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2004-01-11 -- Debtor's Prison for patients with unpaid bills

  *  How Hospitals Are Gouging and Even Arresting the Uninsured

  *  Hospitals Try Extreme Measures To Collect Their Overdue Debts



Democracy Now, Sunday, January 11, 2004

Today's Democracy Now program has a segment on so-called charity
healthcare in the US.  Medical bills are the leading cause of
bankruptcy in the US, partly because the uninsured are billed at much
more than health plans or state and federal governments for the same
services. Private hospitals are providing pennies of charity per
dollar of tax break received, including reduced referrals to
specialists for charity patients.

Today's Democracy Now program documents how uninsured patients at
private "non-profit" (substantially untaxed) hospitals, after failing
to inform uninsured patients of the option of charity care and billing
outrageous charges, have seized houses, garnished wages and even
jailed their patients for not paying bills they cannot begin to
afford.

The program tells about an uninsured musician who had attended 13
court hearings on the hospital bill he incurred at the teaching
hospital of the University of Illinois Champaign-Urbana campus, but
was arrested for failing to appear to another he was not notified of.

The bond money his brother paid to get him out of jail was applied to
his hospital debt.  The original $7,718 charge has had some $3000 in
interest charges added by the collection agency, so none of the
patient's $1340 payments is credited toward his hospital bill.

To listen to this show:
http://stream.realimpact.net/rihurl.ram?file=webactive/demnow/dn200401
07.ra&start=07:21.5

To view minutes of a San Francisco Health Commission meeting on SF
charity care showing that California Pacific Medical Center, Chinese
Hospital, Saint Francis Memorial Hospital and St. Mary's Medical
Center, received far more in tax benefits than they spent caring for
uninsured patients:
http://www.dph.sf.ca.us/HCMinutes/HCMin03/HCMin11182003.shtml

For a revealing Wall Street Journal, in which blame their gross
overcharging of uninsured patients on not being paid enough by
Medicare, see the bottom of this post.




Uncharitable Care:
How Hospitals Are Gouging and Even Arresting the Uninsured

By The Staff of Democracy Now!

What do the Emir of Kuwait and the working poor of the United States
have in common? Not much, except when it comes to paying for health
care in the United States. They all pay the highest price: up to 500%
more than the hospital receives from insured patients.

That's because hospitals negotiate discounts with big institutions
like insurance companies, HMOs or the government that require payment
of only a fraction of the listed charges. Those institutions have
substantial bargaining power and can guarantee hospitals a certain
number of patients. Uninsured people, on the other hand, have no
bargaining power and are left to fend for themselves once they get
their bills.

Jennifer Kankiewicz was rushed to New York's Beth Israel Hospital in
July 2002 for an emergency appendectomy and was hospitalized for two
days. "I waited through a day's worth of not being able to get out of
bed because I didn't have health insurance," recalls Kankiewicz. "The
next day, a friend drove me to the hospital in an emergency and we
went to the closest hospital we knew of."

Kankiewicz had an emergency appendectomy. "They provided great
service," she says. The hospital "reassured me that I could apply for
Medicaid assistance. So I thought, maybe Medicaid would help me with
the $24,000 that it cost me."

Though Kankiewicz is poor, she was not poor enough. She was denied
Medicaid assistance because she makes $19,000 a year. In order to
qualify for Medicaid, Kankiewicz either needed to be pregnant,
disabled or earn less than $350 a month. Though she was able to
convince her surgeon to slightly reduce the charges, she still faces
over $19,000 in hospital bills, more than her annual salary. She says
she is being billed by six separate billing groups and, unlike the big
insurance companies; Kankiewicz has no negotiating power with the
hospital or its collection agencies.

"It's like sending a guppy out to the sharks," says Elisabeth
Benjamin, the supervising attorney of the Health Law Unit at the Legal
Aid Society in New York. "It's just not fair."

Several states operate a funding pool for hospitals to offset the
money they spend on charity care as well as bad debt. In New York,
these funds total almost $1 billion a year.

Benjamin is the author of a new Legal Aid report called "State Secret:
How Government Fails To Ensure That Uninsured And Underinsured
Patients Have Access To State Charity Funds." The report alleges that
none of the 22 hospitals surveyed in New York City have a process that
would let poor or uninsured patients apply for the hundreds of
millions of dollars in state government funds intended to help pay for
hospital care for the needy, despite the fact that they are all
receiving between $4-$60 million annually in charity care funds from
the state. As a result, patients who are uninsured and have limited
financial resources are forced to pay inflated prices for their care.

"An average consumer that might want to call a hospital and find out
what the charity care policy is, forget it," says Benjamin. "What we
found was at all 22 [hospitals], no one had a way to actually get the
state money applied to your case."

In Kankiewicz's case, according to Benjamin, Beth Israel receives $28
million a year for charity or bad debt cases. But rather than
establishing a process to inform patients about applying for this
money, Beth Israel made Kankiewicz go through the process of applying
for Medicaid.

