Proposed Rules Would Prohibit 'Balance Billing' in California / State drafts rules to regulate emergency room payments

[CAL/AAEM News Service]

Proposed Rules Would Prohibit 'Balance Billing' in California

Source: The California Healthline ( http://www.californiahealthline.org )
Date: April 01, 2008


On Friday, the Department of Managed Health Care issued new draft regulations that aim to
ban physicians and hospitals from billing patients for the difference between HMO
payments and the physicians' usual rate, the Los Angeles Times reports.

The practice, called "balanced billing," involves physicians who work in hospitals that
have different contracts with HMOs than the physicians do. The practice primarily affects
emergency department doctors, radiologists and anesthesiologists who work at the hospital
but are not hospital employees.

Arguing that the HMO payments are inadequate, doctors have sent additional bills to
patients indicating the difference between the HMO payment and the usual rate. According
to the Times, patients often paid physicians the amount cited in the bill, believing that
the amount was their copayment under their health plan.

The draft regulations would prohibit hospitals and hospital-based physicians from billing
patients for the cost of emergency department services that should be covered under
patients' health plans. A public comment period on the rules ends May 12.

Background

Similarly, bills to control balanced billing have repeatedly died amid opposition from
providers and insurers, the Times reports.

In 2006, Gov. Arnold Schwarzenegger (R) ordered DMHC to ban the practice. The agency has
worked to negotiate a compromise between physicians and insurers over the past two years
but failed to find common ground.

Reaction

The California Medical Association said the new rules could cause physicians to send
complete bills to patients who would then have to deal with insurers for reimbursement.

Insurers said the proposed rules would discourage physicians from contracting with HMOs
because it would raise the possibility of out-of-network physicians being reimbursed at
higher rates than network providers.

More Action Possible

Senate President Pro Tempore Don Perata (D-Oakland) has introduced a bill (SB 981) that
would ban balanced billing and require HMOs to provide physicians with interim payment
and establish a method for resolving disputes. 

Delaware and Florida have similar laws, while New Jersey and West Virginia require HMOs
to pay physicians' bills (Rau, Los Angeles Times, 4/1).

For more information, please visit:
http://www.californiahealthline.org/articles/2008/4/1/Proposed-Rules-Would-Prohibit-Balance-Billing-in-California.aspx

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State drafts rules to regulate emergency room payments 

Patients are often billed by doctors to make up the difference from insurer
reimbursements. The so-called balance billing practice would be banned.

By Jordan Rau, Los Angeles Times Staff Writer 

12:35 PM PDT, April 1, 2008 

SACRAMENTO -- -- Gov. Arnold Schwarzenegger's administration has moved to ban physicians
and hospitals from billing patients for the cost of services above what their HMOs are
willing to pay.

Such bills, which patient advocates call a consumer abuse, are the product of a
protracted feud between insurers and healthcare providers, principally emergency room
doctors, radiologists and anesthesiologists.
________________________________________
FOR THE RECORD:
This article gives an incorrect name for a billing practice in which doctors and
hospitals charge patients for the cost of services that their insurers refuse to pay. The
practice, which Calfornia HMO regulators are attempting to outlaw, is called "balance
billing," not "balanced billing."
________________________________________


Those doctors often work in hospitals but don't have contracts with the same health
maintenance organizations that serve the hospitals.

Believing the reimbursements they receive from insurers are too low, providers send
additional bills to patients for the difference. Many patients wrongly assume that bill
is the invoice for their co-payment and is authorized by their HMO.

Thousands of Californians have been paying these bills, even though it is their insurers
who are legally responsible for reimbursing providers, consumer advocates said.

"Consumers who do the right thing and go to a hospital that's in their network should not
be leveraged in a fight between doctors and insurers," said Beth Capell, a lobbyist for
Health Access California, a patient advocacy group. "It's just wrong."

"Balanced billing," as the practice is called, is regulated in eight states. But versions
of legislation to control it have repeatedly died in Sacramento amid opposition from
either providers or insurers.

In 2006, Schwarzenegger ordered his administration's HMO regulators to ban the practice.
The Department of Managed Health Care spent the last two years trying to negotiate a
compromise between insurers and providers to work out their payment differences, but
couldn't find common ground.

