UPDATE: Senator Yee introduces yet another bill to prohibit balance billing

[CAL/AAEM News Service]

UPDATE: Senator Yee introduces yet another bill to prohibit balance billing

Source: Steven C. Gabaeff, MD, President, CALAAEM (http://www.calaaem.org)
Date: March 5, 2007
 

Dear Colleagues here is an exchange between Myles Riner President of CalACEP and I that I
thought would be of interest and invites comments.

-----

Myles' original missive to CalACEP members and me...

Dear Colleagues,

Here is a message from CalACEP that I am forwarding for any input that you may have.  You
may have heard that recently, Senator Yee has reintroduced another bill to prohibit
balance billing.  This time, his bill is focused more directly at non-contracted
hospital-based physicians (emergency, radiology, anesthesiology, and pathology) providing
services to patients whose plan or IPA is contracted with the hospital.  It's divide and
conquer time, but the CMA has already indicated its opposition, and we hope the CHA will
as well.

We have also heard that the DMHC still intends to press forward with its proposed
regulations, prohibiting balance billing, undermining the Gould criteria defining the
reasonable value of our services, and substituting an independent claims dispute
resolution process (IDRP) to 'ensure' fair payment.  The DMHC's proposed IDRP sure looks
to CAL/ACEP leadership like an inefficient, biased, cost-prohibitive and fundamentally
flawed program, and the CMA has already notified the DMHC that they will not participate.
 The CAL/ACEP Board will likely do the same at our meeting on March 6.  If the Department
moves forward with the new regulations, we will likely challenge them in court.

Speaking of the courts, the Supreme Court will probably decide the Prospect vs. St. John
and Northridge case in a few months, and our right to fair payment hangs in the balance
there as well.  

The issue of fair payment for our services continues to be a battle fought on many
fronts, and CAL/ACEP's leadership, with input from AAEM and CalAAEM, emergency physician
groups, and billing agents, has developed a strategy to counter this effort by Plans and
capitated medical groups to deny fair payment to emergency care providers.  This strategy
is not without risk, but it appears to us to be the prudent course of action.  This is
why I am writing you: so that you are aware of the risks and so that you may advise
CAL/ACEP leaders if you agree or disagree with the strategy.

Some have advised that we should simply continue to oppose any effort to restrict our
right to balance bill, period.  To us this course may be difficult to hold, if not in the
courts, then in the legislature, where new law could undermine our legal challenges. 
Keep in mind that current law entitles us to the reasonable value of our services, not to
whatever we chose to charge, nor to whatever the plans chose to pay.

Our approach has been to propose an alternative claims payment and dispute process that
takes the patients out of the middle, and which we believe would promote fair (rather
than coercive) contracting and reasonable compensation.

This proposal has the following elements:  First, the physician provides the service and,
second, the payer pays the claim in full (for claims under $1,000).  Then, if the payer
believes the charges were excessive, the payer may dispute the charge in an independent
(baseball arbitration type) claims dispute process.  Participation in this dispute
process by providers would be mandatory if the charges are disputed and the provider
chooses to retain the full payment.  There would be a mechanism to allow payers to
question the accuracy of coding, and the provider to modify the claim, if indicated,
prior to payment or dispute.

A 'loser pays for the dispute' disincentive would be used to deter frivolous disputes by
payers and excessive charges and up-coding by providers.  (The Governor and Legislature
will not support a process that is inflationary.) This proposal might be limited to ER
physician claims, or perhaps extend to other hospital based or even other EMTALA
obligated providers (the CMA is considering this).  Capitated IPAs and Medical Groups
would be excluded from paying non-contracted emergency care claims.  Hospital-based
providers, and payers that are networked with the provider's hospital (in a significant
way), would be expected to use arbitration if they could not reach agreement on the terms
of a contract.  This last bit was intended to eliminate much of the coercive contracting
that we face.

We have taken this proposal to the DMHC and the Governor¹s office and to some
legislators, and we think there may be a chance for this proposal to succeed, despite
expected resistance from the health plans.  You need to understand that, overall, the net
effect of this proposal is to maintain the revenues currently going to support the
emergency care safety net, but plans will have to make up the unpaid balances they
currently foist off on their enrollees to pay, and the plans won¹t like that.  We
anticipate some providers at the lower end will increase their charges, and others,
targeted for their higher fees through the dispute process, may be persuaded to reduce
their charges if they are unable to successfully defend these higher charges in the
dispute process.

