April 1, 2009
Previously published on March 19, 2009
In a dispute regarding payments to non-participating providers for emergency services, the California Supreme Court ruled that under the California Knox-Keene Act, non-participating emergency room doctors cannot directly bill patients for the difference between the bill submitted and payment received from the patient's HMO.
Prospect Medical Group, an individual practice association, had filed related actions against two emergency physician groups ("Emergency Physicians"), seeking - among other things - a judicial determination that the Medicare rate for emergency medical care is "reasonable" payment to emergency physicians and that the practice of balance billing is unlawful. The Court of Appeal held that Prospect Medical Group was not entitled to a judicial declaration imposing the Medicare rate as the reasonable rate and that balance billing is not statutorily prohibited under California law.
On appeal to the California Supreme Court, the court reviewed whether Emergency Physicians may engage in balance billing. The Supreme Court examined the applicable statutory scheme and rejected the Court of Appeal's holding that balance billing is not statutorily prohibited. The court found that "the only reasonable interpretation of a statutory scheme that (1) intends to transfer the financial risk of health care from patients to providers; (2) requires emergency care patients to agree to pay for the services or to supply insurance information (3) requires HMO's to pay doctors for emergency services rendered to their subscribers (4) prohibits balance billing when the HMO, and not the patient, is contractually required to pay; (5) requires adoption of mechanisms to resolve billing disputes between emergency room doctors and HMO's and (6) permits emergency room doctors to sue HMO's directly to resolve billing disputes, is that emergency room doctors may not bill patients directly for amounts in dispute."
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