MTBC to CA Regulators: Make Payers Play by the Rules

As I explained in my April 1st blog, California regulators have proposed new rules that would allow payers to continue to underpay non-participating providers, while penalizing the providers who seek customary and reasonable reimbursement. The proposed rules are now open for public comment and we have supplied the following comments to California’s regulators:

“The underlying objective (“to protect enrollees from unfair billing in specified circumstances arising from the delivery of emergency services”) of the Department of Managed Care (“Department”) in proposing the addition of section 1300.71.39 to title 28 of the California Code of Regulations is laudable and important. See Initial Statement of Reasons – Definition of Unfair Billing Practices, 2008-1536, page 2 (“Statement”). Clearly, “California patients who have purchased the financial protections of health insurance must be assured that they will not be billed for services which are the financial obligation of their health plan” See Statement at 3. However, it is respectfully submitted that the most equitable and effective manner in which to realize the Department’s objective is to ensure that health care payers provide “reasonable and customary” reimbursements to providers, rather than penalizing the providers who are themselves victims of the payers’ unlawful tactics.

California’s current regulatory scheme does not adequately define “reasonable and customary” reimbursement. Of equal (or greater) importance, the present framework for resolving disputes is inadequate and denies providers the ability to obtain the “reasonable and customary” reimbursement they are entitled to receive under California law. As Governor Schwarzenegger correctly indicated in Executive Order No. S-13-06, there is a need to develop 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.” Today’s process is no more “fair,” “fast” or “inexpensive” than it was when Governor Schwarzenegger issued his executive order in 2006.

The New Jersey Department of Banking and Insurance (“the NJDOBI”) recently grappled with issues and regulations similar to those being addressed in the present matter. See NJDOBI A07-59. However, the NJDOBI focused on the payer’s culpability in refusing to provide “reasonable and customary” reimbursement. The NJDOBI recognized that both patients and providers are victimized when a payer refuses to provide appropriate reimbursement and thus chose to penalize the payer, not the providers who are co-victims.

It is respectfully submitted that the Department should redouble its efforts to develop a “fair, fast, and inexpensive Independent Dispute Resolution Process” and to provide (in consultation with the provider and insurance communities) more clarification regarding the nature of “reasonable and customary” reimbursement. Finally, any punitive measures should be focused on the root cause of balance billing, which is the refusal of health care payers to provide legally appropriate reimbursement.

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