Unchecked collections

Our view: Hospital collections policies deserve state scrutiny to ensure that Maryland's system to defray the cost of treating the poor isn't abused

December 24, 2008

Maryland's unique hospital rate-setting system was created to keep health care affordable and available to all Marylanders. Whether patients were insured or not and despite their income, the regulatory system built in incentives to keep rates low and encourage hospitals to operate efficiently. And the public took on the responsibility of helping offset the costs to avoid patient dumping and ensure a quality of care regardless of one's ability to pay. But today, some of the very people the system was designed to protect are being victimized by hospitals with aggressive collections policies and regulators who haven't held them accountable. An eight-month investigation by The Baltimore Sun has discovered a seamier side to a system that has basically succeeded at its mission - to keep hospital rates reasonable while providing top-flight care to all patients.

The regulatory system is a complex one, but it has been handicapped in part by relying on a hospital's account of its collections policies. And while the system is designed to compensate hospitals for care they provide free of charge, regulators also have built in incentives to encourage them to collect as much of that debt as possible. That has resulted in thousands of lawsuits filed against patients by hospitals - some are more aggressive than others - and a reliance on collections agencies whose fees may depend on money recovered.

Patients who can pay should pay; otherwise, the burden falls on everyone else through higher hospital costs and insurance rates. But the collections practices of some hospitals cited in The Sun's series "In Their Debt" don't discriminate. They ruthlessly go after sick or working people who genuinely can't pay, put liens on patient's homes (despite a national policy discouraging it) and even ignore the law when it is in their interest.

The victims of such legal shenanigans may represent a small fraction of the millions of patients treated in Maryland hospitals, but that doesn't make it right or an acceptable cost of doing business. Not when the public is helping foot the bill for some of this care.

While state regulators require annual financial audits of hospitals to check the rate of uncompensated care, collections practices have not been their focus. That oversight must be corrected. As part of an investigation ordered by Gov. Martin O'Malley, the state Health Services Cost Review Commission at the very least should set standards on who is eligible for free care, guidelines for collecting unpaid debt and appropriate sanctions.

There's been an attitude in Annapolis that too much regulation of hospitals would deter them from delivering the kind of care Marylanders have come to expect. But the state's system has to put the public's interest first; robust oversight ensures that responsibility is met, and regulators must have the tools to provide it.

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