Lisa Girion reports in the Los Angeles Times on a new directive from the California Department of Managed Health Care (DMHC) that prohibits hospitals and physicians from “balance billing” patients for emergency care not covered by insurers. “Balance billing” refers to the practice of billing patients for the balance of the charges remaining after their insurance has paid a portion of the bill. When physicians are contracted to health plans, their contracts typically prohibit the practice. Hospital emergency rooms and emergency physicians have relied upon balance billing whenever treating patients with whose plans they are not contracted.
While DMHC’s self-congratulatory public statements treat this decision as a victory for consumers against an unfair practice, the reality is far more complicated. The real victory is not for patients, but for health plans, whose control is expanded by the imposition of this constraint. For patients, this decision is certain to worsen already strained access to emergency care. The practice of balance billing has been integral to the sustainability of emergency medical practice in California as a result of the unfair practice of the health insurers, which use their disproportionate economic power to delay and reduce payments unilaterally. Although hospitals and physicians are theoretically entitled to a usual and customary charges in the absence of a contracted rate of payment, health plans avoid paying such charges with impunity. Skeptics should compare the fiscal track record of the health plans with the record of emergency rooms in recent years. The result has been the closure of hospital after hospital in some parts of California, resulting in significantly less hospital bed access than other parts of the country.
The backdrop for the DMHC decision has been litigation between Prime Healthcare and Kaiser, in which DMHC intervened. Prime, the hospital chain founded by physician Prim Reddy, has developed a successful model of acquiring failing hospitals, canceling their private health plan contracts, and forcing health plans to pay usual and customary rates. Prime appears to have made a tactical error when it antagonized Kaiser patients in order to put pressure on Kaiser to pay for patients who visited a non-Kaiser, Prime emergency rooms. Kaiser urged patients to complain to DMHC, and succeeded in depicting Prime as the problem. Hospitals and emergency physicians need to find ways to turn patients and DMHC into allies to address the challenge of abusive health plans.
California Healthcare Law 