Tuesday, August 24, 2004
Nonprofit hospitals' billing practices examined.
It's not that hard to see how the hospitals got into this situation. First, they have their standard fees - often 3 to 4 times their actual costs. This is the amount that indemnity-type health insurance plans and the uninsured were usually charged. Hardly anyone has an indeminity plan any more: they've been priced beyond the reach of most Americans, for this very reason. Managed care plans exist for basically one reason: to negotiate discounted fees for their insureds. Their rates average about 13 percent above cost (though averages are a bit misleading) and Medicare has legislated itself a sweet deal of 1 percent (on average) above cost.
Uninsured and diagnosed with liver cirrhosis, Elaine Sawyer entered the Mayo Clinic in Jacksonville, Fla.
A month later, doctors determined a transplant wouldn't help. She and her husband, Dempsey Sawyer, returned home to McKinney in June with a terminal diagnosis and a hospital bill for $225,000.
Had Mrs. Sawyer, 63, had health coverage, her family might have been responsible for a modest co-payment, and an insurance company would have paid a discounted price – perhaps tens of thousands of dollars less.
"I've talked to some medical people, and they said some of those charges are ridiculous," said Mr. Sawyer, 69, a retired high-tech worker, who borrowed money to pay $190,000 of the bill.
So who's left paying the full charges? The uninsured. "Paying" may be a misnomer. That's the amount they are billed. Very few pay the full bill and many pay nothing. But that doesn't stop the hospitals from sending bills and trying to collect. As well they should. I believe that, as good stewards of the public's tax subsidy for their operations, nonprofit hospitals have an obligation to take reasonable steps to bill and collect for the services they render.
Is there any relief for the truly indigent? Yes, some. As the article points out:
Patients who qualify for the label "medically indigent" can get a break. All others get the full billed charge, even though a lot of those charges get written off as bad debt after collection efforts have failed.
"It's important to understand that a hospital charges patients the same amount regardless of the type of insurance," said Carmela Coyle, policy analyst with American Hospital Association.
Hospitals in Texas say they can't lower charges for the uninsured because state law prohibits them from knowingly charging more to individuals who have insurance.
The Texas Department of Insurance says this law doesn't apply to Medicare and Medicaid patients or to the "medically indigent."