Balance Billing: California Latest State to Protect Patients Against Surprise Bills From Out-of-Network Providers

As of this summer, California is joining other states that have consumer protection laws prohibiting balance billing. Balance billing – also known as surprise medical bills – refers to the practice of billing patients for out-of-network providers even when the care was given in an in-network facility.

“Here’s a common scenario: A patient takes pains to ensure her hospital and surgeon are in-network, only to get billed by the out-of-network anesthesiologist who appears at her bedside to put her under,” according to a recent article by Kaiser Health News published in Healthcare Finance.

“This situation could arise in an emergency when the patient has no ability to select the emergency room, treating physicians, or ambulance providers,” the Kaiser Family Foundation says. “Surprise medical bills might also arise when a patient receives planned care from an in-network provider (often, a hospital or ambulatory care facility), but other treating providers brought in to participate in the patient’s care are not in the same network.”

“These can include anesthesiologists, radiologists, pathologists, surgical assistants, and others. In some cases, entire departments within an in-network facility may be operated by subcontractors who don’t participate in the same network,” the foundation notes.

A total of 21 states now have laws protecting consumers against balance billing. A brief by The Commonwealth Fund classify the laws as partial or comprehensive protections (see map below). Six states are considered to have a comprehensive approach: California, Connecticut, Florida, Illinois, Maryland, and New York. Fifteen states’ approaches are considered “limited”: Colorado, Delaware, Indian, Iowa, Massachusetts, Mississippi, New Hampshire, New Jersey, New Mexico, North Carolina, Pennsylvania, Rhode Island, Texas, Vermont, and West Virginia. The comprehensive approach includes some sort of provider prohibition on the practice.

California’s new law covers residents who have private health insurance plans that are regulated by the state Department of Managed Health Care (DMHC) and the state Department of Insurance, which includes about 70% of the state’s private insurance market, the California Health Care Foundation says.

However, it does not cover the roughly 5.7 million people whose employer-sponsored insurance plans are regulated by the U.S. Department of Labor.

Balance billing is a great example of what is still wrong with health care despite the repeal and replace rhetoric. It affects actual patients and families, not theoretical interests. For patients undergoing major medical procedures, such as surgery, it is often extremely difficult or impossible to gain a complete and accurate picture ahead of time as to what the cost will be to the patient. California’s new law and others like it are a move in the right direction to protect patients.