CMA Trustees to Consider Balance Billing Pilot Project
[Posted 07/21/05]

CMA’s Board of Trustees at its next meeting will consider a proposal to create three concurrent pilot programs that would test different methods of resolving billing disputes between health plans and noncontracting physicians.

Four years in a row, legislation has been introduced that would prohibit noncontracting physicians from balance billing patients when health plans fail to pay fairly for services provided to their enrollees. CMA strongly opposes the current health-plan backed legislation. It would give insurers a free hand to pay noncontracted physicians as little as possible and would also eliminate any incentive for the plans to contract with physicians at fair rates. Nevertheless, CMA understands that patients do not want or expect to be billed because their insurance companies don’t pay reasonable charges for covered services.

While in previous years legislative authors have worked with CMA to address this problem, this year we witnessed a blatant attempt by health plans to place physicians in a completely vulnerable position by prohibiting balance billing without offering any protections against unfair payments.

That bill (AB 1321 by Assemblyman Leland Yee, San Francisco) narrowly made it out of its first committee. Although the bill has been held up, the debate revealed the public’s anger and confusion about balance billing and the Legislature’s intent to do something about it this year. Clearly, even CMA’s friends in the Legislature want a resolution. With that prompting, CMA staff created several concepts that would protect noncontracted physicians’ right to balance bill, while addressing the specific concerns that arise when HMO patients are treated in hospital-based settings.

These limited pilot projects will be conducted over a period of years to assess the viability of different dispute resolution mechanisms. These projects will be studied and can be rejected if proven unmeritorious.

Two of the proposed pilot programs that the trustees will discuss would test “baseball-style” arbitration, one with state oversight and one with local oversight. In baseball arbitration, the arbiter considers competing proposals from each side and simply chooses the most reasonable. The idea encourages the two sides to make reasonable offers to avoid having their proposal eliminated as unrealistic. The third program would test traditional arbitration overseen by a local medical society. After two to three years, a neutral party would make a recommendation to the Legislature as to which of the three worked best for all.

Many important details are yet to be decided, including who would pay for the arbitration, what evidence can be introduced, and how much time the arbiter should be allowed to take to render a decision. These and many other important details will have to be debated, and even then the results are unpredictable. This uncertainty explains why there is strong support for pilot programs. Because it is such an important matter to a large number of physicians, no one is willing to endorse a single solution for the entire state.

Members are encouraged to discuss this with their trustee prior to the July 29 meeting.