Existing law provides for the licensure and regulation by the State Department of Health Care Services of adult alcoholism and drug abuse recovery and treatment facilities. The department also requires that an individual providing counseling services working within an alcohol and drug abuse recovery and treatment program be registered with or certified by a certifying organization approved by the department to register and certify counselors.

This bill would also prohibit certain persons, programs, or entities, including an alcoholism or drug abuse recovery and a substance use disorder treatment program and persons employed by that program, from giving or receiving remuneration or anything of value for the referral of a person who is seeking alcoholism or drug abuse recovery and substance use disorder treatment services and would authorize the department to investigate and take specified disciplinary action against those persons or programs for violating those prohibitions.

Existing law provides for the licensure and regulation by the State Department of Health Care Services of adult alcoholism and drug abuse recovery and treatment facilities. The department also requires that an individual providing counseling services working within an alcohol and drug abuse recovery and treatment program be registered with or certified by a certifying organization approved by the department to register and certify counselors.

This bill, among other things, would prohibit any alcohol drug treatment program or any certified alcohol drug counselor from offering, delivering, receiving, or accepting any rebate, refund, commission, preference, patronage dividend, discount, or other consideration, whether in the form of money or otherwise, as compensation or inducement for referring patients, clients, or customers to any person or certified or licensed program. A violation of these provisions would be a misdemeanor and would also be punishable by a fine not exceeding $2,500 per violation. The bill would prohibit a licensed or certified alcohol and drug treatment program or any certified alcohol and drug counselor from participating in, or operating, a group advertising and referral service for addiction treatment services unless specified conditions are met, including, but not limited to, that the service register with the department, that the service not employ a solicitor to solicit prospective patients or clients, and that the service file a copy of its standard form contract with the department, which would be kept confidential. The bill would make it a misdemeanor for a person to operate a group advertising and referral service for alcohol and drug treatment programs or counselors without registering with the department. The bill would provide that a violation of the applicable provisions by a certified person or a licensee would be grounds for disciplinary action, as provided. Because a violation of the above-specified provisions would be a crime, the bill would impose a state-mandated local program.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law provides for the regulation of health insurers by the Department of Insurance. Existing law requires group health care service plans to authorize and permit assignment of a Medi-Cal beneficiarys right to reimbursement for covered services to the State Department of Health Care Services, except as specified. Existing law also provides for the direct payment of group insurance medical benefits by a health insurer to the person or persons furnishing or paying for hospitalization or medical or surgical aid or, in the case of a Medi-Cal beneficiary, to the State Department of Health Care Services, as specified.

This bill would impose impose, only with respect to services provided by an out-of-network provider, that assignment requirement on a group or individual health care service plan or health insurer and would also require those plans and insurers to authorize and permit permit, upon request of the enrollee or subscriber, the assignment of an enrollees, subscribers, or insureds right to reimbursement enrollees or subscribers right to reimbursement, or, upon request of the insured, the payment of insurance benefits, as specified, for covered addiction treatment services to the provider furnishing those services. The bill would require the provider to provide the plan or insurer with certain information in order to receive reimbursement. The bill would also limit the amount of the reimbursement, where if the health care coverage is a health insurance policy, to the amount of the benefit covered by the policy.

Because a willful violation of the bills provisions by a health care service plan would be a crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law provides for the licensure and regulation by the State Department of Health Care Services of adult alcoholism and drug abuse recovery and treatment facilities. The department also requires that an individual providing counseling services working within an alcohol and drug abuse recovery and treatment program be registered with or certified by a certifying organization approved by the department to register and certify counselors.

