On March 14, 2016, the Indiana Court of Appeals decided the case of Parkview Hospital v. Frost. (Parkview seems to make a lot of case law on the subject of hospital liens.) The question was the proper amount of the hospital lien against the proceeds of an injured party’s personal injury suit. Parkview asserted a lien based on the sticker prices for medical services found in its chargemaster. Frost wanted evidence from Parkview about what it accepted as payment in full for similar procedures from people covered by private insurance or government programs. Parkview declined to provide that information and asked the court to determine that its chargemaster rates were owed as a matter of law. The trial court declined to make that finding. Two members of the Court of Appeals panel agreed and said that Frost should be able to discover information about what other patients paid and introduce that to challenge the lien amounts.
Judge Najam, however, said that — while he agreed this would be a reasonable decision in a vacuum — it ignored the Supreme Court’s ruling in Allen v. Clarian Health Partners. The Supreme Court in that case had overruled an opinion written by Judge Najam. Judge Najam argues that Allen stands for the proposition that patients signing an agreement to pay for medical services are, in fact, agreeing to pay the chargemaster rates regardless of whether those rates are reasonable, rational, or known to the patient. He feels bound by Allen but disagrees with it and urges the Supreme Court to revisit its holding:
Thus, in its operation and effect, Allen places health care consumers, including emergency room patients, at a permanent, take-it-or-leave-it disadvantage. Allen immunizes a hospital’s unilateral pricing scheme from an evaluation or comparison by individual consumers or the marketplace at the front-end and then leaves those same consumers without recourse from a trier of fact at the back-end. Given that there is no price transparency, to insinuate chargemaster rates into an agreement “to pay the account” cannot possibly represent a meeting of the minds between the contracting parties. Chargemaster rates are not per se reasonable when they are, first, confidential and, second, incomprehensible. In sum, there is no discernable or reliable correlation between chargemaster rates and the reasonable value of the health care services provided.
(As is probably evident from my prior blog posts linked above), I tend to agree with Judge Najam. We need more consistency on standards of proof and whether a reasonableness standard applies where there is no prior meeting of the minds as to health care charges. At the moment, there seems to be a lot of variability based on who is paying and not so much based on what services were provided and the reasonable costs/prices of those services.
Supreme Court gets another chance to address chargemaster rates v. reasonable rates in the Patchett v. Lee case currently pending transfer. Should be an interesting one following up on the whole Stanley v. Walker decision.
Chargemaster rates sometimes do not even reflect a hospital’s costs. They can purchase confidential pricing information and use that. That is what managed care companies often use to set rates to reimburse providers.
Transparency in chargemasters will not generally permit consumers to shop for the best price. Most hospital admissions are not elective. You go to the ER or your MD admits you to the hospital. Also, as noted, there is so much information in a chargemaster a consumer could not meaningfully predict the charges.
Chargemaster rates far exceed what healthcare plans pay. But healthcare plans bring a provider a volume of patients and payment is always forthcoming. The uninsured bear two burdens. First, they pay far more than the rates for healthcare plans. Secondly, they often pay little or nothing on their bill. So chargemasters allow providers to get some payment for services. It is cost-shifting, and a rough way to do it.
If the court or the legislature requires that chargemasters be made public, I imagine that hospitals will examine the rates of hospitals in their area and raise prices to match the highest chargemaster rates being paid.
I have to agree with Najam also. The court is bound by Allen. Reasonableness tests for chargemasters would engage courts in an area where they have no expertise and resources to determine reasonableness.
I suspect that if the supreme court denies transfer, and Parkview stands, the Indiana Hospital Association will draft a bill to provide as a matter of law that chargemaster rates are reasonable.
One more point I would note. The “meeting of the mind” test is an outmoded rule of law. The better rule is the objective rule. Would a reasonable person determine that a contract has been created.
I’m very interested in how our health care system is working and no lawyer but this appears to even further make it seem that we aren’t even close to getting it right.
The whole affair seems a monumental waste of resources to me.
JHarp, the US healthcare system fails at many levels. This first and foremost failure is the exorbitant cost. US per capita healthcare costs 2.5 times the average of other OECD countries. Most every problem flows from the high cost. If US costs were lower, more people and employers could afford absorb the cost of healthcare.
American healthcare quality is about average when compared with outcomes from other Western countries. And the quality varies widely. Rural areas are greatly underserved. Poorer urban areas have poorer outcomes.
The country still cannot achieve universal coverage. Despite modest success in expanding coverage (and eliminating the pre-existing conditions exception), the ACA is targeted for repeal by the Republican party. And the Republicans offer no credible alternative to the ACA.
There are two huge drivers in American healthcare that most other countries do not face. Our healthcare system is hospital driven. Despite being tax exempt and nominally not-for-profit, they behave as for-profit entities. They expand into wealthy suburbs. They race to develop and exploit medical specialties that have generous reimbursement. The hospitals offer amenities to attract patients with generous healthcare benefits. These activities require huge amounts of capital and fixed costs.
