3 reasons to cover new laws on hospital billing and medical debt

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At least 10 states are taking steps to limit hospital billing practices to protect low-income residents from incurring hospital and other health care debt, according to reporting from Anna Wilde Matthews last week in The Wall Street Journal,States Move to Protect Hospital Patients from Heavy Medical Debt.”

Health care journalists in all 50 states could cover this story because there’s a strong consumer-protection angle to it for three reasons.

  • First, early in the year is the ideal time to cover this trend because so many Americans have high-deductible health plans (HDHPs), requiring consumers to pay their deductibles first. In the first few months of the year, consumers with HDHPs pay for all or most of their care before their health insurers cover their costs for the balance of the year.
  • Second, on Jan. 1, the No Surprises Act became effective, banning many of the most egregious practices that hospitals and other health care providers use when billing patients for medical care.
  • Third, during the recent open enrollment period for the Affordable Care Act (ACA), some 14.5 million Americans signed up for health insurance, a 21% increase in ACA enrollment since last year, as this blog reported on Feb. 2. Many of those new enrollees may be unfamiliar with how their health plans work.

The new laws that states passed last year require that hospitals and other health care providers offer financial assistance to low-income patients or limit aggressive debt-collection efforts, Mathews wrote. Other states are considering laws to add or bolster consumer medical-billing protections, she added.

Mathews’ article is loaded with links to related coverage on this topic that the journal published, such as an October article about the apparently arbitrary nature of what hospitals charge consumers and a December article about how Wisconsin hospitals pursued consumers for medical debts widely and unevenly. Be forewarned, however, that you may need a subscription to access coverage on WSJ.com.

Mathews also included data on how the Census Bureau showed in a report in April that about one in five people in the U.S. had to defer payment for medical debt and that Black and Hispanic Americans had a higher share of such debt. Here’s a link to that report from the bureau: “19% of U.S. Households Could Not Afford to Pay for Medical Care Right Away.” The median amount consumers owed was $2,000, Mathews reported.

And she included this staggering statistic: medical bills are the largest source of debt in collections and those medical debts are larger than all other types of debt combined, including credit card debt and amounts owed to utilities. For data to support these facts, she cited an article that JAMA published on July 20, “Medical Debt in the US, 2009-2020.”

Researchers for the JAMA study estimated that some $140 billion in medical debt was in collections, but that estimate was based on data from TransUnion, which is only one of the nation’s three major credit-reporting agencies, Mathews explained.

In July, Mathews and colleagues Melanie Evans and Tom McGinty reported on an analysis of hospital pricing data from Turquoise Health, a company that collects those numbers from hospital websites for 300 shoppable (or elective) services. As of January 2021, the federal Centers for Medicare and Medicaid Services required hospitals to disclose what they charge (from the hospitals internal pricing system, called a chargemaster) and what they get from third-party payers such as health insurers, the company said.

In their analysis, Evans, Mathews and McGinty showed that consumers who are uninsured and who offer to pay cash often are charged more than what health insurers pay for the same service at the same hospital. Before the hospital-price transparency system went into effect, that data were confidential.

Their analysis provides yet another reason to cover this story because, as researchers noted in July, “Few adults are aware of hospital price transparency requirements,” according to the Peterson Center on Healthcare and the Kaiser Family Foundation.

In November, the foundation published its annual report, the “2021 Employer Health Benefits Survey,” on what workers at U.S. companies pay for premiums and deductibles. That report showed that last year, HDHPs with a health-savings account (HSA) were required to have an annual out-of-pocket maximum of no more than $7,000 for single coverage and $14,000 for family coverage. The average annual out-of-pocket maximum for single coverage was $4,425 for HDHPs with a health retirement account and $4,368 for HDHPs with an HSA, the report showed.

For more information on state measures to protect consumers from medical debt, see this article that JAMA published on Jan. 11, “New State Consumer Protections Against Medical Debt.” Inadequate protections in federal law prompted 21 states to pass more stringent protections: California, Colorado, Connecticut, Illinois, Kansas, Louisiana, Maine, Maryland, Massachusetts, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Ohio, Oregon, Rhode Island, South Carolina and Washington, the authors noted. Then, last year, Colorado, Illinois, Maryland and New Mexico strengthened their laws by adding consumer protections that are among the strongest to date, they wrote.

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