California should end balance billing once and for all

Governor Schwarzenegger has repeatedly stated that he wants to end ER balance billing with a solution that protects consumers from “inappropriate medical costs.”  In fact, in August, he said: “I continue to also call on the legislature to pass legislation that will prohibit this anti-consumer practice altogether.”

SB 981 (Perata) is the legislation that answers the Governor’s call for balance billing reform.  SB 981 is very direct: if the patient sees an emergency room doctor who is out of his/hers insurance network, the emergency room doctor can’t bill the patient for the balance of what the insurance company refuses to pay.

It also creates a way for ER doctors and insurance companies to resolve their payment disputes without involving patients.  SB 981 is a win-win situation.  The patient receives treatment, the ER doctors get paid fairly and the insurance company complies with its contract to the consumer it promised to cover.

Seems simple enough right?  Well unfortunately, some insurance companies recognize balance billing as a way to profit. They know that physicians would never turn away a sick patient in need of emergency care. They know that an emergency room doctor’s first obligation is to protect the patient, to make sure they are healthy and safe, especially in a time of crisis. So what they’ve decided to do is not pay the full amount of the doctor’s services – that leaves patients stuck with the balance of the bill – or “balance billing”.

This loophole has been exploited for decades by big insurance companies. This is a nationwide practice that is well documented and pervasive, and it’s happening in every emergency room in the country.

Fortunately, for the first time ever, a bill to ban balance billing, SB 981, was able to make it past the tight grip of the insurance lobby in the Legislature and onto the Governor’s desk and awaiting signature.
Some may advocate that this is a job for the Department of Managed Health Care (DMHC).  We disagree. What DMHC is proposing is to regulate doctors – which it has no statutory authority to do, and ignore the illegal behavior of HMOs – which it was chartered to regulate.  The ongoing calculated practice of chronic underpayments and non-payments by health plans created balance billing in the first place, and unfortunately the DMHC has done little to prevent this unfair payment practice.

In fact, the questions surrounding the legitimacy of a DMHC regulation regarding balance billing makes legal challenges inevitable, and quite likely to be overturned by the California Courts.  Once that occurs and if the Governor has not signed SB 981 into law, consumers will be stuck with paying balance bills for yet another year.  

Further, the paltry fines levied by DMHC against the bad-acting plans are evidence of their woeful lack of regulation and apparent unwillingness to protect patients. For example, in 2005, the department found HealthNet guilty of underpayments to non-contracted emergency physicians in the amount of approximately $6 million to $7 million but fined the plan only $250,000, which when combined with repayments amounted to a net profit for HealthNet of approximately $5 million to $6 million.

SB 981 makes the law clear and concise and leaves no question about the fate of balance billing by emergency physicians — it will no longer exist.   

It is time to fix this balance billing problem for patients.  We encourage the Governor to sign SB 981 and keep his promise to end balance billing.