State proposes ban on HMO billing practice

June 1, 2008 | By LORA HINES | The Press-Enterprise

State officials, hospitals and doctors are locked in a dispute over whether some patients can be charged if they are taken to an emergency room outside of their health care network. For some, that bill can be a couple of hundred dollars, but for others it can reach into the thousands.

The ban proposed by the California Department of Managed Health Care would affect members of HMOs, such as Kaiser Permanente, not members of other kinds of insurance plans. The department only regulates HMOs. Administrators and hospital-based doctors say the state should be targeting insurance companies.

Statewide, thousands of people get pressed for payment by doctors and hospitals, typically after they are taken to an emergency room outside their insurance plan. Doctors and hospitals that think health care plans and insurance companies have shortchanged them on payment for treatment then try to make up the difference by going after patients who already paid their share. It’s called balance billing.

Karla and William Gledhill, of Chino Hills, understand the practice well.

The couple got hit with a $53,000 bill from Arrowhead Regional Medical Center in Colton after their insurance company, Anthem Blue Cross, paid about $25,000. Their 16-year-old son, Ryan, was flown to the hospital after a serious dirt bike crash in Lucerne Valley.

Karla Gledhill said she racked up late-payment fees and bill-collection threats as she repeatedly wrote letters and made telephone calls to the hospital and insurance company. Last week, the insurance company agreed to pay the bill.

Gledhill said she thought she would have to hire an attorney, which sometimes is a patient’s only recourse, hospital officials say.

The hospital and insurance company said privacy laws prevented them from commenting on the family’s claim.

“You don’t know anything about balance billing until you’re stuck in the middle, trying to hammer out what’s right,” Gledhill said.

Balance Billing

More than 1.75 million insured Californians who visited emergency rooms in the past two years were asked to pay more, even after their co-payments and deductibles, according to the California Association of Health Plans. The professional organization represents 40 health care plans that cover an estimated 21 million Californians.

The average balance bill was $300, which added up to about $528 million that patients spent in addition to their co-payments and deductibles, the association said. More than half of the patients who were balance billed paid.

“The practice needs to be banned, period,” said association spokeswoman Nicole Kasabian Evans. “The patient shouldn’t be placed in the middle. That’s what the insurance companies and health care providers are doing.”

In July 2006, Gov. Schwarzenegger ordered an end to balance billing after he realized many residents were being charged for medical expenses they didn’t owe, said Cindy Ehnes, director of the state Managed Health Care Department. But the department couldn’t come up with a suitable solution to HMOs and providers, she said. So, the department decided to merely ban the practice.

“We have tried many other approaches to solve this problem,” Ehnes said. “We have decided to go back to our first job, which is to protect consumers.”

Ehnes said she had hoped lawmakers would have passed legislation regulating balance billing. At least seven states have balance billing laws, including Colorado and Florida. Meanwhile, state Sens. Don Perata, D-Oakland, and Leland Yee, D-San Francisco, have introduced balance billing legislation.

HMO Vs. Hospital

The ban comes as Kaiser, the state’s largest HMO, got a temporary restraining order earlier this month from Los Angeles County Superior Court against Prime Healthcare Services Inc., of Victorville, to stop it from collecting money from thousands of Kaiser patients or reporting them to credit agencies. A hearing is set for Thursday.

“This has been an ongoing dispute for a year or year and a half,” said Dr. Ben Chu, president of Kaiser’s Southern California region. “… They threatened to trash their credit ratings if they didn’t pay.”

Earlier this year, Prime Healthcare sued Kaiser, claiming that Kaiser owes $25 million for its patients who were treated at eight of Prime Healthcare’s hospitals, including Desert Valley Hospital in Victorville, Chino Valley Medical Center and Montclair Medical Center.

Prime Healthcare attorney Michael Sarrao couldn’t be reached for comment.

Prime Healthcare has accused Kaiser of delaying payments by repeatedly demanding patient medical records, claiming that care provided was unnecessary and requiring transfer of members to Kaiser hospitals.

Chu disputed the claims.

“It’s not about delaying payment,” he said. “It’s about substantiating claims.”

Calculating Health Cost

Dr. Richard Frankenstein, president of the California Medical Association, said the organization, which represents 35,000 doctors, will fight the state Managed Health Care Department’s ban.

