Factual background of the case
Prospect Health Source Medical Group is an individual practice care association that manages care through written contracts with health plans. It contracts with medical providers and hospitals to provide patient care to its members at contracted rates. When people go to one of the providers in the network, Prospect pays the provider the agreed-upon rate. However, patients who have to go to the emergency department might go to a hospital that does not have a contract with Prospect.
The defendants are groups of emergency doctors who provide emergency care at hospitals. They are not contracted providers with Prospect. When patients who had health insurance through Prospect went to emergency departments and received care from the defendants, the defendants would submit bills to Prospect. In some cases, Prospect would pay less than the amount billed because it determined that the billing amount was unreasonable. When this happened, the emergency physicians would send bills to the patients for the difference between their bills and what Prospect had paid. Prospect filed suit against the defendants, asking that the court make a determination that balance billing was illegal and that the established Medicare rate was reasonable. The trial court sided with the defendants in their demurrers, and Prospect appealed. The Court of Appeals found that balance billing was not illegal and that Prospect was not entitled to claim the Medicare rate as reasonable. Prospect then appealed to the California Supreme Court.
Is balance billing legal when doctors provide care to patients of non-contracted HMOs?
The court analyzed the case under the Knox-Keene Act, which is a comprehensive act that provides for the regulation and licensing of managed health care. Under the law, HMOs have to reimburse emergency room doctors when they provide care to the enrollees. For hospitals that are contracted providers, the doctors must provide care without regard to the ability of the patients to pay, and the HMOs must reimburse them for the care that was provided. Billing disputes that arise must be settled between the doctors and the HMOs, and the patients are not responsible for billing disputes.
In this case, however, the doctors’ groups were not contracted providers with the Prospect HMO. Since they were not contracted, they engaged in balance billing. Prospect argued that section 1379 of the act prohibited balance billing. The section specifically addressed the practice in the context of contracted doctors billing patients for the difference between what they were paid by the HMOs and what they billed. Under that section, the doctors should instead sue the HMOs directly and not bill the patients for the disputed amounts.
Analysis and conclusion
The court looked at a combination of laws to arrive at its decision of whether balance billing by non-contracting medical providers of patients was allowed. It found that the law provided that HMOs should have dispute resolution procedures in place to resolve billing disputes for non-contracting doctors. The court also noted that the medical providers at hospital emergency departments were obligated to provide care to patients regardless of their ability to pay.
The court looked at the statutory scheme and the legislative history as a whole in order to determine if balance billing of patients by non-contracting providers was allowed when billing disputes arise between the providers and the HMOs. It found that emergency room doctors must file lawsuits against the HMOs directly for billing disputes and that they could not directly bill the patients.
The court also noted that emergency room doctors are entitled to receive reasonable compensation for the care that they provide but not to charge whatever they want. It indicated that determining the reasonable amount is an issue between the providers and the HMOs, and they should resolve the billing issues without involving the patients who received the care.
Contact a lawyer
California doctors are not allowed to engage in balance billing when they are not fully compensated for the care that they provide. If you believe that you have been billed for the balance between what your HMO paid for the care you received and what the doctors charged for it beyond your copay, you might need to get help from an experienced lawyer. Medical billing issues can be complex and necessitate the help of an attorney who understands the regulatory scheme for medical billing. Contact the Law Offices of Steven M. Sweat to schedule your consultation.