If your group tends to charge very high, and write off a lot of underpayments, as a
strategy to sustain your income; this strategy may no longer work to your advantage under
this proposal.  If your group¹s strategy is to charge reasonably, and pursue aggressively
every underpayment, your billing overhead might actually go down and your revenues and
contracting terms improve.  The basic tenet of this proposal is that most non-contracted
providers¹ usual and customary fees are reasonable, and should be paid in full.

However, there is no guarantee that this proposal will work as intended.  We urge you to
carefully consider this proposal, and provide feedback to CalAAEM's and CAL/ACEP¹s Board
of Directors and leadership. Steve, as I thought about this more, I realized it might be
helpful to more Specifically acknowledge the input on this proposal from AAEM (re
baseball arbitration, pay the claim in full, etc), so I would be happy to have you
forward the email below, to your members, and also encourage you to add your own
commentary regarding GAC participation, etc., and your own assessment, as   a prologue. 
Of course, if you prefer, you may wish to request that this feedback be directed to
CAL/AAEM instead, or to both organizations, at your discretion.  We are definitely
interested in feedback from CalAAEM members. 


Myles Riner

President Cal/ACEP

------

My Comments: 

Suggestions to propose a payment schedule that would be used in such situations has been
resisted as there is a belief that we would then be subject to Public Utilities
Commission (PUC) review. The Prospect Court ruled that rates tied to MediCal and Medicare
are unreasonable. The definition of reasonable remains unclear to say the least. I felt
that putting some numbers on the table and proposing a fair and reasonable pay schedule
would put the issue into a clearer context. In the alternative, documenting a range of
fees for information purposes would allow decision makers to see the impact of the
reduction of fees to levels which are incompatible with the survival of the EMS system.
It would provide them with what reasonable fees are by looking Ingenix, Gould, the old
RVS system or even how much it costs to get your car fixed relative to the cost of a life
threatening medical problem in the ED. When one considers that ED costs are <1% of total
health care costs for a health plan why is there so much energy being expended to punish
hospital based MD's who are the core of the safety net. What will happen if health plans
are allowed to pay 120% of MediCal or Medicare rates: disaster! CalACEP is currently
opposed to such a strategy and believes that the governor will insist that the market
should be the primary controller and that any net increase in costs to health plans will
not fly. It sounds like the vagaries of that, will lead to endless fighting. Obviously
the system proposed will increase costs to health plans that will then complain and use
their moneyed influence to try to block "pay first and dispute later" strategy which is
being promoted. Sen. Yee lost his battle to help the insurance companies avoid paying
EP's last year and he is back again as if all the discussions with him never happened. He
like many others seeking political points fundamentally ignore the reasonableness of
supporting a healthy EMS system and the need to force Health Plans to pay for mandated EM
services (under Knox Keene) and do the bidding of their contributors. I am convinced that
if the new regulations by DMHC are passed that we will end up with less money in the
system. The notion of using real numbers to analyze the situation cannot get traction
with CalACEP. My contention that EP's in California could agree on fees that could not be
disputed by the health plans and would fall inside the range of current fees, is
perceived to ignore regional considerations and patient demographics that are used to get
marginally higher payments that go, for example to impoverished areas or some groups that
like to bill bigger numbers that have better patient populations. These differences seems
inconsequential to the larger picture to me. But there is an entrepreneurial force on our
side of the equation that must be dealt with as well. The most important part of this is
to set up a system, even if a baseline is set through the PUC that could be adjusted for
inflation, and getting an outside agency to evaluate the needs of the system and make
adjustments independent of the bribe based model we are dealing with now. Whoever is
contributing the most seems to get their way. Phones, gas, electric and cable don't seem
to have much trouble being profitable when the PUC controls their fees. The debate and
the players seeking advantage when forced to state their positions in public hearings
would go a long way toward informing the public of the financial imbalance. Aren’t
emergency medical services becoming a public safety function anyway?

CalACEP believes we have never been in a better position to influence this situation as
frustration with health plans increasing. The recent exposure of their strategy to
retroactively deny any benefits to the sick who are in a hospital with an illness, who
had any irregularities on their applications for health coverage years ago, who were
accepted as insured before they were sick, is revolting and is raising the ire of some
officials. The question is can their anger create a paradigm shift? Who is controlling
this issue? 

