Doctors sue over balance-billing ban for natural disasters

Louisiana health professionals are suing state Insurance Commissioner Jim Donelon over an emergency rule that effectively prohibits doctors from balance-billing certain patients.

The rule, announced Sept. 4 in response to Hurricane Isaac, says health plans must provide in-network coverage to patients who are forced to obtain out-of-network emergency care because they were displaced by the storm. The physicians said the rule goes a step further by preventing out-of-network doctors from collecting additional fees for their services from patients whose insurance doesn’t cover the full amount. The rule is contrary to existing state law that allows out-of-network physicians to balance-bill, according to the suit filed Sept. 17.

“What we’re really concerned about is the way in which the commissioner has legislated new law,” said Greg Waddell, general counsel for the Louisiana State Medical Society, which is a plaintiff in the case. “He doesn’t have the authority to do that. If it’s balance billing now, where would it end? Could you just make up any law you wanted under the guise of an emergency?”

Donelon declined to comment for this article. In a statement issued Sept. 4, he said the emergency rule allows insurance policyholders affected by Hurricane Isaac greater protection and flexibility.

The rule “provides some necessary protections for insured individuals and business owners in Louisiana who are already dealing with the aftermath of Isaac,” he said. “For example, the emergency rule will enable policyholders who were displaced by Isaac to have access to the coverages provided by their health policies for emergency treatment, even if they are forced by circumstances to go to an out-of-network provider.”

Donelon’s action was authorized by Louisiana Gov. Bobby Jindal, who customarily grants the commissioner the temporary authority to enact emergency insurance rules, the statement said.

Among other provisions, the rule said policyholders affected by Hurricane Isaac will receive an extension to pay insurance premiums without any late fees. Any coverage restrictions health plans usually place on medications will not be applicable, the rule said, and no insurance policy can be canceled because of a Hurricane Isaac-related claim. The provisions apply to health care services that were received between Aug. 26 and Sept. 25, regardless of the date the claim is filed. The emergency rule is similar in scope to the rules issued by the Louisiana Dept. of Insurance after Hurricane Gustav in 2008, Donelon said.

It is true that similar rules were enacted after previous hurricanes, but not to the same extent as the Isaac regulations, said John Matessino, president and CEO of the Louisiana Hospital Assn. The hospital association also is a plaintiff in the lawsuit.

“This emergency rule was to protect patients and consumers if they went out of network to make sure their carriers would still cover them — that’s a good thing,” Matessino said. “Where we have a problem is an added provision of a prohibition against balance billing, basically saying if a provider receives payment from one payer source, they cannot get any other payment from another source. We don’t think it’s the commissioner’s right to declare how the provider does their business.”

Injunction sought against rule

The Louisiana State Medical Society and the Louisiana Hospital Assn. filed the lawsuit against the Louisiana Dept. of Insurance in the 19th Judicial District Court, Parish of East Baton Rouge. The plaintiffs want a judge immediately to block the rule. The Louisiana attorney general’s office said it does not comment on pending litigation.

The suit acknowledges that the commissioner has the authority to suspend provisions of an existing law during an emergency. However, the Isaac rule is more “than a mere suspension of the law, but rather a direct negation of a statute duly promulgated by the Louisiana Legislature,” the suit said.

Balance billing has been the subject of a number of legal and legislative battles over the years. At least nine states restrict balance billing by out-of-network physicians, although in most cases the practice is banned for emergency care only.

The American Medical Association supports the right of physicians to balance-bill patients where permitted by law.

In Louisiana, doctors and insurance officials repeatedly have debated through the Legislature whether balance billing should be allowed, Waddell said. Physicians have been successful in keeping the practice intact, but that success appears to be at risk with the emergency rule, he said.

“It’s a question of what is [Donelon’s] authority after an emergency, and if he has the ability to create new law,” he said. “We feel this action really sets a dangerous precedent.”