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Health Access |
Home “Give Us A Sign!” by Anthony Wright & Beth Capell, Ph.D. Armed Robber: Your money or your life!! For California consumers facing hospital bills of thousands of dollars, especially those with no insurance or with high deductibles, the old Jack Benny line is no joke. Hospitals here and across the country routinely charge self-pay patients consumers three or four times what insurance companies and government programs pay for the exact same treatments. In many cases, these bills send patients and their families to collections, to court, and to bankruptcy. After several years of news stories and legislative efforts, California hospitals adopted “voluntary guidelines” in February 2004 on their billing and collections practices for uninsured patients. In late August and early September, volunteers fanned out across California to determine how hospitals treat the uninsured financially, and to measure compliance with key, measurable elements of those guidelines. This paper reports on the results of that survey. The results indicate that there is widespread noncompliance with the “voluntary guidelines” set forth by the California Healthcare Association. In the case of posting signs to inform the uninsured about financial options and assistance, none comply with all the recommendations in guidelines, and over half don’t have a sign in any of the three recommended locations. With such results, it seems that enforceable standards are needed, as embodied in legislation currently pending on the Governor’s desk. Table of Contents The Uninsured - top - Nearly one out of five non-elderly Californians are uninsured, totaling over 6 million people. Over 80% of the uninsured are workers, or the family members of workers. Significant research, most recently compiled and analyzed by the Institute of Medicine, shows the health consequences of being uninsured. Uninsured people live sicker and die younger than the insured. The uninsured have worse health outcomes regardless of the type of disease, health need, or emergency that they have. The uninsured are less likely to get preventative care, such as a breast cancer screening; less likely to get ongoing care for a illness such as cancer or diabetes; and less likely to get appropriate treatment even in an emergency trauma situation. The Financial Repercussions - top -Less well known are the financial repercussions of being uninsured. An Access Project study indicated that half the uninsured carry “life-altering” medical debt. A Harvard Law Review survey indicated that medical problems and medical bills were cited as a leading cause of personal bankruptcy. For many families, being uninsured is living one emergency away from financial ruin. Many families are prematurely sent to collections and court before they can determine what their financial options may be, including the possibility of public insurance programs. Being sent to collections, by itself, can ruin a family’s financial future, making it more difficult to rent an apartment or even get a job. The impact of these billing practices has a financial impact, but also a health impact. Fearful of the financial repercussions and unaware of their consumer rights and financial options, the uninsured all too often avoid getting the care they need, even in the case of emergencies, resulting in devastating health impacts. An Urban Institute report showed that uninsured adults in California are far less likely to go to the emergency room (12.1% had at least one visit in 1999) that those on private insurance (20.8%) or public programs (32.9%). Overcharging as a Practice - top -What exacerbates this problem is the widespread, common practice of hospitals overcharging the uninsured, in many cases charging multiple times what insurance companies and government programs would pay for exactly the same service. Part of the problem is that hospital costs have little relation to the actual cost of providing the service. Hospitals do not dispute this notion. On February 6, 2003, in written testimony before the Assembly Health Committee, Fred Harder, Senior Vice President of the California Healthcare Association, the hospital lobby, agreed: “On average, hospitals’ billed charges are three times their actual costs… In reality, hospitals’ billed charges have little relevance to the amount of payment made for most hospital services.”
As an example, David Smith was undertaking a home improvement project when he fell off his roof, hitting his head. Even though he was uninsured, he went to be examined at an emergency room in Sacramento, and was thankfully found to be fine. Yet after three hours in the emergency room, he emerged with a $15,000 bill. An insurance company would pay only a small fraction of that bill, yet David was being billed by the full amount. Gabriel Wilson, an uninsured construction worker, received an appendectomy at a hospital in Davis, and after only a one-night stay, got a bill in excess of $32,000. In talking with industry officials, it is estimated that an insurance company would have already had an agreement with the hospital to pay a certain amount for such treatments, probably a couple thousands of dollars, a fraction of the overall amount. Yet the uninsured worker gets stuck with the entirety of the bill, and that is the bill that is sent to collections and to court. As the Medical Director of Emergency Services at the San Jose Medical Center wrote in a letter on October 1, 2002, to another “uninsured and overcharged” patient: “I can appreciate your frustration with having received a bill that seems to be out of proportion with reality. You must understand that our charges are developed to function in the current healthcare insurance system where virtually all bills are heavily discounted by the insurance carriers. Since many of these payers will discount up to 70% of the charges, we have had no choice but to raise the billed amount to ridiculous levels in order to try to obtain adequate payment…. The problem with this system is that, unfortunately, those individuals who honestly try to pay their bills directly can be heavily penalized.”
