California Supreme Court Bars ‘Balance Billing’ for Care in EDs
On Thursday, the California Supreme Court released a unanimous ruling that bars emergency department physicians and hospitals from billing insured patients directly for charges that their HMOs decline to pay, the Sacramento Bee reports (Caina Calvan, Sacramento Bee, 1/9).
So-called "balance billing" typically occurs when insured people seek emergency care at a facilities that are not included in their HMOs' preferred health care provider networks.Â
Insurers reimburse doctors and hospitals at a lower, out-of-network rate, and the health care providers bill patients for the remainder of the charges (California Healthline, 10/15/08).
In the decision, Justice Ming Chin wrote, "Billing disputes over emergency medical care must be resolved solely between emergency room doctors, who are entitled to a reasonable payment for their services, and the HMO, which is obligated to make that payment" (Sacramento Bee, 1/9).
According to the AP/San Jose Mercury News, the ruling did not address charges for out-of-network services that HMOs decline to reimburse providers for (AP/San Jose Mercury News, 1/8).
The case is Prospect Medical Group vs. Northridge Emergency Medical Group.
Support for Ruling
Consumer groups, health plans and Gov. Arnold Schwarzenegger (R) applauded the ruling.
Jerry Flanagan, health care policy director for Consumer Watchdog, said, "It's up to the doctors and insurers to work out what the fair rate is to be paid. The patients shouldn't have to pay a dime."
In a release, Schwarzenegger said, "This ruling will protect Californians who have done the right thing by obtaining insurance, but then later receive burdensome medical bills that they do not owe" (Sacramento Bee, 1/9).
Chris Ohman, CEO of the California Association of Health Plans, said insured patients "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" (Girion, Los Angeles Times, 1/9).
Health care providers argued that they need a guarantee that they can be reimbursed for their services (Wall Street Journal, 1/8).
California Medical Association President Dev GhnanaDev said, "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 the doctors."Â He added, "Me, the little trauma surgeon, going up against Blue Cross of California is like David against Goliath -- no chance."
The Los Angeles Times reports that a loss in income stemming from the ruling could exacerbate challenges at hospital EDs and discourage medical specialists from accepting emergency cases.
CMA spokesperson Ned Wigglesworth said the organization is considering its options in response to the ruling (Robertson, Sacramento Business Journal, 1/8).
According to the Bee, the ruling suggests that the court might "be wary of arguments" by CMA in a lawsuit that seeks to overturn DMHC rules that classify balance billing as an unfair business practice (Sacramento Bee, 1/9).
In addition, the ruling would have implications for a DMHC lawsuit against Prime Healthcare.Â The agency maintains that after Kaiser Permanente refused payment, the hospital chain improperly billed Kaiser members who received emergency treatment at Prime Healthcare facilities (Egelko, San Francisco Chronicle, 1/9).
Beyond pending court cases, Brian Liang, executive director of the Institute of Health Law Studies at the California Western School of Law in San Diego, said the ruling will press the need for action by the California Department of Managed Health Care and the state Department of Insurance because the "court really avoided the big issue -- what is 'reasonable and fair' payment" for doctors and hospitals (Los Angeles Times, 1/9).
Cindy Ehnes, director of DMHC, said, "We won't retreat from efforts to make sure that doctors are paid fairly" (Los Angeles Times, 1/9).
Lisa Page, a spokesperson for the governor, said that the Schwarzenegger administration believes legislation is needed that establishes a "fair dispute resolution process between health plans and ER physicians" (Sacramento Bee, 1/9).
Broadcast CoverageOn Friday, Capital Public Radio's "KXJZ News" reported on the ruling (Weiss, "KXJZ News," Capital Public Radio, accessed 1/9). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.