(COMTEX) B: Florida Hospitals Come under Fire for Sending Uninsured Patients Bigger Bills
Mar 21, 2004 (The Orlando Sentinel - Knight Ridder/Tribune Business News via COMTEX) -- Juan Torres passed out on his front lawn, clutching his abdomen.
An ambulance took him to Osceola Regional Medical Center in Kissimmee, where he received two CT scans, a painkilling shot and some blood work. Doctors sent him home after four hours, telling him he had kidney stones that would pass naturally.
His bill: $7,263.75.
Torres, who didn't qualify yet for the health insurance offered by his then-new employer, was flabbergasted by the size of his September 2002 hospital bill. But if he had been covered by a health plan, his insurance company would have probably gotten a bill half that size or less.
The hospital eventually turned the account over to a collection agency and was suing Torres until a lawyer hired by a consumer-advocacy group intervened.
"I still believe they were overcharging me," said Torres, 47, a truck mechanic from Kissimmee. "You've got to fight back for what's right."
Hospitals throughout the nation are coming under increasing attack for charging uninsured patients far more than they do the insurance companies that handle insured patients' bills.
Florida's hospitals, increasingly sensitive to the growing controversy, have proposed legislation that would require them to offer some discounts to some of their uninsured customers. Hospitals in New York, California and Colorado already have agreed to such voluntary-discount programs. And the U.S. House Committee on Energy and Commerce is conducting an inquiry into the industry's billing and collection policies for the uninsured.
"Pricing to the uninsured right now is very opaque and at times unfair," said Glenn Melnick, professor of health-care finance at the University of Southern California, who testified last year before another congressional committee studying the issue.
Hospital executives defend their policies for billing the uninsured. In Florida they say that the industry spent $1.5 billion last year on free care for uninsured patients.
"I challenge anyone in the state of Florida to show me an industry that does more to help consumers," said Rich Rasmussen, a spokesman for the Florida Hospital Association.
For years, health-care advocates' main focus in dealing with the growing ranks of the uninsured has been finding ways to extend medical coverage to more people. Inequities in the rate systems applied to uninsured patients versus insured patients have only recently moved to the forefront of the debate, largely because of the relentless campaigning of a Los Angeles-based consumer-advocacy group -- Consejo de Latinos Unidos, or "Council of United Latinos."
The group, which is waging campaigns in Florida and several other states, wants hospitals to give the uninsured -- many of whom never pay their bills -- the same discounts on medical services that insured Americans receive through their health plans.
Led by its controversial founder, K.B. Forbes, Consejo argues that uninsured patients often are charged as much as five times more for their care than the health plans that pay for the nation's insured patients.
And when uninsured patients can't pay, which happens often, they are frequently harassed and their credit damaged by the hospitals and hired collection agencies, Forbes said. Or they may be placed on high-interest payment plans that can take decades to pay off, he said.
"Hospitals' behavior against their uninsured patients has been abhorrent, and they need to face up to that," Forbes said.
In Torres' case, Forbes said, the insurer for a covered patient would have paid about $2,500 for the same ER services -- a two-thirds discount compared with the charges on Torres' bill.
Since his trip to the hospital, Torres said, Osceola Regional has called him at work and at home to demand payment. The hospital ultimately turned his account over to a collection agency and filed a lawsuit against him, though it dropped the suit after Consejo de Latinos Unidos hired a lawyer on Torres' behalf.
Torres has not paid any of the bill because, he said, the hospital would not discount the charges.
"They didn't try to work with me -- they just wanted their money," he said.
Florida's hospitals agreed in January to a legislative proposal backed by Gov. Jeb Bush that would require them to provide a minimum discount of 30 percent to some of the state's uninsured.
The plan would offer discounts to some uninsured patients with family incomes up to 300 percent of the federal poverty level -- or about $55,000 a year for a family of four.
But Forbes and other critics say the proposal would prevent too many people from getting a discount -- because they own a car, for example, or have a savings account or other investment. The proposed legislation would disqualify anyone with discretionary assets -- defined as savings, investments and non-homestead property -- totaling more than 50 percent of the hospital charges.
Iris Cotto took her husband, Gerardo Ramos, to Osceola Regional's emergency room in October after a bug bite became infected.
After receiving treatment, Ramos -- a self-employed cabinet installer who doesn't have health insurance because, he says, he can't afford the premiums -- was sent home later that night.
A few weeks later, the Orlando couple got a bill for $11,682.68.
Osceola Regional, which won't comment on either Torres' or Ramos' case, sent Ramos a letter in February demanding full payment. The letter threatened to turn the debt over to a collection agency and warned that the hospital intended to "pursue all legal and appropriate means to collect this debt."
Ramos' wife, Cotto, a Puerto Rican native who speaks little English, said she can't understand how her husband's care could come with such a high price tag.
"My husband is self-employed, and I don't work, so paying the bill is going to be nearly impossible," she said through an interpreter. "I just think I'm being overcharged for something that should be much less."
Hospital executives admit that charges for hospital services overall are often grossly inflated -- but fair. They say their billing policies for the uninsured often include free care and some discounts.
They blame inflated charges generally on Medicare, which imposed a complex reimbursement system in the early 1990s.
At that time, Medicare -- the federal government's health plan for the elderly and disabled -- stopped paying hospitals based on their actual costs. Instead, the government started a fixed-rate, take-it-or-leave-it plan. While actual costs meant little in the new system, the size and nature of the charges could influence what Medicare ultimately paid a hospital. So hospitals gradually ratcheted up their charges, hoping to qualify for higher reimbursement rates from Medicare.
