Hospitals Still Violating Law by Overcharging Poor

One of the patients featured in the TIME cover story I wrote last March--"Bitter Pill: Why Medical Bills Are Killing Us"--was Emilia Gilbert, a school-bus driver. Gilbert was 61 years old in 2008 when she slipped and fell one evening in her backyard in Fairfield, Conn.

She was taken to the emergency room at Bridgeport Hospital, where she was treated for some cuts and a broken nose. She left a few hours later with a bill for $9,418, which included $6,538 for CT scans and $239 for a routine blood test. The charges, I found, were based on something called the hospital chargemaster--a list of hugely inflated prices that no one could explain or defend.

Medicare--which by law pays hospitals and other providers their actual costs, including overhead--would have paid Bridgeport Hospital just $825 for those CT scans and $13.94 for that blood test.

When Gilbert, who was earning about $22,000 a year, was unable to pay, she was sued by the hospital, which is part of the Yale--New Haven Health System. A judge ordered her to pay off her bill in $20 weekly payments over six years.

But that was before Obamacare.

Tucked onto page 737 of the law, enacted on March 23, 2010, is a provision that was supposed to eliminate that kind of dunning and overbilling. Section 9007 of the Affordable Care Act instructs the Internal Revenue Service to take away the tax exemption for nonprofit hospitals like Yale--New Haven unless they become aggressive about informing patients clearly of the availability of financial aid and take steps to learn whether patients need such assistance before they hand over their bills to lawyers or debt collectors. 

More important for Gilbert and hundreds of thousands of patients like her, Section 9007 says the IRS can now take away a hospital's tax exemption if it tries to charge patients who needed financial aid more than the average amount paid for services by insurance companies and Medicare. In other words, hospitals cannot try to make people like Gilbert pay the inflated chargemaster prices.

That's a big deal. And it's been black-letter law for more than 3½ years.

Read more: Bungling the Easy Stuff - TIME http://content.time.com/time/magazine/article/0,9171,2159286,00.html#ixzz2n4E03Hgf