So the department decided to simply outlaw the practice through new draft regulations
issued Friday.

"We tried to say, when we were young and naive, that we could find a mutually acceptable
resolution to make sure physicians were being paid fairly and on time," said Cindy Ehnes,
the department's director. "We finally said, we can't solve this marketplace dispute, but
what we can do is our core mission of protecting consumers."

The draft regulations would prohibit hospitals and hospital-based physicians from billing
a patient for the cost of emergency services that are the responsibility of the patient's
health plan. The state's main doctors' lobby said the new rules, if approved by the
department after a public comment period that ends May 12, could backfire by causing
physicians to send the entire bill to patients to let them haggle with insurers for
repayment.

"This is a total giveaway to the HMOs," said Francisco Silva, general counsel for the
California Medical Assn. He said specialists will be less inclined to be on call for
emergencies.

The Legislature has been struggling with this topic for much of this decade, with
lawmakers reluctant to choose sides between two groups of major political donors. This
year, the Assembly is considering a bill -- SB 981 from Senate President Pro Tem Don
Perata (D-Oakland) -- that would ban balanced billing, require HMOS to give doctors an
interim payment and establish a method for resolving disputes, something that is done in
Delaware and Florida.

New Jersey and West Virginia require HMOs to pay the doctors' bills. Maryland has a
formula to determine what the reimbursement rate should be. Connecticut, Colorado and
Rhode Island indemnify patients against having to pay these bills.

Even lawmakers who are harshly critical of insurers believe that balanced billing is
unacceptable.

"It seems clear to me that the contract for payment is between the provider and the
insurance company," said Sheila Kuehl (D-Santa Monica), the chairwoman of the Senate
Health Committee and author of bills to get rid of private insurers.

In California, many patients are not aware that they are not supposed to pick up the
extra tab. Michele Salas, 40, of San Diego, received bills from radiologists who had read
her CAT scans at the request of her hospital when she was treated for cancer.

"Depending on whose desk it landed on, some of those specialists were part of my network
and others weren't," she said. "They were calling and demanding payment."

Salas said she ultimately paid more than $1,500.

Many doctors say they are simply trying to collect their full rate.

"Our attitude is: Most providers' usual and customary charges are reasonable," said Dr.
Myles Riner, an emergency room physician from Greenbrae, Calif., and past president of
the state chapter of the American College of Emergency Physicians.

Insurers said that paying doctors and hospitals more than they pay their own providers
would disrupt the managed care system, because it would create a disincentive for
providers to sign contracts with HMOs.

"We want our members to have good, reliable, predictable service,"
said Chris Ohman, president of the California Assn. of Health Plans.

But some insurers have paid doctors below their "reasonable and customary" rate -- the
legal standard for reimbursements. In 2005, state regulators fined Health Net $250,000
for underpaying emergency room doctors and other physicians in hospitals. The department
said the Woodland Hills HMO had underpaid more than 65,000 claims.

For more information, please visit:
http://www.latimes.com/news/local/la-me-health1apr01,1,4877258.story

-----------------------------------------------

Health Care Stakeholders in California Face Off Over Balance Billing
 
Source: The California Healthline ( http://www.californiahealthline.org )
Date: March 20, 2008


California lawmakers are considering legislation aimed at "balance billing," a practice
that health care stakeholders say is at the center of the debate on health care reform,
Capitol Weekly reports.

Balance billing occurs when insured people undergo treatment at a clinic or hospital --
often in the emergency department -- that is not in their health plan's coverage network.


The health care provider bills the patient's health plan, but in some cases the insurer
rejects the bill or pays only part of the charges. The health care provider then bills
the patient directly.

Health plans, hospitals, physicians and patients often have different perspectives on the
practice, as each group seeks to protect its own economic interests.

Estimates of balance billing charges in California range from $450 million to $527
million annually (Howard, Capitol Weekly, 3/20).

For more information, please visit:
http://www.californiahealthline.org/articles/2008/3/20/Health-Care-Stakeholders-in-California-Face-Off-Over-Balance-Billing.aspx?topicID=37


Abid Mogannam &
Brian Potts MD, MBA
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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