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AB 974

Medi-Cal managed care plans: enrollees with other health care coverage.

2025-2026 Regular Session Introduced by Joe Patterson

AB 974 eases billing when Medi-Cal is payer of last resort by letting noncontracted providers bill managed care plans for allowable costs, with balance-billing protections.

In committee: Held under submission.
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Bill Summary · AB 974

AB 974 (Patterson) — Summary

Status: In committee; held under submission (last action: 2025-05-23).
Introduced: February 20, 2025.
Subject: Medi‑Cal managed care plans; enrollees with other health care coverage.

Main purpose

AB 974 seeks to clarify and limit administrative barriers when Medi‑Cal enrollees have other health care coverage and Medi‑Cal is the payer of last resort. It aims to make it easier for Medi‑Cal fee‑for‑service (FFS) providers to bill Medi‑Cal managed care plans for allowable costs not covered by the enrollee’s other insurer, and to protect enrollees from balance billing. The bill also focuses stakeholder attention on coordination between commercial coverage and Medi‑Cal managed care—particularly for people receiving regional center services.

Key provisions

  • Adds Welfare & Institutions Code §14197.8 requiring the Department of Health Care Services (DHCS) to ensure that non‑contracted providers billing a Medi‑Cal managed care plan (for costs not paid by another insurer) do not face administrative requirements that are “significantly in excess” of those for billing the Medi‑Cal FFS system.
  • Establishes that, for enrollees who have other health coverage (excluding Medicare) and for whom Medi‑Cal is payer of last resort, a provider in the Medi‑Cal FFS system is generally not required to become an in‑network provider of the enrollee’s Medi‑Cal managed care plan in order to bill that plan for Medi‑Cal allowable costs.
  • Allows a managed care plan to require a letter of agreement (or similar agreement) in two circumstances:
    • When a covered service requires prior authorization, or the service is not covered by the other insurer but is covered by the Medi‑Cal plan. Without such a letter, the provider may be liable for billed amounts above the Medi‑Cal FFS allowable rate or any service limits; however, providers may not balance‑bill enrollees (per §14019.4).
    • When the enrollee qualifies for continuity of care or completion-of‑services protections under existing law (e.g., Section 1373.96) due to terminated or nonparticipating providers.
  • Directs DHCS to solicit input from stakeholders—emphasizing regional center clients—about payment coordination between Medi‑Cal managed care plans and enrollees’ commercial coverage.
  • Requires DHCS to place this topic on the agenda of the first Medi‑Cal Managed Care Advisory Committee meeting in 2026 and, within six months thereafter, take actions it deems necessary to clarify conditions for provider billing to plans.
  • DHCS is urged to offer educational resources to enrollees who request help understanding continuity of care and coordinating coverages.
  • DHCS must report annually (2026–2029) to the Legislature’s health committees on implementation effectiveness.
  • Implementation may be done via plan letters or similar instructions and is conditioned on any required federal approvals and availability of federal financial participation.

Who is affected

  • Medi‑Cal enrollees who also have other health coverage and for whom Medi‑Cal is payer of last resort (excludes Medicare in certain provisions).
  • Providers operating in the Medi‑Cal FFS system, especially noncontracted providers delivering services to managed‑care enrollees with other coverage.
  • Medi‑Cal managed care plans and DHCS.
  • People receiving regional center services (developmental disability services) are explicitly emphasized.

Implementation, timing, and procedural notes

  • The bill conditions implementation on receipt of necessary federal approvals and federal funding participation.
  • DHCS must address the issue through the Medi‑Cal Managed Care Advisory Committee in 2026 and provide follow‑up within six months; annual implementation updates are required from 2026–2029.
  • Legislative history: Passed out of committee on 4/22 (Health Committee, 15–0); referred to Appropriations (suspense). Held under submission as of 5/23/2025.

Potential impacts and considerations

  • May reduce administrative burdens and clarify billing pathways when third‑party coverage exists, improving access and continuity for dual‑coverage enrollees.
  • Protects enrollees from balance billing while creating a mechanism (letters of agreement) for plans to manage prior authorization and service completion.
  • Financial and operational impacts on plans and providers depend on federal approvals, DHCS guidance, and how letters of agreement are used in practice.

Compiled from official sources — confirm details with the bill’s official record.

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