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Effective January 1, 2007, AB774 allows uninsured patients and patients with high medical costs who have a family income that’s less than 350 percent below the federal poverty level to apply for charity (free) or discounted care. The bill requires hospitals to maintain a written policy regarding discounts for financially qualified patients and allows patients to seek review from the business manager, chief financial officer, or other manager. Financially qualified patients are to be charged no more than the amount the hospital would receive from Medicare, Medi-Cal, Healthy Families, or any other government-sponsored health program in which it participates, whichever is greatest. Furthermore, hospitals must give financially qualified patients 150 days to negotiate bills before they are sent to a collection agency.

Despite the legislation, hospitals still overcharge regularly, says Dr. Geni Bennetts of Healthcare Billing Advocacy in Napa. The policies outlined in AB774 are rarely enforced “unless somebody like me challenges it.” Bennetts, former chief of the division of hematology/oncology and bone marrow transplantation at Children’s Hospital of Orange County, became aware of routine overbilling when she was paying emergency-room bills of her own. Since then, she has “hardly seen anything that wasn’t upcoded on something.”

“Upcoding” means using a code for a higher-paying item or procedure instead of the appropriate code. “It’s considered illegal,” says Bennetts, “but it’s done all the time.” The practice is particularly harmful to uninsured and underinsured patients. “People don’t choose to get $5000 to $10,000 deductibles,” Bennetts says of underinsured patients. “They get them because they are all they can afford. They go to the ER for a small operation and end up paying it all in cash. Those people are really stung.”

Common upcodings include medications charged at up to 6000 times their cost, billing for a 30-minute visit when the doctor leaves after 10, and billing for a higher level of treatment than was given. As an example of the latter, Bennetts once worked with a woman who had her throat and ears examined before being prescribed cough syrup. She was billed $1390 because it was coded as an emergency-room visit.

“Some people think it’s their dumb luck,” Bennetts says, “but they’re coming to realize it’s everyone’s dumb luck.”

Meanwhile, the nation’s five largest health insurance companies made combined profits of $12.2 billion in 2009, up 56 percent over 2008. The companies — WellPoint, UnitedHealth Group, Cigna, Aetna, and Humana — covered 2.7 million fewer people than they did in 2008. Premiums have simply become unaffordable.

Phil notes that if patients were charged what he ultimately paid (about 150 percent of the Medicare payment), insurance would be largely unnecessary.

In a revealing letter dated February 19, 2004, Tommy Thompson, then secretary of the U.S. Department of Health and Human Services, discussed with the president of the American Hospital Association, Richard Davidson, the association’s rationale for charging the uninsured higher prices. “Hospitals charging the uninsured the highest rates is a serious issue that demands all of our attention,” Thompson said. He continued, “Your letter suggests that HHS regulations require hospitals to bill all patients using the same schedule of charges [chargemaster] and suggests that as a result, the uninsured are forced to pay ‘full price’ for their care.”

Thompson went on to write that hospitals are encouraged to give charity care and discounts to poor and uninsured patients. In fact, Medicare was already subsidizing hospitals $22 billion a year to help offset the costs of charity care and another $1 billion for bad debt associated with serving Medicare clients.

The letter concluded, “I strongly encourage you to work with AHA member hospitals to take action to assist the uninsured and underinsured and therefore, end the situation where, as you said in your own words, ‘uninsured Americans and others of limited means are often billed and required to pay higher charges.’”

The American Hospital Association declined comment on this story but referenced the Healthcare Financial Management Association, which is “spearheading a patient-friendly billing project and can talk about the factors that go into a hospital bill.”

California Department of Public Health spokesperson Ralph Montano says his department is responsible for enforcing AB774 and encourages anyone who suspects that a facility is not following this law to contact the department and file a complaint. If you are uninsured, you are entitled to negotiate your bill down to the price paid by Medicare, Medi-Cal, Healthy Families, or any other government-sponsored health program in which it participates, whichever is greatest. A complaint can be filed on the department’s website.

Charity Care

Of the 4518 Medicare-certified hospitals in the nation in 2003, 58 percent were nonprofit, 18 percent were for-profit, and 24 percent were government owned, according to a 2006 Congressional Budget Office report.

Nonprofits, in theory, invest their proceeds back into providing health care rather than distributing earnings to private investors. They are exempt from paying federal taxes. In 2002, the report found, nonprofit hospitals received an estimated $12.6 billion in federal, state, and local tax exemptions. In exchange for exemptions, nonprofit hospitals are required to provide charity care and community benefits, though the Congressional Budget Office report admits there is “little consensus on what constitutes a community benefit or how to measure community benefits.”

