California’s surprise billing legislation stalled for the year

Assemblymember David Chiu announced on Wednesday that California’s surprise billing legislation is stalled for the year. The bill, AB 1611, was set to be heard in the Senate Health Committee on Wednesday afternoon but was pulled by Chiu, who introduced the bill.  

AB 1611 would have protected privately-insured patients from receiving unexpected, expensive medical bills after receiving emergency care in an out-of-network hospital. The legislation would have prohibited patients from paying more than the cost sharing they would have paid if they had received the care at an in-network hospital. 

 

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According to a joint statement from Assemblymembers Chiu and Scott Wiener, AB 1611’s principal co-author, the bill was ultimately stalled this year due to the “insurmountable” opposition from lobbyists and CEOS for California hospitals.

“We have decided to take a pause and make Assembly Bill 1611, legislation to protect California patients from surprise emergency room bills and astronomical emergency room costs, a two-year bill.

This bill curtails a practice that generates billions of dollars of profits for hospitals, and lobbyists and CEOs for the most profitable hospitals in California have made it abundantly clear that they will protect these profits over patients. Unfortunately, that level of moneyed opposition proved insurmountable at this time.”

One provision of the bill, which was the key point of opposition, would have limited what hospitals could charge insurers for out-of-network emergency services. The bill would have required the health plan to pay the out-of-network hospital based off a specified formula, defined as “The reasonable and customary value of the hospital services or the average contracted rate for the same or similar hospital services in the general geographic region in which the services were rendered.”

According to reporting from Kaiser Health News, the California Hospital Association (CHA) criticized this provision as unnecessary rate-setting and as a deterrent for health plans to negotiate contracts with hospitals. If this provision were removed, a spokesperson for CHA said the hospital association would support the bill. 

“Rather than amending this legislation to leave patients vulnerable to price gouging, we have decided to take time to ensure our colleagues understand the importance of protecting patients from surprise bills on the front end and higher premiums on the back end. We will be back next year,” concluded the Assemblymembers’ joint statement.

California is one of several states that pursued legislation to address balance billing this year. It is also a topic at the national level. U.S. Senators Lamar Alexander and Patty Murray’s “Lower Health Care Costs Act” would end balance billing and would utilize a similar “benchmark approach” to determine the amount health plans would pay providers. This provision has received similar criticism from the American Hospital Association

In his statement, Chiu described California’s bill as a “two-year bill” and has vowed to continue working on the legislation to bring it forward in 2020.