California Supreme Court Rules Against Balance Billing by Hospitals, ED Physicians When HMOs Decline To Pay Some Out-of-Network Care Costs
The California Supreme Court on Thursday released a unanimous ruling that bars emergency department physicians and hospitals from billing insured patients directly for charges that their HMOs refuse to pay, the Sacramento Bee reports. In effect, the ruling bars so-called "balance billing," which typically occurs when insured people seek emergency care from out-of-network physicians and hospitals. Insurers reimburse out-of-network doctors and hospitals at a lower rate, and the health care providers bill patients for the remainder of the charges in addition to copayments and deductibles.
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" (Caina Calvan, 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).
Support for Ruling
Consumer groups, health plans and California Gov. Arnold Schwarzenegger (R) praised the ruling. 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." 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). 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" (AP/San Jose Mercury News, 1/8).
Physicians' Reaction
Health care providers argued that they need a guarantee that they will receive reimbursement for their services (Wall Street Journal, 1/8). California Medical Association President Dev GnanaDev 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." In addition, 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. Cindy Ehnes, director of the California Department of Managed Health Care, said, "We won't retreat from efforts to make sure that doctors are paid fairly" (Girion, Los Angeles Times, 1/9).
Implications
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). The ruling also will have implications for other pending court cases involving balance billing. In addition, 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 DMHC 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).
