Committee Expands Inquiry into Hospital Billing Systems

Investigation turns to overly complex invoices

WASHINGTON – The House Energy and Commerce Committee has opened a new phase in its investigation of America’s hospitals, seeking to assess the full impact on consumers of payment disparities for services and to determine whether hospital bills require an accountant to decipher.

Today the committee asked 10 leading American hospital companies to provide extensive records on these and other topics. The health care providers contacted are: Ascension Health, Inc. of St. Louis; Adventist Health of Roseville, CA; Catholic Health East of Newton Square, Pa.; Sutter Health of Sacramento, Calif.; New York-Presbyterian Healthcare System at Columbia Presbyterian Medical Center in New York City; HCA of Nashville, Tenn.; Catholic Health Initiatives of Denver; Mayo Health System of Rochester, Minn.; Tenet Healthcare Corp. of Santa Barbara, Calif.; and Catholic Healthcare West of San Francisco.

The request follows a hearing by the Subcommittee on Oversight and Investigations last year. At that hearing, witnesses spoke of hospitals expecting patients without traditional health coverage to pay far more than the amount that insurance companies paid for the same service. Those affected include the millions of Americans without insurance and those that opt for health savings accounts.

“When Americans go to the hospital, they shouldn’t be taken to the cleaners,” said U.S. Rep. Joe Barton, R-Texas, chairman of the committee. “Today, some patients are confronted with prices that can be grossly out of line and with statements that might as well be in a foreign language.

“I want consumers to be empowered with the information they expect and ought to have. They also deserve a pricing structure that is fair,” he said. “We need to know how close we are to those goals and to determine what, if any, changes may be necessary to protect consumers. It is my hope that this inquiry can help more Americans have access to affordable, quality health care.”

Full text of the letter is below:

Dear _______:

Over the past two years, the Committee on Energy and Commerce has been conducting an in-depth review of hospital billing and collection practices. On June 24, 2004, we held a hearing on the impact of these policies and practices on uninsured/self-pay patients. We are following up with the hospital industry on several additional related matters raised in the course of our review that also potentially affect issues of public health and consumer protection. -- more --

The Committee’s work to date has focused on hospital billing and collection practices for uninsured/self-pay patients. The Committee examined how hospitals often expect uninsured/self-pay patients to pay far more for their care than what the hospitals would otherwise accept from managed care or government programs and then sometimes aggressively pursue these patients for this debt. Many hospitals have revisited their policies and practices on these issues and recently, on February 10, 2005, the Committee sent a letter to the nation’s five largest hospital systems to learn how any such changes have improved the situation of this patient population.

“We now follow up on two additional specific issues raised by these earlier matters. First, while our inquiry to date has looked closely at the manner in which hospitals set their charges, we turn now to the manner in which those charges are presented, explained, and understood by the medical consumer through patient billing records. The Committee is examining how clear, accurate, and accessible these important documents are to patients. While this issue may touch all medical consumers, it is perhaps most relevant to patients who handle a bill without the direct support of a large and experienced health insurer – such as the uninsured or a person managing a health savings account. Second, expanding on the Committee’s work that revealed how expensive hospital charge master or “list” prices are, we are also studying further how patients and other consumers may be directly or indirectly affected by these high prices.

Patient Billing Records

On December 17, 2003, new American Hospital Association guidelines for treatment of uninsured patients in billing and collections matters included the following: “Hospitals should use a billing process that is clear, concise, correct and patient friendly.” Many patients, however, may still find medical bills to be very difficult to understand and evaluate. To be sure, medical providers necessarily use terminology outside the common experience of most patients; nevertheless, health care consumers must be given every opportunity to understand exactly what they are paying for and how much they are paying - particularly given the significant costs and financial consequences involved. Transparency and accuracy in patient billing records are vital to enlisting patients and consumers in monitoring and controlling health care costs.

What is the Impact of “Charge Masters” on Consumers?

