Obamacare Still Hasn't Stopped Non-Profit Hospitals from Ripping People Off

One of the patient protections built into the Affordable Care Act prevents hospitals from overcharging for services and requires them to examine a patient's financial situation before filing a lawsuit. As Steven Brill reported in Time magazine, however, that isn't happening.

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One of the patient protections built into the Affordable Care Act prevents hospitals from overcharging for services and requires them to examine a patient's financial situation before filing a lawsuit. As Steven Brill reported in Time magazine, however, that isn't happening. Hospitals are still charging patients inflated rates and aren't being reprimanded. This is, in part, the fault of the administration.

According to Section 9007 of the Affordable Care Act, charitable hospitals are not allowed to issue "gross charges," are required to clearly outline their financial aid strategies, and not supposed to "engage in extraordinary collection actions before the organization has made reasonable efforts to determine whether the individual is eligible for assistance." Basically, don't overcharge people, and, if they have trouble paying, don't sue them until you've tried to help them. In March Brill covered the obscenely high fees hospitals charge for services ($1.50 for an aspirin, $77 for four rolls of gauze). Hospitals use a chargemaster — a master list that assigns prices to services, usually much, much more than Medicare would pay.

Obamacare should change that, and prevent hospitals from charging patients those chargemaster prices. It's the law, but the Treasury Secretary hasn't issued regulations telling hospitals how to comply with said law. As Brill explains:

Under Section 9007, the only step left to enforce the law was for the Treasury Secretary or his designees at the IRS to issue specific regulations instructing hospitals like Yale - New Haven how to comply. Without the instructions, the hospitals have nothing to comply with.

Then Treasury Secretary Timothy Geithner, or current Treasury Secretary Jack Lew, could have written the regulations with his staff the day after the law was signed, and there is nothing John Boehner or Ted Cruz could have done about it. After posting the rules in the Federal Register and a brief comment period, the regulations would have taken effect.

Instead, the rules were not drafted and published in the Federal Register until June 26, 2012 — more than two years after Obamacare was passed. And that was just an initial draft called "Proposed Regulations." The American Hospital Association then complained — no surprise — that the drafted rules were too prescriptive.

And that's where things stand over a year later. Brill makes it sound incredibly easy — just jot off some regulations and be done with it — and Max Mazur, the Assistant Treasury Secretary for Tax Policy, said they were working on it. "These things take time. It's something we're actively working on," he told Time. Well, work faster.

Under Obamacare, hospitals are also meant to publish their chargemasters, but Health and Human Services Secretary Kathleen Sebelius hasn't written the regulations for that section, either. "We do not have an update on the timeline for implementation of this provision at present," a spokesperson for Sebelius told Time.

This doesn't affect as many people as the millions who lost their non-compliant plans. According to Brill, of the 3.5 million bankruptcies declared since Obamacare went into law, medical debt played a key role in about 2 million of them. And, many of those medical debts wouldn't have existed if those patients had insurance (in the examples Brill gives, both were uninsured at the time of their hospital stay, though one was waiting for employer insurance to kick in). Still, though it's not the biggest hurdle the law has to get over, it's also not the most challenging. This isn't as hard as fixing millions of lines of buggy code, or negotiating cancelled plans with insurers and insurance commissioners. Those were unexpected, but patient protections are built into the law.

More importantly, at least politically, studies have shown that hospital rate-setting has helped keep medical costs from rising quickly. As The Washington Post explained earlier this year, rate settling has helped keep the rise in medical costs low in places like Luxembourg  France, Germany and Maryland, the only U.S. state that limits what hospitals can charge for procedures. Thirty other states also tried out rate-setting before repealing it, but in 2011 the Journal of the American Medical Association thought it wasn't such a bad idea.

This article is from the archive of our partner The Wire.