Judge slaps IU Health over billing

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A lawsuit challenging the ways hospitals bill patients got new life last week, which isn’t good news for Indiana University Health.

The Indiana Court of Appeals reversed a Marion Superior Court decision to dismiss a lawsuit by Abby Allen and Walter Moore, two uninsured patients who received care at IU Health North Hospital in Carmel. (At the time of their care, IU Health called itself Clarian Health.)

Both were charged IU Health’s “chargemaster” rates, charges that are set primarily as a starting point for contract negotiations with insurance companies, which then wrangle for large discounts.

It has been common for hospitals to raise their chargemaster rates substantially each year in an effort to win higher reimbursement rates from health insurers. But the practice falls hard on uninsured patients, because most hospitals give no more than a 20 percent discount to the uninsured. And some give no discount  if the patient’s income is high.

Allen was billed $15,600, even though IU would have accepted half that much if she had been insured, according to the unanimous opinion by three appeals court judges. Moore was billed $1,138, but would have paid “substantially less” if he had been insured.

When neither Allen nor Moore paid any of their bills, IU Health turned them over to a collection agency.

A key issue in the case is that IU Health specified no upfront price in the paperwork Allen and Moore signed, which pledged them to pay for the medical services. IU Health contends those documents bind its patients to pay chargemaster rates, but the court disagreed.

“There is no reference to the chargemaster rates, express or implied, in the contracts. Accordingly, the law implies a reasonable charge,” wrote Judge Edward Najam Jr. in his Oct. 12 opinion.

And IU Health’s chargemaster rates seem anything but reasonable, Najam suggested, citing a bevy of studies that note that hospital chargemasters have long since stopped bearing any relationship to the actual costs of the services rendered. Also, Najam said, IU Health’s contract never used a term like “rates” or “charges” that might have given its patients an indication that its chargemaster applied to them.

“We decline to hold that Allen and Moore agreed to pay whatever amount Clarian charged,” Najam wrote. “That would be an unreasonable, if not absurd, interpretation, and we will not interpret a contract in a manner that results in a manifest absurdity.”

Najam also noted the apparent inconsistency that IU Health regards its chargemaster rates as confidential and proprietary. “Left unanswered by Clarian is how a patient and a provider can mutually agree to an ‘unambiguous’ and ‘express’ chargemaster fee schedule that is not available to the patient,” Najam wrote.

Najam sent the case back to Marion Superior Court for reconsideration.


  • Outrageous
    A little over a month ago, I went to an urgent care center because I could tell my blood pressure was high and I needed medicine. The urgent care said that because my pressure was so high it was better that I go to the IU Health Center here in Muncie, so I went expecting to get a prescription for my blood pressure. But went I got to the emergency room, the hospital said I needed to be admitted because my pressure was so high and I might be having a stroke or something. They took me to a room and gave me nitro which immediately brought my pressure down to normal. I felt fine afterwards and told them so. But they said I needed to be admitted overnight for further tests. I declined and said I wanted to leave. The ER doctor was sent back to my room and talked me out of leaving, saying "If you were my wife I'd chain you to the bed to keep you here because that's how badly you need to stay". So I stayed even though I felt fine after the nitro and only wanted to go home with a script for BP meds. After being moved to a room upstairs, another doctor visited and told me he wanted me to have an MRI scan to check my brain.I told him I didn't want one because I couldn't afford it and he said I had to have it because I could've had a stroke or could have brain damage resulting from stroke. The nurses also took a lot of blood for lab tests. Then, the doctor said he had also ordered ultrasound tests to be performed to scan my heart and neck arteries. I new very well that this would all result in a huge bill and I again told the nurse and doctor that I didn't want to stay because I couldn't afford it. And once again the doctor talked me into staying by looking at me idiotically and stating that I needed to stay and have these tests done because I may have either had a stroke or been about to have one. The next day, I demanded to leave because they were attempting to have me stay longer for further "tests". The doctor said he at least wanted to do another MRI scan because my petuitary gland looked slightly "off to the side". Whatever that meant. Regardless, I demanded to leave that day. So, yesterday I received a hospital bill for over $12,000, for an overnight stay at the hospital and a bunch of rediculously expensive, fruitless tests- which all by they way came up clean showing I had no health issues other than... High Blood Pressure and a mild sinus infection. I'm going to fight this bill with everything I have.
  • Deceptive and misleading billing information
    IU Health, and their billing department, apparently don't know what you (as a patient) will get billed for when seeing an affiliated physician. Assurance had been provided, after they gouged me almost triple what an eye specialist charged, that they wouldn't charge to see the same GP I had seen one year ago (with no surcharge from IU Health). What did I receive in the mail? Anthem documentation proving they lied. They billed Anthem almost $700 - nearly 3 times the physicians charge - after telling they wouldn't. What happened to ethics in this industry?
  • Ridiculous!
    I just recently had a procedure done that I was originally quoted by the docs to cost around $6,000 and was told insurance should cover most of... What a surprise! When the actual bill came it said everything cost over $26,000 for an outpatient procedure that was supposedly only $6,000 and now I'm being charged over $1,000 out of pocket expenses when I was under the impression that my portion was only $600...WOW! Oh yeah it was at IU Health
  • What a joke!
    Its about time that IU Health is held accountable for its absurd charge master. The system charges differently for the same type of room and recovery depending on where the procedure takes place - jacking up the charges at IU Health North hospital - probably due to the perceived demographic surrounding that hospital. This, in my opinion, is wrong and IU Health should take a serious look at these unfair billing practices. The key point mentioned in the article is "hospital chargemasters have long since stopped bearing any relationship to the actual costs of the services rendered." This is absolutely right on. The true cost endured by a facility has no relation to what is charged. This is unethical - no wonder healthcare in this country is so expensive to the patient and insurers.

    For what its worth, as a patient if I had a choice of where I had a procedure performed, I would choose ANYWHERE but an IU Health facility. It is a fact that they charge more than any other local hospital system for similar procedures.

    Perhaps that big IU Health marketing campaign on commercials, billboards, signs in the mall and everywhere else you look should be suspended until IU Health can start charging prices that don't rip off the patients for whom they are in existence.
  • excellent...
    it's about time that SOMEONE holds these hospitals/ health care providers accountable for their billing...the fact that the Marion Co. court dismissed the suits originally just shows how much the *justice* system in Indiana is heavily weighted in favor of the corporations AGAINST the individual, thanks to corporate owned politicians
  • What's wrong with Health Care
    A different organization than IU recently charged my insurance company over $20,000 for a surgical center outpatient service (not including doctors, anesthesia, etc.) for a 1/2 hour surgery. It was discounted almost $15,000 and the insurance allowed around $5,000. All I could wonder is what would have been charged to an uninsured patient. JUST NUTS!

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