Medicare Compliance & Reimbursement

Plus: Watch out for state, federal laws on charging patients interest and surcharges.

Emergency room physicians who "balance bill" patients who belong to managed-care organizations are not breaking the law, a court ruled.

When a managed-care patient comes into the ER, sometimes an emergency physician who belongs to that patients' MCO isn't available. In that case, the law requires a non-participating ER doc to treat the patient, and the MCO must pay the doctor.

But the doctor doesn't have to accept the MCO's payment rate as payment in full, the Court of Appeals for the Second District of California ruled in Prospect Medical Group v. Northridge Emergency Medical Group (B172737). Instead, the doctor can bill the patient for the difference between the MCO's rate and the doctor's fee.

If the patient belongs to a Medicare managed-care plan, the physician can still "balance bill" the patient, the court adds.

But the health plan has standing to sue the physician if it decides the physician's fee is unreasonable, the court says. Thus, the plaintiff in this case, Prospect Medical Group, can sue based on the idea that the physicians charged an unreasonable amount.

Providers Can't Play The Percentages With Overdue Copays And Deductibles

Patients who drag their feet on paying bills can be nuisances to providers--but providers will complicate their lives by trying to hassle them.

Some billing experts have been advising practices to charge a "statement fee" for late copayments or deductibles. And a few practices have been adding on a flat percentage when they send the overdue bill to a collection agency or a company that sends out reminders. But this may not be a smart idea.

Providers could get themselves into trouble with state and federal regulators if they charge their patients extra amounts for such non-medical services, warns Bob Burleigh with Brandywine Consulting in Malvern, PA. When providers start charging to send bills, they're stepping into a territory where there are so many ways to get in trouble, he warns.

In some states, charging patients what amounts to an interest payment or surcharge may be illegal. Medicare doesn't allow providers to charge patients for anything other than Medicare-covered services, Burleigh says. Providers could also be violating the federal Fair Credit Reporting Act because they're charging for extending credit, says Burleigh.

Also, providers' billing systems may have a hard time accounting for the extra charge, Burleigh notes.

The amount providers are allowed to charge the patient is the amount they're allowed to charge, says attorney Alice Gosfield with Gosfield & Associates in Philadelphia. With private payors, such as HMOs, you usually sign a contract that limits how much you can charge the patient, she points out.

There are plenty of ways to "push the issue" besides charging the patient extra, Gosfield adds. Providers can warn patients, send them to a collection agency or put them on a payment plan. Providers can also fire their patients. Providers "don't have to continue to treat people who don't pay their bills," notes Gosfield.