HOSPITAL BILLING AND COLLECTION
AHA guidelines on providing financial assistance to uninsured and low-income patients
The American Hospital Association (AHA) on December 16, 2003 released two documents, a set of principles and guidelines and a legal white paper, on hospital billing and collections practices. These materials are posted on the AHA’s website at http://www.caringforcommunities.org/caringforcommunities/principles/hhs.html. The release was covered as a front page story in the Wall Street Journal and subsequently by other media.
The AHA issued these documents in the face of mounting criticism of some hospitals’ practices toward low-income uninsured patients. Reports by The Access Project, the SEIU, and others led to articles in the Wall Street Journal and other media detailing the impact of extremely harsh billing and collections practices directed at these patients including failing to inform people about eligibility for charity care, foreclosing on homes, garnishing wages, and even putting people in jail. A Congressional subcommittee is currently investigating 20 hospital systems regarding the high prices they charge the uninsured, and the Connecticut Attorney General has filed suit against Yale-New Haven Hospital for misuse of free care funds.
In a separate letter to Tommy Thompson, Secretary of the Department of Health and Human Services, asking for clarification of certain Medicare regulations affecting hospital billing and collection practices, the AHA acknowledges that an unfair burden is placed on low-income uninsured because, as they don’t have access to the steep discounts set by the government and negotiated by insurers, they are often expected to pay higher prices for the same services than those with insurance. The AHA also acknowledges that some hospitals have been inconsistent in their billing and collections practices and/or have done a poor job of communicating them to clients.
We believe the AHA materials may be of great value to those of you who are working to help low-income uninsured people faced with crushing medical bills and resulting long term debt. However, the materials and some of the underlying regulatory issues are confusing and easily misinterpreted. We’ve tried to highlight some key points to help you use the release, and related developments, as part of your campaigns to advocate for more humane hospital billing and collection practices:
1. While the AHA says that complex Medicare regulations are a barrier to reducing prices for the uninsured, its legal paper and comments from officials at the Centers for Medicare and Medicaid Services (CMS) make clear that hospitals can provide discounts based on “indigence,” as long as need is documented. According to Tom Gustafson of CMS, “…hospitals can and do make discounts for the uninsured. They have to go through a process to get there.” The definition of indigence is left to the hospital, and may include consideration of the size of a bill relative to the patient’s income. It is true that Medicare regulations are less clear on discounting prices for all uninsured patients regardless of their income.
2. According to the new AHA guidelines, hospitals should:
- Make public and available their charges for services
- Review current charges to ensure that they are “reasonably related to both the cost of the service and to meeting all of the community’s health care needs”
- Provide financial counseling to patients about their hospital bills
- Have understandable written policies to help patients determine if they qualify for public assistance or hospital-based assistance programs
- Ensure that all written policies for assisting low-income patients are applied consistently, and share them with appropriate community health and human services agencies and other organizations that assist people in need
- Educate hospital staff about these policies
3. The AHA guidelines on debt collection practices are somewhat vague, and not as strong as recommendations the organization made in an advisory memo to its member hospitals in June. The new guidelines simply call on hospitals to define the practices used by their outside collection agencies and develop written policies about when and how patient debt is advanced for collection. The June memo had encouraged hospitals to make sure that their outside collection agencies’ behaviors reflected the policies and values of the organization.
4. In a related development, HCA Inc., a major for-profit hospital chain, after receiving a formal approval from CMS, began implementing its program to provide financial relief to uninsured patients who earn up to twice the federal poverty level, and a sliding scale to patients who earn up to four times the poverty level. HCA had announced this program, pending CMS approval, with great fanfare in March of this year; however, it has been much less public about the fact that it received approval and began implementing the program on October 1st.
5. Groups and officials in various states (
California, Connecticut, ) have proposed legislation that would limit or prohibit certain hospital billing and collection practices. Some of the proposed legislation includes requiring hospital debt collectors to notify people about free care on all bills and notices, prohibiting hospitals from filing collection lawsuits against patients eligible for free care, setting required levels of discounts for low-income uninsured, and setting a cap on interest rates hospitals can charge on hospital debt. Illinois Connecticutand have actually enacted legislation. Illinois
Community Catalyst has created a model free care act that may be of use in your efforts. See its website at http://www.communitycatalyst.org for a compendium of state laws regarding free care.
The PATIENT FRIENDLY BILLING® project is a nationwide, cross-industry initiative, lead by HFMA, to make financial communications to patients clear, concise, and correct. The latest report and worksheet provide knowledge on how to review and update financial assistance policies for uninsured and underinsured patients. We feel that these AHA materials, and the comments from CMS, help to clarify steps hospitals can and should take to provide financial assistance to uninsured patients. We encourage consumer advocacy groups to utilize this information in efforts to improve access for people without health insurance. If you have any questions or need more information, please contact us at firstname.lastname@example.org or call (617) 654-9911.