Lawmakers Push To Stop Surprise ER Billing

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Yves here. This article is a bit fuzzier than I’d like on the details of how the proposed California legislation to bar balanced billing would work, and past failures to halt this practice says that details matter.

However, as I read this piece, the intent is make health insurance work like old-fashioned indemnity plans, at least as far as emergency room coverage is concerned. Indemnity plans were once the norm, and the insured could go to any doctor. No network, no GP gatekeeping.

The sticky part here is the patient is supposed to be on the hook for only what he’d have to pay if he went to an emergency room that was in network. That would seem to give the upper hand to the insurance companies, since the hospital has no recourse to the patient beyond his obligation for an in-network visit. The insurer sends the same reimbursement to the out-of-network hospital as it would to an in-network hospital, and washes its hands of the matter.

One downside for the insurer is that they will now be on the hook for ER bills from any hospital. So they will wind up increasing premiums as a result. But routine care, managing chronic conditions like diabetes, and scheduled surgeries still constitute the substantial majority of what those premiums are intended to cover.

By Ana B. Ibarra, Reporter for California Healthline, based in Sacramento. Previously, she covered health in California’s Central Valley for the Merced Sun-Star. She is a 2015 Center for Health Journalism fellow and a Cal Poly Pomona graduate. Originally published at Kaiser Health News

California has some of the nation’s strongest protections against surprise medical bills. But many Californians still get slammed with huge out-of-network charges.

State lawmakers are now trying to close gaps in the law with a bill that would limit how much hospitals outside of a patient’s insurance network can charge for emergency care.

“We thought the practice of balance billing had been addressed,” said state Assemblyman David Chiu (D-San Francisco), author of the bill. “Turns out there are major holes in the law potentially impacting millions of Californians with different types of insurance.”

“Balance billing,” better known as surprise billing, occurs when a patient receives care from a doctor or hospital — or another provider — outside of her insurance plan’s network, and then the doctor or hospital bills the patient for the amount insurance didn’t cover. These bills can soar into the tens of thousands of dollars.

Chiu’s proposal would prohibit out-of-network hospitals from sending surprise bills to privately insured emergency patients. Instead, hospitals would have to work directly with health plans on billing, leaving the patients responsible only for their in-network copayments, coinsurance and deductibles. Hospitals are fighting the proposal, calling it a form of rate-setting.

“If we are able to move this forward in California, it could be a model and standard for what happens around the country,” Chiu said of his measure, which the state Assembly is expected to consider this week.

Surprise billing is a scourge for patients around the country.

Last year, a Kaiser Family Foundation poll found that two-thirds of Americans are “very worried” or “somewhat worried” about being able to afford a surprise bill for themselves or a family member. (Kaiser Health News, which produces California Healthline, is an editorially independent program of the foundation.)

Health policy experts say the problem demands federal action rather than an inconsistent patchwork of state laws. And President Donald Trump has called on Congress to pass legislation this year to put a stop to surprise medical bills.

“In one swipe, the federal government can offer a universal approach in protecting consumers,” said Kevin Lucia, a research professor with Georgetown University’s Health Policy Institute.

Lawmakers in both the U.S. Senate and House have introduced bills to end surprise billing. But passing federal legislation promises to be an uphill battlebecause two influential lobbying groups — health insurers and health providers — have been unable to agree on a solution.

Frustrated by waiting for federal lawmakers to act, states have been trying to solve this issue. As of December 2018, 25 states offered some protection against surprise billing, and the protections in nine of those states were considered “comprehensive,” according to the Commonwealth Fund. California, New York, Florida, Illinois and Connecticut are among the nine.

New state laws also have been adopted since, including in Nevada, which will limit how much out-of-network providers, including hospitals, can charge patients for emergency care, starting next year.

In California, a 2009 state Supreme Court ruling protects some patients against surprise billing for emergency care, and a state law that took effect in 2017 protects some who receive non-emergency care.

But millions remain vulnerable, largely because California’s protections don’t cover all insurance plans. The California Supreme Court ruling applies to people with plans regulated by the state Department of Managed Health Care. That leaves out the roughly 1 million Californians with plans regulated by the state Department of Insurance and the nearly 6 million people with federally regulated plans, most of whom have employer-sponsored insurance.

The state law governing non-emergency care also doesn’t apply to the millions of residents with health plans regulated by the federal government.

Chiu’s bill attempts to close those loopholes by targeting hospitals and their billing practices. With this strategy, a patient’s health plan — and the agency that regulates it — would not matter, explained Anthony Wright, executive director of Health Access California, a Sacramento-based advocacy group that is sponsoring the legislation.

