02 April 2008

California Moves to Ban Balance Billing

The Arnold tried to do this via executive fiat last year and there was enough blowback that it failed. I thought it was dead.

Apparently not.

This will be terrible for ER doctors in California.

Here's why:

Hypothetically, when I take care of a "Level 5" patient -- a complex patient requiring lots of diagnostic work and risk -- my gross charges might be $474.

However, most patients pay much less, because their insurers negotiate a lower payment rate. Medicare patients pay less than half, about $180, based on the medicare fee schedule. Private insurers -- Blue Cross, Aetna, UnitedHealth, etc, will individually negotiate rates with the physician group, typically getting a discount anywhere from 15-50%, depending on the size and political clout of the plan. They promise rapid payment with less hassle in return for this discount. However, the demands are typically for very deep discounts, and as the representative for our physician group my job is to try to keep payments as high as possible, largely to offset the losses we take on uninsured and medicaid patients.

The only leverage I have to extract concessions from insurers is to walk away from the table and go "non-participating" or "non-par" with a given insurer. In that case, the patient gets no discount and is responsible for the full charge. The insurer will usually send a token payment, and the patient is billed for the balance. This sucks for patients who thought they had purchased insurance to cover their medical expenses. Typically, in response to such a threat -- or a notice of termination letter -- the plans will respond with a reasonable compromise. The doctors' only alternative is to bend over and take whatever pittance the insurance companies offer.

If the balance billing prohibition is enacted, insurance companies will have the ability to drive down physician reimbursements with no recourse whatsoever. They can use the threat of paying non-par physicians at Medicaid rates to force doctors to contract at unsustainably deep discounts.

CA-ACEP and CMA are opposing this - good for them. But with the Governor in their pocket, the big bucks the insurers can apply to the legislators and the phony patient-advocate spin they're putting on it, I worry that the deck is stacked against them.


Anonymous said...

As a patient who has had to deal with this, and someone who lives in California, I have to say that I am with the governator on this one.

I do not think that the status quo is fair to ER docs, and I think we need a system that is (including funding for EMTALA-mandated care).

But the solution is not continuing to let the patient get screwed. There is one hospital ER I am allowed to go to by my managed care plan. I have no control over what doctor or doctor group sees me when I go there, what they charge, or what my insurance plan reimburses them for. And I know from personal experience that it is hell to spend 8+ hours on the phone followed by 3+ hours crutching around the hospital to try to figure out why you are getting this doctor bill for care your plan was supposed to cover when you went to the right hospital and did what you were supposed to do. It's extortion -- I shouldn't have to pay it, but it's either my pocketbook or my credit history that's going to take a hit.

Again, what is happening now is truly not fair to the docs. But for the docs to respond to the situation by turning around and screwing over the only people with less control of the situation than they have is unconscionable.

Anonymous said...

+1 anonymous 707.
but do you have any suggestions for a workable alternative?

Anonymous said...

The problem with me suggesting a workable alternative is that I have no idea what I am talking about. I think I have some right to an opinion on situations I've been directly involved with as a patient, but since medicine isn't my field, my opinion on how to fix the current billing problems isn't worth the, uh, electrons (light emitting diodes? pixels?) it's printed on.

There are too many things I don't know anything about as far as how contracts with hospitals work, exactly how reimbursement works and is negotiated, etc. But it seems like a hospital can't be the recommended one for a large insurance plan unless all the docs the patients encounter take that insurance. So if the ER groups refuse to take the insurance plans when the reimbursement rates are not sustainable, the hospital loses business to other hospitals. When all of the docs in an area won't take a plan, the plan has a reason to negotiate a higher rate. If there are too many problems with coverage in the area, businesses will drop the insurance plan, which also pressures the insurance company to stop screwing around. But there may be other factors that keep that from working.

In general I think health care billing is totally insane. The amount I pay a plumber isn't dependent only on what is wrong with the pipes; I pay a base charge for getting him/her to my house, and then for time after that. And yet in medicine it seems to be the case that the time of a very highly educated person spent talking to a patient is worth little, while the time of the same person doing something is worth a lot. Time is time, and the time of highly skilled people is expensive whether they are coming up with a brilliant diagnosis, running a code, or explaining that a 3 year old does not need antibiotics for 36 hours of sniffles. I think that getting away from the crazy X diagnosis gets you Y amount of money and all of the bizarre coding to a simpler system where time is more directly compensated would make things better for everyone. But I have no idea how to make that happen.

-Anon 707

karla said...

I think the issue is that the state needs to set pricing guidelines for "emergency balance billing. This is my situation happening right now. My 16 yr. old had accident and was flown to nearest trauma center. 8 day stay and surgery 80,000. My insurance said that it is not contracted with hosp. so it will only pay 37,000. I am billed for what is left!!! Neither hosp. or insurance will give me pricing criteria or how they each reached their decision. I am expected to write a 40,000 plus check to hospital and call it a day. I did not pick the hosp. the paramedics decided that was nearest trauma center. What to do. I am in the middle with the most to lose!!!! This is an epidemic problem bankrupting people. By the way I pay 989.00 a month for insurance. I do not expect a free ride!!

Anonymous said...

I had a noncontracted ER doctor take good care of me at a contracted hospital (Aetna PPO). My insurance mistakenly (or not?)processed it for a contracted doctor, and I was balance billed immediately. I called the insurance company (because the emergency gp didn't even try to negotiate), and they agreed to resubmit the charges correctly. Meanwhile, I paid the ER group the balance, because they are aggressive - stating I was already 30-days past due, and threatening finance charges (this is 60 days post accident). A few days later, my insurance came back with a new explanation of benefits, paying the ER doctors in full (not knowing I already paid them). So now I have to write a letter requesting reimbursement from the ER docs - perhaps I can threaten a finance charge. But this is clearly a case where the ER docs group didn't even try to negotiate with my insurance. This shouldn't be. I'm sure they've had bad experiences in negotiations, but now it seems something has to be done to protect the patient, because the docs (their billing gp that is) aren't even trying. They know where the weak link is - the patient who may be dealing with health issues and is trying to protect their credit.