Colorado hospitals charge their highest prices to the poorest, uninsured patients. That practice is now likely to end by late summer.
Most people don’t know that hospitals charge different prices to different people for the same procedure. “There’s price discrimination,” says state Sen. Irene Aguilar. She likened it to pricing a box of cereal at $1.50 for one person and $2 for someone else.
Aguilar is the force behind a bill to limit hospital charges to the low-income uninsured. The Denver Democrat has won support from the Colorado Hospital Association and Republicans. The bill passed out of a Senate committee on a 9-0 vote and is expected to pass.
The strange story of hospital billing practices came into being because insurance companies and federal Medicare and Medicaid programs negotiate lower prices for their patients.
“The uninsured are charged more than the insured, because they simply do not have the bargaining power,” said Debra Judy of the Colorado Consumer Health Initiative, another backer of the bill.
Here’s an example: A patient went to the emergency room at St. Joseph’s Hospital in Denver for back pain and was billed $1,000. When the patient finally persuaded the billing department that he was insured, he was told his insurance company only had to pay $212 for the same service. His co-pay was $200. The insurance company paid $12.
Exempla spokeswoman Debbie Welle-Powell explained in an e-mail: “The federal government requires that we charge all (payers) the same rates; however, payers pay differently. Some payers are able to negotiate significant discounts, while others may not have the negotiating clout.”
Aguilar’s bill would make hospitals give their best price, not their worst, to the low-income uninsured. That could cut their bills by half, or even more.
Medicare data show Colorado hospitals now charge nearly 400 percent of costs on average, though they don’t collect that much. It’s estimated the legislation would let the low-income uninsured pay the lowest price paid by a private insurer, which is closer to 100 to 150 percent of costs.
The limits will apply to individuals with incomes at 250 percent of poverty level. That’s $27,925 for a single person and $57,625 for a family of four.
The bill also requires hospitals to tell patients about their financial aid and payment plans. Many don’t publicize them now. Hospitals also would be required to give patients 30 days after a late payment before sending bills to collections agencies.
“This is just going to be such a positive change,” said Ailsa Wonnacott, whose family would have benefited from such a rule. She was born in America but raised in Britain, where health care is free. Just three days after arriving in the U.S. as an adult, her son had a seizure and fell. They had to rush to the emergency room, and had no insurance.
The Wonnacott family was offered a discount for paying immediately. So they did. And they thought they were done. It was only months later that they discovered thousands of dollars in additional bills for the hospital visit had never reached them in temporary quarters, and the bills had gone to collection. “My husband’s credit rating was trashed,” just as they were trying to buy a house, Wonnacott said.
If this legislation had been in place, she would have been told about the charity care program. It’s not quite clear if she’d have been told about the other bills associated with the hospital visit.
Wonnacott now works as the executive director of The Association for Community Living in Boulder County, where many of the working developmentally disabled clients struggle with hospital bills they can’t possibly pay. Typically, no one told them about a charity care program, a payment plan or applying for federal aid, Wonnacott said.
Recently, she was helping a disabled client, Linda Conlin, sort out stacks of medical bills and call the debt collectors. The hospitals should have signed up Linda for Medicaid. She qualifies, and it would have covered many of her expenses.
All of this trouble could be avoided with this legislation, Wonnacott said. And the hospitals would get paid more, if people had realistic options for paying, she added.
If that doesn’t happen, the legislation might raise prices to the better-off uninsured, and to people with insurance.
Aguilar won Republican support in part due to legislators’ own experience with strange hospital bills. Rep. Kevin Lundberg, R-Berthoud, told the Senate hearing about a relative’s bill being inexplicably discounted from $64,000 to $4,000.
“It’s just nuts,” he said. “I’m not sure if this is the cure, but the problem is unquestionable.”
Sen. Shawn Mitchell, R-Broomfield, was similarly interested in the problem, though he had a different solution. “I would prefer mandating a uniform list of prices that were publicly available.” Then customers could compare, he said.
Aguilar smiled in response and said, “Nobody knows what anything costs.” Hospital pricing has long been obscure, she said. A state database now being compiled is the first time anyone will have any sense of pricing.
Exempla, which runs four hospitals in Grand Junction, Lafayette and Denver, said it supported the bill because “it is consistent with our mission to care for the underserved,” Welle-Powell said. Exempla, run by the Sisters of Charity of Leavenworth, has a policy of providing free care for patients with up to 200 percent of the federal poverty level and subsidies for patients earning up to 400 percent.
That would be free for families of four with incomes up to $46,100 and subsidies for up to $92,200.