This article, Hospitals Give Until It Hurts, first appeared in California Healthcare News on April 10, 2018.
“The formula ‘two and two make five’ is not without its attractions.” — Fyodor Dostoevsky
A 2005 report surveyed 1,771 personal bankruptcy filings, half of which cited medical expense as the cause. For those suffering from an illness that preceded bankruptcy, individual out-of-pocket medical expenses averaged close to $12,000, and those qualifying as “medical debtors” were 42% more likely to experience lapses in health insurance coverage. This serves as the backdrop to what is commonly known in health care as “charity care” or “hospital fair pricing policies.” Consumer advocates blamed hospitals as the cause of this financial epidemic, fueled by the absence of any law or regulation regarding the prices that uninsured and underinsured consumers/patients paid for health care, not to mention the collection practices employed by those entities insisting upon payment for services rendered.
Health Care By Robin Hood
Fundamentally there should be nothing wrong with accepting from those patients without financial means less money than wealthier patients for similar services. Certain laws are inconsistent with this medical benevolence, such as one federal statute that prohibits health care providers from submitting a bill for payment substantially in excess of that entity’s usual charges for these items or services. The penalty for violating this law, 42 U.S.C. § 1320a-7(b)(6), is possible exclusion from Federal health care programs such as Medicare and Medicaid. The California Court of Appeal, Fifth District, offered another reason why hospitals should refrain from such generosity, specifically after the seminal 2014 decision in Children’s Hospital of Central California v. Blue Cross of California (226 Cal. App. 4th 1260). After decades of fighting between non-contracting providers and insurance companies, the best advice the judicial system had to offer in defining “reasonable value” was past agreements to pay and accept a particular price.
Nevertheless, legislators believed the ways in which hospitals should bill the uninsured could not be left to chance, and in 2005 California passed Assembly Bill 774 which required hospitals to develop a policy specifying how it will determine financial liability for services rendered to financially qualified patients and those patients without any insurance. In part, AB 774 (1) placed limitations on billing and collection practices for hospitals as well as their billing agents, (2) required hospitals to submit to the Office of Statewide Health Planning and Development (OSHPD) their plan to comply with the new obligations, and (3) charged the Office of the Attorney General with enforcing transgressions. … Read more →