California’s out-of-network billing and payment law (AB 72) took effect on July 1, 2017, changing the billing practices of non-participating physicians providing covered, non-emergent care at in-network facilities including hospitals, ambulatory surgery centers and laboratories.

The law requires plans and insurers to reimburse physicians at the greater of either the payor’s average contracted rate or 125 percent of the Medicare fee-for-service rate for the same or similar services in the general geographic region in which the services were rendered, unless otherwise agreed to by the noncontracting provider and the payor. However, it also includes a mechanism for physicians to challenge the interim payment amount if they are dissatisfied—the independent dispute resolution process (IDRP).

To be eligible to challenge a payment amount through the IDRP, you must first appeal in writing to the payor for additional payment. If you are unsuccessful in resolving the dispute through the payor’s internal appeal process, you may file a claim dispute using the IDRP through the appropriate regulator—either the Department of Managed Health Care or the California Department of Insurance, depending on the product type.

Physicians are encouraged to utilize the IDRP, as regulators are required to consider information from the IDRP when establishing methodology for determining average contracted rates, which in turn will likely impact payor contracting practices going forward.

The California Medical Association (CMA) has published a sample payor appeal letter and a guide to the IDRP that walks physicians through the process. The sample appeal letter and IDRP guide are free and available exclusively to members in CMA’s AB 72 resource center.

If you have questions about IDRP or if your practice has received incorrect payments or denied claims related to the law, contact CMA at (888) 401-5911 or via email.