Another great failure is the exorbitant cost of pharmaceuticals that Americans pay. Most countries negotiate with drug companies to achieve huge discounts. In the US we have many relatively small payors that do not have bargaining power. And the law actually bars Medicare from negotiating with drug companies for the drugs provided under Medicare Part D.
The other pharma cost driver is television advertising. It creates demand for new brand name drugs where medical need may be slight and where generics are available.
I have been following healthcare reform since 1990. I believe that the Clinton plan, Managed Competition, would have been moderately successful in restraining costs and providing universal coverage. The Clinton plan would have saved money by eliminating all small and medium size insurers. Only a handful of the largest payors would managed benefits for the entire nation. The administrative cost savings would be huge as would be the negotiating power of these payors. In the early 1990s, healthcare costs amounted to a then exorbitant 1/8 of Us GDP. The country missed the boat by failing to enact the Clinton Plan, and healthcare costs amount to 1/6 of GDP. No surprise there.
For the last ten years or so, I have supported single-payor as the only credible vehicle to restrain costs and provide universal coverage. Medicare Part E, as it is also called, would have administrative costs of two to three percent. And by giving Medicare monopsony bargaining power, costs could be brutishly(at first) contained and increases would be vary minimal. And the physical infrastructure is in place. Just as large insurance companies under contract with the US government to administer the current Medicare program, current large insurers could contract with the government to manage the new Medicare Part E benefits.
You left out the part where the for profit and the not for profit hospitals are fucking over doctors.
And though I was at one time in favor of a single payer for all I have since changed my mind.
For now. Let’s see how this ObamaCare thing works for the time being. And keep in mind the Dutch went from a single payer to an ObamaCare model.
And my belief is what really needs to be done is regional single payer health care systems.
While well intended there are many logistical problems with ObamaCare.
1) It does not automatically cover people between Medicaid levels and poverty line. This is state-by-state. Indiana has HIP 2.0 but it is (or at least was) hard to get into because of a lack of funding.
2) People whose earnings fluctuate around the poverty line income (e.g., waitresses) will yo-yo between a federal program and a state program.
3) It requires knowing up-front how much a person will earn in the upcoming year. This is not easy to determine and if a person guess wrong then the government needs to claw-back money from the person.
4) Choosing a health plan, filing the tax forms and completing other paperwork is irritating. Employers tend to do this for their employees (and give them limited plans to choose from) but ObamaCare does not shield people from the hassles. And hassles the paperwork becomes especially for the low-income, less educated people for whom ObamaCare is created.
Overall all a very ugly and, I suspect, ultimately unmanageable system.
Got it.
So when can expect Republicans to fix any of these issues?
You do realize it’s been 7 years we’ve been waiting?
Probably never. All the Republicans (at least the majority) seem to want to do is to get rid of ObamaCare and not fix the overall problem with medical care in the USA. ObamaCare is evil in and of itself and must be eradicated at any cost — at least in the sight of many Republicans.
Rick Westerman said : “It does not automatically cover people between Medicaid levels and poverty line. This is state-by-state. Indiana has HIP 2.0 but it is (or at least was) hard to get into because of a lack of funding.”
I’m going to try to address this because what you are saying is not quite correct. HIP 2.0 is available to anyone who applies and is eligible. The previous version of HIP did limit the number of people who enrolled, but HIP 2.0 does not. HIP 2.0 is Medicaid. It is part of the Medicaid expansion under the Affordable Care Act. The famous “Obamacare” case decided by the Supreme Court in 2012, National Federation of Independent Business v. Sebelius, did more than just uphold the law and the individual mandate. Three justices, including Chief Justice Roberts ruled that the Medicaid expansion under the act was constitutional, but that states had to be given the right to opt out without losing their Medicaid funding, which is how things stand now. Indiana eventually expanded Medicaid to include eligible adults with incomes up to 138 percent of the federal poverty level. Several states have not done so, however, since they are not compelled to do so.
Please keep in mind that the ACA, actually came from The Heritage Foundation and is pretty much what “conservative” health care reform would look like. Similarly, HIP 2.0 is largely based upon conservative ideology about health care, which, unfortunately, does not necessarily align with reality. Most of the flaws of both the ACA and HIP 2.0 can be tied back to conservatism that is the foundation of both programs.
Pila, you are right that in the pantheon of healthcare reform models, the ACA is based on a conservative model. In 1994 the Heritage Foundation proposal would have had near complete republican support.
Good to hear that HIP2 is completely funded and open to any one that qualifies due to income. My direct experience was with the original HIP and I was unsure if the HIP2 had same limitations which is why I put “.. (or at least was) …” in my original post.
Well, I can’t say that HIP 2.0 is fully funded, just that there is not a limit on number of enrollees. :) While income is the major eligibility requirement, there are others, such as age, Indiana residency, citizenship or immigrant status, etc.
I just read that the new Kentucky Governor wants to drop traditional Medicaid and model the Kentucky system after Indiana’s HIP. CMS has been very generous with waivers for states that want to expand Medicaid in non-traditional ways such as HIP. However, it is believe that CMS may not approve a rollback from traditional Medicaid to alternative model.