Missouri Lifestyle Journalism Awards

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The Darrell Sifford Memorial Prize in Journalism

Darrell Sifford BJ '53

The Wall Street Journal

Rough Treatment: Uninsured and Ill, a Woman Is Forced to Ration Her Care

Amandeep Kaur, Like Many, Stretches Out Her Drugs And Delays Doctor Visits

An Eye Ravaged by Glaucoma

By Lucette Lagnado
12 November 2002
Copyright © 2002, Dow Jones & Company, Inc.
Reprinted by permission.

NEW YORK -- One morning in May, Amandeep Kaur awoke to a throbbing in her right eye. It hurts most of the time, but on that morning, she says, it felt as if "someone was punching me, hard."

Ms. Kaur swallowed the pain, left her Queens apartment and headed for work at a Manhattan newsstand. A little after 6 a.m., she unlocked the green metal shed at East 86th Street and Second Avenue, but the pressure inside her red, swollen, totally blind eye had grown unbearable. Instead of stacking fresh bundles of newspapers and greeting early customers, she closed up and sat on the stool in the shuttered newsstand to wait for the owner, her husband's uncle.

When he showed up later in the morning, Ms. Kaur rushed to the emergency room of New York Eye and Ear Infirmary, where she has been treated for glaucoma off and on since 1999. A nurse asked her to rate the pain on a scale of 1 to 10. Nine, Ms. Kaur replied.

The doctors rejiggered Ms. Kaur's prescriptions, conducted a $221 ultrasound exam and other tests, and told her to return the next week. The bill came to $591.74, and she forked over most of her cash, $130.90. She decided against the prescribed return visit, though, because she didn't want to add to the $460.84 balance she now owed. Instead, she used her limited funds to buy more of the eye drops that ease the pain in her diseased eye. She also wanted to hang on to some cash in case she had to make another emergency visit.

As one of the more than 41 million Americans without health insurance, Ms. Kaur, 23 years old, makes these sorts of difficult choices every day. Trapped in a pincer of soaring drug and medical costs and unaffordable health insurance, she epitomizes the people whose lives are a day-to-day struggle to stay healthy so they can keep working so they can stay healthy.

While doctors, hospitals, health-maintenance organizations and insurers ration the health care of the insured, Ms. Kaur is left to ration her own care and act as her own physician and druggist. She avoids regular doctor visits and apportions her prescription drugs as she sees fit. Doctors worry that the lack of professional attention may wind up causing problems in her other eye.

Even when she seeks out a doctor, she hesitates: Should she go to the less expensive public hospital, where the wait is long and she doesn't much like the care? Or should she go to the prestigious New York Eye and Ear Infirmary, which specializes in glaucoma but is tough on her budget?

Working seven days a week in the newsstand, she earns barely enough to pay for necessities and buy her eye drops, which she takes as many as 14 times a day when the pain in her eye is at its most intense. Her annual income of about $16,000 puts her way over the limit to qualify for Medicaid, the government health program for the poor. Because she doesn't qualify as legally blind, Ms. Kaur fails to meet the less-stringent income guidelines for the disabled who qualify for Medicaid coverage. And she lacks access to and has no knowledge of the few programs that could help her.

She could quit her job to receive Medicaid. But while that would cover medical bills, she wouldn't have enough money for other necessary expenses. Her father's income already barely supports an extended family. And besides, Ms. Kaur wants to work and expects no handouts. "If I stopped working," she says, "I would die."

Ms. Kaur and millions like her have slipped through gaping holes in the "safety net" of the nation's health-care system. And their plight lays bare the political and economic forces that make it hard to mend these holes: the pharmaceutical industry's opposition to price controls, hospitals' inability to control costs and the government's failure to expand coverage to the working poor.

"The sociology of the decision-makers and uninsured don't overlap," says James R. Tallon Jr., president of the United Hospital Fund, a health-care think tank in New York. "We simply don't share the common experience."

EVERY MORNING at 4:15, Ms. Kaur awakes in her tiny one-bedroom apartment. Her husband awaits immigration papers in their native India, where she married him while on a trip in 1998. She dreams of the day he will come to the U.S. to support her and the children they plan to have.

For now, she takes two subway trains each day to her newsstand, a stuffy box barely 28 inches wide on the inside. There she perches on a wooden stool, her waist-length black hair pulled back in a bun, from 6 a.m. until as late as 3 p.m., without a lunch break. She is a devout Hindu who adheres to a strict vegetarian diet. One indulgence she allows herself: the occasional cappuccino. She wears unbreakable glasses to shield and see better with her nearsighted left eye.

Cheerful with customers, she likes to step outside to wait on children who gaze longingly at the lollipops and chewing gum. "Life is happy with children," Ms. Kaur says. "You play with them, you forget."

She was little more than a child herself when her right eye began to fail. She immigrated to the U.S. in 1994 to join her father and his parents -- her mother and younger sister followed in 1998. Optometrists she visited prescribed stronger and stronger spectacles. She says none told her to see an ophthalmologist.

At Newtown High School in Queens, she strained to read the blackboard, was racked with headaches and missed classes a lot, so she dropped out and earned a high-school diploma from Long Island Home Study of East Meadow, N.Y. By the time she turned 20, she had lost all sight in her right eye. She finally visited the Eye and Ear Infirmary in spring 1999. Doctors there diagnosed her with "absolute," or irreversible, glaucoma.

About three million Americans, most of them over 40, suffer from glaucoma, a term for a variety of diseases characterized by increasing pressure in the eyeball that can gradually destroy the optic nerve and lead to blindness. Doctors call glaucoma the "sneak thief of sight" because it often spreads without its victim knowing. As the optic nerve deteriorates, there is a loss, first, of peripheral vision, then a gradual narrowing of the field of vision. Glaucoma can be accompanied by severe headaches, nausea and vomiting, and an affected eye becomes cloudy and painful.

Ms. Kaur became a U.S. citizen in 2001 and earned a certificate from a computer trade school in Queens. But her worsening eye made it too painful to stare at a computer screen, so she didn't pursue the sorts of white-collar jobs that frequently offer health benefits. About two years ago, her husband's uncle hired her at the newsstand. He pays her about $6 an hour, 85 cents above minimum wage. She gets no health benefits, but her uncle occasionally advances her cash for prescriptions.

Buying her own health insurance is next to impossible. A limited HMO plan would cost her $300 to $500 a month, and a more-traditional plan, upwards of $600, according to the New York State Insurance Department. That agency recently began offering subsidized health coverage through HMOs aimed at the uninsured and working poor in New York, for about $200 a month -- roughly 15% of Ms. Kaur's monthly income. But those policies, like others, aren't required to cover doctor visits or drugs for a pre-existing condition such as Ms. Kaur's glaucoma for up to a year, an agency spokeswoman says.

SELLING NEWSPAPERS, magazines, phone cards and other sundries, Ms. Kaur spends her days making $5 to $10 additions and subtractions on a pocket calculator. Her medical life also entails plenty of daily arithmetic. "This is why I work seven days," she says. "I could have worked five days, but I need the money for my health."

A day's income of about $50 covers the cost of about one 2.5- or 5-milliliter vial of the pricier glaucoma drugs, or two or three of the cheaper ones. A vial of the cheaper stuff can last Ms. Kaur a month, if she takes it as prescribed, while the costlier drops may last a bit longer.

Like many elderly people on fixed incomes, Ms. Kaur often tries to stretch her prescriptions -- and her budget -- by skipping doses for days and weeks at a time. Sometimes she stops taking a medication if she doesn't feel it's working well. Sometimes she ignores a doctor's advice because she can't afford the prescriptions.

In January 2000, Ms. Kaur visited the Eye and Ear Infirmary for the first time in several months. She paid $111.95 for the visit and left with a fistful of prescriptions. At a Walgreen's near her apartment, she bought glaucoma eye drops called Xalatan, made by Pharmacia Corp. ($48), Alphagan drops from Allergan Inc. ($58), and Merck & Co.'s Cosopt drops ($44), as well as the anti-inflammatory prednisolone ($17). Her total bill for the day: $269. Because she wasn't working then, she had to borrow money from her husband's uncle.

After that, Ms. Kaur didn't return to the Eye and Ear Infirmary until pain drove her back last spring. Instead, she returned to Elmhurst Hospital, the city-run institution in her neighborhood that she started using a few years earlier. But she abandoned that institution as well in September 2000. She stretched her cache of prescriptions out for more than a year by using them only when her eye felt its worst. She says: "I thought, `Why am I wasting the money'" on doctor visits? "I thought, `God will help me.'" Which meant she had to endure more than the usual pain and irritation. But, she says, "There is nothing I can do."

Such behavior is typical of the uninsured, experts say. An August 2001 study of young, working adults without health insurance found that they are two to three times as likely as insured people to postpone care or to ignore filling a prescription because of costs. The study was commissioned by two philanthropies that focus on health-care issues, the Commonwealth Fund of New York and the Kaiser Family Foundation of Menlo Park, Calif.

For years, the number of Americans without health insurance climbed steadily, from 32.7 million in 1988 to 44.3 million 10 years later. Since then, the effects of the economic boom of the 1990s have helped keep the number flat. Steven Findlay, research director for the National Institute for Health Care Management Foundation, a health-care policy group in Washington, says that with the economy now on unsteady ground, "if health-insurance premiums and health-care costs in general continue to escalate, it is virtually certain the numbers of uninsured will continue to rise."

In a good month, when her eye doesn't hurt so much and she's using cheaper drugs, Ms. Kaur might spend $35 on prescriptions, or about 2.5% of her income. A bad month might mean she spends more than $100, not counting the occasional doctor visit.

AS THE TEMPERATURE ROSE this past June, Ms. Kaur began taking more and more eye drops at the newsstand. Both her eyes are sensitive to heat and humidity. The hotter the day, the more often she reached into her black shoulder purse, where she keeps several vials handy, and then squeezed a drop or two into her right eye.

She has used most available glaucoma drugs. Cosopt seems to work best at controlling the pressure in her eye, which has at times risen above 55 millimeters of mercury. Normal pressure is 10 to 20 millimeters of mercury.

The newest glaucoma drugs are "like liquid gold," says Richard Fiscella, a pharmacy professor at the University of Illinois who recently completed a study of the costs of the drugs.

The study, which was underwritten in part by Merck, Allergan and Pharmacia, concluded that new glaucoma drugs are cost-effective. For example, the study found that Cosopt effectively costs only about $1 a day. But Mr. Fiscella says prices still can be prohibitive for an uninsured person who needs drops daily. "I tell patients, `Be careful, don't waste product.'"

William Stewart, a glaucoma specialist and clinical professor at the University of South Carolina medical school, says the mid-1990s brought advancements that resulted in an array of new eye medicines that reduce pain without the headaches and other side effects of older drugs. But the drugs' prices have caused "widespread concern" among ophthalmologists, Dr. Stewart says.

Americans spend about $1.2 billion a year on glaucoma drugs, a sliver of the nation's $174 billion pharmaceutical market, according to Ian Spatz, executive director of public policy for Merck, of Whitehouse Station, N.J.

Drug makers have boosted prices of glaucoma medications in recent years, often beyond the inflation rate. For instance, Xalatan's average wholesale price rose 32%, to $50.05 per 2.5-milliliter vial, over the past five years, says Families USA, a health-care consumer group in Washington. By comparison, prices for the 50 drugs most popular with seniors have climbed on average 27% over the same period, while prices of all goods and services in the U.S. have gone up 12.4%, the group says.

The average wholesale price of Cosopt has risen 16% to $45.99 per vial since 1998, says First DataBank Inc., a provider of pharmaceutical information in San Bruno, Calif. Overall, drug prices in the three years to the end of 2001 rose about 15%, says the National Institute for Health Care Management Foundation.