This bill, among other things, would prohibit any alcohol drug treatment program or any certified alcohol drug counselor from offering, delivering, receiving, or accepting any rebate, refund, commission, preference, patronage dividend, discount, or other consideration, whether in the form of money or otherwise, as compensation or inducement for referring patients, clients, or customers to any person or certified or licensed program. A violation of these provisions would be a misdemeanor and would also be punishable by a fine not exceeding $2,500 per violation. The bill would prohibit a licensed or certified alcohol and drug treatment program or any certified alcohol and drug counselor from participating in, or operating, a group advertising and referral service for addiction treatment services unless specified conditions are met, including, but not limited to, that the service register with the department, that the service not employ a solicitor to solicit prospective patients or clients, and that the service file a copy of its standard form contract with the department, which would be kept confidential. The bill would make it a misdemeanor for a person to operate a group advertising and referral service for alcohol and drug treatment programs or counselors without registering with the department. The bill would provide that a violation of the applicable provisions by a certified person or a licensee would be grounds for disciplinary action, as provided. Because a violation of the above-specified provisions would be a crime, the bill would impose a state-mandated local program.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law provides for the regulation of health insurers by the Department of Insurance. Existing law requires group health care service plans to authorize and permit assignment of a Medi-Cal beneficiarys right to reimbursement for covered services to the State Department of Health Care Services, except as specified. Existing law also provides for the direct payment of group insurance medical benefits by a health insurer to the person or persons furnishing or paying for hospitalization or medical or surgical aid or, in the case of a Medi-Cal beneficiary, to the State Department of Health Care Services, as specified.

This bill would impose that assignment requirement on a group or individual health care service plan or health insurer and would also require those plans and insurers to authorize and permit assignment of an enrollees, subscribers, or insureds right to reimbursement for covered addiction treatment services to the provider furnishing those services. The bill would require the provider to provide the plan or insurer with certain information in order to receive reimbursement. The bill would also limit the amount of the reimbursement, where the health care coverage is a health insurance policy, to the amount of the benefit covered by the policy.

Because a willful violation of the bills provisions by a health care service plan would be a crime, this bill would impose a state-mandated local program.

Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

This bill would make legislative findings to that effect.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

SENATE COMMITTEE ON HEALTH

Senator Ed Hernandez, O.D., Chair

BILL NO: SB 636

SUBJECT: Addiction treatment: advertising: payment

SUMMARY:

Requires on and after January 1, 2018, a health care service plan and a health insurer, as specified, to authorize and permit assignment of the enrollee’s or subscriber’s right, upon request of the enrollee or subscriber, to any reimbursement for addiction treatment services covered under the plan contract to the provider who furnished the addiction treatment services, only when the services are provided by an out-of-network provider. Prohibits specified entities from giving or receiving remuneration or anything of value for the referral of a person who is seeking alcoholism or drug abuse recovery or treatment services, and gives the Department of Health Care Services authority to enforce this prohibition, as specified.

Existing law:

1. Requires the Department of Health Care Services (DHCS) to license alcoholism or drug abuse recovery or treatment facilities (RTFs) that provide 24-hour residential non-medical services to adults who are recovering from problems related to alcohol, drug, or alcohol and drug misuse or abuse, and who need alcohol, drug, or alcohol and drug recovery, treatment, or detoxification services.
2. Requires RTF licensees to provide at least one of the following: recovery, treatment, or detoxification services. Requires DHCS to adopt regulations requiring records and procedures appropriate for the type of service provided. Provides that the records and procedures can include all of the following: admission criteria; intake process; assessments; recovery, treatment, or detoxification planning; referral; documentation of provision of recovery, treatment, or detoxification services; discharge and continuing care planning; or indicators of recovery, treatment, or detoxification outcomes.
3. Requires, through regulation, substance use disorder (SUD) counselors that work in a facility licensed or certified by DHCS to be registered with or certified by a counselor certification organization (CO) recognized by DHCS.
4. Prohibits, through regulation, “licensed professionals,” as defined, in good standing with their licensing agencies from being required to become certified by a CO in order to work at a facility licensed or certified by DHCS. Defines “licensed professional” as a physician licensed by the Medical Board of California (MBC); a psychologist licensed by the California Board of Psychology (CBP); a clinical social worker or marriage and family therapist licensed by the California Board of Behavioral Sciences (BBS); or an intern registered with the CBP or the BBS. Defines “in good standing” as the professional’s license being valid and not revoked, suspended, or otherwise terminated.
5. Renders unlawful the offer, delivery, receipt, or acceptance by a licensed healing arts professionals of any rebate, refund, commission, preference, patronage dividend, discount, or other consideration, whether in the form of money or otherwise, as compensation or inducement for referring patients, clients, or customers to any person, irrespective of any membership, proprietary interest, or coownership in or with any person to whom these patients, clients, or customers are referred. Allows the payment or receipt of consideration for services other than the referral of patients which is based on a percentage of gross revenue or similar type of contractual arrangement if the consideration is commensurate with the value of the services furnished or with the fair rental value of any premises or equipment leased or provided by the recipient to the payer.
6. Renders unlawful for a licensed healing arts professional to disseminate or cause to be disseminated any form of public communication containing a false, fraudulent, misleading, or deceptive statement, claim, or image for the purpose of or likely to induce, directly or indirectly, the rendering of professional services or furnishing of products in connection with the professional practice or business for which he or she is licensed, including, but not limited to, communication by means of mail, television, radio, motion picture, newspaper, book, list, or directory of healing arts practitioners, Internet, or other electronic communication.
7. Requires group contracts administered by health plans licensed under the Knox-Keene Health Care Service Plan Act of 1975 (Knox-Keene) to authorize and permit assignment of enrollee's or subscriber's right to reimbursement to DHCS when services are provided to a Medi-Cal beneficiary.
   
