Insurers Win Big Case Involving Double Payment of Doctor Bills
Laurence Darmiento
The California Court of Appeal has handed down a major loss to California’s doctors and an equally significant win to large insurers, including several based locally.
In a case largely prompted by the massive failure of Medpartners Providers Network in 1999, the panel upheld a lower court ruling that insurers do not have to pay doctors for their unpaid bills if physician management groups like Medpartners go bankrupt.
That failure, and others like its, left thousands of doctors with millions of dollars of unpaid bills, even though the groups already had been paid by insurers through managed care contracts.
But the doctors had argued that insurers should pay again if such intermediary groups failed because of stingy contracts negotiated with health insurers, such as Blue Cross of California, Health Net or Maxicare (which is, ironically, now defunct itself.)
The panel disagreed, saying it was a matter for the Legislature to take up, cheering insurers who said any other decision would have knocked the foundation out of the existing managed care payment structure.
“It’s the only way the system can work,” said Walter Zellman, executive director of the California Association of Health Plans. “We have already paid for those services. If the medical group then fails to pay its contract physicians that’s a problem between them.”
The California Medical Association doesn’t see it that way, saying that the current payment structure can leave doctors holding the bag just for doing their job.
“We believe that someone should be taking care of this issue, and because of that we plan to petition for a rehearing,” said CMA spokeswoman Karen Nikos.
County Health
With Los Angeles County set to see a sharp drop in federal aid and an expected $500 million annual deficit in its health budget, the Board of Supervisors has decided to step up the pace.
The board last week approved a proposal by Supervisor Gloria Molina to meet regularly as a separate committee to consider how it may reorganize the health department to avoid a collapse of services.
The move comes at the same time the board has yet to choose a new director for the department, whose prior director left this past summer. However, that choice may be imminent.
The supervisors will have their hands full. An ad hoc committee appointed by the board to review new forms of department governance plans to make recommendations in February.
The committee is considering whether to simply tinker with the current system, establish some structure modeled after private non profits or create a separate health authority or district. The first meeting is set for Jan. 22.
Daniel Freeman Deal
The Service Employees International Union is making hay over Tenet Healthcare Corp.’s decision last week to go forward with the purchase of the Daniel Freeman hospitals despite a host of conditions imposed on the sale by the Attorney General Bill Lockyer.
The SEIU, which had accused the Santa Barbara-based company of understaffing other hospitals in order to fatten its bottom line, specifically noted a condition that will impose specific nurse-to-patient staffing ratios on the Inglewood and Marina del Rey facilities.
However, a closer look at the condition reveals that Tenet only agreed to abide by staffing ratios that the state Department of Health Services is expected to soon release under a new state law. In other words, it agreed to do something it would have had to do anyway.
However, union officials claim Tenet threatened to make the condition a deal breaker, since it will mean that Lockyer, not the understaffed health department, will be in charge of enforcing them at the Daniel Freeman facilities. Tenet is not commenting.
Staff reporter Laurence Darmiento can be reached at (323) 549-5225 ext. 237 or at
[email protected].
