Hospitals to Underinsured: Pay Upfront

The Wall Street Journal's “Cash Before Chemo: Hospitals Get Tough” reports hospitals are demanding large upfront payments from the uninsured and underinsured if they have any income, assets; or if they can beg, borrow, or steal the money. Both the nonprofit M.D. Anderson Cancer Center in Houston and for-profit Tenet (THC) and HCA hospitals chains were cited. Not only are these hospitals demanding large payments before even starting a course of treatment, but they are also sustainably inflating their rates.

The Journal example is a 52 year old early retiree who purchased a United Healthcare (UNH) policy through AARP. The policy has a maximum benefit of $37,000, less than 30% of the cancer patient’s estimated cost of treatment. The M.D. Anderson hospital demanded $45,000 just for a diagnosis, and then an additional $60,000 before any treatment would start. Because Anderson did not accept the United policy, it would not let the patient pay United’s negotiated rates. M.D. Anderson hospital charged her full retail.

Hospitals are required by law to provide emergency care in life threatening situations. They differentiate between a life threatening heart attack and long-term care for cancer. The cancer patient in the example was not at risk of dying on the exact day she appeared for treatment.

The hospitals have greatly improved their collections with the pay upfront policies, and the nonprofits are generating large profits for their executives. M.D. Anderson justifies discounting prices for insurers because insurers provide volume and are less risky than individuals.

United reimbursed its policy holder $38,478.36. But United did not explain why she was not entitled to its negotiated hospital rates, at least for the first $37,000 in charges. If the M.D. Anderson hospital charged United directly (at negotiated rates) for the first $37,000, she would have gotten much more value from her insurance coverage.

Apparently, the “free marketeers” mantra that no one goes without care in the US is flawed. The talk about the open door emergency room is of limited value. People with any assets can lose everything, even with health insurance. I wrote in "United Healthcare: Beyond the Numbers" that United is seeing its Medicare policy holders have delayed treatments prior to becoming 65. United Healthcare cited the economics of deferred care in its conference call.

The Wall Street Journal presents an interesting sense of balance in healthcare coverage. The Journal provides the best coverage of the difficulties faced by the self-employed, early retirees, and others without benefits in acquiring adequate health insurance. I have not seen any other newspaper publish as many warnings to the potential self-employed and early retirees about medical underwriting.

At the same time, almost every editorial touts the dangers of healthcare reform. Typical topics include how guaranteed issue will raise everybody else’s premiums and how the Canadian system has long wait times for elective surgery. By definition elective means non-emergency. No reports of patients dying at the hospital doorstep have been published. Keep in mind that most US insurers do not cover elective surgery anyway!

Note: The Wall Street Journal print edition titles the same article “Hospitals Demand Cash Upfront From Patients.” The article is on page one, below the fold.

Comments

[AmericanSphinx:]

I think this was a poor example to use for this article. Everyone has the ability to receive care with/without insurance, but no one said it was free. Last time I checked if I didn't pay my water bill my water will be cut off, so why is there an expectation that healthcare should be free? Also, why is there an expectation that the cost for an insurance plan member (a distributor) vs. an uninsured member (a retail customer) would be the same? The insurance company is guaranteeing a significant portion of the payment to the provider, whereas the retail customer is guaranteeing nothing in advance. Further, I would suspect I (a retail customer) pay more to buy a set of tires directly from Goodyear than it would cost America's Tires (a distributor) to buy the same set of tires from Goodyear. Should I get mad at Goodyear for not extending me the same discounts as America's Tires receives? Lastly, the person must have thought it a value to receive care from a non-network doctor considering they paid out of pocket for care they could have received at significant savings if they had used an in-network doctor, so why is anyone outraged that the patient is getting the care they want?

2008 Apr 29 11:23 AM

[AmericanSphinx:]

Forgot to add there is a difference in the elective surgeries referenced at the end of the article. A non-covered elective surgery in the U.S. would be for things like breast augmentation, rhinoplasty, etc. Whereas an elective surgery in the Canadian system would be for something like knee replacement surgery for a 50-yr. old, which would not be denied (or delayed) in the U.S. system. It's that sort of yellow journalism, or ignorance, that muddies the healthcare discussion. Nice going...

2008 Apr 29 11:31 AM

[Wall Street...:]

AmericanSphinx: Please explain how you acquired your health insurance. Was it through employment? Did you have to go through medical underwriting? I think it is important to understand whether a person who is critical of healthcare reform is so because they are guaranteed access to insurance already.

As for cost, part of the purpose of any consumer oriented health insurance is for the insurer to negotiate rates for services for their customers. Then the insurers and policy holders pay their portions based on the insurance contract.

The WSJ was not specific as to whether the hospital was “in network”, the rejection of the insurance was based on the policy limit.