The proposal “extends protections to a broader set of Californians,” Wright said.

The California Hospital Association opposes the measure, which would limit the amount hospitals could charge insurance plans to a certain rate for each service, varying by region.

The association believes that would equate to the state setting prices, which could discourage health plans from entering contracts with hospitals, said Jan Emerson-Shea, a spokeswoman for the association.

“We fully support the provision of the bill that protects patients. It is the rate-setting piece that is our concern,” she said.

Chiu said his bill was prompted by the peculiar billing practices at Zuckerberg San Francisco General Hospital spotlighted by Vox in January.

Unlike most large hospitals, San Francisco General does not contract with private insurers. Vox found that the hospital considered patients with private insurance out-of-network, and was slapping many of them with whopping bills.

Stefania Kappes-Rocha was one of them.

On April 30, 2018, Kappes-Rocha, 23, landed in San Francisco General’s emergency room with a fever and intense pain in her lower right back caused by a kidney infection. A student at Hult International Business School at the time, she had a private plan through the college.

“I didn’t know it at the time, but that was the problem — that I did have insurance,” Kappes-Rocha said.

She was sent home a day later with ibuprofen. About two months later, she was billed $27,767.70.

“I couldn’t move because of the pain,” she said. The last thing on her mind was that she’d be on the hook for the entire cost of her hospital visit.

Her insurance eventually agreed to pay about $24,000 of her bill.

“I fought back, I pressured them every week,” she said. “But some people don’t know they should do that.”

Skewered by media reports, the hospital announced in April that it would no longer balance-bill privately insured patients.

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19 comments

  1. Cal2

    There’s a reason that this state bill originated in the civic disaster that is San Francisco.

    San Francisco General, now named for the billionaire, used to be an excellent public teaching hospital affiliated with the University of California. It has one of the better trauma units in California, thanks to the proximity of nearby gang turf wars and housing projects that keep it replenished with fresh gunshot wounds.

    Someone has to pick up the tab for San Francisco being a magnet for the uninsured homeless and undocumented from all over the western hemisphere. All this is very expensive.

    The city has a dedicated health plan for the “undocumented.”
    https://healthysanfrancisco.org/en/

    Billions have been spent on free health care for “homeless” people.
    https://www.sfchronicle.com/bayarea/heatherknight/article/Businesses-must-contribute-more-to-city-s-13178743.php

    More spending coming:
    https://dailycaller.com/2018/11/01/san-francisco-homeless-spending-proposition-c/

    The word among some locals, third generation Americans, who grew up in the city, even those who have insurance, if they go to the emergency room, is to claim to not be insured, give a false name and social security number for emergency treatment. That idea came from refugees flushing their passport down the toilet on the plane.

    Reply
    1. Joe Well

      OK, I actually followed the link to the SF Chronicle you posted to support the claim that in SF, one city, “billions have been spent on free health care for ‘homeless’ (scare quotes?? why??) people.”

      In fact, that article does not even use the word “healthcare” and implies the exact opposite of what you claim, stating that 2.2% of a $250 million annual budget dedicating to homelessness issues was spent on “health services” for the homeless. The vast bulk of the budget went to fight evictions and keep housed people from becoming homeless. It does not discuss emergency departments at all.

      You’re making stuff up, not just little things, but enormous things.

      Might I add, IMHO, this kind of thing is typical of conservatives, and dovetails nicely with today’s post about conservative ideology dying out.

      Reply
      1. Cal2

        You corrected my pre-coffee error. Thank you.
        People that make things up don’t post a contradictory URL.

        “Billions have been spent on the homeless in San Francisco”, is what I meant to say. Healthcare is part of that, which includes ambulance rides, fire department calls. BTW, there’s lots of debate about numbers. “Billions includes housing, subsidies etc.

        Why “homeless” quotes? There are actual Homeless people who have been kicked out of public housing or who simply cannot afford rents. The majority of the “homeless” in San Francisco are recently arrived who have never had a home here, move from place to place and are mostly just junkies and drug users, who would continue to be, even if given “a home.”

        I’m a Bernie, Medicare for All, Peace in The Middle East, free transit, tax the wealthy “conservative”, glad they are coming around.

        Reply
        1. Joe Well

          You should actually read that article you linked to.

          Where is your figure for the billions that were supposedly spent on the homeless in San Francisco coming from? As that article makes clear, most of the money is being spent on people who live in apartments in San Francisco, to keep them from becoming homeless. Another huge chunk is spent on people who are homeless and in precarious temporary arrangements rather than on the street. Very little is being spent on the “visible homeless” as the article calls them.