The Committee has closely studied the impact high hospital charge master prices have on uninsured/self-pay patients. In its defense, some in the hospital industry have suggested that few parties, including many uninsured patients, in actuality, pay these full rates. However, given the magnitude of these prices, the Committee must examine further the significance of these charges to patients and consumers. As such, the Committee will explore two areas where these high charge master rates may impact, directly or indirectly, patients and consumers.

1. Out-of-Network Patients: Out-of-network patients are insured individuals treated, by circumstance or choice, in hospitals with whom their health insurer has not negotiated any rate or discount. While the insurer may cover part of the services, hospitals may seek the balance of the bill (the difference between what the health insurer pays and the charge master price) directly from the patient. This “balance billing” may be surprising insured patients with unexpectedly high bills based on charge master rates.

2. Property/Casualty Insurers: The Committee is also exploring how hospital charge master rates impact consumers in the area of property/casualty insurance, such as automobile coverage. Property/casualty insurers may be paying medical benefits under their policies at or close to the full charge master rates. Unlike health insurers who can negotiate discounts in advance with an area hospital, car insurers cannot know where their insured will be when involved in an accident and have to pay after-the-fact charges – sometimes at full charge master rates. This may mean insureds pay hospital charge master rates indirectly in their auto premiums and see their policy limits quickly exhausted. We will look at whether these entities, and their insureds, are shouldering the full charge master rates.

Record and Information Requests

Pursuant to Rules X and XI of the U.S. House of Representatives, please provide the Committee with the following records and information by May 13, 2005. Please note that Requests Nos. 2, 3, 5, 6, 8, 10, 11, 13, 14, 15, 16, 17, 18, 19, and 21 ask for narrative responses or a statement of specific data. With respect to these specific Requests, answers by way of simple reference to produced documents will be insufficient and incomplete. The breadth and timeliness of this review requires each respondent to prepare and submit complete written responses to these Requests, as appropriate. Next, where your response to this letter will include documents which were previously produced by your system to this Committee in response to either our July 16, 2003 or February 10, 2005 letter, you do not need to produce again any such documents, but rather you may incorporate them in your response to this letter by reference to specific Bates ranges from the earlier production. Finally, for the purpose of your response to this letter, please limit your search for documents and information, where appropriate, to the three largest hospitals (by net patient revenue) in your system.

Please respond to these Requests in accordance with the definitions attached to this letter and otherwise provided herein. Additionally, please also respond to these Requests pursuant to the following definitions:

“Patient billing records” mean:
Any statements, reports, forms, invoices, or other such record, made for any internal or external use whatever, relating to the accounting of the charges or payments for health care services rendered to a specific patient. For the purposes of this letter, “patient billing records” does not mean any general hospital accounting or financial records containing only aggregate patient billing information.

“Patient medical records” mean:
Records typically completed by medical service providers documenting medical services including emergency room records, recovery room records, anesthesiology records, nursing medication notes, operation room records, nursing notes, physicians’ orders, or discharge summaries.

“Out-of-network services” mean:
Health care services provided to a patient with health coverage through an insurer with whom the treating health provider does not have any relevant payment contract or agreement.

Finally, for the purposes of these Requests, please do not provide any patient names or patient specific or individually identifiable health information. Further, please do not produce any records which relate only to the accounts of individual, specific patients.

1. Please provide the first 500 items that appear on the current charge masters of your 3 largest hospitals. This list should be printed, copied, or otherwise produced in whatever form it is typically kept. The items should include any and all service or supply descriptions, associated codes or references, and associated prices or charges.

a. Are these item descriptions and charges those that would appear on patient billing records - for example, in an itemized statement?

2. Please state under what circumstances the description of an item in your charge master would be changed. Please state the last 5 changes made to the descriptions in each of the charge masters discussed above in response to Request No. 1 and the reasons for such changes.