We really should be support Sen. Kuehl's proposal for universal health care and so many
problems would be solved at once. This is an issue that the public is ready to support.
Let's spend a million dollars on that and have a proposition to provide a single payer
system that covers everyone and create a system of taxing the superrich to pay for it or
a progressive system of taxation (that used to work so well) that distributes the costs
fairly across the different socio-economic groups. How is that hospitals and MD's can be
perceived as the best targets to be the major sources of revenues for the Governor's new
health plan (60% of the costs)? Does someone with $100 million dollars in assets really
need another $50 million this year. Could they afford to give up 5% of the second million
on their personal state income taxes without even a perceptible change in their life
style? That number applied to all the millionaires in CA would actually generate enough
money to fix all the problems that California faces. The market is driven by greed and
market solutions are a code word for the exercise of greed and the transfer of funds from
the middle and lower classes to the rich. The market has never had a human feeling and
the people that control the market have set us on trajectory of destruction of the middle
class, an expansion of the poor and ultra poor and the creation of a permanent underclass
to serve the ultra rich. How wide does the gap between rich and poor have to get to
accept the notion that creating the gap is the goal. Deregulation has enabled the rich to
do as they please and what they have achieved is all around us now. 

We are the ones who care about the healthcare system and medical care for all. We are not
fighting for our income we are fighting for the survival of the EMS system. Health
insurance executives are mandated to care about profits in the corporate model or they
get fired (with multimillion dollar golden parachutes to help them adjust to the
transition). Many of them see the world in a predatory paradigm in which the advantaged
act on an unconscious biologic imperative to seek more advantage to ensure their
survival, an imperative residing in the lower level brain functions that is cognitively
deaf to a reasonable argument. Regardless of their personal nature they are literally in
violation of their fiduciary responsibility to share holders to make decisions based on
what is right. How many of these corporate types insinuate themselves into governmental
regulatory bodies where these same imperatives drive their decision making? How many
unregulated market driven solutions do we have to see to come to the realization that
they are inefficient, profit driven, callous, and have never improved the quality of life
for the general population? Many market solutions knowingly destroy the fabric of our
society (the end of manufacturing in the US and the elimination of millions of good
paying jobs) and yet are passed off as superior to organized systems of solutions where
the end result is an intelligently planned healthy society? The changes in society from
1945-1980 are testament to the value of this model of inclusion, the value of science and
academic research driving decision making and the proper distribution of wealth though
adequate revenue creation for necessary government functions. From 1980 on, the advantage
that the moneyed interests have manically exploited has been gained at the expense of
mental health, preventive care, access to health care, education, public safety, etc.,
etc. Cut taxes, create deficits, cut programs, shut down programs that don't have enough
money, disenfranchise and demolish the basic American middle class life, all so the rich
can get richer. 

We have a right to be paid for what we do by corporations that are awash with profit who
are mandated by law to pay for EMS. Their intent seems to be to inflict emotional damage
on patients and get them to carry the flag to the Sen. Yee's of the world to punish EP's
that work day and night to be ready when they get sick. How wrong is that? If they paid
every ED bill at full price they would have less than a single digit percentage decrease
in profits that are already in the billions after executives get 10's of millions of
dollars of bonuses every year they effectively execute their well thought out (and
destructive) business plans. 

We cannot rely on the market and we cannot at this time rely on the regulatory agencies
that seem to be getting marching orders from other places.

If anyone has a good idea it is time to speak up.


Sincerely,

Steven C.Gabaeff, M.D.
President CalAAEM

-----

Myles response to my comments

Steve, of course you have some interesting ideas there, but I have to take issue with the
first sentence in the above paragraph.  CAL/ACEP has been working very hard to ‘use real
numbers’ when it comes to determining the fair value of a non-contracted emergency
physicians services:  we performed a fee survey and had a majority of ED groups respond,
representing close to half of the ED claims in a year, and measured the results against
the Ingenix fee schedule of usual and customary fees, which is owned by a Plan but claims
to represent nearly all of not just ER physician claims, but all physician claims and
charges.  By the way, both surveys were pretty close to each other.  We have also
proposed that the DMHC survey the fees for all codes in claims submitted to the MediCal
or Medicare programs (note that I said fees submitted, not payments made).  Our goal has
been to convince the DMHC, and the Governor’s staff, to acknowledge that most provider’s
charges are reasonable, and to use the existing Gould criteria (based primarily on UCR),
unmodified, in the existing AB 1455 regulations, as the standard for adjudicating the
issue of ‘reasonable value’.  The Plans and CAPG and the DMHC are trying to modify the
Gould criteria to allow adjudicators to consider the Medicare rate, the MediCal rate, and
discounted contract rates and ‘fees accepted’ as additional factors to determine the
reasonable value of a non-contracted provider’s services, which is of course ridiculous
and unreasonable.

