Good State Laws and Policies About Hospital Billing
Information From a Conference Call With Consumer Health Assistance Programs
Speakers: Grace Rollins, Service Employees International Union, Connecticut; Jocelyn Guyer, Kaiser Family Foundation, Washington, DC
I. Hospital billing of uninsured patients: Helpful state and local laws
Connecticut
In 2003, Connecticut passed a law to increase disclosure requirements about resources available at hospitals for charity care. Most patients who were pursued for payment had no idea that charity funds were available to them. Connecticut's Service Employees International Union actively publicized problems.
The Connecticut law, “An Act Concerning Hospital Billing Practices,” Public Act 03-266, Connecticut Uninsured Discount Law, on www.cga.ct.gov, strengthened the law requiring hospitals to disclose the availability of free care. Connecticut had other requirements for disclosure, which Yale-New Haven was violating. Now, all hospital billing and collection agents, whether internal or external, have to include notice of various charity programs in every single collection notice they send out. The law stipulates what must be included in that notice. If a collector learns that a debtor may qualify for charity care, the collector must cease collection activities, even if a lawsuit is in progress or the collector has won a lawsuit. (A Know Your Rights handbook on hospital debt in Connecticut is available at http://www.ctneweconomy.org/.)
The law in Connecticut applies to any debt collector with whom the hospital contracts.
The law is intended to deter hospitals’ reliance on default judgments. For example, Yale-New Haven did not know the extent of a patient’s ability to pay and did not make any effort to find out about ability to pay before filing a lawsuit. Under the new law, Connecticut hospitals must determine whether a patient is eligible for free-bed funds before it can sue. Hospitals must also collect certain types of income information before they can sue.
Since 1994, section 19A-673 of Connecticut General Statutes, “Collections by Hospitals from Uninsured Patients,” has governed what hospitals can try to collect. A hospital is not allowed to collect more than the cost of providing care from any uninsured patient whose income is below 200 percent of the federal poverty level (FPL) and who was rejected from State Medical Assistance or Medicaid and who does not qualify for any other kind of insurance coverage. Hospitals should not be making a profit off of the poor. In Connecticut, this means a discount from normal charges of usually around 50 percent for these patients. Although this law has been in place since 1994, hospitals have been placing the onus on the patients to claim this discount. Advocates and people in Legal Assistance were not necessarily aware that this law is on the books.
This spring, a requirement was passed as part of Public Act 03-266 that hospitals have to determine whether patients qualify for this discount before they can sue. This requirement is important because hospitals will have to gather income information, find out whether a patient qualified for state assistance, and if the patient does qualify, help the patient apply for assistance. Hospitals cannot pursue legal action if they have not fulfilled those requirements.
Public Act 03-266 also provides that once a hospital does get a judgment against a patient, the patient has additional rights: acknowledgement that this is involuntary debt and not subject to the same kind of punitive debt collection tactics that Connecticut law normally allows. The maximum monetary judgment interest on hospital debt is now 5 percent. For other debts, the maximum judgment can be 10 percent. Until now, hospitals had been able to collect 10 percent. A special hearing is required before wage garnishment or bank execution is permitted, and a judge can only grant the hospital request if the patient has defaulted on a court-order payment schedule. The judge will look at the reasons for the default—was the person sick again? did the person lose employment?
New York
Long Island Health Access Monitoring Project has worked successfully for local and state laws to assist uninsured patients in learning about financial help. Their website includes laws and fact sheets (see www.lihamp.org).
Minnesota
The Minnesota Attorney General's office forged an agreement with hospitals in that state in 2005 about their debt collection practices. The hospitals agreed to charge a fair price for care and to use "diligence" to prevent impoverished patients from having wages garnished to pay hospital debt. A summary can be found athttp://www.ag.state.mn.us/consumer/pr/pr%5F050505hospitalfairpricing.htm
Colorado
A 2006 law in Colorado gets at a different hospital billing problem. Many insured patients who enter the hospital are assigned to ancillary providers, such as anesthesiologists, who are not in their health plan's network. The patients do not realize this until they get a bill.
Colorado's new law requires that "covered services or treatment rendered at a network facility, including ancillary services or treatment rendered by an out-of-network provider performing the services or treatment at a network facility, shall be covered at no greater cost to the covered person than if the services or treatment were obtained from an in-network provider." The full text is onhttp://www.leg.state.co.us/Clics2006A/csl.nsf/MainBills?openFrameset
under bill SB06-213.
II. Disproportionate-Share Hospitals (DSH)
Jocelyn Guyer, Kaiser Family Foundation, gave an overview of federal Medicaid DSH provisions. Dating from the early 1980s, DSH was intended to give states a vehicle for providing hospitals that served a disproportionate number of low-income patients extra payment. While DSH is part of the Medicaid program, it is a different creature. Most Medicaid pays for services for people who meet Medicaid eligibility. DSH is a different program, where states make payments to hospitals. As a part of Medicaid, the state and the federal government split the costs. States send money to hospitals as DSH payments, and the federal government reimburses the states between 50 and 77 percent of the payment.
States have tremendous flexibility in how they operate DSH programs. They do not have to participate, and if they do participate, they have discretion over how much money they send to hospitals and whether they require hospitals to do anything in exchange for DSH payments. This year, DSH spending by the federal government is expected to be $9 billion, which is twice the size of the State Children’s Health Insurance Program (SCHIP).
The only federal requirement to receive DSH payments is that hospitals must have one percent of patient days be attributable to Medicaid patients. This is an extraordinarily low bar. The rest of the requirements are determined by the states. In some states, what determines which hospitals get DSH money is not the hospital’s need but “creative financing.” Ms. Guyer gave an example of a creative financing scheme: A state gives money to a hospital as a DSH payment, the hospital returns the money to the state, perhaps as a tax or assessment fee charged by the state to the hospital, and the state uses the hospital’s payment as the state share of Medicaid and collects federal matching funds. While there have been some restrictions on these schemes since the 1990s, some states still use transfers of funds from hospital districts and state-owned facilities to similarly generate federal Medicaid match without actually changing the amount of money or care available at an institution.
On the other hand, some states have done a good job of distributing DSH funds to hospitals that need the money to serve low-income patients. Georgia has made the effort to send a significant share of the federal DSH money to hospitals with large numbers of low-income and uninsured patients and has set up an accountability system. Hospitals that accept DSH payments have to meet certain conditions: assure that there are sufficient physicians on staff to treat Medicaid patients; tell patients which physicians with staff privileges accept Medicaid; help patients get to the providers who accept Medicaid; spend at least 85 percent of DSH payment on indigent care, so hospitals have to set up an eligibility process for determining which patients should be getting free and reduced-cost care. In order to get DSH payments, Georgia hospitals must agree to treat people with incomes below 125 percent FPL for free and with incomes between 125 and 185 percent FPL on a sliding scale (at least until they have used up a large share of their DSH funds for such care). Notices about free and reduced-cost care must be posted in waiting rooms, emergency rooms, admissions offices. Applications must be available to patients, and someone on staff must be available to talk with patients who have questions.
For information about the conditions Georgia imposes on hospitals receiving DSH funds, click here or see http://www.familiesusa.org/assets/pdfs/ICTF_Manual_07-01-030ea5.pdf for a pdf file of Georgia's Indigent Care Trust Fund Manual.
