California Doctors Sue over Balance Billing Ban

October 24, 2008
Special Feature

It usually starts when a patient is taken to an emergency room in a hospital that isn't in his or her insurance plan's network.

It usually starts when a patient is taken to an emergency room in a hospital that isn’t in his or her insurance plan’s network. When the hospital and the ER doctors bill the insurance company, the payment is often less than the usual and customary charges. The patient gets stuck with a bill for the balance, one that sometimes goes unpaid, which can do disastrous damage to the patient’s credit rating.

California’s Department of Managed Health Care (DMHC) has taken steps to prevent ER balance billing, issuing new rules that ban the practice. But doctors and hospitals are fighting back, filing lawsuits aimed at blocking the DMHC from enforcing the rules. Officials of the California Medical Association maintain that the DMHC’s job is to police managed care organizations, and they dispute the department’s authority to target doctors and hospitals over the balance billing issue.

Both doctors and hospitals claim that the root cause of the problem is late and inadequate payment by managed care plans, an issue that DMHC officials promise they will address. In the meantime, the DMHC sees the new rules as a necessary step to prevent thousands of Californians from paying bills that they shouldn’t have to pay or risking a loss of credit if they refuse to pay. State officials also say they expect the rules to survive any court tests.