Hospitals Alter Billing and Collection Practices for Uninsured Patients

Little Impact to Date on Hospital Bottom Lines as Bad Debts Shift to Charity Care Write-offs

News Release
Oct. 12, 2005

Alwyn Cassil (202) 264-3484 or

WASHINGTON, DC—Many hospitals have adopted more generous charity-care guidelines for uninsured patients after a barrage of publicity about aggressive hospital billing and collection practices and a spate of lawsuits alleging hospitals overcharged uninsured patients, according to a study released today by the Center for Studying Health System Change (HSC).

Hospitals in more than 50 health systems across the country were named as defendants in class-action lawsuits alleging that not-for-profit hospitals charged uninsured patients full billed charges for care, when other payers, including private insurers, Medicare and Medicaid, receive large discounts from billed charges. Virtually all of the suits against hospitals filed in federal court have been dismissed without merit, but state court action is still possible.

Nonetheless, many hospitals have modified billing and collection practices for low-income, uninsured patients, following a campaign by hospital associations to encourage hospitals to create formal policies for billing uninsured patients, the study found.

"Many uninsured patients are poor and unable to afford care, while others may have the resources to pay for their care, leaving hospitals the task of determining who is financially needy," said Paul B. Ginsburg, Ph.D., president of HSC, a nonpartisan policy research organization funded principally by The Robert Wood Johnson Foundation. "What we found is that hospitals generally have adopted guidelines to help make those calls in a more organized and structured way."

The study’s findings are detailed in a new HSC Issue Brief—Balancing Margin and Mission: Hospitals Alter Billing and Collection Practices for Uninsured Patients—available online here. The study is based on HSC’s 2005 site visits to 12 nationally representative communities: Boston; Cleveland; Greenville, S.C.; Indianapolis; Lansing, Mich.; Little Rock, Ark.; Miami; northern New Jersey; Orange County, Calif.; Phoenix; Seattle; and Syracuse, N.Y.

"In every HSC community, most hospitals have either recently changed their pricing, billing and collection policies or tried to improve the clarity of the information provided to patients," said HSC Research Analyst Andrea B. Staiti, coauthor of the study with HSC Senior Consulting Researcher Robert E. Hurley, Ph.D., of Virginia Commonwealth University, and HSC Senior Researcher Peter J. Cunningham, Ph.D.

Other key findings of the study include:

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The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded principally by The Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.