The State Worker

250,000 CalPERS members at risk of ‘surprise’ medical bills

What is CalPERS? We explain in one minute

CalPERS, California Public Employees Retirement System, aims to build retirement and health security for state workers. Here's a quick look at the retirement system.
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CalPERS, California Public Employees Retirement System, aims to build retirement and health security for state workers. Here's a quick look at the retirement system.

About 250,000 people with CalPERS health insurance are at risk of receiving “surprise” medical bills that many other policyholders are shielded from.

Their PPO plans leave them subject to an insurance company practice known as balance billing, which is the subject of a state proposal meant to protect consumers that passed the Assembly this week.

At risk are CalPERS members with PERS Choice, PERS Select and PERS Care PPO plans. About 1.25 million other people with HMO and Medicare supplement plans from CalPERS aren’t exposed.

Patients get stuck with balance bills when they receive treatment from a doctor or hospital that isn’t in their insurance plan’s network. For the most part, the bills can be avoided by getting treatment from in-network doctors and hospitals, with whom insurance companies have negotiated prices for medical services.

But the “surprise” balance bills come when patients unknowingly or unexpectedly receive care from out-of-network doctors or hospitals.

A patient might be transported to an out-of-network hospital in an emergency, for example, and in some of those cases can end up paying out-of-network prices, although insurers often cover at least some emergency treatment.

A proposal from Assemblyman David Chiu, D-San Francisco, would provide protection against balance billing in emergencies. The proposal would set standards to limit how much an out-of-network hospital could charge an insurance company in those cases. The proposal passed the Assembly Thursday and moved to the Senate.

“After a trip to the emergency room, the only thing you should be focused on is getting better, not a bill for tens of thousands of dollars,” Chiu said in a statement after Thursday’s vote. “This legislation will protect patients from surprise emergency room bills and hopefully bring some peace of mind to those who need emergency care.”

CalPERS, which regularly weighs in on health care legislation, hadn’t taken a position on the bill as of May 2, when it last issued a public report on bills it is monitoring. Projections in an Assembly Health Committee analysis of the bill say the change could increase premiums for PPO policyholders by a total of about $1.3 million while reducing their medical spending by about $22 million.

In 2017, CalPERS members received 3.5 percent of their medical care from out-of-network doctors, CalPERS spokeswoman Stephanie Buck said in an email. About 1.3 percent of that care was emergency treatment, Buck said.

The bill is sponsored by the California Labor Federation and Health Access California. A wide range of unions and health care advocacy groups support it.

Perhaps the most surprising of the balance bills come when patients go to in-network hospitals for procedures and then receive treatment from a specialist at the hospital who happens to be outside the patient’s insurance network. Since groups of specialists contract with insurance companies separately from hospitals, this sometimes happens.

PPO plans typically split treatment costs with patients on a percentage basis. So the insurer might pay 80 percent of the price it has negotiated with a specialist for a given procedure, while the patient would pay 20 percent.

If the insurer doesn’t have a contract with the specialist, the specialist might charge much more than the insurer wants to pay. The insurer might then pay 80 percent of what it has determined is the right price, and the patient is left paying the rest of what the specialist thinks the price should be.

California passed a law in 2016 to protect many people with insurance from that type of surprise billing, but that law didn’t cover the type of PPO plan that the 250,000 CalPERS members have.

CalPERS’ PPO plans are all offered through Anthem Blue Cross, which has a large network of doctors and hospitals. Anthem and other insurers also offer CalPERS HMO plans. Kaiser Permanente’s are the most popular among CalPERS members.

HMO plans are structured differently and generally not subject to balance billing. They typically require patients to receive authorization for treatment from a specialist beforehand, and HMOs usually are structured around flat fee payments known as co-pays, rather than the percentage payments.

Medicare supplement plans are based around Medicare’s rates, so retirees with those plans aren’t affected.

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