State and National Attention - top - Health Access California, along with other consumer groups like Consumers Union and the Western Center on Law and Poverty, have been working on these hospital billing and collections issues for many years, and have proposed legislative solutions for the last three years. These included SB1394 (Ortiz) in 2002, and AB232 (Chan) in 2003 and 2004. It also includes one bill currently pending on Governor Arnold Schwarzenegger’s desk, SB379 (Ortiz). Over these past three years, this issue has gotten both state and national attention. MEDIA ATTENTION: Many state and national newspapers have reported on this story, in the context of hospital overbilling scandals, focusing specifically on the inequity of the overcharging of the uninsured. In addition to the extensive coverage that this issue had gotten from the Wall Street Journal and USA Today, ABC's Nightline did an entire show on this issue recently. LAWSUITS: Several law firms have filed class action suits against nonprofit hospital chains around the country, including several against Sutter here in California, all attacking the billing and collections practices of the hospitals. The Sutter lawsuit mentions two reports that Health Access co-authored on this topic, which can be obtained at the website, at http://www.health-access.org/. FEDERAL ACTION: Federal leaders have taken an interest in this issue. Some hospital chains claimed that the practices were required by Medicare and federal policy. Earlier this year, U.S. HHS Secretary Tommy Thompson and the Centers for Medicare and Medicaid Services forcefully responded, issuing guidelines for hospitals, making clear that federal programs do not condone or require these billing practices. “ Hospitals' charging the uninsured the highest rates is a serious issue that demands all of our attention,” read the February 20, 2004 letter from Secretary Thompson to American Hospital Association President Richard Davidson. “ This guidance shows that hospitals can provide discounts to uninsured and underinsured patients who cannot afford their hospital bills and to Medicare beneficiaries who cannot afford their Medicare cost-sharing obligations. Nothing in the Medicare program rules or regulations prohibit such discounts. With this guidance as a tool, I strongly encourage you to work with AHA member hospitals to take action to assist the uninsured and underinsured and therefore, 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." CONGRESSIONAL HEARINGS: A Republican Congressman from Colorado has introduced H.R.4092, the “Hospital Billing Fairness Act.” The U.S. House Energy and Commerce Committee held an oversight and investigations hearing on "Hospital Billing and Collection Practices" toward the uninsured. Information from that information request and hearing is posted at: http://energycommerce.house.gov/108/Hearings/06242004hearing1299/hearing.htm OTHER STATES: Connecticut passed related legislation last year on hospital collections practices. This includes a prohibition on hospitals placing liens on homes, and a limit on the amount of interest a hospital can charge for pending charges. However, as best we can determine, the California bill is the first time a state legislature anywhere in the nation has passed a law to limit the actual amount that hospitals can collect from the uninsured. An issue brief summary on this issue, which talks about groundbreaking developments in California and other states, has just been published by the Commonwealth Fund, at: http://www.cmwf.org/programs/insurance/pryor_medicaldebt_749.asp A Proposed Legislative Solution: Fair Prices, Not Free Care - top -This additional attention has provided a useful context for a legislative discussion on hospital overcharging. SB379 by Senator Deborah Ortiz, is now pending before Governor Schwarzenegger. This legislation and AB232, a companion bill by Assemblymember Wilma Chan, were introduced in February 2003. The bill sets consumer protections for self-pay patients, so the uninsured and the underinsured stand a better chance of getting the hospital care they need without facing financial ruin:
Such legislation is supported by a wide range of organizations representing consumers, seniors, children, labor, communities of color, people of faith, and grassroots constituencies, including Consumers Union, Western Center on Law and Poverty, AARP, California Labor Federation, ACORN, Congress of California Seniors, California Pan-Ethnic Health Network, MALDEF, Latino Issues Forum, National Council of La Raza, Children Now, California Church Impact, and many others. Hospitals Announce Voluntary Guidelines - top - In February, 2004, more than two years after legislation was initially introduced in California to protect consumers from hospital overcharging, after dozens of news stories in California and across the country, after academic studies and reports by consumer groups detailing how the lives of consumers have been ruined by hospital bills costing thousands or tens of thousands or even hundreds of thousands of dollars, the California Healthcare Association, the trade association for the hospital industry, along with Sutter Health Systems and the Alliance for Catholic Health Care, announced voluntary guidelines to protect consumers from hospital overcharging. The voluntary guidelines adopted by the hospital industry were provided to Governor Schwarzenegger’s administration immediately. After requests by Assemblymember Wilma Chan and Senator Deborah Ortiz, the hospitals also provided their guidelines to these legislators. But what about real consumers? What happens when someone without insurance goes to a hospital? Are hospitals abiding by their own guidelines? How does a consumer, not a consumer advocate, find out whether going into the emergency room jeopardizes their financial future? If the purpose of the guidelines was to head off legislation, it may be successful. A letter, dated May 12th, 2004, from the Director of the Office of Statewide Health Planning and Development announced the agency’s opposition to the bill, and cited the voluntary guidelines as the reason:
