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New law limits hospital bills, installs safeguards for uninsured

A new law takes effect in January that limits what hospitals in New York State can charge uninsured patients and prohibits overly aggressive bill-collection practices.

Hospitals must abide by the law or risk eligibility to receive a share of the approximately $850 million a year the state gives hospitals for bad debts and charity care.

But critics are voicing concern over a proposed rule that would restrict the scope of the law to the ZIP code in which the hospital is located, as well as contiguous ZIP codes where more than half the hospital's inpatients lived in 2004 and 2005.

"For the first time, hospitals in New York will be required to provide financial assistance to hard-pressed hospital patients as a condition of the hospitals receiving $847 million in taxpayer funds to make up for unpaid bills," said Richard Kirsch, executive director of Citizen Action of New York. "However, if the Health Department issues a proposed rule, it could severely limit the promise of the new law to protect patients who cannot afford hospital care."

Hospital prices for treatments vary based on whether patients have private insurance, Medicare or Medicaid. It became commonplace for hospitals to charge uninsured patients a higher list price compared with the discounted rates for patients with private or government coverage.

The new law will establish a formula based on income for assessing charges. It also will require hospitals to tell patients with large medical bills how to apply for financial help, and it restricts hospitals from aggressive bill-collection practices.

Hospitals also must give patients a chance to apply for financial assistance before starting collection procedures.

Criticism focuses on a part of the law that requires the Health Department to issue a rule on the geographic area under which each hospital must apply the law. Citizen Action said it was notified of the ZIP code proposal earlier this month.

"ZIP codes were designed to deliver mail, not provide health services," said Kirsch. "This new rule would do nothing to protect patients who are referred to hospitals which aren't very close to a person's home."

He urged officials to hold off on a decision until the administration of Gov.-elect Eliot L. Spitzer can review the matter.


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