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Survey of Selected Markets Finds More Charity Care for Uninsured

OCTOBER 12, 2005 -- A research group that tracks changes in the health care marketplace said Wednesday that many hospitals are easing eligibility for free care following lawsuits and bad press faulting facilities for charging uninsured patients more than insured patients.

"It is now common policy for hospitals to provide charity care to uninsured persons with incomes under 200 percent of poverty and offer sliding-scale discounts beyond this income threshold, in some cases up to 400 percent or 500 percent of the poverty level," said the study by the Washington, D.C.–based Center for Studying Health System Change. Twice the federal poverty level adds up to $38,700 for a family of four.

But Hispanic advocacy group Consejo De Latinos Unidos said HSC missed the mark in its study by not focusing more on uninsured middle-class Americans, who continue to take a huge hit under hospital billing practices.

"The real victims of price gouging, aggressive billing techniques, and ruthless collectors are middle-class uninsured families who are not poor enough to qualify for government aid or charity care, but are not wealthy enough or healthy enough to own private insurance," the organization said in a press release.

"These middle class uninsured families may own a home, have a decent paying job, or a college savings account for their children. Some hospitals target these hard-earned assets by charging the uninsured four or five times more than what they would accept as payment in full from an insurance company for the exact same care. The public relations induced guidelines that hospitals have adopted do little to help the middle class."

Nonprofit hospitals were rocked by suits filed several years ago by Richard Scruggs, the plaintiff's attorney whose litigation forced the tobacco industry to pay states tens of billions of dollars. "Virtually all of the suits against hospitals filed in federal court have been dismissed without merit, but state court action is still possible," the center noted.

Hospital industry critics say policies about how much or even whether to charge the uninsured for care too often are unclear. That has led uninsured patients who are eligible for charity care vulnerable to aggressive billing practices in some cases.

"In every HSC community, most hospitals have either recently changed their pricing, billing, and collection practices or tried to improve the clarity of the information provided to patients," said HSC research analyst Andrea B. Staiti, who cowrote the study with HSC Senior Researcher Peter J. Cunningham and Robert E. Hurley of Virginia Commonwealth University.

HSC's finding that pricing for the uninsured has become more generous is based on visits to 12 communities earlier this year. Researchers also found, however, that hospitals in some cases "have engaged in other activities to manage their payer mix that inhibits access to care for some uninsured.

"For example, Jackson Memorial Hospital in Miami and Harborview Medical Center in Seattle, both county-owned hospitals, have started limiting non-emergency care provided to out-of-county residents and are working to attract more private-pay patients," the study found.

The flap over charging the uninsured the highest prices led to hearings in the previous session of Congress. The American Hospital Association said federal regulations made it difficult to charge the uninsured lower prices. Industry critics were skeptical, but the Medicare program issued clarifications of billing regulations. Hospital associations followed up with guidelines to members about billing the uninsured.

The study also found that changes in billing and collection practices didn't affect hospital profits.

"Almost all of the hospitals interviewed that had adopted more generous charitable policies indicated that expenses previously classified as bad debt have shifted to charity care write-offs, with little impact on hospital bottom lines," the study said.

The communities visited in the study were Boston; Cleveland; Greenville , S.C.; Indianapolis; Lansing, Mich.; Little Rock, Ark.; Miami; northern New Jersey; Orange County, Calif.; Phoenix; Seattle; and Syracuse, N.Y.

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