California doctors to continue battling ban on balance billing

California physicians likely will appeal a recent state court ruling that upheld the Dept. of Managed Health Care's right to define balance billing for out-of-network emergency services as an unfair billing practice.

The California Medical Assn., the state chapter of the American College of Emergency Physicians, the California Hospital Assn. and several other medical specialty groups sued the department to halt rules banning doctors and hospitals from billing patients for out-of-network emergency care costs that health plans don't cover.

Physicians and hospitals argued balance billing is not a "billing pattern" addressed in the law that governs the state's managed care department. They maintained the statute only allows the Dept. of Managed Health Care to regulate how a practitioner bills, addressing issues such as upcoding or unbundling.

But physicians and hospitals told the court that making rules pertaining to balance billing regulates who a physician or hospital bills. That is something the law doesn't give the managed care department the authority to do, organized medicine argued.

The court disagreed with the interpretation. The Sacramento County trial court in December 2008 ruled that the department had the legal authority to create the regulation that has been in place since Oct. 15, 2008. The court noted that "nothing in the express language of [the law] ... limits what can constitute an unfair billing pattern in terms of who and how. DMHC's conclusion that balance billing can constitute a demonstrable and unjust billing pattern is reasonable and not in conflict with [the law]."

Dissatisfied with court decision

CMA officials said the ruling leaves important questions unanswered. They are exploring an appeal.

"The court only upheld the DMHC's right to define 'balance billing' as an unfair billing practice. The court explicitly chose not to address whether the DMHC has the authority to enforce that definition against providers, leaving that issue for another day," the CMA, lead plaintiff on the lawsuit, said in a statement.

CMA officials said the regulation is a one-sided rule that does not address why physicians balance bill in the first place: HMOs do not pay the emergency care bill for policyholders.

"It is also short-sighted in that it will transfer hundreds of millions of dollars from California's distressed system of emergency care to HMOs," the CMA said in its statement. "Another related systematic impact will be to remove incentives that HMOs have to contract with providers, which will leave Californians with smaller networks of HMO providers and less access to the health care they need."

Dept. of Managed Health Care Director Cindy Ehnes said the court's ruling protects patients from balance billing for emergency services.

"Our legal authority to protect consumers from bills they should never have received has now been confirmed," Ehnes said in a statement. "We will continue to not only defend consumers from being caught in the middle of billing disputes but also work to ensure that providers are paid fairly and on time."