Doctors Fight California Insurance Reform

SACRAMENTO (CN) — After clearing the California Legislature in September with rare bipartisan support, a law aimed at preventing "surprise medical bills" has roiled a coalition of doctors who are fighting government health care reforms.

For more than 70 years the Association of American Physicians and Surgeons has fought federal and state governments over health care reforms, including the stillborn Hillarycare in the 1990s and now Obamacare. Staging physician rallies and federal lawsuits, the advocacy group prides itself on defending doctors "mugged by Medicare" and "railroaded" by peer review.

Now the Arizona-based nonprofit, which has gained recent publicity by casting doubt over Hillary Clinton's health, is attacking the newly passed Assembly Bill 72.

In its Oct. 13 federal lawsuit, the association claims AB 72 violates due process by allowing insurance companies to set doctor reimbursement rates, with a damaging impact on minorities and impoverished patients who rely on out-of-network doctors for emergency care.

Andy Schlafly, the association's general counsel, likened allowing private insurance companies to cap compensation rates for doctors it does not contract with to a football team setting the salaries of its opponents.

"It would be like the San Francisco 49ers dictating the salaries for the New England Patriots," Schlafly said in an interview. "It's a non sequitur."

Gov. Jerry Brown signed AB 72 on Sept. 23, after it cleared the Legislature by a combined 114-1 margin. The consumer protection bill establishes protections against surprise medical bills associated with out-of-network medical services and creates a dispute resolution process for doctors' reimbursement claims against insurers.

Illinois and New York also have passed bills aimed at capping surprise bills, which lawmakers say can bankrupt and destroy families.

Supporters and the bill's author, Assemblyman Rob Bonta, D-Oakland, say patients often unknowingly receive medical attention from out-of-network providers and are later hit with a hefty bill.

Surprise bills may come when a patient does not have the ability to choose an emergency room for treatment, or a patient's in-network hospital contracts certain services to out-of-network doctors.

With Brown's approval, Bonta's bill requires the California Department of Managed Health Care to create a resolution dispute process by Sept. 1, 2017 and limit doctors from charging more than 125 percent of the amount Medicare pays for a procedure.

Brown and the department of managed health care are the defendants in the lawsuit. The governor's office declined to comment, saying it has not been served.

After its passage, Bonta said California was on the cusp of implementing some of the nation's strongest protections against surprise bills.

"With the signing of AB 72, patients will be protected from paying surprise medical bills when they do everything correctly by staying within their health networks when they seek medical care. No patient should pay for a surprise bill or be forced into bankruptcy because of a complicated and unfair billing system," Bonta said in a statement.

AB 72 was predictably endorsed by insurance companies such as Anthem Blue Cross and Blue Shield of California, and by several labor unions.

While lawmakers call the measure a landmark consumer protection bill, many doctors see it as an unconstitutional government foray into health care.

Schlafly described out-of-network doctors as free agents who can and often do provide charity work to underserved patients. He said the association's free agent doctors are the only ones with the flexibility to provide charity services and that capping their reimbursement rates could cause them to forgo providing free or inexpensive medical care.

"You need these out-of-network doctors to be like free agents out there who can serve the uninsured," Schlafly said. "The bottom line is you can't allow insurance companies to impose wage and price controls for people that don't even work for them."

The association says AB 72 is unconstitutional because it violates the due process, takings and equal protection clauses and that it will directly affect minority patients.

"The act violates the equal protections clauses of the U.S. and California constitutions by having a disparate impact on minority patients for whom the availability of medical care will sharply decline as out-of-network physicians are coerced by the act to withdraw services from predominantly minority communities," the complaint states.

A handful of physician groups also opposed AB 72 as it moved through the legislative process, including the American Society of Plastic Surgeons, the American College of Surgeons and the California Chapter of the American College of Cardiology.

According to the bill's Assembly analysis, the cardiology college expressed doubt whether AB 72 will actually protect patients, and worried that insurance companies will respond by offering "lowball" contract rates to in-network physicians.

The surgeons college wrote that "mandating payment incentivizes health insurers to drive down contracting rates, making it less likely that physicians will contract with them to be participating providers in the network."

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