Surprise Emergency Room Bills Legislation Withdrawn in California

By KJ McElrath | July 25, 2019

Category: Legal News

Under industry pressure, California lawmakers withdrew new legislation that would have strengthened patient protections against surprise emergency room bills.

The bill was withdrawn on July 10 after lobbyists demanded that lawmakers refrain from engaging in an “unnecessary form of rate setting.”

Assemblyman David Chiu of San Francisco, who authored the bill, has promised to re-introduce it next year. Nonetheless, failure of the bill means that for now, consumers will continue to face surprise medical bills in the tens of thousands of dollars simply because someone who treated them was “out of network.”

The Issue of Surprise Emergency Room Bills

The problem of unexpected medical bills is that can they can add tens of thousands of dollars for even relatively minor treatments or procedures. Also known as “balance billing,” these invoices are sent to patients when they have been treated by a physician who is not part of a hospital’s “network” – even after this attending physician has billed or even received payment from an insurer.

In recent years, hospitals have been contracting with outside private physicians’ networks to staff their emergency rooms instead of their own physicians. Physician groups like Envision Healthcare are not hospital employees; as a result, Envision winds up charging patients fees that are sometimes as much as 975 percent higher. This can leave unsuspecting patients stuck with tens, even hundreds of thousands of dollars in liability.

How Patients May Be Vulnerable

Patients wind up getting surprise medical bills even when they have done everything to make certain their treatment is covered by their existing insurance. Healthcare facilities are not always forthcoming when it comes to informing patients when their staff is made up “out of network” contractors. This happens even when the patient is treated at an “in-network” facility.

One example of how companies like EmCare have allegedly deceived patients was illustrated in a recent class action lawsuit. The plaintiff went to an emergency room at a hospital that she knew was covered under her insurance policy.

What she did not know was that the emergency room services had been contracted out to EmCare and staffed by doctors who did not accept her insurance – and according to the complaint, EmCare made absolutely no effort whatsoever to inform her. As a result, she was hit with surprise emergency room bills totaling more than $4,000 for treatment that would normally have cost a quarter of that inflated amount.

Unfortunately, patients can get unexpected bills even after having done their own due diligence. This happened to a Texas man whose jaw was broken in two places as the result of a mugging. While in the emergency room of Dell Seton Medical Center in Austin awaiting surgery, he used his cell phone to make sure the hospital was part of his insurer’s network. While confirmed that the hospital was indeed “in network,” it turned out that the oral surgeon who worked on him was not. As a result, he was billed nearly $8,000.

Later, he told Vox, “In hindsight, I don’t know what I could have done differently.”

The Last Straw

In January 2019, Vox reported about two people who had been brought to Zuckerberg San Francisco General Hospital following minor injuries. One of them reportedly received a bill for over $20,000, which the hospital cut down to $200 after Vox published the story. The other was billed nearly $28,000, and wound up in a two-year legal battle.

After the negative publicity generated by news reports from Vox as well as the San Francisco Chronicle, the hospital promised to change its billing practices and to consider a cap on fees for patients with private insurance.

That wasn’t good enough for Assemblyman Chiu, however. After the stories were brought to his attention, Chiu began his own investigations into the matter.

A Need for Stronger Regulations?

Despite having strong legal protections preventing patients from being hit with surprise emergency room bills, serious gaps in the law have left Californians particularly vulnerable. A Vox survey of 1,330 such bills sent to patients across the U.S. found that 224 of them – nearly 17 percent – were sent to people who had been treated in California hospitals.

In September 2016, Governor Jerry Brown signed a law that prevented patients from being presented with bills from out-of-network physicians they had been assigned for scheduled surgeries. Furthermore, a State Supreme Court ruling in 2009 extended those protections for those who wind up in emergency rooms.

What existing laws could not have foreseen were situations in which virtually an entire hospital staff has been “outsourced” to out-of-network physicians – even when the hospital itself is “in-network.”

Chiu, who described these billing practices as “outrageous,” crafted a bill that would prohibit hospitals from charging more than a patient’s normal co-pay or deductible under their insurance policy. It would also limit those charges to 150 percent of what the federal Medicare program would charge or the local contracted rates, whichever is higher.

Efforts at Legislative Relief Continue

The idea that the bill would determine what they could charge insurers for out-of-network emergency services was the primary stated objection by industry opponents to the proposed protections for health care consumers. They claimed that it was “an unnecessary form of rate setting,” according to Benefits Pro, an online resource for employee benefits managers.

State legislators across the country have attempted to address the issue, although policy experts say that the federal government needs to take ownership of the problem. A “discussion draft” of a bipartisan bill to protect patients from surprise medical bills was released by the U.S. House Energy and Commerce Committee in May. The draft was released after the Trump administration called upon lawmakers to address the issue.

If some form of the bill moves forward and is signed into law, it would provide patients protection on a federal level, helping to make certain that their out-of-pocket costs remain the same whether or not care providers are in or out of their network. It would also require that patients who receive non-emergency treatment are informed ahead of time if any of their care providers are out-of-network, and that they be provided with a written estimate of their out-of-pocket costs prior to treatment. Additionally, patients would be presented with a single bill from all providers involved in their treatment.

In a joint statement to the media, the co-sponsors of the bill, Senators Greg Walden (R-OR) and Frank Pallone Jr. (D-NJ) said they are confident that their legislation would protect patients from surprise medical bills. They added, “We must ensure that patients are not responsible for these outrageous bills, which is why our discussion draft removes patients from the middle.”

Arguments on All Sides

One health policy analyst notes that “The [current] system exists in a way that allows a subset of providers to stay out-of-network and charge very high rates…they’re basically exploiting the system.”

A spokesperson for the California Hospital Association claims that they are “supportive of protecting patients,” but argues that if the state is allowed to set limits on pricing, insurers would have “little incentive” to reach agreements with health care facilities. She insisted that “The provision doesn’t need to be in the bill if the bill is really about protecting patients.” Her arguments reflect similar objections raised by the American Hospital Association to similar legislation being considered in the U.S. Congress.

Chiu disagrees. He says that were the provision regulating prices to be removed, those exorbitant fees would simply be translated into higher insurance premiums. He said, “It is useless to protect patients from receiving a bill on the front end if hospitals can turn around and price gouge consumers on the back end. It’s like closing your front door and leaving the back door wide open.”

Is Change Coming?

Surprise medical bills, which affect one out of every seven patients, are only one of the problems faced by health care consumers in the U.S. A recent poll conducted by the Wall Street Journal and NBC News indicates that health care will be the top issue for voters in the 2020 elections.

Half of those who were surveyed said they would agree to higher taxes for guaranteed health coverage under a “Medicare for All” single payer system. People who participated in the poll were less willing to support the idea if it meant having to give up their employer-sponsored coverage, however.