          Your general impression that SF is a net economic contributor in any way to American society is absurd. It is sucking wealth out with scam companies like Uber while it is casting out lower income people to every other corner of the state and country.

          If SF did take in some homeless people and provide them a few thousand dollars a year of services, that would be a drop in the bucket compared to the damage its citizens have done. But you have not provided one word of evidence that the homeless in SF have primarily come from out of town, much less out of state. Given the Bay Area’s efforts to gentrify over the decades, it seems quite likely that they were formerly housed inhabitants of the city.

          Reply
          1. Cal2

            “Your general impression that SF is a net economic contributor in any way to American society is absurd.”
            You must be confusing me with someone else?
            I think San Francisco is a giant black hole of exorbitant social services for “homeless”, illegals, and profit sucking billionaires that often pay zero local taxes. i.e. Twitter, in it’s special Mid Market Resurrection Zone. All those stock options…think of the savings.
            Add up the money spent over the last 25 years or so on homeless and preventing homelessness and it’s in the billions.
            $40,000 per “homeless” person per year. With the passage of Proposition C, to go to $70,000 per year.

            Here’s article with per year expenditures on homeless:
            https://www.sfchronicle.com/bayarea/heatherknight/article/Businesses-must-contribute-more-to-city-s-13178743.php

            I grew up in San Francisco and have been involved in local politics for half a century. So where are you from? Where are you getting your numbers? Please share. We can all learn from each other.

            Reply
  2. KevinD

    As long as the people making the rules are monetarily above worrying about health care costs, the rest of us will continue to get squeezed out of existence. Put some people in charge who cannot afford today’s medical costs and you will see them go down. Pretty simple actually ( at least in my head)

    Reply
  3. Anon

    I have direct experience with this sort of ‘balance billing’. It’s not just the hospitals that do it. Doctors are a big part of the problem, too.

    My doctor recommended major surgery and so we scheduled a specific time and date with the hospital. My medical insurance required the use of in network doctors. So I explained to the chief nurse (in a long discussion prior to admittance) at the in-network hospital I needed to vet ALL doctors for their network status. Actually put it in writing. (I gave them a list of the known in-network doctors affiliated with the hospital.)

    Survived the surgery (as you can tell). But to my surprise a ‘balance bill’ appeared in the mail. Then another. What?! I don’t recognize any of these people (doctors). In California the Legislature has given the State Medical Board authority over hospital operating room procedure. The medical board ‘requires’ three doctors to be ‘present’ in the operating room for certain major surgeries; they are selected by the primary surgeon. These other two doctors, whom I was never introduced to (before or after surgery) had sent me the unexpected billing (with no discussion of the medical work they performed– or not) in the mail. Of course, they were not in-network and my insurance initially refused to pay them.

    Long story shortened, I was able to convince my insurance provider to pay them in-network fees. The doctors refused it, we went to court, they got nothing (zero, nada, zilch). Written record carried the day.

    Hospital care in America is a wild ride. You literally need a personal advocate every minute you are in one.

    Reply
    1. Joe Well

      Congratulations on your victory and for fighting the good fight.

      I have tried hard to get as much of my healthcare as possible outside the US.

      I am confident that many American specialist doctors are decent people, but too many of them are clearly greedy.

      Reply
      1. wilroncanada

        Canadian specialist doctors who are REALLY greedy may stay around and join those trying to privatize our system, or they may move to the US where greed is king. We made the mistake back in the 1970s of engaging an obstetrician at a maternity hospital in Vancouver for the birth of our first two children. For our oldest he showed up seconds before the birth, leaving a me and a resident who had not done a birth before. Of course, the nurses knew exactly what to do. His fee from medicare was, I guess, being there to catch. With our second two years later, he knew exactly what might happen–my wife would race through the transition phase of labour and almost immediately into delivery. That did not matter to him, he still arrived within seconds of delivery completion.
        Our third was with a GP in a different city. He was a REAL doctor, present and supportive. It didn’t matter, though, because the obstetrician had moved to Texas where he could schedule caesareans around his golf game.

        Reply
    2. baldski

      I have a Medicare PPO from Humana. The hospital selected by them for emergencies is Northern Nevada. I happened to fall off my porch and hurt my arm. I went to the emergency room and was told I had a fractured elbow. Some time later Humana denied the payment for the attending doctor because he was in the group of emergency physicians that man the emergency room and were not in Humana’s network. Catch-22 – The emergency room bill is in network but the doctors are not.

