Gov. backs hospital billing plan

The Baltimore Sun

Gov. Martin O'Malley says he supports legislation to correct "abusive billing and collection practices" by some Maryland hospitals, while expanding health care and financial assistance for lower-income patients.

The governor spoke Friday in Baltimore as his administration released a report that recommends defining who is eligible for free and reduced-price hospital care, requiring hospitals to provide financial assistance information to all patients, and banning hospitals and their collection agencies from charging the uninsured interest and penalties on bills before court judgments are entered against them.

"These reforms will help secure expanded access to quality hospital care to more people rather than fewer, without fear of financial ruin," O'Malley said.

The first-term Democratic governor ordered the report by the Health Services Cost Review Commission in response to an eight-month investigation by The Baltimore Sun that documented how hospitals were aggressively pursing collection of unpaid bills from patients of limited means even though those debts are supposed to be recovered in the rates they charge.

The Sun series, "In Their Debt," found that hospital debt collection lawsuits spiked sharply between 2003 and 2006 before falling slightly in 2007. In all, hospitals filed more than 132,000 of these suits over five years and won at least $100 million in judgments.

The Maryland Hospital Association says it supports most of the proposals outlined in the report to the governor.

Banning prejudgment interest and penalties "strengthens the process," said hospital association spokeswoman Nancy Fiedler, and the trade group is "comfortable" with requiring its members to provide details about the availability of financial assistance.

In 2005, the association and state regulators successfully fought provisions in a bill that would have required hospitals to give charity care applications to patients.

On Friday, Del. Peter A. Hammen, a Baltimore Democrat who is chairman of the House Health and Government Operations Committee, introduced a bill to require hospitals to provide free care to all Maryland residents whose incomes are less than 1 1/2 times the federal poverty level, which would equal $33,075 for a family of four. It is similar to a bill introduced earlier last week by Sen. George W. Della, a Democrat who represents South Baltimore.

"Hospitals have a responsibility to assist lower-income individuals access the health services and programs for which they qualify," Hammen said. "This legislation will ensure that there is a proper safety net for this vulnerable population."

The report by the rate-setting commission recommends setting the minimum standard at two times the federal poverty guideline, which would be $44,100 for a family of four. It says more study is needed on the question of how assets should be considered in providing free or reduced-price care.

Maryland Secretary of Health and Mental Hygiene John M. Colmers said he supports the report's rationale, which cited recent and proposed expansions of Medicaid to families who earn up to 116 percent of the federal poverty level.

Also, most of Maryland's 46 nonprofit hospitals say they use the hospital association's voluntary standard of allowing charity care for those who earn less than 1 1/2 times the federal poverty threshold, wrote Robert B. Murray, the commission's executive director. Johns Hopkins Hospital, Johns Hopkins Bayview Medical Center and Howard County General Hospital use that standard.

Several hospitals - including University of Maryland Medical Center, Franklin Square Medical Center, Bon Secours, Mercy Medical Center and Sinai Hospital - told the rate-setting commission that they already use the standard of two times the federal poverty line. But the hospital association expressed "some reservations about legislating" the minimum standard at that level.

"It may prove challenging for some hospitals to provide that amount of free care," Fiedler, the group's spokesman, wrote in an e-mail.

The report to the governor said four hospitals informed state regulators that their policies didn't meet the association's voluntary standard for providing free care to lower-income patients.

Reached for comment, officials at two of those hospitals - Washington Adventist in Takoma Park and Shady Grove Adventist in Rockville - said they are increasing their policy to 1 1/2 times the federal poverty guideline but maintained they often have provided free care to patients above that level.

Tom Grant, a Washington Adventist spokesman, said the hospitals "should not be judged on guidelines" but on what they actually provide in charity care and the amount of debts they write off. He said Washington Adventist had $25.9 million in free and reduced-price care and debt write-offs last year.

The Sun's report found that Washington Adventist rarely sues patients, even though it lost $5.3 million in 2007 on unpaid and charity care.

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