Monday, January 26, 2009

Price-Breaks for Uninsured Coming to Hospitals

An interesting bill, the Illinois Fair Patient Billing Act, recently became law and the impact of the price concessions that uninsured patients can request were printed in the Chicago Tribune this morning, irrespective of income level. Note: The online version of the story does not contain the graphic printed in the paper, so here's what was printed:

Price Concession Amount for Uninsured
Discount PercentHospital System
15%Alexian Brothers Hospitals (Alexian Brothers Medical Center, Elk grove Village; St. Alexius Medical Ctr, Hoffman Estates; Alexian Borthers Behavioral Health, Hoffman Estates
20%Advocate Heath Care (Bethany Hospital, Christ Medical Center, Condell Medical Center, Good Samaratan Hospital, Good Shepherd Hospital, Illinois Masonic Hospital, Lutheran General Hospital, South Suburban Hospital, Trinity Hospital)
25%Northwestern Memorial Hospital; University of Chicago Medical Center; Resurrection Health Care (Ressurection Hospital, Our Lady of Ressurection Medical Center, St. Joseph Hospital, Sts Mary and Elizabeth Medical Center, Holy Family Medical Center, St. Francis Hospital, West Suburban Medical Center, Westlake Hospital)
30%Elmhurst Memorial Hospital
35%Northshore University HealthSystem (Evanston Hospital, Glenbrook Hospital, Highand Park Hospital, Skokie Hospital)
40%Loyola University Medical Center; University of Illinois at Chicago Medical Center; Provena Health (Provena Covenant Medical Center, Provena Mercy Medical Center, Provena St. Joseph Hospital (Elgin), Provena St. Joseph Medical Center (Joliet), Provena St. Mary's Medical Center (Kankakee), Provena United Samaritans Medical Center (Danville))
50%Rush University Medical Center
55%Edward Hospital, Naperville

How this will effect basic pricing structures remains to be seen, since hospitals are under no constraint to keep prices at their current levels.

According to the Illinois Fair Patient Billing Act, hospitals can charge 35% above cost for services provided to the uninsured. The natural question we should ask, then, is why the insured should have to pay "full price" if a profit margin is already built into the price offered to the uninsured.

The reason, of course, is simple: someone has to pay for the insurer's offices and staff salaries, don't they?

-Wes

6 comments:

Keith Sarpolis said...

Wes,

No one should have to pay full price since full price of hospital charges in most circumstances bears to relation to reality. You and I know it is a number grabbed out of nowhere and set artificially high in order to capture all possible insurance payments that fall underneath. So having seen this article in the Trib this morning, my first thought was 15-55% of what? Some hospitals have exorbitantly high charges and other are lower. the article gave the impression to the typical reader that some hospitals are being more generous than others. This may not be the case since some may simply have higher charges than their competitors. Which leaves you with a bigger bill; 35% off a $2000 charge or 25% of $1000?

Furthermore, as you have quite rightly pointed out in your previous posts, whose costs are going to be greater; the hospital with the brand new 900 million hospital with a waterfall in the lobby, or the small hospital livng on a shoestring? This model only continues to reward those hospitals by allowing them who spend more to collect more from the uninsured.

shadowfax said...

Thanks for posting this! Great info.

However, you ask something of a straw man question in the last graf: why the insured should have to pay "full price" if a profit margin is already built into the price offered to the uninsured.

It's because the uninsured don't pay (the average collection for self-pay patients is 10 cents on the dollar), and the costs are higher for insured patients to offset the losses on the uninsured and Medicaid populations.

The whole argument about "prices" for the uninsured is a huge fiction. They don't pay, whether full price or the discounted price, so any discussion of what the price is and what the discount is represents an elaborate kabuki signifying nothing.

Patrick said...

So I'm confused by the two different presentations. Are they saying that (IFPBA) hospitals are capped to a reasonable attempt to cover their costs of (Tribune article) some hospitals are generously giving huge discounts to indigent patients? Seems like, to me, some hospitals are making a lot more and/or have much lower costs than others. Full disclosure, I work for a hospital named in the listing.

Anonymous said...

@shadowfax: I respectfully disagree with your statement that uninsured don't pay. Perhaps many of the uninsured don't or cannot pay. I have been uninsured and have paid out-of-pocket, although I was fortunate not to need any drastic or emergent care during that time.

Anonymous said...

Yes, the uninsured pay. They may pay slowly on a payment plan but they do pay. My brother is paying over $700 for a facial lac suffered in a hockey game... he now carries his own bottle of superglue in his equipment bag.

shadowfax said...

Anon,

I speak from experience on the other side of the fence. I manage a medical company with over $35 million billlable annually. The collection ratio on self-pay is minuscule. I haven't looked at it lately (since we view it essentially as charity care/bad debt) but the last time I checked the collection rate was about 7 cents on the dollar.

Maybe there are some souls out there who pay, but they (you) are in the great great minority, statistically speaking.