A spokeswoman for Allergan, of Irvine, Calif., says prices reflect the company's investment in research and development. Merck's Mr. Spatz says Cosopt's introduction in 1998 actually saved consumers money. Cosopt combined two older products that many patients took, and was priced lower than what the others cost together, Mr. Spatz says. A Pharmacia spokesman says the company's Xalatan has the advantage of being taken only once a day, compared with two or three times a day for other remedies. That means patients are more likely to use it consistently, glaucoma specialists say. Because she's uninsured, Ms. Kaur probably pays more for her drugs and care than other consumers. "Medicaid gets rebates and HMOs negotiate discounts, but she is coming in off the street and paying out of her pocket," says Kathryn Haslanger, vice president of the United Hospital Fund, the think tank. "It is the most unfair of positions."

Because Ms. Kaur doesn't have a regular doctor, she never has received the free samples that many patients enjoy. Pharmaceutical companies have free-drug programs for the poor, but Ms. Kaur isn't wired to the Internet, where information about the programs is readily available, nor has anyone ever told her about them. Mr. Spatz says she would probably be an ideal candidate for Merck's program. He says many people like her haven't heard of it, and Merck is trying to get the word out better. The Pharmacia spokesman says Ms. Kaur could receive Xalatan for at least six months under a company program for the uninsured.

Ms. Kaur is at once convinced that no help is forthcoming and unwilling to seek it. She says her financial burdens are "my problem, not the doctors' problem." For that reason, she says, she never tells doctors about her money problems.

AT NIGHT, MS. KAUR goes home to the Elmhurst neighborhood in Queens, a working-class enclave where storefront windows are lively with Chinese and Indian script and hallways are spiced with the aromas of Asian and Latin American food.

She often stops by the two-bedroom apartment where her parents, grandparents and younger sister and brother live. One summer night, Ms. Kaur's mother, Kamaljit Kaur, sat on the living-room sofa playing with her 2-year-old son, born after she arrived in the U.S. Her smile gave way to tears as she spoke about her eldest daughter, Amandeep.

A stately woman in traditional Indian garb, Mrs. Kaur said it would be unthinkable in India for a young woman to work at all, let alone seven days a week. "America hard," she said. "I tell her not work. But medicine too much, medicine has high price. My daughter is 23 and all the time working, working, working, working. Not enjoying nothing. Not picture hall, not shopping, not travel. Only medicines."

Mrs. Kaur feels bad that she and her husband can't help their daughter more. Her husband works in a laundry shop -- 6 1/2 days a week -- and his $1,518 in monthly income is barely enough to support the family. Sometimes Mrs. Kaur tries to press money on her daughter, but Amandeep refuses.

While the toddler romped around the apartment, Amandeep's 10-year-old sister, Ramandeep, said she wants to be a doctor so she can help her sibling. "My mom, she cries, and then I feel like crying," the girl said. "My sister has so much pain. We talk about it . . . what will happen to her eye?"

Doctors say they can ease some of the pain in Ms. Kaur's right eye, but the sight can't be restored. Her left eye isn't afflicted with glaucoma, but Ms. Kaur's medical history and evidence of some abnormalities in that eye put Ms. Kaur at increased risk of total blindness, says Paul A. Sidoti, director of the Eye and Ear Infirmary's general outpatient eye clinic. Ms. Kaur needs to be monitored closely, he says, but her pattern of seeking professional care has been "erratic."

OVER SEVERAL YEARS, Ms. Kaur has become a virtual fugitive from health care -- or at least from hospitals and clinics to which she owes money. Elmhurst Hospital has a sliding-fee scale and minimal charges even for some expensive drugs. For a routine checkup there, she was charged $60, of which she typically paid only $20.

Ms. Kaur resented the long waits at crowded Elmhurst -- almost an entire day, at times -- and increasingly felt that doctors there couldn't cope with her condition. In the fall of 1999, she underwent laser surgery there on her diseased eye that she says left her with excruciating pain and a $2,167 bill she couldn't pay. Counting doctor visits, Ms. Kaur accumulated debt to the hospital of about $2,500.

Officials at Elmhurst say the hospital prides itself on serving the uninsured. A spokesman says that if Elmhurst officials had known the extent of Ms. Kaur's financial problems, they could have discounted the cost of the surgery, arranged a payment plan or even waived the fee.

Robert Fischer, Elmhurst's director of ophthalmology, says he regrets that Ms. Kaur feels she had a bad experience. He says that doctors at city hospitals often are overwhelmed, and that sometimes, "you have to sacrifice the touchy, feely, fuzzy" aspect of care. He says that Elmhurst gives quality care to thousands of patients with financial problems -- including specialized glaucoma care -- and that Ms. Kaur's case is an exception.

After the laser surgery, she switched to the Eye and Ear Infirmary, which is part of Continuum Health Partners, a prominent New York-area not-for-profit health system. Ms. Kaur liked the place, but couldn't regularly afford its minimum $97 to $117 per-visit charge.

Medicaid reimburses the infirmary about $73 for the same outpatient clinic visit, says Vincent Raab, the infirmary's chief financial officer. That amount isn't enough to cover the clinic's costs, he says, contributing to the infirmary's losses. While HMOs pay the infirmary somewhat more, he says, it's still less than what Ms. Kaur pays.

Throughout this sweltering summer, she chose to use her cash for prescriptions over physicians. In July, her eye bothered her so much that she occasionally wore an eye patch to block out glare from the sun and the fluorescent lamp in the newsstand. Her boss installed a small air-conditioner in the stand and told her to help herself to the bottled water sold there, to rinse her eye.

Ms. Kaur knew she had to see a doctor. But a collection agency had been pursuing her about the money she owed to Elmhurst. Then her Aug. 1 mail brought a purple sheet from the Eye and Ear Infirmary. "Final notice before referral to collection agency," it said, demanding the $460.84 balance from her May visit. Ms. Kaur stuffed the notice in a drawer.

THE MOST OBVIOUS solution for Ms. Kaur would seem to be Medicaid. The government insurance program is administered by states and cities, and eligibility varies widely. New York has liberalized its rules to expand eligibility so that working poor can qualify under a program similar to Medicaid called Family Health Plus.

Ms. Kaur qualifies for neither. The rules for Medicaid say singles can earn no more than $352.10 a month, and childless couples no more than $468.50 a month -- in both instances, about 50% of poverty-level income. Ms. Kaur's monthly earnings of about $1,400 are roughly four times Medicaid's benchmark, and nearly twice what Family Health Plus, capped at $739 a month, will allow.

"This is the secret shame of New York," says Elisabeth Benjamin, a lawyer with the Legal Aid Society, a legal-services organization for the poor. She says the system tends to benefit "preferred classes" such as pregnant women, young children, and mothers and couples with children. Many singles and childless couples are out of luck.

Robert Hinckley, a spokesman for New York Gov. George Pataki, says: "We have focused on increasing access to health care for our most vulnerable population, and we have worked to increase job opportunities so that people can earn a good living and access health care, and we are going to continue on these activities every day."

On Sept. 13, Ms. Kaur received a letter from a collection firm retained by the Eye and Ear Infirmary to obtain the $460.84. She shoved it in the drawer with the other notice.

Officials at the infirmary say that they would have tried to help if they had known Ms. Kaur was so strapped. "If somebody comes and pays a bill, how do I know what their financial situation is?" Mr. Raab says. The infirmary doesn't offer a sliding-fee scale pegged to income, but its fees are discounted with the uninsured in mind, he says. "We don't wish to turn anyone away, and especially in the emergency room, we treat anyone with or without insurance."

ON OCT. 9, MS. KAUR returned to the infirmary. In the cooler fall weather, her eye had started feeling better. But lately, she felt twinges of pain, and her eyeglasses didn't seem as effective. She wondered if her left eye was growing weaker.

She left her newsstand one afternoon and went first to wait at the infirmary cashier. Clinic patients must line up to pay before they're treated.

"Medicare? Medicaid?" the cashier asked.

"Sorry, I don't have any," Ms. Kaur said.

"$117.36," the cashier said. Ms. Kaur paid cash, about one-third of her weekly pay.

An eye test showed that her vision had worsened since May. She considered the $50 cost of new glasses against her desire to protect her good eye. She planned to buy the glasses.

Next, a resident, Tara Viechnicki, examined Ms. Kaur first. "You are telling me that in the mid-1990s, you realized you couldn't see out of the right eye?" Dr. Viechnicki asked.

"Yes," Ms. Kaur said.

"Did you ever see an eye doctor?"

"No."

Dr. Sidoti, the attending physician and a glaucoma specialist, followed up. "On a 1-10 scale, what is the pain?" he asked.

"Between two and three."

"You are never without pain?" he said. "It is never zero?"

"No," she said.

"There aren't a whole lot of options," the doctor said. "One I know doesn't sound nice is to remove the eye. Cosmetically, they can make it look good."

Ms. Kaur said nothing.

There was some good news: Dr. Sidoti said the pressure in Ms. Kaur's eye had dissipated enough that she could stop using Cosopt, at least temporarily, and manage on an intensive regimen of less-costly drugs. He said he wanted her to return for a checkup. She scheduled an appointment for Oct. 30, when Dr. Sidoti would be the supervising attending physician. Seeing him again, she thought, would almost be like having a regular doctor.

THREE WEEKS LATER, the clinic was more crowded than usual. When Ms. Kaur's turn finally came, another resident, Alfonso Ponce, examined her and reviewed her medical history. The pressure in her eye, now a deep red, had decreased further and was very low.

"It is too red," Ms. Kaur told him. "I feel this eye is smaller than that eye."

"That could happen," the Dr. Ponce said. "Your eye is not producing fluid anymore."

Dr. Sidoti, the eye clinic chief, arrived. He confirmed that Ms. Kaur's eye could be shrinking. "There is nothing really to do for that," he said. "We don't have a way to make it better."

Then, he returned to the subject of surgery. "If you really don't like the way it looks, or it becomes painful," he said, the options "would include taking out the eye."

As before, Ms. Kaur was silent.

Eye-removal surgery, plus prosthetic, can cost as much as $12,000 -- an amount that makes Ms. Kaur laugh. Of late, she has been thinking of consulting doctors in her native India, where she thinks care, including surgery, will be cheaper than in the U.S.

Dr. Sidoti urged her to continue the less-expensive drops and to return in two months. In October alone, two visits to the clinic, at $117.36 apiece, plus medication, swallowed 20% of her income.

"These two months, I will save the money," Ms. Kaur said. But given the condition of her eye, she can't be sure that she won't need it sooner. "It has happened before -- emergency."

AFTER INQUIRIES by The Wall Street Journal in reporting Ms. Kaur's story, the New York Eye and Ear Infirmary erased the $460.84 balance on Ms. Kaur's May emergency-room bill. Also, Elmhurst Hospital slashed her $2,500 bill to $450. And the American Academy of Ophthalmology said it will help find her a doctor who can treat her free of charge. A regular doctor could enlist her in the drug-giveaway programs for which she qualifies, such as Merck's and Pharmacia's.

Such actions, while beneficial to Ms. Kaur, point up the difficulties even the most motivated among the uninsured face in piecing together their health care. "Pick up a drug here, pick up a doctor there," says Mr. Tallon of the United Hospital Fund. A lasting solution "can't be a solution that calls for special pleadings and special actions and extraordinary navigation."

(See related letter: "Letters to the Editor: Where Will All the Sick People Go?" -- WSJ Nov. 21, 2002)

By Lucette Lagnado
13 March 2003
Copyright © 2003, Dow Jones & Company, Inc.
Reprinted by permission.

QUINTON WHITE lies in bed at his home in Bridgeport, Conn., suffering from kidney ailments and the aftereffects of a heart attack and dreaming of a trip to Paris, which he has seen only in the movies.

But for Mr. White, a retired dry-cleaning worker, seeing Europe is probably as likely as a trip to the moon. In addition to his health troubles, the 77-year-old is strapped with nearly $40,000 of debt.