3. Describe each type of patient billing record created by your system and state under what circumstances each such record is created. Also, please indicate any differences between the patient billing records created for patients based on the party responsible for payment (e.g., Medicare patients vs. self-pay patients).

4. Provide a representative copy of each type of patient billing record presently created by your system.

5. Are all patient billing records available upon request by the subject patient?

a. If not, which patient billing records are not available and why are they not available?

b. Are any patient billing records available to the patient only for a fee?

6. Does your system generate for every patient a standard health insurance claim form “UB-92” or all information necessary for a “UB-92” form? If so, are all patients allowed to have, upon request, a “UB-92” form related to their treatment and, if not, why?

7. Provide all written policies and procedures related to giving patients access to the patient billing records related to their treatment including, but not limited to, UB-92 forms.

8. Describe your policies and procedures regarding requests by a patient or other payor for information about the terms, codes, or charges on their bill and requests for an audit of their bill.

9. Provide all written policies and procedures related to requests by a patient or other payor for information about the terms, codes, or charges on their bill and requests for an audit of their bill.

10. Do you believe that the typical patient is able, without detailed consultation with the hospital, to understand your patient billing records as presented and determine whether the services and supplies listed on the records were appropriate and related to their care?

11. Provide a list and description of each unique coding or reference system used within your hospital system in its patient billing records with respect to any revenue, service, supply, or charge such as any revenue codes, service numbers, batch references, procedure codes, charge codes, reference numbers, service codes, or charge master numbers. Please also indicate which hospitals within your system uses each such coding or reference system.

12. Provide any studies, evaluations, or reports on the clarity, readability, or understandability of patient billing records and any written policies or procedures related to managing customer inquiries or complaints about the clarity, readability, or understandability of patient billing records.

13. Are all patient medical records available upon request by the subject patient?

a. If not, which patient medical records are not available and why are they not available?

b. Are any patient medical records available to the patient only for a fee?

14. Are you familiar with the practice of “unbundling” charge master items and does such a practice take place in your system? If “unbundling” takes place, please state:

a. When and why are items “unbundled” on your charge master?

b. Does the total charge for items when unbundled ever exceed the total charge for the single aggregate item?

c. Please produce all records related to plans for the unbundling of any items on any charge masters in your system.

15. During the course of this review, some hospital systems had suggested that, although charge master prices may be high, few parties in reality paid the full charge. As such, describe under what circumstances parties pay at or near full charge master rates or near to charge master rates given only standard or prompt pay discounts. Please identify such instances and parties, including any related third-party payor.

16. For the period beginning January 1, 2000, and for each subsequent year, please state the three largest single payors to your system excluding all federal or state health plans, or group health insurers such as any maintenance organizations or preferred provider organizations.

17. For the period beginning January 1, 2000, and for each subsequent year, please state the following information for your system: the net revenue collected per patient day for (a) all group health insurance; and (b) all other insurance, including but not limited to, automobile insurers.

18. Do patients ever pay prices based on a charge master for out-of-network services? If so, is this ever at or near the full charge master price?

19. Have you ever sought payment for out-of-network services from a patient individually (not including deductible or co-payment amounts), by any means, for prices based on a charge master when part of the bill had already been covered by a group health insurance payor? If so, under what circumstances does this occur?

20. Provide all written policies and procedures related to billing and collection of “out-of-network” patients.

21. For the period beginning January 1, 2000, and for each subsequent year, please state the following information with respect to out-of-network services for your system: (a) the gross billing per patient day; (b) the net revenue collected per patient day; and (c) total number of patient days.

If you have any questions, please contact Anthony M. Cooke, Majority Counsel for Oversight and Investigations, at (202) 226-2424.

Sincerely,

Joe Barton
Chairman

Ed Whitfield
Chairman
Subcommittee on Oversight and Investigations

cc: The Honorable John D. Dingell, Ranking Member
The Honorable Bart Stupak, Ranking Member
Subcommittee on Oversight and Investigations

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