Lastly, the hospital asked for payments in advance without the patient being able to approve each service on a line by line basis. Have you ever bought any other service by writing a blank check?

2008 Apr 29 12:15 PM

[MarkR:]

This write-up, as well as the WSJ article, are two of the most misinformed opinion pieces that I have ever read. They are opinion pieces, because there is nothing journalistic about gathering one side of stories and publishing it as a legitimate article. A better word for this would be propaganda.

First, the article asserts blame for the hospitals for requiring payments up front. After they make it sound like patients waiting on an organ are lined up outside the doors of the hospital, they also make it sound like nurses are refusing to finalize treatment until proof of payment is shown. Not only would that be illegal for a nurse to do (not to mention grossly unethical and against everything they're taught), I find it hard to believe that a nurse at perhaps the most respected cancer treatment facility in the world is refusing to give a patient life-saving care because the business office hasn't signed off on the treatment yet. Let's be clear about thing: doctors and nurses do not wait on the billing personnel to tell them it's ok to provide life-saving care to patients.

More importantly, however, is the blame this article asserts against hospitals, when they are not blame. These hospitals, whether for-profit or not-for-profit, operate in a system whereby they must compete to stay alive. This isn't like the UK where healthcare providers receive funding directly from the government (except for the VA). Doctors/hospitals must be paid for their services, the same way any businessperson must be paid for their products/services, or they will go out of business. Mr. Steinberg conveniently left out the part of the article where it talks about the millions of dollars MD Anderson has lost from patients being unable to pay. As someone that works in healthcare, I can tell you that the billions of dollars a year are lost because patients cannot pay for their care; however, they still receive the care they need.

This article, and the misinformed viewpoints of Mr Steinberg are extremely off-target. I suggest you do more research and deeper thinking before blindly commenting on a topic that you do not understand.

2008 Apr 29 02:33 PM

[Wall Street...:]

To Mark R: You do realize that if the information stated by the WSJ reporter was untrue that the hospital would sue the Journal for libel. I find it interesting that you fail to address the key issues in this piece such as insured individuals being charged full retail price for medical procedures. Just because you find it "hard to believe" does not mean it isn't true. I suppose you defend all the $million+ pay packages these "nonprofit" executives receive at the expense of the middle class. The poorest are taken care of because they have no assets. The wealthy are taken care of. It is the middle class who gets screwed because they have some assets. If you are as educated on the subject as you claim to be, then please comment on SA the federal law that cites turning away patients is illegal. I'm sure the WSJ would be interested. Please tell SA readers where you get your health insurance.

2008 Apr 29 07:56 PM

[MarkR:]

WSW, it is indeed illegal to turn away admitted patients in the event of providing life-saving care or in a life-threatening situation. Meaning, if there was a patient that had half of a chemo bag emptied (as per the example in the WSJ story), the hospital could not hold the person without care until they pay. That would not only be unethical, but also flagrantly illegal. Sighting caselaw is not something that is necessary, because if you are at all familiar with the healthcare industry, you know this is true. Further, this goes against everything that doctors and nurses (and other providers) are taught. Now, do some potential patients get turned to other facilities because they cannot pay for a certain facility up front? Yes, but it is completely within a hospital's right to do so, because 1) they know the patient will receive the needed care (even if it isn't from their facility) and 2) they are a business that must answer to either shareholders or a community and if they do not maintain profitable margins, they will go out of business, which will cause a much greater problem to our healthcare delivery system. There are so many hospitals, especially ones in rural settings, that are in this situation ... they can't get gov't funding, yet they also cannot get their patients to pay for their very costly services. This is the biggest problem in our healthcare system, which only leads to further problems, i.e., uninsured, frivolous lawsuits, etc.

In terms of million $ pay packages - that is not my concern, but I can tell you as someone that works for a firm who develops compensation plans for hospital and medical group executives, there isn't a hospital CEO - for profit or non-profit - out there that receives a million $ comp plan for only serving as a hospital CEO or Med Dir. You're off target there and you, like the author, do not understand that of which you speak.

Finally, your first point is the one that is most interesting, because I actually pointed this out on a response I wrote on my own website, reiboldt.com. The WSJ articles cites a situation at UCLA Med Ctr whereby a family was claiming mistreatment of sort by the hospital that allegedly led to the tragic death of a young lady. While this is a horrible situation, the family's attorney is lambasting the hospital; however, the family refused to give the hospital consent to respond to the claims, which without such consent, the hospital would violate HIPAA rules and other privacy regulations. So, the hospital is being claimed for doing something and they can't even respond or defend themselves, so it's open season on frivolous blame by the trial attorney representing the family, which (the story left this part out) received a multi-million dollar settlement out of the situation. Now, whether there was wrongdoing or not, we'll never know, because it was a one-sided blame game by a trial lawyer representing a grieving family. So, ultimately, the WSJ can't be sued for libel because it's giving one side to stories that no one can stipulate or refute, due to privacy restrictions. Tell me something isn't wrong there.

