Inflated numbers?
Bart Hinkle, an editorial writer at the Richmond Times-Dispatch, has long crusaded against “baroque and opaque” pricing in the hospital industry, a fundamental flaw in the health care system that makes it difficult for patients to exercise consumer choice.
Now Hinkle is taking aim at the accounting conventions by which hospitals calculate how much charity care they provide. In a Sunday column, he notes that there is no common standard for determining a number. When hospitals report how much they cover in uncompensated care for indigent patients, Peter Boswell, who oversees hospital licensing in Virginia, told Hinkle, “Nobody is checking behind them. We take their word for it.”
And as William Hazel, Virginia’s Secretary of Health and Human Resources said, how hospitals arrive at charity care figures is “mystical to me.”
Some hospitals tally up the cost they incur in treating indigent patients, writes Hinkle. Others report “gross revenue foregone,” a number that reflects not how much a procedure cost but how much the hospital would have charged — an inflated number before insurance discounts. In other words, it’s a fictitious figure.
Why does this matter? Because Virginia hospitals cite the large burden of uncompensated care as reason for expanding the Medicaid system in Virginia under the provisions of the Affordable Care Act. Before the act, the federal government provided a partial offset — some $163 million in 2015 — to Virginia hospitals that treated a disproportionate number of charity cases. The feds are cutting back that payment now on the assumption that state health insurance exchanges and expanded Medicaid coverage would provide coverage for formerly indigent patients. Virginia has a health insurance exchange, but not the expanded Medicaid.
Bacon’s bottom line: With the exception of a few rural hospitals, Virginia hospitals are highly profitable — adn that includes the not-for-profits. Before we can take industry claims seriously about the debilitating impact of charity care, we should have some faith in their numbers. At a minimum citizens should demand (a) a common definition that applies to all hospitals, (b) a number that reflects actual costs, not inflated gross revenues, and (c) a transparent reporting of those numbers. Only then we can start to have an intelligent discussion.
— JAB
