By Winthrop Quigley
Journal Staff Writer
New Mexico hospitals can implement kinder and gentler billing policies, thanks to a recent ruling by the federal Health and Human Services Department.
The New Mexico Hospitals and Health Systems Association has adopted a policy statement directing its members to more aggressively offer financial assistance to uninsured patients, to cap payments it expects the uninsured to pay and to make sure its bill collectors treat patients with respect.
The policy was written after the industry received federal assurances that hospitals can offer price discounts to uninsured patients.
For years, lawyers told hospital administrators that federal law required a fixed charge for each service and that the charge could not be discounted for individual patients, said Liz Alhand, Presbyterian Healthcare Services chief financial officer.
Hospitals were regularly criticized for charging one rate to insurance companies and government programs and a higher rate to individual patients, then allowing collections agencies to hound patients who couldn't pay. The Wall Street Journal last year published horror stories about collections agencies having debtor patients arrested for failing to appear at court hearings.
Locally, the Community Coalition for Healthcare Access, during a campaign last year to change UNM Hospital pricing policies, said that some patients' credit was ruined by unpaid hospital bills and others resorted to bankruptcy court protection.
A U.S. House of Representatives committee launched an investigation of hospital pricing, and the American Hospital Association asked the Health and Human Services Department, which oversees the Medicare and Medicaid programs, to review federal law and regulations.
Last February, the department's Office of the Inspector General wrote it had no authority to restrict "hospitals from offering discounts to uninsured patients who are unable to pay their hospital bills."
The New Mexico association said its members should actively encourage uninsured patients to seek hospital financial assistance and accept partial payments when necessary. It said hospitals should expect payments no higher than they receive from government programs "or as otherwise deemed appropriate by the hospital."
The association policy says the federal government requires "reasonable collection efforts" but that collections agencies should treat patients "with dignity and respect." Collections agencies should encourage patients to seek financial assistance from the hospital.
New Mexico hospitals already provide $200 million in care it classifies as either charity or uncollectable debt, according to the association. Albuquerque's three major hospital systems— UNM Hospital, Lovelace Sandia Health System and Presbyterian— say they already have policies that meet or exceed the association's guidelines.
However, the policies should ensure consistency among hospitals, said UNM Hospital CEO Steve McKernan. UNM provides about $75 million in charity care a year.
"The first thing (hospitals) can ask of you if you are uninsured is would you like a copy of the financial assistance policy," he said. "It should be written in layman's language. The staff ought to be able to explain it to you and tell you the process you can go through for financial assistance."
McKernan expects patients who can't afford their bills "won't experience that credit rating problem they had in the past. What was classified as bad debt will be turned into financial assistance."
Alhand said Presbyterian expects to improve on the $6.5 million in charity care it provided in 2002, the last year for which data are available.
The system will be able to take into account the effect of catastrophic health events on patients' future finances, for example, instead of considering only the patient's current income, she said.
The Community Coalition applauded the association's policy guidance.
The coalition is pleased New Mexico health industry leaders "are taking leadership in addressing the serious needs of the 25 percent uninsured in our state," said Andru Ziwasimon, a coalition member and a family practice physician.
"This policy statement is a great first step," he said. "We hope that hospitals around the state will quickly institute significant price reductions for all uninsured patients in our state."
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