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And Yes, The Affordable Care Act Really Does Make Care More Affordable. Here’s One Example ….

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. What I uncovered wasn’t news, but it drove home how egregious the current system can be, why it so badly needs to be fixed, and how the Affordable Care Act (ACA) helps move us in the right direction.

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 payor 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.

But while that resolved that patient’s problem, it did nothing to change the broader practice. 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.
Some states have strictly limited what hospitals can charge low income patients. In California, uninsured patients with incomes below 350 percent of the federal poverty level (FPL) – $82,425 in 2013 for a family of 4 – can be charged no more than Medicare rates. In New Jersey, patients within 500 percent of the FPL cannot be charged more than 115 percent of Medicare.

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.

That’s the core point. Most health system executives have, at some time in their careers, released a friend or acquaintance from egregious pricing. Many have forgiven a debtor they didn’t know because the issue was raised and they knew how unfavorable it would look in the local media. In other words, most know that, while these practices are lucrative and mostly hidden, they are also disgraceful.

For that reason alone, it is time for health system leaders to stand up, announce that their systems will adhere to the ACA’s intention, stop pursuing self-pay patients as a windfall opportunity, and encourage systems throughout the country to follow their lead.

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

Brian Klepper, PhD is an independent health care analyst and Chief Development Officer for WeCare TLC Onsite Clinics. His website, Replace the RUC, provides extensive background on the role that the AMA’s RVS Update Committee has had on America’s health care cost crisis. This originally appeared in Medscape Connect’s Care and Cost Blog.

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Admitting Clerk (tm)
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Admitting Clerk (tm)

Political vitriol aside, healthcare facilities are to be required to offer to Self Pays what they offer insurance companies per the Section of the ACA mentioned. What you failed to point out is that hospitals often offer different contractual rates to different insurances. (BCBS may get 90+%, Cigna may get 60+%, Beechstreet may get 30+%) All a hospital has to do is meet the benchmark of their lowest common denominator (a Self Pay Discount of 30% in this case would be sufficient, but still doesn’t keep people out of medical bankruptcy – as the law was intended.) Which is a… Read more »

Joel Hassman, MD
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Joel Hassman, MD

Wonderful, so you yourself do this. This is extrapolated to every other doctor practicing in this country? I am glad you do the right thing, I think I do too. But, if you have 20% plus of our colleagues who DON’T, what is the endpoint to that behavior? Frankly, I read your rebuttals to either dismiss the concerns I raise about this incessant focus on profits in our profession, or perhaps an insidious acceptance of such behaviors and agendas? Plus the fact too many doctors continue to rationalize, minimize, and deny any consequences that arise from the erroneous expectation that… Read more »

Joel Hassman, MD
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Joel Hassman, MD

Because most here are commenting through the partisan playbooks of their party’s agenda, not expressing nor committed to any honest and sincere principles to what health care is about and should strive for further. And frankly, it is a no brainer what to do when these alleged NON profit centers for providing care are obscenely gouging the public for being a captive audience for care needs. The pervasive silence by what I believe is over 80% of our colleagues is not only astounding, but perverse. So, WHEN we see a sizeable portion of docs either try to be sole boutique… Read more »

Joel Hassman, MD
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Joel Hassman, MD

Oh, as a suggestion as a start, EVERY doctor should commit some appreciable amount of time treating those in society who are down and out, even if it is just 5-10% of your billable hours, so at the end of your day as a provider, EVERY patient in the community has access to care, whether it be the President or a homeless patient figuratively sitting together in your waiting room for treatment. That is a foundation expectation at least physicians should be accepting as a premise to doing what is right and responsible. Oh, also, profit margins are put back… Read more »

LegacyFlyer
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LegacyFlyer

Joel, We provide care to everyone that comes through the door at the hospitals we cover. The volume of non-paying patients at most of our hospitals probably exceeds 5 – 10%. And in our offices, when I have been asked if we can do a test for someone who needs it, but can’t pay, I have always said: “Ask them to pay what they can and we will do the test”. (Not sure that that always happens the way our offices are run today) And of course in the past, before the GOVERNMENT MADE IT ILLEGAL! we always gave professional… Read more »

Joel Hassman, MD
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Joel Hassman, MD

What is both sad and pathetic how politicians twist the differences between principles versus agendas. Principles in health care as a primary basis are do no harm and go from least to most invasive in interventions. PPACA, however, is based on agendas, everyone “deserves” health care and go from cheapest to most expensive interventions. Oh, also politics sees EVERYONE with diagnosis “A” gets the same exact treatment options from moment one. After all, this is the basis of everyone is equal and everything has to be fair. But, politics, especially these days by BOTH parties are almost solely driven by… Read more »

legacyflyer
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legacyflyer

Joel, This post was about how the ACA had prevented hospitals from charging outrageous amounts to patients without insurance. I believe that all the commenters were opposed to those kinds of charges. From there the discussion took off in a number of directions. Not sure why you are angry at the commenters. I am a practicing physician, who would like to see our country have a quality, cost effective health care system. Most others are similarly motivated, although have very different ideas about how it should be accomplished. What specific suggestions do you have on how things could be improved?

legacyflyer
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legacyflyer

Barry,

Can’t answer your question except to say that if they have made certain representations which they haven’t kept, we will remember at the next contract renewal – “Fool me once ….

As for the self pay patient, in theory you are right, however keeping cash is tricky, checks can bounce and credit cards have a discount on them.

Barry Carol
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Barry Carol

legacyflyer – I understand that imaging is a high fixed cost business. However, it troubles me that you give the large insurer a better deal without any guarantee of a specific minimum amount of volume per year. If I come in as a self-pay patient and I pay immediately by check, cash, credit card or debit card, I actually cost less to serve than an insured patient because you get your money immediately and you don’t have to file a claim. All you have to do is give me a receipt for my payment. I wonder how the large insurer… Read more »