Maryland law should be changed so that hospitals are required to provide charity care to more people and give financial-assistance information to all patients, according to the state agency that sets hospital rates.
In a report to Gov. Martin O'Malley that will be released today, the Health Services Cost Review Commission recommends several changes to the state's unique rate-setting system, which was designed in part to guarantee all Marylanders hospital care whether they could afford it or not.
The commission also recommended that hospitals be required to provide written notice about the availability of financial assistance to all patients before or as they are discharged, and that hospitals and their collection agencies be barred from adding interest and penalties on bills to uninsured patients for periods before court judgments are entered against them.
O'Malley ordered the commission to do an "immediate and thorough review" of hospital debt collection practices in response to a Baltimore Sun investigative series in December. The articles documented how hospitals were aggressively pursuing collection of unpaid bills from patients of limited means even though those debts are supposed to be recovered in the rates they charge.
"When we identify there is a problem, it is important that we study it and come up with practical solutions to solve it," said John M. Colmers, secretary of the Department of Health and Mental Hygiene.
The 90-page report says hospitals should be required to provide free care to all Maryland residents whose incomes are less than 200 percent of the federal poverty guideline - or $36,620 for a family of three or $44,100 for a family of four.
The Maryland Hospital Association has said all of its members, at a minimum, offer free care to patients who have incomes below 150 percent of federal poverty guidelines - $27,465 for a family of three and $33,075 for a family of four - and less than $10,000 in net assets.
"The State lacks any standards for Credit and Collection activities and hospitals' articulated policies are ambiguous and vary even more widely," according to the report by Robert B. Murray, executive director of the cost review commission.
State officials said yesterday that they could not pinpoint the number of additional Marylanders who could be eligible for charity care if the General Assembly follows the report's recommendations, partly because they are still studying the issue of using assets to determine eligibility. But based on 2007 figures, an estimated 90,000 uninsured, nonelderly citizens could become eligible.
The cost review commission had joined the Maryland Hospital Association to oppose moves by the General Assembly in 2005 to define charity care eligibility and to require hospitals to give patients charity care applications.
Yesterday, the association said the report and bills being introduced this week "include a number of steps in the right direction to improve the billing and collection process for Marylanders."
"Some of the recommendations parallel and strengthen guidelines previously adopted by the Maryland Hospital Association," Carmela Coyle, the trade group's president, said by e-mail.
The Sun's series found that in some cases, hospitals sought to add interest at the legal maximum of 12 percent a year on judgments, going back to 60 days after the patient was discharged. The Maryland Constitution sets interest rates at 6 percent for most debt, but hospital debts are exempt.
The report to O'Malley also says state regulators should collect more information on how hospitals handle money they recover from unpaid bills. The newspaper's report found that state officials cannot be sure hospitals aren't getting paid twice for some of the same bills because they don't check. Hospitals deny they collect bills twice. Commission officials have said that while some hospitals report income from debt collections to them every year voluntarily, others don't.
Colmers said state regulators have begun audits of every hospital to determine whether they are deducting money they collect from judgments from the amounts of unpaid bills that they submit for recovery through the rate-setting process.
Del. Peter A. Hammen, the Baltimore Democrat who is chairman of the House Health and Government Operations Committee, plans to introduce a bill today that would set the minimum standard for charity care at 150 percent of the federal poverty guideline, as does a bill filed this week by Sen. George Della, a Democrat who represents South Baltimore.
Hammen's legislation calls for the commission to set up a "work group" to study several issues, including how the assets of patients should be considered in collection efforts.
Also, the attorney general's office would review whether hospitals should continue to be able to obtain liens on patients' homes and charge prejudgment interest. The deadline for presenting findings to the governor would be Oct. 1.