8. Requires health insurers to pay group insurance benefits, for or contingent upon hospitalization or medical or surgical aid, upon written consent of the insured, to the person or persons having provided or having paid for the services, if the person qualifies for reimbursement by submitting specified information about the service and the insured person or dependent is covered by the policy.
   
9. Requires a health insurer to pay group insurance benefits to DHCS, in the case of a Medi-Cal beneficiary, where DHCS has paid for hospital, medical, or surgical services, as specified.
   
10. Requires contracts between providers and health plans to be in writing and prohibits, except for applicable copayments and deductibles, a provider from invoicing or balance billing a plan's enrollee for the difference between the provider's billed charges and the reimbursement paid by the plan or the plan's capitated provider for any covered benefit.
    
11. Requires a health plan or health insurer to authorize and permit assignment of the enrollee’s or insured’s right, if any, to any reimbursement for health care services covered under the plan contract or policy to a non-contracting individual health professional who furnishes the health care services at an in network facility, as specified.
    

This bill:

1. Requires, on and after January 1, 2018, a health care service plan that provides hospital, medical, or surgical expense benefits for plan members and their dependents to authorize and permit assignment of the enrollee’s or subscriber’s right, upon request of the enrollee or subscriber, to any reimbursement for addiction treatment services covered under the plan contract to the provider who furnished the addiction treatment services, only when the services are provided by an out-of-network provider. Requires a provider, when seeking payment from a health care service plan, to provide the plan with the provider’s itemized bill containing specified information.
2. Requires, on and after January 1, 2018, a health insurer, upon request of the insured, to pay insurance benefits contingent upon, or for expenses incurred on account of, addiction treatment services covered under the health insurance policy to the person or persons having provided the addiction treatment services if that person has qualified for reimbursement by submitting specified information, only when the services are provided by an out-of-network provider. Prohibits the amount of that payment from exceeding the amount of the benefit covered by the policy. Requires, when payment is made, discharge of the insurer’s obligation with respect to the amount paid.
3. Prohibits the following persons, programs, or entities from giving or receiving remuneration or anything of value for the referral of a person who is seeking alcoholism or drug abuse recovery or treatment services:
   1. An alcoholism or drug abuse recovery and treatment program licensed by DHCS;
   2. An owner, partner, officer, or director, or a shareholder who holds an interest of at least 10% in an alcoholism or drug abuse recovery and treatment facility licensed by DHCS; and,
   3. A person employed by, or working for, an alcoholism or drug abuse recovery and treatment program licensed or certified by DHCS, including registered and certified counselors and licensed professionals providing counseling services.
4. Allows DHCS to investigate allegations and assess a penalty upon an alcoholism or drug abuse recovery and treatment program licensed or certified by DHCS; suspend or revoke the license or certification of the program; and suspend or revoke the registration or certification of a counselor for violating the provision in 3) above.
5. Allows DHCS to investigate allegations against licensed professionals providing counseling services at an alcoholism or drug abuse recovery and treatment program licensed, certified, or funded by DHCS, and to recommend disciplinary actions, including, but not limited to, termination of employment at a program, and suspension and revocation of licensure by the respective licensing boards.
6. Renders unlawful the offer, delivery, receipt, or acceptance by any alcohol or drug treatment program or any certified SUD counselor of any rebate, refund, commission, preference, patronage, dividend, discount, or other consideration, whether in the form of money or otherwise, as compensation or inducement for referring patients, clients, or customers to any person or certified or licensed program, irrespective of any membership, proprietary interest, or coownership in or with any person or program to whom these patients, clients, or customers are referred. Makes it a misdemeanor, punishable by a fine not to exceed $2,500, for a violation of this provision.
7. Deems a violation of the provisions in this bill, in the case of a certified person, as unprofessional conduct and grounds for suspension or revocation of certification by a CO, or if a license is issued in connection with a place of business, for the suspension or revocation of the license of the place of business for the violation.