Furthermore, no one at the DMHC, or in the legislature, has so far has indicated any
inclination to set our fees according to a single fee schedule, or even a range of fees,
for emergency care providers.  (Actually, that is not exactly true:  just for fun and to
goad the health plans, Senator Speier at a hearing last year asked the plans if they
would agree to a set fee at 200% of Medicare – they all quickly shook their heads, but
frankly, we weren’t sure that was good for us, either – we hadn’t run the numbers, but my
guess is that, given all sources of revenue from commercially insured patients, including
balance billing, we would lose total revenue at that rate, and still wouldn’t escape
coercive contracting for discounts below that rate).  The CMA is ABSOLUTELY OPPOSED to
fee setting, there is no available process to establish such a fee schedule (I am talking
about a PUC-type process, obviously the Public Utility Commission is not set up to
establish a fee schedule for physicians), and current law does not allow anyone to set
physician fees for commercial services.  The Governor, as a Republican who believes in
the free market, would probably oppose it, and finally, there is no guarantee that the
fee setting process would result in a fee schedule you would like – it might end up being
the 120% of Medicare rates you acknowledge is grossly inadequate.   If you mean that
CAL/ACEP would oppose fee setting for emergency physicians, you are probably right, but
it is not because we are trying to protect groups that overcharge, it is because the
process is far too risky, and would require years of ground work to ensure that we didn’t
end up being screwed by the rate setters in an effort to ‘control health care

-----

My response to his comments 

Myles, Thanks for your thoughtful reply. I will review and integrate some of your
thoughts into a final document. This has not been sent yet as I released it for comments.


What about Kuehl? 

My concern is that they are heading for the 120-200 % of Medicare/cal and I agree that
the net effect will be less. The backroom nature of the negotiations plays into there
hands as the basic contention that we are overcharging and they are suffering would come
out in a public process. Right now they are controlling the public face of this issue. 

At some point cost cutting will result in the collapse of the EMS system so the PUC then
becomes the villain in that scenario. The public nature of the debate will favor us. 

I agree with the pay and dispute later idea as an adequate solution. My fear is that it
will not fly and we will be handed a 120-200% solution. The presentation of a reasonable
fee schedule as a formal aspect of the financial consequences of the 120-200% solution
would show the net reduction of income to the already barely financially intact system
would drive more hospitals to closure and more physicians out of EM. How much stress can
providers take on when the total resources are so low? 

They can kill EM if they want and if they want to they will as most of them see them
selves as above the chaos of a UC hospital ED. 

CMA might support an RVS based system (unit value) that in effect would create a
standard. We also do not have to move in concert with them as we are hospital based.
EMTALA controlled and providing public safety services providing us with a distinction
that could allow us to split.

-----

Myles final response


On my comment that “the public nature of the debate will favor us.”

Myles wrote


Unfortunately, the public feels physicians are overpaid.

We do not have the data currently to substantiate your assertion that being paid at 200%
of Medicare for non-contracted providers will bankrupt the emergency care safety net. 
This is because we have no idea what this would do to contracting discounted rates (some
up, some down), and we have no data about what ER docs are currently collecting for
non-contracted services from payers and patients together.  A PUC process would likely
explore that (without violating anti-trust issues), but the nature of these kinds of
things is that it might help some of us, and hurt many of us.  I don't think either of
our constituents would be happy about that.  At worst, we will be faced with a poorly
contrived IDRP as a substitute for balance billing, not the 120-200% solution you fear.  
I believe we and the CMA could fight, in court, and win, regarding the UCR standard for
non-contracted providers.

Myles

---- 

If there are any comments please let me know.

SG



Cyrus Shahpar & Brian Potts 
Managing Editors, CAL/AAEM News Service
University of California, Irvine

The CAL/AAEM Archives are available at: http://maillists.uci.edu/mailman/public/calaaem/



 
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