"I could have told Jennifer in 30 seconds, she wasn't going to be
eligible for Medicaid," says Benjamin. "For her to have gone to a fair
hearing [on Medicaid eligibility] on her own was a waste of time."

Kankiewicz says that when she initially spoke to the collections
department at Beth Israel, they asked her why she chose the most
expensive hospital if she was uninsured. "Honestly, I didn't
understand that I was a consumer, that I had to shop," Kankiewicz
says. "I wasn't making a decision at the time. I rushed to the
hospital that I knew where it was."

Like Kankiewicz, many uninsured patients end up with huge medical
bills and no way of paying them. Hospitals then hound them for payment
using collection agencies and lawyers, who employ such methods as
filing lawsuits, slapping liens on homes, seizing bank accounts and
garnishing wages to extract payments. Some hospitals now rank among
America's most aggressive debt collectors.

"[Patients] don't know they have been sued because the collection
attorneys and the collection agent hired by the hospitals are
voracious," says Benjamin. "They claim to serve people, but in fact
they have never served anybody with court papers. The next thing my
clients know, their bank accounts have been taken."

But for some people, it can get worse than that.

A Return to Debtors Prisons

Hospitals in several states have actually had patients arrested and
jailed if they are unable to pay their debts. This legal tactic is
chillingly known as body attachment.

"Body attachment is basically a warrant for arrest," says Claudia
Lennhoff, executive director of Champaign County Health Care Consumers
in Illinois. She says that if a patient misses a court date, that they
may not even know they have, the attorneys for the hospitals or
collection agencies can ask the judge to issue a warrant for the
patient's arrest.

"They can go out immediately and find that person or it can just kind
of be out there and then if the person gets pulled over, for example,
for having a taillight out or speeding or something, it pops up, and
then shows a warrant for arrest and the person gets brought in, and
then they get incarcerated," says Lennhoff.

Take the case of Jim Bean, a musician in Urbana, Illinois. More than a
decade ago, he received treatment at the Carle Foundation Hospital,
the primary teaching hospital of the University of Illinois at
Champaign-Urbana, for a gunshot wound after a failed suicide attempt.
He attended 13 court dates to answer to his $7,718 hospital bill. But
then Bean missed a hearing, which he says he did not know was
scheduled. The hospital asked the court for an arrest warrant.

"They put out this body attachment that I found out about the next
day. I went and turned myself in," recalls Bean. "I went to find out
what was going on, and they told me to go across the street to the
county sheriff's office where I turned myself in. I was jailed, and I
was put into general population at the satellite facility here until
my brother could come up with 10% of $3,500 to bail me out of jail."

Bean says the next time he went to court, the attorneys for Carle
Hospital asked that Bean's bail money be applied toward his debt to
the hospital. The judge approved the request. "It was just a really
quick way for them to collect $350," he says. "I had no say in that."

In an interview with Democracy Now!, Robert Tonkinson, chief financial
officer for Carle Foundation Hospital, said the hospital would not end
its practice of having patients arrested.

"We are exercising more review, and more care and more direction over
that practice," says Tonkinson. But he says, "The reason we're not
willing to say that we'll never, never use that practice again is
because we do feel a very strong obligation to be a good steward of
the resources we have." He adds that sometimes having people arrested
is "the only option left in order to get the information we need to
see if these people qualify for our charity programs or in assistance
in other ways is to pursue that process."

Bean has been dealing with his debt to Carle Hospital for more than 12
years. He says he has made payments totaling $1,340. "When I started
making those payments, my bill was $7,718.23," he says. "My bill today
is $10,620.46. None of the money that I have paid has been applied to
the debt whatsoever, it's all in interest charges."

Legal Aid's Benjamin says that Bean's case is part of a national
trend. "In New York State, for example, the collection agents charge
9% interest," she says. "So, even though the federal interest rate is
1%, and most people can get mortgages for 6%, the hospital industry is
charging 9%, at least, on average."

Lennhoff of the Champaign County Health Care Consumers says that
practices like arresting people who can't afford to pay the exorbitant
costs of health could have far reaching implications. "It creates a
bad dynamic in our community, where people become very afraid of
getting healthcare because they fear that they will be jailed if they
cannot pay the bill," she says. "They are treated as a criminals and
that's outrageous."


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Hospitals Try Extreme Measures To Collect Their Overdue Debts
Patients Who Skip Hearings On Bills Are Arrested;
It's a 'Body Attachment'

Wall Street Journal, October 30, 2003

By LUCETTE LAGNADO
Staff Reporter of THE WALL STREET JOURNAL

CHAMPAIGN-URBANA, Ill. -- Late one night in June 2000, a police
cruiser pulled up to Marlin Bushman's house on a quiet, tree-lined
street. While Mr. Bushman's wife and son stood by, an officer
handcuffed the burly truck driver and took him away to jail. The
charge: missing a court hearing about a $579 hospital bill.

