What the “balance billing” court ruling means….

As my colleague Anthony Wright said, and which has been trumpeted in front-page headlines around the state today, the ruling in the Prospect case is a big win for consumers—and it is particularly sweet since it was a unanimous and conclusive decision in a case that might well have led to murky law, as did the appellate case that it overturned.

Here is what the California Supreme Court said:

For HMO members, it is always clear in advance who has to provide emergency services — any emergency room doctor to whom the member goes in an emergency — and who has to pay for those services — the HMO. The conflict arises when there is no advance agreement between the emergency room doctors and the HMO regarding the amount of the required payment… The resolution of such disputes can create difficult problems.

But the question of how to resolve disputes between the doctors and the HMO over the amount due for emergency care is not before us in this case. The issue here is narrow, although quite important for emergency room doctors, HMO’s, and their members: When the HMO submits a payment lower than the amount billed, can the emergency room doctors directly bill the patient for the difference between the bill submitted and the payment received — i.e., engage in the practice called “balance billing”?

Interpreting the applicable statutory scheme as a whole — primarily the Knox-Keene Health Care Service Plan Act of 1975, Health and Safety Code section 1340 et seq. (Knox-Keene Act) — we conclude that 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. A patient who is a member of an HMO may not be injected into the dispute. Emergency room doctors may not bill the patient for the disputed amount.

Often legal decisions are a tangle of precedents and legal Latin (literally) that take a bit of thinking to untangle. Not so in this ruling. Justice Ming Chin, writing a 7-0 decision, chose to use very plain English, and his colleagues concurred.

How did the Supreme Court arrive at this decision? How did they find the law so plain when others have struggled to sort out what the law is on balance billing? Well, they did what courts do: they looked at the statutes that have been enacted in sequential order and said here is what the statutory scheme is:

The only reasonable interpretation of a statutory scheme that (1) intends to transfer the financial risk of health care from patients to providers; (2) requires emergency care patients to agree to pay for the services or to supply insurance information; (3) requires HMO’s to pay doctors for emergency services rendered to their subscribers; (4) prohibits balance billing when the HMO, and not the patient, is contractually required to pay; (5) requires adoption of mechanisms to resolve billing disputes between emergency room doctors and HMO’s; and (6) permits emergency room doctors to sue HMO’s directly to resolve billing disputes, is that emergency room doctors may not bill patients directly for amounts in dispute. Emergency room doctors must resolve their differences with HMO’s and not inject patients into the dispute. Interpreting the statutory scheme as a whole, we conclude that the doctors may not bill a patient for emergency services that the HMO is obligated to pay. Balance billing is not permitted.

Among the key statutes, the Court cites is one of our victories in HMO Reform: the California law that states that the HMO must pay for emergency care if a consumer reasonably believed they had an emergency. While we have been most pleased with this because it is a more consumer-friendly standard than the “prudent layperson” standard used in other states, the law has also been clear that HMOs must pay providers for emergency care they provided so long as the consumer “reasonably” thought they had an emergency.

One of the things that we have learned as we have struggled with legislative and regulatory solutions to the balance billing question over the last five years is that HMOs have obeyed the law— that is, the HMOs actually do pay emergency room providers and in a reasonably timely way. What the ER docs and hospitals are upset about is that they want to get paid more. So the ER docs and some hospitals have gone after the patient to get the money—or to get the patient to complain to the HMO so the HMO will pay more. This is what Health Access opposes because it puts consumers with insurance in the middle of a business dispute between two institutional players that play this game every day while the average consumer goes to the emergency room once in a blue moon and has no idea what hit them when they start getting collection notices.

You may be thinking, but wait, that nice emergency doctor, they deserve to get paid. That’s right. The emergency doctor (and the hospital with the emergency room) do deserve to get paid and to get paid timely and to get paid a fair amount. But as the Court pointed out, there are mechanisms for that in the law. And more importantly, ER docs bill HMOs every day—and HMOs pay ER docs. There are literally hundreds of thousands of claims made, and paid, every year in California.

When was the last time you went to the emergency room? Thank goodness, it has been several years since I helped a loved one through an ER visit. And he never did figure out all the bills and the paperwork. Consumers should not have their credit ruined just because they did the right thing and got medical care when they needed it most urgently.

There were lots of other arguments and issues that could easily have tangled up the Court, making for a murky decision—implied contracts, delegation of the HMO role, legislative efforts, and the regulation on balance billing which is also being litigated. The Court was distracted by none of this.

So it is a sweet victory, and sweeter because it is unanimous and conclusive. There is other pending litigation in this area. We shall see what the Court and the various parties do as a result of this ruling. This ruling technically applies only to doctors and not to hospitals, but it is difficult to see the Court reaching any other conclusion with respect to hospitals. And it only applies to emergency care.

Going to the emergency room is never a happy experience. But the only thing you should be worrying about if you have insurance is getting better—not the fear that your credit will be ruined. That is what we thought the law should say. And now the Supreme Court has said that is what the law says.

Health Access California promotes quality, affordable health care for all Californians.

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