IRS rules to protect patients from health care financial burdens are inadequate, need legal reform

http://ekaweb01.eurekalert.org/pub_releases/2015-08/gsu-irt081715.php

Public Release: 17-Aug-2015
IRS rules to protect patients from health care financial burdens are inadequate, need legal reform
Georgia State University

Recently issued new Internal Revenue Service (IRS) rules for tax-exempt, typically nonprofit, hospitals designed to help protect patients from health care financial burdens are inadequate and need further legal reform, Georgia State University Law Professor Erin C. Fuse Brown says.

The American Medical Association (AMA) Journal of Ethics published Fuse Brown's article, "IRS Rules Will Not Stop Unfair Hospital Billing and Collection Practices" in August. The article summarized Fuse Brown's analysis of the IRS rules issued in December 2014. The rules address the problems of unfair hospital prices and harsh debt collection practices, including assigning the debt to collection agencies, suing patients, seeking foreclosure on patients' homes or garnishing wages.

Fuse Brown was motivated to write the article after hearing stories of patients who were being subject to very harsh debt collection and billing practices from hospitals. She wanted to address questions of whether these practices were legal and if anything could be done to protect individuals from the financial insecurity caused by their medical bills.

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"I expected to see more of a standard industry practice emerging for hospital financial assistance and charity care," she said. "But the policies are all over the map and patients still have no idea when they go to a hospital what the financial bottom line will be for them."

Fuse Brown found the rules provide inadequate and unpredictable protection for many patients.

"First, they do not apply to for-profit or government-run hospitals, which make up more than 40 percent of all hospitals in the United States," she wrote. "Second, the rules give hospitals complete discretion to determine eligibility for financial assistance, which is the trigger for the rules' protections. Under the rules, for example, a hospital could adopt a narrow financial assistance policy with very restrictive income requirements, exclude all patients with any form of insurance regardless of out-of-pocket expenses, or make applying for financial assistance so onerous that few are able to complete the process."

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