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Settlements affect care for homeless, uninsured
Two recent settlements could have an impact on how health providers do business. In the first case, two Illinois hospital systems have agreed to settle lawsuits alleging that they overcharged thousands of uninsured patients and provided inadequate financial assistance.
As part of the agreement, Resurrection Health Care and Advocate Health Care will recalculate patients' bills and give refunds to needy patients who were eligible for free or discounted medical care. Resurrection, which owns eight hospitals in and around Chicago and is the state's largest chain of Catholic medical centers, also has agreed to give a 25% discount to anyone who is uninsured regardless of his or her income level. Advocate agreed to a similar plan for patients with bills of at least $5,000 or more in a single year.
Jeannie Frey, JD, senior vice president of legal affairs for Resurrection, issued a statement saying the health system did not admit wrongdoing but settled the suit because of "the cost of litigation and the toll it takes internally on an organization."
Resurrection notified 220,000 patients of the settlement and the opportunity to apply for financial relief on outstanding or past bills. Advocate Health Care, which operates nine hospitals, sent similar notices to 170,000 patients.
Resurrection is placing annual limits on what people without insurance will be asked to pay for hospital services in any given year no more than 10% of annual income for those with incomes under 400% of the federal poverty level, and no more than 15% others. Those limits are more lenient than required in a new Illinois law that caps hospital payments for people without health insurance at 25% of income. That law goes into effect April 1, 2009.
In the second case, UnitedHealth Group agreed to change the way it determines the portion of reimbursements for which health insurers are responsible when members receive services from out-of-network providers. New York state Attorney General Andrew Cuomo recently announced the settlement terms.
The settlement ends an investigation into concerns that health insurers understated the portion of reimbursements for which they are responsible for such services by as much as 28% in some cases. The underpayments amounted to hundreds of millions of dollars over the last 10 years, according to Cuomo's office.
Under the settlement, UnitedHealth will pay $50 million to finance the development of a new database that an undetermined university will operate. UnitedHealth will not admit any wrongdoing and will not have to pay restitution to consumers.