California's high court on Thursday barred emergency room doctors from directly billing insured patients when their HMOs refuse to pay the entire bill.
The ruling affects California's roughly 21 million HMO members when they are treated by emergency room doctors who aren't covered by their plan. An unanimous California Supreme Court ruled that doctors who feel shortchanged by HMOs for ER visits must take up the issue with insurance companies rather than patients.
The practice — known as "balance billing" — is becoming increasingly common in California and has touched off fierce political and legal debate.
"Emergency room doctors must resolve their differences with HMOs and not inject patients into the dispute," Justice Ming Chin wrote for the seven-member court. "We perceive a clear legislative policy not to place patients in the middle of billing disputes between doctors and HMOs."
Ching noted that a 1994 law requires HMOs to pay for out-of-system emergency room visits and it also empowered doctors to sue the managed health care insurers if they were underpaid.
"These provisions strongly suggest that doctors may not bill patients directly when a dispute arises between doctors and the HMOs," Chin wrote.
The California Medical Association, which filed a friend-of-the-court brief in the case, complained Thursday that the court's 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," said CMA president Dr. Dev A. GnanaDev, who is a trauma surgeon. "I signed up to be a doctor, not a lawyer."
Ruling could increase ER money woes
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.
Thursday's ruling overturned two lower court decisions allowing the billing for emergency room visits. It stemmed from a lawsuit by Los Angeles-based Prospect Medical Group Inc., representing HMOs, filed against two Southern California companies that provided emergency room doctors to area hospitals.
The Supreme Court left unresolved other out-of-system visits that result in patients receiving out-of-system doctor bills, though the bulk of the fast-growing dispute between doctors and managed health care plans are emergency room treatments.
State and federal laws require emergency room doctors to treat everyone regardless of insurance status or ability to pay.
The state Department of Managed Health requires HMOs to pay emergency doctors "reasonable" costs and that's where the trouble starts. HMOs complain bitterly about doctors inflating their bills. The doctors complain that HMOs routinely shortchange them, and many then bill patients directly for the difference.
The lobbying group California Association of Health Plans 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.
Association chief executive Christopher Ohman called the billing practice "predatory" and said the Supreme Court's "ruling will help ensure consumers have the peace of mind they should have with health insurance."