The hospital that pursued Mr. Bushman, a 295-bed not-for-profit
facility called Carle Foundation Hospital, is one of several that has
at times employed debt collection tactics that are shunned by many
other creditors. It has filed hundreds of lawsuits, garnisheed
patients' wages and seized their tax refunds. Since 1995, Carle, the
primary teaching hospital of the University of Illinois, confirms it
has also sought 164 arrest warrants for debtors who missed court
hearings.

In one case, Carle went after an uninsured, part-time musician whom it
had treated for a gunshot wound in a suicide attempt. When the man,
James Bean, missed a hearing on his $7,718 hospital bill, Carle asked
the court for an arrest warrant, and in November 2001 Mr. Bean landed
in jail for several hours.

In another case, Carle obtained an arrest warrant for an uninsured
single mother, Kara Atteberry, who missed two court hearings on a
$1,678 debt she incurred for a miscarriage. Ms. Atteberry turned
herself in to authorities in October 2001 and was briefly jailed
before making a $100 bail payment. She now owes a total of $2,070 to
Carle, including a bill for other treatments, and she expects to file
for bankruptcy.

Some hospitals now rank among America's most aggressive
debt-collectors, as they put increasing pressure on poor and uninsured
patients to pay their bills. Adding to the problem, as The Wall Street
Journal has reported, hospitals generally charge uninsured patients
far more than the discounted rates negotiated by health-maintenance
organizations and other private insurers and government agencies.

Some also use one of the harshest and least-known collections tactics
of all: seeking the arrest of no-show debtors. A review of court
records and interviews with hospital trade groups, collections
attorneys and consumer advocates shows that hospitals in several
states, including Connecticut, Indiana, Kansas, Michigan and Oklahoma,
have secured the arrest and even jailing of patients who miss court
hearings on their debts.

Tough Tactic

The legal tactic of arresting a debtor who fails to appear for a court
hearing -- known in some areas as "body attachment" -- is so extreme
that some of the country's biggest commercial creditors say they never
use it. For instance, Sears, Roebuck & Co. and Ford Motor Credit Co.,
the finance arm of Ford Motor Co., say they expressly prohibit their
collections agents from asking judges to issue arrest warrants against
no-show debtors.

In many areas of the country, collections lawyers say, the procedure
has been all but abandoned. Judges grant a creditor's request for a
body attachment when someone misses one or more hearings or otherwise
flouts a court's authority -- technically, it's not punishment for the
debt itself.

In Connecticut, the state's largest hospital, Yale-New Haven, has
obtained at least 65 civil arrest warrants in the past three years for
debtors who have missed court hearings, according to an examination of
New Haven County court records by a researcher for the Service
Employees International Union, which represents some hospital workers.
After several inquiries from the Journal, the hospital, which doesn't
dispute the union's research, said it would severely limit the tactic.

In Champaign-Urbana, a county agency was so shocked by hospitals'
debt-collection practices that it tried to strip Carle and another
hospital of their tax exemptions as charitable institutions. The
effort failed against Carle; the challenge to the other hospital, a
268-bed Catholic facility called Provena Covenant Medical Center, is
pending. "This concept of debtor's prison, you read about it in
Dickens, but it is still going on," says Laura Sandefur, a former
member of the agency, the Champaign County Board of Review

The hospitals' pursuit of body attachments is surfacing at a time when
many major U.S. medical centers are under fire for their billing and
collections practices. In June, the American Hospital Association, the
industry trade group, issued a memo urging its 4,800 members to
examine their bill-collection practices and demand that their
collections agencies and lawyers "treat your patients with dignity and
respect."

Connecticut recently passed a law slashing interest rates that could
be applied to hospital debt. In California, a bill that would have
shielded patients from aggressive billing and collections was shelved
this summer following heavy industry opposition. Illinois is holding
hearings on how hospitals bill and collect from the uninsured.
Meanwhile, Congress has launched an investigation into the practice of
charging uninsured patients more than the discounted rates offered to
insured patients.

Patient advocates argue there is a fundamental difference between
medical debt and other types of consumer debt. "If it is a car or a
vacuum cleaner, they will simply repossess it. What do you want them
to do? Give the heart valve back?" says Jane Perkins, an attorney at
the National Health Law Program in North Carolina.

For their part, hospitals say they are forced to recoup every dollar
they can because health-care costs are soaring, and insurers and the
government are cutting their reimbursements for services. Hospitals
have also been squeezed by the rising numbers of the uninsured -- the
total hit a record 43.6 million people this year -- who often don't
pay their bills. Hospitals say they shouldn't be forced to bear the
disproportionate financial burden of a national crisis.

"You can't solve the issue of millions of uninsured by simply turning
to hospitals whose financial conditions are quite fragile and say,
'You do it,' " says Howard Peters, senior vice president of the
Illinois Hospital Association, a trade group representing more than
200 institutions, including Carle and Provena Covenant.

