#PNN_Sacramento Capitol Building in California

State Bill 510, authored by Senator Richard Pan, M.D., was recently signed into law. The law requires health insurers to cover the cost of coronavirus tests and ensures Californians do not have to pay out-of-pocket fees or contend with prior authorization requirements, which have left some consumers with surprise medical bills and bureaucratic headaches.

“This is about public health,” Senator Pan said in an interview. “We don’t want to be flying blind as a society. When people think they might be infected, we want them to get tested during a pandemic. We need to minimize barriers.”

The new law takes effect January 1, 2022, but is retroactive to the beginning of the public health emergency, which was declared on March 4, 2020.

SB 510 also prohibits payors from shifting the financial risk of COVID-19 testing and vaccine administration to contracted providers, unless both parties have negotiated and agreed to a new contractual provision. This is due to some health plans and insurers have been shifting the financial risk of critical COVID-19 diagnostic testing to physicians on the front lines caring for their patients by reimbursing far below the cost of the test itself.

As such, the bill requires payors to negotiate a payment rate for in-network providers, rather than unilaterally imposing a contracted rate. For non-contracted providers, payors must reimburse for COVID-19 testing and vaccine administration at a rate that is reasonable when compared to prevailing market rates in the geographic region where the service is rendered. Providers are required to accept this as payment in full and balance billing of patients is not allowed.

“SB 510 will ensure that any Californian who wants a COVID-19 test or vaccine can get one without having to pay extra out-of-pocket costs,” said Anthony York, a spokesman for the California Medical Association. “At a time when health inequities have been laid bare in the healthcare system, SB 510 ensures that all Californians regardless of race, income, or geographic region are able to receive a vaccination and testing, which will remain necessary until the conclusion of the pandemic, without unnecessary hurdles.”

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