Sponsored by the California Medical Association (CMA) and authored by Senator Richard Pan, M.D., SB 510 (2021) requires health plans and insurers to reimburse providers for specified COVID-19 testing, related office visits and immunization services. The law also prohibits health plans and insurers from shifting the financial risk for COVID-19 testing, vaccine administration and related services to contracted providers, unless both parties have negotiated and agreed to a new contractual provision. Though the law took effect January 1, 2022, it applies retroactively to claims dating back to March 4, 2020, the beginning of California’s public health emergency for COVID-19.

The California Association of Health Plans (CAHP) filed a lawsuit in November 2021 challenging the law’s retroactive application on constitutional grounds. Although CAHP obtained a preliminary injunction that temporarily prohibited the enforcement of the law with respect to pre-2022 claims, the trial court ultimately ruled against CAHP, and held that the law could apply retroactively to March 4, 2020, and dissolved the preliminary injunction. This means that the law, including its retroactive provisions, is fully in effect. Plans and insurers are required to comply with the reimbursement requirements.

According to guidance issued by the California Department of Managed Health Care (DMHC) (APL 23-021), plans were required to reimburse providers with interest for unpaid or underpaid SB 510 claims by February 12, 2024. Plans that failed to reimburse providers by this date, may be subject to enforcement action by DMHC. CMA has heard reports, however, that some plans have still not reimbursed physicians for COVID-19 testing and related services.

Additionally, CMA is hearing some plans have refused to reimburse delegated groups, asserting that SB 510’s prohibition on delegation of financial risk applies only to COVID-19 testing, not related services, such as screening exams. However, the law is clear that “health plans shall not delegate the financial risk to a contracted provider for the cost of enrollee services provided under this section unless the parties have negotiated and agreed upon a new provision of the parties’ contract” (Health & Safety Code 1342.2(a)(6)). Services provided under section 1342.2 include both “COVID-19 diagnostic and screening testing and health care services related to diagnostic and screening,” which the law expressly defines to include “hospital or health care provider office visits for the purposes of receiving testing,” and “the administration of testing,” among items and services. This is also reiterated in DMHC guidance (APL 22-014) issued in April 2022 regarding SB 510 compliance.

Physicians and physician groups facing plan refusals to pay pre-2022 COVID-19 testing, and related services are encouraged to consult with their practice attorney and contact CMA’s Center for Economic Services at (800) 786-4262 or economicservices@cmadocs.org.