Carle defends its debt-collection practices, emphasizing that body
attachments are imposed by a judge as the legal result of a debtor's
violating a court order. "We are not going door-to-door to put people
in prison," says Carle's chief executive, James Leonard, 48, a family
doctor who still occasionally practices medicine. "It is your choice
to not show up in court."

In some cases, the debtors did appear for at least one court hearing.
Ms. Atteberry says that when she did come to court, she was talked
into accepting payment terms she couldn't afford -- including an order
not to spend her tax-refund money. When the judge summoned her back,
she didn't go because she feared "the whole hounding process" would
start anew. "Who would want to show up?" she asks.

After inquiries from the Journal, Carle said it would permit its
collections agencies to seek body attachments only after a review by a
new, three-person committee consisting of two hospital employees and
an outsider. Dr. Leonard says he still considers body attachments
useful, but the panel will try to assess the "human story" behind each
case. He says Carle, which handles 100,000 patient visits a year, goes
to great lengths to serve Champaign's poor and uninsured, and has
programs designed to provide discounted care. "We really are a
microcosm of part of the struggle that is going on," Dr. Leonard says.
"We are charged with sorting out who can afford to pay, who can't
afford to pay. How do you set the rules?"

Carle says its policy is to refer bills to an outside collections
agency once they are 100 days overdue. The hospital says it has
authorized its collections agencies to pursue legal action on about
7,300 bills since 1995, but many of those cases were settled before a
suit was filed. In response to inquiries from the Journal, the
hospital searched its records from 1995 to 2003, and said it had
obtained 164 body-attachment orders during that period. Carle said not
all of the orders had resulted in arrests; some were vacated and
others remain outstanding. The hospital wouldn't be more specific. It
also said it has sought far fewer body attachments in recent years
than previously.

Because Carle doesn't always file cases under its own name, the number
of body attachment orders and arrests resulting from its collections
lawsuits couldn't be independently confirmed. As recently as a few
years ago, the hospital did file such cases under its own name, but
since then suits against Carle debtors have increasingly been filed
under the names of collections agencies. Gretchen Robbins, a Carle
spokeswoman, says the hospital isn't trying to camouflage its legal
activities, but rather its collections agencies increasingly file
"consolidated" suits on behalf of multiple creditors, which she says
is more efficient and cost-effective, saving court costs for both
sides.

Mr. Bushman, the truck driver who was arrested in the middle of the
night, has had a long struggle to pay his hospital bills. In a series
of trips to the Carle emergency room over a period of five years, Mr.
Bushman, who is diabetic, sought care for his wife and their three
young sons. At times, the Bushmans were insured. Other times, they
lacked coverage, or their insurance didn't cover the entire bill. They
paid some of the Carle bills, but by late 1998, still owed $579 and
had received several collections notices.

In February 1999, Carle filed a lawsuit in Champaign County Circuit
Court seeking payment. Mr. Bushman appeared at a court hearing on the
debt a month later. He says he couldn't afford a lawyer -- and in
Illinois civil arrest cases, unlike criminal cases, the court isn't
required to appoint one. At the hearing Mr. Bushman agreed to pay the
full amount within a month, even though he says he wasn't sure he
would have the money. After he failed to make the payment, the court
ordered him to appear at another hearing at the end of April.


This time, he didn't show up. He says he was worried about losing a
day's pay. He knew he was risking arrest, but he says, "I assumed I
could probably take care of it later" and, besides, he says, he
couldn't pay the debt. Mr. Bushman, who is now 40 and works as a
mechanic, says he was "expecting some money from a tax return" but
didn't get it.

The court, at the request of a lawyer for Carle's collections agency,
ordered a body attachment. However, Mr. Bushman wasn't arrested right
away. In Champaign County, body attachments are usually enforced only
when an officer confronts someone for another incident or alleged
offense.

About a year later, at 1:10 in the morning of June 13, 2000, Urbana
police picked up Mr. Bushman's 16-year-old son for drinking and
violating curfew laws, according to police records. When the officer
brought the teenager home, his last name triggered an alert about the
outstanding civil-arrest warrant against his father. Mr. Bushman's
wife, Diane, remembers thinking, "You bring home my son and take away
my husband?"

Mr. Bushman was booked and fingerprinted at the Champaign jail. He
posed for a mug shot, turned over his shoelaces and was escorted to a
cell. A judge imposed bail of $2,500 -- with $250 payable up front.
Mr. Bushman waited in a cell while his wife tried to come up with the
money. He says he fell asleep on the concrete bench, using a roll of
toilet paper as a pillow. Ms. Bushman borrowed the money from her
mother-in-law, and Mr. Bushman was freed a short time later. Within
three months, he paid Carle the balance of his debt, and the case was
dismissed.

Carle's chief financial officer, Robert Tonkinson, defends the use of
a body attachment against Mr. Bushman. Mr. Tonkinson pointed out that
Mr. Bushman had more than a year to pay his debt between the time the
body attachment was imposed and the day he was arrested. "He landed in
jail, and that is certainly where no one wanted him to be," Mr.
Tonkinson says, "but I struggle with the personal responsibility on
his part, and my responsibility as chief financial officer."

