Metropolitan News-Enterprise


Friday, January 9, 2009


Page 1


Supreme Court Says HMO Members Not Subject to ‘Balance Billing’




Patients who receive emergency room services through their health maintenance organizations are not responsible for the difference between the value of the services as determined by the doctors and the amount paid by the HMO, the California Supreme Court ruled yesterday.

“Balance billing,” as the practice is known, is prohibited by the Knox-Keene Health Care Service Plan Act of 1975 and other statutes, Justice Ming Chin wrote for a unanimous court, which included Fourth District Court of Appeal Justice Alex McDonald. McDonald was assigned in place of Justice Kathryn M. Werdegar, whose husband is a physician and who recused herself.

“Interpreting the applicable statutory scheme as a whole...we conclude that billing disputes over emergency medical care must be resolved solely between the emergency room doctors, who are entitled to a reasonable payment for their services, and the HMO, which is obligated to make that payment,” Chin wrote.

Medicare Rate

The case ruled on yesterday arose out of a billing dispute between Prospect Medical Group, which acts on behalf of HMOs, and emergency physicians at Northridge and Saint John’s hospitals. When the doctors rejected Prospect’s assertion that they were only entitled to the Medicare rate and that billing in excess of that amount was unreasonable, Prospect sought a judicial declaration that it did not have to pay more than the Medicare rate and that balance billing was unlawful.

Los Angeles Superior Court Judge Gerald Rosenberg sustained the physicians’ demurrers and dismissed the action. The Court of Appeal affirmed in part, agreeing with the trial judge that balance billing was not per se unlawful, but said  Rosenberg should have allowed Prospect to amend the complaint to allege the doctors were seeking to be  paid excessive rates for specific procedures.

The Supreme Court granted review as to the single issue of whether balance billing is legal, and concluded that it is not.

The Knox-Keene Act, Chin noted, provides, among other things, that health care plans and medical providers must contract in writing regarding payment for services; that every such contract include a provision that no patient is liable for his or her plan’s failure to pay; and that no provider may sue a patient to collect sums owed by a plan.

Dispute Resolution

It also requires HMOs to establish mechanisms for resolving billing disputes with non-contracting providers such as emergency doctors, and was interpreted in Bell v. Blue Cross of California (2005) 131 Cal.App.4th 211 to allow those doctors to sue HMOs if disputes cannot be resolved otherwise.

The justice also cited a 1994 law, codified as Health and Safety Code Sec. 1371.4, that requires HMOs to pay for out-of-system emergency room visits. Reading all the statutory provisions together, and in light of public policy, leads to the conclusion that there is “a clear legislative policy not to place patients in the middle of billing disputes between doctors and HMOs.”

Chin emphasized that the court was not addressing “the larger issue” of adequate compensation for emergency physicians.

The case was argued in the Supreme Court by Thomas R. Freeman of Century City’s Bird, Marella, Boxer, Wolpert, Nessim, Drooks & Lincenberg  for Prospect Medical Group, Michael D. McClelland of Sacramento for the California Department of Managed Health Care as amicus for Prospect, and Jerome B. Falk Jr. of San Francisco for the doctors.

Other amici included the California Association of Health Plans and California Association of Physicians Groups for the plaintiff and the California Medical Association, American Medical Association, and California Hospital Association for the defendants.

Emergency Room Visits

The CAHP said the overwhelming majority of patient bills result from emergency room visits. The association estimated that 1.76 million Californians received such doctor bills in 2005 and 2006 totaling $528 million and that more than half the patients paid the bills.

CMA President Dr. Dev A. GnanaDev told The Associated Press that the ruling left emergency room doctors unfairly at the mercy of HMOs when it comes to determining the value of their work.

“This court ruling basically says if I do my job as I see fit and HMOs don’t want to pay, tough luck, go to court,” the trauma surgeon said. “I signed up to be a doctor, not a lawyer.”

GnanaDev said that the ruling will add to the financial problems of overburdened emergency rooms throughout the state. He said 70 emergency rooms have closed in the state since 1990.

Gov. Arnold Schwarzenegger issued a statement praising the decision.

“Today’s court ruling is good news for Californians and reaffirms that patients should not be put in the middle of billing disputes between providers and health plans,” the governor said. “Just like my regulations protect patients from unfair medical bills, this ruling will protect Californians who have done the right thing by obtaining insurance, but then later receive burdensome medical bills that they do not owe.”

California Association of Health Plans chief executive Christopher Ohman told the AP that balance billing is “predatory“ and said the Supreme Court’s decision “will help ensure consumers have the peace of mind they should have with health insurance.”

The case is Prospect Medical Group, Inc. v. Northridge Emergency Medical Group, 09 S.O.S. 182.


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