The practice of balanced billing gets the spotlight in an excellent article by Jordan Rau in the Los Angeles Times today. It deserves attention not just in California but across the country.
The piece focuses on the new regulations by the Department of Managed Health Care to ban the practice of “balanced billing,” where *insured* consumers are unfairly billed and even sent to collections for going to the doctor or hospital.
The bill should go to the insurer, but because there’s a dispute between the health provider and the insurer, the provider also bills the patien–the whole bill or the “balance” of what the insurer won’t pay–as a way to leverage the insurer to pay more.
The patient, as a result, either unwittingly pays an bill (often inflated beyond what anybody pays) that is the insurer’s responsibility, and even if they don’t, they are dragged into this contractual dispute and could be sent to collections–with their credit history and financial future at risk.
Either way, it’s not what the consumer was expecting when they signed up for health insurance in the first place. As our Health Access California colleague Beth Capell is quoted, “Consumers who do the right thing and go to a hospital that’s in their network should not be leveraged in a fight between doctors and insurers… It’s just wrong.”
But in deference to our policy advocate, the quote of note comes from the Administration, which illustrates how contentious this issue, describing how regulatory efforts to broker a deal failed after the Schwarzenegger Administration had issued an executive order on this issue in 2005.
The Department of Managed Health Care spent the last two years trying to negotiate a compromise between insurers and providers to work out their payment differences, but couldn’t find common ground. So the department decided to simply outlaw the practice through new draft regulations issued Friday.
“We tried to say, when we were young and naive, that we could find a mutually acceptable resolution to make sure physicians were being paid fairly and on time,” said Cindy Ehnes, the department’s director. “We finally said, we can’t solve this marketplace dispute, but what we can do is our core mission of protecting consumers.”
The draft regulations would prohibit hospitals and hospital-based physicians from billing a patient for the cost of emergency services that are the responsibility of the patient’s health plan.
There will continue to be pending legislation, including by Senate President Pro Tem Don Perata, to see if there is a legislative agreement to settling the contract wars between providers and insurers.
There are issues to work out: these are often cases where a patient goes to an in-network hospital, but has no idea that the ER doctor on call, or the anasthesiologist or other specialists, are not contracted with their insurer. Unlike contracted doctors, there’s no negotiated agreement on the rate. The doctor, who was not in a position to refuse the patient, feels the insurer is underpaying. The insurer isn’t going to pay the full billed amount by the doctor–a “sticker price” that is more than any insurer pays. So when there isn’t an agreement up front, what should be the payment? There’s lots of alternatives–and that’s what the various legislative proposals seek to address–but the answer shouldn’t be to simply stick the consumer with the bill.
But while we are working through those issues, it is appropriate for the Department to focus on what should be the consensus item; to focus on the core issue of protecting consumers from this unfair billing behavior.