How much of a regulatory and legal predicament the not-for-profit hospital industry is in as a result of the uninsured billing/charity-care tsunami remains to be seen. There is no question, however, that a lack of clarity of mission and poor reporting by many in the industry invited this deluge of scrutiny.
Some hospitals and systems really do act like for-profits, and they threaten to damage the many providers with a patient-first mentality. The bad actors aggressively seek market share, force the highest possible prices on health plans (and therefore patients), pay their top executives outsized salaries, and go after unpaid bills with heavy-handed collection practices, including liens on homes and even civil arrest warrants.
Even those with a strong sense of community service frequently report a hodgepodge of data on "charity care" that includes bad debt, the cost of discounts to other payers and community health fairs.
To be sure, the issues that Congress is trying to grapple with are phenomenally complicated. It was particularly interesting to watch members of Congress wade into the issue of what hospital charge masters are and how to make them "accessible and understandable" to the general public. None of the five leading hospital industry CEOs at a House hearing was able to be of much help, probably because there really is no answer except to say that "retail hospital prices" are all but inexplicable. Medicare reimbursement rules, legacy prices, the need to have profit centers and a myriad of other factors make up a charge master.
Nor were any of the CEOs able to contradict a study of major hospital systems by the House Energy and Commerce Committee's oversight and investigations subcommittee, which found that hospitals billed some uninsured patients as much as 21/2 times more than patients covered by insurance and government programs.
Faced with almost certain legislative action and the class-action lawsuits filed by Richard Scruggs-the man who began the successful fight against Big Tobacco-the industry seems both extremely nervous and primed for a response. The American Hospital Association has persuaded 2,600 hospitals to sign its voluntary principles on discounting for the uninsured. Some in the industry have formed something called the Tax-Exempt Leadership Coalition to monitor developments (and undoubtedly to lobby against legislation). Anecdotally, a number of high-profile providers have publicized new policies that spell out discounts for the uninsured that are equal to or less than the discounts for private payers.
But as Rep. James Greenwood (R-Pa.), chairman of the oversight panel, said, none of these changes would have happened without pressure from lawsuits and the looming hearings. Make no mistake about it: Greenwood and House Ways and Means Committee Chairman Bill Thomas (R-Calif.) are on a mission and the issue will be revisited, with possible action on tax exemptions and charity care next year.
So the question is, what can be done to rectify this situation without harsh new regulations or billion-dollar settlements?
For one thing, providers are right in arguing that hospital uncompensated-care programs are being asked to cover for a societal problem-43 million uninsured. If something could be done about the share of that group that really needs help, that would reduce some of the financial pressures that force hospitals to cost-shift.
More immediately, not-for-profits need to prove that they are on a charitable mission first and foremost. Few believe that in aggregate not-for-profits don't provide more community service than for-profits. But each provider must clarify and promulgate its charitable activities, sharply discount bills for the uninsured and adopt patient-friendly billing.
Nobody expects hospitals to start posting signs with their prices at a cashier's window. But treating every patient fairly is not the same as giving away the store.