Banning Surprise Medical Bills

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California Bans Surprise Medical Bills for Healthy Families, AIM Enrollees
Yee-authored law will stop excessive medical bills for low-income families

SACRAMENTO – Over the past two years, 1.76 million Californians who already had healthcare benefits received surprise medical bills following hospital visits, according to a recent APCO Insight Survey. The practice known as balance billing results in individual medical bills ranging from $100 and under to upwards of $20,000 or more, and come even though a hospital contracts with a patient's health insurance plan.

Even worse, many of those who fall victim to this practice are enrolled in the state’s Healthy Families program, which provides healthcare coverage for uninsured children of low-income families, or are enrolled in the Access for Infants and Mothers (AIM) program designed for pregnant women.

Governor Arnold Schwarzenegger (R-Los Angeles) today signed legislation – SB 697 authored by Senator Leland Yee (D-San Francisco/San Mateo) – to end the practice of balance billing for individuals enrolled in AIM and Healthy Families. Balance billing is already prohibited for Medicare and Medi-Cal enrollees under existing federal and state laws and last month the California Department of Managed Health Care declared balance billing an unfair billing practice.

“It is simply unfair for any patient to receive an excessive and surprise medical bill,” said Yee. “It is unconscionable that low-income families are exposed to aggressive tactics, threats to their credit, and improper and coercive billing practices designed to intimidate them into making excessive payments they are not obligated to pay. I am very pleased that the Governor signed this much-needed bill into law.”

“By further limiting unfair balance billing practices that target low-income consumers…this legislation will improve consumer protections against unfair health care practices,” said Schwarzenegger. “These deplorable practices further highlight the need to reform our broken health care system. Californians deserve a financially sustainable and comprehensive health care reform plan that promotes prevention, shares responsibility, covers all Californians, contains costs and keeps our emergency rooms open and operating.”

Balance billing most often happens when a provider sends a bill for an amount that is more than the contracted rate with the patient’s plan or when a non-contracted provider who works in a hospital, such as an anesthesiologist, radiologist, pathologist, or emergency room physician, sends a bill for any balance a health plan does not pay.

Due to the practice of balance billing, coverage alone does not necessarily mean that families are left without significant healthcare costs. Non-contracted doctors often over-charge patients relative to the rates that contracted providers accept. In fact, a recent survey showed non-contracting doctors over-charging Healthy Families recipients between 206 and 1769 percent. The most egregious examples were for an initial hospital inpatient consultation which Medi-Cal reimburses at $53.92, but the Healthy Families participants were charged on average $966.20 by non-contracted physicians.

A review of complaints made to the California Managed Risk Medical Insurance Board shows that four percent of such complaints received by the board were about balance billing. However, the number is likely significantly higher as individuals may also be reporting complaints to their health plans, Department of Managed Health Care, or may simply pay some or all of the charges without filing a grievance with any entity.

“Families enrolled in these two programs are in low- to moderate-income working families already struggling to make ends meet,” said Elizabeth Landsberg, Legislative Advocate for the Western Center on Law and Poverty. “They should never be charged more than their co-pay just because, through no fault of their own, they ended up with an out-of-network radiologist or anesthesiologist.”

Senator Yee’s SB 697 will explicitly prohibit a health care provider who is furnished documentation of a person’s enrollment in Healthy Families or AIM to seek reimbursement or attempt to obtain payment for any services provided to that person other than from the participating health plan covering that individual.

SB 697 officially becomes law on January 1, 2009.