How Does California Handle Surprise Bills from Non-Contracted Providers?
California's AB 72 covers non-emergency care from a noncontracting individual health professional at a contracting facility. The patient pays no more than in-network cost sharing, and unless the parties agree otherwise, the plan pays the greater of the average contracted rate or 125 percent of the Medicare fee-for-service amount for the same or similar services in the region.
Written by Salman Saeed, CEO and Co-Founder · Reviewed by a Certified Medical Coder · 
In short: AB 72 applies to DMHC and CDI regulated coverage, not to Medi-Cal, Medicare or self-insured plans, and not to dentists. You dispute underpayment through the plan's own process first, then through a state-run independent review that you must request within 365 days. Emergency claims and air ambulance follow different rules, so confirm the plan before you file.
Which California Claims Does AB 72 Cover?
AB 72 reaches claims for covered, non-emergency services from a noncontracting individual health professional at a contracting health facility. It sits in Health and Safety Code section 1371.9 for DMHC-licensed plans and Insurance Code section 10112.8 for CDI-regulated insurers, and it applies to contracts issued, amended or renewed on or after July 1, 2017.
A facility under the law includes a licensed hospital, an ambulatory surgical center or other outpatient setting, a laboratory, and a radiology or imaging center. The classic case is an anesthesiologist, pathologist or radiologist the patient never chose.
| Situation | What the sources say |
|---|---|
| Non-contracted anesthesiologist at an in-network hospital, no advance consent | AB 72 applies; the patient owes only in-network cost sharing |
| PPO-type benefit, patient consented in writing at least 24 hours in advance on a separate document, not obtained by the facility | The consent exception applies, and the written estimate of total out-of-pocket cost has to be in it |
| Emergency physician | Section 1371.9 says it does not apply to emergency services and care; see the emergency section below |
| Dentist | Excluded |
| Medi-Cal, Medicare or self-insured plan | CDI says AB 72 does not apply to them |
| Air ambulance | CMS's California letter says federal IDR applies |
CMS's December 22, 2021 letter to California treats HSC 1371.30, 1371.31 and 1371.9 and Insurance Code 10112.8, 10112.81 and 10112.82(a) as specified state laws for non-emergency services by noncontracting individual health professionals at contracting facilities. It says federal IDR applies to items and services those sections do not cover.
What Does the Plan Have to Pay, and What Can You Bill the Patient?
Unless the plan and provider agree otherwise, the plan reimburses the greater of the average contracted rate or 125 percent of the amount Medicare reimburses on a fee-for-service basis for the same or similar services in the general geographic region (HSC 1371.31(a)(1); Insurance Code 10112.82(a)(1)).
The Medicare fee-for-service amount for the service in the region is $900, so 125 percent is $1,125. If the plan's average contracted rate is $1,000, the plan owes $1,125. If its average contracted rate is $1,300, it owes $1,300. The patient's share is the in-network cost sharing, taken out of that total. All numbers are made up.
On the patient side, the law is strict. Only the in-network cost share may be sent to collections, and adverse credit reporting is barred. You may not start a civil action against the enrollee for at least 150 days after the initial billing, and no wage garnishment or lien on a primary residence is allowed. A patient overpayment must be refunded within 30 calendar days, with 15 percent interest if late. Set your patient statement rules to match before the first bill goes out.
How Do You Dispute an Underpayment, Step by Step?
Work through the plan first. The statute requires the parties to complete the plan's internal process before the state's independent dispute resolution (IDRP), whose decision binds both sides.
- Confirm who regulates the coverage. A health care service plan is a DMHC matter; a CDI insurer follows the Insurance Code.
- Check the claim against the coverage list above, including contract date, setting and service.
- File a provider dispute with the plan. For DMHC plans, a written determination is due within 45 working days of receipt under Rule 1300.71.38(f), and amounts owed are due within five working days of the determination, with interest and penalties.
- Gather the claim form, the plan's determination letter and the EOB or remittance advice.
- Apply to the correct state process within the window in the table below, with a final offer.
- Wait for the independent organization's written decision and its list of appropriate reimbursement amounts by billing code.
| Item | DMHC AB 72 IDRP | CDI IDRP |
|---|---|---|
| Window | The provider completed the plan's dispute process within the last 365 days | 365 calendar days from receiving the insurer's determination notice; if the insurer misses 45 calendar days on an internal appeal, the 365 days start on day 46 |
| Where | DMHC's web portal | The Health Care Provider Complaint portal |
| Bundling | Up to 50 claims, same or similar services, same noncontracting provider, same plan | Up to 50 claims in the same calendar year, same or similar services, same professional, same insurer |
| Documents | Claim forms, PDR determination letters, EOBs or remittance advice, all as PDFs | The Department's IDRP Request Form; the requesting party states a final offer |
| Decision time | Maximum 30 calendar days for the independent organization | 30 calendar days from the review organization receiving payment from both parties, plus 10 business days if it asks for more information |
| How it decides | Not limited to the amounts the parties suggest | Selects one party's final offer only; no other amount |
If you filed a plan dispute but received no acknowledgment or determination letter, and at least 45 business days have passed since the plan received it, DMHC lets you submit dated proof of the attempt instead. You cannot revise a DMHC application after you submit it, and you must redact unrelated patient information.
