Some Kaiser Foundation Health Plan patients may find themselves hit by large bills for receiving emergency care from the The Queen’s Health System if the two organizations can’t settle a legal dispute over reimbursement rates.

Negotiations for a new contract began in 2017, but the legal dispute began with a letter penned by Mich Riccioni, Queen’s executive vice president and chief financial officer. 

Three days after the Kaiser-Queen’s hospital services agreement expired on May 31, Riccioni wrote that Queen’s would begin to bill certain Kaiser patients directly for medical care if Kaiser would not pay for it itself.

In response, Kaiser filed a federal lawsuit in mid-June against Queen’s.

The Queen’s Health System plans to bill some Kaiser patients full price for emergency and non-emergency services if the two health organizations can’t agree on reimbursement rates. Cory Lum/Civil Beat

In the letter, Riccioni said Queen’s would charge its full price for emergency and non-emergency care, without seeking pre-authorization from Kaiser for services provided to its members. 

Riccioni did not respond to a request for comment.

The Queen’s Health Systems spokeswoman, Minna Sugimoto, said in an emailed statement that Queen’s officials are reviewing the lawsuit and would not comment on pending litigation. But she said Queen’s will continue to provide clinical care to all patients, including Kaiser members.

Queen’s has until mid-July to respond to the lawsuit. 

Frances Miller, health care legal expert and visiting law professor at the University of Hawaii Richardson School of Law, said she suspects the Kaiser-Queen’s argument arose from disagreement over the cost of Queen’s emergency care.

“Hospitals are always arguing about what gets counted as cost,” she said. “Queen’s is treating Kaiser patients as though they’re not insured, which means they’re being billed the highest price the hospital charges anyone for emergency care.”

Contract disputes such as Kaiser and Queen’s are common across the country.  

But to escalate into litigation this early is unusual, she said.   

“It looks like pretty aggressive behavior for Queens to threaten to bill Kaiser’s emergency patients directly,” she added.  

This impasse has resulted in four Queen’s facilities considered out-of-network for certain Kaiser Permanente Hawaii commercial insurance members. The facilities include The Queen’s Medical Center in Honolulu, The Queen’s Medical Center – West Oahu, North Hawaii Community Hospital, and Molokai General Hospital. 

Patients who are covered by Medicare and Medicaid are not affected by the dispute. 

In a statement on its website, Kaiser expressed disappointment that Queen’s rejected its “multiple” contract proposals and called Queen’s move “unfair.” In its lawsuit, Kaiser asks for a preliminary injunction, claiming that because they have worked together before, they have an implied contract to continue. 

Kaiser is the state’s second-largest insurance carrier, and holds almost a quarter of Hawaii’s market share. Correction: A previous version of this story incorrectly stated Kaiser’s market share as a third. 

Approximately 191,000 Hawaii residents are commercial members of a Kaiser Permanente Hawaii health plan, about 2,800 of whom used Queen’s facilities in 2018, according to Kaiser Permanente Hawaii spokeswoman Laura Lott. 

Surprise Bills

When unable to provide certain services, health maintenance organizations such as Kaiser, called HMOs, usually strike agreements with other hospitals to ensure their patients can receive specialized care. Emergency medical care, which has been protected by federal law since 1986, is one of the services. 

Hospitals and insurers must work out what they’ll pay each other for taking care of patients outside of their network, considering they have no control over which emergency room their insured patients will visit.  

But nothing protects patients from getting bills in the mail after they visit the doctor. 

Any patient who shows up at Queen’s doors will be treated, but certain Kaiser patients who head to Queen’s emergency facilities could be in for a surprise, Miller said. 

The benefit of joining an HMO for health care means you’ll pay a premium for all services, instead of paying for individual services, said Miller.

“That’s why it’s a double hit for a Kaiser patient to go out of network for care, as Queen’s is threatening to treat them here, and a double surprise because they’re not used to getting any kind of billing,” she said.

A National Issue

Transparency in medical billing has become a significant issue nationwide.

Last week, President Donald Trump signed an executive order that not only calls for hospitals to be required to make public their negotiated rates with third-party payers, but also outlines plans to curb “surprise billing,” a term for when patients are billed for care provided by hospitals or physicians not covered by their insurance. That often happens for emergency services.     

The move follows other efforts put forward by his administration in recent months to boost medical price transparency, allowing patients to shop around for the best deal. The Affordable Care Act has required hospitals to list their prices since this January, but health care costs in the U.S. remain unpredictable.

According to the list of prices it provides online, Queen’s has a base standard charge for emergency services that run from $432 for a “non-urgent” emergency fee to $4,874 for critical care, but the ultimate price tag varies. Each Hawaii hospital price list Civil Beat surveyed includes a disclaimer that the price is “determined at the time of service” and “determined upon receipt of an invoice from an outside service provider.”

Queens Hospital Emergency sign. 14 feb 2017
The listed price for emergency services at Queen’s Medical Center can from $432 to $4,874, but there are huge variations. Cory Lum/Civil Beat/2017

“It’s very hard to understand what hospital costs really are because it all depends on what gets counted and who is doing the counting,” said Miller.  

The practice of “surprise billing,” when patients are unaware that the doctor or hospital that treats them is actually out of their insurance network,  has garnered bipartisan attention and disapproval as reports of unanticipated and outrageously expensive emergency room bills have surfaced across the United States. 

Hawaii, along with 25 other states, does not have any comprehensive protections against the balance billing, according to a January study by the Commonwealth Fund. A Hawaii bill that circulated the 2016 session of the state Legislature recommended an evaluation of the issue of balance billing, but it failed. 

Lorin Eleni Gill, who covers health care issues, is a corps member with Report For America, a national nonprofit organization that places journalists in local newsrooms. 

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