Apache Health provides this article about medical billing in California in order to help our clients, in particular facility-based physician groups for hospitalist billing, anesthesiologist billing, and radiologist billing, who often need to balance bill a patient in full when they are out of network in order to try and recover a reasonable reimbursement rate since the insurance company may often underpay the out of network physician for their services.  In this article, we will discuss the potential financial reimbursement impact of the new patient balance billing law California AB 72.


Reimbursement Impact

California bill AB 72, which passed into law in 2016 and becomes effective starting July 1, 2017.  IT is known as the “Surprise Medical Bill” law.  Although there is some nuance to it and some exceptions, it basically requires facility based physicians when performing California medical billing to take whatever reimbursement is offered by insurers.  The AB 72 law states that insurers will reimburse either the average contracted rate for that service in that area for that insurer or 125% of the Medicare rate, whichever is higher, and that patients may not be balance billed for a higher fee when a non-contracted physician performs a service at a contracted facility.


There has been and continue to be a great deal of speculation regarding what the impact of this will be financially to physicians for emergency billing, anesthesia billing, hospitalist billing, pathologist billing, and radiology billing.


Dispute Resolution Outcomes

In order to get some indication of what we may see in California, looking to another state which has recently enacted a similar review process may provide some guidance.  According to Crain’s New York Business, after a similar law was enacted in New York state that set up an independent dispute resolution process, the outcomes were nearly divided evenly with insurance companies winning slightly more often than half the time against physicians out of several hundred cases that were adjudicated.


In the New York review process, the insurer and the provider submit to the review board what they consider to be reasonable reimbursement and the panel then chooses one of the two submitted reimbursement levels.  Out of the several hundred cases for emergency services so far adjudicated, 22% of the cases were decided in favor of the payer while 13% were in favor of the physician.  However, when the disputed amount was between $1,000 and $5,000 the cases were nearly evenly split with providers winning 18 and insurers 20.


A large percentage at this point were ineligible for a final determination and may still be pending, therefore at this stage it may be premature to draw any long term conclusions.


Legal Dispute

As noted in the previous article, a court case was filed last year against AB 72.  The primary legal argument is that the law violates the Due Process Clauses of both the California and US Constitutions, by depriving physicians of the ability to set their own fees since this power has been delegated to the insurance companies by this law.


About Apache Health

Apache Health is a revenue cycle management (RCM) analytics, benchmarking, and auditing company. The founders of Apache formerly ran a large RCM company that was acquired by a private equity group in a rollup. Apache’s predictive analytics will benchmark billing performance and project exactly how much more revenue you should earn from your existing volume of patients.  Using many factors and a blend of artificial intelligence and specialty specific benchmarks, the model projects whether changing the billing process would improve collections for your particular mix of procedures and payers. Apache Health can help you evaluate whether to outsource the billing, determine which billing company to select to maximize performance, or track inhouse billing performance improvement over time. For more information contact:

Sean McSweeney

Apache Health



Legal disclaimer: Apache Health is engaged in the business of healthcare revenue cycle management analytics.  We offer information about regulations, rules, and industry practices relating to compliance.  Apache has researched that subject and has set forth the results of that research herein.  Apache Health is not a law firm and we do not offer legal advice.  Apache does not guarantee the completeness nor the accuracy of its research.  You should consult with your qualified healthcare attorney.