Hospitals sock it to the uninsured, study says

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The San Francisco Chronicle

Despite efforts by hospitals to curb aggressive collections practices, a study released Tuesday found the uninsured in California still pay more on average for services than government payers such as Medicare.

Researchers for the Rand Corp. and the University of Southern California found the state’s hospitals collect a higher percentage of their listed charges from the uninsured than they do from Medicare.

Uninsured people are typically billed the highest prices for hospital care — the so-called retail rate — because government and commercial payers negotiate steep discounts.

The study, to be published today in the journal Health Affairs, analyzed data submitted from 2001 to 2005 by hospitals to a state agency.

From 2001-2002, hospitals collected 18 percent more of their charges from uninsured than from Medicare patients, a percentage that increased slightly to 20 percent of charges in 2004-2005.

Researchers concluded actual net prices paid by the uninsured increased during the study period because the uninsured paid the same or higher rates than Medicare from 2001 to 2005, a period in which Medicare increased what it pays to hospitals by about 13 percent.

Hospitals in California and nationwide have been sued over the past couple of years for unfairly charging uninsured patients much higher rates. In 2004 and 2005, California hospitals voluntarily agreed to offer patients with low to moderate incomes managed-care-style rates.

“Hospitals have started to adjust prices to the uninsured somewhat, but not substantially. The study shows they continue to raise prices to the uninsured during this period,” said the study’s author, Glenn Melnick, USC professor of health economics and Rand economist.

But hospital officials criticized the study for failing to reflect recent changes the industry has implemented to provide some relief for the uninsured.

“It’s a nice piece of history but it’s completely irrelevant to what’s happing in hospitals today,” said Jan Emerson, spokeswoman for the California Hospital Association. Emerson said hospitals are motivated to work with patients because they will be more likely to find some source of reimbursement.

A 2006 California law, written by former Assemblywoman Wilma Chan of Oakland, requires hospitals to offer discounts to uninsured people who earn as much as 350 percent of the federal poverty level.

The law went into effect Jan. 1, 2007.

As part of the law, the state unveiled a new Web site in January that helps consumers compare charity care policies at California hospitals.

In addition, lower rates for the uninsured and less aggressive collections practices have also been negotiated as part of settlements with several hospital systems, including Sutter Health in 2006 and Catholic Healthcare West in 2007.

Consumer advocates agreed that uninsured pay high hospital rates, but they pointed out some limits to the study.

“What we’re not getting here is information about the utilization and quality of care those people are receiving,” said Jerry Flanagan, health policy advocate for the Foundation for Taxpayer and Consumer Rights. “Just because the uninsured are paying a higher level of charges doesn’t mean they’re getting the same level of care.”

Because the study relied on averages, it failed to show that some patients diligently pay large bills while others don’t pay at all, said Anthony Wright, executive director of Health Access California.

That makes the average look the same or only slightly higher than Medicare, but does not reflect the fact some people are paying two to four times those rates.

“This is the case of some people boiling and some people freezing so average temperature is mild,” he said.

The study was funded by the USC Center for Health Financing, Policy and Management and the Robert Wood Johnson Foundation.

How to deal with hospital bills:

If you are uninsured and find yourself stuck with a large hospital bill:

– Don’t stick your head in the sand. Ignoring the bill will cause the hospital to assume you will not pay, and you will probably be sent to collections.

– Try to negotiate lower rates. You may qualify for discounts or even free care. Don’t assume the hospital will inform you about its charity care policies.

– Keep meticulous records and check all bills for errors.

– For information about discount and free care policies at California hospitals, visit:

Consumer Watchdog
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