updated 12/17/2003 3:48:31 PM ET 2003-12-17T20:48:31

The hospital industry said Wednesday it will consider cutting the price of care for the uninsured in the face of growing complaints that hospitals charge such patients too much.

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But the American Hospital Association, which represents nearly 5,000 hospitals, pinned much of the blame for the high prices on inflexible federal regulations.

The AHA said it needs the government’s help if hospitals are to change the practice of charging uninsured patients the full retail price for medical procedures. Typically, participants in private and government insurance plans pay steeply discounted, negotiated rates.

“Federal Medicare regulations as written today contain a string of barriers that discourage hospitals from reducing charges or forgiving debt for these patients without potentially running afoul of the law,” AHA President Richard J. Davidson wrote Health and Human Services Secretary Tommy Thompson.

The AHA is seeking protection for hospitals from penalties the government can impose on them for using financial incentives to draw customers or taking unfair advantage of a program in Medicare that reimburses hospitals for bad debts.

Centura Health, Colorado’s largest hospital system, this week dropped a plan to offer discount services to the uninsured, saying it might violate federal law.

Consumer groups said the plan could have helped 700,000 uninsured Coloradans, some of whom make too much money to qualify for Medicaid.

The company last spring said it would consider offering uninsured patients the same discounts offered by health plans, which could save individual patients thousands of dollars.

Tom Gustafson, a Medicare official who oversees hospital reimbursements, said federal regulations do not prohibit hospitals from helping the uninsured, but said his staff would study the AHA requests.

“Basically, hospitals can and do make discounts for the uninsured. They have to go through a process to get there,” said Gustafson, deputy director of the Center for Medicare Management within HHS.

Hospitals take first steps
The nation’s two largest for-profit hospital chains this year announced differing plans to offer discounts to the uninsured. Nashville-based HCA Inc., the largest chain, said it would offer help to low-income patients without insurance. Tenet Healthcare Inc., of Santa Barbara, Calif., said it would offer the uninsured discounts regardless of their income.

HCA has put its plan into practice, but Tenet has met with resistance from federal regulators and is awaiting a legal opinion from the HHS inspector general.

In his letter to Thompson, the AHA’s Davidson also acknowledged a central complaint of consumer groups, that hospitals’ billing process can be confusing and unfair. In particular, the groups have criticized aggressive collection practices, including suing people for unpaid bills and in some cases, placing liens on their homes.

K.B. Forbes, founder of an advocacy group that has been pushing hospital chains to improve their policies for uninsured patients, said he was grateful that the AHA “had acknowledged price gouging of the uninsured.”

He said his group, Los Angeles-based Consejo de Latinos Unidos, remains concerned that people of moderate means who are uninsured would continue to be targeted by hospitals because voluntary guidelines adopted by the AHA focus on the poor.

The guidelines call for better communication of hospital billing policies, including the possibility of discounted care, and more consistent billing and collection practices.

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