Tenet Healthcare Corp., Santa Barbara, Calif., announced new billing and collection procedures for self-pay patients last week, signaling what some observers said might amount to a sea change in how the industry deals with the uninsured.
The company's "Compact with Uninsured Patients" largely conceded the claims of Consejo de Latinos Unidos, a Los Angeles-based Latino advocacy group that accused Tenet of price gouging uninsured patients. Both HCA, Nashville, and Tenet, the largest and second-largest for-profit chains, respectively, have met with the group's executive director, K.B. Forbes, to discuss their policies regarding the uninsured (Dec. 23-30, 2002, p. 12).
Scott Johnston, technical director of the Healthcare Financial Management Association and an expert in patient financial services, said Tenet's idea to offer the same discounts that managed-care contracts call for should be a best practice in the hospital industry. "I think a lot of people will be watching this and seeing how this works out," Johnston said.
Hospitals have been increasingly aggressive in their bill collection with the uninsured in recent years, Johnston said. They are turning more often to collection agencies, and lawsuits-which were "very, very rare" 10 years ago-are more frequent, though still small in number, Johnston said. In addition, hospitals also are more aggressive about checking patients' eligibility for Medicaid, he said.
Tenet's uninsured discount plan also raises accounting questions, such as whether the discount should be figured in a hospital's charity care or as a component of bad debt, Johnston said. Hospitals use bad debt and charity-care figures to justify their tax-exempt status or, in Tenet's case, to show their commitment to local communities. Richard Wade, a spokesman for the American Hospital Association, said even if Tenet's discount policy clears regulatory scrutiny, it won't have much effect on self-pay patients. "If the bill goes from $45,000 to $30,000, it's still beyond their imagination to be able to pay," Wade said.
Wade said the AHA has no plans to take a position on Tenet's discount proposal.
Wade dismissed the effects that a weak economy may be having on this specific issue, but he did say that the broad question of universal coverage has re-emerged. "(President) Bush talked (last week) about finding a way to cover everybody," Wade said. "We're starting to talk about it again, and it's the first time in more than eight years, since the early part of the Clinton administration."
Tenet said it would seek a legal opinion from HHS' inspector general's office that would allow its 114 hospitals to offer discounts to the self-pay patients. Medicare and other regulations require all patients to be billed at a hospital's gross charges, or list prices, unless a contracted discount is in place, Tenet spokesman Harry Anderson said. If regulators approve, self-pay patients would be offered a contract with lower rates. Patients would have the option to decline, Anderson said.
Anderson said the scrutiny of Tenet's much higher-than-average Medicare outlier payments led to an assessment of its pricing as it affects its three main payers-commercial insurance, government programs and self-pay patients. Tenet's outlier payments are being audited by HHS' inspector general's office.
Other probes of Tenet include two by federal authorities in California, an informal review of executive stock trades by the Securities and Exchange Commission, and a review of a Missouri hospital merger by the Federal Trade Commission. The Joint Commission on Accreditation of Healthcare Organizations, Oakbrook Terrace, Ill., has completed its surveys of 18 Tenet hospitals, but the results are not yet known, JCAHO spokeswoman Cathy Barry-Ipema said. The JCAHO review came after the probe of two physicians at Tenet's 188-bed Redding (Calif.) Medical Center was revealed.
Last week, Chae Hyun Moon, one of two physicians under investigation at Redding, said in a written statement that he suspended his cardiology practice as of Feb. 1 because his malpractice insurer refuses to renew his policy. Federal authorities are investigating whether Moon and Fidel Realyvasquez Jr., a cardiac surgeon at Redding, performed medically unnecessary procedures and then falsely billed Medicare. No charges have been brought against either man.
An Oct. 30, 2002, raid on Redding triggered a major sell-off of Tenet stock. Neither Tenet nor the hospital has been identified as a target of the investigation.
Under the compact announced last week, Tenet no longer will pursue collections lawsuits against patients who are unemployed or whose only significant asset is their home.
Tenet also said it has settled a group of lawsuits, which were consolidated in Orange County (Calif.) Circuit Court, brought by 10 self-pay patients who accused Tenet of unfair billing and collection practices. Consejo did not represent the plaintiffs but assisted them in finding lawyers. Terms of the settlement were not disclosed, and Tenet did not admit wrongdoing.
Forbes hailed Tenet's plan as "everything that we wanted," though the group plans to monitor Tenet's hospitals' compliance with the compact. Consejo will mobilize the 10 former plaintiffs to assist Tenet's efforts to lobby federal officials on the discount plan, said Forbes, who has been active in Republican campaigns and plans to push Tenet's case himself with officials from HHS and the Centers for Medicare and Medicaid Services.
Forbes had harsh words for HCA, however. He accused the company of dragging its feet and said he plans to begin an investigation of the practices of HCA and other hospitals in the Denver area, citing a series last week in the Denver Post on hard-nosed bill collection efforts there.
HCA spokesman Jeffrey Prescott said of Forbes, "If he really is interested in working with us, and if he's really interested in resolving the problem-not just generating headlines and lawsuits-then we would consider it."
Earl Lui, a senior attorney in the San Francisco office of Consumers Union, said Tenet's plan is just a first step. Consumers Union and other consumer groups are pushing the California Legislature to approve a bill that would tie the rates charged to uninsured patients to a publicly available set of prices, such as Medicare, Medicaid (known as Medi-Cal in California) or workers' compensation programs. Such a law also would give patients recourse if they believe they haven't been billed correctly, Lui said.
As for not pursuing unemployed patients in court, Lui said: "That's not much of a give-up by Tenet, because they were never going to collect from them anyway. You're not going to get blood out of a stone."