State drafts rules for ER doctors’ payments
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.
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.