The use of body attachments -- known in some states as civil arrest
warrants, bench warrants or writs of capias -- varies widely from
state to state, and even from courtroom to courtroom, depending on
such factors as the aggressiveness of local collections agencies and
judicial sympathies. It isn't possible to determine how many hospitals
nationwide use the procedure. In body-attachment proceedings, a
collections lawyer acting on the creditor's behalf generally can
request the arrest, which is then ordered by a judge.

Hospitals, industry trade groups, collection lawyers and consumer
advocates in several states, including New York, Louisiana, Wisconsin
and Texas, say they had never heard of hospitals seeking the arrest of
no-show debtors. Laura Redoutey, president of the Nebraska Hospital
Association, expresses shock at the tactic, and says she "can't fathom
it has ever happened here." Stanley Brezenoff, president and chief
executive of Continuum Health Partners, the elite New York hospital
system that includes St. Lukes-Roosevelt and Beth Israel, says he has
never heard of a New York hospital pursuing an arrest warrant related
to a debt. "We are not in the business of replicating 'Les
Miserables,' " he says.

Nonetheless, just last month in Evansville, Ind., the not-for-profit
Deaconess Hospital sought the arrest of a 22-year-old debtor, Jamie
Ruston, who had missed two court hearings on a $5,664 debt related to
gynecological surgery. Ms. Ruston, who works at a McDonald's, was
briefly in custody before her mother arrived at the jail with the $500
needed to secure her release. "I cried the whole time," Ms. Ruston
says.

Alan Shovers, a lawyer for Deaconess, says the hospital, which is
affiliated with the United Church of Christ, made "innumerable efforts
to get in touch" with Ms. Ruston to work out a payment plan or to see
if she qualified for charity care. "In the range of 16 times, she has
ignored us, ignored the hospital, ignored the court house," Mr.
Shovers says. He defends the hospital's use of bench warrants -- as
the proceeding is known in Indiana -- saying the hospital seeks them
only when debtors have been repeatedly unresponsive. "Most people,
whether rich or poor or whatever, can to some degree respond to the
system -- and you have some people who go through life without
responding," he says. "The question is, are we taking some unfair
advantage, and I don't think we are."

In Connecticut, one of the debtors pursued by Yale-New Haven hospital,
John Franchi, 35, says a state marshal appeared at his East Haven home
one Saturday morning last November and announced he was placing him
under arrest and taking him to the local jail. "I have two little
kids, and it was unbelievable," Mr. Franchi says. He was able to
persuade the officer that he would appear court on his own the
following Monday. "I didn't want to go to jail," he says. "I was
terrified."

After appearing in court, Mr. Franchi, a warehouse supervisor, worked
out a payment arrangement on his $3,978 debt for treatment he says was
related to viral meningitis. He says the hospital is now garnisheeing
a portion of his $14.50 hourly wages. "It is devastating me," Mr.
Franchi says.

Yale-New Haven initially defended its use of writs of capias -- as the
proceeding is called in Connecticut -- saying they were a useful way
to compel recalcitrant debtors to appear. "If someone will be
uncooperative and they ignore the legal system, what is the
alternative?" said William Gedge, a Yale-New Haven hospital vice
president. However, after inquiries from the Journal, Mr. Gedge said
the hospital would severely limit the use of such warrants and would
scrutinize each one that is sought.

Another debtor, Leslie Caplan Block of Newton, Conn., says she was
home caring for her infant twins and 3-year-old daughter in September
2000 when two sheriffs' deputies arrived. They arrested her for
missing a court date on a $9,454 debt she had incurred at Yale School
of Medicine -- which is incorporated separately from Yale-New Haven
hospital -- for surgery on one of her babies. After her father agreed
to come over and watch the children, Ms. Block, now 34, was taken away
in the back of the officers' car and was put in a holding cell while
she awaited a judge. She was released after her husband paid $350 in
bail money. "I was scared to death," she says. In the ensuing months,
her debt swelled to $15,715, including interest and court costs.

Tom Conroy, a spokesman for Yale University, says the medical school
has used writs of capias only as "a last resort." He says doctors at
Yale medical school -- who care for patients at Yale-New Haven
hospital -- don't inquire into a person's means before offering care.
Mr. Conroy adds that the institution has vacated Ms. Block's debt.


In Champaign-Urbana, James Bean, the man who was treated at Carle
hospital for a self-inflicted gunshot wound, says he has been pursued
aggressively by a collections agent since 1995, when the hospital sued
him over his $7,718 bill. In June 2001, Mr. Bean, who says he held a
series of odd jobs during that period and couldn't afford a lawyer,
missed a court hearing. He says he wasn't aware of the hearing.
Carle's lawyer obtained a warrant for his arrest, and a few months
later, Mr. Bean says, he heard about the warrant and turned himself
in. Bail was set at $3,500, and he spent six hours in jail before his
brother came up with the 10% required to release him.

