New Law Clearly Prohibits Rescission of Treatment Authorization After Services Have Been Rendered
[Posted 12/13/07]

A CMA-sponsored law that takes effect January 1 clarifies that under no circumstances are insurers allowed to rescind or modify authorization after services are rendered in good faith. Although existing law already prohibits this activity, physicians and their patients have been increasingly faced with unpaid medical bills for preauthorized services.

This new law (AB 1324) specifically states that authorization cannot be rescinded for any reason, including but not limited to, subsequent rescission, cancellation, or modification of the patients health insurance polcy or subsequent determination by the insurance company that it did not initially make an accurate determination of eligibility. 

There will now be no question that the law prohibits retroactive modification of authorization after services have been rendered, even if a patient’s health insurance policy is subsequently cancelled by the insurer.

The CMA ON-CALL system is currently being updated to reflect all new legislation, including A.B. 1324.  This new law will be discussed in full in the revised ON-CALL document #0145, “Payment Denial After Treatment Authorization or Verification of Eligibility.”  This document will be available on CMA’s website, CMA's website, in January 2008.

Contact: CMA’s legal department, 916/551-2033 or legalinfo@cmanet.org.