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May 5, 2005
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| Attorney General Mike Hatch announced an agreement with Minnesota hospitals Thursday to reduce the cost of hospital stays for patients without insurance coverage. (MPR Photo/Tom Scheck) |
St. Paul, Minn. — The four hospital systems include Allina Health System, North Memorial Health Care, Park Nicollet Health Services and HealthEast Care System. Together they have 18 hospitals. A similar plan by Fairview Health Services was made public last month.
Under the terms of their agreement with the state, the hospitals will extend their preferred rates to uninsured patients who earn less than $125,000 a year. Attorney General Mike Hatch says the decision corrects an unfair billing practice.
"Those people who can't afford insurance coverage are the ones who get caught between a rock and a hard place. They can't negotiate," says Hatch. "They walk in, and they're still paying this charge master list, which is two to three times higher."
A charge master list is the list price that hospitals charge for specific services. Hatch says in the 1970s, the charge list more accurately reflected a hospital's true expenses. Today, he says, the list price is not even close to what a big insurer would pay for a procedure.
To illustrate his point, he pulled out a bill belonging to an unidentified patient. The bill from a Twin Cities hospital, dated August 2004, charged $4,200 for a radiology procedure. But right off the top, the hospital discounted its services by $3,300 before submitting it to a major insurance company. So the final bill was only $729.
Hatch says typically, uninsured patients would never get a discount like that. But they will with this agreement.
"There are lawsuits in this country right now that say, 'Hey, wait a minute. This is consumer fraud. This is wrong,'" says Hatch. "These hospitals sat down, and there was some pretty tough negotiation that went on, but they came to an agreement. I think that's a good thing."
The hospital systems have also agreed to improve their debt collection practices. They adopted a zero-tolerance policy for abusive and harassing debt collection conduct. And they have agreed not to push for the arrest of patients who owe them money. They also will give patients more chances to pay their bills before garnishing their wages.
The four hospital systems are members of the Minnesota Hospital Association. The president of that organization, Bruce Rueben, says the agreement wasn't an easy decision for any of the hospitals because they will have to make up the discounts somehow.
"Obviously, when you lower the price for any of the patients, there's a financial consequence of that," says Rueben. "But it's important that hospitals demonstrate their commitment to treating patients in a fair and appropriate manner, and that's why we are pleased to establish a community standard like this."
Rueben says the agreement will be sent to all Minnesota Hospital Association members in the hopes that more hospitals will sign on to the plan.
But he says for some hospitals it might pose an unreasonable financial burden, depending on whether they get most of their money from insurers or from government health programs which have lower reimbursement rates.
Still, State Sen. Linda Berglin, DFL-Minneapolis, says it's possible the agreement will bring in more revenue for hospitals.
"I believe hospitals will benefit by seeing more of their uninsured patients paying a bill, because they find the bill to be a fair bill," says Berglin.
Berglin says even though the agreement is very good news for Minnesotans facing hefty hospital bills, it's not a substitute for providing affordable health coverage to the state's more than 400,000 uninsured people.
"People should have insurance. Because even if you're healthy, anybody can have an accident, anybody can have something happen to them where they need health care," says Berglin. "And believe me, even wealthy people are not really in a position to afford the bills they're going to get if they need hospital care."
A plan approved this week by the DFL-led Senate would expand Minnesota's subsidized health insurance program called MinnesotaCare. But the Republican-controlled House and Gov. Pawlenty have proposed vastly different plans that would cut thousands of people from that program to help balance the state budget.
The four hospital systems that are extending discounts to uninsured patients say they're worried they'll have a more difficult time absorbing those costs, if more people are cut from MinnesotaCare.
The agreement between the hospitals and the state takes effect immediately. It lasts for two years.
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