Monday, Aug. 25, 2008

Our View: Health insurance bill interferes with care costs

Lawmakers should allow current regulations to take care of out-of-network health care costs.

You end up at the nearest emergency room with a life-threatening illness or injury. It's out of your health insurance network, no fault of yours. The doctor charges $286 for your emergency care; the insurer wants to pay $159.

What happens when out-of-network emergency room doctors and insurers don't agree on a payment? Too often, patients wrongly end up getting billed for the difference (a practice called "balance billing") -- even though they've already paid their insurance premiums, deductibles and co-pays.

That's why this page has supported a new regulation championed by Gov. Arnold Schwarzenegger and the Department of Managed Health Care that would ban the practice of balance billing for emergency room care.

Unfortunately, even before the new regulation takes effect Oct. 15, Senate Bill 981 by Senate President Pro Tem Don Perata proposes changes with potential for big unintended consequences. Legislators should reject it and let the regulation have an impact.

Balance billing results from one of two things:

The insurer is failing to pay the "reasonable and customary" value of the services rendered, as the law requires; or,

The doctor is billing more than the reasonable and customary value.

California has multiple mechanisms to resolve the dispute. SB 981 gets in the way, radically changing the process. While a payment is in dispute, SB 981 would require insurers to pay the doctor 250 percent of the Medicare reimbursement rate -- much higher than average in-network rates for emergency services.

While the aim is to discourage insurers from underpaying, it is likely to have the effect of increasing health costs while billing amounts are disputed -- and providing an incentive for emergency room doctors not to negotiate fee contracts with insurers.

Legislators should reject this bill, let the new regulation take effect in October, monitor it to see how it works and then consider tweaks, if needed.