“Hospitals are not required to provide a certain amount of charity care annually to maintain tax-exempt status,” says John Cihomsky, Sharp’s vice president of public relations and communications. “In California, private not-for-profit hospitals are required to comply with Senate Bill 697 by annually reporting the economic value of community benefits, including charity care. SB697 requires hospitals to conduct collaborative community planning and develop benefit plans that address identified community needs. The community-needs assessment is conducted by the Community Health Improvement Partners. The fiscal year 2009 community benefit report submitted by Sharp HealthCare identifies $342.5 million relating to unreimbursed community benefits.”

“In Nevada, the hospitals I heard about usually offered charity upon finding out the patient had no other form of payment,” says Talina Smith, the health-provider billing agent. “Other states typically waited until the patient requested some kind of help. The hospital chain I worked with in Colorado would run any unpaid accounts over a certain amount — I believe $10,000 — through a soft credit check at the end of the fiscal year and automatically apply charity to those accounts so they could obtain the maximum tax reduction.”

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Comments

elliott July 10, 2010 @ 1:13 p.m.

Great article. In these times we need stories like this and the useful supporting research. Thanks

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SurfPuppy619 July 10, 2010 @ 1:43 p.m.

I agree-excellent article-thanks for sharing!

Love this one;

“[Overbilling] is common practice,” says Brian Heller, Ph.D., a health-insurance consultant in Ohio. “Hospitals have to jack up their charges to offset the nonreimbursed or underreimbursed care they provide.”

However, the hospital in question states in its annual financial disclosure report that it lost $872,022 in 2008 to unpaid outpatient bills, an insignificant sum compared to the year’s $413,075,407 net patient revenue.

***Note that hospitals quote their unpaid bills and charity work at their billing rates, not their actual cost, which is typically about 25 percent of their billing.****

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mrsannoymous July 10, 2010 @ 6:22 p.m.

If you're going to write an article, you need to learn to do your research before you provide the public with a deceptive article from a woman that CLAIMS she only received 50% discount. If you have ZERO knowledge of the health care billing process, coding, customer service, and the ACTUAL steps providers take to help financial strapped patients, maybe you shouldn't always take the "supposed victim" side right away.

BTW to Chad Deal (writer), get your quotes right before you publish an article. Learn to do some math and get the real numbers before you provide the public with false information.

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Origami_Astronaught July 12, 2010 @ 9:19 p.m.

"...the hospital settled for $17,000 (6.8 percent of the original bill)..."

If you are privy to "real numbers" or any relevant information, I would be interested to hear about it.

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ChinaCat July 17, 2010 @ 7:15 a.m.

To mrsannoymous; Re cover story by Chad Deal; your remarks were so general and vague, it seems you missed the whole point of the story, which is Mary was offered a 50% discount up front the first time she called the hospital billing department. AFTER gross irregularities in the bill had been presented the hospital offered to settle for 6.8% of the original bill. Duh! I wonder why?

Also I can assure you, the numbers in the article are real and the fact that hospital billing departments don't seem to, or want to understand California law AB774 is also real. They are only too happy to pretend it doesn't exist or "doesn't apply in this particular case". They do not go out of their way to help "financially strapped" patients. The patients have to find the way, even though AB774 requires the hospital to state what charity care and discounts (2 very separate things) are available. I am still trying to get a copy of a certain hospital's written discount policy after months of first seeing the bill. AB774 requires that the hosital has such a written policy and presents it on request, but it doesn't happen that easily.

I'd be glad to answer mrsannoymous if he/she could be more specific.

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jv333 July 22, 2010 @ 12:15 p.m.

What an eyeful!! Great article with excellent and nightmarish data about the hospitals and healthcare system. I wish your cover would have had an eye-catching subtitle to draw more attention.

The invoice cited where the article started would have been good to put on the cover...along with the actual bill for $250,000.

or a simple "get well card from a hospital: "Your cost to stay 30 days in the hospital is $60,000 ... we're billing you for $250,000. Get well soon."

And people don't think something has to be done about health care? This is abominable. The least protected get screwed the most. Welcome to America.

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Jake July 22, 2010 @ 5:39 p.m.

This article came into my hands just in time for me to activate my own agenda to drive down my bill. I literally have the same situation. The hospital didn't want to admit that AB774 was even an option. Nearly everyone on the billing staff said they never heard of it. After having them read their own bill, asking for an audit, and writing letters to the billing department, my local legislators and the like, they have offered me a substantial cut in price, nearly 66 percent. But I'm not going to stop there and agree. I still will have trouble covering it and paying my monthly bills. I'm now negotiating the rate even lower, hopefully down to 85 percent of their inflated cost and then I will write a check and call it a day.

