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University of Iowa News Release


Jan. 24, 2011

Law student notes Grassley’s contribution to health care reform but says more needed

Iowa Sen. Charles Grassley has taken a leading role in preventing nonprofit hospitals from aggressively pursuing uninsured patients who can’t pay their bills, but a University of Iowa law student believes further efforts are needed.

“For a number of people unfortunate enough to go through a medical emergency without insurance, medical debt is more than just an innocuous, monthly bill in the mail,” Amanda Thai, a third-year law student, writes in an article published this month in the Iowa Law Review. She said that many uninsured people cannot pay for basic necessities while paying medical bills, while others use high interest credit cards or clean out their savings.

Worse, she wrote, is that nonprofit hospitals, which according to law are supposed to provide health care as a community benefit in order to justify their tax-exempt status, often charge uninsured patients full rates for medical procedures to subsidize lower rates for insured patients negotiated by insurance companies. In recent years, she said nonprofit hospitals have become increasingly aggressive in pursuing uninsured, often poor patients. She noted one nonprofit health care organization, Carillon Health Care in Roanoke, Va., once sued 9,888 patients in a single year, garnishing the wages of 5,478 people and placing liens on 3,920 homes.

“With downward spirals like these, it is arguable as to whether these community members truly benefited in the long term from these hospitals’ involvement in their lives,” she wrote.

Thai acknowledges that hospitals must collect payments that are due so that they can remain open. But Grassley’s provision in last year’s health care reform law aims to prevent organizations from engaging in predatory billing practices by requiring that nonprofit hospitals charge uninsured patients the same rates they charge insured patients. The law also requires that hospitals, when possible, disclose up front that they have financial assistance programs available for poor or uninsured patients, and may even offer services for free.

Hospitals that violate the provision risk losing their tax-exempt status.

Thai said Grassley’s provision goes a long way toward helping patients understand their options in paying for their health care and not be surprised when they receive a large bill. It also provides a legal defense to many patients when a nonprofit hospital begins court proceedings against them.

But she said the provision’s weakness is that it depends on hospitals to acknowledge that society has changing expectations of nonprofit hospitals’ behavior and improve their own communications with their patients and their community.

While it’s a good first step, Thai said more reform is needed.

“It is entirely possible that complete reform of the (American healthcare system) is the only way of solving the issue,” Thai wrote. “Realistically, however, a multi-tiered legislative approach with an eye to local communities may be the most feasible way to presently approach the situation.”

Thai’s article “Is Senator Grassley Our Savior? The Crusade Against 'Charitable' Hospitals Attacking Patients for Unpaid Bills,” appears in the January 2011 issue of the Iowa Law Review.

STORY SOURCE: University of Iowa News Service, 300 Plaza Centre One, Iowa City, Iowa 52242-2500

MEDIA CONTACT: Tom Snee, 319-384-0010 (office), 319-541-8434 (cell),