2008 Apr 29 09:26 PM

[AmericanSphinx:]

WSW - True in group insurance there isn't individual medical underwriting, but in a lot of states (like here in NC) there are individual guarantee issues policies, or a state high risk pool through which to purchase insurance if you are high-risk. As to your rebuttal about payment. When I go to my auto mechanic for a tune up, I approve a certain amount up-front for a specific set of service. If it ends up costing less then I pay that amount. If they need to do something else then I pay the increased amount. Additionally, a lot of doctors and hospitals will provide a global bill, which reflects the total cost for treatment of "X," so there isn't a need for a line item bill.

2008 Apr 30 12:16 PM

[romrex:]

amer. sphinx--You are probably a govt worker who has full coverage and you only pay a co pay.Regarding your auto mechanic analogy,it doesn't hold up.Auto mechanics have competition,you can drive around the block and choose another mechanic to get a better price.If you check a health care invoice,the billing for a procedure will be 500 but the settlement is 150.The uninsured pays 500.THAT'S FAIR to you?

2008 May 06 10:43 AM

[romrex:]

!!

2008 May 09 02:03 PM

[MarkR:]

romrex, that isn't exactly right? the uninsured are the same as self-pay. that means that have more leverage than anyone with coverage. they can go to the different providers of healthcare and not only compare prices, but they can negotiate the price they will pay. doctors should gladly accept this, b/c they will still get a larger percentage than what they would actually get paid by third parties (i.e., insurance companies).

i will concede the fact that most people will not do that, and it is definitely more difficult to "shop" around for healthcare. however, there are many organizations that are popping up that provide data on quality and pricing, giving consumers more of an edge in choosing their care. this is part of the consumer-directed approach to solving our nation's healthcare delivery challenges. sure, the uninsured still have to pay, but they have leverage in the process, just the same way they have the ability to choose the mechanic they use.

what is killing our system are the people that not only don't want to negotiate, but they aren't willing to pay at all. they think the gov't should provide everything at no cost (but it does cost).

2008 May 12 05:23 PM

[rubbish:]

How can a hospital who allows non citizens to receive care free, such as birthing, all routine care via the ER and yet extort fully inflated costs from a U S Citizen who has perhaps only a few dollars saved, when they provide the same level of service to big insurance companies for 50% to 60% less?
I will tell you exactly why. It is the same reason why we have a housing crisis, illegal immigration, $4.00 gasoline. This government is more concerned pandering to the people who will reelect them than to the average citizen.
Long term solution, term limit the dead wood out. Short term solution, Revolt!

2008 May 15 11:42 AM

[CStevenTucker:]

What has our government done, to convince people to hand over our very health freedoms for it to govern over?
Katrina……..?
Fannie Mae – bailout? (this is a government entity who's employee's receive bonuses!) What other government employee receives bonuses for doing their jobs?
Social security – bankrupt ? (robbed for other expenditures)
Medicaid – ? (robbed for other expenditures)
$2 trillion Porkulus bill - ? (and growing)
AIG – bail out, yet nobody knows where's the money gone?
No committee of oversight in place (was promised by our representatives to be in place immediately)
Gas prices - ?(50% of every dollar at the pump goes to Washington) But who did you point your finger at as the problem????

Since our government "cannot" be sued, how will one be able to be recompensed for its malfeasance or neglect? How will the government, once it tells 300 million people "go see the doctor" we will pay all the bills, be able to control the consequences? By overwhelming our medical profession or break it, will come another grand government solution," we need more money to fix it"! You are already familiar and have accepted this excuse for too long, and know this to be their power solution. Our government has impoverished our families' financial freedom to pay our own way, by immoral taxation.

Furthermore how has Government run health care worked in other countries? Let's get past the emotions and examine the facts. A common example used to further the cause of "socialized medicine" in the United States is to point out how well it is working in countries such as France and Canada. However, those living in Canada know full well that their government run health care program is most certainly not working. As a matter of fact, many Canadian citizens choose to hire high priced brokers to find them quality health care right here in the United States because of the terrible bureaucracy that controls all forms of health care in Canada.

For more about what is really going on with the Canadian health care system please watch these short but very informative documentary videos:
www.freemarketcure.com... www.freemarketcure.com... www.freemarketcure.com... www.youtube.com/watch?...
The number of actual uninsured's in the US has also been grossly inflated as well. For the real numbers: www.freemarketcure.com...
www.youtube.com/watch?...

Medical care in the United States is derided as miserable compared to health care systems in the rest of the developed world. Economists, government officials, insurers and academics alike are beating the drum for a far larger government role in health care. Much of the public assumes their arguments are sound because the calls for change are so ubiquitous and the topic so complex. However, before turning to government as the solution, some unheralded facts about America's health care system should be considered, says Scott W. Atlas, a senior fellow at the Hoover Institution and a professor at the Stanford University Medical Center.

