Financially speaking, patients soon will find visits to North Carolina hospitals less painful and mystifying.
Under laws passed by the General Assembly, they’ll get more protection from aggressive bill-collection practices.
Hospitals will be prohibited from putting liens on the houses of some patients, and will have to give written notice before sending accounts to a collection agency.
Patients will also find it easier to comparison shop. Starting next June, hospitals must post prices for common procedures, as well as their charity care policies.
And they’ll have to put their bills in plain, easy-to-understand language without obscure codes and medical jargon.
“Transparency is a good first step to fixing things,” said Sen. Bob Rucho, a Matthews Republican who led the push for the changes.
The bill came after a series of stories in the Observer and The News and Observer of Raleigh last year explored how the growing market power of hospitals has driven up prices.
The stories revealed soaring profits at nonprofit hospitals, seven-figure executive salaries, and efforts by hospitals to sue uninsured patients delinquent on their bills or to turn over the accounts to collection agencies.
For years, the state’s hospital industry was accustomed to getting its way in Raleigh. With a squad of lobbyists and generous donations to elected officials, it has long been one of the most powerful interest groups.
In the past, hospitals rarely had to appeal directly to the public. Hospital lobbyists and CEOs met privately with lawmakers to kill bills they opposed or to push legislation they favored. They seldom suffered defeats.
This year was different. Hospital officials said they were hurt by cuts in Medicaid reimbursement and a federal matching funds program known as hospital assessments.
“This session included the largest budget cuts in history for hospitals,” N.C. Hospital Association spokesman Don Dalton said in a statement. “Hospitals will be taking $100 million in cuts from the State.”
A major ad campaign
Those weren’t the only issues that forced hospital lobbyists to play defense.
The legislature capped sales tax refunds for large nonprofit hospitals, though the cap is so high that it’s unlikely to affect any hospitals this year.
More serious was the General Assembly’s refusal to expand Medicaid to 500,000 North Carolinians, one of several proposed changes under the federal Affordable Care Act. That was “a huge loss” for hospitals, said Adam Searing, director of the Health Access Coalition at the N.C. Justice Center.
“It seems to me they lost a lot with the Medicaid decision,” Searing said. “But it seems like they worked really hard to make it clear that was the only thing they were going to lose.”
Hospitals responded with an unprecedented lobbying campaign outlining a variety of financial threats, including the loss of sales tax refunds and competition from same-day surgical centers.
The N.C. Hospital Association said it spent about $1 million to spread its message to the public. An extensive letter-writing campaign sent more than 40,000 letters to lawmakers and the governor.
Hundreds of hospital employees visited the legislature to lobby. And hospital officials became more public at the legislature.
“You started seeing lobbyists from the association actually speak in committee, which you almost never saw before,” Searing said. “I think they were feeling more pressure.”
Bills you can understand
Hospital bills are notoriously hard to understand. Under the new legislation, which Gov. Pat McCrory is expected to sign soon, those bills will have to be written in simple language.
Hospitals will have to post pricing and payments for their most common admissions, surgeries and imaging procedures. They will have to list the prices and the reimbursements from Medicare, Medicaid, large private insurers and uninsured patients.
They will also be required to post their charity care policies prominently in their buildings and on their websites.
The bill also mandates that hospitals rein in some of their more aggressive bill-collection activities.
They will be prohibited from putting liens on houses co-owned by spouses – at least until one of the spouses dies. They will also be banned from referring unpaid bills to collection agencies while a request for charity care is pending.
The newspapers’ 2012 investigation found that N.C. hospitals filed more than 40,000 lawsuits to collect on bills over a five-year-period.
Most of those suits were filed by just two entities – Carolinas HealthCare and Wilkes Regional Medical Center in North Wilkesboro.
In many cases, the hospitals put liens on houses, a practice that allows them to collect money after patients sell their homes or die. But those liens also can make it impossible for people to refinance or borrow on their homes.
Charlotte resident Terry Belk applauded the changes.
In 2006, he said, Carolinas HealthCare System placed a $28,000 lien on his east Charlotte home after his wife’s breast cancer treatment left the family with bills they could not afford to pay.
Now, he says, he cannot refinance his mortgage or borrow on the home’s equity. “Basically, I’m a renter,” he said.
The new legislation will force hospitals to use “more respectful collection practices,” Belk said. “They’ll have to work with people.”
Carolinas HealthCare said it “maintains fair and compassionate collection practices” and offers financial assistance to those who are eligible.
In a statement, the system said it is “reviewing the latest legislative language related to this topic, and we welcome the legislature’s interest.”
Battle over sales taxes
Defeating the sales tax refund proposal was the biggest priority for hospitals. Each year, the N.C. Department of Revenue refunds about $220 million to nonprofit hospitals.
In June, the state Senate passed a bill capping sales tax refunds to nonprofits at $100,000. When the House refused to go along, the Senate offered to raise the tax break cap to $2.85 million.
That would have been a significant hit for some big hospitals. Novant Health, which owns the Presbyterian hospitals in Mecklenburg County, said it received tax refunds of about $21 million last year.
When the N.C. Chamber, the state’s business lobby, backed a tax bill that eventually would have capped the annual refund at $2.85 million, the hospital association dropped its membership in the chamber. So did Carolinas Healthcare System.
As hospitals continued to object, the sales tax refund was raised again, this time to $45 million.
Hugh Tilson, lead lobbyist for the hospital association, said the cap will not affect any hospitals this year, but he worries that a precedent has been set to lower that cap in future sessions.
“It’s easier to deal in black and white than gray,” Tilson said. “We used to have: Thou shalt not tax non-profits.”
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