May 31, 2022

Ellen K. Giarratana previously served as Litigation Director at CCLP, where she advocated for the equitable enforcement of legislation, representing community members in litigation in our four focus areas (food, health, income, housing) while working to improve racial equity.

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For French v Centura Health, a resolution at long last

by | May 31, 2022

The cost of health care in the United States is astronomical — so much so, that unpaid medical bills are the leading cause of bankruptcies. One glaring contributing factor is the fact that hospitals have free rein to set internal prices for medical services and hospital stays, which unsurprisingly leads to exorbitant bills for patients.

These internally set, highly inflated, and unregulated medical care prices are called “chargemaster rates.” Chargemaster rates are intentionally set to be well beyond the reasonable cost of care because it is understood that insurance companies will negotiate with hospitals for a better price. For this reason, insured and in-network patients do not pay anything close to chargemaster rates. But for those who are uninsured or find themselves in an unpredictable out-of-network procedure, there is no insurance company there to negotiate on their behalf. Instead, they become easy targets to sue for unpaid bills.

Melody French, a clerk at a trucking company, was one such target for Centura Health. Ms. French was admitted to a Centura Health hospital for a spinal fusion surgery and was discharged with a bill of over $300,000. Originally, the hospital had estimated that the bill would cost $56,601.77, of which she would be personally responsible for $1,336.90. But because of a mistake on the hospital’s part, it was later determined that Ms. French was out of network. After the insurance company paid some of the cost and Ms. French paid $1,000 out of pocket, the outstanding balance was $229,112.13.

Ms. French, like most Coloradans faced with a similar bill, could not afford to pay. The hospital (whose stated mission reads: “We extend the healing ministry of Christ by caring for those who are ill and by nurturing the health of the people in our communities.”) sued her.

In court, the main issue concerned whether Ms. French’s signed agreement with the hospital pre-operation to pay “all charges” for medical services meant that she agreed to pay the chargemaster rates rather than the reasonable cost of care. The trial judge allowed the jury to decide what “all charges” meant, and the jury interpreted the phrase to mean the “reasonable value of goods and services.” In the jury’s view, Ms. French was only liable for $766.74.

Unsatisfied with that number, the hospital appealed.

The Colorado Court of Appeals sided with Centura and held that the phrase “all charges” incorporates a hospital’s chargemaster rates, despite the fact that the pre-operation agreement never referred to such rates and that patients typically do not pay chargemaster prices.

In normal circumstances, a valid contract requires that the parties mutually agree to a price term. But the Court “set aside [its] misgivings” about the lack of mutual assent because of the complex nature of hospital billing and the resulting litigation that might arise if patients were responsible only for the “reasonable” value of services. The Court also emphasized that the Ms. French agreed to pay all charges and that the chargemaster rates are publicly available for her to review. What the Court left out was the reality that very few health care consumers know where to look for chargemaster prices, and fewer still are even aware that chargemaster rates exist.

After the Colorado Supreme Court agreed to hear the patient’s appeal, CCLP felt it was vital to join the Colorado Consumer Health Initiative and Colorado Legal Services in an amicus brief to shed light on the policy reasons in favor of overturning the court of appeals’ opinion. Specifically, the court of appeals’ opinion would have inevitably resulted in price discrimination against low-income individuals and people of color, both of whom are more likely to be uninsured or seek out-of-network care. The brief explains that many will be unable to pay and will fall into bankruptcy over medical costs that they may not have been able to avoid. The brief also points out that the court of appeals opinion ignores basic contract principles and thus allows hospitals to continue arbitrarily increasing the costs of services. (Read our amicus here.)

Thankfully, on May 16, 2022, the Colorado Supreme Court unanimously reversed the lower court’s opinion, holding that Ms. French could not agree to a price term that was never disclosed to her. The Court also noted that Centura had refused to even turn over the chargemaster during the course of the litigation. However, even if the hospital had disclosed the chargemaster, it would have been impossible for Ms. French to interpret the tens of thousands of codes within it. It was therefore appropriate for the jury to determine the reasonable cost of care.

The result of this case is certainly a victory for advocates fighting against predatory hospital billing practices. But patients should remain vigilant about any reference to chargemasters in hospital agreements that could result from the French opinion. Though we are pleased with the outcome of the case, the fight for fair medical billing continues to be an uphill challenge.

