The court decision attempts to redress the hospital practice of balance billing, which typically occurs when a patient goes to an emergency room not covered under that person’s health insurance.
When a hospital does not get sufficiently reimbursed by the insurer, it often tries to collect the difference from the patient in addition to normal co-pays and deductibles. This is known as balance billing, and it often leads irate employees to call their health plan administrator to complain.
“A guy will say, ‘Hey, look, my wife dialed 9-1-1. I had a stroke, I ended up at the hospital and now I have a $30,000 bill,” said Russell Bigler, CEO of the Self Insured Schools of California, which manages benefits for public school districts in Central California’s Kern County. Bigler said the problem has worsened in recent years as more hospitals have terminated contracts with insurers.
“This is one of the fronts of the battle” of health care reform," said Jonathan P. Weiner, professor at Johns Hopkins Bloomberg School of Public Health in Baltimore.
The ruling provided a victory for patients, employers and health insurers. But that victory could be short-lived if hospitals reduce emergency services, as they say they will, if they can’t make ends meet.
Already, hospitals around the country are terminating contracts with insurers because they say they are not getting reimbursed enough to stay in business. That leaves patients who live in those areas effectively uninsured when they go to the emergency room.
Prime Healthcare Services, a 13-hospital system in California, is one company that has bought bankrupt or near-bankrupt hospitals and then terminated contracts with insurers because reimbursement rates were not high enough to stay in business.
“There would never be a need to bill the patient if the HMO paid hospitals fairly,” said Mike Sarrao, vice president and general counsel for Prime Healthcare Services.
Currently, 11 states have laws that make reference to balance billing, with the most detailed laws prohibiting hospitals from collecting additional money from Medicaid patients, according to the Conference of State Legislatures, a Denver-based policy research organization. Many hospitals though say it’s those low rates that force them to make up the difference elsewhere.
The number of hospitals that terminate contracts with health plans varies from region to region, but the occurrence is especially common in areas where hospitals have less competition from other hospitals, such as in rural and inner-city areas or in markets that have seen hospital mergers, health policy experts say.
These changes pose a challenge for employers.
“Hospitals are exerting more and more market leverage,” said Dennis White, senior vice president for value-based purchasing with the National Business Coalition on Health in Washington. “They are getting tougher on the rates they will accept to stay in the network.”
Hospital systems are forcing concessions by employers and health insurers, White said, such as prohibiting employers from making public information about quality differences among hospitals. Some have prohibited the use of tiered co-pays that would discourage employees to seek care from certain hospitals.
“This is, again, the market butting up against the rights and needs of patients, which some believe should surmount market economics,” Weiner said.
Caught in the middle are patients and the employers who pay for their care. Employees, for one, will not tolerate getting stuck with a hospital bill, especially in these tough economic times. And when they do, they will let their employer know about it.
“Rest assured,” Weiner said, “if the self-insured employer gets nothing but pushback from employees, they will need to change their approach … which is exactly what the doctors and hospitals want.”
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