This week, California lawmakers are scheduled to vote on legislation (SB 1285) that seeks to curb the hospital practice of "capturing" out-of-network, privately insured patients to increase payments, California Watch reports.
Sen. Ed Hernandez (D-West Covina) -- chair of the Senate Health Committee -- introduced the bill after a yearlong California Watch investigation of billing practices by Prime Healthcare Services.
In a statement, Hernandez said that the bill was introduced after his office heard about "a growing business practice in the hospital world where unscrupulous hospitals avoid contracts with health plans, filter patients with commercial insurance through their ER and bill higher 'out-of-network' charges to maximize profits."
He said the bill would seek to "remove the economic incentive for a hospital to operate in this manner."
The bill would limit how much hospitals can be paid if 50% or more of privately insured patients admitted through the emergency department over the course of one year are outside health providers' care network. According to the legislation, once hospitals reach that threshold, they would be paid Medicare rates or a "good faith and reasonable" estimate of costs.
Reaction to Bill
Edward Barrera -- spokesperson for Prime Healthcare -- said the legislation is part of Hernandez's "increasing bizarre and illegal attempts to target one hospital system."
Barrera said, "This poorly written bill unduly gives more power to HMOs and insurance companies, makes no sense to anyone who understands the economics of health care and the already fragile health care safety net, and makes it even more difficult for hospitals across the state to stay solvent."
The California Hospital Association in a recent letter to Hernandez said that the bill conflicts with current law, which specifies what ED physicians and managed care plans are required to do when caring for out-of-network patients.
The association said that the "appropriate forum to resolve disputes" over the process "remains in the courts" (Jewett, California Watch, 4/23).