Don't let hospitals push you around. It's illegal to send you to debt collectors when you are eligible for the AB774 FAIR PRICE discount. The hospital I'm dealing with kept sending me to apply for medicare or CMS. But they never offered a FAIR PRICING discount which states that in nearly invisible ink on the back of the bill. The care was excellent at the hospital but the billing people are monsters. Why didn't they offer this discount from the gate and I would have been paying it off by now...?

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PaulAllen July 31, 2010 @ 2:05 a.m.

Jake I hope you read this.

Excellent article in the Reader BTW and I agree, VERY TIMELY.

Here is the scenario. I am currently on unemployment, I am uninsured and do not qualify for Medi-Cal but may have too much money in the bank to qualify for CMS. I think I might qualify for the discount payment policy as per Assembly Bill No. 774

I just got my ER bill (still waiting on the Dr. bill) from a recent visit for a hand wound. The ER bill is just ridiculous for the service I actually received.

Here is the question, according to AB774 it seems all I would have to provide to the hospital to see if I qualify for the the discount payment policy would be recent pay stubs or income tax returns. The hospital (which will remain nameless) apparently asks for more info, according to their paperwork they ask for checking account #, savings account #, CD/IRA/Stocks/Bonds value, etc. They seem to use the same form for both Charity Care and discounted payment, that seems sneaky to me. What info did you provide?? I cut and pasted the pertinent section (1) of the bill below. Any help is appreciated.

(1) For the purpose of determining eligibility for discounted payment, documentation of income shall be limited to recent pay stubs or income tax returns. (2) For the purpose of determining eligibility for charity care, documentation of assets may include information on all monetary assets, but shall not include statements on retirement or deferred-compensation plans qualified under the Internal Revenue Code, or nonqualified deferred-compensation plans. A hospital may require waivers or releases from the patient or the patient’s family, authorizing the hospital to obtain account information from financial or commercial institutions, or other entities that hold or maintain the monetary assets to verify their value. Information obtained pursuant to this paragraph regarding the assets of the patient or the patient’s family shall not be used for collections activities.

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Founder July 31, 2010 @ 7:54 a.m.

To both #7, # 8 and Chad Deal

Please consider keeping US posted about your efforts to reduce your bills!

I guess AB774 needs a penalty clause to keep providers from asking for "illegal" paperwork requests and or delaying to provide timely paperwork to their patients...

Also perhaps a followup story with a link to this one would help raise public awareness about these “These Gangsters" and you might also seek a public information request regarding these Providers financial stats as reported to the State and Federal IRS...

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ChinaCat Aug. 6, 2010 @ 7:08 a.m.

Re AB774: There is a ton of information on the Internet. The bill in the original article was not negotiated in terms of AB774, but was based on a slew of double and incorrect billings, for services that were not provided.

We are however currently negotiating another ER bill based on AB774 which clearly states the difference between Discount and Charity. For a Fair Price Discount all that is needed is a statement and proof of income to determine whether a)your income is below the Federal Poverty Level(FPL) or b) your medical out-of-pocket is more than 10% of your income. The hospital we are dealing with also requested savings and bank account statements, something they are basically not allowed to do for a fair price discount. Since we told them this some months ago, we have not heard back.

As you say, the hospitals good care is ruined by the predators in the billing departments. And why do doctors all belong to these national organizations that then rent them out to the hospitals adding another layer of expense and complexity, but contributing nothing to your care?

As Churchill said "Never, never, never, never give up". Non illegitimes carborundum!(Don't let the b*ds wear you down)

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Founder Aug. 6, 2010 @ 9:40 a.m.

Thanks for keeping US posted!

Other will profit by your experiences...

  • Here are some suggestions for getting billing issues ironed out fast:

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PaulAllen Aug. 6, 2010 @ 3:59 p.m.

OK update.

Made my first call to the hospital billing dept to attempt to take care of the emergency room part of the bill. Explained I am unemployed and uninsured and that the bill was too much to handle, also mentioned about 5 times I was prepared to make payment while I was on the phone. The woman I spoke with asked me what I could afford. I offered to pay 1/3 of the bill. The woman said they could offer a discount of 30% , leaving me to pay the rest. I thanked her for the offer, reiterated my situation and brought up the AB774 bill. She told me I would need to apply for Charity care and Discounted care at the same time and I think she said I had to go thru CMS as well. I asked her if I could come in and speak to someone in person and she gave me the run around that it's not how their office is set up. I politely pushed her to give me someone else to speak to who was her superior.

