HHS Says Hospitals Wrong
To Shift Blame on Discounts
By LUCETTE LAGNADO
Staff Reporter of THE WALL STREET JOURNAL
In a blunt rebuke to America's hospitals, the nation's top health regulator said hospitals can immediately slash prices charged uninsured patients without fear of government reprisals and rejected the hospital industry's position that federal rules prohibited such discounting.
The nation's 4,800 hospitals told Health and Human Services Secretary Tommy Thompson in a letter last December that federal rules blocked them from cutting prices and offering greater relief to the nation's nearly 44 million uninsured. The industry asked Secretary Thompson to alter rules and policy to allow the industry to take steps without risking punishment.
But in a toughly-worded letter to the American Hospital Association, Mr. Thompson said the hospitals had mischaracterized government policy and were simply "not correct" in arguing that complex federal rules left them no choice but to bill top rates to Americans who lack insurance coverage.
Secretary Thompson also noted that his agency provides hospitals with some $22 billion in subsidies to care for the uninsured, who now number nearly 44 million.
"I strongly encourage you to work with AHA member hospitals to take action to assist the uninsured and underinsured," Mr. Thompson wrote to Richard Davidson, the trade group's president, and "end the situation where, as you said in your own words, 'uninsured Americans and others of limited means are often billed and required to pay higher charges.'"
The letter, which was hand-delivered Thursday to AHA, marks the government's long-awaited response to the industry's effort to deflect criticism of the way its institutions have been billing and collecting from the uninsured.
American Hospital Association officials said Thursday they are meeting to discuss a response to the secretary's letter.
Reaction from health-care advocates was gleeful. "This finally puts to rest the hospital's tired and inaccurate argument that the government made them charge uninsured and underinsured people these crazy inflated prices," said Elisabeth Benjamin, an attorney for the Legal Aid Society who has been at the forefront of efforts to reform the system. "Tommy Thompson's next step should be to start investigating the hospitals' price system," Ms. Benjamin said.
With medical bills the second leading cause of personal bankruptcy, the issue of what hospitals charge for services, and the tactics hospitals use to collect unpaid bills, has taken on increasing urgency in business and political circles. The HHS move, coming in an election year, should help the Bush administration counter Democratic challengers who have argued the president hasn't done enough to help the poor and uninsured.
For the hospital industry, the HHS policy statement opens a door to further scrutiny of the complex economics of the U.S. health-care system, where list prices have little relationship to true costs.
In a document that accompanies Secretary Thompson's letter, the HHS inspector general stresses that "nothing" should stop the industry from taking steps to offer discounts to the uninsured. The inspector general even offers a helpful roadmap for hospitals in the form of a question-and-answer dialogue.
For example, the Q-and-A states: "Are hospitals required to take low-income patients to court or seize their homes or send claims out to a collection agency when those patients don't their hospital bills?" The answer: "No. Nothing in the Medicare instructions requires the hospital to seize a patient's home, take them to court, or use a collection agency." It adds that hospitals aren't required under law "to engage in any specific level of collection effort for Medicare or non-Medicare patients." The only caveat is that the hospitals must treat both types of patients in the same fashion.
As The Wall Street Journal has reported in a series of articles, hospitals have come under fire for billing the uninsured "full charges," in effect, list prices the hospitals maintain for every single item and procedure, even as they offer steep discounts to insurance companies and HMOs and those covered by Medicare and Medicaid.
Industry executives have said the system is unfair, but have argued they must abide by it. Industry executives have argued that a thicket of government rules forced them to bill everyone the same "charges," and put severe constraints on their ability to offer discounted rates to the uninsured.
But in recent months, hospitals have been moving to change some of their practices. Two of the most influential state hospital associations, New York and California, have recently put forward new guidelines which call on members to offer rate cuts to low-income uninsured. And the AHA itself has urged members to reinvent both their practices and their culture to be more compassionate.
But the HHS action could open up the hospital industry's pricing practices to further scrutiny. In recent years, as hospitals have felt squeezed and pinched by managed care, they have allowed the list prices for their services to skyrocket, so that even simple procedures and short stays can cost thousands of dollars.
A congressional probe, led by the House Subcommittee on Oversight and Investigations, is looking into the issue of hospital pricing, probing how the nation's 20 top hospital chains have been charging the uninsured many times more than what they expect to get from other payers.
Meanwhile, labor unions led by the Service Employees International Union have led campaigns in key cities, including New Haven, Conn., San Francisco and Chicago, to highlight price disparities that hurt the uninsured. |
