Obamacare delivers some good news for self-pay patients

It’s been hard to find good news about the Patient Protection and Affordable Care Act (more commonly known as Obamacare) of late. But there is one thing that not a lot of people are familiar with that has the potential to significantly help some self-pay patients.

Buried in the law is a requirement that non-profit hospitals establish a written policy for charity care, including who is eligible for the care, and make that policy publicly available. More importantly for self-pay patients, it imposes limits on what these hospitals can charge self-pay patients, potentially eliminating the problems associated with wildly inflated ‘chargemaster’ prices that the uninsured and those being treated out-of-network are often hit with

This feature of Obamacare was recently written up by Brian Klepper at the Care and Cost blog, excerpted below.

Predatory Health Care

Recently I was asked to intervene on behalf of a patient who, trapped by circumstance, was paying off an enormous bill for a lithotripsy procedure…

The patient had health insurance through her husband’s job. But it was cancelled just after the hospital validated it, because the employer failed to pay the premium. The procedure was performed, and the patient was charged as “self-pay.”

If Medicare had been the payer in this case, the hospital’s total reimbursement would have been a little less than $2,000. But the lithotripsy and associated costs were billed at $33,160, or just under 17 times the Medicare rate. After the patient applied for financial assistance, a 30% contractual adjustment was applied, reducing her bill to just under 12 times the Medicare rate.

If the health system had asked her to pay 190 percent of Medicare – typically the upper end of commercial insurance rates – her bill would have been about $3,800. By the time I was contacted, the patient and her husband – responsible people trying to make good on their debt – had already paid the health system $5,700 or 285 percent of Medicare. The hospital insisted they owed an additional $16,000.

I laid this out in a letter to the CEO and, probably because he wanted to avoid a detailed description of this unpleasantness in the local paper, he relented, zeroing out the patient’s balance. No hospital executive wants to be publicly profiled as a financial predator…

Most US health systems, both for-profit and not-for-profit, exploit self-pay patients in this way. Worse, not-for-profit health systems legally pillage their communities’ most financially vulnerable patients while getting millions of dollars in tax breaks each year for providing charity care. Aggressive collections procedures, including home liens, are widespread…

Section 9007 of the ACA took effect last year and prohibits excessive pricing for self-pay patients, and would revoke a charitable hospital’s tax-exempt status if it charges them more than it charges for insured patients. The language is ambiguous, conceivably allowing health systems to circumvent the law’s intent. But the spirit is clear. To keep their not-for-profit tax status and perks, health systems must stop taking advantage of self-pay patients…

In a stroke, this would improve American health care and make life better for millions of patients.

As Klepper notes, the language in Obamacare isn’t terribly clear, leaving some wiggle room. But the biggest loophole is pretty explicit – the limits on hospitals’ ability to gouge patients through chargemaster billing only applies to non-profit hospitals (about 60% of all U.S. hospitals, for-profit and public hospitals with similar ‘chargemaster’ rates are still free to abuse patients) and more importantly, only those patients who would qualify for the hospital’s charity care program are protected from chargemaster billing. And each hospital sets its own criteria for who qualifies.

I haven’t reviewed many hospitals’ charity care guidelines, but what I have read suggests that to be eligible to receive some form of charity care self-pay patients must have a relatively low income, usually less than 200 percent of federal poverty (about $23,000 for single person, $47,000 for a family of four), and must also be uninsured.

These are reasonable enough guidelines for charity care, but in this particular instance they leave millions of self-pay patients potentially at the mercy of hospital chargemasters if they have even moderate incomes or are being treated out-of-network.

Nevertheless, Section 9007 of Obamacare represents a victory for many self-pay patients, and whatever the other shortcomings and problems of the law and its implementation are, this part of the law should be celebrated and considered for expansion to provide this same protection to more self-pay patients.

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