Big legal victory! Health plans drop challenge to retroactive enforcement of law requiring payment for COVID-19 services

5/14/2024 1:09:40 PM   

After losing at the trial court level, the California Association of Health Plans (CAHP) has dropped its appeal in a lawsuit challenging the constitutionality of a state law that requires that health plans and insurers reimburse health care providers for certain COVID-19 claims retroactive to the beginning of the pandemic.  

The California Medical Association (CMA) sponsored Senate Bill 510, which was authored by Senator Richard Pan, M.D., in 2021. SB 510 (codified in relevant part at Health and Safety Code section 1342.2 and Insurance Code section 10110.7) requires health plans and insurers to reimburse providers for specified COVID-19 testing, immunization and related 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 applied retroactively to claims dating back to March 4, 2020, the beginning of California’s public health emergency for COVID-19, to ensure that health plans and insurers that failed to make appropriate payments for COVID-19 testing in the early months of the pandemic would be required to pay for the testing that was so necessary. 

CAHP had originally filed the lawsuit in November 2021, challenging the retroactive enforcement of SB 510 on constitutional grounds. Though CAHP had obtained a preliminary injunction on the law’s retroactivity, the trial court ultimately ruled in favor of the law, upholding the validity of SB 510’s retroactive provisions. CAHP subsequently appealed the trial court’s ruling. Yesterday, the appellate court dismissed the appeal following a request by CAHP filed last week. The dismissal formally ends CAHP’s legal challenge to the enforceability of the law’s retroactive provisions. This action does not affect the separate pending lawsuit filed by CMA challenging the California Department of Managed Health Care’s guidance to health plans regarding provider reimbursements for SB 510 services.  

This latest development confirms that SB 510 continues to remain the law, and health plans and insurers are legally obligated to comply with all its requirements, including its retroactive provisions and the payment of interest for claims that were not paid in a timely manner.  

Physician members that have not been reimbursed for COVID-19 testing, immunization and related services, such as screening exams, are encouraged to contact CMA at (800) 786-4262 or economicservices@cmadocs.org.

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