Governor’s ‘Balance Billing’ Limit Misses the Real Problem
[Posted 08/03/06]

Gov. Arnold Schwarzenegger last week issued an executive order directing the Department of Managed Heath Care (DMHC) to limit so-called "balance billing" for emergency care. While the order does not tell the department how to accomplish this, CMA is angered and astonished that the order attacks the future viability of physician practices, while doing nothing to solve the real underlying issue of for-profit HMOs refusing to pay fairly for emergency care provided to their enrollees.

"This executive order deals with a symptom and not the true problem," says CMA President Michael Sexton, M.D. "The problem is that for-profit HMOs have not provided a sufficient portion of premiums to fairly fund emergency care and support the physicians and surgeons who save our lives in a crisis."

CMA understands that patients do not want or expect to be billed because their insurance companies don't pay reasonable charges for covered services. However, limiting balance billing without also addressing the underlying issues would reward for-profit HMOs for refusing to pay for their insureds' emergency health care, giving them a free hand to pay noncontracted physicians as little as possible and eliminating any incentive for the plans to contract with physicians and capitated medical groups at fair rates. The result will be the collapse of the emergency room system.

"While the governor's order leaves it up to DMHC to develop regulations, CMA warns against adopting a solution that puts the burden disproportionately on physicians and hospitals who provide more than $1 billion in free care for uninsured patients in California annually," says CMA CEO Jack Lewin, M.D.

For more than 12 months, CMA has been working in good faith with the Schwarzenegger administration to create a fair payment dispute process for emergency care. CMA hopes the governor's abrupt and ill-conceived order does not derail the significant progress that has been made.It is also critical that DMHC enforce current regulations that require health plans to contract with enough physicians to provide care for all of their enrollees. If the plans were held to task for their inadequate provider networks, they would be forced to offer fairer contracts to both individual physicians and delegated medical groups.

CMA has developed a legislative package that would help stabilize California's emergency care system by ensuring that HMOs contract with sufficient numbers of physicians to provide care for all their insured, and requiring that they spend at least 85 cents of every premium dollar on health care. Currently, several major for-profit HMOs spend less than 79 percent of premiums on patient care, with the rest going to administrative and marketing costs and profit.

The issue of balance billing inevitably stirs up strong emotions, and there is no doubt that CMA has members on all sides of this issue. CMA's policy on this issue is to oppose any proposed ban on balance billing, while advocating for insurance reforms to protect fair funding for emergency care, including the possible necessity of setting limits on the tax deductibility of the soaring profits of health insurers. CMA policy is set by its members and is carefully developed through a democratic process designed to air all perspectives and find solutions that best protect the interests of physicians and their patients. (For more information on getting involved in this process, click here.)

Contact: CMA’s legal information line, 415/882-5144 or legalinfo@cmanet.org.