Five months later, in April 2002, Mr. Bean missed another court
hearing, which he also says he wasn't aware of, and Carle requested
another body attachment. The judge granted it and set bail at $5,000,
but the body attachment was then quashed, according to court records.

Mr. Bean, 44, has recovered from the shotgun wound to his neck and now
works as a stage hand. He says he tried to kill himself because he was
despondent over the breakup of his marriage. Since then, he made
payments totaling $1,340 to Carle, but because of interest and court
costs, his debt swelled to $10,345. "It has been a nightmare," he
says. "Is there ever going to be an end to it?"

Ms. Robbins, the Carle spokeswoman, says the hospital acted
appropriately after Mr. Bean had failed for years to pay his debt. The
suicide attempt was in 1991, and Carle unsuccessfully tried to collect
for more than four years before filing suit. She says the hospital
also encouraged Mr. Bean to apply for the state's insurance program
for the poor, but that he didn't follow through.

"It doesn't appear as if we were incredibly aggressive in seeking
payment," Ms. Robbins says. "There are many tragic situations we see
day in and day out, and so there is a time for people to work through
their grief, [and] there is time for them to deal with the finances of
their medical care." Ms. Robbins adds that Mr. Bean's bill didn't have
a code that indicated a suicide attempt, so "the folks that process
this wouldn't have known." After inquiries from the Journal, Ms.
Robbins says Carle's collection lawyer had agreed to eliminate Mr.
Bean's interest charges, and that Mr. Bean now owes the hospital
$6,535.


Carle also defends its pursuit of its October 2001 body attachment
against Ms. Atteberry, 26, the single mother whose $1,678 debt had
resulted from a miscarriage. Ms. Atteberry, who then was working as a
waitress at a local pizzeria and is now unemployed, says she turned
herself in to authorities after her shift ended one evening. She says
she didn't want to be arrested in front of her two daughters. At the
time, one was 3 years old and the other 3 months.

Ms. Atteberry was also the subject of an earlier body attachment order
in August 1998, stemming from a debt of $1,514 that she incurred for
various medical treatments in the mid-1990s at both Carle and Provena
Covenant. Ms. Atteberry, who then was working at Kentucky Fried
Chicken, says she turned herself in to authorities the following
month, even though she was nine months pregnant. "I was freaking out,"
she says. "I didn't want to go into labor when they arrested me." She
was detained in a jail cell for under an hour while her $250 bail
payment was being processed.

Cheryl Harmon, Provena Covenant's chief financial officer, says the
treatment of Ms. Atteberry was consistent with general practices in
the industry. Ms. Harmon says Provena Covenant filed several hundred
collections lawsuits a year in the mid-to-late 1990s, but a change of
philosophy and collections agencies has drastically reduced that
number -- to as few as 19 in 2002. A court search revealed that
Provena Covenant obtained a body attachment against one of its debtors
as recently as February 2003. That patient, who was briefly arrested
in March, couldn't be located for comment.

Provena Covenant has "made a number of changes to make sure we aren't
sending people to collection who cannot pay," Ms. Harmon says. "It
really has been a soul-searching to find a way to distinguish between
those who can't pay and those who can." Provena Covenant says Ms.
Atteberry has paid $764, and the hospital has "purged" the rest of her
debt. Earlier this month, in response to inquiries from the Journal,
Provena Covenant's chief executive, Mark Wiener, 47, said the hospital
would no longer pursue body attachments.

Ms. Robbins, Carle's spokeswoman, says Ms. Atteberry ignored numerous
efforts to reach her. "We sent statements and we sent her letters,"
and also telephoned Ms. Atteberry and left a message with her father,
Ms. Robbins says. Noting that Ms. Atteberry could have avoided the
court proceedings by communicating with the hospital. She probably
would have qualified for discounts or other financial assistance, Ms.
Robbins says: "There is only so much we can do for folks."


Updated October 30, 2003

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Hospitals Will Give Price Breaks
To Uninsured, if Medicare Agrees
They Concede Many Charges Aren't Fair
To the Needy, but Blame Federal Rules

By LUCETTE LAGNADO
Staff Reporter of THE WALL STREET JOURNAL

Under pressure from lawmakers and consumer advocates, the hospital
industry said it would consider making broad price cuts for the
uninsured -- provided the federal government approves.

The announcement by the American Hospital Association included a stark
admission that some hospital billing and collections practices are
unfair to needy patients.

But even as some big hospitals scramble to curtail their most
aggressive tactics, such as putting liens on debtors' homes, the trade
group is also blaming much of the problem on Medicare. In a letter
delivered Tuesday to the Department of Health and Human Services, the
hospital group said Medicare regulations "make it far too difficult
and frustrating" for hospitals to reduce prices for people who can't
afford health care.