“They ought to be regulating the insurance companies, not the doctors, which it does not have the authority to do,” he said. “We see this as a $500 million transfer from patients to insurance companies, and the insurance companies aren’t paying the bill.”

On average, Frankenstein said, insurance companies pay all but about $30 of a doctor’s bill.

“If that doctor sees 50 to 60 patients, that $30 does add up,” he said.

Some specialists may not work on-call emergencies if insurance companies refuse to pay and they can’t bill patients, Frankenstein said.

Frank Arambula, Arrowhead Regional Medical Center’s chief financial officer, said the hospital compares its costs to those of other facilities, which are reported to the California Office of Statewide Health Planning and Development. The data are posted on the agency’s Web site.

“We set our rates based on market-driven prices,” he said. “We think it’s a fair assignment and the payer is going to pay those charges.”

Conversely, insurance companies rarely show patients and health care providers how they determine what to pay for service, Arambula said.

In a written statement, Anthem Blue Cross spokeswoman Peggy Hinz said the company reimburses out-of-network hospitals for what it considers reasonable and customary costs. It is changing its reimbursement policy to protect members who require emergency care, she wrote.

“It was not the intent of our reimbursement policy to increase out of pocket expenses for our members, who do not have a choice in selecting the place where health care services are performed, such as in the case of an emergency,” Hinz wrote.

Anthem Blue Cross bases its reimbursement rates on factors including submitted charges for payment, comparisons of charges for services offered at other hospitals, and service costs that are reported to the state, Hinz wrote.

Fighting the Bill

The Gledhills didn’t care whether Arrowhead Regional Medical Center was in their Anthem Blue Cross preferred provider organization network. Their son needed surgery on his pancreas.

“Worst case, we thought we would owe $6,000,” said Karla Gledhill, whose husband owns a small Anaheim business.

Anthem Blue Cross first determined the Gledhills owed the hospital $53,273.17 after it paid $25,121.28, according to a claim recap. It paid another $12,606.15 after Karla Gledhill complained to the California Department of Insurance.

The Gledhills still faced a $40,667.12 bill and no explanation of how Anthem Blue Cross determined what it would pay.

“How could I fight a fair fight if I didn’t have all the information?” Karla Gledhill asked. “I didn’t think Arrowhead’s charges were exorbitant for the care my son received.”

On May 21, Anthem agreed to pay the rest of Ryan Gledhill’s hospital bill after the company “made a one time administrative decision to remit payment,” according to the letter the Gledhills received.

The letter did not include further explanation, and Hinz said privacy laws prevented her from offering one.

Reach Lora Hines at 951-368-9444 or lhines@PE.com

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Online Help

California Office of Statewide Health Planning and Development: www.oshpd.ca.gov

California Department for Managed Health Care: www.hmohelp.ca.gov

California Department of Insurance: www.insurance.ca.gov

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Health care billing fight is looming

Proposal would ban some charges to ER patients

By Keith Darcé

UNION-TRIBUNE STAFF WRITER

May 17, 2008

Doctors and hospital officials will square off with health insurers Monday in San Diego over a state plan to ban medical providers from billing emergency room patients for charges not covered by insurance companies.

The proposal, by the Department of Managed Health Care, is the agency’s third attempt in two years to outlaw so-called balance billing, which turns patients into pawns in payment disputes. The earlier proposals were scrubbed after regulators failed to build consensus among various health care parties.

What remains is a stripped-down version that lacks provisions for an independent dispute-resolution process and a method for calculating fair charges for hospital and doctor services.

The San Diego hearing comes about two weeks after several medical centers owned by Prime Healthcare, including Paradise Valley Hospital in National City, sent thousands of collection letters to Kaiser Permanente members. They demanded payment for outstanding emergency room bills.

Prime’s hospitals had sued Kaiser, the state’s largest health plan, in February. They contended that Kaiser refused to pay for more than $25 million worth of services after concluding that the conditions of some patients didn’t constitute true emergencies.

Kaiser officials said as many as 6,000 of their members received the bills from Prime. A Prime spokeswoman said a relatively small number of bills were sent to patients treated at Paradise Valley, but she didn’t know the exact figure.

Cindy Ehnes, director of the managed care agency, said Prime’s widespread balance billing “put a face” on a practice that receives little public attention despite being controversial.

A final version of the agency’s proposal is expected to be published by fall.

