Ruling lifts money worry in ER visits


Winding up in the emergency room is bad enough. But the California Supreme Court ruled Thursday that patients no longer have to worry about getting billed for emergency treatment charges that their HMOs fail to pay.

Health maintenance organizations and patient advocates hailed the decision as an important protection against gouging by hospitals and physicians. But doctors said it would encourage greedy HMOs to underpay them and that that could put emergency rooms in jeopardy.

The decision resolves one part of a contentious debate that has vexed courts, lawmakers and regulators for years. But it leaves open the question of what constitutes reasonable payment for emergency services. Regulations require HMOs to pay hospitals and physicians reasonable fees but do not set out specific amounts.


At issue in the case is a practice known as balance billing, a practice that typically occurs when a patient is treated for an emergency at a hospital that does not have a fee contract with the patient’s HMO.

In such cases, HMOs say, physicians and hospitals often submit inflated charges. But hospitals and physicians say that without minimum fee requirements, HMOs routinely underpay them.

Disputing such underpayments is impractical and costly, physicians say, so they bill patients for the balance, hoping the patients’ complaints will prompt the HMO to pay in full.

Gov. Arnold Schwarzenegger praised the ruling because it “reaffirms that patients should not be put in the middle of billing disputes between providers and health plans.”

Two years ago, Schwarzenegger directed his Department of Managed Health Care to adopt regulations banning balance billing, and last year he vetoed a bill that would have set minimum payments for emergency care.

Chris Ohman, chief executive of the California Assn. of Health Plans, said the ruling would help contain healthcare costs and give consumers “the peace of mind they should have with health insurance.”


“They will no longer face the threat of receiving bills from emergency room doctors who want more than the fair payment a health plan is willing to cover,” he said.

Physicians said they were disappointed by the decision and bristled at the notion that they would overcharge. They said the loss of patient billing removed what little leverage they had with big HMOs to get fair payment.

“I understand taking the patient out of the middle, but you can’t just give a blank check to the HMOs at the expense of doctors,” said Dev A. GhanaDev, president of the California Medical Assn. and a trauma surgeon at Arrowhead Regional Medical Center in Colton.

“Me, the little trauma surgeon, going up against Blue Cross of California is like David against Goliath -- no chance,” he said.

The case considered by the Supreme Court stemmed from a dispute between emergency physicians and the Prospect Medical Group, a Southern California physician organization that operates like an HMO. It centered on emergency care rendered to its patients at Saint John’s Health Center in Santa Monica and Northridge Hospital Medical Center.

In August, after failing to negotiate a compromise between physicians and HMOs, the Department of Managed Health Care issued regulations banning balance billing.


Since then, some HMOs and large HMO-like physician groups have declined to renew or have canceled contracts with emergency room physicians in apparent attempts to avoid paying negotiated rates, said Andy Selesnick, a lawyer for the emergency room physicians in the case. “Everybody wants 24-hour service, but nobody wants to get a bill,” he said.

Many doctors say they fear that any loss in income resulting from the ruling could further strain already strapped hospital emergency rooms and discourage specialists from taking emergency cases.

“This is really bad for emergency medicine,” said Dr. Ramon Johnson, an Orange County emergency room physician. “This is going to shift a lot of money to HMOs and away from people who actually provide the care.”

Representatives of the Prospect group did not return calls.

DMHC Director Cindy Ehnes praised the ruling and sought to allay physicians’ concerns. “We won’t retreat from efforts to make sure that doctors are paid fairly,” she said.

Much work is ahead for the DMHC and the Department of Insurance, which also supervises health insurance, said Bryan Liang, executive director of the Institute of Health Law Studies at the California Western School of Law in San Diego.

“The court really avoided the big issue -- what is ‘reasonable and fair’ payment” for doctors and hospitals, he said. The DMHC and Department of Insurance “will have to weigh in on this, and how the amounts will be determined.”


The ruling could affect a battle between Kaiser Permanente and Prime Healthcare over bills the hospital chain sent to thousands of Kaiser members for emergency care. Kaiser said it was pleased by the decision.

“The decision provides much needed protection for California patients, taking them out of the middle of billing disputes between providers and health plans,” said Benjamin Chu, president of Kaiser’s Southern California region. A representative of Prime Healthcare could not be reached for comment.