May 18, 2023
SACRAMENTO, CA – In a ruling issued this week, the Los Angeles Superior Court upheld the constitutionality of a state law requiring health plans to fairly reimburse health care providers for the costs of COVID-19 testing during the COVID-19 state of emergency.
Senate Bill 510, which the California Medical Association (CMA) sponsored, mandates that health plans and health insurers reimburse health care providers, regardless of network status, for COVID-19 testing and vaccination services. The law requires that health plans and insurers cover testing and vaccination without any cost-sharing or prior authorization requirements. SB 510 extended those provisions retroactively to March 4, 2020, the date Governor Gavin Newsom declared a state of emergency for the pandemic.
In his ruling, Judge Mitchell L. Beckloff dismissed the arguments made by the California Association of Health Plans (CAHP) challenging the constitutionality of SB 510’s requirement that CAHP’s health plan members pay health care providers for COVID-19 testing rendered during the period from the March 4, 2020, state of emergency declaration through December 31, 2021. Recognizing that health plans do not operate as a matter of right, but rather must comply with state law, the court found it improper for those health plans to force health care providers to shoulder the responsibility for the cost of COVID-19 diagnostic testing through unfair contracting practices.
Judge Beckloff found that SB 510 was passed “to combat COVID-19 and its community spread by ensuring access to and encouragement for…screening and testing [and to] protect access to COVID-19 diagnostic and screening testing by ensuring the overall financial stability of the healthcare system.” His order further states that the health plans’ attempt to impose unreasonable contract terms on health care providers could frustrate this purpose by “diminish[ing] access to quality care.”
“CMA was proud to sponsor SB 510 when it was introduced by then-Senator Richard Pan, M.D., and we’re thrilled to see it’s been rightly upheld in court,” said CMA President Donaldo Hernandez, M.D. “SB 510 is a vital, life-saving bill that ensured all Californians were able to access COVID-19 testing throughout the duration of the pandemic and will require coverage for testing and vaccination during future public health emergencies.”
Prior to the passage of SB 510, CMA asked the California Department of Managed Care and the California Department of Insurance to investigate concerns that certain payors were illegally impeding patients’ access to COVID-19 testing and profiting at the expense of treating physicians.
CMA sponsored SB 510 to ensure that those barriers to testing were removed, physicians were reimbursed fairly by health plans, and patients did not have to incur out-of-pocket expenses for testing.