AB 510 (Wood) adds new protections for patients from surprise medical bills

For immediate release:

Sacramento–Today Assemblymember Jim Wood (D-Santa Rosa) introduced AB 510, a bill that adds new protections for patients from surprise medical bills, building on those already provided by AB 72, a bill that has protected 14 million California patients from surprise medical bills since 2017.

“AB 72 has been a lifeline for patients the past four years protecting them from the financial devastation that surprise medical bills could have caused,” said Wood.

"Closing loopholes which still allowed consumers to receive huge out-of-network surprise bills has only grown more urgent during this pandemic when many are finding themselves in the hospital or seeking emergency care. Aligning state and federal law will codify powerful consumer protections and keep Californians from falling into traps that might lead to a costly bill," said Yasmin Peled, policy and legislative advocate for Health Access California, a sponsor of AB 510. 

AB 510 incorporates additional protections recently placed into federal law when the “No Surprises Act” became law through the Consolidated Appropriations Act of 2021, which was signed in December 2020 and becomes law on January 1, 2022. The federal act included a provision that carves out existing state law, allowing California law to remain and not be preempted by federal law, but it does provide some additional consumer protections regarding consent that are being incorporated into AB 510. The act also extends protections to approximately 6 million Californians who are covered under ERISA plans, plans California does not regulate.

“AB 72 provided patients with many protections against surprise medical bills and those will remain, including a key provision establishing the out-of-network physician payment structure, but AB 510 allows us to improve and add some new patient protections,” said Wood.

In AB 72, enrollees were allowed to consent to out-of-network services in advance, for instance when the enrollee chose to use their PPO out-of-network benefit, but that the providers had at least 24 hours to obtain this consent in advance of services being rendered. AB 510 changes that to align with the federal act that requires at least 72 hours to consent to care, either in writing or electronically. Additionally, the act requires that enrollees be given a list of contracted providers who can provide these services and must be provided in 15 most commonly used languages. 

One of the most significant provisions of AB 72 – the payment structure for out-of-network physicians – resulted from significant negotiations among physicians and other stakeholders at the time and will be preserved as the greater of 125 percent of Medicare or the “average contracted rate” which is a commercial rate determined by the market where physicians and insurers negotiate. This payment structure serves to allow out-of-network providers to collect something close to their current price but prevents them from using their monopoly position to further inflate their payments, both in and out of network.

“The federal act does not include a benchmark payment standard like California’s but instead relies on voluntary negotiations between insurers and providers, backed up by arbitration if negotiations fail,” said Wood. “We have absolutely no interest in changing California’s current payment structure because it provides the most effective patient protections and also serves us well in controlling health care costs. We put California’s benchmark payment structure into statute to protect patients, not to make payments more lucrative for providers.”

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