FISCAL EFFECT:

This bill has not been analyzed by a fiscal committee.

COMMENTS:

1. Author’s statement. According to the author, SB 636 will ban patient brokering, which is allowing unscrupulous and unqualified persons to prey on those seeking treatment for addiction. Other states have banned financial incentives and kickbacks for patient referral – it’s time for California to do the same. SB 636 also allows payments for addiction services to be furnished to the service provider upon request. This will help prevent relapse from treatment when patients are discharged from treatment.
2. RTFs. RTFs licensed by DHCS, based on what is commonly referred to as the social model, are currently allowed to provide recovery, treatment, and detoxification services. (The Department of Public Health licenses medical model RTFs known as chemical dependency recovery hospitals.) The services provided by these RTFs include group and individual counseling, educational sessions, and alcoholism or drug abuse recovery and treatment planning. Social model RTFs are allowed to provide clients first aid and emergency care, and since the passage of AB 848 (Stone, Chapter 744, Statutes of 2015), RTFs can apply to DHCS for an additional license to provide incidental medical services by a licensed physician and surgeon or other health care practitioner, as specified.
3. RTF and counselor oversight. As part of their licensing function, DHCS conducts reviews of RTF operations every two years, or as necessary. DHCS’s SUD Compliance Division checks for compliance with statute and regulations to ensure the health and safety of RTF residents and investigates all complaints related to RTFs, including deaths, complaints against staff, and allegations of operating without a license. DHCS has the authority to suspend or revoke a license for conduct in the operation of an RTF that is inimical to the health, morals, welfare, or safety of either an individual in, or receiving services from, the facility or to the people of the State of California.

The SUD Compliance Division also investigates violations of the uniform Code of Conduct of registered or certified SUD counselors, which is used by the three COs recognized by DHCS. This document includes a prohibition against registered and certified counselors from advertising, marketing, or promoting programs, services, training, education, or experience in a false and misleading manner. Additionally, RTFs are required to report counselor misconduct to DHCS within 24 hours of the violation. RTFs that do not comply with statute and regulations are subject to civil penalties and license suspension or revocation. Licensing actions against SUD counselors who are “licensed professionals,” and not required to be registered with or certified by a CO, would be conducted by the respective licensing boards within BBS, CBP, and MBC.

DHCS states that it currently does not have the authority to regulate program/counselor advertising and kickbacks and has received a limited number of complaints regarding this problem for patient/client referrals, most of which are occurring in the commercial health plan market and not in the Medi-Cal program, as Medi-Cal currently only pays for residential treatment for a very limited population.

