Emergency room doctors who think a patient’s HMO has underpaid them can’t bill the patient for the difference and must seek whatever redress they can from the health plan, the state Supreme Court ruled Thursday in a big-money dispute in the medical industry.
The unanimous ruling won praise from consumer groups and state officials but was lamented by the California Medical Association, which said it will hurt emergency care in the state.
"California emergency rooms are really in bad shape, and this will make the situation significantly worse," said the association’s president, Dev GnanaDev, a trauma surgeon in Colton (San Bernardino County). He said the ban on billing patients would shift costs from health maintenance organizations to doctors, some of whom will end their affiliations with emergency rooms.
But Cindy Ehnes, director of the state Department of Managed Health Care, which regulates HMOs, said the ruling lifts "a crushing economic burden off the backs of California health care consumers." She said it also confirms her department’s decision to issue regulations in October that prohibited the billing practice that the court outlawed Thursday.
"The ruling puts the burden of disputed medical fees where it belongs,
on insurers and doctors, not on the patients who are far too often
caught in the middle," said Jerry Flanagan of the advocacy group
More than 21 million Californians are covered by HMOs. The case involves a limited but relatively common type of fee dispute, over the cost of caring for HMO members who receive emergency care at hospitals that don’t have contracts specifying the amount the health plans will pay them.
State law entitles doctors and hospitals to receive reasonable fees for their services, but doesn’t define those amounts, giving rise to frequent disagreements.
GnanaDev said the amounts in dispute for physicians are usually modest – perhaps $20 to $100 for typical emergency room care and up to $1,000 for surgery. But statewide, he said, doctors claim underpayments of about $200 million a year, and contested hospital bills are probably higher.
The scope of the issue is also illustrated by the state regulatory department’s pending lawsuit against Prime Health Care, which owns a group of hospitals in Southern California, said department spokeswoman Lynne Randolph. She said the company sent bills to 6,000 Kaiser customers last year for amounts the HMO had refused to pay for emergency and post-stabilization care.
Thursday’s ruling should invalidate those bills, Randolph said. But she said patients often pay such bills, sometimes under pressure from a collection agency, and can’t get their money back under current regulations.
The justices overturned lower-court rulings that had allowed doctors at two hospitals in Los Angeles County to bill patients for unpaid amounts in emergency care bills. Although no California law specifically prohibits such billing, the court said, the statutes that regulate emergency care express an intent to "transfer the financial risk of health care from patients to providers."
"We perceive a clear legislative policy not to place patients in the middle of billing disputes," said Justice Ming Chin in Thursday’s ruling. "Emergency room doctors must resolve their differences with HMOs and not inject patients into the dispute."
Randolph, the Department of Managed Health Care spokeswoman, said the department allows doctors to submit such disputes to an independent review panel whose decision on reasonable fees is binding on both sides. GnanaDev, the medical association president, said the department’s system is useless – bureaucratic and far too costly in time and effort for the amount of fees at stake – and physicians have no real recourse in most cases.
"The court gives you an option to go to court against an insurance company," he said. "How many doctors have the time and money?"
The case is Prospect Medical Group vs. Northridge Emergency Medical Group, S142209.
E-mail Bob Egelko at [email protected].