Tuesday, August 24, 2004

The big question.....
A commenter to this post asked:
If what Mr. Rehberg et al says about the hospital's practices is true, the motivation in coming forward is irrelevant. Wouldn't the practices be illegal?
That is the crux of the whole matter, were the practices illegal? Given the widely accepted interpretation of Medicare regulations before the February 2004 memo, their actions were, IMO, within the law. There are no clear requirements for not-for-profit organizations in relation to charity care.
As there may be some confusion, allow me to explain. The Acme Surgical Company has a list of what we consider our "usual and customary fees". These date back tp the time before managed care when private insurance would pay the charges within reason. We have contracts with managed care and insurance companies which define a reimbursement for a service which have little or no relation to those "usual and customary fees". We cannot, under the contract, "balance bill' the patient for the difference. In exchange for that "discount", if you will, we are given access to the "insured lives" of that company as well as being reimbursed directly by the company rather than the check going to the patient. "Medicare assignment" works the same way. We cannot have "usual and customary fees" below that of Medicare. From the memo:
As noted in the preamble to the proposed regulations, the exclusion provision does not require a hospital to charge everyone the same price; nor does it require a hospital to offer Medicare or Medicaid its "best price." However, hospitals cannot routinely charge Medicare or Medicaid substantially more than they usually charge others.
So given a vague regulation relating the discounting of care the hospital is going to act in a way to avoid the scrutiny of a Medicare audit. That means that as far as charges go, Medicare serves a floor, not a ceiling.
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