Getting healthy sometimes means getting stuck with a bill – even for those who think they have coverage through their health care insurer.
The phenomenon known as "balance billing" has not figured prominently in the debate over health care reform, but it is gaining importance as the on-again, off-again negotiations continue. Complaints about balance billing have long been at or near the top of concerns from consumers who call the hot line set up by the state Department of Managed Health Care, which regulates HMOs.
Balance billing typically arises when a patient receives care at a hospital or clinic that is not within the patient's HMO network. The treating physician or hospital submits a bill to the health plan, which may or may not pay it. The rejected bill then gets sent to the patient – who is outraged to learn that he or she was not covered in the first place. Just who ultimately gets hit the hardest in this round of billing is disputed, although it's clear that the patient feels it first. By some estimates, balance billing involves some $450 million to $527 million annually, money that is billed but isn't paid. In some cases, the unpaid bill gets sent to collection, or the patient pays under the threat of collection.
"Really, it's the patients who ultimately wind up holding the bag," said Ned Wigglesworth, a spokesman for the California Medical Association. "The insurers leave the patients paying the bill." He noted that in at least one state, New York, authorities are looking at the business practices of insurers on billing-related issues.
But the hospitals and health plans, not surprisingly, have a different perspective on an issue that has at least four separate corners – the health plans, the hospitals, the doctors and the patients.
"Consumers have the most at risk, and health plans want to take the consumer out of the middle if there is a billing dispute between the hospital or doctor, or both, and the health plan," said Nicole Kasabian Evans, a spokeswoman for the California Association of Health Plans. "The dispute should be worked out directly between the health plan and the provider."
Doctors in California do not work for the hospitals where they practice; in effect, they are independent contractors. Anesthesiologists, radiologists, ophthalmologists, dermatologists and other specialists, as well as general physicians, perform services and expect to get paid. So do hospitals that provide the equipment, space, beds, drugs, therapy and other types of treatment. All submit their bills, and the health plan decides what to cover.
Health plans feel they have to guard against overcharging, and they note that doctors' costs have skyrocketed. Hospitals, with substantial overheads, face out-of-pocket losses and at least some believe that balance billing, unfortunately, offers needed leverage.
One problem is that the care due patients isn't spelled out in advance, which leaves room for ambiguity because of the absence of a contract; the provider of care – a radiologist, for example-may feel that the health plan is inadequate, and that the obligation rests with the patient at that point.
The hospitals, which have urged an end to balance billing, say that unlike the doctors, the hospitals generally have contracts.
"What it comes down to is that hospitals generally have contractual arrangements with health plans, so it is not an issue," said Dietmar Grellman, a vice president of the California Hospital Association. "It's more of an issue with doctors than hospitals. The reason for balance billing has to do with the contracting landscape."
"I think it should be just like anything else," Grellman added. "If a service is provided, a bill is rendered and the health plan should pay. There is no service where a provider of the service gets to pay only a part of it. If they (the health plans) think it is unfair, they can go to court. But instead, they withhold the money and make the provider chase them for the rest. The health plan has collected those premiums for all those years, and they should be forced to pay."
Legislation targeting balance billing is in the works, and one bill by Assemblywoman Mary Salas, D-San Diego, would expedite payments from the non-contracting hospitals to health care plans.
Health plans believe that medical costs, in part, are driving the problem.
"CAHP supports protecting consumers by banning balance billing," CAHP chief Chris Ohman said recently in Burbank. "Patients who are insured and are playing by the rules should not be used as leverage in disputes between providers and insurers." Ohman cited a study commissioned by CAHP that said 1.76 million insured Californians who visited emergency rooms in the last two years had received balance bills on top of their co-pays and deductibles. The average bill was $300, so a total of $528 million was charged to insured patients.
"Balance billing adds hundreds of millions of dollars in excess costs at a time when health care costs are already growing two to three times faster than economy. We need to work on lowering costs, not adding to them," Ohman added.