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Volume 27, Issue 472 |
July 24, 2006 |
Matthew Gever
On June 20, Illinois became the third state to enact legislation (HB 4999) that protects patients who can’t pay their hospital bills from “abusive, harassing, oppressive, false, deceptive or misleading” practices by collection agencies. The brainchild of Illinois Attorney General Lisa Madigan, the Fair Billing Patient Act establishes standards and guidelines that hospitals and their collection agencies must follow when they bill and collect debts from patients.
The law, which the Attorney General’s Office called the “most comprehensive of its kind,” requires hospitals to post signs notifying patients that they may be eligible for financial assistance. The law also lists the information that must be included in a billing statement; establishes a process for patients to inquire about billing disputes; provides the conditions that must be met before a hospital pursues collection; and, prohibits hospitals from turning to collection agencies for 60 days, during which time a patient can apply for financial assistance.
“I became interested in the bill because of the high number of bankruptcies caused by medical debt,” said Rep. Karen May, who introduced the bill in the House. According to the Attorney General’s office, in 2001 Illinois was home to 110,000 people in medically bankrupt families. May also was concerned that some hospitals were over-zealous in their pursuit of payments. “People would get a letter from a collection agency before they ever saw a bill.”
“A lot of people were calling, complaining that they were getting turned down at hospitals because they didn’t have insurance,” added Rep. Mary Flowers, chair of the Health Care Availability Access Committee.
Connecticut and Washington are the only other states to have passed laws regulating hospital bill collection. In 2003, Connecticut passed SB 568 which, among other things, prohibits hospitals from collecting more than the cost of services from qualifying low-income patients. On June 7, 2006, SB 6189 went into effect in Washington. That law requires hospitals to provide clearly understandable information about services provided and the bills a patient is likely to receive, as well as a phone number for patients to call with questions about their bills. New York State’s 2006-2007 budget also included a provision forbidding ‘egregious billing and debt collecting practices.’
The Illinois law as passed was quite different than initially introduced. The Illinois Hospital Association (IHA) and various business groups objected to many provisions in the original bill, saying they were unworkable for hospitals. The bill was subsequently “amended quite a bit to make it less onerous to hospitals and the hospital association,” said May.
One provision that raised objections would have required hospitals to provide a detailed bill upon discharge, regardless of whether the patient was insured or not. Bills are not always ready when a patient walks out the door, and sometimes can number up to 100 pages, according to Danny Chun of the IHA. Chun also noted that there already was a law in Illinois that allowed a patient to request a detailed statement. He commented that many insured patients aren’t really concerned with detailed bills, so producing them automatically would be a significant waste of time and money.
Rachel Burton
Pennsylvania is poised to save millions per year under a new law designed to transform the State Pharmaceutical Assistance Program (SPAP). PACE and PACENET programs, supported by state lottery funds, provide prescription drug coverage for low-income seniors not eligible for Medicaid. SB 1188, sponsored by Sen. Patricia Vance and signed in early July by Gov. Ed Rendell, will convert the state’s drug assistance plans into a supplemental program that will “wrap around” private Medicare Part D prescription drug plans.
The new program, called PACE Plus Medicare, will cover drugs not covered by Part D, pay beneficiaries’ Part D deductibles, and pay for expenses incurred during a coverage gap known as the “donut hole.” Along with providing Pennsylvania seniors with one of the most generous prescription drug benefits in the nation, the change will shift some of the costs of drug coverage onto the federally funded prescription drug program and save the state $170 million a year.
Under the new law and a special agreement with the federal government, the state is authorized to act as a representative for PACE and PACENET enrollees in matters relating to Medicare Part D—giving it the authority to enroll beneficiaries into Medicare Part D plans, pay Part D premiums, and apply for low-income subsidies on behalf of PACE and PACENET members.
Pennsylvania will send letters to beneficiaries informing them that the state wants to enroll them in a private drug plan, based on an assessment of that individual’s drug needs and preferred pharmacies. PACE beneficiaries will have 10 days to contact the state if they disagree with the state’s plan selection, after which beneficiaries will be auto-enrolled into plans of the state’s choosing.
Some PACE Plus Medicare members who enroll in a Part D drug plan could be eligible for federal low-income subsidies that would cover the cost of Part D premiums and lower their co-payments. At present, 23,000 beneficiaries are enrolled in Part D plans and have signed up for the low-income subsidy, and another 32,000 have signed up for the subsidy but have not yet enrolled in plans.
Others, however, could pay more once they are enrolled in a Part D plan. The new program will drop the $40 monthly deductible PACENET enrollees pay in favor of a monthly premium, not to exceed the regional benchmark Part D premium of $32.54. The premium will be treated like a deductible and will be collected by pharmacies. About 15,000 PACENET enrollees who do not normally use drugs may face higher costs under this new plan design. Because enrolling in Part D will be optional, PACE program director Tom Snedden doesn’t anticipate any problems. “I think the vast majority of our enrollment will end up in Part D plans, and be very satisfied with what we have done here,” he said.
Snedden denied recent reports that beneficiaries would be forced to enroll in Part D to keep PACE and PACENET benefits. “We’re not going to terminate somebody who doesn't accept the assignment,” he said. “But we are going to strongly encourage everybody in the program to [enroll in a Part D plan], because it doesn't mean any harm to them – they're not going to see any diminishment in their benefits.” In fact, Snedden predicts that many people will actually get a slightly better benefit once enrolled in Part D. Under the federal low-income subsidy, roughly 60,000 beneficiaries will become eligible for lower co-payments.
Sen. Vance believes that integrating the programs is a "win-win" for Pennsylvania. The changes to the programs will enable the state “to continue [providing] important benefits for current and future low-income Pennsylvania seniors without beneficiaries noticing changes,” said Vance. In addition, the vast savings generated by the change will go toward “expanding the program and (underwriting) the burgeoning costs of long-term care services for older people on Medicaid,” Snedden said. Snedden anticipates that the PACE and PACENET programs will be expanded by 35 percent to cover an additional 120,000 enrollees.
Pharmaceutical assistance programs in some other states began “wrapping around” the Part D drug benefit when it went into effect in January, but Pennsylvania’s PACE program held off on implementing their plan in order to allow the confusion surrounding the new drug benefit to subside, according to Snedden.
PACE was launched in 1984, and PACENET in 1996 (to cover seniors whose incomes are too high to qualify for PACE coverage). In 2003, Pennsylvania passed legislation expanding access to PACE and PACENET drug assistance programs for the elderly by increasing income limits for PACE to $14,500 and for PACENET to $23,500 (for married couples, limits are $17,700 for PACE and $31,500 for PACENET). This move increased enrollment by almost 100,000 seniors, to nearly 317,000 beneficiaries.
For more information, read NCSL’s report on State Pharmaceutical Assistance Programs (SPAPs), and the Kaiser Family Foundation’s 2-page Medicare Part D summary.
Rachel Burton is an intern with the Forum for State Health Policy Leadership at NCSL.
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