California IDR Arbitration For Medical Revenue Recovery

The California Surprise Billing Law (SBL)

The California State Surprise Billing Law (SBL) took effect on July 1, 2017, and is codified under Cal. Health and Safety Code § 1371.9 (2016). This comprehensive law protects patients from out-of-network (OON) balance bills in situations where they did not knowingly choose to receive care from an OON provider. Additionally, it establishes a state-level dispute resolution process to address reimbursement disputes.

Key Provisions:

1. Reimbursement Standards:
   • For inadvertent OON services: Payment must be the greater of 125% of Medicare rates or the average in-network (INN) rate.
   • For emergency OON services: Payment must reflect usual and customary rates (UCR), as defined by California case law.
2. State Arbitration Process:
   California provides an arbitration process for resolving payment disputes between providers and insurers for covered services.
3. Coordination with Federal Law:
   • California does not have an All-Payer Model Agreement that dictates OON rates. Instead, the state laws specified in Cal. Health and Safety Code §§ 1371.30, 1371.31, 1371.9, and Insurance Code §§ 10112.8, 10112.81, and 10112.82(a) govern OON rate determination for non-emergency services provided by noncontracting professionals at contracting facilities.
   • For cases not covered under these state laws (such as air ambulance services), the federal Independent Dispute Resolution (IDR) process under the No Surprises Act applies.
   • The California Department of Insurance and the Department of Managed Health Care collaboratively enforce outcomes of the federal IDR process within the state.

This dual framework ensures patients in California are shielded from surprise medical bills while providing a structured mechanism for resolving OON payment disputes.

(Source: CMS Letter to the Governor of California, December 22, 2021)