Editor's Corner

There's lots of activity in the air this week regarding hospital pricing, particularly toward those who don't have insurance companies footing the bill. For example, California passed a new law setting hospital price caps for self-pay patients, following New York, which passed similar legislation in April. Catholic Healthcare West agreed to a class-action settlement limiting what its hospitals charge the uninsured and handing back 35 percent rebates going back five years. Meanwhile, Minnesota hospitals began posting their prices for standard procedures on the Web. And as an article in the Healthcare Financial Management Association's magazine notes, 15 states are currently considering legislation that would limit hospital prices for self-pay patients, require discounts to the uninsured, limit debt-collections efforts toward self-pay patients and other similar measures. Something's got to give here.

With CDHPs continuing to emerge, the demand for pricing accountability is only going get tougher over the next several. Voluntary industry guidelines are a step in the right direction, but given the financial pressure to ignore those guidelines, they're not going to solve the problem. While charging full-fare pricing to under- and uninsured patients has never been popular, it's gone from unpopular to politically deadly (I'd argue that it's always been ethically questionable) and it's time hospitals acknowledge the fact. It's time to stop making excuses for a traditional fee structure which simply ignores the facts.

Yes, in theory a hospital needs to charge someone "retail" prices to make up for Medicare, Medicaid and private insurance discounts. However, do hospital financial executives really think they're going to make up for that shortfall by sending massive bills to people who will never be able to pay those bills? After all, industry norms suggest that facilities only collect 2 to 8 percent of all charges to uninsured patients, making the original bill something of a straw man--even a distraction.

But hospitals do have some valid options for rationalizing their pricing structure and remaining profitable. As HFM Magazine authors Richard Wichmann and Reatha Clark note, providers can make sure their pricing falls within reasonable market benchmarks--avoiding the "$250 Band Aid"--leverage IT to guide their decision making, and keep all stakeholders, including the uninsured, informed as to why they're making the pricing decisions they've made.

Ultimately, it all comes down to communication. Whether a pricing strategy is "fair" or not is anyone's call. But if hospitals (and other health facilities) take the time to make reasonable pricing decisions and explain them clearly, maybe states and courts won't feel they need to force pricing and billing policies on the industry to protect the vulnerable. Email me if you have any thoughts on the matter. -Anne