Consumer advocates declared victory while hospitals expressed cautious optimism following HHS Secretary Tommy Thompson's assertion last week that hospitals can legally offer discounts to uninsured patients.
In a brusque letter to American Hospital Association President Richard Davidson, Thompson said federal rules don't prohibit hospitals from giving price breaks to individuals. The declaration, which was accompanied by six pages of question-and-answer guidance, fell short of the legal safe harbor requested by the AHA but could accelerate hospitals' efforts to temper their billing and collections practices and attempt to put an end to embarrassing publicity over the issue.
Thompson's response came two months after the AHA blamed "vast and confusing federal regulations" for hospitals' unwillingness to cut prices for uninsured patients.
Hospitals "have been hiding behind their interpretation of Medicare rules. Now, they're no longer going to be able to do that," said Susan Sherry, deputy director at Community Catalyst, a national consumer advocacy group that has published a model free-care policy for hospitals. "Whether they care about people in their community who are under- and uninsured should be the determining factor now."
Already in recent months, at least four state hospital associations and the AHA have issued guidelines on how hospitals should bill the uninsured and underinsured (Feb. 9, p. 8).
But last week, some hospitals said it was premature to say how the document would affect their policies. "We haven't had the oppor- tunity to study those guidelines," said Laura Wegscheid, a spokeswoman for Centura Health, a 12-hospital system based in Denver, which said last year that it had scrapped a plan to reduce charges to uninsured patients because the program could have been misconstrued as an inducement for Medicare referrals.
In his letter, Thompson called "not correct" assertions contained in a letter the AHA's Davidson sent to him in December, which Thompson said suggested that HHS regulations require hospitals to bill all patients using the same schedule of charges. The HHS guidance summarizing federal policy on billing and collections for uninsured patients and Medicare beneficiaries was a response to an AHA "white paper" outlining regulatory stumbling blocks, which was published in December.
"With this as a guidance tool, I strongly encourage you to work with AHA member hospitals to take action to assist the uninsured and the underinsured and therefore, end the sitation where, as you said in your own words, `uninsured Americans and others of limited means are often billed and required to pay higher charges,' " Thompson wrote.
Davidson was not available for comment, an AHA spokesman said.
HHS rejected the AHA's request that the agency create a safe harbor for discounting or waiving charges, augmented by an advisory opinion process, and a panel including hospitals to explore solutions to regulatory barriers that block hospitals from assisting patients of limited means.
In a conference call with journalists, acting CMS Administrator Dennis Smith and acting Principal Deputy Inspector General Dara Corrigan said they don't see a need for the government to delineate a safe harbor in the law.
Smith said the summaries of existing policies "should be sufficient information. ... I think these are very straightforward and any hospital should be able to review their practices within them." He and Corrigan said that included Tenet Healthcare Corp.'s request for an advisory opinion on its billing and collections practices for the uninsured, which is pending with the agency.
A Tenet spokesman said the company was still studying the guidance and expected to decide this week whether to continue the advisory opinion process. The Federation of American Hospitals, which represents investor- owned companies, called it a "useful roadmap" with "substantive guidance (that) should help end confusion."
But Smith admitted that existing federal policies were "scattered here and there, and we thought it would be helpful to pull a document together that could serve as a single source of information that could address these very important questions."
Corrigan said the agencies "have come together to make sure there are no barriers in this area, except in very limited circumstances." In the published guidance and comments to the media, federal officials stressed that it's up to hospitals to set their own policies on who qualifies for free or discounted care.
But some gray areas remain. For example, Corrigan said hospitals have to be "a little bit careful" in waiving deductibles or copayments for Medicare patients so that they are not generating more Medicare business. Also unclear are the steps hospitals can take to educate patients about the availability of financial assistance without straying into general advertisements that might be interpreted as an effort to induce Medicare referrals.
Despite their insistence that existing rules are clear, both Smith and Corrigan urged hospitals to contact their agencies if more guidance is needed. "Certainly, serving the uninsured is a very high calling, and we want to encourage (hospitals) to help," Smith said.
AHA spokesman Richard Wade said the guidance "does provide some clarification," but it's still uncertain how much flexibility hospitals can build into their indigent policies. "This is good, but we need to have more conversation (with HHS) so we can give our members some comfort level," Wade said. "We want to be sure that when our members start to do things, we don't run into some little glitch in the law."
Wade said a safe harbor provision "largely would have eliminated the need for clarification."
Wade said AHA and HHS officials met a few weeks ago but did not negotiate what the government's response would be to Davidson's letter. "When (the letter) came out in December, they felt a little like we didn't give them enough advance notice. There was a little bit of tension there that needed to be addressed," Wade said.
He added, "I'm sure one of the reasons they didn't get back to us for a couple of months was that they were trying to gather all of this stuff up."
A congressional probe into hospital pricing for the uninsured continues and hearings are expected this spring, said a spokesman for U.S. Rep. Billy Tauzin (R-La.), one of two members of the House Energy and Commerce Committee who launched the probe in July 2003.
Tauzin resigned the committee chairmanship last week after dodging questions about his job negotiations with the Pharmaceutical Research and Manufacturers of America shortly after helping to pass Medicare drug benefit legislation.
While the hospital industry has attempted to defend its practices, hospitals' treatment of the uninsured is fast becoming an election-year issue. As the Bush administration's healthcare chief denied culpability last week, hospitals in several states have been fighting proposals to regulate their pricing practices.
For example, an Illinois Senate committee led by Democratic U.S. Senate candidate Barack Obama advanced legislation last week that would require hospitals to treat uninsured patients at or below cost and curtail aggressive collections practices, according to a Modern Healthcare sister publication, Crain's Chicago Business.
The legislation followed allegations leveled against one of the state's largest healthcare systems, Advocate Health Care, by the Service Employees International Union. Advocate has sued the union for making allegedly defamatory remarks about Advocate's pricing and collection practices in an effort to pressure the 10-hospital system into letting the union organize its employees, according to the magazine.
Consejo de Latinos Unidos, an advocacy group that has accused hospitals of price-gouging, hailed HHS' rebuke as a "victory." In a news release, Executive Director K.B. Forbes, a GOP strategist, said, "Like the segregationist in the 1950s who hid behind Jim Crow laws to justify their egregious and immoral behavior, some hospitals have attempted to hide behind phantom regulations to justify their egregious and immoral conduct. Secretary Thompson has demonstrated unwavering leadership and deep compassion for the uninsured, many who happen to be minorities, by removing those bogus barriers established by greedy hospitals and their stooges."
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