In California, a fierce battle over surprise medical bills pits docs against insurers

For the second time in as many years, California legislators are debating a bill that would protect patients from paying surprise medical bills when they inadvertently get treatment from doctors who are not covered by their insurance.

Under the bill, AB 72, consumers would only pay the equivalent of in-network rates if, for example, during surgery covered by insurance, they are treated by an out-of-network anesthesiologist, or have X-rays read by an out-of-network radiologist. AB 72 is in the California Senate and must be approved before going to the state assembly and governor. The state legislature has until Aug. 31 to act, or the bill effectively dies in committee.

The legislation was sponsored by state Assemblyman Rob Bonta (D-Alameda), who sponsored a similar bill last year that languished over the finer points of what the lower, in-network-style payment would be.

“This is as important a consumer protection bill as there is today,” said Bonta. “Thousands and thousands of Californians throughout the state will benefit.”

Surprise medical bills occur in a small percentage of overall health care transactions, but they often result in thousands of dollars in unanticipated charges that are difficult for many people to afford. Patients get hit with these extra charges because in the course of getting treatment, one or more ancillary providers aren’t on their insurance plan, even if the main provider, like a surgeon, is. That ancillary provider may be someone who routinely works with a particular surgeon or hospital, or just happens to be the only one available that day, said Bonta, so even if patients do all their homework to make sure they are covered, it isn’t enough.

In most cases, doctors, insurers, and lawmakers agree that surprise medical bills should be eliminated. But accomplishing that requires striking a delicate economic balance in health care markets where physicians and insurers are constantly battling over physicians getting the highest reimbursement versus insurers having the lowest costs.

In California, this fight is on full display and the proposal is generating harsh criticism from some doctors because they have to take that lower rate, or go to arbitration.  

“We’re supposed to hire an attorney or go off to a dispute resolution process, spend hours getting ready, and then hours at the process?” said Dr. Michael Couris, a San Diego ophthalmologist. “You’re telling me this is a tenable position? This is laughable.”

Some independent physicians argue the current proposal would only empower insurers to keep narrower networks, ignore independent physicians and small practices, and limit access to crucial health services. Many doctors don’t contract with certain insurers because of payment rates, creating this pool of out-of-network doctors.

Dr. Eileen Natuzzi, an acute care surgeon, said she would gladly be on insurance plans if she could get one to pay what she considers a reasonable rate.

“Insurers won’t negotiate with us. They tell us, ‘Take it or leave it. Here’s what we’re going to give you,'” she said, adding that insurers might offer 90 percent of the Medicare reimbursement rate. 

Many doctors criticize Medicare payments as some of the lowest in the country.

The first iteration of Bonta’s bill called for 100 percent of the Medicare reimbursement as what out-of-network doctors could get. This time around, Bonta said, the bill would offer 125 percent.

“We’re creating a reasonable, practical approach to ensure that (physicians) get a minimum reimbursement that is a strong starting point,” Bonta said. He added that if doctors are unhappy with their payments, they can bundle their claims and appeal to an independent panel that will be established by the legislation. 

Currently, there is no such process, as doctors must either write off unpaid bills or pursue individual patients for payments.

Natuzzi said the establishment of a default reimbursement rate could cause many providers to leave California.

“Access to care will suffer,” she said. “If my fees are capped or some of my associates fees are capped and it’s not [financially] feasible, then the number of surgeons and specialists available will decrease.”

The battle in California could influence bills pending in states across the country, including Pennsylvania, New Jersey, Georgia, Hawaii, and Missouri. New York and Florida have already passed laws addressing the issue.

Nicole Evans, a spokeswoman for the California Association of Health Plans argued, however, that insurers are seeking to strike the best deal for consumers and hold down premiums.  She said insurers are concerned that the pending legislation could tie their hands in negotiations with health care providers.

Higher costs for the insurers, she implied, would get passed down to consumers.

“We need to make sure the language in this bill does not inadvertently increase premiums,” Evans said. “We want to make sure we can build our networks and get a good, fair price for consumers.”

But the bill creates additional bureaucracy for a profession already steeped in long hours, weekend and night shifts for some specialties, and extra paperwork, said Dr. Couris, the ophthalmologist.

“Never has government involved itself in private transactions like this,” he said. “This is really taking things too far.”