California Code of Regulations
Title 10 - Investment
Chapter 5 - Insurance Commissioner
Subchapter 2 - Policy Forms and Other Documents
Article 5.5 - Average Contracted Rate Methodology
Section 2238.10 - Definitions

(1) "Average contracted rate" means the average of the contracted commercial rates paid by a health insurer for the same or similar health care services in the baseline year in the geographic region in which the service was provided, for services most frequently subject to Insurance Code section 10112.8. This rate is then adjusted to the date the service was rendered by using the inflation adjustment described in Insurance Code section 10112.82(a)(2)(B).

(2) "Baseline year" is calendar year 2015.

(3) "Bundled payments" means a single payment for all services to treat a condition or provide a given treatment. Bundled payments may also include facility fees and other charges.

(4) "Geographic region" for the calculation of the average contracted rate means:

(5) "Modifiers" mean codes applied to the service code that make the service description more specific and may adjust the reimbursement rate or affect the processing or payment of the code billed.

(6) "Same or similar services" means a health care service billed under the same service code, or a comparable code under a different procedural code system. The use of a different service code as a proxy for the service code ordinarily applicable to the actual service shall only be applied in a special or unique circumstance.

(7) "Service code" means the code that describes a service using the Current Procedural Terminology (CPT) code or Healthcare Common Procedure Coding System (HCPCS).

(8) "Service unit" means the number of times the service described by a particular service code was provided per claim for reimbursement.

(1) "Services most frequently subject to Section 10112.8" means, for the purpose of this article, the health care service codes, which, in aggregate, comprise the top 80 percent of the health insurer's statewide claims volume, determined by number of claims, when ranked in descending order beginning with the service codes with the highest number of claims, for all market segments for health care services subject to Insurance Code section 10112.8 for each of the following specialties:

(2) In addition to the health care services for the three specialties listed in subdivision (b)(1), "services most frequently subject to Section 10112.8" also includes all other services subject to Insurance Code section 10112.8, which, in aggregate, comprise the top 80 percent of the health insurer's statewide claims volume, determined by number of claims, when ranked in descending order beginning with the service codes with the highest number of claims, for all market segments for services other than those determined using subdivision (b)(1).

(3) If a health insurer offers commercial health coverage in multiple market segments, the same list of most frequent services subject to Insurance Code section 10112.8, as described in subdivision (b)(1) and (2), shall be used for each market segment.