      Calling all lawyers: Please answer.

      Is this not Agency of Estoppel on Humana’s part?

      The Emergency Room of Northern Nevada Hospital is writ large by a large neon sign. The doctors there are contracted with Northern Nevada and practice in their facility. I contend that the doctors are agents of the hospital and Humana is denying that agency by not paying the bill. Agency of Estoppel is illegal, I was taught in my limited business law course.

      Any lawyer out there please respond.

      Reply
      1. run75441

        baldski:

        What you have just described is pretty common in Texas. These doctors do not have a contract with the hospital and are usually 3rd party. Is your PPO supplemental or are you in an Advantage (BS) Plan? If you are truly in Medicare and using a Supplemental for the 20% of Part B not covered, you are safe.

        If you are in an Advantage Plan I would go back to Humana and ask them to negotiate a price. Not an attorney; but, doctors are agents of the hospital whether 3rd party and contracted or employed.

        Reply
        1. Paul P

          The hospital is in network, they ask for your insurance,
          and then supply out of network doctors, who don’t contact you to enter into a contract to provide out of network services. i don’t see how a contract has been
          made with these out of network doctors.

          You probably signed an ABN (“I’m responsible for what
          insurance does not pay.”} So, that is an “I gotcha” in favor of their right to bill you. I’ve been crossing out their ABNs and writing I will only be responsible for what insurance pays.

          Reply
          1. run75441

            Paul:

            When you go to the ER, you get whoever comes through the door which baldski got. Again what I will say, this is happening with greater frequency and especially in Texas where a hospital contracts the ER doctors out to a 3rd party and does not negotiate the ER rates. It is like having a vendor in your hospital who is contracted to the hospital and charges whatever price. There is a term for this and it is little more than entrapment.

            Reply
  4. Janie

    Every one of us should be concerned about this. We are vulnerable, even in our homes. Ambulances take you to the nearest hospital where there is space in Emergency, not necessarily to one in your network. You may be unconscious or incoherent.

    Next issue:. Ongoing care. A friend had a pancreatitis attack while on vacation. After ER, he was admitted and told he needed immediate surgery. His insurance company refused to pay for the surgery, saying he could have returned home safely. As you can imagine, the bill was a big one. Insurance never came through, and he settled with the hospital for a large amount.

    Reply
    1. Joe Well

      I think the issue with balance billing is not whether the ER is in your network. Here in Massachusetts, for instance, health plans cover every ER visit to every ER on earth. The issue is that some of the doctors provide services which are for whatever reason not considered “emergency” for the purposes of your health plan and if that doctor is out of network, you get charged for the “balance” beyond whatever small amount the plan will pay. Oftentimes the doctors are greedy sharks and pile on the charges which understandably the insurer is unwilling to pay.

      The ER admission itself is only a manageable amount, about $500 when I went. It was the fees and medications that added up.

      Reply
  5. Bob Hertz

    In Yves’s fine piece, a spokesman for hospitals complained that the new legislation was a form of ‘rate setting.”

    Well heck yes. When consumers are helpless and a legitimate contract is impossible, it is accepted that courts and legislatures can regulate the fees.

    For that matter, Maryland has had regulated hospital charges for several decades, and I know of no crisis that has occurred nor of a hospital that went broke.

    The very idea that every hospital bill for emergencies should involve attorneys and the media is grotesque. Seeiing the hospital as a greedy, grabbing institution that sets fees at $100,000 and accepts $10,000 would be considered idiotic in most nations. In Germany, a bargaining unit for all hospitals meets annually with a bargaining unit for all insurers and they set all the fees. In America, hospitals
    “bargain” esssentially by financial terrorism.

    Reply
    1. run75441

      Bob:

      That is Maryland which does regulate pricing.

      The other 49 states do not regulate pricing and set market rates. Places like University of Michigan hospital charge more than other generic hospitals, As hospitals consolidate, there is less competition as the most recent Commonwealth Fund funded Health Affairs study determined in their findings. Indeed from 2007 to 2014, hospital-prices for inpatient care grew 42% compared to 18 percent for physician-prices for inpatient hospital care. For hospital-based outpatient care, hospital-prices rose 25 percent compared to 6 percent for physician-prices.

      If you go to a hospital with 3rd party doctors, they can balance bill you. We are not in Germany and it varies state by state what can be done.

      You being an insurance guy like ME should already know this as you expound about it over at Charles Gaba’s site.

      Reply

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