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It's time to reassess payment policies for the uninsured

Zimmerman

Hospitals are under pressure as never before to revamp their payment policies to ensure that the low-income uninsured get free or discounted care and don't have to deal with hard-nosed collection agencies.

The pressure comes in the form of dozens of class-action lawsuits filed by the same attorneys who successfully won billions of dollars of payments from tobacco companies.

Citing tax breaks and federal funding given in exchange for community service, the lawsuits argue that hospitals have an obligation to make sure that the low-income uninsured get free or reduced care and are not unduly harassed for collection.

In addition, a subcommittee of the U.S. House Ways & Means Committee held several days of hearings on hospital billing practices in June.

Most hospitals have offered discounts and free charity care for many years, but critics argue that low-income uninsured patients have been unaware of these offers and ended up getting the full bill.

Ironically, the full bill that is sent to many low-income uninsured patients can be twice what everyone else receives, because the uninsured do not get the deep discounts that health plan members get.

Out of dozens of hospitals and health systems named in the lawsuits so far, only one, North Mississippi Medical Center in Tupelo , Miss. , has settled. Nonetheless, these suits have prompted many hospitals and hospital associations to reexamine their policies.

Actually, hospitals have little to lose from relaxing their policies. Guaranteeing discounts or even free care to low-income patients should not substantially affect revenue cycles, because only a few pennies are collected on the dollar billed to the low-income uninsured, according to several studies .

The Centers for Medicare and Medicaid Services says Medicare does not require hospitals to provide any discounts to the uninsured, but neither does it prohibit hospitals from providing discounts, as some hospital organizations have feared.

Developing discounts “is a decision to be made by the hospital,” CMS states. “The only Medicare requirement is that whatever decision the hospital makes, it must be consistently applied.”

CMS also advises that a hospital could exert tighter control over collections by requiring that only the hospital CEO can authorize a collection action. But “this is a decision to be made by the hospital,” the agency adds.

Posting notices and informing staff

One of the problems in getting hospital discounts for the uninsured is that some patients – and even some hospital employees – may not eve know they are available.

New guidelines for hospitals adopted by the California Hospital Association in February 2004 state that hospitals should post notices about financial assistance “in visible locations throughout the hospital, such as admitting/registration, billing office, emergency department and other outpatient settings.”

CHA says the posted notice should contain brief instructions on how to apply for financial assistance and provide a contact telephone number to obtain more information.

The CHA guidelines also direct that staff members should be knowledgeable of these policies, and those advising low-income patients on payments should get special training on the policies. Since many low-income patients cannot speak English well, hospital staff should communicate in their primary language “if reasonably possible,” CHA says.

The guidelines add that hospitals should disseminate their policies among local agencies.

A different approach has been developed by the Patient Friendly Billing project, founded last year by the American Hospital Association, Healthcare Financial Management Association and Medical Group Management Association.

The Patient Friendly Billing g uidelines, released in summer 2003, recommend that hospitals inform patients in advance about financial expectations for the whole episode of care and p rovide information to help meet their financial responsibilities. The project suggests including a list of frequently asked questions and a glossary of terms, based on the project's own glossary that is limited to terms that patients can understand.

The guidelines recommend meeting with the patient one-on-one at the beginning of the hospital stay, which can pay off because many of them may qualify for Medicaid or other programs. Also, the hospital could request payment for relatively small bills at that time.

Several hospital organizations and individual hospitals have also constructed sliding payment scales for the low-income uninsured:

* California Hospital Association: Guidelines call for financial assistance for patients at or below 300 percent of the federal poverty line.

* Illinois Hospital Association: Guidelines state that uninsured patients should receive free care if they are at or below 100 percent of poverty and discounts if they are between 100 and 200 percent of poverty.

* Sentara Healthcare, Norfolk , Va. : Policy calls for a sliding scale for payments that gives give discounts of up to 45 percent and goes up to 500 percent of the federal poverty level.

* Florida Hospital , Orlando , Fla. : Hospital expects zero payment for non-elective and ER care from uninsured patients at or below 150 percent of poverty. Those at up to 400 percent of poverty pay as much as 60 percent of charges, and those at more than 400 percent of poverty get a discount of 30 percent or more.

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