Gov. Arnold Schwarzenegger (R-CA) has issued an executive order that requires the Department of Managed Health Care to protect patients from a practice called "double billing." Payment disputes between doctors and insurers sometimes result in patients being billed for services covered by insurance. The problem arises if, for instance, a hospital charges an insurer for $1000 worth of services but the insurer only pays for $500. In some cases the hospitals have billed patients the remaining $500 even though it's a dispute with the insurer. The practice--called "balance billing"--is illegal under California law though the restriction has been challenged in court. Schwarzenegger hopes his order will put an end to the practice. Critics say balance billing is often the only way physicians get their money and that Schwarzenegger's plan doesn't address the problem of insurers underpaying doctors for their services. On the other hand, a contract's a contract, and if the consumer had no part of the original contracted rates, I'd argue that it's more than a bit unfair for providers to squeeze the difference out of a third party. If providers don't like the rates they're getting from managed care companies, there's many ways to fight back, but hitting the consumer harder is counter-productive.
For more on the balance billing issue:
- check out this article from the Los Angeles Times