1. Sober living homes (SLHs). A 2010 report on the National Institutes of Health (NIH) Web site, Sober Living Houses for Alcohol and Drug Dependence: 18-month Outcomes, states that SLHs are not formal treatment programs and are not obligated to comply with state or local regulations applicable to treatment. However, NIH does not provide a formal definition of an SLH. The report also mentions that it is difficult to determine how many SLHs there are in California because they are outside of the purview of state licensing authorities (so no one is tracking SLHs). The NIH report cites the protection that the federal Fair Housing Act affords SLHs to be located in residentially zoned areas, personal privacy under the Fourth Amendment, and the right of people with disabilities to live together for a shared purpose, such as mutually assisted recovery and maintenance of an abstinent lifestyle.

According to DHCS’s Web site, facilities that do not provide alcohol and other drug services and do not require licensure by DHCS include cooperative living arrangements with a commitment or requirement to be free from alcohol and other drugs, sometimes referred to as SLHs, transitional housing, or alcohol- and drug-free housing. DHCS states that while SLHs or alcohol- and drug-free housing are not required to be licensed by DHCS, they may be subject to other types of permits, clearances, business taxes, or local fees, which may be required by the cities or counties in which they are located. DHCS also does not certify or investigate complaints against SLHs. If a SLH is providing licensable services to adults, then it must obtain a valid RTF license from DHCS. Licensable services can include, but are not limited to, detoxification services, group sessions, individual sessions, one-on-one counseling, educational sessions, or recovery, treatment, or discharge planning. If a SLH is providing just one of the mentioned services, then it should be classified as an RTF and must obtain a valid license from DHCS.

1. Reports about “patient brokering.” Several articles obtained by committee staff (“A Choice for Recovering Addicts: Relapse or Homelessness, New York Times, May 30, 2015; “California’s Rehab System is in Crisis … ” CityWatch Los Angeles, June 23, 2016; and “Special Report: Two states with an ocean view, and an ethical cloud,” Addiction Professional, March 18, 2013) highlight the issue explained by the author of this bill. In all the reports, the issue is attributed to facilities that do not require state licensure or oversight, including SLHs and what New York refers to as “three-quarter houses,” which are New York’s equivalent to California’s SLHs. The articles highlight advertising practices by these unregulated facilities, which often attract clients by promising services that are never provided. The articles suggest that states begin to regulate SLHs and other like, unregulated facilities in order to protect consumers.
2. Health insurance oversight. Regulation and oversight of health insurance in California is split between two state departments. The California Department of Managed Health Care (DMHC) regulates health maintenance organizations (HMOs) and some Preferred Provider Organization (PPO) plans. The California Department of Insurance (CDI) regulates disability insurers offering health insurance, which includes PPO plans and traditional indemnity insurance. An HMO is a managed care arrangement that provides and arranges for health care through contracted or employed providers and generally only covers health services provided by network providers, except in an emergency. In a PPO arrangement, the health insurer contracts with a network of medical providers who agree to accept lower fees and/or to control utilization. Enrollees in a PPO plan receive a higher level of benefits if they go to a preferred provider than if they go to a non-preferred or non-contracted provider.
3. Assignment of benefits. Assignment of benefits refers to an arrangement where a patient requests that his or her health benefit payments be made directly to a designated person or facility, such as a physician or hospital. All health plans under Knox-Keene, HMOs, and the PPOs subject to DMHC jurisdiction are required to directly reimburse providers for emergency care and services, providing certain statutory and regulatory conditions are met. Otherwise, HMO model plans would generally have no legal obligation to reimburse non-contracted providers, except in an emergency, since the plan contract provides that enrollees must get services from network providers in order for the benefits to be covered. PPO plan enrollees may seek services from non-contracted providers. Traditional indemnity insurance and PPO coverage plans have historically reimbursed the patients directly for covered services but have generally allowed for assignment of benefits to network providers, and even for out-of-network providers. If a patient signs a written authorization, the provider may seek, and the insurer must pay, the provider directly. Patients would still be liable for their share of costs, which can be substantial for a provider outside the PPO network.
   