He owes the money to Yale-New Haven Hospital, a distinguished not-for-profit facility where his wife, Jeanette, was treated 20 years ago. Mrs. White died in 1993, but her debt lives on, growing like her cancer because of the 10% interest charged on her original $18,740 bill. Back in 1983, the hospital's lawyer got a lien on the Whites' house, and in 1996 nearly cleaned out Mr. White's bank account. Mr. White figures he will be stuck paying the hospital until his own dying day, though he adds, with a mischievous glint in his eye, "They will never get the whole amount. I am not gonna live that long."

Mr. White isn't alone in his predicament. Many hospitals besides Yale-New Haven have adopted aggressive collection practices aimed at their uninsured and underinsured patients as they seek extra income to stay afloat. Collection dollars are one of the ways hospitals are compensating for the squeeze on HMO and government reimbursements and countering their losses from caring for the uninsured.

Recently patient advocates from Connecticut to California have begun to criticize the way hospitals pursue patients who owe them money. As part of a national campaign by the Service Employees International Union, the New England health-care local has been researching Yale-New Haven's collection practices. Grace Rollins spent months looking up court cases the hospital has brought and interviewing some of the patients involved. Some of these people "are living hand to mouth," Ms. Rollins says. "These debts are literally crippling them."

Indeed, medical bills are now the second biggest cause of personal bankruptcies, according to a study by Elizabeth Warren, who heads Harvard University's Consumer Bankruptcy Project. Along with the astronomical cost of even routine hospital procedures, she blames hospitals' aggressive collection tactics.

The patients who suffer the most aren't necessarily indigent. The very poor can get Medicaid, the government health plan that pays hospital tabs for those who qualify, while most middle-class families have health coverage that picks up the bulk of their medical bills. It is working-class families like the Whites, with some assets but no insurance coverage, who are penalized the most by the system.

Yale-New Haven, the primary teaching hospital for Yale University's medical school, defends its collection practices. The hospital, whose board includes the university's president and the medical school's dean, says prudent business practices mean that the hospital must at least try to get back money for care rendered. "I can attest vehemently to the ethics, the goodwill, and the intent of this organization," says Marna Borgstrom, Yale-New Haven's chief operating officer.

Mr. White seems more resigned to his fate than resentful. Leaning back on his mattress, his skinny limbs covered by a worn blanket, he points to desk drawers stuffed with stacks of canceled checks. Many are made out to Yale-New Haven Hospital, tangible proof, he says, of how month after month he faithfully attempted to repay the institution for its care.

Over the years, Mr. White has paid Yale $16,000 -- close to the amount the hospital originally billed for his wife's stays. But interest on the bill now exceeds $33,000. Indeed, between the principal Mr. White has paid off, the principal that remains to be paid, and the interest and fees owed to the hospital's attorneys and others, the total bill for Mrs. White's treatment has ballooned to around $55,000. The hospital confirms that Mr. White still owes $39,000. "I accept it. That's the way it is," Mr. White says with a shrug. "How are you gonna fight them?"

But E. Richard Brown, a professor at the UCLA School of Public Health who studies the uninsured, argues that a hospital's tax-exempt status should require it to steer clear of hard-nosed tactics, including lawsuits, wage garnishing, liens and unrelenting claims for payment. "If we are going to give them that status," Professor Brown says of hospitals, including Yale-New Haven, "they should be responsible for fulfilling the intent. The intent is to create a community benefit, a public good, and not simply act like a for-profit hospital but with a taxpayer subsidy."

Mr. White, who married Jeanette in 1946, says the two struggled from the beginning to make a life for themselves and their four sons. They bought a house on Seaview Avenue in the 1960s. Mrs. White worked part time as a cleaning woman and Mr. White worked as a spotter, or stain remover, for a dry-cleaning shop in Westport, Conn., a suburb on New York's Long Island Sound. The occasional movie star would wander in, he recalls, including Westport's most famous resident, Paul Newman, whom he laughingly describes as "that short, blue-eyed guy."

Then, in 1982, Mrs. White was diagnosed with throat cancer and admitted to Yale-New Haven, first in March and again in May. In return for her care, she signed a note agreeing to pay the hospital "regular charges" and late fees. A couple of months later, her husband signed a similar note agreeing to guarantee payment.

Doctors thought they had removed all of his wife's cancer, Mr. White says. Still, a pall descended on the Whites' house. The couple's son, Anthony, who lives with his father and helps take care of him, recalls that his parents' friends all seemed to vanish after his mom had her voice box removed. "She couldn't talk, and everyone stopped coming," he says.

The hospital says it held frequent discussions with the Whites over how its bill would be paid. Early on, Mrs. White applied for Medicaid but was turned down. She offered to pay $25 a month, but the hospital considered that unacceptable. In August 1982, Yale-New Haven's lawyer, Joseph Tobin, was brought in, and several months later he got a court order for a lien on the Whites' house, guaranteeing that the hospital's debt would be repaid in the event of any sale.

Numerous motions were filed with the court in late 1982 and early 1983, culminating the following May in a summary judgment and an order for payment that included the original debt, Mr. Tobin's $2,811 in legal fees, $192 in court costs and $153 in late charges, for a total of nearly $22,000. The judge then signed off on a payment schedule of $5 a week.

In 1993, Mrs. White succumbed to her cancer, but her husband continued to send the hospital checks. In January 1996, hospital lawyers sought a higher monthly payment, and a judge agreed, tripling the amount Mr. White had to pay to $15 a week.

That same year, the attorneys upped the ante again, moving to seize Mr. White's savings to pay down his debt. He responded that he had been making regular installment payments and that the funds the hospital sought amounted to his entire savings. He also pointed out that some of the money came from Social Security payments deposited directly to his bank account but protected by law from seizure by creditors. As a result, the court agreed to allow Mr. White to keep $5,416.87 and let attorneys for Yale-New Haven seize $9,627.49.

Even after Mr. White retired from his job at the dry cleaner's, he continued to make payments on his wife's bill. But last year, he became seriously ill himself, suffering from heart and kidney conditions. Though his niece and his son were supposed to pay his bills while he was hospitalized at St. Vincent's Medical Hospital in Bridgeport, Conn., his son concedes that he missed some hospital installments. (Yale-New Haven says that Mr. White has missed 17 payments over the past 20 years, the bulk of them in 2002.)

The hospital's attorneys quickly went back to court, seeking to seize whatever was left in Mr. White's bank account. A June 25, 2002, letter from the hospital's attorneys to the state marshal offers crisp instructions on what to do: "Go immediately to the main branch of the below named bank and make demand on the defendant's checking and/or savings account." The letter adds that, "in addition to the judgment debt, bank fees, and your service fees, you are hereby instructed to collect legal interest at a rate of 10% from the date of judgment on the unpaid principal. Collect interest in the amount of $32,119.37 from May 17, 1982, to June 25, 2002." When the $491 in Mr. White's account turned out to be Social Security money, however, the hospital halted its effort.

At Yale-New Haven, Ms. Borgstrom defends the hospital's approach. "In this business you deal with a lot of sad stories," she says. "The reality is they came to the hospital, they were given service and to the best I know it was the very best service." A senior hospital official adds that hospital policy is to try to work out payment arrangements with patients before resorting to collection actions. Officials also stress that the hospital doesn't charge interest when it bills patients directly.

But lawyers retained by the hospital to collect debts are permitted to charge interest under Connecticut law. The law firm that has pursued Mr. White these many years is Yale-New Haven's most highly paid outside consultant, Tobin & Melien, which received more than $2 million from the hospital in 2000, according to Internal Revenue Service filings. (The firm declined to comment on its role, referring questions about collection practices to the hospital's public-relations office. A hospital spokesman, Mark D'Antonio, verified the history of the hospital's debt-collection efforts and the sums involved, as did Ms. Borgstrom.)

Yale-New Haven has operated in the black in recent years, says Ms. Borgstrom, but margins are "very thin." In 2002, the hospital had to deal with $52 million in bad debt and uncompensated care.

"Are there areas where a mistake has been made? Undoubtedly," Ms. Borgstrom says. In Mr. White's case, the hospital might even be willing to forego interest payments, she says. "I read his file; he is not a wealthy man."

But Ms. Borgstrom denies that Mr. White's case indicates a need to rethink the hospital's debt-collection methods. "You would not be surprised I am sure to know there are a lot of people who have perhaps many more means than this individual who go to great lengths to avoid obligations," she says. She adds that the hospital is mindful of its responsibilities to the poor and indigent of New Haven. "We live as a mission-driven organization."

Nancy Kane, a professor of health finances at Harvard University, is skeptical. "There is always tension, of course, between charitable mission and bottom line," she says, "but to pursue these people the way they are pursuing them is highly uncharitable."

The hospital's practices are indeed legal, says Peter Looney, the state senate majority leader whose district includes New Haven, but he suggests that legislation could change that. Noting that "no one incurs a hospital bill by choice," he argues that debt-collection laws should be amended to make hospital charges "a special area of debt." After all, he says, "it is very different from people who purchase a car and then default on that obligation."

Another issue is Yale-New-Haven's receipt of $2.5 million in federal funds for construction projects from the 1950s to the 1970s under the Hill-Burton Act. In return for such funding, hospitals were supposed to perform public service and provide either free or subsidized care to patients who couldn't afford to pay. UCLA's Prof. Brown suggests that Yale-New Haven had a responsibility under Hill-Burton to help the Whites.

Ms. Borgstrom says no, because Yale-New Haven long ago met its obligation to provide $12.8 million in free care. In addition, she says, to be eligible under Hill-Burton rules, a family's income wasn't supposed to exceed 185% of the poverty level, and the Whites were $4,000 over the limit.

But Prof. Brown responds that while the hospital may have met the letter of the law, it appears to have ignored its larger intent: "The obligation is about more than specific dollars," he says. "It is an orientation to helping people in the community, and this was a man who clearly needed help."

In California, Tenet Healthcare Corp., a for-profit hospital system based in Santa Barbara, was recently targeted by a group of Hispanic patients who alleged they were the victims of overly aggressive billing and collection efforts. In a sharp turnaround, Tenet unveiled a "Compact With Uninsured Patients" in late January, announcing that it would change the way it bills and collects money from the poor.

In the wake of the Tenet scandals, says Jan Emerson, the spokeswoman for the California Healthcare Association, "We as an industry need to take ownership and need to put some restrictions on ourselves." The association supports legislative measures that would place "restrictions on hospital collection processes," she says, adding, "No one's goal is to drive the uninsured into bankruptcy or to have their house taken."

These days, Mr. White spends his days watching TV in the cramped bedroom he used to share with his wife. His son, who works as a mechanic nearby, says he does his best to care for his dad, but the two are clearly having trouble coping. Mr. White, though 6 feet tall, weighs barely 135 pounds.

What would he do with the money the hospital has taken over the years, he is asked. Mr. White flashes a wistful smile. He says he has never traveled farther than Canada, but if he had some of that money back, he would muster the energy to travel to Paris.

His son confirms that he has often heard his dad speak of his longing to visit France. "He will probably never get there," he says sadly.

(See related letters: "Letters to the Editor: The Wolf at the Door Was the Hospital" -- WSJ April 9, 2003)

Ms. Nix Confronts Harsh Fact Of Health-Care Economics: Uninsured Are Billed More

Moving In With Mom at Age 25

By Lucette Lagnado
17 March 2003
Copyright © 2003, Dow Jones & Company, Inc.
Reprinted by permission.

NEW YORK -- Dreams of a bright career in a big city lured Rebekah Nix here from the western plains of Texas two years ago. An appendectomy sent her home.

But not because she was ill. Ms. Nix, 25 years old, was fleeing the nearly $19,200 in medical bills that had piled up on her bedroom dresser. The college graduate and former magazine fact-checker couldn't fathom how two days in a hospital could cost so much, until she learned that people like her -- who don't have health insurance -- often are expected to pay far more for their medical care than large insurers, health-maintenance organizations or even the U.S. government.

The hospital where Ms. Nix was treated, New York Methodist in Brooklyn, typically bills HMOs about $2,500 for an appendectomy with a two-day stay, compared with the $14,000 -- plus doctors' fees -- that Ms. Nix was billed. The hospital gets paid about $5,000 from Medicaid, the state and federal health program for the poor, and about $7,800 from Medicare, the federal program for the elderly, for the same procedure.