Balance billing surfaces most often when emergency room patients receive care outside of their insurance company’s network of contracted providers. State law requires health plans to pay fair amounts for emergency room services, but the exact price is often disputed and insurers wind up paying a lower amount than what they are charged.

Some physicians and hospitals offset the reduced payments by sending bills to patients that cover the difference, an amount that can run from as little as $25 to thousands of dollars.

Balance bills average about $300, according to the California Association of Health Plans, a trade group that lobbies for its 40 members.

The practice can leave patients confused and afraid of being reported to collection agencies if they ignore the bills. While some people lodge complaints with their insurers or state regulators, many pay the charges.

Medical providers who engage in balance billing said the practice is intended to pressure insurers to pay for services in full. They also said it’s their most effective alternative to taking health plans to court, an expensive option given the huge legal resources that most health plans have.

The managed care agency’s latest proposal will give insurance companies a bigger advantage in payment disputes with out-of-network providers, said Dr. Ted Mazer, past president of the San Diego County Medical Society.

“The department is telling the health plans that they can tell the physicians what their services are worth,” he said.

Instead, Mazer said, the agency should require insurers to pay some portion of disputed bills upfront and use historical data to determine what constitutes appropriate charges.

Supporters of the proposed regulations said a ban on balance billing is long overdue.

“What this does is take the first step: saying it is wrong to have patients in the middle,” said Chris Ohman, president and CEO of the California Association of Health Plans. “The health plan industry is committed to the next step, which is designing a process that will be fair to both plans and providers.”

Insurers, doctors and hospitals must resolve their disagreements without involving patients, said Michael Russo of the nonprofit California Public Interest Research Group in Los Angeles.

“It’s ridiculous to hold consumers hostage,” he said. “The patients aren’t doing anything wrong.”

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Keith Darce: (619) 293-1020; keith.darce@uniontrib.com

 

Balanced Billing Destroys Capitalist Economy – Opinion

By: Alex Wawro

Posted: 4/9/08

If you have health insurance you ought to know what “balance billing” is. Balance billing and the ongoing attempts to outlaw it directly determine how much you pay for medical services.

Typically, if you have medical insurance (say, Kaiser Permanente), your provider will pay any medical fees above your standard co-payment. If Kaiser, however, only pays a standard allotment of $500 for a service a physician would normally charge $750 for (say, an emergency cardiac bypass), the doctor or hospital might send the patient a bill for the missing $250.

What this means for the average consumer is that not only do they have to pay their co-payment, they may receive a second bill for the remaining amount the insurance chose not to pay. Governor Arnold Schwarzenegger supports a bill that would outlaw balance billing.

The less money you have to pay the better, right?

Wrong. The legislation is blatantly unjust; worse, it undermines the foundation of free enterprise that our economy is built upon.

Think about it – when you sign up with an HMO like Kaiser, you agree to pay a standard fee monthly in exchange for a guarantee of financial aid if you need serious medical care.

In return, Kaiser receives monthly income and negotiates flat rates for services with a pool of physicians; those physicians give up the right to charge their own price in exchange for guaranteed business from Kaiser customers.

But if you, as a Kaiser customer, are brought to the ER for emergency surgery, there are no guarantees that the surgeon working is a Kaiser-approved doctor. If that surgeon saves your life, should he or she be forced to accept whatever percentage of the standard rate Kaiser chooses to pay him or her for the service? He does not receive the benefits of being a member of the Kaiser family; why should he be forced to abide by their restrictions?

Essentially, passing this bill destroys the basis of our capitalist economy in favor of a more socialist system in which the government regulates our freedom to spend and charge what we think is fair. By eliminating the practice of balance billing, Schwarzenegger forces all doctors to accept whatever healthcare providers think is fair payment.

Even worse, it makes the entire system of licensed physicians meaningless. A doctor who agrees to accept Kaiser’s rates does so in exchange for receiving more business from the company. In essence, what he loses in individual sales he more than makes up for in volume.

If all physicians are limited to collecting only what Kaiser chooses to pay, why bother contracting with doctors in the first place?

Kaiser can pay a doctor whatever they believe they can get away with, and the physician has no choice but to take what he is given.

By removing a practitioner’s ability to charge what he thinks is adequate for his services the government is sullying the principles on which this country was founded.

Though this legislation seems to benefit the consumer, in the end only the corporation wins.

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