4. CDI investigation. On November 10, 2016, CDI issued a press release about an investigation that resulted in the arrest of the operators of a Southern California SLH, Community Recovery of Los Angeles (CRLA). The operators were arrested on several felony counts of grand theft and identity theft for allegedly conspiring to defraud clients and insurers out of more than $176 million. Affected insurers include Anthem Blue Cross, Blue Shield, Cigna, Health Net, and Humana, which paid nearly $44 million before discovering the suspected fraud and stopping payments to CRLA. CRLA is accused of luring people with treatment marketing schemes and stealing patient identities to buy health insurance policies for people without their knowledge, as well as committing such acts as submitting claims for services not provided, falsely representing CRLA as a residential treatment facility while not being licensed as such, and filing fraudulent health insurance policy applications. CDI Commissioner Dave Jones stated that this case was the first wave of indictments and charges in an ongoing investigation into one of the largest health insurance fraud cases in the state. CDI was assisted in the investigation by various local agencies, and DHCS accompanied detectives to ensure that patients in CRLA facilities were transferred to licensed treatment facilities.
   
5. Double referral. Should this bill pass out of this committee, it will be referred to the Senate Judiciary Committee.
6. Prior legislation. SB 1283 (Bates of 2016) would have allowed a city, county, or city and county to adopt, by ordinance, health and safety standards and enforcement mechanisms for structured sober living homes, as defined. Specified that a structured sober living home registered pursuant to an ordinance authorized by this bill is not subject to state licensure and regulation, as specified. SB 1283 failed passage in the Senate Health Committee.

AB 2255 (Melendez of 2016) would have provided that a residence housing those purporting to be recovering from drug or alcohol abuse would be presumed to be a SLH if it has been certified, registered, or approved by a state-recognized nonprofit organization, which would be required to establish minimum standards for SLHs, including protocols to address suspected drug and alcohol abuse or to report the death of a resident. AB 2255 was held on suspense in the Assembly Appropriations Committee.

AB 72 (Bonta, Chapter 492, Statutes of 2016) establishes a payment rate, which is the greater of the average of a health plan or health insurer’s contracted rate, as specified, or 125% of the amount Medicare reimburses for the same or similar services, and a binding independent dispute resolution process for claims and claim disputes related to covered services provided at a contracted health facility by a non-contracting health care professional. Limits enrollee and insured cost sharing for these covered services to no more than the cost sharing required had the services been provided by a contracting health professional. Requires plans and insurers to permit enrollees or insureds to assign payment of these benefits to the health care professional.

AB 1086 (Dababneh of 2015) would have required health plans and health insurers that sell products in the individual market to authorize and permit assignment of an enrollee or insured's right to reimbursement for covered services to a non-contracting physician who furnishes health care services. AB 1086 failed passage in the Assembly Health Committee.

AB 1742 (Pan of 2012) would have required all health care service plans and individual insurers, except specialized health plans and insurers, to permit enrollees to assign benefits directly to health care providers for health care services in the same way that existing law requires such benefits for group issuers to be assigned to the Department of Health Care Services on behalf of beneficiaries of the Medi-Cal program. AB 1742 failed passage in the Assembly Health Committee.

AB 1579 (Campos of 2012) would have required a health care service plan or health insurer that pays a contracting dental provider directly for covered services rendered to an enrollee or insured to also pay a non-contracting dental provider directly for covered services rendered to an enrollee or insured where the provider submits a written assignment of benefits signed by the enrollee or insured, or their legal representative. AB 1579 was held by the author in the Senate Health Committee.

AB 2491 (Nestande of 2014) would have required DHCS to administer the licensure and regulation of adult recovery maintenance facilities (SLHs), as defined, and to adopt emergency regulations, applicable only to adult recovery maintenance facilities, to implement the fee process for initial licensure, and the provisions for the extension of licensure, follow-up compliance visits, and civil penalties. AB 2491 was held on suspense in the Senate Appropriations Committee.

AB 2335 (Mansoor of 2014) would have defined SLHs with certain criteria and exempted an SLH or supportive housing from licensure as an RTF. AB 2335 failed passage in the Assembly Health Committee on April 22, 2014, on a 6-12 vote.

SB 214 (Benoit of 2009) and AB 724 (Benoit of 2007) were both substantially similar to AB 2255 (Melendez). SB 214 failed in the Senate Health Committee without being heard. AB 724 failed passage in the Senate Health Committee on a 5-4 vote. Reconsideration was granted, but the bill was not heard again in the committee.

