Hospitals Extend Uninsured Discounts

Attorney General Lori Swanson and the Minnesota Hospital Association announced a five-year extension of an agreement to provide uninsured patients with deep discounts on their medical care.

The extension builds off an existing agreement set to expire in May that requires hospitals to offer the same rates to uninsured patients that it bills to large insurers, which use their market share to negotiate lower charges.

Discounts will vary from hospital to hospital but could be as high as 40 to 60 percent, according to the attorney general's office.

Patients whose household income is less than $125,000 are eligible. Under terms of the agreement, those patients cannot be charged more than the largest insurer.

The agreement also extends a debt-collection policy to establish a less confrontational relation-ship between the hospital and financially strapped patients. Among other items, hospitals agree to work out payment plans with patients and avoid abusive or harassing debt-collection practices.

"The health care system is undergoing a lot of change, and I hope we see some more change so we're not grappling with this issue in 2012," said Swanson, referring to legislative proposals for universal health care coverage for all Minnesotans.

Swanson said the agreement with Minnesota's 135 hospitals contains "kinder, gentler" debt-collection polices. She said "a very high number" of Minnesotans benefited from the discount in the past two years, but she didn't have a specific number.

Sen. Linda Berglin, DFL-Minneapolis, one of the Senate's leading health care advocates and chairwoman of the Senate Health and Human Services Budget Division, said catastrophic hospital bills are one of the leading causes of personal bankruptcy.

"When the uninsured have a fair price, they're more likely to pay their bill," Berglin said.

Bruce Rueben, president of the Minnesota Hospital Association, cautioned that the agreement was "not a substitute for insurance."

"We hope by 2012, this agreement will no longer be needed because every Minnesotan will have coverage," Rueben said. Rueben said the discount will vary by size of hospital, competition and the mix of patients on commercial insurance plans and patients on government programs, which tend to pay lower reimbursement rates to providers.

"If you're in a tiny hospital in a one-hospital town with low volume, there will be very little difference between cost and the charges," Rueben said.

But hospitals that see a lot of patients on Medicare and Medicaid will shift costs to private health plans to make up for the low government reimbursement rates, Rueben said. Hospitals with money losing programs, such as large emergency departments, also shift costs to commercial insurers to minimize or equalize those losses.

"When you get into big urban areas, then you have hospitals getting the sickest of the sick," Rueben said. "Then there's a much bigger difference between costs and charges."

Former Attorney General Mike Hatch and the state's largest hospitals negotiated the original agreement regarding discounts to the uninsured and less aggressive debt-collection practices in 2005 as a two-year trial. Eventually, all of the state's hospitals joined the agreement.