At CDI, a responding party that misses the 15 business day response deadline is held to a final offer of the amount paid (an insurer) or the amount billed (a provider), so answer on time.
What Are the DMHC Review Fees?
DMHC says the parties split the review fees equally. The independent organization bills them and collects before it starts the review. The fee goes up with the number of claims in the bundle. The CDI process also divides its fee equally, and its guidance lists lower base fees: $295 for a single request or a bundle of 2 to 10 claims, $325 for 11 to 25 and $375 for 26 to 50, when no one disputes the coding.
| Claims in the dispute | Standard rate | With a coding review |
|---|---|---|
| 1 claim | $315 | $330 |
| 2 to 10 similar claims | $315 | $330 |
| 11 to 25 similar claims | $340 | $355 |
| 26 to 50 similar claims | $395 | $415 |
A group bundles 12 similar claims against one DMHC plan with no coding dispute. The review fee is $340, and each side pays half, $170. The fees come from DMHC's published list; confirm the current list on the portal before you file.
What Does the AB 72 Process Not Cover?
DMHC lists several disputes it will not take: late payment disputes, interest payment disputes, emergency services disputes, claims from plans licensed by another state, claims for non-covered benefits, and claims denied as not medically necessary or experimental. A Medi-Cal managed health care plan or other DHCS contractor is out too.
Late payment and interest go to the prompt pay rules instead. For claims received on or after January 1, 2026, Health and Safety Code section 1371 requires a plan to pay a complete claim within 30 calendar days, with interest at 15 percent per annum after that. Our post on collecting prompt pay interest shows the math.
What About Emergency Claims from Non-Contracted ER Physicians?
Two official sources answer differently, so do not assume. CMS's December 22, 2021 letter lists the AB 72 sections as specified state laws for non-emergency services and says federal IDR applies to items and services those sections do not cover. DMHC's All Plan Letter 22-011, dated March 21, 2022, says it confirmed with CMS that California law governs out-of-network emergency services for DMHC-licensed plans, including cost sharing, reimbursement and disputes.
That letter speaks for DMHC plans only. Ask the plan in writing which process it treats as controlling, and check with DMHC or CDI before you file. The CMS No Surprises Help Desk, at 1-800-985-3059, also helps with whether federal or state law applies. Our guide to state or federal law walks through the sort.
How Does Nucleus Align Handle California Claims?
We confirm the regulator and the plan type, track the plan's dispute clocks and the 365-day windows, and build the payment case claim by claim. Our out-of-network billing and IDR service covers California and federal workflows, and the anesthesia billing page covers a specialty that meets AB 72 often. The California billing page holds the state reference, and the federal IDR process and No Surprises Act guide cover the rest. To have us review a California claim, book a call.
- Health and Safety Code, Article 5, sections 1371, 1371.9, 1371.30 and 1371.31 · California Legislative Counsel
- Insurance Code, Article 1, sections 10112.8, 10112.81 and 10112.82 · California Legislative Counsel
- Non Emergency Services Independent Dispute Resolution Process (AB 72 IDRP) · California Department of Managed Health Care
- All Plan Letter 22-011, No Surprises Act Guidance · California Department of Managed Health Care
- All Plan Letter 25-007, Assembly Bill 3275 Guidance (Claim Reimbursement) · California Department of Managed Health Care
- Implementation Guidance AB 72:2, Independent Dispute Resolution Process · California Department of Insurance
- Consumer Protection from Surprise Medical Bills · California Department of Insurance
- Letter to California on enforcement and dispute resolution under the Consolidated Appropriations Act, December 22, 2021 · CMS
We check every rule, code and deadline against the official source. See our editorial policy.
Common Questions
Straight answers from the team that does the work.
Ask a billing lead directly. A 20-minute call, Monday to Friday, 9am to 5pm Eastern.
01How does California handle surprise bills from non-contracted providers?
AB 72 bars a noncontracting professional at a contracting facility from billing more than in-network cost sharing for non-emergency care. The plan pays the greater of the average contracted rate or 125 percent of Medicare, and payment disputes go to an independent review after the plan's own process.
02What does a plan pay a non-contracted anesthesiologist in California?
Unless otherwise agreed, the greater of the average contracted rate or 125 percent of the Medicare fee-for-service amount for the same or similar services in the region. The enrollee pays only in-network cost sharing, which comes out of that total.
03How long do I have to start an AB 72 independent dispute?
At DMHC, you must have completed the plan's dispute process within the last 365 days. At CDI, you have 365 calendar days from receiving the insurer's determination notice, starting on day 46 if the insurer misses 45 days on an appeal.
04Does AB 72 cover non-contracted ER physicians?
No. Section 1371.9 says it does not apply to emergency services and care. CMS's California letter and DMHC's All Plan Letter 22-011 describe the emergency pathway differently, so ask the plan in writing and check with DMHC or CDI before you file, because the answer can change the dispute route and the clock.
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