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Gov. Seeks to Protect Patients From Medical Billing Tactic

Schwarzenegger orders regulators to target possibly illegal method by which doctors and hospitals bill for charges not paid by insurers.

July 26, 2006|Rong-Gong Lin II | Times Staff Writer

Gov. Arnold Schwarzenegger on Tuesday ordered state regulators to redouble efforts to protect patients from a possibly illegal medical billing practice in which insured patients are charged for emergency services that should be covered by their insurers.

The practice -- called "balance billing" -- often involves doctors and hospitals that claim that they are receiving inadequate payment from health insurers and then ask patients to pay the balance.

For example, in such a dispute, a doctor may charge $2,000 for a procedure, but the insurer pays only $1,500. Under balance billing, the physician would then bill the patient the outstanding $500 -- even though the full cost was supposed to be covered by the patient's health plan.

"No patient should be caught in the middle of a billing dispute between a doctor and an insurer," said Cindy Ehnes, director of the California Department of Managed Health Care, which regulates health plans and helps consumers resolve complaints.

The legality of the practice is unclear. Federal law requires health plans to be responsible for charges that occur in an emergency. In addition, state regulators say that balance billing is illegal under California law. But that interpretation is being challenged in court.

Florida, Rhode Island, West Virginia, Colorado and Maryland have recently passed bills prohibiting the practice.

Schwarzenegger's executive order requires the Department of Managed Health Care to "take all steps necessary to protect Californians from balance billing," including writing regulations to bar the practice.

The order also calls for the creation of independent panels of medical and insurance experts to resolve billing disputes.

In addition, the department plans to bring together medical, hospital and insurance groups to suggest a reasonable range of rates to avert future arguments over billing.

State Sen. Deborah Ortiz (D-Sacramento) said the billing practice has caused major problems for consumers, who are left with enormous medical bills and targeted by collection agencies for emergency care that they had expected to be covered. Often, patients pay the difference.

Dr. Jack Lewin, chief executive of the California Medical Assn., said Schwarzenegger's plan failed to address the underlying problem. Balance billing, he said, is an essential last resort for doctors when they are not adequately paid.

"Nothing in this plan talks about how insurance companies have nearly unilateral power to control the pricing and reimbursements for healthcare," Lewin said.

"Is a doctor a whole lot different from an electrician or plumber? If insurance companies aren't paying fairly, then doctors have to bill for their services like any other business," Lewin said.

Robert Alaniz, a spokesman for WellPoint and Blue Cross of California, said that he shares some of the governor's concerns about balance billing, but that his company remains cautious about Schwarzenegger's order.

"It's important that any new policies not serve as an impetus for an increase in the overall cost of healthcare," Alaniz said.

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