"Why does a single person get stuck with the whole bill?" Ms. Nix asks. "An uninsured person would have a lot less money than those government agencies or insurance companies."

Ms. Nix stumbled onto a troubling fact of health-care economics: Most major U.S. hospitals are required to set official "charges" for their services, but then agree to discount or even ignore those charges when getting paid by big institutions such as insurance companies or the government. As a result, almost no one but uninsured individuals ever faces the official charges. In some ways, hospital charges are like automobile "list prices" or hotel "rack rates" -- posted prices that everybody knows nobody pays. But in the case of hospitals, the pricing disparity isn't publicly known and falls most heavily on the vulnerable. America's 41 million people without health insurance tend to be young, working-class and unaware that they are being billed more than everyone else for the same services.

At the same time, charges at virtually all hospitals have soared in recent years. That's partly due to the rising costs of new procedures and drugs. Also, deregulation of the hospital industry removed limits on charges in almost all states. But some hospitals say they are raising charges to offset what they view as overly harsh reductions in their reimbursements by HMOs, insurers and the government. That would mean hospitals are effectively subsidizing their lower income from patients who are insured or have a government safety-net by boosting fees paid by the uninsured.

"It is a reflection of the insanity of the system," says Bruce Vladeck, a hospital-policy expert who ran Medicare in the 1990s. "The most vulnerable members of society" are being asked to "pay cash at list."

In many areas, hospitals have cranked up their charges far beyond the cost of providing treatment. Before deregulation in 1997, hospital charges in New York state couldn't be more than 30% above costs. They now are an average of 87% above costs, says the Greater New York Hospital Association, an industry trade group, citing federal data. In California, charges have ballooned to 178% above costs. By contrast, in Maryland, where hospital charges are still strictly regulated, charges average only 28% above costs, says Hal Cohen, a Maryland health consultant.

At many hospitals, the practice of cutting prices for big insurers, HMOs and the government has become so routine that the discount is calculated automatically and appears on bills alongside the original charge. The amount of the discount usually depends on how aggressively a particular insurer bargained with the hospital, or on terms struck with a government program, or how much other hospitals in the area are discounting. But uninsured patients aren't told that big institutions get these reduced rates. Some hospitals then retain collection agencies to pursue the uninsured with hard-nosed tactics such as suing, garnisheeing wages and slapping liens on homes.

"Hospitals have a choice as to who will bear the costs," says Elizabeth Warren, a Harvard Law School professor who is studying the effects of health-care costs on the uninsured. "There is someone to negotiate on behalf of the insurance companies. There is someone to negotiate on behalf of the state . . . . But there is no one to negotiate on behalf of people without insurance."

Hospitals say they have no choice but to give steep discounts to powerful payers, even if that means uninsured patients end up being faced with higher bills. Mark Mundy, president and chief executive of New York Methodist, says his private, not-for-profit hospital looks to competitors in setting its charges, and must offer discounts to HMOs and insurers or they won't do business with it. As for the government, it pays whatever it wants. "Pricing makes no sense, we all know that," Mr. Mundy says.

Hospitals also point out that most uninsured patients don't pay their bills -- the rate of default varies across the country -- yet hospitals are required by law to treat all emergencies. "Anybody that shows up in my ER, the first question isn't, `Can they pay?' The question is, `What are we going to do,' " to care for them? Mr. Mundy says. "If I had 5,000 Ms. Nixes, how do I handle them and keep this place alive?" Mr. Mundy says many uninsured patients, especially those who aren't indigent, could afford insurance and should bear at least some responsibility for their care. He adds that New York Methodist, unlike many hospitals, doesn't charge interest on unpaid bills.

Advocates for the uninsured say poor people without insurance should be charged the same, low rates that Medicaid pays. Instead, they are asked to pay "what the Emir of Kuwait pays," says Elisabeth Benjamin, a health attorney with the Legal Aid Society in New York. Royalty and other wealthy foreigners flock to U.S. hospitals, where they're among the few uninsured patients who can afford to pay full freight.

Ms. Nix's billing problems started on a Saturday afternoon last April when she arrived in agony at New York Methodist. The previous night, she had felt stabbing pains in her abdomen while celebrating her 25th birthday with friends at a Manhattan bar. She had left early, staggered home to Brooklyn, and went to bed figuring she had food poisoning or the flu. When she awoke to the same unrelenting pain, her boyfriend's mother, a registered nurse, insisted she go to the nearest hospital. As she sat in a hard metal chair in the emergency room, she began to worry: How much is this going to cost?

Ms. Nix had arrived in New York a little less than two years earlier, fresh from graduating Phi Beta Kappa from Southwestern University in Georgetown, Texas. Growing up in Midland, Texas, she saw her hometown as a "desolate wasteland" where social gatherings often revolved around high-school football. Her ticket out was a summer internship at Ms. Magazine in Manhattan, which she loved. "This is the greatest city to be young in," she says. "I had no intention of ever leaving."

But the internship paid just $150 a month. Ms. Nix helped support herself by working as a waitress while sharing a basement apartment that cost her $350 a month in rent. The magazine soon hired Ms. Nix as a full-time fact-checker with an annual salary of $30,000 and health benefits. But it was struggling financially, and Ms. Nix was laid off after the Sept. 11 terrorist attacks. The magazine, as required by law, offered to maintain her health insurance if she paid $330 a month, but Ms. Nix demurred. She figured she couldn't afford it on unemployment payments of $1,122 a month, and thought she could land another job with benefits. Besides, she thought, she was young and had always been healthy.

In the months before her illness, she tried offering her fact-checking services as a free-lancer, but jobs were sporadic. She was determined to be independent, so she didn't want to tell her divorced parents that she'd lost health coverage. Her mother, who runs a small medical-supply business she founded near Midland, might have been able to help. Her father, an independent oil consultant, struggles financially. By going without coverage, Ms. Nix became one of the estimated 39% of uninsured Americans who are between the ages of 19 and 34, according to the Kaiser Commission on Medicaid and the Uninsured in Washington.

In the emergency room at New York Methodist, someone asked her to collect a urine sample in a paper cup. She kept it at her side for six hours, until at last she was admitted to the clinical area of the emergency room and asked to wait on a gurney. Ms. Nix remembers telling nurses and doctors that she had no money and no insurance. No one seemed to mind, she says. Still, she'd heard horror stories about how costly a hospital could be and decided to try to leave as soon as possible.

When she woke up on Sunday morning, she was still on the emergency-room gurney, and the pain seemed to have subsided. "Maybe I am going to go home," she told a doctor. "I don't have health insurance." According to Ms. Nix, the doctor responded: "It is $1,000 to come to the ER, and it is another $1,000 to come in again." Ms. Nix resigned herself to staying. But while undergoing two CT-scans, she recalls telling doctors, "I don't want any extras."

Tests confirmed she had appendicitis. Her surgeon, Piotr Gorecki, removed her appendix using laparoscopy, a method that requires a shorter hospital stay than traditional invasive surgery. The one-hour surgery went smoothly. Ms. Nix was recovering in her room when an attending doctor ordered that she be given a nicotine patch. She regularly used one to control a smoking habit, but she balked at it now, worried about the cost. The doctor insisted, she says.

Ms. Nix left the hospital on Monday afternoon, 42 hours after being admitted. She had a prescription for painkillers but decided not to fill it because of the expense. She also decided to skip a follow-up visit that Dr. Gorecki had recommended. Two weeks later, she received a letter from the hospital offering advice on how she could apply for Medicaid. The letter also gave the first hint as to how much she would be billed: "Note: hospital bill is $12,973."

In mid-June, she learned that Medicaid had turned her down because her income was too high. New York's Medicaid rules say a single person's income can't exceed $352 a month, unless she's certified as disabled. The hospital urged Ms. Nix to appeal at a hearing before a state administrative-law judge, and she arranged to do so.

In July, Ms. Nix received her hospital bill. It showed charges for two days at $1,550 a day, even though she spent the first night on the emergency-room gurney. It also listed operating-room charges of $5,340, a charge of $540 for the recovery room and a charge of $850 for the emergency room. Every test administered in the emergency room was charged separately. Her two CT-scans together came in at $2,120. One charge, which showed up in a more-detailed bill, brought a wan smile to her face: $8 for the nicotine patch. Lyn Hill, a spokeswoman for New York Methodist, says Ms. Nix was admitted at 10 p.m. Saturday and remained through Monday, so it was appropriate to charge her for two nights, regardless of where she slept.

The total: $13,110. Soon after, she received $5,000 in separate bills from Dr. Gorecki, an anesthesiologist and other doctors who had seen her at Methodist. Much like hospitals, some doctors also routinely accept lower payments from insurers, HMOs and government programs. Dr. Gorecki, whose charge to Ms. Nix was $2,500, says Medicare typically pays him only $589 for a laparoscopic appendectomy, and Medicaid usually pays an even skimpier $160. The New York Health Plan Association, an HMO trade group in Albany, N.Y., says Brooklyn surgeons get an average of $600 for a laparoscopic appendectomy.

Ms. Nix's bank account held less than $2,000. She tossed some of the bills on her dresser, unopened, and tried not to think about the debt. But often she could think of nothing else. "I knew that I was going to be in major trouble financially," she says.

Her last hope was the Medicaid hearing, which was held on a sweltering July morning at the city's Medicaid headquarters. The building was jammed with applicants standing in lines and sitting in rows of plastic chairs, waiting to see case workers. Judge Michael Vass sat at a desk facing Ms. Nix. She recalls his telling her: Your case "is bad, but there are people who come in here and they have cancer and they make too much for Medicaid. Unless you are over 65 or under 18 or deaf or blind, you are not going to get Medicaid." Ms. Nix burst into tears.

She wasn't sure what to do. Her parents offered conflicting advice. Her mother, whose work has familiarized her with the medical system, told Ms. Nix to get tough with the hospital and negotiate a deal to pay a few dollars a month. Her father told her she should repay the debt she'd incurred, whatever the hardship. Without Methodist's care, he reminded her, she could have died.

In late August, a new hospital bill arrived, listing the total amount due as $14,182. The hospital had added an additional charge of $1,072 earmarked for the Bad Debt and Charity Care Pool, a state fund that compensates hospitals for caring for the uninsured. Ms. Nix was stunned by the irony. "Tack on another grand I can't pay, but use it to help someone else!" she says.

The inequity in health-care pricing is rooted in a policy that was designed to prevent it. Rules dating back to the establishment of Medicare in the 1960s require hospitals participating in the program to set uniform charges for all procedures. The idea was to prevent hospitals from charging some classes of patients, such as Medicare beneficiaries, more than others. Hospitals were free to set charges -- typically kept on voluminous lists called charge masters -- as they wished, depending on costs, local competition and state regulatory limits.

In the early years of the program, charges roughly correlated to hospitals' costs plus a modest profit, and reimbursements closely tracked charges. Then, in the mid-1980s, Medicare started pegging most payments to standardized diagnostic codes rather than to hospitals' charges. As HMOs became more powerful in the late 1980s and early '90s, they negotiated their own rates with hospitals.

Ms. Nix contacted the hospital and the doctors who had worked on her, seeking a break. Dr. Gorecki, the surgeon, immediately slashed his fee to $1,000 from $2,500 -- a break he often gives to the uninsured. Ms. Nix says she has sent him two checks for $20 each. The hospital was somewhat less obliging. It offered to reduce her bill by 20%. Ms. Nix says the hospital demanded that she agree to pay within a month or two, but Ms. Hill, the New York Methodist spokeswoman, says the hospital gave Ms. Nix a full year to pay. Under those terms, she would have faced monthly payments greater than $900 a month.

Ms. Hill says three or four uninsured inpatients a month, out of an average of about 90 uninsured inpatients treated, call with concerns about their bills, and they are routinely offered a 20% discount off charges before the bill is assigned to a collection agency. Even so, Ms. Hill says, uninsured patients "almost never pay." New York Methodist says that it racked up $50 million last year in "bad debt and charity care," or about 14% of its annual budget.

