The California administration on Friday issued a draft of regulations that propose to ban physicians and hospitals from billing patients for the cost of services above what HMOs are willing to pay.
Some physicians often do not have contracts with the same HMOs that serve the hospitals in which they work. Providers send additional bills to patients for the difference, believing the reimbursements they receive from insurers are too low. Many patients wrongly assume that bill is the invoice for their co-payment and is authorized by their HMO, the Los Angeles Times reported.
This practice, called balanced billing, is regulated in eight states, but versions of legislation to control it have not passed due to opposition from either providers or insurers.
In 2006, Gov. Arnold Schwarzenegger ordered the administration's HMO regulators to ban the practice, and the Department of Managed Health Care has since tried to negotiate a compromise between insurers and providers to work out their payment differences. Such a compromise has not yet been reached.
The LA Times reported that the draft regulations would prohibit hospitals and hospital-based physicians from billing a patient for the cost of emergency services that are the responsibility of the patient's health plan.
California’s main doctors' lobby said the new rules, if approved by the department after a public comment period that ends May 12, could backfire by causing physicians to send the entire bill to patients to let them haggle with insurers for repayment, the LA Times reported.
Meanwhile, some insurers said that paying doctors and hospitals more than they pay their own providers would disrupt the managed care system, because it would create a disincentive for providers to sign contracts with HMOs.
However, according to the LA Times, some insurers have paid doctors below their "reasonable and customary" rate—the legal standard for reimbursement.
In 2005, California regulators fined Health Net $250,000 for underpaying emergency room doctors and other physicians in hospitals. The department said the Woodland Hills HMO had underpaid more than 65,000 claims, the LA Times reported.