California ED physicians entitled to reasonable fees for services

A state appellate ruling is viewed by the medical community as putting out-of-network physicians in a better position to receive fair reimbursement for emergency care.

By Mike Norbut — Posted Aug. 15, 2005

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California physicians who do not have a contract with a health plan but provide emergency care to its members are entitled to reasonable fees and can take the insurer to court to receive them, according to a recent appellate court ruling.

The ruling, made last month by the California Court of Appeal's 2nd Appellate District, elicited praise from the physician community, which seems to have a constant tug-of-war with HMOs over the subject of fair reimbursement. The ruling reverses the action of the trial court, which threw out the original class-action lawsuit and said emergency physicians could only seek additional reimbursement for services directly from the patient or file a claim with the state's Dept. of Managed Health Care.

"This makes clear that a physician has a right to fair reimbursement, that health plans can't arbitrarily decide what a physician should receive," said Jack Lewin, MD, executive vice president and CEO of the California Medical Assn. "This really puts physicians, and to some extent the hospital, in a much more positive position for fair reimbursement."

In the original lawsuit, noncontracted emergency physicians claimed that Blue Cross of California underpaid, delayed payment, or simply did not pay some claims filed for the care of its members.

Blue Cross argued to the appellate court that since state laws do not tie reimbursement for emergency services to a specific benchmark, such as the Medicare fee schedule, the insurer should be free to select the rate at which it pays noncontracted physicians. The court, however, disagreed.

"Although we agree that Blue Cross' reimbursement obligation is not tied to a specific amount [Medicare or anything else], we do not agree that Blue Cross has unfettered discretion to determine unilaterally the amount it will reimburse a non-contracting provider, without any regard to the reasonableness of the fee," the court stated in Bell v. Blue Cross of California.

Impact of the ruling

The appellate decision sends the case back to the trial court, which will revisit the original complaint of whether the physicians are reasonably reimbursed by Blue Cross under the state's Unfair Competition Law.

The trial court originally decided that the Unfair Competition Law was preempted by a law giving the state's Dept. of Managed Health Care exclusive jurisdiction over disputes between emergency physicians and health plans. The appellate court, however, said that decision was incorrect, and ordered the trial court to put the original complaint on track for trial.

Lead plaintiff Mark R. Bell, MD, an emergency physician based in Manhattan Beach, Calif., said he could see the ruling leading noncontracted emergency physicians to take a more aggressive approach when trying to collect payments from health plans.

"Certainly, the decision in the appeals court will allow other physicians to file lawsuits against egregious payers," Dr. Bell said. "I would think they would consider using the court system as a means of getting their fair reimbursement."

Michael Chee, a spokesman for Blue Cross, said the insurer has not yet decided whether it will appeal the appellate court decision.

"Suffice it to say there are multiple directions that the case could follow," Chee said, though he declined to outline what those directions are.

"We are disappointed by the decision, but it's too early to say what we will do. The issue is, what is the interpretation of the decision?" he said.

There remain some questions about how to determine reasonable value based on the court's decision, especially since it says the definition "will be adjudicated by Dr. Bell's prosecution of this lawsuit against Blue Cross."

ED physicians already consider their fees to be reasonable, particularly compared with what a specialist would charge in a nonemergency situation, said Andrew H. Selesnick, an Encino, Calif., attorney who represented the plaintiffs. The average charge for an emergency physician is about $250, with $500 for the highest level of service, such as caring for a cardiac trauma patient, he said.

"From our perspective, that's very reasonable," he said.

Physicians also expect the health plans to show consistency in their reimbursement policies, but they contend HMOs do not. For example, Dr. Bell submitted claims for the same level of service on the same day, Selesnick said. For one claim, he was paid at 100% of the total, but for the other claim, he was paid at 40%.

While the trial court said doctors should appeal to the state rather than the court system when they have a dispute, the state 's Dept. of Managed Health Care supported the notion of physicians pursuing remedies in the legal system. The court agreed with the department's argument that Dr. Bell's claims under the Unfair Competition Law did not infringe on its administrative jurisdiction.

On the other hand, the court was not swayed by Blue Cross' counterargument that allowing physicians to seek what they perceive to be fair reimbursement in court will only raise health care costs and hurt everyone. Physicians could actually gain a higher reimbursement rate by not signing on with Blue Cross, which could drive up premiums for patients, the insurer argued.

"However concerned we may be about spiraling costs for health care service plans and their enrollees, those concerns cannot justify a rule that would single out emergency care physicians and force them to work for something other than a reasonable fee," the court stated.

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Case at a glance

Mark R. Bell, MD; Max Franklin Lebow, MD; and Antelope Valley Emergency Medical Associates Inc. v. Blue Cross of California

Venue: California Court of Appeal, 2nd Appellate District
At issue: Whether physicians who are not contracted with a health plan but care for its members on an emergency basis are entitled to a reasonable fee for those services, and whether they can take the HMO to court to seek those fees.
Impact: Emergency physicians say this decision will give them a better opportunity to receive fair reimbursement for their services. Blue Cross argued to the court that non-contracted physicians could actually be paid at a higher rate than contracted physicians, leading to higher costs to the health care system and higher premiums for patients.

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