News Briefs

Nonprofit hospital settles suit for $150 million

A large Mississippi-based hospital has reached a landmark agreement, valued at $150 million, with a group of lawyers. Under the agreement, the system will provide free and discounted care for patients without health insurance. This agreement sets a precedent that could put pressure on at least 40 other nonprofit hospital systems included in class-action suits for allegedly overcharging uninsured patients and then using aggressive tactics to seek payment. These hospitals have been accused of breaching their charitable obligations in their financial dealings with the uninsured.

North Mississippi Health Services (NMHS) announced on Aug. 5 that it agreed to the new billing practices for the uninsured to avoid protracted litigation and avoid getting tangled up in a lawsuit that would distract the system from addressing other important issues. The NMHS system includes the 650-bed North Mississippi Medical Center in Tupelo and five smaller hospitals in north Mississippi and western Alabama. The Tupelo facility is the largest hospital in Mississippi and is thought to be the nation’s largest nonmetropolitan hospital.

Richard Scruggs, who leads the plaintiff’s attorney group, sees this settlement as a "template" for other nonprofit hospital systems to change their treatment of the uninsured. He further states that about a dozen other hospital systems, including some that have not been sued, are currently discussing settlements with his group. The Mississippi agreement, which begins Oct. 1, includes the following terms:

  • Anyone who is uninsured with household income of up to 200% of the federal poverty level (about $37,000 for a family of four) will receive free medical care.
  • The uninsured with household income of up to 400% of the federal poverty level (up to about $74,000 for a family of four) would receive discounted rates for care.
  • Overall, uninsured people would face collections of no more than 10% of their income per year.

The Mississippi health system also agreed to refund uninsured patients who have received services over the past three years and who would have qualified under the new revised policy. NMHS also agreed to stop aggressive bill collection practices.

Scruggs states that, if the agreement spreads to other hospitals, it would go a long way toward solving the problems of the uninsured. The lawsuits state that nonprofit hospitals have enjoyed tax-exempt status while they accrued millions of dollars in cash and securities. In the process, the lawsuits allege, the hospitals have broken their promise to the government to operate as a charity provider by charging the uninsured at rates that are far higher than those billed to patients with insurance.

CMS: Reimbursement for immigrant care proposed

The Centers for Medicare & Medicaid Services (CMS) has proposed an approach for reimbursing hospitals and other health care providers for emergency health services provided to undocumented immigrants. The Medicare Modernization Act earmarked $250 million a year in fiscal years 2005 to 2008 to help hospitals and certain other emergency care providers recoup a portion of the costs associated with providing such emergency services.

A paper describing CMS’ proposed implementation approach can be found at www.cms.hhs.gov/providers/mma1011.pdf.

The American Hospital Association has said it was disappointed the proposal would, in many cases, still require hospitals to ask patients’ immigration status.

AHRQ outlines alternate health care sites

A tool to help state and local officials quickly locate alternate health care sites if hospitals are overwhelmed by patients because of a bioterrorism attack or other public health emergency has been released by the Agency for Healthcare Research and Quality (AHRQ), part of the federal Health and Human Services Department.

The tool allows regional planners to locate and rank potential alternative sites such as stadiums, schools, and recreation centers based on whether they have adequate ventilation, plumbing, food supply, kitchen facilities, and other factors.

Produced by Denver Health, a partner in ARHQ’s Integrated Delivery System Research Network, the tool was shared with emergency response planners at the 2004 Summer Olympics in Athens, Greece. It can be found in a new ARHQ report, "Rocky Mountain Regional Care Model for Bioterrorist Events."