Americans have better survival rates than Europeans for common cancers:

* Breast cancer mortality is 52 percent higher in Germany than in the United States, and 88 percent higher in the United Kingdom.
* Prostate cancer mortality is 604 percent higher in the United Kingdom and 457 percent higher in Norway.
* The mortality rate for colorectal cancer among British men and women is about 40 percent higher.

Americans have better access to treatment for chronic diseases than patients in other developed countries:

* Some 56 percent of Americans who could benefit are taking statins, which reduce cholesterol and protect against heart disease.
* By comparison, of those patients who could benefit from these drugs, only 36 percent of the Dutch, 29 percent of the Swiss, 26 percent of Germans, 23 percent of Britons and 17 percent of Italians receive them.

Lower income Americans are in better health than comparable Canadians:

* Twice as many American seniors with below-median incomes self-report "excellent" health compared to Canadian seniors (11.7 percent versus 5.8 percent).
* Conversely, white Canadian young adults with below-median incomes are 20 percent more likely than lower income Americans to describe their health as "fair or poor."

Americans spend less time waiting for care than patients in Canada and the United Kingdom:

* Canadian and British patients wait about twice as long -- sometimes more than a year -- to see a specialist, to have elective surgery like hip replacements or to get radiation treatment for cancer.
* All told, 827,429 people are waiting for some type of procedure in Canada.
* In England, nearly 1.8 million people are waiting for a hospital admission or outpatient treatment.

Source: Scott W. Atlas, "10 Surprising Facts About American Health Care," National Center for Policy Analysis, Brief Analysis No. 649, 3/24/09 www.ncpa.org/sub/dpd/i...

Because of how the Single Payer System is designed Canadian citizens have NO WHERE NEAR the choices that we as American citizens do. As a matter of fact, until very recently (2005) it was simply not possible for a Canadian citizen to pay for their own health care or to purchase private medical insurance that would "bump them up the long waiting list" for medical treatments. The reason Canadian citizens now have the right to do so (and it is still limited) is a direct result of long hard battles (many that are still being fought) that have been waged by brave Canadian citizens like Dr. Jacques Chaoulli who took his clients case all the way to the Canadian supreme court and won! Dr. Chaoulli (www.healthcoalition.ca...) and his patient, George Zeliotis, launched their legal challenge to the Canadian government's monopolized healthcare system after waiting more than a year for hip-replacement surgery.

Canada's high court found for the plaintiffs and in doing so issued the following statement: "The evidence in this case shows that delays in the public healthcare system are widespread, and that, in some serious cases, patients die as a result of waiting lists for public healthcare. The evidence also demonstrates that the prohibition against private health insurance and its consequence of denying people vital healthcare result in physical and psychological suffering that meets a threshold test of seriousness." Furthermore, Justice Marie Deschamps said, "Many patients on non-urgent waiting lists are in pain and cannot fully enjoy any real quality of life. The right to life and to personal inviolability is therefore affected by the waiting times."

Furthermore, the Vancouver, British Columbia-based Fraser Institute which keeps track of Canadian waiting times for various medical procedures. According to the Fraser Institute's 14th annual edition of "Waiting Your Turn: Hospital Waiting Lists in Canada (2006)," total waiting time between referral from a general practitioner and treatment, averaged across all 12 specialties and 10 provinces surveyed, rose from 17.7 weeks in 2003 to 17.9 weeks in 2006. Depending on which Canadian province you live in, a simple MRI requires a wait between 7 and 33 weeks! Orthopedic surgery could require a wait of 14 weeks for a referral from a general practitioner to the specialist and then another 24 weeks from the specialist to treatment! For even more real life horror stories about Canadian citizens left in the lurch by the Canadian healthcare system read the well researched and fact based Wall Street Journal article entitled "Too Old For Hip Surgery" here: online.wsj.com/article... This is what happens when you put government in control of your health care decisions. Doing so in this country, would be nothing short of a train wreck. Anyone who thinks otherwise is simply uninformed or "willfully ignorant".

Real healthcare reform can be accomplished through consumer education, weeding out abuse of existing Federal entitlement programs (via a legitimate needs assessment) and continued funding of State sponsored Risk Pools so that people who are declined for insurance have an affordable option to continue coverage if declined on the individual major medical market. Following these few simple steps will go a long way towards not only maintaining our current health care system, but also towards keeping the bulk of our nations risk where it belongs, namely with the private health insurance sector. In light of the recent multi Trillion Dollar "Bail Outs" and many other failing corporations coming to the table with their hats in their hands (and their private jets on the tarmac) the last thing our government should do is start cutting more blind "bail out" checks in an effort to "reform" the U.S. health care system.

Apr 11 01:01 PM