The letter asks the agency, which oversees Medicare, the federal
health-care program for the elderly, to change or clarify its rules so
that hospitals "have the ability to do what they can to respond to the
needs of these patients." In a document filed in support of its
letter, the trade group also said it would urge its 4,800 member
hospitals to adopt a set of voluntary guidelines on billing and
collections.

At the heart of the issue is the hospitals' common practice of
charging full listed prices to the nation's 43.6 million uninsured
patients. Meanwhile, other patients enjoy steep discounts negotiated
on their behalf -- either by private insurers and HMOs or by
government programs such as Medicare and Medicaid, the federal-state
program for the poor. In some areas, the hospitals' official charges
amount to several times the discounted rates.

Adding to the problem for the uninsured, many hospitals have become
more aggressive in seeking payment of these bills. Hospitals have
placed liens on debtors' homes, garnisheed wages, seized bank accounts
and, in some cases, sought the arrest of debtors who miss court dates,
a practice known in some states as "body attachment."

The letter, addressed to Secretary of Health and Human Services Tommy
Thompson, marks a turning point for an industry that has been
reluctant to acknowledge that its financial practices contribute to
the plight of the uninsured.

In a series of articles this year, The Wall Street Journal has
examined hospitals' aggressive billing and collections methods,
including charging uninsured patients full listed prices while other
patients get discounts.

The hospitals contend the pricing disparity is the result of Medicare
regulations requiring hospitals to maintain a uniform list of charges
for every treatment and service they administer -- even for patients
who aren't covered by the program. The hospitals claim they can't
offer unilateral reductions in these charges to categories of people,
such as uninsured patients, without fearing they may be violating
Medicare rules.

In a longer document accompanying its letter, the hospital group also
blamed Medicare for some of their collections practices, claiming the
program's rules "create a very strong presumption that hospitals must
use aggressive efforts to collect from all patients," including
sending collection letters, making telephone and personal contacts,
and initiating court action.

It isn't clear whether Medicare's complex rules are as inflexible as
the hospitals claim. Tom Gustafson, deputy director of the Center for
Medicare Management, a Medicare division, said the rules allow
hospitals to offer poor people discounts from listed charges "on a
patient-by-patient basis, and it has to require verification of the
financial need of each patient." Mr. Gustafson said Medicare officials
need to study the hospital group's concerns and added: "We are
prepared to think about, to consider and to learn about this situation
in greater detail." A spokesman for HHS Secretary Thompson said the
secretary would consider the issues the industry was bringing to his
attention.

Over the past year, lawmakers, labor unions and patient advocates have
increasingly urged hospitals to make changes in the way they bill and
collect from patients. The House Subcommittee on Oversight and
Investigations this summer launched a probe into hospital billing and
collections, and plans to hold hearings early next year. "In the worst
instance, hospitals simply apply outrageously high charges -- higher
than what Medicare pays, higher than private payers -- and then will
relentlessly and sometimes mercilessly pursue poor people for their
money, even to the point of having them arrested," said Rep. James
Greenwood, a Pennsylvania Republican and chairman of the subcommittee.

A new Connecticut law, which went into effect in October, makes it
harder for hospitals to sue patients and to seize their bank accounts
or place liens on their homes. That law also slashes interest rates
charged on patient bills to 5% from 10%. In Illinois, state
legislators are weighing laws that would end what they call
"discriminatory pricing," the practice of billing uninsured patients
more than insured patients -- on the theory that uninsured people tend
to be minorities against whom it is illegal to discriminate. In New
York, a pending bill in the state legislature would limit the amount
hospitals could bill poor uninsured patients to no more than the sum
Medicare or private insurers would pay, whichever is larger.

Now the hospital industry is pushing for big changes in Medicare. Its
letter requested that Medicare issue a "safe harbor" rule enabling
hospitals to discount or waive charges for the uninsured without
risking trouble with the program. The association is also asking
Medicare for a new advisory process under which hospitals could
quickly get rulings on when and how they could discount rates to the
uninsured.

If Medicare makes these changes, "hospitals will gladly and willingly
deconstruct the terribly frustrating system that ties their hands and
is ruining their reputations," said Richard Wade, a spokesman for the
American Hospital Association.

The Medicare rules requiring hospitals to maintain lists of their
charges date to the establishment of the program in the 1960s. The
original purpose of the uniform charges was to prevent hospitals from
charging some classes of patients more than others, or overcharging
the Medicare program. That made sense in the early years of Medicare,
when hospital charges generally reflected the cost of providing care
plus a modest profit.

In the 1980s, as powerful HMOs emerged, they began demanding their own
discounts from the hospitals' listed charges. Hospitals in turn began
boosting their charges, in part as an effort to set a higher starting
point for negotiations. Lost in the mix were uninsured patients, who
continued to be billed as they always were, unaware of the discounted
rates and with no one to negotiate on their behalf.

Mr. Gustafson, the Medicare official, conceded that the listed charges
"had a lot more meaning 20 or 30 years ago, before managed care."