However, those figures are based on the hospital's charges, not its costs. Also, the hospital is able to mitigate some of these losses by tapping into the New York Bad Debt and Charity Care pool. In 2001, the latest year for which figures are available, Methodist collected $13 million to $14 million from the pool. A state health-department spokesman says the pool on average reimburses hospitals for their costs at about 50 cents to 70 cents on the dollar.

On Oct. 21, Ms. Nix sent a letter to the hospital. "I understand that I am indebted to Methodist hospital," she wrote. "The staff was so kind to me during my stay." But, noting that her bills for the surgery totaled nearly $19,200, she wrote: "This is more money than I will make this year, almost twice as much." She added: "I do not wish to pay nothing for the life-saving services I received," but she said she couldn't pay what Methodist wanted. She had consulted bankruptcy lawyers and was considering returning to Texas.

The hospital didn't respond to the letter. Ms. Nix soon started telling shocked friends that she was leaving. On Nov. 5, she stuffed everything she could into two suitcases and flew home on a ticket her mom had given her.

After The Wall Street Journal contacted New York Methodist about Ms. Nix, the hospital told her it would reduce her bill to $5,000 -- essentially what Medicaid would have paid, says Methodist's Ms. Hill. The hospital also said it would give Ms. Nix one year to pay, provided she pay $3,000 up front, which she has yet to do. She says she hopes to start paying the hospital back within a year.

In Midland, she has taken over her younger brothers' old bedroom. Life is slower, and she has gone to some high-school football games. "I miss the glamour of the city," she says. For the past few months, she has been working part-time at her mother's medical-supply firm, where she earns $7 an hour for filing and filling out forms. She also has been doing unpaid research for her father. Her mother's company couldn't offer her health benefits because they were too expensive to provide. Two weeks ago, Ms. Nix finally purchased health insurance.

Young and Exposed
U.S. uninsured population by age in 2001

AGES
Under 19 ........... 23%
19-24 .............. 17%
25-34 .............. 22%
35-44 .............. 17%
45-54 .............. 13%
55-64 ..............  8%
Total Uninsured: 41 million

Note: The number of uninsured older than 65
is 0.8% because they are covered by Medicare.
Source: Kaiser Commission on Medicaid and the
Uninsured/Urban Institute analysis

Behind the Bill: Who Pays What

Hospitals are required to list official charges for all procedures. But big players such as HMOs, insurance companies and the government routinely negotiate or demand big discounts. Uninsured patients are almost always faced with full charges. Below, a sampling of charges and discounts for a relatively common procedure: a diagnostic bilateral mammogram.

HOSPITAL/LOCATION: UCLA Medical Center/Los Angeles
OFFICIAL CHARGE: $460
MEDICAID*: $127
MEDICARE*: $90
HMOs, HEALTH PLANS*: Up to $242
POLICY ON UNINSURED: Gives discounts based on individual's
ability to pay, says CFO Sergio Melgar

HOSPITAL/LOCATION: Oregon Health & Science University/Portland
OFFICIAL CHARGE: $240
MEDICAID*: $65
MEDICARE*: $59
HMOs, HEALTH PLANS*: Average $128
POLICY ON UNINSURED: Works with uninsured patients to help 
them find financial aid; offers sliding scales, payment plans

HOSPITAL/LOCATION: Jamaica Hospital/Queens, N.Y.
OFFICIAL CHARGE: $351
MEDICAID*: $50
MEDICARE*: $96
HMOs, HEALTH PLANS*: $40 to $78
POLICY ON UNINSURED: Has sliding fee scales for uninsured,
says CEO David Rosen

HOSPITAL/LOCATION: Johns Hopkins Hospital & Health System/Baltimore
OFFICIAL CHARGE: $261
MEDICAID*: $156
MEDICARE*: $173
HMOs, HEALTH PLANS*: $186
POLICY ON UNINSURED: State regulation of charges reduces disparity
between bills to insured and uninsured

HOSPITAL/LOCATION: Grinnell Regional Medical Center/Grinnell, Iowa
OFFICIAL CHARGE: $285
MEDICAID*: $73
MEDICARE*: $79
HMOs, HEALTH PLANS*: $119 to $190
POLICY ON UNINSURED: Works with uninsured to set a payment schedule
*actual payment from Medicaid, Medicare and/or HMOs, health plans
Note: Charge includes hospital and physician fees.

Source: the hospitals

(See related letters: "Letters to the Editor: The Wolf at the Door Was the Hospital" -- WSJ April 9, 2003)

Lawmakers Push Legislation To Curb Aggressive Collection Against Uninsured Patients

By Lucette Lagnado
10 June 2003
Copyright © 2003, Dow Jones & Company, Inc.
Reprinted by permission.

"STOP! . . . You're killing us," screamed a recent memo to California legislators from a hospital trade group.

The Alliance of Catholic Health Care wasn't fulminating against budget cuts, Medicare reform or the other hot-button issues that usually galvanize the industry. Along with other hospital groups, the Alliance, which represents the state's Catholic health systems, was opposing legislation -- subsequently passed by the state assembly -- that is designed to shield patients from aggressive hospital billing and collection tactics.

In addition to the potential legislation in California, a breakthrough patient-protection bill passed the Connecticut legislature last week and awaits the signature of Gov. John Rowland, whose office says he will sign it.

In Washington, the American Hospital Association, which represents nearly 5,000 hospitals, has been monitoring these developments closely. "You always watch the East Coast and West Coast as bellwethers for how health-policy issues play out," says Rick Wade, a senior vice president.

Accustomed to basking in their image as charitable care givers, hospitals have found themselves under a spotlight recently following revelations that many of them demand that the uninsured pay far more for health services than the discount rates charged to HMOs and other insurers, and that they then hound those patients for payment using collection agencies, wage garnishing and liens.

Health activists, frustrated by their failure in recent years to focus attention on the plight of America's 41 million uninsured, have seized on the issue. Mark Rukavina, an advocate for the uninsured who heads the Access Project in Boston, says the bills on both coasts would have been unthinkable as little as a year ago.

In Connecticut, Sen. Martin Looney, a Democrat from New Haven, was able to push through his bill -- "An Act Concerning Hospital Billing Practices" -- after weeks of negotiation. In addition to enacting practical remedies -- such as slashing to 5% the onerous 10% interest rate hospitals are allowed to charge on unpaid bills -- the Connecticut measure helps codify a principle that supporters say had gotten lost in recent years: That hospital bills are by nature different from other consumer debt -- such as bills for washing machines -- because most patients didn't choose to incur them. At the same time, medical debt has emerged as a leading cause of personal bankruptcy.

The disclosure of aggressive bill-collection methods involving the uninsured at Yale-New Haven Hospital also served as a wake-up call for hospitals around the country, says the hospital association's Mr. Wade. Articles in The Wall Street Journal in March described how, over a 20-year period, the teaching hospital used a lawsuit, a house lien and the seizure of much of his bank account to try to get a Bridgeport man to pay for his late wife's cancer treatment. Quinton White, had made regular payments, yet the size of his bill had ballooned because of a 10% interest charge. Even before the legislation passed, the hospital announced it had wiped out the debt of the 78-year-old Mr. White and some other patients and would limit interest rates on a case-by-case basis.

Ken Roberts, a spokesman for the Connecticut Hospital Association, acknowledges that his members initially had serious concerns over the bill, specifically that hospitals wouldn't be able to meet their "mandated" tasks of billing patients and then collecting from them, which he said is required by Medicare and Medicaid.

Grace Rollins, who had documented alleged collection abuses for the Service Employees International Union, says she would have preferred interest rates pegged to the rate of inflation but the bill still puts important safeguards in place.

In California, the billing and collection scandal that first erupted around Tenet Healthcare Corp. has affected all the state's hospital systems. Earlier this year, after Medicare launched a probe, Tenet unveiled a Compact With Uninsured Patients in which it pledged to bill the uninsured at the lower rates Tenet charges HMOs. The company is awaiting clearance from Medicare, which must approve such a billing change.

The state's not-for-profit hospitals seem to have been caught flat-footed by Tenet's public-relations offensive. There is no disagreement that change is needed, says Jan Emerson, spokeswoman for the California Healthcare Association, which represents some 500 hospitals, including not-for-profits, for-profits, rural and academic teaching hospitals. But the problem, she suggests, is how best to do it.

The main bill her group is fighting, introduced by Assemblywoman Wilma Chan, an Oakland Democrat, calls for families who earn up to 400% of the poverty level and individuals or two-person households who earn up to 500% to be offered discounts, capping their charges at the lower rates available to Medicare, Medi-Cal and workers' compensation. For patients who can't get insurance because of chronic illnesses, the bill calls for discounts if patients have income levels of up to 700% of the poverty level.

On the collection side, the bill asks that hospitals wait a full six months before turning unpaid bills over to collection agencies.

The authors of the "You're Killing Us" memo stress that the Catholic hospitals in California want to be faithful to their charitable roots by supporting change. But, they argue, the legislation on the table is onerous and excessive.

By Lucette Lagnado
7 July 2003
Copyright © 2003, Dow Jones & Company, Inc.
Reprinted by permission.

FACING A GROWING public backlash, the hospital industry is weighing fundamental changes in the way it bills and collects payments from needy patients who have little or no health insurance.

The American Hospital Association, an industry trade group, dispatched an "Alert" on June 10 to the chief executives of 4,800 hospitals across the U.S., as well as every state hospital association. It suggested they perform the equivalent of an "audit" of their billing, charity-care and debt-collection practices.

The Alert, including a cover letter from the AHA's president and a three-page memo, warns of increased media scrutiny of how hospitals bill the uninsured and notes that a congressional committee "has expressed a high level of concern." The House Committee on Energy and Commerce confirms that its oversight and investigations subcommittee has launched a preliminary investigation into hospital pricing.

Rick Wade, an AHA senior vice president, says that congressional staffers appear to be interested in the thorny issue of "charges," which are the retail prices that hospitals list for their services. "We have offered to cooperate," he adds.

The charges issue has become a focus of health-care advocates, who have flagged a major inequity in the billing system: While hospitals negotiate discounts with insurers and HMOs that require payment of only a fraction of the listed charges, they ask the uninsured to pay the full rates and then pursue them aggressively to collect.

The AHA Alert urges members to stop using harsh bill-collection tactics that reflect poorly on the industry. If hospitals are hounding people who have no resources and aren't informing them about available resources and charity care, "that is inappropriate and they should stop," Mr. Wade says. "Hospitals exist because they have a relationship with their communities that is built on trust and compassion, and that compassion has to go from the bedside to the billing office."

Mr. Wade also stresses that the "vast majority" of his member hospitals work hard to stay true to their charitable roots, and take their responsibilities to minister to the needy and the uninsured seriously.

In recent months, The Wall Street Journal has provided extensive coverage of the billing and collection issues addressed by the Alert. In March, the Journal described the case of Quinton White, a 78-year-old widower who was trying to pay an ever-expanding bill incurred by his late wife at Yale-New Haven hospital 20 years before. The hospital subsequently forgave the debt and announced significant changes in its collection practices. The Journal also explored the case of Rebekah Nix, a 25-year-old uninsured woman who amassed $19,000 in hospital and doctor bills for an appendectomy at New York Methodist Hospital in Brooklyn. Those fees were considerably higher than an HMO, insurer or Medicaid would have paid. The hospital ultimately cut its portion of her bill sharply.

The AHA memo outlines remedial measures hospitals should consider, ranging from the cosmetic to the substantive. Hospitals are urged to be more transparent about what they charge; to be proactive in identifying low-income patients who may qualify for assistance and helping them obtain subsidized or charity care; and, finally, to be, in effect, kinder and gentler in collecting what is owed to them. Hospitals frequently employ outside collection agencies and lawyers who use such methods as filing lawsuits, slapping liens on homes, seizing bank accounts, and garnishing wages to extract payment.