SB 992 (Wiggins of 2008) would have required the Department of Alcohol and Drug Programs to license SLHs, or “adult recovery maintenance facilities.” SB 992 was vetoed by Governor Schwarzenegger who stated that while licensure and regulation of SLHs are important to ensure SLHs respect and participate in their local community; for communities to provide support to these facilities; and for individuals seeking recovery from alcohol and drug addiction to live in safe environments that help them in their recovery, this bill did not accomplish these policy goals.

AB 36 (Strickland of 2006) was similar to SB 992. AB 36 was held on suspense in the Senate Appropriations Committee.

SB 340 (Florez of 2003) was similar to SB 992 and AB 36. SB 340 failed in the Senate Health and Human Services Committee without being heard.

AB 2317 (Chu of 2002) was similar to SB 992, AB 36, and SB 340. AB 2317 was held on suspense in the Senate Appropriations Committee.

1. Support. Supporters of this bill, largely providers, argue that they can attest to the destructive nature that kickbacks and unscrupulous financial agreements between treatment providers and referrers have on the safety of patients and the integrity of the payment system in California. Supporters argue that the inability to prohibit patient brokering has led to unscrupulous financial relationships between treatment providers and referring agents. Supporters state that these unscrupulous relationships have led to referrals being made based upon financial incentive rather than client benefit, and is a practice that lends itself to immense conflict of interest. Supporters further argue that patient brokers are not credentialed professionals and may have little to no competency in identifying or assessing addiction. Supporters say that this bill will end this resource draining practice and return integrity to the payment system. Further, supporters state that direct payment to patients for medical care has obvious financial implications for all insurers and enrollees, and that direct payment to individuals in early recovery can have dramatic impacts, including relapse or even death by overdose encouraged by ready access to otherwise unavailable cash.
2. Oppose unless Amended. The Association of California Life and Health Insurance Companies (ACLHIC) and the California Association of Health Plans (CAHP) have requested removal of sections of this bill requiring the assignment of benefits for out-of-network treatment providers. ACLHIC argue that this measure would require plans and insurers to reimburse providers based on their billed charges vs. what is allowed under the contract, which would be a huge deviation from current practice. ACLHIC and CAHP indicate this bill would take away one of the few tools they have to encourage provider contracting. ACLHIC states that over the last several years, insurers and health plans have had to find innovative strategies to encourage provider contracting and protect consumers against increased premiums, out of pocket expenses, and the practice of balance billing. Not only does it encourage providers to be part of a network, but it also protects consumers from facing exorbitant medical costs when they see an out-of-network provider. CAHP states that their member plans will be forced to directly reimburse an addiction services provider even if the provider does not participate in the plan network. CAHP argues this will increase health costs and lower the quality of care. CAHP further states that less contracting between health plans and providers means a loss of many consumer protections.
3. Amendments. The author has agreed to the following amendments:
   1. Strike out SEC. 1 and SEC. 5 of this bill related to health plan and insurer assignment of benefits.
   2. On page 4 between lines 35 and 36, insert:

(c) A violation of Section 11833.1 constitutes a misdemeanor and is punishable by a fine not exceeding two thousand five hundred dollars ($2,500) per violation.

• 1. On page 5, strike out lines 7 through 15, inclusive.
  2. On page 7, strike out lines 12 through 29, inclusive.

SUPPORT AND OPPOSITION:

Support: California Consortium of Addiction Programs and Professionals (sponsor)

Associated Rehabilitation Program for Women, Inc.

Benchmark Transitions

California Access Coalition

Community Recovery Resources

Community Social Model Advocates, Inc.

County Behavioral Health Directors Association of California

Phoenix Rising Behavioral Health Care Services

The Ranch Recovery Centers, Inc.

Soroptimist House of Hope, Inc.

Sun Street Centers

Twin Town Treatment Centers

The Villa Center, Inc.

Oppose: Association of California Life & Health Insurance Companies (unless amended)

California Association of Health Plans (unless amended)

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