 The next person I spoke to, a man, asked what he could do for me.  I reiterated once again my situation and after a short period he said they could offer up to a %40 discount.  I again thanked him and explained about AB774 and how I understood the law, that  "For the purpose of determining eligibility for discounted payment, documentation of income shall be limited to recent pay stubs or income tax returns."  He repeated basically what the woman told me but did say I didn't have to fill out all of the info for bank acct#'s, etc but that I would then be eligible for less of a discount.

My understanding is Charity care can pay for the entire hospital bill depending on the situation. Discounted care (by name actually) is a "discount" "..to the amount of payment the hospital would receive for providing services from Medicare, Medi-Cal, Healthy Families, or any other government-sponsored health program of health benefits in which the hospital participates, whichever is greater."

Why can I not choose specifically which programs I apply for?? again..

"..Any patient, or patient’s legal representative, who requests a discounted payment, charity care, or other assistance in meeting their financial obligation to the hospital shall make every reasonable effort to provide the hospital with documentation of income and health benefits coverage. If the person requests charity care or a discounted payment and fails to provide information that is reasonable and necessary for the hospital to make a determination, the hospital may consider that failure in making its determination. (1) FOR THE PURPOSE OF DETERMINING ELIGIBILITY FOR DISCOUNTED PAYMENT, DOCUMENTATION OF INCOME SHALL BE LIMITED TO RECENT PAY STUBS OR INCOME TAX RETURNS."

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PaulAllen Aug. 6, 2010 @ 4:02 p.m.

continued..

I have NO problem giving them what they need to look at my case for Discounted care.

So here is where I am thus far.  I am wondering if I do only send in the info for Discounted care will I be disqualified due to me "...fail(ing)s to provide information that is reasonable and necessary for the hospital to make a determination..."  ??

After writing all of this it seems logical that Discounted care will cut at least %40 off an emergency room hospital bill if not more , otherwise why would they protect that option so much?

Whoever read this far thanks and any advice will be greatly appreciated. Continue the good and just fight!

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Founder Aug. 6, 2010 @ 5:08 p.m.

Reply to PaulAllen (I'm also adding these to my blog (see above)).

Rule #1. Don't let them get you to agree to any payment until you CLEARLY understand all your options.

Rule #2. Call again and refer to your notes because they are referring to their notes (on what you said) and ask to speak to another Rep or better yet the Boss.

Rule #3. Ask them to explain each of the laws to you and how it affects your bill (take good notes).

Rule #4. Call another Hospital's Billing Department and ask the same questions and see what their answers are, for a quick "Reality Check"...

Rule #5. Ask the Rep for the California State's Office of XYZ that you can talk to about what you are being charged; that will get their attention.

Rule #6. Consider getting a free legal consultation to see if you have other options; take you printed out "History" and watch the Lawyers eyes light up while he reads them... Then ask him if you should seek further legal help or go to Small Claims Court yourself.

Rule #7. While you are doing this, tell yourself you are getting paid $50 per hour, that will make you smile and in reality, you will probably be saving more than that!

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Origami_Astronaught Aug. 6, 2010 @ 9:26 p.m.

Excellent advice, Founder.

PaulAllen, it may also be worth your while to seek out the assistance of a Medical Billing Advocate such as Chapman or Bennetts (though your options are many with this and you would do well to shop around for the best rate) or request a bill with CPT codes from the hospital and decipher them yourself using the websites noted in the story. If you end up finding double charges, phantom charges, or upcoding (all of which are fairly common), you may be offered a better discount as was the case with ChinaCat.

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ChinaCat Sept. 25, 2010 @ 10:16 a.m.

My duaghters ER bill was finally resolved by our consistently and firmly reiterating the AB774 rules and pointing out the difference between Charity Care and Discount. We were re-directed to Administration, who finally directed us (after much prompting from us) back to billing. I don't know if it's ignorance of the law, or whether they are under pressure from their bosses, but they finally responded to us by accepting our first offer (less than 1/3 of the original bill, and about Medicare plus 20%) some 8 months after we made the offer.

You have to be very firm, and you can always threaten to report them to Health and Human Services if they insist on not obeying the law. There are form letters for just such complaints on the HHS website. That usually does the trick because their licensing depends on it!! It definitely worked for us!

China Cat

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Founder Sept. 25, 2010 @ 11:21 a.m.

Reply #15 Thanks and I like your advice also. Well done!

Isn't helping others is a GREAT thing!

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Founder Sept. 25, 2010 @ 11:23 a.m.

Reply #16 GREAT NEWS!

I hope others will be inspired by what you did!

All the best to you and your Daughter!

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