The AHA memo suggests these practices need to be re-examined -- especially since such tactics can result in a predatory image at odds with a hospital's charitable mandate. "Demand that the individuals or agencies involved in billing or debt collection on behalf of your hospital or health system treat your patients with dignity and respect," the Alert advises.

Hospitals generally blame their pricing on HMOs and reductions in reimbursements for medical care. They also contend that Medicare rules that require uniform pricing have forced them to adopt policies that reduce their flexibility.

Indeed, slashing charges for the uninsured is fraught with peril because of arcane government regulations that require hospitals to charge uniform prices but permit discounts following formal negotiations with HMOs and other insurers. Recently, Tenet Healthcare Corp., a for-profit chain, announced with great fanfare that it would adopt a Compact With Uninsured Patients under which it would cease any harsh practices and charge the needy uninsured the rates it charges HMOs. HCA, a for-profit chain based in Nashville, Tenn., also vowed to make changes.

But when the two chains sought approval from the government's Centers for Medicare & Medicaid Services, the agency sent out letters that were ambiguous. The letter to Tenet warned that its plan appeared to conflict with existing guidelines. The letter to HCA gave qualified approval to its plan, which would offer graduated discounts to low-income, uninsured patients. Spokesmen for the companies expressed optimism that they would soon be able to offer better service to the indigent uninsured.

The missive from the AHA is welcomed by some health-care advocates, who have tried for years to focus attention on the plight of America's 41 million uninsured. "This memo is extremely significant," says Mark Rukavina, who heads the Access Project, a Boston-based research group that focuses on health care and the uninsured. The Alert "exposes a dirty little secret -- the fact that people who get sick can have liens put on their properties, can have their bank accounts attached. The general public and many policy makers are probably unaware that these practices are going on."

Some of the proposed measures may seem simple, such as posting signs indicating that charity care is available. But they are precisely the types of actions for which advocates have spent years fighting.

The Greater New York Hospital Association, which represents over 100 institutions, including some leading teaching centers, says it backs the Alert and that its members are prepared to try to implement some of the suggestions. "My assumption in all of this is that there is no hospital that intends to treat their patients badly whether they are insured or uninsured," says Patricia Wang, a senior vice president at Greater New York. "We all know that with large complex institutions, sometimes communications can break down."

By Lucette Lagnado
17 July 2003
Copyright © 2003, Dow Jones & Company, Inc.
Reprinted by permission.

CITING "SIGNIFICANT PUBLIC health and consumer protection issues," a congressional committee launched a formal investigation into hospital billing practices that often require uninsured patients to pay rates that far exceed what other payers, including the government and HMOs, are charged.

The House Energy and Commerce Committee sent seven-page letters to 20 hospital and health systems nationwide asking them detailed questions about their finances and their billing practices in relation to both the uninsured and major payers, such as insurers and managed-care companies.

The committee also asked the hospitals to disclose their charity-care practices and how they go about identifying financially needy patients who may need help. The investigation is being led jointly by W.J. "Billy" Tauzin of Louisiana, the committee's chairman, and James Greenwood of Pennsylvania, chairman of the committee's Oversight and Investigations Subcommittee.

The hospitals receiving letters are "a representative cross-section" of the nation's hospital systems, says Ken Johnson, a committee spokesman, "we are targeting a problem and not a specific company." The hospitals include academic medical centers, such as the NewYork-Presbyterian Hospital and UC Davis Health System in Sacramento; for-profit chains like HCA in Nashville, Tenn., and Tenet Healthcare Corp. in Santa Barbara, Calif.; and health systems with religious affiliations, such as Ascension Health in St. Louis and Adventist Health in Roseville, Calif.

In the letters, which were sent out by fax yesterday morning, the committee expressed concern that the uninsured have become the victims of the "sophisticated and complicated forces driving health care financing," including government entitlement programs, managed care and rising costs.

Even before the investigation was announced, the industry was on edge, as evidenced by a special "Alert" sent out by the American Hospital Association last month to its 4,800 member hospitals, urging them to change their billing and collection practices. The Alert cited increased media scrutiny and warned of a possible congressional probe.

In recent months, The Wall Street Journal has run a series of articles about billing and collecting issues involving the uninsured. One cited the case of a 78-year-old widower who was hounded over an ever-expanding bill resulting from his late wife's treatment at Yale-New Haven hospital 20 years before. Another explored the case of a 25-year-old woman who amassed $19,000 in hospital and doctor bills for an appendectomy at New York Methodist Hospital in Brooklyn, considerably more than an HMO, insurer or Medicaid would have paid.

At the heart of the congressional investigation is the thorny issue of "charges," which are the retail prices that hospitals list for their services. According to the letter, these rates are "often inflated far beyond [the hospitals'] actual costs and reasonable profit." Some payers are able to negotiate discounts and pay far less, but "individual uninsured patients are expected to pay this full, undiscounted `sticker' price," the congressional letter said. Added Mr. Johnson: "In some cases, it appears that the very people who can least afford it are paying the full sticker price for hospital services."

"It is clearly a broken system," responded Tom Nickels, a senior vice president of the American Hospital Association. But he added that many of the issues being investigated by the committee are "rooted in the fact that we have 40 million uninsured, and hospitals have to develop policies to compensate for that." He described a complex system in which private insurers pay more than Medicare and Medicaid, HMOs insist on major discounts and the uninsured at times may pay nothing at all. As a result, he said, there is "enormous cross-subsidization" going on.

Mr. Nickels also criticized complicated government regulations that make it hard for hospitals to offer discounts to the uninsured. Medicare regulations require strict adherence to a system under which hospitals can't bill anyone less than they bill the federal government.

As a result, hospitals run the risk of violating Medicare regulations if they slash rates to uninsured patients -- or at least if they do so without checking carefully with government authorities.

Recently, HCA and Tenet sought government permission to offer discounts to the needy uninsured. The responses from the government were far from clear-cut. HCA, though, cheerfully interpreted its note as a go; a Tenet spokesman said "It's our hope and expectation that we will eventually be able to offer a discount" to the uninsured.

Reached yesterday on the issue of the congressional letter, Jeff Prescott, an HCA spokesman, said the company has a "longstanding concern" about helping the uninsured and is trying to implement a plan to help them. He added that the hospital chain would cooperate with the investigators in Washington.

Advocates for the poor such as Elisabeth Benjamin, a health-care attorney with the Legal Aid Society in New York, expressed delight at the prospect of a congressional probe. "It is the secret shame of the U.S. health-care system," she said, "that all of these entities that are either tax exempt or received other government largesse have failed to pass on the benefits of this largesse to uninsured Americans."

The congressional probers may be wading into other difficult terrain: whether hospitals are actually benefiting from some of their uninsured patients, who are also known as "self-pay" patients. The letter, invoking data from a California governmental body, cited the case of a California chain that had less than 2% uninsured patients.This small sliver of patients "accounted for as much as 35% of the chain's total profits," the letter said.

Spokesmen for a number of the hospitals that received the letters -- including NewYork-Presbyterian and North Shore-Long Island Jewish Health System in the New York area -- said they were examining the letter and were prepared to cooperate with the probers and respond to the congressional requests for information.

Several hospitals, including the Mayo Clinic in Rochester, Minn., expressed dismay at the tight deadline and the massive informational request. At Trinity Health, in Novi, Michigan, a spokesman said they planned to comply but "it would be a superhuman effort to comply."

John Wallace, spokesman for Los Angeles County Dept. of Health Services, which operates five public hospitals, said: "We serve about 800,0000 patients annually -- 600,000 of whom are uninsured. The uninsured are in no way a profit center for our health system."

A spokeswoman for Ascension also said that as a Catholic health ministry it was dedicated to delivering health care "particularly to those persons who are poor and vulnerable." Ascension provided $484 million for community benefit and care to the poor last year, the spokeswoman said.

Under Scrutiny

A House committee has launched a formal investigation of billing
practices at 20 hospital systems nationwide:

 -- Adventist Health, Roseville, Calif.
 -- Ascension Health, St. Louis
 -- Catholic Healthcare Partners, Cincinnati
 -- Catholic Health East, Newtown Square, Pa.
 -- Catholic Healthcare West, San Francisco
 -- Catholic Health Initiatives, Denver
 -- HCA, Nashville, Tenn.
 -- Los Angeles County Department of Health Services, Los Angeles
 -- Marian Health System, Tulsa, Okla.
 -- Mayo Health System, Rochester, Minn.
 -- New York-Presbyterian, New York
 -- NYC Health and Hospitals Corporation, New York
 -- North Shore-Long Island Jewish Health System, Great Neck, N.Y.
 -- Providence Health System, Seattle
 -- Sutter Health, Sacramento, Calif.
 -- Tenet Heathcare, Santa Barbara, Calif.
 -- Triad Hospitals, Plano, Texas
 -- Trinity Health, Novi, Mich.
 -- UC Davis Health System, Sacramento, Calif.
 -- Universal Health Services, King of Prussia, Pa.

Source: House Energy and Commerce Committee, and Oversight and
Investigations Subcommittee

Patients Who Skip Hearings On Bills Are Arrested; It's a "Body Attachment"

Mr. Bean's Time Behind Bars

By Lucette Lagnado
30 October 2003
Copyright © 2003, Dow Jones & Company, Inc.

CHAMPAIGN-URBANA, Ill. -- Late one night in June 2000, a police cruiser pulled up to Marlin Bushman's house on a quiet, tree-lined street. While Mr. Bushman's wife and son stood by, an officer handcuffed the burly truck driver and took him away to jail. The charge: missing a court hearing about a $579 hospital bill.

The hospital that pursued Mr. Bushman, a 295-bed not-for-profit facility called Carle Foundation Hospital, is one of several that has at times employed debt collection tactics that are shunned by many other creditors. It has filed hundreds of lawsuits, garnisheed patients' wages and seized their tax refunds. Since 1995, Carle, the primary teaching hospital of the University of Illinois, confirms it has also sought 164 arrest warrants for debtors who missed court hearings.

In one case, Carle went after an uninsured, part-time musician whom it had treated for a gunshot wound in a suicide attempt. When the man, James Bean, missed a hearing on his $7,718 hospital bill, Carle asked the court for an arrest warrant, and in November 2001 Mr. Bean landed in jail for several hours.

In another case, Carle obtained an arrest warrant for an uninsured single mother, Kara Atteberry, who missed two court hearings on a $1,678 debt she incurred for a miscarriage. Ms. Atteberry turned herself in to authorities in October 2001 and was briefly jailed before making a $100 bail payment. She now owes a total of $2,070 to Carle, including a bill for other treatments, and she expects to file for bankruptcy.

Some hospitals now rank among America's most aggressive debt-collectors, as they put increasing pressure on poor and uninsured patients to pay their bills. Adding to the problem, as The Wall Street Journal has reported, hospitals generally charge uninsured patients far more than the discounted rates negotiated by health-maintenance organizations and other private insurers and government agencies.

Some also use one of the harshest and least-known collections tactics of all: seeking the arrest of no-show debtors. A review of court records and interviews with hospital trade groups, collections attorneys and consumer advocates shows that hospitals in several states, including Connecticut, Indiana, Kansas, Michigan and Oklahoma, have secured the arrest and even jailing of patients who miss court hearings on their debts.

The legal tactic of arresting a debtor who fails to appear for a court hearing -- known in some areas as "body attachment" -- is so extreme that some of the country's biggest commercial creditors say they never use it. For instance, Sears, Roebuck & Co. and Ford Motor Credit Co., the finance arm of Ford Motor Co., say they expressly prohibit their collections agents from asking judges to issue arrest warrants against no-show debtors. In many areas of the country, collections lawyers say, the procedure has been all but abandoned. Judges grant a creditor's request for a body attachment when someone misses one or more hearings or otherwise flouts a court's authority -- technically, it's not punishment for the debt itself.