For uninsured patients, the impact of being billed at full hospital
charges can be harsh. Last year, Judith Geva, an uninsured 51-year-old
small-business owner, had an emergency hysterectomy at North Shore
University Hospital in Manhasset, N.Y., part of the North Shore-Long
Island Jewish Health System. She received a hospital bill for full
charges of $21,508.

For the same procedure, which requires a three-day stay, Medicaid pays
the hospital $8,456, and Medicare pays $7,600, according to the
hospital and the government programs. The hospital said private
insurers and HMOs in the area would reimburse it at roughly the same
rate as Medicare.

Ms. Geva says her home software business had suffered a downturn and
she couldn't afford to buy insurance or pay her hospital bill. She
says she had applied for Medicaid but was turned down, in part because
she owns a house. In February, North Shore turned her bill over to
collections, and the hospital sued her three months later.

Ms. Geva says she e-mailed legislators and searched the Internet in
vain seeking assistance, until she found the Long Island Health Access
Monitoring Project, a group that helps the uninsured. A retired
physician in the group called a hospital executive, and Ms. Geva's
bill was cut by more than half, to $10,000 -- an amount still higher
than what any government program or private insurer would have paid.
Ms. Geva says she charged most of the bill on her Discover card, and
is trying to pay it back, with interest. She adds that she now has
health insurance.

Terry Lynam, a spokesman for North Shore-LIJ, said Ms. Geva had been
billed full charges in keeping with Medicare regulations, and that the
hospital refers bills to collection agencies after 60 days. "The
collection efforts weren't heavy-handed," he said.

Mr. Lynam added that North Shore-LIJ "recognizes the flaws in the
billing process" and is planning to implement a far-ranging new
financial-aid plan. Starting in February, the hospital said, uninsured
patients and those in families below a certain income ceiling would
qualify for sliding-scale reductions from Medicaid rates, which are
already much lower than the hospitals' listed charges. Mr. Lynam said
the hospital believes this plan will pass muster with Medicare.

Other hospitals are planning sweeping changes to their billing
practices. Ascension Health, the nation's largest Catholic hospital
chain, said it will offer free care to every uninsured patient whose
income falls below the federal poverty level, provided they don't
qualify for government aid. (The poverty level is $8,980 for an
individual, and $18,400 for a family of four.) Poor patients with an
income up to twice the poverty level also would be eligible for
discounts. The amount of the discounts would be left to the discretion
of individual hospitals in the 67-hospital Ascension system, which is
based in St. Louis, Mo.

Douglas French, chief executive of Ascension, said the chain also
plans to seek Medicare approval for even more dramatic price cuts.
Ascension wants to bill all uninsured patients -- rich and poor -- at
the same discounted rates its hospitals get from HMOs and insurers.
Under that plan, "basically, nobody gets [full] charges," said Bruce
Vladeck, a member of Ascension's board of directors. However, Mr.
Vladeck, a former head of Medicare, said he isn't sure the unilateral
discount for uninsured patients would pass muster with his old agency.

A major for-profit hospital chain, HCA Inc. of Nashville, Tenn., said
it struggled for months to craft a program of price breaks for
uninsured patients that would satisfy Medicare rules. HCA's plan,
launched this fall, offers free care to uninsured patients who earn up
to twice the federal poverty level. HCA also offers a sliding scale of
discounted fees to patients who earn as much as four times the poverty
level. "It wasn't casually, 'Oh, we will do this,' " said Jeff
Prescott, an HCA spokesman. "We sat internally for more than a year
trying to craft what could be done within the existing environment." A
Medicare spokesman declined to comment on the HCA plan.

Meanwhile, another large, for-profit chain, Tenet Healthcare Corp. of
Santa Barbara, Calif., said it hasn't been able to move forward on its
own discounting plan, which involved billing low-income, uninsured
patients at the same discounted prices it gets from HMOs. Medicare
raised questions on the plan, and the company said it is awaiting a
legal opinion from the Inspector General of the Department of Health
and Human Services. In the meantime, Tenet says, it has drastically
curtailed lawsuits against uninsured debtors and restricted the use of
liens, eliminating them entirely for patients whose home is their only
asset.

In its appeal to regulators, the American Hospital Association said it
was urging its members to adopt "fair billing and collection
practices," such as requiring hospitals to better monitor their
collection agencies. However, the guidelines stopped short of barring
hospitals from using specific collections tactics such as putting
liens on houses or seeking the arrest of debtors.

Responding to criticism that hospitals frequently don't tell patients
that charity care or financial aid is available, the guidelines urge
institutions to offer financial counseling and to make that counseling
"widely known."

The hospital group also urged its members to lift the veil of secrecy
that has surrounded their lists of charges, stating that hospitals
should make available for public review "specific information in a
meaningful format about what they charge for services" to help
patients understand their bills. Mr. Wade, the group's spokesman,
added: "We have to be much more transparent about our charges."

Write to Lucette Lagnado at lucette.lagnado@wsj.com

Updated December 17, 2003 12:00 a.m.