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State's high court to weigh hospital bills

May 7, 2012

The Indiana Supreme Court this week will consider whether hospital billing practices should be put on trial. The state’s highest court will hear oral arguments Thursday in a case in which two uninsured patients have sued Indiana University Health for charging them much higher prices than it would have charged someone with insurance.

IU Health won the first round in the 2-year-old fight, when a Marion Superior Court judge dismissed the patients’ lawsuit. But after a state appeals court judge reversed that decision, ordering the case back to the county level, IU Health appealed to the state’s highest court.

If the patients win again, they get the opportunity to take their case to trial. More importantly, the patients’ lawyers—and other trial attorneys around the state—are likely to bring similar cases against hospitals around the state.

The patients in the case—Abby Allen of Avon and Walter Moore of Carmel—were billed by IU Health’s North Hospital in Carmel at “chargemaster” rates—fees that are set primarily as a starting point for contract negotiations with insurance companies, which then wrangle for large discounts.

For years, hospitals raised their chargemaster rates annually in an effort to win higher reimbursement rates from health insurers. But the practice fell hard on uninsured patients until last year because most hospitals gave no more than a 20 percent discount to the uninsured.

Beginning last year, IU Health began offering 40 percent discounts to uninsured patients in order to comply with new rules that were part of the 2010 Patient Protection & Affordable Care Act.

Still, lots of patients either paid much larger bills than their insured peers or, like Allen and Moore, paid nothing but instead had their credit records damaged when the hospital turned over their accounts to collection agencies.

Scott Weathers, the lead attorney for Allen and Moore, has said he wants to turn their case into a class-action against hospitals across Indiana, according to the Associated Press. For that reason, the Indiana Hospital Association has filed a brief with the Indiana Supreme Court asking it to find in IU Health’s favor.
 

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