In October and November, the California Department of Managed Health Care held hearings in Burbank, Sacramento and San Diego to learn how physicians, health plans, consumers and others view its proposed rules on balance billing. As expected, doctors did not approve.

The DMHC wanted to hear impressions of three main aspects of the proposed rule change, said Rick Martin, DMHC assistant deputy director for provider oversight, at the Oct. 24 Burbank hearing. California Medical Association doctors came out in force, with several testifying in opposition, particularly to an interim reimbursement rate for non-contracted hospital-based physicians. Favoring the rule change were health plans, the California Association of Physician Groups and some consumer groups.

Modifying the Gould criteria, the DMHC would pay non-contracted physicians an expedited interim reimbursement of 150 percent of Medicare rates for hospital services. Should that seem inadequate, a second part of the planned rule change sets up an independent dispute-resolution process to handle disagreements between non-contracted physicians and health plans. Finally, the proposed rule would also prohibit non-contracted doctors from billing patients directly for emergency services.

"We feel that the enrollee should not be responsible for any additional fees," beyond those in health plan contracts, such as co-payments, DMHC Spokeswoman Lynne Randolph told Southern California Physician.

"Medicare clearly is the wrong standard," on which to base reimbursement, said Richard Frankenstein, MD, California Medical Association president, at the Burbank hearing. Several physicians made a similar point, with anesthesiologist Paul Yost, MD, an Orange County Medical Association and California Association of Anesthesiologists member, arguing that full Medicare rates represent only one-quarter to one-third of his discounted rates.

"If you have an interim payment rate and the ability to challenge payment, how does that equal an unfair payment rate?" DMHC Director Cindy Ehnes asked Dr. Frankenstein.

"The floor becomes the ceiling," he replied, contending that health plans will see a minimum as a default rate, and then fight doctors who bill for a greater amount.

Pasadena ophthalmologist and CAPG member Mark Kislinger, MD, testified that an interim rate of 150 percent of Medicare was too high, and that it would lead most doctors to let their health plan contracts expire, especially once healthcare reform establishes mandadory coverage.

Representing the California Association of Health Plans, Gretchen Lachance did not discuss the interim rate's adequacy. The vice president of legal and regulatory affairs testified that 1.76 million California emergency-room patients had received balance bills averaging $300, 56 percent of which patients paid. "If providers are not prohibited from balance billing the insured patient, the dispute process would be worthless," she said in a CAHP statement. The statement also blames balance billing for contributing to rising healthcare costs.