Before long, stories of patients being charged $75 for a hospital gown or $25 for a single aspirin became commonplace. Torres, for example, was charged $2,348 for one CT scan and $3,273 for another, according to his bill from Osceola Regional. That's several times higher than the hospital's actual costs, Forbes said.
"The pricing structure of hospitals is really bizarre," acknowledged Rich Morrison, vice president of Orlando-based Florida Hospital. "We're still trying to find out how to get back to a place where there isn't a huge disconnect between charges and cost."
Until recently, hospitals had argued that they were prohibited by those Medicare rules from giving uninsured patients discounts similar to those negotiated by insurance companies.
But last month, U.S. Secretary of Health and Human Services Tommy Thompson, whose agency administers Medicare, said that wasn't true. "That suggestion is not correct and certainly does not accurately reflect my policy," Thompson wrote in a letter to the American Hospital Association.
Hospital executives now argue that their negotiations with insurance companies would become difficult -- if not impossible -- if uninsured patients were given the same discounts as the insurers. In return for promising a hospital thousands of insured patients, an insurer essentially gets a discount for buying in bulk, just as consumers do when they buy cartons of food or household goods at a wholesale shopping club.
Morrison, of Florida Hospital, said granting the same discount to both individual customers and bulk buyers would violate basic business principles -- and probably result in insurers demanding ever-bigger discounts, creating a money-losing spiral for hospitals.
"I'm going to have to give a whole rash of people the same discounts without a guarantee of timeliness and volume of payment?" Morrison said. "The insurers would say, 'I want a bigger discount.' "
Forbes, however, points to an agreement negotiated between Consejo and Santa Barbara, Calif.-based Tenet Healthcare Corp. in 2003. It requires the chain, which operates hospitals nationwide, including 15 in South Florida, to grant its uninsured patients discounts that are within a few percentage points of those negotiated by insurers.
Tenet also settled several lawsuits filed by Consejo on behalf of uninsured patients who had accused Tenet of price-gouging.
Steven Campanini, a Tenet spokesman, said the company hopes to start using the new discount system in most of its hospitals by the end of June. By offering discounts, Tenet also hopes that more uninsured patients will pay their bills, he said.
"Tenet's compact with the uninsured is an industry-leading solution that we feel could be widely adopted," Campanini said.
USC's Melnick said that, until hospitals are forced to publicly disclose their costs, their fee schedules, their discounts and their collection policies, it will be difficult to eliminate inflated hospital costs and the harm they cause the uninsured.
"This is an area that has gotten out of control quickly and that we don't know much about," he said. "The best thing is to use social pressure and disclosure to figure out the extent of the problem."
Osceola Regional officials say their hospital's parent corporation, HCA Inc., recently started a sliding-scale discount program for uninsured patients, based on a person's income.
"I think we put a very fair process into place to help us respond to our patients' needs," said Mike Scialdone, Osceola Regional's chief financial officer.
Florida Hospital also gives uninsured patients a break on their bills using an income-based sliding scale. Families with household incomes within 200 percent to 400 percent of the poverty level are eligible for price breaks, which also are based on the size of the patient's assets and investments. And those who qualify cannot be billed more than 20 percent of their household's total income.
But Melnick said hospital discount plans often are confusing and applied unevenly.
"The process by which they do that [apply discounts] is ad hoc at best and probably in a lot of cases unfair," Melnick said. "Two people can go in and use the same services and get billed differently."
Some health-care experts doubt that bigger discounts would improve the low repayment rate among uninsured patients. Many uninsured patients are unable -- or sometimes unwilling -- to pay their bills regardless of the amount, they said.
"The price that most uninsured patients pay for hospital care is pretty good -- it's zero," said David Webster, president of Webster Consulting Group, a Bethlehem, Pa., firm that works with health providers such as hospitals.
Diane and Ed Jellison spent 20 years running a successful commercial-roofing business. It all ended Jan. 3, 2002, the day Ed collapsed in their Orlando home and suffered a series of grand mal seizures.
Diagnosed with encephalitis, Ed spent two weeks in a coma at Florida Hospital Orlando. When he awoke, he could barely speak and suffered some permanent memory loss. The bill for his 17-day hospital stay: $116,242.
Unfortunately for the Jellisons, they had let their health-insurance plan expire three months earlier because of frequent increases in the premium. They say they were shopping for a new, cheaper policy at the time of Ed's illness. But without coverage, they were responsible for the entire hospital bill.
The Jellisons no longer had any income -- they had been forced to close the family business because of Ed's permanent disability. But Florida Hospital used the couple's tax returns from the previous year -- when they were both working -- to determine their eligibility for a discount. So instead, the hospital offered to settle the bill for $80,000, about the equivalent of a 30 percent discount.
But that offer was good only if the couple paid the whole amount within 30 days, Diane Jellison said. Florida Hospital later rejected the Jellisons' offer to pay $30,000 -- about $10,000 cash and $20,000 from a home-equity loan, she said.
Forbes said an insurance company probably would have been charged only $25,000 for a hospital stay like Ed Jellison's. Morrison -- who denied that the couple had ever offered to pay $30,000 -- said an insurer's bill would have been closer to $60,000.
The hospital eventually turned the Jellisons' case over to a collection agency.
"I would love to have this settled, but they have treated us so badly," Diane Jellison said. "They victimize the very people that can least afford it."
Walter Pacheco contributed to this report.
By Greg Groeller
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(c) 2004. Distributed by Knight Ridder/Tribune Business News.
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