DMHC Builds on Efforts to Protect Patients from Unfair and Unexpected Bills
State of California
Department of Managed Health Care
August 1, 2008
The California Department of Managed Health Care (DMHC) today announced that it has finalized new regulations to restrict the practice of “balance billing” in emergency care settings – a practice that makes patients, not providers or health plans, responsible for paying the disputed difference between their provider’s bill and the health plan’s coverage. The regulations restrict balance billing by making it an unfair billing practice, thus allowing DMHC enforcement actions against those providers who engage in activities that unfairly burden consumers.
“Consumers, employers and taxpayers pay millions of dollars each year in health care premiums in exchange for a promise to protect them from unexpected bills when a health emergency strikes,” said Cindy Ehnes, Director of the DMHC. “The practice of balance billing breaks this promise to consumers and is unacceptable.”
Balance billing happens most often when an HMO patient receives emergency care from a physician or hospital that is not contracted with their health plan.
The DMHC has a strong record of aggressively protecting consumers from unfair balance billing. It recently filed a lawsuit in the Orange County Superior Court to stop Prime Healthcare Services, a Southern California-based hospital chain, from balance billing more than 3,500 HMO patients for services received at its hospitals.
http://www.hmohelp.ca.gov/library/reports/news/prbbregs.pdf
The issue of balance billing stems from a conflict between contracts (health plans) that patients have with their managed care organizations and contracts that physicians and hospitals do not have with the managed care organizations covering patients that they are required to provide services for in emergency situations.
This action by the California Department of Managed Care requires that hospitals and physicians comply with contracts between patients and their managed care organizations, even though a contract to provide services has never been negotiated with these private managed care entities. Thus the providers are required to accept fees that may be lower than their costs – fees that are dictated by the private health plan.
The example of Prime Healthcare Services demonstrates why it was necessary to adopt regulations to prevent patients from being gouged at unfair rack prices. But this action, in protecting patients, also protected the private managed care organizations, often at the cost of ripping off the health care providers.
In contrast, our public insurance program, Medicare, does set rates with which providers must comply (with slight variations depending on accepting assignment or contracting as a provider). Recently, in many regions, Medicare rates have been declining in relation to provider costs. A greater effort must be made by the administrators of Medicare to establish rates that cover legitimate costs and provide fair profits. Only then is it fair to demand compliance with government regulated rates.
If we had a universal single payer national health program, a unified effort would be made to demand fair compensation at a level that would ensure that our health care delivery system would be there when we need it. What we don’t need is private intermediaries that manipulate patients and providers to accomplish their business goals. We’ve had enough of that.