In Connecticut, the state's largest hospital, Yale-New Haven, has obtained at least 65 civil arrest warrants in the past three years for debtors who have missed court hearings, according to an examination of New Haven County court records by a researcher for the Service Employees International Union, which represents some hospital workers. After several inquiries from the Journal, the hospital, which doesn't dispute the union's research, said it would severely limit the tactic.

In Champaign-Urbana, a county agency was so shocked by hospitals' debt-collection practices that it tried to strip Carle and another hospital of their tax exemptions as charitable institutions. The effort failed against Carle; the challenge to the other hospital, a 268-bed Catholic facility called Provena Covenant Medical Center, is pending. "This concept of debtor's prison, you read about it in Dickens, but it is still going on," says Laura Sandefur, a former member of the agency, the Champaign County Board of Review.

The hospitals' pursuit of body attachments is surfacing at a time when many major U.S. medical centers are under fire for their billing and collections practices. In June, the American Hospital Association, the industry trade group, issued a memo urging its 4,800 members to examine their bill-collection practices and demand that their collections agencies and lawyers "treat your patients with dignity and respect." Connecticut recently passed a law slashing interest rates that could be applied to hospital debt. In California, a bill that would have shielded patients from aggressive billing and collections was shelved this summer following heavy industry opposition. Illinois is holding hearings on how hospitals bill and collect from the uninsured. Meanwhile, Congress has launched an investigation into the practice of charging uninsured patients more than the discounted rates offered to insured patients.

Patient advocates argue there is a fundamental difference between medical debt and other types of consumer debt. "If it is a car or a vacuum cleaner, they will simply repossess it. What do you want them to do? Give the heart valve back?" says Jane Perkins, an attorney at the National Health Law Program in North Carolina.

For their part, hospitals say they are forced to recoup every dollar they can because health-care costs are soaring, and insurers and the government are cutting their reimbursements for services. Hospitals have also been squeezed by the rising numbers of the uninsured -- the total hit a record 43.6 million people this year -- who often don't pay their bills. Hospitals say they shouldn't be forced to bear the disproportionate financial burden of a national crisis.

"You can't solve the issue of millions of uninsured by simply turning to hospitals whose financial conditions are quite fragile and say, `You do it,' " says Howard Peters, senior vice president of the Illinois Hospital Association, a trade group representing more than 200 institutions, including Carle and Provena Covenant.

Carle defends its debt-collection practices, emphasizing that body attachments are imposed by a judge as the legal result of a debtor's violating a court order. "We are not going door-to-door to put people in prison," says Carle's chief executive, James Leonard, 48, a family doctor who still occasionally practices medicine. "It is your choice to not show up in court."

In some cases, the debtors did appear for at least one court hearing. Ms. Atteberry says that when she did come to court, she was talked into accepting payment terms she couldn't afford -- including an order not to spend her tax-refund money. When the judge summoned her back, she didn't go because she feared "the whole hounding process" would start anew. "Who would want to show up?" she asks.

After inquiries from the Journal, Carle said it would permit its collections agencies to seek body attachments only after a review by a new, three-person committee consisting of two hospital employees and an outsider. Dr. Leonard says he still considers body attachments useful, but the panel will try to assess the "human story" behind each case. He says Carle, which handles 100,000 patient visits a year, goes to great lengths to serve Champaign's poor and uninsured, and has programs designed to provide discounted care. "We really are a microcosm of part of the struggle that is going on," Dr. Leonard says. "We are charged with sorting out who can afford to pay, who can't afford to pay. How do you set the rules?"

Carle says its policy is to refer bills to an outside collections agency once they are 100 days overdue. The hospital says it has authorized its collections agencies to pursue legal action on about 7,300 bills since 1995, but many of those cases were settled before a suit was filed. In response to inquiries from the Journal, the hospital searched its records from 1995 to 2003, and said it had obtained 164 body-attachment orders during that period. Carle said not all of the orders had resulted in arrests; some were vacated and others remain outstanding. The hospital wouldn't be more specific. It also said it has sought far fewer body attachments in recent years than previously.

Because Carle doesn't always file cases under its own name, the number of body attachment orders and arrests resulting from its collections lawsuits couldn't be independently confirmed. As recently as a few years ago, the hospital did file such cases under its own name, but since then suits against Carle debtors have increasingly been filed under the names of collections agencies. Gretchen Robbins, a Carle spokeswoman, says the hospital isn't trying to camouflage its legal activities, but rather its collections agencies increasingly file "consolidated" suits on behalf of multiple creditors, which she says is more efficient and cost-effective, saving court costs for both sides.

Mr. Bushman, the truck driver who was arrested in the middle of the night, has had a long struggle to pay his hospital bills. In a series of trips to the Carle emergency room over a period of five years, Mr. Bushman, who is diabetic, sought care for his wife and their three young sons. At times, the Bushmans were insured. Other times, they lacked coverage, or their insurance didn't cover the entire bill. They paid some of the Carle bills, but by late 1998, still owed $579 and had received several collections notices.

In February 1999, Carle filed a lawsuit in Champaign County Circuit Court seeking payment. Mr. Bushman appeared at a court hearing on the debt a month later. He says he couldn't afford a lawyer -- and in Illinois civil arrest cases, unlike criminal cases, the court isn't required to appoint one. At the hearing Mr. Bushman agreed to pay the full amount within a month, even though he says he wasn't sure he would have the money. After he failed to make the payment, the court ordered him to appear at another hearing at the end of April.

In February 1999, Carle filed a lawsuit in Champaign County Circuit Court seeking payment. Mr. Bushman appeared at a court hearing on the debt a month later. He says he couldn't afford a lawyer -- and in Illinois civil arrest cases, unlike criminal cases, the court isn't required to appoint one. At the hearing, Mr. Bushman agreed to pay the full amount within a month, even though he says he wasn't sure he would have the money. After he failed to make the payment, the court ordered him to appear at another hearing at the end of April.

Medical Seizures: Hospitals Try Extreme Measures

This time, he didn't show up. He says he was worried about losing a day's pay. He knew he was risking arrest, but he says, "I assumed I could probably take care of it later" and, besides, he says, he couldn't pay the debt. Mr. Bushman, who is now 40 and works as a mechanic, says he was "expecting some money from a tax return" but didn't get it.

The court, at the request of a lawyer for Carle's collections agency, ordered a body attachment. However, Mr. Bushman wasn't arrested right away. In Champaign County, body attachments are usually enforced only when an officer confronts someone for another incident or alleged offense.

About a year later, at 1:10 in the morning of June 13, 2000, Urbana police picked up Mr. Bushman's 16-year-old son for drinking and violating curfew laws, according to police records. When the officer brought the teenager home, his last name triggered an alert about the outstanding civil-arrest warrant against his father. Mr. Bushman's wife, Diane, remembers thinking, "You bring home my son and take away my husband?"

Mr. Bushman was booked and fingerprinted at the Champaign jail. He posed for a mug shot, turned over his shoelaces and was escorted to a cell. A judge imposed bail of $2,500 -- with $250 payable up front. Mr. Bushman waited in a cell while his wife tried to come up with the money. He says he fell asleep on the concrete bench, using a roll of toilet paper as a pillow. Ms. Bushman borrowed the money from her mother-in-law, and Mr. Bushman was freed a short time later. Within three months, he paid Carle the balance of his debt, and the case was dismissed.

Carle's chief financial officer, Robert Tonkinson, defends the use of a body attachment against Mr. Bushman. Mr. Tonkinson pointed out that Mr. Bushman had more than a year to pay his debt between the time the body attachment was imposed and the day he was arrested. "He landed in jail, and that is certainly where no one wanted him to be," Mr. Tonkinson says, "but I struggle with the personal responsibility on his part, and my responsibility as chief financial officer."

The use of body attachments -- known in some states as civil arrest warrants, bench warrants or writs of capias -- varies widely from state to state, and even from courtroom to courtroom, depending on such factors as the aggressiveness of local collections agencies and judicial sympathies. It isn't possible to determine how many hospitals nationwide use the procedure. In body-attachment proceedings, a collections lawyer acting on the creditor's behalf generally can request the arrest, which is then ordered by a judge.

Hospitals, industry trade groups, collection lawyers and consumer advocates in several states, including New York, Louisiana, Wisconsin and Texas, say they had never heard of hospitals seeking the arrest of no-show debtors. Laura Redoutey, president of the Nebraska Hospital Association, expresses shock at the tactic, and says she "can't fathom it has ever happened here." Stanley Brezenoff, president and chief executive of Continuum Health Partners, the elite New York hospital system that includes St. Lukes-Roosevelt and Beth Israel, says he has never heard of a New York hospital pursuing an arrest warrant related to a debt. "We are not in the business of replicating `Les Miserables,' " he says.

Nonetheless, just last month in Evansville, Ind., the not-for-profit Deaconess Hospital sought the arrest of a 22-year-old debtor, Jamie Ruston, who had missed two court hearings on a $5,664 debt related to gynecological surgery. Ms. Ruston, who works at a McDonald's, was briefly in custody before her mother arrived at the jail with the $500 needed to secure her release. "I cried the whole time," Ms. Ruston says.

Alan Shovers, a lawyer for Deaconess, says the hospital, which is affiliated with the United Church of Christ, made "innumerable efforts to get in touch" with Ms. Ruston to work out a payment plan or to see if she qualified for charity care. "In the range of 16 times, she has ignored us, ignored the hospital, ignored the court house," Mr. Shovers says. He defends the hospital's use of bench warrants -- as the proceeding is known in Indiana -- saying the hospital seeks them only when debtors have been repeatedly unresponsive. "Most people, whether rich or poor or whatever, can to some degree respond to the system -- and you have some people who go through life without responding," he says. "The question is, are we taking some unfair advantage, and I don't think we are."

In Connecticut, one of the debtors pursued by Yale-New Haven hospital, John Franchi, 35, says a state marshal appeared at his East Haven home one Saturday morning last November and announced he was placing him under arrest and taking him to the local jail. "I have two little kids, and it was unbelievable," Mr. Franchi says. He was able to persuade the officer that he would appear court on his own the following Monday. "I didn't want to go to jail," he says. "I was terrified."

After appearing in court, Mr. Franchi, a warehouse supervisor, worked out a payment arrangement on his $3,978 debt for treatment he says was related to viral meningitis. He says the hospital is now garnisheeing a portion of his $14.50 hourly wages. "It is devastating me," Mr. Franchi says.

Yale-New Haven initially defended its use of writs of capias -- as the proceeding is called in Connecticut -- saying they were a useful way to compel recalcitrant debtors to appear. "If someone will be uncooperative and they ignore the legal system, what is the alternative?" said William Gedge, a Yale-New Haven hospital vice president. However, after inquiries from the Journal, Mr. Gedge said the hospital would severely limit the use of such warrants and would scrutinize each one that is sought.

Another debtor, Leslie Caplan Block of Newton, Conn., says she was home caring for her infant twins and 3-year-old daughter in September 2000 when two sheriffs' deputies arrived. They arrested her for missing a court date on a $9,454 debt she had incurred at Yale School of Medicine -- which is incorporated separately from Yale-New Haven hospital -- for surgery on one of her babies. After her father agreed to come over and watch the children, Ms. Block, now 34, was taken away in the back of the officers' car and was put in a holding cell while she awaited a judge. She was released after her husband paid $350 in bail money. "I was scared to death," she says. In the ensuing months, her debt swelled to $15,715, including interest and court costs.

Tom Conroy, a spokesman for Yale University, says the medical school has used writs of capias only as "a last resort." He says doctors at Yale medical school -- who care for patients at Yale-New Haven hospital -- don't inquire into a person's means before offering care. Mr. Conroy adds that the institution has vacated Ms. Block's debt.

In Champaign-Urbana, James Bean, the man who was treated at Carle hospital for a self-inflicted gunshot wound, says he has been pursued aggressively by a collections agent since 1995, when the hospital sued him over his $7,718 bill. In June 2001, Mr. Bean, who says he held a series of odd jobs during that period and couldn't afford a lawyer, missed a court hearing. He says he wasn't aware of the hearing. Carle's lawyer obtained a warrant for his arrest, and a few months later, Mr. Bean says, he heard about the warrant and turned himself in. Bail was set at $3,500, and he spent six hours in jail before his brother came up with the 10% required to release him.

