DENVER — A new Colorado law prohibits hospitals that haven’t posted their prices from suing patients over unpaid bills, but the bigger impact of the legislation may be indirect, as customers use those prices to decide where to get care.
Under federal law, hospitals are required to have a list of “shoppable” services and a machine-readable file that includes the prices they charge to insurance plans and people paying cash. Typically, that’s a very large spreadsheet of diagnostic codes.
House Bill 1285, which Gov. Jared Polis signed on June 9, prohibits hospitals that haven’t posted the required price information from sending patients’ debt to collections, suing them or reporting the debt to entities that calculate credit scores.
The state won’t enforce the law itself, though. Rather, it gives patients the right to sue if a hospital that hasn’t posted its prices takes any of those steps. If a patient who’d had a $10,000 surgery sued and won, the patient wouldn’t have to pay the debt, and would receive an additional $10,000.
The law still puts the onus on patients to take action if a hospital isn’t complying, but it gives them the right to go to court, which is progress, said Cynthia Fisher, founder of PatientRightsAdvocate.org. If hospitals do comply, that also gives the patient some ability to challenge their bill with the billing department by pointing to the price list, or to shop around and ask for a price match if they do their research in advance, she said.
“The enforcement empowers the patient,” she said. “We hope to have all this data unleashed and create a marketplace.”
Bob Smith, founder of the Colorado Business Group on Health, said the law will give hospitals a financial incentive to be transparent, allowing employers to decide which locations they want in their insurance networks and how much they’re willing to pay.
A new report from the Rand Corporation estimated Colorado had the 12th-highest hospital prices, as a percentage of what Medicare would pay, in the country. Some hospitals charge significantly more than others, even if their results aren’t better, so steering employees toward the most efficient facilities is a relatively easy way to get health care costs under control, Smith said.
“Health care (cost) is a threat to the economy of the state of Colorado,” he said.
Given that patients sometimes don’t receive their bills until months after they got care and usually aren’t sent to collections immediately, there likely won’t be a spurt of lawsuits as soon as the law takes effect on Aug. 10. It won’t apply to some small rural hospitals until Feb. 15, giving them more time to post their prices.
How much of an impact the law will have over time depends on how many hospitals aren’t complying, as well as how many patients know they have an option to sue and can get an attorney to take their case — something that can be challenging for smaller claims.
As it is now, many hospitals could be sued because they haven’t listed all the required prices, Fisher said. In February, her group reviewed about 1,000 hospitals nationwide and found only about 14% were complying with the federal price transparency rules. In Colorado, they examined 17 larger hospitals’ postings, and found only University of Colorado Hospital was fully compliant.
So far, the Centers for Medicare and Medicaid Services have sent warning letters to 352 hospitals, and 171 fixed the problem by posting the information. On June 7, it issued the first fines for noncompliance to two Georgia hospitals, for $214,320 and $883,180. Hospitals with more beds face larger fines, which are assessed based on a daily rate for however long they weren’t complying.
Katherine Mulready, chief strategy officer at the Colorado Hospital Association, said they estimate 85% to 90% of Colorado hospitals are complying, but ultimately CMS will make that call. Some hospitals offer services as part of bundles — say, contracting to offer prenatal, birth and postpartum care for a set amount — so they don’t have prices to list for every service that CMS wants to see, she said.
Without knowing how many hospitals are in compliance, it’s difficult to know how much of an impact the law might have, Mulready said. Hospitals vary in how often they use tactics like lawsuits or sending patients to collections, which adds another layer of uncertainty.
And not every hole in the price list is grounds for a lawsuit — if you went in for heart surgery and later discovered a hospital hadn’t posted all prices for childbirth, that’s not relevant, she said.
“Hopefully a whole lot of patients would not be affected,” she said. “Colorado has always been a leader in health care cost transparency. This is a fail-stop.”
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