Earlier this week, California Governor Arnold Schwarzenegger’s administration followed the lead of a handful of other states by moving to ban certain balance billing practices.

This latest lost hardware debacle is instructive for New Jersey health care providers and payers. Likewise, since most states have laws similar to New Jersey’s data breach law, providers and payers in other states can also learn a great deal from this episode.

There is a great deal of confusion regarding the term “balance billing,” so we will start by defining the term. “Balance billing” is the practice of billing a patient an amount equal to the difference between the provider’s full charge and the sum of the reimbursement actually received from a payer, together with any standard co-payment, deductible or co-insurance. While laws vary from state to state, most states – and Medicare and Medicaid – prohibit participating providers from balance billing patients relative to covered services; however, many states permit non-participating providers to balance bill patients.

California’s proposed regulation is narrowly focused on the balance billing activities of hospitals and hospital-based physicians. As proposed, the regulation would prohibit hospita ls and hospital-based physicians from billing patients for the difference between the insurance reimbursement received (including the patient cost-sharing amount) and the charge amount. California justifies its limited focus on hospital encounters by explaining that the majority of balance billing occurs in the hospital emergency room setting.

In one of my prior blogs (August 1, 2007), I discussed New Jersey’s prohibition on balance billing. Interestingly, New Jersey has viewed balance billing as a problem created by insurance payers who fail to pay “reasonable and customary” fees; therefore, New Jersey has targeted the payers when it comes to balance billing. West Virginia takes the same approach as New Jersey and places the onus on the payers. Other states – such as Maryland, Rhode Island, Connecticut and Colorado – have attempted to address balance billing concerns by either providing patient indemnification or distilling “reasonable and customary” into specified and binding reimbursement amounts.

By aiming their regulatory and punitive cannons at the pro viders, California has chosen a different approach than New Jersey and many other states. In fact, punishing the providers marks a 180 degree turn in California’s approach which had been focused on creating a “fair, fast, and inexpensive Independent Dispute Resolution Process to… ensure that non-contracted providers who deliver critical services without regard to a patient’s financial ability to pay are paid the reasonable and customary value for their services.” See Executive Order No. S-13-06.

Instead of providing “fair,” “fast” and “inexpensive” means for resolving payment issues, California is proposing to punish the very providers who are being victimized by the payers. It stands to reason that any punitive measures should be focused upon the root cause of balance billing; namely, the refusal of payers to provide legally appropriate reimbursement.

The written comment period for the proposed regulation will remain open until May 12, 2008. If you would like to provide any public comments, you may do so by Clicking Here.

Disclaimer: The information contained within the MTBC^® Learning Center is provided for general educational and informational purposes only and should not be construed as legal advice. The author of the Learning Center does not represent the Web site user or the individual submitting a particular question. Please seek the advice of legal counsel to address any specific questions you may have regarding your particular facts or circumstances

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