Hospitals cut costs for uninsured
2 networks plan discounts of 15-50%
Two of the state's largest hospital networks, Partners HealthCare and UMass Memorial Health Care, will no longer routinely charge uninsured patients full ''sticker price" for medical care, but instead will offer 15 to 50 percent discounts, in some cases as much as the mark-downs large health insurers receive.
The goals are to provide a price break for uninsured patients who earn too much money to qualify for state assistance and to make collecting payments from them easier. The new policies come at a time when hospitals across the US face criticism and lawsuits over aggressive billing methods and for routinely charging the uninsured far more for treatment than they do health insurers.
Executives at Beth Israel Deaconess Medical Center said they routinely give patients discounts, but most hospitals don't offer reductions or offer them only for specific services, or if patients ask to negotiate a lower rate.
The Partners and UMass policies are among the first formal, publicized policies in Massachusetts that guarantee discounts to a broad group of patients and don't depend on patients requesting a markdown.
Northeast Hospital Corp., which includes Beverly Hospital, has adopted a policy to offer 10 percent discounts to patients who pay promptly.
The Partners and UMass policies, which were recently approved by trustees, are among the most generous in the country, said consumer advocates. Partners includes Massachusetts General Hospital, Brigham and Women's Hospital, Newton Wellesley Hospital, Faulkner Hospital, and North Shore Medical Center; UMass includes UMass Medical Center in Worcester and four other smaller Central Massachusetts hospitals.
Hospitals routinely treat uninsured patients, who are required during their hospital stay to fill out a financial disclosure form. In some cases, hospitals enroll patients in the state Medicaid program. Patients who don't qualify for Medicaid but whose incomes are below a state-set maximum are covered fully or partly by the state's free-care pool. The pool reimburses hospitals for some or all of the patients' care.
For uninsured patients with higher incomes, attempts by hospitals to collect payment are expensive and often unsuccessful. By charging these patients less, hospitals hope to increase collections, create a fairer payment system, and lessen the financial stress on uninsured families with staggering medical bills.
About 100,000 Massachusetts residents are uninsured and have incomes above the state-set maximum and therefore don't qualify for free care, according to Governor Mitt Romney's office.
For routine care, Partners will give such uninsured patients a 15 percent discount off the full price of medical care if they pay their bill or agree to a payment plan within 60 days, and a 20 percent discount if they pay or agree to a payment plan within a month.
Patients who require emergency or urgent care will receive a 50 percent discount if their medical bills exceed 30 percent of their annual income.
Partners executives said about 2,000 of its patients annually are uninsured and don't qualify for free care.
UMass will provide 50 percent discounts on all care for uninsured patients whose incomes are between 400 and 500 percent of the poverty level, about $96,750 for a family of four. The cutoff for free care is 400 percent of the poverty level, or $77,400 for a family of four. UMass executives said they don't know how many patients are at or below that level. Fifty percent is about the same discount given to health maintenance organizations and their members, hospital executives said. Uninsured patients who earn above the income limits will receive a 15 percent discount if they pay promptly.
''Some of these large medical bills just turn into bad debt for us because some people despair over the magnitude of them, and they don't pay," said John O'Brien, chief executive of UMass Memorial Health Care.
Both organizations said the discounts will apply to bills from doctors employed by the hospitals. The state's free-care pool applies only to hospital bills, but under the new policies such patients also will receive free or reduced care from the hospitals' doctors.
The UMass discounts take effect July 1, and the Partners policy starts Aug. 1.
''This is kind of out there in terms of national leadership," said Susan Sherry, deputy director of Community Catalyst, a national nonprofit consumer group based in Boston that advised Partners and UMass. ''They're doing much more than hospitals in other parts of the country."
The organizations are moving a step closer to rectifying one of the largest imbalances in the US healthcare system: Insurers are allowed to negotiate steep discounts for themselves and their members based on volume, while the uninsured often pay two to four times as much.
Richard Scruggs, a Mississippi lawyer who helped win a $206 million settlement from the tobacco industry for states, is coordinating a group of plaintiffs' attorneys who have sued about 50 US hospitals, saying they routinely overcharge the uninsured. Last summer, congressional leaders began hearings about whether hospitals should disclose prices to consumers and how hospitals bill patients and collect the money.
Hospital executives have said that ambiguous federal rules prohibited them from providing discounts to uninsured patients. But a year ago, US Health and Human Services Secretary Tommy G. Thompson clarified the issue, saying hospitals are allowed to give discounts if they are based on a clear and consistent policy. The American Hospital Association, the industry trade group, developed guidelines that advised hospitals to offer discounts to low-income patients, but left the details up to members.
''Many hospitals had policies to deal with the poorest patients," said Carmela Coyle, senior vice president of the hospital association. ''What's changed is that we have this mushrooming number of people without insurance. People who are working but are not poor enough to qualify for charity care, but are not making enough to meet their healthcare bills. Hospitals are now extending their policies to this group."
Sherry called the association's voluntary guidelines ''weak and pathetic." She said Community Catalyst has been talking to Partners and UMass about why hospitals need to assume a national leadership role in providing discounts. She said some hospitals are not changing their discount policies or are keeping them secret, as shown in a survey this year by the Boston-based nonprofit The Access Project. She said the Partners and UMass policies are an advancement, not only because of the discounts, but because the organizations will widely publicize the markdowns.
Peter Markell, vice president of finance for Partners, said full hospital charges, which are based partly on what the hospital and doctor determine a particular service is worth, have long been used to cross-subsidize the state Medicaid program and other insurers that pay well below the hospitals' costs. Markell has said that practice makes it difficult to change the system. Yesterday, he said that executives have decided ''people deserve a break off the charges, no matter what."
Partners and UMass annually incur millions of dollars in bad debt -- past-due money owed by patients. Last year, Partners' hospitals and doctors racked up $108 million in such debt, while UMass estimates it will absorb $20 million this year. For large bills that go to a collection agency, hospitals must pay the agency a percentage of any money recovered.
If enough additional patients are prompted to pay their bills because of the new discounts, executives said, the hospitals probably will not see a significant impact on revenue.
Liz Kowalczyk can be reached at kowalczyk@globe.com. 