Lamwakers Address Surprise Charges, Exec Pay
Two bills pending in the state Legislature would provide consumers a considerably more transparency regarding the price of their care and the pay received by top hospital executives if they are eventually signed into law.
The cost transparency bill, SB 1252, is authored by Sen. Jeff Stone, R-Indio. It would require providers to notify patients of their estimated costs for any scheduled medical procedure. It would also require disclosure of the participation of any physicians that are not in the provider network of the patient's health plan.
According to a source within Stone's office, the bill is a response to constituent complaints of “surprise” medical bills that were received from out-of-network providers, with the patients or their families unaware that such providers had rendered any care.
Lawmakers in New York State recently passed a law limiting the practice of surprise out-of-network billing – not long after a surgeon made a cameo appearance at a fusion procedure and charged the patient's insurer nearly $118,000 for his troubles.
The other bill, AB 2467, is authored by Assemblyman Jimmy Gomez, a Democrat from the Echo Park section of Los Angeles. That bill would require hospitals to release the compensation data for their top executives. That data would then be posted on the website of the Office of Statewide Health Planning and Development.
That bill noted that the reason for publishing such data is that “the compensation packages of chief executive officers, executives, managers, and administrators of hospitals, hospital groups, and affiliated medical entities that operate under nonprofit corporate status are often excessive, unnecessary, and inconsistent with the corporations’ charitable purposes, as revealed by compensation surveys and other sources.”
According to the most recent Payers & Providers compensation survey released in late 2015, the average non-profit hospital CEO enjoyed an average compensation package of more than $800,000 annually based on 2013 data, the most recent year available. More than five dozen executives at Sutter Health, Kaiser Permanente and Dignity Health – all not-for-profit hospital operators – were paid more than $1 million apiece in 2013.
The California Hospital Association is opposed to both bills, although it suggested it would have more leeway regarding the cost estimate legislation. CHA spokesperson Jan Emerson-Shea said the lobbying group is “in conversations with (Stone’s) office.”
Emerson-Shea noted that the prime sticking point of the cost estimate bill is the fact that hospitals do not directly employ physicians in California. “Hospitals do not legally have access to the information that SB 1252 would require hospitals to provide to patients,” she said. “Additionally, physicians are not required to disclose to hospitals which health plans they contract with – or at what rates. Therefore, a hospital cannot determine every individual patient’s out-of-pocket costs.”
Regarding the compensation bill, Emerson-Shea observed that “much of the data that this bill wants to have reported is already available from IRS Form 990s (non-profit hospitals are required to disclose the data for their most highly-paid employees) and from the SEC for investor-owned facilities. This duplicative reporting obligation unnecessarily increases administrative costs for hospitals and reduces resources for patient care without any real public policy benefit. The bill also expands current reporting obligations to include mid-level staff who reach an arbitrary compensation and benefit threshold simply because they are highly-skilled employees who work in a competitive job market. These employees have no authority or influence over their hospital/system management decisions.”
The bill joins at least one local ballot measure that would seek to tamp down compensation among non-profit hospital executives. Signatures are being gathered for a measure in San Diego County that would cap the pay of executives at the Tri-City Healthcare District to $250,000 a year. That measure, backed by the Service Employees International Union-Healthcare Workers West, is currently in the signature-gathering process and could appear on November's ballot.
The labor union successfully sponsored a ballot measure to cap compensation at the El Camino Healthcare District in Mountain View. It was narrowly passed by voters, but defeated in a court battle.
A hearing on the surprise charges bill is scheduled in the Senate Health Committee next month. A hearing has not yet been scheduled for the compensation legislation.
