Fixing the Chargemaster Problem for the Uninsured

For those disturbed by the evils of the hospital chargemaster as exposed by Brill’s piece in time, Uwe E. Reinhardt’s proposed solution is a must read.
While the hospitals are never going to charge the uninsured the same rate as they charge medicare (and probably be less forgiving the more they think they can get out of you), that’s no reason we can’t force them to with state law. Apparently that’s what Reinhardt had them do in Jersey:

In the fall of 2007, Gov. Jon Corzine of New Jersey appointed me as chairman of his New Jersey Commission on Rationalizing Health Care Resources. On a ride to the airport at that time I learned that the driver and his family did not have health insurance. The driver’s 3-year-old boy had had pus coming out of a swollen eye the week before, and the bill for one test and the prescription of a cream at the emergency room of the local hospital came to more than $1,000.
By circuitous routes I managed to get that bill reduced to $80; but I did not leave it at that. As chairman of the commission, I put hospital pricing for the uninsured on the commission’s agenda.
After some deliberation, the commission recommended initially that the New Jersey government limit the maximum prices that hospitals can charge an uninsured state resident to what private insurers pay for the services in question. But because the price of any given service paid hospitals or doctors by a private insurer in New Jersey can vary by a factor of three or more across the state (see Chapter 6 of the commission’s final report), the commission eventually recommended as a more practical approach to peg the maximum allowable prices charged uninsured state residents to what Medicare pays (see Chapter 11 of the report).
Five months after the commission filed its final report, Governor Corzine introduced and New Jersey’s State Assembly passed Assembly Bill No. 2609. It limits the maximum allowable price that can be charged to uninsured New Jersey residents with incomes up to 500 percent of the federal poverty level to what Medicare pays plus 15 percent, terms the governor’s office had negotiated with New Jersey’s hospital industry.

Reinhardt also makes clear that the problem of excess cost is not the chargemaster or hospital profits, which are not so extraordinary, as did I in my original piece (at least compared to excess drug costs, insurance administration, inefficiently delivered service and unnecessary services etc). But the injustice of the uninsured facing these inflated bills that are designed to antagonize large payers like health insurance companies, should be addressed. You can’t bleed a radish, and hospitals should stop trying to when it comes to the uninsured. Since they won’t without government encouragement, such legislation should be considered at the state and national levels.


2 responses to “Fixing the Chargemaster Problem for the Uninsured”

  1. Honestly, well made points. And I was not even aware that NJ did that. I think the best thing for everyone probably would be a system of rate setting similar to that. Either in each state or federally mandated (maybe a baseline there and states can expound on it). Hospitals definatly need money for equipment and personel, but that said I think using price setting of some sort (including drugs) will really help people get the care they need and not go bankrupt getting it. Not to mention would probably lower insurance rates as well.

  2. Cheryl Winchell

    I agree with Mark that pegging fees to the uninsured to Medicare fees is a sensible solution. Medicare fee schedules are easy to come by and the reduction of fees to something within the realm of reason would encourage the uninsured to make good on the care received. As is is now, the unpaid bills of many uninsured people become the bulk of the “charity care” the hospital provide. Putting a reasonable price tag on a visit introduces some fairness to an otherwise non-negotiable and unfair equation.

Leave a Reply

Your email address will not be published. Required fields are marked *