Financially speaking, patients soon will find visits to North Carolina hospitals to be a less painful and less mystifying experience.
Under laws passed by the General Assembly, hospital bills must be in plain, easy-to-understand language without obscure codes and medical jargon. Hospitals will have to give written notice before sending patients to a collection agency, and they cant send patients to collection while they are requesting charity care.
Starting in June, hospitals will have to post prices for common procedures and detail what the hospital is paid by Medicaid, Medicare, private insurers and uninsured patients. Theyll also have to post their charity care policies prominently.
Transparency is a good first step to fixing things, said Sen. Bob Rucho, a Matthews Republican who led the push for the changes.
The transparency bill came after a series of stories in The News & Observer and The Charlotte Observer last year explored how the growing market power of hospitals has driven up prices. The stories revealed soaring profits at nonprofit hospitals, huge executive salaries, minimal spending on charity care and efforts by hospitals to sue uninsured patients delinquent on their bills or to turn over the accounts to collection agencies.
For years, the state hospital industry had been accustomed to getting its way in Raleigh. With a squad of lobbyists and generous donations to elected officials, it has long been one of the most powerful interest groups in state politics.
In years past, hospitals rarely had to appeal directly to the public. The boards of directors of the states 110 community hospitals kept in close touch with their legislators. Hospital lobbyists and CEOs met privately with lawmakers to kill bills they opposed or to push legislation they favored. They seldom suffered defeats.
This year was different. Hospital officials said they were hurt by cuts in Medicaid reimbursements and a federal matching funds program known as hospital assessments.
This session included the largest budget cuts in history for hospitals, N.C. Hospital Association spokesman Don Dalton said in a statement. Hospitals will be taking $100 million in cuts from the State.
A major ad campaign
Those werent the only issues that forced hospital lobbyists to play defense.
The legislature capped sales tax refunds for large nonprofit hospitals, though the cap is so high that it likely wont affect any hospitals this year.
More serious was the General Assemblys refusal to expand Medicaid to 500,000 North Carolinians, one of several proposed changes under the federal Affordable Care Act. That was a huge loss for hospitals, said Adam Searing, director of the Health Access Coalition at the N.C. Justice Center.
It seems to me they lost a lot with the Medicaid decision, Searing said. But it seems like they worked really hard to make it clear that was the only thing they were going to lose.
The Medicaid defeat early in the session was particularly hurtful to small struggling rural hospitals that have a high percentage of uninsured and Medicaid patients, said Adam Linker, an analyst at the Health Access Coalition.
There really was, when you take it all together, a sort of existential threat to some hospitals, Linker said.
Hospitals responded with an unprecedented lobbying campaign outlining a variety of financial threats to the hospitals, including a loss of sales tax refunds and competition from same-day surgical centers.
The N.C. Hospital Association said it spent about $1 million on the social media campaign and on ads in TV markets around the state. The hospital association estimates that hospital employees wrote 40,000 letters to lawmakers and the governor. Hundreds of hospital employees visited the legislature to lobby. And hospital officials adjusted their tactics by becoming much more public at the legislature.
You started seeing lobbyists from the association actually speak in committee, which you almost never saw before, Searing said. I think they were feeling more pressure. When youre feeling more pressure, you have to speak publicly more.
Bills you can understand
In the final days of the session, the General Assembly passed legislation aimed at making hospitals more patient-friendly and hospital bills more understandable. The hospital association said it did not oppose the consumer-friendly measures.
Hospital bills are notorious for incomprehensible codes and legal jargon; now they will have to be written in simple language.
Hospitals and ambulatory surgical centers will have to post pricing and payments for their most common admissions, surgeries and imaging procedures. They will have to list the prices and the reimbursements from Medicare, Medicaid, large private insurers and uninsured patients. Hospitals must post their charity care policies prominently in their buildings and on their websites.
The bill also gives patients more protection from aggressive bill-collection activities. Hospitals will have to notify patients in writing before referring the patient to a collection agency, and hospitals cant refer unpaid bills to collection agencies while a request for charity care is pending.
UNC Hospitals will no longer be able to collect unpaid bills from a patients state tax return or lottery winnings.
Battle over sales taxes
Defeating the sales tax refund was the biggest priority for hospitals. Each year, the N.C. Department of Revenue refunds about $220 million to nonprofit hospitals.
In June, the state Senate passed a bill capping sales tax refunds to nonprofits at $100,000. When the House refused to go along, the Senate offered to raise the tax break cap to $2.85 million.
That would have been a significant hit for some big hospitals. Duke Hospital receives about $40 million annually in refunds, according to Sen. Floyd McKissick of Durham. Novant said it received tax refunds of about $21 million last year.
When the N.C. Chamber, the states business lobby, backed a tax bill that eventually would have capped the annual refund at $2.85 million, the hospital association dropped its membership in the chamber. So did Carolinas Healthcare System in Charlotte, the states largest hospital chain.
The advertising campaign infuriated Rucho, the bills sponsor.
Why did they spend all those millions to defend the fact that they pay no taxes? Rucho asked. They pay no income tax, no corporate tax, no property tax, no franchise tax, no sales tax They do tend to pay their chief executives and higher-level employees seven figure salaries.
Rucho was frustrated by the final outcome: The sales tax refund is capped at $45 million.
Hugh Tilson, lead lobbyist for the hospital association, said the cap will not affect any hospitals this year, but he worries that a precedent has been set to lower that cap in future sessions.
Its easier to deal in black and white than gray, Tilson said. We used to have: thou shalt not tax non-profits.