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DMHC proposes "average contracted rate" metholology



February 16, 2018
Area(s) of Interest: Payor Issues and Reimbursement 

The California Department of Managed Health Care (DMHC) has issued proposed regulations for calculating payors’ “average contracted rate” under California’s new out-of-network billing and payment law. The law (AB 72), which took effect July 1, 2017, requires fully insured commercial payors to make “interim payments” to non-contracted physicians for covered, non-emergent services performed at in-network health facilities. The interim rate is the greater of 125 percent of Medicare or the plan/insurer’s average contracted rate (ACR).


Under the new law, the Department of Managed Health Care (DMHC) and the California Department of Insurance (CDI)─are each required to specify a methodology to determine the ACR by January 1, 2019. CDI is also expected to issue its proposed ACR methodology very soon.


By participating in stakeholder meetings and submitting written comments, the California Medical Association (CMA) has been working hard to ensure that health plans and insurers do not game the system to pay artificially low reimbursement rates to physicians subject to AB 72. CMA is reviewing DMHC’s proposed methodology and will submit written comments by March 19, 2018.


If your practice has received incorrect payments or denied claims related to the new law, CMA wants to hear from you. Practices can contact CMA at (888) 401-5911 or economicservices@cmadocs.org.


To learn more about this law, find out if payors are reimbursing you correctly and learn how to dispute the interim rate, visit CMA’s AB 72 Resource Center.

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