Hospitals discount care for the uninsured [The Morning Call (Allentown, Pa.)]

Sept. 30--The survival of the Affordable Care Act before the U.S. Supreme Court earlier this year had a double-barreled benefit for the uninsured -- not only would it push states and employers to make health insurance more available, but it also will keep many of them from getting hit with their hospital's most expensive bills.

For the past decade or more, nonprofit hospitals across the country have generated a huge amount of bad publicity and legal bills by billing uninsured people the full "gross" charges for their health care -- bills equal to the cost of a car, or even a house.

A pending change in the IRS code required by the heatlh care law will change all that.

The agency last week closed the pubilc comment period on regulations that would prohibit nonprofit hospitals from charging uninsured patients who qualify for financial help any more than they charge to patients with insurance.

Final publication of the rule will be a welcome change to health finance reform advocates such as Princeton University professor Uwe Reinhardt, who has for years argued against hospitals charging their highest prices to those who are least able to afford them.

"It is time," Reinhardt said, "to terminate this outrage."

Courts all over the country have heard cases of health systems arguing for their right to bill the full charge for care to the uninsured while accepting much less for the same service from insurance companies. Hospitals too have found themselves on the receiving end in class action cases where uninsured patients complained of unfair treatment. In one of the most recent cases, the Indiana Supreme Court this May heard arguments by two uninsured people, one of whom was billed more than $15,600 to treat an infection.

The Lehigh Valley's four nonprofit hospitals already offer free care or discounts to patients based on their income. But that hasn't entirely dampened the issue locally.

Those full charges will come back on Lehigh Valley Health Network patients who don't complete the hospital's reduced charge plan, which, like other plans, requires patients to provide tax returns, pay stubs and other personal financial information to qualify.

LVH has dozens of open cases in Lehigh County Court against patients for tens of thousands of dollars each. Jeff Hinkle, director of Patient Financial Services, said LVH lawyers filed cases against 44 patients in the past year. Because the cases are in litigation, hospital officials don't comment about them.

The lawsuits cover a small fraction of the patients who won't pay or can't pay a bill, even at reduced charges. Like other hospitals in the region, LVH uses a sliding-scale system based on a patient's income to determine if a "self-paying" patient qualifies for free care or how much the patient will be asked to pay. The scale has no top limit, meaning that even a well-heeled patient who is uninsured and completes the reduced price application will be billed no more than 33 percent of the full charge.

"We have a great deal of charity that we write off," said Hinkle.

In its 2011 fiscal year, LVH gave up $18.5 million in charity care and another $25 million in unpaid medical bills. Its Medicaid patient caseload rose 33 percentage points in the past two years, he added.

Well before the signing of the Affordable Care Act, LVH and other local hospitals began working to see if uninsured patients qualified for Medicaid -- the state-federal program for the poor and disabled -- or other coverage before being discharged. LVH, St. Luke's University Health Network and Sacred Heart Hospital in Allentown now use third-party outfits that seek to secure coverage for uninsured patients.

Hinkle said LVH sends three letters over 90 days to patients who have unpaid bills before involving its lawyers. Often, a call from a legal representative is enough to get a payment plan initiated, he said, adding that a bill has to be more than $5,000 for LVH to consider legal action.

St. Luke's and Sacred Heart go to court much less frequently than LVH, although they face the same issues with the uninsured and unpaid bills.

For example, St. Luke's last year provided $17.5 million in free care to the poor and wrote off another $11.5 million in unpaid bills. Sacred Heart's charity care last year was $1.4 million and unpaid bills were another $2.9 million.

Joyce Sourbeck, associate vice president for patient business operations at St. Luke's, said patients are often unaware of another option, PA Fair Care, the state's insurance program for those with pre-existing conditions. St. Luke's will start a new program in October to seek out uninsured people who use its emergency departments to see if they qualify for Medicaid, she said.

Those who refuse to cooperate are reported to credit bureaus, said Sourbeck. But the health network has filed only two lawsuits against patients in her four years as vice president, she said. "They were egregious," Sourbeck said. "They just refused to pay."

Like LVH, St. Luke's and Sacred Heart use federal poverty income levels to determine how much a self-paying patient can be charged. At Sacred Heart, patients can receive discounted care if they make no more than 150 percent of the federal poverty level, or about $34,000 a year for a family of four. Uninsured patients at St. Luke's pay no more than 20 percent of charges.

Hospitals officials say they use the system of negotiating down gross charges because the federal government requires institutions to have uniform prices.

"The charge is the same," said Martin Ciccocioppo, vice president of Research for the Hospital and Healthsystem Association of Pennsylvania. "What everybody pays is not the same."

Dr. Gerard Anderson of Johns Hopkins University'sBloomberg School of Public Health said his study of Medicare cost reports shows that full charges in Pennsylvania typically were three to four times what private insurers would have to pay.

Only Maryland, which operates under a special arrangement with the U.S. Centers for Medicare and Medicaid Services, uses a statewide rate setting, he said. The Maryland Health Services Cost Review Commission determines prices for health services across the state.

He looks forward to the day when nonprofit hospitals can no longer sock the uninsured with a huge bill.

"You just look at the bill that somebody is being charged -- three times, four times, in some cases 10 times what an insurer would pay," Anderson said. "It's just not defensible."

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