Frederick Memorial Healthcare Systems chalks up more losses to those who don’t pay and can afford it than to those considered charity cases, according to company officials.
The parent company of Frederick Memorial Hospital reported $33.3 million in losses from uncollected bills between 2009 and 2011. The losses accelerated each year, reaching $10.7 million in 2009; $12.8 million in 2010; and $13.8 million in 2011.
Now, thanks to the federal Affordable Care Act, what hospitals can charge will be reined in starting in 2014, and hospitals will no longer be on the losing end of bad debt from the uninsured who do not pay their bills.
The Affordable Care Act, passed by Congress in 2010, is being phased in over time, with most of its major provisions in place by 2014.
Among other provisions, the sweeping bill extends insurance coverage to young adults, strengthens community health centers, ensures that most people have insurance or pay a penalty, requires insurance companies to spend most of its money on claims, and requires better communication between patients, their doctors and hospitals.
The most controversial part of the act, mandating that people buy insurance or pay a penalty, withstood a challenge in the U.S. Supreme Court, which ruled it was a legal tax on June 28. The court rejected the portion of the law that would have penalized states that did not comply with the expanded eligibility requirements for Medicaid, a federal medical care program that serves the poor.
The uninsured who qualify for financial assistance are considered charity-care writeoffs, and Frederick Memorial receives reimbursement from the state. Between 2009 and 2011, charity cases amounted to $17.7 million, according to Harry Grandinett, a spokesman for the hospital.
The hospital does not have information on the number of patients the losses represent, or the number of uninsured patients it sees, Grandinett said.
Currently, the costs of those who can afford insurance but do not buy it are borne by everyone else, according to Jennifer Teeter, assistant vice president of payor relations and contracting for Frederick Memorial Healthcare Systems.
“Patients with enough money to buy insurance who elect not to purchase insurance usually land in the ER [emergency room], which drives up the cost of ER services,” said Teeter, who is also a registered nurse.
Those considered charity cases are usually single adults, who cannot receive medical assistance or Medicaid, because they do not have a family, Teeter said.
The health care bill also originally required states to expand their Medicaid coverage, but the Supreme Court struck down that portion of the bill in its June ruling. Maryland has already been working on expanding its Medicaid program, according to Jim Reiter, spokesman for the Maryland Hospital Association.
“Maryland is a forward-thinking state, and we have been expecting to get more people covered under Medicaid, and that’s what this bill tried to do,” Reiter said.
The health care act also requires those who can afford it to buy health insurance or pay a fine.
The cost of insurance is based on income. The penalty for not complying is an extra charge on income tax returns beginning in 2015. The tax would start at $95 in 2015 and increase to $695 by 2017, which is less than the cost of insurance.
Reiter said the general problem with health care for years stemmed from people not having coverage.
“This bill eliminates the uninsured, which was the gist of the problem with health care. Those who weren’t covered skews the payment system by shifting costs. At the hospital, your aspirin goes up to $7 a pill because you are paying for those who are uninsured,” he said.
The hospital association supports the legislation, issuing a statement of support following the Supreme Court’s decision.
“...The health care reform bill is not perfect — what legislation ever is? But the reform bill is already helping Marylanders, and, taken to its full effect, promises better coverage and care for generations to come,” said Carmela Coyle, president and chief executive officer the association.
U.S. Rep. Roscoe G. Bartlett (R-Dist. 6) voted July 11 to repeal the health care law. It did not pass.
“Since the Supreme Court upheld President Obama’s unpopular health care reform law, it was important for a bipartisan majority of the House to act immediately so that Americans know that they can help gain the power in the Congress to protect Marylanders and other Americans by repealing the unfolding disaster of Obamacare,” Bartlett said in a statement at the time. “... Until it is repealed, Obamacare will worsen health care for most Marylanders, making it more expensive and less accessible.”
Former Massachusetts governor and presumptive Republican presidential nominee Mitt Romney has pledged to work to repeal the law if he is elected, even though he worked to pass a similar law as governor of Massachusetts in 2006.
One of the benefits people are already seeing in the health care act is insurance rebates.
Insurance companies who spent less than 80 percent of premiums on direct care had to pay their clients the difference. The average insurance rebate nationwide was $151 per family, while in Maryland it was $340.
Ed Hinde of Frederick was one of 141,129 people in Maryland who received a check. His former insurance company, Coventry Health and Life Insurance Co., mailed him a check for $566.72 and told him in a letter that the company had spent 64.6 percent of premium dollars on health care and activities to improve health care quality.
“I have no idea what they [Coventry] were spending their money on,” Hinde said.
Meanwhile, Maryland is the only state that has a commission that sets payer rates, including those for Medicare and Medicaid for hospitals.
The Health Services Cost Review Commission is working with hospitals to reduce the number of readmissions, part of the Affordable Care Act. The act directs Medicare to apply payment penalties for hospitals with high readmission rates, beginning in 2012.
“The Maryland Hospital system will be exempt from these penalties only to the extent that it can demonstrate to the Secretary of Health and Human Services that the system’s performance on reducing unnecessary readmissions meets or exceeds what is being required of hospitals nationally,” according to a statement from the health cost commission.
With all the positive changes Teeter sees from the bill, she said that people are still accountable for taking control of their own health.
“All of us here at the hospital encourage employees to be healthier and to be better consumers of health care. To be healthy, there has to be some personal accountability,” she said.