CA bill gives state extra power to fine insurers who don't pay providers

In what is sure to be a cliffhanger, a bill has gone to California governor Arnold Schwarzenegger (R) for his signature, which would give the state beefed up power to fine HMOs and PPOs that don't pay providers. The bill was passed by the California Assembly with reasonable margins in both houses.

The measure is vigorously supported by the American Medical Association, which argues that physician underpayment is a national problem--and calculates that doctors' costs for collecting from insurers are about $200 million per year. While the agency arguably has such powers already, it would give the state's Department of Managed Health Care more legal cover for fining health plans that underpay or fail to pay providers.

On the other hand, it's opposed by HMOs, which are asking Schwarzenegger to issue a veto. They contend that the bill is unnecessary, given that DMHC already has substantial regulatory powers. Perhaps more significantly, the measure is also opposed by the DMHC itself, whose attorneys believe that the new rules could force the agency to become "a bill collector for providers."

To learn more about the bill:
- read this Los Angeles Times piece [1]

Related Articles:
Kaiser assessed record-breaking $3 million fine [2]
BC of California fined $1M for cancellations [3]