Lost in the hype over the Supreme Court’s health care decision was a Treasury Department move that could affect millions of people seeking health care in the emergency room.
The Treasury Department issued a proposed rule change on June 22 involving the Affordable Care Act, just six days before the Supreme Court health care decision.
The change restricts how debt collectors can approach patients within nonprofit hospitals --before, during and after treatment--and how long they have to pay ER bills.
In some cases, hospitals would need to wait 240 days before trying to collect a debt from you.
But the proposed rules change could also drive up costs at hospitals, and they could be extended to all hospitals, if a well-known politician can get another health care act passed.
The battle in Minnesota
The proposed rules seem spurred by a battle in Minnesota between Lori Swanson, the state’s attorney general, and Accretive Health, a Chicago-based company that works with hospitals to process and collect payments.
In a complaint, Swanson claims Accretive Health used a “high-pressure boiler-room-style sales atmosphere” to collect payments from patients at nonprofit hospitals in Minnesota.
The alleged tactics included approaching patients in the emergency room, at their bedsides and on exit from the hospital for bill payments.
Accretive Health was hired by Fairview Health Services and North Memorial Health Care, to help with administrative tasks. (Since Swanson's filing, Fairview Health Services ended its contract with Accretive Health.)
Accretive Health has repeatedly denied any wrongdoing in its battle with Swanson, and it is offering to help set industry-wide standards for collecting medical payments.
Accretive Health also says it mostly works with patients and hospitals to make sure people are insured and aware of their financial help options, and that medical facilities get reimbursed from different sources.
"The state's proposed amended complaint contains no new causes of action and no additional requested relief. The state has merely added selected allegations from its initial compliance review, which contain numerous mischaracterizations and distortions of documents and facts," the company said in late June.
Accretive Health has filed with a federal court to have the complaint dismissed.
ER debt collection rules
The collection of debt payments could be a significant issue as President Barack Obama’s health reform program heads toward its full implementation in 2014.
The Treasury Department didn’t say directly if the proposed national rule changes were related to the Accretive Health case.
“In recent months, we have heard concerns about aggressive hospital debt collection activities, including allowing debt collectors to pursue collections in emergency rooms. These practices jeopardize patient care, and our proposed rules will help ensure they don’t happen in charitable hospitals. These rules also require charitable hospitals to establish and publicize financial assistance policies, and give hospitals the flexibility to establish programs that meet the needs of their communities,” said Acting Assistant Secretary for Tax Policy Emily McMahon.
The changes allow could drive down out-of-pocket costs for patients who need financial assistance to pay their hospital bills.
"A hospital may not charge individuals eligible for its financial assistance more for medically necessary care than the amounts generally billed to insured individuals," says one proposed rule change.
The Treasury Department changes are now in a 90-day public review stage. They only apply to nonprofit hospitals, which would be barred from putting financial representatives in emergency departments and other wards to collect payments from patients.
If nonprofit hospitals don’t comply with the rules, they face losing their nonprofit tax status. About half of the hospitals in the U.S. would be affected by the decision.
Unpaid bills a drain on health care
Hospitals and other medical providers use a variety of methods to collect payments. By one estimate, about $40 billion a year is lost by health care providers in uncollected payments.
A report from Kaiser Health News from February 2012 detailed upfront bill collection efforts at for-profit hospitals, as operators tried to contain emergency room costs.
The Kaiser story also discussed how some nonprofit ERs were asking for upfront co-payments (for the insured) or cash payments (from the uninsured) for dealing with non-emergency treatments. The upfront cash payments for the uninsured were $350.
The Supreme Court’s decision to allow states to opt out of Medicaid expansion also complicates matters.
In 2010, health care providers agreed to accept lower government reimbursements, in the expectation that more people would have health insurance to pay for expenses like emergency room visits.
As many as 18 million additional people had been expected to join Medicaid if the ACA had passed in its original form. Now, states have the choice to decline Medicaid expansion.
And some states have already started restricting emergency room payments to hospitals under Medicaid.
ER visits and politics
U.S. Senator Al Franken from Minnesota wants to take the Treasury Department changes further, and apply debt collection and privacy restrictions to for-profit hospitals.
Franken says he will introduce the End Debt Collector Abuse Act of 2012. While Franken doesn’t name Accretive Health in his proposed law, he held a hearing in Minnesota in May during which an Accretive Health representative testified.
One of the public supporters of Accretive Health is Chicago Mayor Rahm Emanuel. In a letter in May, Emanuel asked Swanson to first try to settle the matter privately.
Swanson later claimed that Accretive Health “has retained or contacted numerous heavyweights in the national Democratic Party.”
Both Emanuel and Swanson are Democrats.
Accretive Health then retained Leavitt Partners, a consulting firm run by Mike Leavitt, the former Utah governor, to set up a project to research national debt collection standards.
The project’s board includes former Clinton cabinet member Donna Shalala, and former Senators Tom Daschle and Bill Frist.
Leavitt also later selected by Mitt Romney in June to lead his presidential transition team, if Romney defeats President Barack Obama in November.
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