The California Supreme Court on Monday guaranteed that HMOs will pay for noncontracted emergency services in the state, telling insurers they can't hide behind third-party contracts to avoid paying ER providers.
Two groups of doctors accused several California insurers of refusing to pay them for emergency services provided to the HMOs' planholders because the insurers had delegated the payment responsibility to independent physician associations, or IPAs. But those IPAs—known as La Vida—were in financial trouble and failed to pay those emergency bills.
The California justices unanimously ruled that HMOs must ensure their contracted IPAs are financially sound, and the insurers can't delegate their payment responsibilities to insolvent groups.
The doctor groups alleged that the insurers—including Anthem Blue Cross, Aetna and Cigna Healthcare of California—should have known La Vida was in trouble when it failed to meet the state's solvency rules back in 2007. Although the doctors repeatedly reached out to the HMOs for help when La Vida wouldn't pay for the emergency services, the health plans told the providers to keep submitting their bills to the IPA. La Vida eventually went bankrupt in 2010.
The health plans claimed that state regulations allowed them to shift their financial responsibilities to the IPAs, and the providers should have no recourse to come after them, even if the IPAs were insolvent. But the high court determined the HMOs were negligent and still had a duty to pay the doctors.
“With this decision, the California Supreme Court has championed the notion that emergency service providers should get paid for their work, and that HMOs cannot simply absolve themselves of their obligations to these providers by delegating payment responsibility to third parties,” said Andrew Selesnick, an attorney with Michelman & Robinson who represented one of the plaintiffs. “As a matter of public policy, we want emergency service providers to deliver excellent care to all who need it, rather than worrying about whether payers are financially distressed or insolvent."
The cases had originally been tossed based on the health plans' contentions that they weren't liable for the payments. The lawsuits will return to the trial court level for further proceedings.