HMO Regulator Brings ‘Balance Billing’ Suit Against Prime Healthcare
On Friday, the Department of Managed Health Care filed a lawsuit in Orange County Superior Court seeking to stop the hospital chain Prime Healthcare Services from billing insured patients for balances on bills unpaid by insurers, the Los Angeles Times reports. The practice is commonly referred to as "balance billing."
Cindy Ehnes, director of DMHC, said, "Prime Healthcare's ongoing practice of putting consumers in the middle of billing disputes between providers and health plans is the largest example of this egregious practice we've seen to date, and it must be stopped."
Prime Healthcare acknowledged it was using balance billing and said it believed that California law permits the hospital chain to send such bills to patients.
Mike Sarrao, Prime's general counsel, criticized DMHC's action and said Prime believes that the agency lacks "the requisite legal or equitable standing to bring the suit forward."
Prime is one of the fastest growing hospital chains in California and now rivals Kaiser Permanente in size in the state, according to the Times.
When Prime acquires a hospital, the chain often cancels most private insurance contracts, making it possible to charge insurers higher out-of-network fees for treating their members.
In a lawsuit filed this spring, Kaiser brought similar charges against Prime and won an injunction barring the chain from seeking payment from Kaiser members for bills the HMO had not paid.
In 2006, Gov. Arnold Schwarzenegger (R) ordered state regulators to ban balance billing.
DMHC worked for two years trying to negotiate a compromise between insurers and health providers, and the agency this spring drafted regulations that will bar hospitals and physicians from charging patients for emergency services that insurers have not paid.
The regulations are not expected to be adopted until the fall, so the state decided to take action against Prime in court, a DMHC spokesperson said (Costello, Los Angeles Times, 7/2).