When the Healthcare Association of New York State quietly unveiled its new guidelines on financial aid and charity-care policy for its 230 members last week, it was not prepared for the rush of inquiries from hospitals throughout the nation.
"We have had dozens upon dozens of telephone requests from law firms around the country seeking copies of the HANYS hospital financial aid guidelines," said Monica Mahaffey, a spokeswoman for the group. "The level of interest in our members' recommendations is overwhelming."
Singed by the lawmakers, patient advocates, unions and media who have dragged hospital billing and collecting practices into the national spotlight of public opinion in the past year, hospitals are apparently doing a lot of soul-searching. And as state legislatures across the country deliberate bills that threaten to dictate how hospitals collect their unpaid bills, other state hospital associations, in addition to New York's, are working on pre-emptive solutions.
California, which in some ways set the stage for the national debate when consumer groups challenged Tenet Healthcare Corp. for its pricing policies, is the latest to approve new billing guidelines. Late last week, the California Healthcare Association approved a set of guidelines recommending financial aid to uninsured patients who earn less than 300% of the federal poverty level.
Also last week, Yale-New Haven (Conn.) Hospital found itself in hot water again when a group of patients announced they were suing the hospital and its affiliate Bridgeport (Conn.) Hospital for violating their rights under a new state law enacted last year to regulate hospital debt-collection practices. The class-action lawsuit alleges that the two affiliated hospitals are pursuing collections against uninsured and underinsured patients even after they were informed that the patients are eligible for charity care, in violation of the law. The lawsuit follows a class-action lawsuit filed last December by the Service Employees International Union 1199 New England on behalf of former patients who allegedly were illegally denied free medical care and "subsequently hounded" by the hospitals to pay their bills. Yale-New Haven officials vehemently rebutted the charges and said they were directly related to SEIU's attempt to unionize Yale-New Haven Hospital.
Hospitals are coming to realize that regardless of their good intentions to equitably collect what is owed to them, it's the public's perception that counts.
"The virtue here is both a blessing and a curse. We have to be society's safety net," said Daniel Sisto, president of New York's association. "Until there is universal healthcare coverage nationally, I think it's better to have the hospital community step up and fulfill its obligation with energy and enthusiasm rather than have the government initiate legislative solutions that would only exacerbate the problem."
The American Hospital Association has not conducted a comprehensive state-by-state survey, but so far it appears only three state hospital associations have developed billing guidelines, said Alicia Mitchell, an AHA spokeswoman. Only Connecticut has passed legislation regulating billing, although there are a handful of states that are considering legislation, including California, Florida and New York.
The Illinois Hospital Association was apparently the first to formulate formal charity-care policies and collection practices for the uninsured in September 2003-three months after the SEIU charged that the pricing of healthcare services at Chicago-area hospitals discriminated against the uninsured. The subsequent guidelines put forth by the Illinois group suggest offering a partial discount to the uninsured when the family's income is less than 200% of federal poverty guidelines.
New York's was the first association to step up to the plate since the AHA released a "white paper" last year outlining billing guidelines nationally (Dec. 22/29, 2003, p. 8).
Like the Illinois guidelines, the New York guidelines promise financial assistance to uninsured patients who fall below 200% of the federal poverty level, and they discourage attempts to garnish wages of the poor or force the sale or foreclosure of a patient's primary residence. Both state associations recommend that hospitals not use the threat of jail to force a patient to make a court appearance.
The New York guidelines break new ground in offering discounts to the uninsured similar to the discounts enjoyed by private health plans and government programs. The AHA has asked the federal government to clarify regulations that many hospitals believe may prohibit reduced rates. The AHA and HHS' inspector general's office were reportedly meeting late last week to discuss regulatory relief that would allow hospitals to provide more favorable billing policies for the uninsured and underinsured. Neither the AHA nor the inspector general's office would comment on the talks.
"Hospitals are taking a black eye for doing the right thing in what is perceived the wrong way," Sisto said. "I can't imagine that someone in the federal government is going to be outraged that we recommend poor people be discounted after a year of going after hospitals for outlier payments."
Some hospitals are going beyond state recommendations. For example, North Shore-Long Island Jewish Health System in Great Neck, N.Y., plans to provide assistance to people who earn up to 300% of the federal poverty level, said Terence Lynam, a system spokesman. By the end of March, all of the system's 11 hospitals will have implemented the new policy, which has been in the works for months, he said.
Late last week the California association approved a sweeping set of guidelines that have been under development for more than a year. The guidelines establish a floor of 300% of the poverty level for financial assistance and suggest hospitals turn patients over to collection agencies only as a last resort, said Jan Emerson, an association spokeswoman. They also encourage hospitals to make certain that there are clear agreements with collection agencies that support the hospitals' missions.
Emerson said it's probably too late for the guidelines to be pre-emptive; there already are two bills in the legislative process that would mandate certain charity-care practices. One would allow families earning up to 700% of the federal poverty level-$128,000 a year for a family of four-to receive financial assistance from hospitals, according to Emerson. That bill, which has passed the state Assembly, is in the Senate appropriations committee and waiting for action, she said.
"We think that's absurd, and we are not willing to go there, but the consumer advocates are not willing to sit down and work with us," she said. "We do hope by putting the guidelines out we will have an influence on the legislative debate, but we don't assume our publishing the guidelines is going to stop the bills."