State Supreme Court backs ER patients over billing
By Bobby Caina Calvan
bcalvan@sacbee.com
Published: Friday, Jan. 09, 2009 | Page 1A

In a decision with broad implications for health care consumers, the California Supreme Court has ruled that medically insured patients may not be billed for emergency care that their health plans refuse to pay.

In a unanimous decision released Thursday, the high court provided strong support to patient advocates who claimed that emergency room doctors and hospitals were unfairly going after consumers and putting patients in the middle of billing disputes with health maintenance organizations, or HMOs.

But the court declined to inject itself into the emotionally and politically charged debate over what constitutes reasonable charges and payments, long a sticking point between medical providers and insurers – and the underlying controversy over the practice known as balance billing.

The reluctance to weigh in on the issue will likely return the debate to state lawmakers.

"The court case is good news for consumers, but we still believe that legislation that enacts a fair dispute resolution process between health plans and ER physicians is needed," said Lisa Page, a spokeswoman for Gov. Arnold Schwarzenegger.

One idea being touted is a winner-take-all arbitration process that allows each side to submit what it considers a fair resolution. An independent arbitration board then picks the better of the two solutions.

Balance billing occurs most often in medical emergencies, when patients are treated by so-called out-of-network doctors and hospitals. Health plans negotiate fees with hospitals and doctors and establish health care networks. But providers who aren't part of the network aren't bound by those fees – and when an insurer declines to pay the full bill, physicians and hospitals try to collect the balance directly from the patient.

Since 2006, more than 1.75 million Californians who received emergency room care were billed by doctors and hospitals for balances – totaling about $528 million – beyond their co-pays, deductibles and what their insurance plans paid, according to the California Association of Health Plans, the trade group that represents the state's HMOs.

State regulators have attempted to mediate balance billing disputes but have been stymied by the lack of participation by physicians and health plans.

"We have not been able to find a common ground," said Lynne Randolph, spokeswoman for the Department of Managed Health Care.

Consumer groups were pleased with Thursday's decision. "The bottom line is that this is a dispute between insurers and doctors," said Jerry Flanagan, the health care policy director for Consumer Watchdog. "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."

The high court's ruling calls balance billing a practice meant to frighten consumers into paying bills that HMOs should pick up.

"Billing disputes over emergency medical care must be resolved solely between the emergency room doctors, who are entitled to a reasonable payment for their services, and the HMO, which is obligated to make that payment," Justice Ming W. Chin wrote.

The decision in Prospect Medical Group v. Northridge Emergency Medical Group overturns earlier rulings that sided with Northridge, an emergency caregiver that argued state law does not prohibit balance billing.

The court also signaled that it may be wary of arguments presented in another balance billing case, in which the California Medical Association is seeking to undo a state regulation that went into effect in October classifying balance billing as an unfair practice.

Schwarzenegger, who directed the Department of Managed Health Care to draft the regulations, applauded the ruling.

"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," Schwarzenegger said in a statement.

The CMA expressed disappointment in the decision, which it considered a blow against the state's emergency rooms.

In its analysis of state data, the CMA said that emergency rooms in California absorbed more than $1 billion in unpaid services from June 30, 2006, to June 30, 2007.

The ruling's prescribed recourse – take billing disputes to court – is not feasible and could add to doctors' expenses, said Dr. Dev A. GnanaDev, CMA president and a trauma surgeon at Arrowhead Regional Medical Center, the county hospital in San Bernardino.

"It's your little practice going after a company with a lot more resources," he said. There is no incentive, he said, to go after deep-pocketed insurance companies for relatively small amounts of money.

The decision takes away what little leverage doctors have against big insurers, he said. "Let's put some pressure on insurance companies to pay fair rates," GnanaDev said.

Call The Bee's Bobby Caina Calvan, (916) 321-1067.
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