A bill introduced this month at the Hospital Association of Rhode Island’s urging would make health insurers – not hospitals and individual health care providers – responsible for collecting co-payments and deductibles imposed by patients’ health plans.
The bill, H-6468, sponsored by state Rep. Steven M. Costantino (D-Providence), is meant to address a growing problem of uncollectible debt that hospitals, especially, face, said Daniel P. Egan, vice president for government relations at HARI.
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All Rhode Island’s hospitals provide some charity care as part of their mission. But increasingly, they’re providing millions more worth in care they expect to be paid for, but they can’t get the money because it’s the patients’ responsibility and they can’t or won’t pay.
From 1998 to 2002, uncompensated care at local hospitals rose from $111.4 million to $155.2 million, the R.I. Department of Health has said. The trend has hit hospitals with busy emergency rooms, such as Memorial Hospital of Rhode Island, particularly hard – free care and bad debt cost it $15.8 million last year, 11 percent of patient revenues – but even small community hospitals have been affected.
HARI has raised this issue before, Egan said. In 2001, a similar bill backed by the hospitals led to the adoption of a compromise measure requiring that co-pay and deductible details be printed on insurance cards.
Now, with high-deductible health plans becoming so common, and the advent of health savings accounts promising to make them even more widespread, Egan said, it seemed like a good time to bring the issue to the table again.
Costantino’s bill would radically change the way health care billing is done, requiring insurers to reimburse hospitals and “all licensed health care providers” for the “entire negotiated payment rate” for each service rendered, including co-pays and deductibles, except they could deduct up to 7.5 percent as a “processing fee.”
Providers could still opt to collect the co-pays and deductibles themselves instead. But most of the collections would be done by the insurers.
Not surprisingly, the concept hasn’t gone over well with local insurance companies. In a written response to a PBN inquiry, UnitedHealthcare of New England CEO Stephen J. Farrell said collection of co-pays and deductibles is “standard practice for every hospital” nationwide, and because those items aren’t part of a member’s covered benefits, it would be “inappropriate” for an insurer to have to collect them.
While providers’ billing systems are designed to bill individuals for medical services, Farrell added, insurers’ billing systems are designed to bill groups for premium payments. Converting them to collect co-pays and deductibles would be “extremely expensive,” he said, and the cost “would be directly borne by the consumers and employers.”
As it is, Farrell said, United data show that while the average co-payment nationwide for inpatient care is 3.94 percent of total inpatient costs, in Rhode Island it’s only 0.75 percent.
“Dropping co-payments will only increase the state’s already high medical expenses and make Rhode Island even less attractive to national health insurers,” Farrell concluded.
Blue Cross & Blue Shield of Rhode Island also strongly opposes the bill, spokesman Scott A. Fraser said.
But neither Costantino nor the hospitals expected anything different. Costantino said the measure is “an idealistic kind of bill,” introduced not with the expectation of passage, but to “at least start a discussion about the difficulty hospitals are having in collecting co-pays.”
“A lot of money is spent in trying to collect those co-pays,” he said, “and I’d much rather see that money going into direct care.”
The bill has been referred to the House Finance Committee, which Costantino chairs, so regardless of its chances of passage, it’s certainly going to be heard. And that, said Egan, is what the hospitals hoped would happen.
“We obviously would love to see it go,” Egan said. “But we’re realistic on where the insurers will be on it. We just really want to force a conversation, and have people realize what hospitals are faced with.”
