Hospital Billing Practices Examined

A congressional panel has asked for information on the billing practices of 20 hospital chains nationwide -- including Los Angeles County’s public hospital system -- to determine whether uninsured patients are being overbilled.

The U.S. House Committee on Energy and Commerce is examining claims from consumer groups that uninsured patients pay more for treatment than do others. Private health insurers and government health programs are able to use their size and clout to negotiate substantial discounts, but uninsured patients may be charged the full list price.

“The uninsured seem caught in the middle of the sophisticated and complicated forces driving health care financing,” said a letter sent Wednesday to the hospitals from Reps. W.J. “Billy” Tauzin (R-La.) and James C. Greenwood (R-Pa.).

As a result, the committee has asked the operators of the 20 chains for extensive financial information, dating to 1998, as well as facts about charity care policies and patient billing practices.

In addition to the Los Angeles County Department of Health Services, five other California systems are among those being tapped for information: Tenet Healthcare Corp., based in Santa Barbara; the UC Davis Health System in Sacramento; Adventist Health in Roseville; Sutter Health in Sacramento; and Catholic Healthcare West in San Francisco.

Ken Johnson, a spokesman for the House committee, said the hospitals were selected because they represent a cross-section of medical providers and not because they are suspected of wrongdoing. The hospitals include private, public, religious, for-profit and nonprofit institutions.

“We’re targeting a problem, not a company or an industry,” Johnson said. “We believe you have to identify a problem before you can solve it.”

A spokesman for the Los Angeles County health department said it does not overcharge the uninsured. On the contrary, he said, the health department is facing a looming budget shortfall because it treats so many people who can’t pay. The system treats 800,000 patients a year, three-quarters of whom are uninsured.

“People pay basically on a sliding-fee scale and it’s very rare, if ever, that people pay full charges,” said spokesman John Wallace.

UC Davis spokeswoman Bonnie Hyatt said her hospital provides 42% of the indigent care in the Sacramento region and employs 19 full-time staff members to help patients qualify for public assistance programs or figure out how to pay their bills.

UC Davis gave away more than $140 million in charity care last year, she said, and wrote off another $53 million in bad debt.

“We feel that we’ve been conscientious in working hard to assist patients who don’t have coverage,” Hyatt said.

Officials at Tenet, Adventist Health, Sutter and Catholic Healthcare West said they are working to comply with the committee’s request for data, which is due by July 31.

“It will certainly be very, very time consuming,” said Rita Waterman of Adventist. “It’s not simple stuff and they’re asking for it sliced and diced in different ways.”

In their letter to the hospitals, Tauzin and Greenwood said the list prices at California urban hospitals in 2002 had been marked up more than 300% above the actual costs of providing that care.

In addition, for one hospital chain, self-pay patients accounted for less than 2% of its patients, but accounted for as much as 35% of its total profits in California in 2001, the letter said.

Health advocates in California were among the first to call for changes in the way the uninsured are billed.

A bill sponsored by Assemblywoman Wilma Chan (D-Alameda) would prohibit hospitals from charging many uninsured patients more than the facilities receive from Medicare, Medi-Cal or workers’ compensation. It would also require hospitals to give consumers notice about their rights and financial options.

The bill, AB 232, has passed the state Assembly and is pending in a Senate committee.

Industry trade groups agree that the current billing system for the uninsured needs to be changed.

But they say federal regulations make it difficult, if not impossible, to give uninsured patients a price break.

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Ornstein reported from Los Angeles and Kemper reported from Washington, D.C.