Dr. Larry Ozeran - General Surgery

Dr. Ozeran and Tami

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Analysis of SB 981 - Senator Perata 2008

Below is my assessment and comments on this legislation to ban billing for services. Overall, it is much too biased in favor of health plans and pushes us further into crisis by increasing provider costs and decreasing receipts. To meet its stated intent, many amendments would be required. (Full text of the bill can be found here: http://info.sen.ca.gov/pub/07-08/bill/sen/sb_0951-1000/sb_981_bill_20080822_amended_asm_v91.html)

Positives

initial payment would be no less than the interim amount (if this amount is clearly and consistently applied)
prohibits health plans from bundling unrelated services together

Negatives - and potential fixes

prohibits billing patients (might accept only if all of the necessary amendments below were implemented)
the interim amount is much too low, at 50th percentile it could require that 50% of claims be contested, not at all a focused approach to a limited problem
Suggested amendment: this should be 98th percentile as the intent is to remove those few egregious charges, not require every noncontracted provider to increase their overhead by participating in time and resource wasting activities to obtain fair payment.
delays payment
Suggested amendment: should require payments to providers, not to a trust
requires providers to complain, burdening the service provider who has already provided a service without fair compensation
Suggested amendment: should require plans to complain, since they already received the money to pay for services
penalty for failing to pay properly is insignificant and as we have seen with other insignificant health plan penalties, will not be a deterrent
Suggested amendment: if plan is found to have willfully underpaid a claim, the plan should be required to pay treble damages (3x the billed amount)
requries a noncontracting provider to use the health plans internal dispute process - having used them, the determination has never changed, this is an unnecessary additional overhead expense, a waste of time and unnecessarily harms provider cash flow
Suggested amendment: there should be no requirement of the provider to use the plans dispute process unless they have contracted with the plan to do so
Medicare bundling rules sometimes violate standard practice (i.e. codes specifically defined as separately billable are randomly bundled together and denied), so use of Medicare rules to determine bundling is biased in favor of payors and unacceptable
Suggested amendment: CPT rules should be used to assess unbundling of procedures, these rules offer the only non-health plan perspective on bundling and are the only ones which are not biased to automatically and arbitrarily reduce health plan payments to providers for services rendered
losing party pays fees - this inhibits the ability of the small party, the one already being harmed, from pursuing fair compensation
Suggested amendment: the costs of the dispute process should be paid for by exsiting fines on health plans

Missing

The only reason patients have a problem now is because plans offer unreasonable "take-it-or-leave-it" contracts which underpay and overburden through administrative costs. If plans were actually required to fulfill their Knox-Keene obligation to provide adequate provider networks, patients would always see contracted physicians in an emergency. That would make the problem disappear. Since there is currently no financial consequence to health plans for violating their obligations, one is needed. Once implemented, plans might actually choose to expand their networks by offering reasonable contracts.
Suggested amendment: add new language to address this issue: "Health plans shall be prohibited from requiring patients to pay higher deductibles or copays for obtaining services from non contracted providers in an emergency than they would pay to a contracted provider. Health plan allowables for emergency services by noncontracted providers must be no less than the health plan's highest discounted rate offered in California or the Interim payment amount, whichever is greater."

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