Wednesday, December 17, 2003

In today's Wall Street Journal a story (free version here courtesy of Business Word) about efforts being made by the American Hospital Association to resolve the disparity between fees billed to uninsured patients and those with Medicare or other means of health insurance. But hospitals and health plans are coming up against resistance from Medicare:

Other hospitals are planning sweeping changes to their billing practices. Ascension Health, the nation's largest Catholic hospital chain, said it will offer free care to every uninsured patient whose income falls below the federal poverty level, provided they don't qualify for government aid. (The poverty level is $8,980 for an individual, and $18,400 for a family of four.) ........

Douglas French, chief executive of Ascension, said the chain also plans to seek Medicare approval for even more dramatic price cuts. Ascension wants to bill all uninsured patients -- rich and poor -- at the same discounted rates its hospitals get from HMOs and insurers. Under that plan, "basically, nobody gets [full] charges," said Bruce Vladeck, a member of Ascension's board of directors. However, Mr. Vladeck, a former head of Medicare, said he isn't sure the unilateral discount for uninsured patients would pass muster with his old agency

Even the "evil empire" of health care is attempting to come up with a plan:

Meanwhile, another large, for-profit chain, Tenet Healthcare Corp. of Santa Barbara, Calif., said it hasn't been able to move forward on its own discounting plan, which involved billing low-income, uninsured patients at the same discounted prices it gets from HMOs. Medicare raised questions on the plan, and the company said it is awaiting a legal opinion from the Inspector General of the Department of Health and Human Services. In the meantime, Tenet says, it has drastically curtailed lawsuits against uninsured debtors and restricted the use of liens, eliminating them entirely for patients whose home is their only asset.

Hospitals and physician offices are rightly wary of crossing Medicare and getting fined or thrown in jail. My partner recently attended a coding seminar which he was told that Medicare's return on audits was $14 for every $1 they spend. Either there is a tremendous amount of fraud and abuse or physicians are being penalized for honest mistakes arising from a coding system that no one can understand. (I believe it is the latter)

The regulations that are proving to be the roadblocks are those that require Medicare patients to be charged the "lowest" fees. This would prevent hospitals from charging reduced fees to uninsured patients. This is also what inhibits "professional courtesy" in some practices.

As I posted earlier (10/3) hospitals have had to become more aggressive in collecting debt because private insurance plans and HMO's have cut reimbursement, and those patients cannot subsidize the uninsured:

In the 1980s, as powerful HMOs emerged, they began demanding their own discounts from the hospitals' listed charges. Hospitals in turn began boosting their charges, in part as an effort to set a higher starting point for negotiations. Lost in the mix were uninsured patients, who continued to be billed as they always were, unaware of the discounted rates and with no one to negotiate on their behalf.

The story also describes regulations the states are putting in place to regulate the collection of unpaid medical bills:

A new Connecticut law, which went into effect in October, makes it harder for hospitals to sue patients and to seize their bank accounts or place liens on their homes. That law also slashes interest rates charged on patient bills to 5% from 10%. In Illinois, state legislators are weighing laws that would end what they call "discriminatory pricing," the practice of billing uninsured patients more than insured patients -- on the theory that uninsured people tend to be minorities against whom it is illegal to discriminate. In New York, a pending bill in the state legislature would limit the amount hospitals could bill poor uninsured patients to no more than the sum Medicare or private insurers would pay, whichever is larger.

A fair system would also allow hospitals and physicians to deduct bad debt from their taxes, based on a Medicare fee schedule.
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