The battle is on in California over the issue of when it's legal to balance-bill patients, with providers contending that they need to issue such bills when health plans underpay. The dispute comes because in that state, the law is apparently unclear on a key issue--whether providers who don't contract with a health plan can balance-bill patients who see them as out-of-network providers.

At present, the California Department of Managed Health Care is suing Prime Healthcare Services in an effort to stop the hospital network from billing patients for out-of-network emergency care fees. The DMHC contends that Prime illegally billed up to 6,000 Kaiser Permanente members for outstanding balances, as well as members of other health plans. (It doesn't help matters any, politically, that Prime has made a routine practice of dropping managed care contracts when it acquires a hospital, seemingly in an effort to get higher out-of-network reimbursement rates.) The DMHC argues that state law bans balance billing for emergency care because doctors and hospitals have an implied contract to treat patients in emergencies--as required by EMTALA--which gives insurers the obligation to pay for services.

Providers don't care for the DMHC's reasoning, according to AMA newspaper American Medical News. They say that under this interpretation of the law, health plans can unilaterally decide what they're going to pay, and are likely to pay unfair rates for emergency services. They note that balance billing for emergency services was found legal under a 2006 state appeals court ruling, which held that "contracting providers" who can't balance bill are only those with an actual contract.