The major rating agencies have recently announcement they will remove medical debt from Americans’ credit reports, strengthening the financial power of many ordinary people in these precarious economic times. Proposed Colorado legislationintroduced in both the House of Representatives and the State Senate, can prevent medical debt in the first place while helping to usher in a functional and competitive healthcare marketplace.
HB22-1285, sponsored by Republican and Democratic leaders, prohibits hospitals from sending consumer bills to collections if they fail to comply with the federal price transparency law. The legislation adheres to a fundamental moral principle: you shouldn’t face bankruptcy for bills you never accepted.
Such medical debt protection is needed now. According to the Urban Institute, almost a quarter Coloradans of color have medical debts in collection. Unpaid health debts leads regularly to financial ruin, lawsuits, liens, and wage garnishments. Half of the coloradans to avoid care each year for fear of unknown and exorbitant bills.
Medical debt differs from financial liabilities such as consumer loans and auto loans because it is usually involuntary. This is true in more ways than one. Although people generally have little control over their health care needs, they generally cannot access pre-care prices. They are blind to the prices of more than 90% health expenditures that are not intended for emergencies. Then they are blindsided by massive bills that they would often never have accepted and that arrive in the mail weeks and months after the treatment.
For example, a Colorado hospital charged Colorado Mesa University student Mason Kochel $15,000 for an EpiPen that can be purchased for about $200 over the counter. This legislation protects patients from predatory hospital billing practices.
On January 1, 2021, a Department of Health and Human Services to reign went into effect, requiring US hospitals to publish their actual prices, including discounted cash and all health plan rates from insurers, employers and unions. Armed with this information, consumers of health care, including patients, employers and unions, can benefit from financial security before care. Actual, up-front prices allow patients to budget for their treatment and avoid most cases of medical bankruptcy.
Unfortunately, this HHS rule has been marred by widespread hospital noncompliance. A recent report published by PatientRightsAdvocate.org concludes that only 14.3% of hospitals in the country are complying with the mandate one year after it came into effect. The University of Colorado Hospital is the only hospital to follow the rule among 17 in the state under review. Most hospitals do not post their negotiated payor-specific fees “clearly associated with the names of each third-party payor and plan” as required by law.
Full compliance with the Price Transparency Act can reduce the immense burden of health care costs through choice and completion. Patients with pricing power can choose the best quality care at the best prices. The ability to purchase cheaper care is particularly crucial in healthcare, given the well-documented widespread cost variations for the same treatments, even within the same hospital. University of Colorado Hospital Charge disclosures demonstrate that prices for the same procedures can vary by 10 times or more depending on the payer.
According to a To analyse health claims data from the RAND Corporation, the average charge for many Colorado hospitals is at least 300% of Medicare’s rate for the same care. Some state hospitals, including North Suburban Medical Center in Thornton, St. Anthony’s Hospital in Lakewood, and Valley View Hospital in Glenwood Springs, average nearly 400 percent or more of what Medicare pays.
With access to real prices, consumers can avoid price-gouging hospitals in favor of higher-value alternatives. Employers, who provide health coverage to most Colorado residents, can lower their health care costs and share the benefits with their employees by offering them higher wages. Innovative employers across the country, including Employee Solutions in Texas, have already saved 30-50% on their healthcare costs by contracting with transparent providers on prices such as Texas Open Market Surgery. State and local governments can reduce the health care burden on their public employees, leaving more money for vital social services and taxpayers. And patients can have immediate recourse for overcharging, overcoding and billing fraud.
Yet Colorado hospitals continue to deliberately break the law by keeping patients in the dark about prices, leaving them exposed to aggressive debt collection and medical bankruptcy. This bill will protect these patients from the bait and switch billing practices of non-compliant hospitals. This bill will also help unleash hospital pricing transparency in the state by providing hospitals with a significant financial incentive to comply with the federal rule.
Recent vote demonstrates that an overwhelming, bipartisan majority of nearly 90% of Americans support system-wide health care pricing transparency. HB22-1285 is an important step towards this healthcare revolution that will put consumers in control of their health and wealth decisions for generations to come.
Cynthia A. Fisher is a life science entrepreneur, founder and president of PatientRightsAdvocate.organd founder and former CEO of ViaCord.