Given that these voluntary guidelines are a central rationale for opposing this legislation, it seemed most prudent to examine the hospitals’ compliance with these voluntary guidelines. Are these guidelines providing real protections for consumers? Or only for hospitals that hope to avoid effective consumer protections? Survey of Hospital Compliance with Their Own “Voluntary Guidelines” - top - In August and early September 2004, volunteers fanned out to determine whether hospitals were complying with their own guidelines. Over 40 of the 450 California general acute care hospitals were visited. Hospitals included public and private, North and South, urban, suburban and rural hospitals, and included both stand-alone facilities as well as those associated with various hospital systems (Sutter, Kaiser, Catholic Healthcare West, HCA, Tenet, Adventist). While this was not a scientifically drawn stratified random sample, efforts were made to include a representative range of hospitals. The surveyors were volunteers, including both individual volunteers and those who work with various consumer groups, community organizations and health care unions. (See the appendix for list of organizations.) Unlike professionally trained surveyors for the Joint Commission on the Accreditation of Health Organizations or the National Commission for Quality Assurance, these volunteers were simply trying to do what an individual consumer, albeit a particularly energetic one, would do to try to determine whether the hospital offered a fair price to a low or moderate income consumer. These volunteers were not professional surveyors: neither is the average consumer who goes to the emergency room. These volunteers played two roles: first, as mystery shoppers and second, as representatives of community groups that assist patients. The one-page survey instrument is attached as Appendix A. The guidelines we checked for were part of “California Hospital Billing and Collection Practices: Voluntary Principles and Guidelines for Assisting Low-Income Uninsured Patients,” adopted by the California Healthcare Association’s Board of Trustees on February 6, 2004. The guidelines include 21 different bullet points. The survey focuses on the five elements of the voluntary guidelines that make up the section, “Communications of Financial Assistance Policies with Patients and the Public,” which are important for assisting the uninsured, and easily measurable to determine compliance. These elements (posting specific sign in emergency rooms, having knowledgeable staff, etc.) are also the easiest to implement, as opposed to, for example, structural changes within a computerized billing system. These elements could readily have been implemented in the eight months since the guidelines were released:
The survey also asked whether a financial assistance policy was posted on the hospital’s web site, which was included as a guideline not in the California Healthcare Association’s guidelines, but those of specific hospital chains and groups, such as that of the Alliance of Catholic Health Care. It should be noted that these “Voluntary Principles and Guidelines” are not posted anywhere on the website of the California Healthcare Association, making it difficult for an average consumer to be aware of them. The CHA guidelines do end with a note on implementation: “Most California hospitals have been using responsible guidelines for years as they work with uninsured patients who have limited financial resources. To the extent that changes are necessary, however, it understandably may take several months to retool billing and information systems to be in full compliance with these guidelines. Nonetheless, California hospitals are committed to be in full compliance with these voluntary principles and guidelines by the end of 2004.” Since it has been more than eight months since the release of these guidelines, and that these are the easiest of the guidelines with which to comply that do not require any retooling of billing and information systems, we feel it is appropriate to conduct this survey at this time, especially given that this issue has been around for years, and the hospital association claims that many of its hospitals have already been “using responsible guidelines for years.” Survey Results: Widespread Noncompliance - top - The results show widespread noncompliance by California hospitals with the voluntary guidelines on the communications of financial assistance policies. The most concrete indication was with the placement and content of the signs that the guidelines recommend throughout the hospital. However, the survey also did point out issues with regard to staff knowledge. Overall Communications
Signage on Financial Assistance
Getting Information
Language Access
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Only one of the 40 hospitals fully complied with the five California Healthcare Association guidelines for which we surveyed.
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