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Posted: Saturday, Apr. 28, 2012

Senator to hospitals: Do more to help poor, uninsured

By Ames Alexander, Joseph Neff and Karen Garloch
Published in: Prognosis: Profits

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U.S. Sen. Chuck Grassley, the most influential member of Congress on nonprofit issues, says most hospitals in North Carolina need to do more to help poor and uninsured patients.

Grassley, an Iowa Republican, was responding to articles by the Observer and The (Raleigh) News & Observer last week that found most North Carolina nonprofit hospitals spend less than 3 percent of their budgets on charity care.

“I don’t think they’re doing enough,” Grassley said.

The investigation disclosed that Charlotte-area hospitals generate some of the nation’s largest profit margins, mark up prices of drugs and procedures, and pay their top executives millions of dollars a year.

The stories also showed that when uninsured patients can’t afford to pay their bills, most hospitals pursue them with collections agencies or lawsuits.

A patient advocacy group plans to put pressure on Charlotte-based Carolinas HealthCare System to stop suing patients.

The newspapers found that North Carolina hospitals filed more than 40,000 bill collection suits over a five-year period. Most of those were filed by two entities – Carolinas HealthCare, a multibillion-dollar system with 30 hospitals, and Wilkes Regional Medical Center, a single hospital managed by Carolinas HealthCare.

Adam Searing, director of the N.C. Health Access Coalition, called the more than 12,000 suits filed by Carolinas HealthCare “staggering.” He said his group will push for change, either through protests or legislation.

“I think it is immoral to do what they do (at Carolinas HealthCare),” Searing said. “…Their balance sheet adds to the argument they should not be doing this. It would be easy for them to do the right thing.”

The system has more than $2 billion in reserves.

System officials say they file suit only when people fail to answer repeated requests for payment. And they say they must try to collect from those who don’t pay their bills because it’s only fair to those who do.

But most North Carolina hospitals don’t sue patients. Cecilia Moore, the chief operating officer at Duke University Medical Center, called the practice “old school.”

A shocked senator

Bob Rucho, co-chairman of the state Senate Finance Committee, has been irritated with hospitals since his son’s recent nasal surgery to improve his breathing. The outpatient operation at Presbyterian Hospital took less than five hours. Rucho said he was stunned by the $27,000 bill.

“I told them, ‘You guys need to find a way to control those costs,’ ” the Charlotte Republican said.

Nonprofit hospitals don’t pay sales, property or income taxes. The newspapers estimated those tax exemptions to be worth more than $800 million annually. In exchange, the hospitals are expected to give back to their communities, largely by providing care to those who can’t afford it.

Rucho said he’ll consider whether large hospitals deserve the sales tax exemption, which returns about $200 million a year to hospitals statewide, most to large hospitals. Most of the money goes to 28 large hospitals. Rucho said the Senate would likely review that in the 2013 long session, when Republicans plan to overhaul the tax code.

House Republican Dale Folwell from Winston-Salem introduced legislation last year that would have required large hospitals pay some sales tax. The bill died quickly following lobbying by the N.C. Hospital Association, which argued the move would increase health care costs.

Folwell wants to return to his proposal to cap sales tax refunds for large nonprofits. His proposal would let state and local government keep an extra $100 million from 28 hospitals and six universities or colleges.

“People are shocked that big nonprofit hospitals get all their sales tax refunded, NASCAR teams get their sales tax refunded, but the public schools don’t,” Folwell said.

Missing the mission

Charity care – free or reduced care for the poor or uninsured – varies widely among North Carolina hospitals, with some spending more than 13 percent of their budgets to provide free care and others spending less than 1 percent.

“It tells me some (hospital) boards of trustees know what their mission is – and others don’t,” said Grassley, a senior member of the Senate Finance Committee.

No national or state rules dictate how much charity care a hospital must provide.

Grassley noted that some for-profit hospitals provide more charity care than nonprofit hospitals – and aren’t even receiving tax exemptions.

Mecklenburg’s hospitals – all nonprofits – perform better than average, with all spending more than 4 percent on free care for the needy.

Many nonprofit and for-profit hospitals pay their CEO’s comparable amounts, Grassley said. “Today, there’s not much difference between nonprofit and for-profit hospitals,” he said.

Grassley said he hopes new provisions in the federal Affordable Care Act, now under review by the U.S. Supreme Court, will encourage hospitals to act more charitably.

But if hospitals don’t show signs of improvement, Grassley said, “we’ll set a very definite benchmark” about how much charity care nonprofit hospitals must provide.

Mystifying bills

For most patients, hospital prices are a mystery. Prices aren’t publicly posted, and patients often have little idea what they’ll wind up paying when they enter a hospital.

Some lawmakers – including N.C. House Speaker Thom Tillis and Senate President Pro Tem Phil Berger, both Republicans – say patients need an easier way to find key information about hospital pricing and charity care.

Tillis said lawmakers will likely work with the hospital industry to make more data available.

Rep. Tricia Cotham, D-Mecklenburg, said she has received numerous emails and Facebook posts from constituents about the series.

Cotham said she’s interested in a bill proposed by U.S. Rep. Heath Shuler, a Waynesville Democrat, that would ease the damage that medical debt can do to a person’s credit rating.

Cotham found herself with a credit problem after a car accident more than 10 years ago. She said she wasn’t at fault and the other driver’s insurance company was supposed to pay for her medical care. But when she tried to rent an apartment last year, she found that an outstanding hospital bill for about $70 was on her credit report. “It was one of those things I didn’t know was on there,” she said.

Folwell said lawmakers should be careful not to add unneeded complexity to the system.

“This problem is like marbleized meat,” he said. “Every single good thing has a regulation or piece of fat attached to it, driving down access and driving up cost.”

Alexander: 704-358-5060

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