responsibility of sorting through these grossly inaccurate lists, sifting through directories in an effort to find care, calling provider after provider, only to be told the provider is no longer in-network, no longer accepting new patients, or even no longer in practice.”

“This is especially harmful to those already suffering from health care inequity, such as those with limited English proficiency and persons with disabilities. Ghost networks contribute to inequity in health care by leaving Californians to fend for themselves in their most vulnerable time”.

The bill tackling what are disparagingly called “ghost networks” has so far passed the Assembly and the Senate Health Committees with only Republicans in opposition, and despite the lobbying powerhouses representing California doctors and insurers fighting the bill every step of the way.

Doctors and insurers blame each other for problems in the directories, but they argue the bill is unnecessary, burdensome on them and that laws on the books already address the problem.

Combined, the groups have given at least $4.7 million to California legislators since 2015, according to the Digital Democracy database.

CalMatters reports that along with opposition from influential lobbyists for doctors and insurers, the measure also received a lukewarm response from the state agency that would enforce the bill if it becomes law.

As the Legislature and Gov. Gavin Newsom sought to address a $30 billion budget deficit this year, the Department of Managed Health Care estimated that the bill would cost $12 million to bring on “additional staff.” According to the bill’s analysis, the new employees are needed to develop regulations, forms and to monitor “provider directory accuracy.”

The estimate of $12 million is the equivalent of 80 employees each making $150,000 a year – figures that could alarm Newsom’s budget team and the lawmakers who dole out cash to state agencies on the Senate Appropriations Committee, where the bill will be considered in the coming weeks.

Holden’s bill would require an insurer’s provider directory to be at least 60% accurate by this time next year and 95% accurate by July 1, 2028. The insurers would face fines up to $10,000 for every 1,000 enrolled customers each year if they didn’t hit the benchmarks. Kaiser, for instance, says it provides care to 9.4 million Californians.

The bill also says patients who mistakenly use an out-of-network doctor due to inaccurate information from provider lists cannot be charged out-of-network rates.

Under the federal Consolidated Appropriations Act (CAA) of 2021, “No Surprises Act,” providers and health care facilities must generally refund enrollees amounts paid in excess of in-network cost-sharing amounts with interest, if the enrollee has inadvertently received out-of-network care due to inaccurate provider directory information, and if the provider or facility billed the enrollee for an amount in excess of in-network cost-sharing amounts, and the enrollee paid the bill.

In addition, providers and health care facilities must maintain business processes to submit provider directory information at specified times to support plan and issuers in maintaining accurate, up to date provider directories. Contract provisions can require a provider to be removed at the time of the contract termination, and the plan to bear financial responsibility for providing inaccurate network status information to an enrollee.