Five months later, in April 2002, Mr. Bean missed another court hearing, which he also says he wasn't aware of, and Carle requested another body attachment. The judge granted it and set bail at $5,000, but the body attachment was then quashed, according to court records.

Mr. Bean, 44, has recovered from the shotgun wound to his neck and now works as a stage hand. He says he tried to kill himself because he was despondent over the breakup of his marriage. Since then, he made payments totalling $1,340 to Carle, but because of interest and court costs, his debt swelled to $10,345. "It has been a nightmare," he says. "Is there ever going to be an end to it?"

Ms. Robbins, the Carle spokeswoman, says the hospital acted appropriately after Mr. Bean had failed for years to pay his debt. The suicide attempt was in 1991, and Carle unsuccessfully tried to collect for more than four years before filing suit. She says the hospital also encouraged Mr. Bean to apply for the state's insurance program for the poor, but that he didn't follow through.

"It doesn't appear as if we were incredibly aggressive in seeking payment," Ms. Robbins says. "There are many tragic situations we see day in and day out, and so there is a time for people to work through their grief, [and] there is time for them to deal with the finances of their medical care." Ms. Robbins adds that Mr. Bean's bill didn't have a code that indicated a suicide attempt, so "the folks that process this wouldn't have known." After inquiries from the Journal, Ms. Robbins says Carle's collection lawyer had agreed to eliminate Mr. Bean's interest charges, and that Mr. Bean now owes the hospital $6,535.

Carle also defends its pursuit of its October 2001 body attachment against Ms. Atteberry, 26, the single mother whose $1,678 debt had resulted from a miscarriage. Ms. Atteberry, who then was working as a waitress at a local pizzeria and is now unemployed, says she turned herself in to authorities after her shift ended one evening. She says she didn't want to be arrested in front of her two daughters. At the time, one was 3 years old and the other 3 months.

Medical Seizures: Hospitals Try Extreme Measures

Ms. Atteberry was also the subject of an earlier body attachment order in August 1998, stemming from a debt of $1,514 that she incurred for various medical treatments in the mid-1990s at both Carle and Provena Covenant. Ms. Atteberry, who then was working at Kentucky Fried Chicken, says she turned herself in to authorities the following month, even though she was nine months pregnant. "I was freaking out," she says. "I didn't want to go into labor when they arrested me." She was detained in a jail cell for under an hour while her $250 bail payment was being processed.

Cheryl Harmon, Provena Covenant's chief financial officer, says the treatment of Ms. Atteberry was consistent with general practices in the industry. Ms. Harmon says Provena Covenant filed several hundred collections lawsuits a year in the mid-to-late 1990s, but a change of philosophy and collections agencies has drastically reduced that number -- to as few as 19 in 2002. A court search revealed that Provena Covenant obtained a body attachment against one of its debtors as recently as February 2003. That patient, who was briefly arrested in March, couldn't be located for comment.

Provena Covenant has "made a number of changes to make sure we aren't sending people to collection who cannot pay," Ms. Harmon says. "It really has been a soul-searching to find a way to distinguish between those who can't pay and those who can." Provena Covenant says Ms. Atteberry has paid $764, and the hospital has "purged" the rest of her debt. Earlier this month, in response to inquiries from the Journal, Provena Covenant's chief executive, Mark Wiener, 47, said the hospital would no longer pursue body attachments.

Ms. Robbins, Carle's spokeswoman, says Ms. Atteberry ignored numerous efforts to reach her. "We sent statements and we sent her letters," and also telephoned Ms. Atteberry and left a message with her father, Ms. Robbins says. Noting that Ms. Atteberry could have avoided the court proceedings by communicating with the hospital. She probably would have qualified for discounts or other financial assistance, Ms. Robbins says: "There is only so much we can do for folks."

(See related letters: "Letters to the Editor: Dunning Is Deplorable, Yet Someone Must Pay" -- WSJ Nov. 11, 2003)
(See related letter: "Letters to the Editor: Health-Care ComplexitiesWork Against All of Us" -- WSJ Nov. 28, 2003)

By Lucette Lagnado
30 October 2003
Copyright © 2003, Dow Jones & Company, Inc.
Reprinted by permission.

Before the Champaign County Board of Review decided to take on the biggest not-for-profit hospitals in town, it had never done anything particularly controversial.

Mostly, the board's three part-time members review property-tax assessments in a windowless corner of a former elementary school. When they get applications to renew tax exemptions, they usually just rubber-stamp them and send them along to the state Department of Revenue for approval.

But in May 2001 the board members decided to look more closely at the hospitals' applications. They were inspired in part by a community activist, Claudia Lennhoff of Champaign County Health Care Consumers, who had held a series of town-hall meetings and written reports calling attention to the hospitals' debt-collection tactics. Turning first to the biggest local hospital, Carle Foundation, they obtained summaries of hundreds of collections lawsuits Carle filed in the county court from 1998 through 2001.

They were shocked by what they read. At one point, board member Stan Jenkins asked his colleagues about the term "body attachment," which he'd never heard before. "I thought it was a prosthetic device," he said, half-jokingly.

In September 2002, for the first time in memory, the board recommended that a local institution be stripped of its property-tax exemptions on the grounds that it wasn't truly charitable. In a memo to the state revenue department, the board wrote that Carle's status as a charity "is in serious question given the scope and nature of lawsuits brought against patients and customers." About five months later, on March 14, 2003, the state denied the board's request.

For now, the board is focusing on a similar challenge to the other big, not-for-profit hospital in town, Provena Covenant, filed in July. In one case noted by the board, Provena Covenant, a Catholic hospital, seized a large part of the retirement savings of a man whose insurance had expired just days before he checked in. Harold Quinn, now 65 years old, sought treatment at Provena Covenant in January 2000 for abdominal pain, and spent seven days there. His bill -- including $12,259 for a one-day, outpatient kidney-stone removal -- came to $34,500.

Mr. Quinn, a former worker at a Wendy's hamburger outlet, told the hospital he couldn't afford to pay it. Provena Covenant cut the bill in half, but Mr. Quinn says the hospital wouldn't agree to his offer of minimal payments. Provena Covenant referred his bill to a collections agency and tried to seize his bank account. Mr. Quinn agreed to turn over what he says is half his savings -- about $10,000 -- and pay $5 a month.

Mr. Quinn now works in a food pantry, where he earns about $100 a week and supplements his income by cleaning toilets at a local gas station. He economizes by eating lunch for $2.50 at a special program for seniors. He says he told Provena Covenant it was unfair to seize his retirement money. "They said, `You still owe it, regardless.' They didn't really care," Mr. Quinn says.

After the Journal contacted Provena Covenant, it vacated Mr. Quinn's debt. Mark Wiener, Provena Covenant's 47-year-old chief executive, who has held the position for only a few months, says Provena Covenant is offering more and deeper reductions on poor people's bills. "We're doing a lot more reflection" about how the hospital handles collections, with more "administrative intervention" to make sure the process is fair, he said.

As to the review board's challenge, Mr. Wiener said, "I welcome the questioning and the review, in terms of making sure we meet the definition of a nonprofit hospital." In response to the Journal's inquiries, Mr. Wiener said Provena Covenant would no longer pursue body attachments.

They Concede Many Charges Aren't Fair to the Needy But Blame Federal Rules

Judith Geva's $21,508 Bill

By Lucette Lagnado
17 December 2003
Copyright © 2003, Dow Jones & Company, Inc.
Reprinted by permission.

Under pressure from lawmakers and consumer advocates, the hospital industry said it would consider making broad price cuts for the uninsured -- provided the federal government approves.

The announcement by the American Hospital Association included a stark admission that some hospital billing and collections practices are unfair to needy patients. But even as some big hospitals scramble to curtail their most aggressive tactics, such as putting liens on debtors' homes, the trade group is also blaming much of the problem on Medicare. In a letter delivered yesterday to the Department of Health and Human Services, the hospital group said Medicare regulations "make it far too difficult and frustrating" for hospitals to reduce prices for people who can't afford health care.

The letter asks the agency, which oversees Medicare, the federal health-care program for the elderly, to change or clarify its rules so that hospitals "have the ability to do what they can to respond to the needs of these patients." In a document filed in support of its letter, the trade group also said it would urge its 4,800 member hospitals to adopt a set of voluntary guidelines on billing and collections.

At the heart of the issue is the hospitals' common practice of charging full listed prices to the nation's 43.6 million uninsured patients. Meanwhile, other patients enjoy steep discounts negotiated on their behalf -- either by private insurers and HMOs or by government programs such as Medicare and Medicaid, the federal-state program for the poor. In some areas, the hospitals' official charges amount to several times the discounted rates.

Adding to the problem for the uninsured, many hospitals have become more aggressive in seeking payment of these bills. Hospitals have placed liens on debtors' homes, garnisheed wages, seized bank accounts and, in some cases, sought the arrest of debtors who miss court dates, a practice known in some states as "body attachment."

The letter, addressed to Secretary of Health and Human Services Tommy Thompson, marks a turning point for an industry that has been reluctant to acknowledge that its financial practices contribute to the plight of the uninsured.

In a series of articles this year, The Wall Street Journal has examined hospitals' aggressive billing and collections methods, including charging uninsured patients full listed prices while other patients get discounts.

The hospitals contend the pricing disparity is the result of Medicare regulations requiring hospitals to maintain a uniform list of charges for every treatment and service they administer -- even for patients who aren't covered by the program. The hospitals claim they can't offer unilateral reductions in these charges to categories of people, such as uninsured patients, without fearing they may be violating Medicare rules.

In a longer document accompanying its letter, the hospital group also blamed Medicare for some of their collections practices, claiming the program's rules "create a very strong presumption that hospitals must use aggressive efforts to collect from all patients," including sending collection letters, making telephone and personal contacts, and initiating court action.

It isn't clear whether Medicare's complex rules are as inflexible as the hospitals claim. Tom Gustafson, deputy director of the Center for Medicare Management, a Medicare division, said the rules allow hospitals to offer poor people discounts from listed charges "on a patient-by-patient basis, and it has to require verification of the financial need of each patient." Mr. Gustafson said Medicare officials need to study the hospital group's concerns and added: "We are prepared to think about, to consider and to learn about this situation in greater detail." A spokesman for HHS Secretary Thompson said the secretary would consider the issues the industry was bringing to his attention.

Over the past year, lawmakers, labor unions and patient advocates have increasingly urged hospitals to make changes in the way they bill and collect from patients. The House Subcommittee on Oversight and Investigations this summer launched a probe into hospital billing and collections, and plans to hold hearings early next year. "In the worst instance, hospitals simply apply outrageously high charges -- higher than what Medicare pays, higher than private payers -- and then will relentlessly and sometimes mercilessly pursue poor people for their money, even to the point of having them arrested," said Rep. James Greenwood, a Pennsylvania Republican and chairman of the subcommittee.

A new Connecticut law, which went into effect in October, makes it harder for hospitals to sue patients and to seize their bank accounts or place liens on their homes. That law also slashes interest rates charged on patient bills to 5% from 10%. In Illinois, state legislators are weighing laws that would end what they call "discriminatory pricing," the practice of billing uninsured patients more than insured patients -- on the theory that uninsured people tend to be minorities against whom it is illegal to discriminate. In New York, a pending bill in the state legislature would limit the amount hospitals could bill poor uninsured patients to no more than the sum Medicare or private insurers would pay, whichever is larger.

Now the hospital industry is pushing for big changes in Medicare. Its letter requested that Medicare issue a "safe harbor" rule enabling hospitals to discount or waive charges for the uninsured without risking trouble with the program. The association is also asking Medicare for a new advisory process under which hospitals could quickly get rulings on when and how they could discount rates to the uninsured.

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