Hospitals changing billing, collection practices while controlling damage caused by lawsuits
Fiscal Fitness: How States Cope
Hospitals changing billing, collection practices while controlling damage caused by lawsuits
Stung by lawsuits that allege hospitals overcharged uninsured patients and were too aggressive in trying to collect bad debts, many hospitals have revised their billing and collection practices, according to an issue brief from the Center for Studying Health System Change (HSC). Although the lawsuits have been dismissed, many hospital associations and advocacy groups have called for changes to try to repair the public relations damage caused by the suits.
Under the federal Emergency Treatment and Labor Act, Medicare-participating hospitals with emergency departments must provide stabilizing care to patients with an emergency condition, regardless of the patient's ability to pay. That law does not provide payment for services to uninsured patients or cover how hospitals bill patients and then try to collect the billed charges for services provided under the act.
The HSC issue brief is based on site visits to 12 nationally representative communities, half of which had at least one hospital named in the class action suits.
Researchers Andrea Staiti, Robert Hurley, and Peter Cunningham reported U.S. hospitals provided $24.9 billion in uncompensated care in 2003, representing 5.5% of all hospital costs, according to the American Hospital Association. Uncompensated care includes charity care provided to poor, uninsured patients and debts of individuals and third-party payers that are never collected by hospitals. With an estimated 44.8 million people uninsured, the researchers found, hospitals treat uninsured patients every day. Many uninsured patients are poor and unable to afford care, while others may have the resources to pay for their care, leaving hospitals the task of determining who is fiscally needy.
As the lawsuits and public criticism heated up in 2003, the American Hospital Association issued guidance outlining how hospitals could assist low-income patients in paying for hospital care. The study said the recommendations broadly addressed effective communications with patients, helping patients qualify for coverage, ensuring hospital policies are applied accurately and consistently, making care more affordable for low-income patients, and engaging in fair billing and collection practices.
According to the issue brief, site visits found little local level pressure on hospitals to change their billing and collection practices. But even without such pressure, most hospitals reported that media attention to the issue and encouragement from state and local hospital associations had persuaded them to adopt voluntary guidelines for providing free or reduced-cost care to uninsured patients.
"In every HSC community, most hospitals have either recently changed their pricing, billing, and collection policies or tried to improve the clarity of the information provided to patients," the brief reported. "Most of the hospitals interviewed had increased the income threshold for full charity care or discounted services. It is now common policy for hospitals to provide charity care to uninsured persons with incomes under 200% of poverty and offer sliding-scale discounts beyond this income threshold, in some cases up to 400% or 500% of the poverty level. … Other hospital responses include prompt-pay discounts for self-pay patients at any income level, with the most generous discount for payment at the time of service."
Ms. Staiti and her colleagues said several factors appear to influence the level of concern about hospital billing and collection practices for uninsured patients across the 12 communities. In some communities, market observers believed that the existence of state charity laws or uncompensated care pools lessened attention to the issue, while in communities that have a major public hospital or institution that serves a disproportionate share of low-income uninsured patients, that facility may deflect pressure that otherwise would come to other hospitals.
Negligible bottom line impact felt
The researchers found that most changes in billing and collection practices have had negligible impact on hospital finances to date.
"Almost all of the hospitals interviewed that had adopted more generous charitable policies indicated that expenses previously classified as bad debt have shifted to charity care write-offs, with little impact on hospital bottom lines," they said.
Implementing billing and collection policy changes was less costly than expected by some hospitals, and in some instances reduced administrative costs and hassles, according to the report.
The researchers said it is important to note the changes in hospital billing practices come when many hospitals report continued increases in uncompensated care, including in EDs and outpatient services. Those increases are not a result of changes in hospital billing practices, they said, but rather because of increases in the number of uninsured people in the community and decreased access to many outpatient providers, particularly specialty physicians.
"Policy-makers should not lose sight of the fact that as providers of last resort, many hospitals are absorbing the problems associated with diminished access to care for uninsured patients," the researchers concluded. "Ensuring reasonable billing and collection practices is important, but it is not a substitute for addressing these more fundamental problems with access to care."
(Download the issue brief from www.hschange.org.)
Stung by lawsuits that allege hospitals overcharged uninsured patients and were too aggressive in trying to collect bad debts, many hospitals have revised their billing and collection practices, ...Subscribe Now for Access
You have reached your article limit for the month. We hope you found our articles both enjoyable and insightful. For information on new subscriptions, product trials, alternative billing arrangements or group and site discounts please call 800-688-2421. We look forward to having you as a long-term member of the Relias Media community.