Read more about French v Centura Health in the New York Times and Washington Post.

 

Recent articles

HEALTH:
HEALTH FIRST COLORADO (MEDICAID)

To maintain health and well-being, people of all ages need access to quality health care that improves outcomes and reduces costs for the community. Health First Colorado, the state's Medicaid program, is public health insurance for low-income Coloradans who qualify. The program is funded jointly by a federal-state partnership and is administered by the Colorado Department of Health Care Policy & Financing.

Benefits of the program include behavioral health, dental services, emergency care, family planning services, hospitalization, laboratory services, maternity care, newborn care, outpatient care, prescription drugs, preventive and wellness services, primary care and rehabilitative services.

In tandem with the Affordable Care Act, Colorado expanded Medicaid eligibility in 2013 - providing hundreds of thousands of adults with incomes less than 133% FPL with health insurance for the first time increasing the health and economic well-being of these Coloradans. Most of the money for newly eligible Medicaid clients has been covered by the federal government, which will gradually decrease its contribution to 90% by 2020.

Other populations eligible for Medicaid include children, who qualify with income up to 142% FPL, pregnant women with household income under 195% FPL, and adults with dependent children with household income under 68% FPL.

Some analyses indicate that Colorado's investment in Medicaid will pay off in the long run by reducing spending on programs for the uninsured.

FOOD SECURITY:
SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM (SNAP)

Hunger, though often invisible, affects everyone. It impacts people's physical, mental and emotional health and can be a culprit of obesity, depression, acute and chronic illnesses and other preventable medical conditions. Hunger also hinders education and productivity, not only stunting a child's overall well-being and academic achievement, but consuming an adult's ability to be a focused, industrious member of society. Even those who have never worried about having enough food experience the ripple effects of hunger, which seeps into our communities and erodes our state's economy.

Community resources like the Supplemental Nutrition Assistance Program (SNAP), formerly known as Food Stamps, exist to ensure that families and individuals can purchase groceries, with the average benefit being about $1.40 per meal, per person.

Funding for SNAP comes from the USDA, but the administrative costs are split between local, state, and federal governments. Yet, the lack of investment in a strong, effective SNAP program impedes Colorado's progress in becoming the healthiest state in the nation and providing a better, brighter future for all. Indeed, Colorado ranks 44th in the nation for access to SNAP and lost out on more than $261 million in grocery sales due to a large access gap in SNAP enrollment.

See the Food Assistance (SNAP) Benefit Calculator to get an estimate of your eligibility for food benefits.

FOOD SECURITY:
SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS AND CHILDREN (WIC)

Every child deserves the nutritional resources needed to get a healthy start on life both inside and outside the mother's womb. In particular, good nutrition and health care is critical for establishing a strong foundation that could affect a child's future physical and mental health, academic achievement and economic productivity. Likewise, the inability to access good nutrition and health care endangers the very integrity of that foundation.

The Special Supplemental Nutrition Program for Women, Infants and Children (WIC) provides federal grants to states for supplemental foods, health care referrals, and nutrition information for low-income pregnant, breastfeeding and non-breastfeeding postpartum women and to infants and children up to age five who are found to be at nutritional risk.

Research has shown that WIC has played an important role in improving birth outcomes and containing health care costs, resulting in longer pregnancies, fewer infant deaths, a greater likelihood of receiving prenatal care, improved infant-feeding practices, and immunization rates

Financial Security:
Colorado Works

In building a foundation for self-sufficiency, some Colorado families need some extra tools to ensure they can weather challenging financial circumstances and obtain basic resources to help them and their communities reach their potential.

Colorado Works is Colorado's Temporary Assistance for Needy Families (TANF) program and provides public assistance to families in need. The Colorado Works program is designed to assist participants in becoming self-sufficient by strengthening the economic and social stability of families. The program provides monthly cash assistance and support services to eligible Colorado families.

The program is primarily funded by a federal block grant to the state. Counties also contribute about 20% of the cost.

EARLY LEARNING:
COLORADO CHILD CARE ASSISTANCE PROGRAM (CCCAP)

Child care is a must for working families. Along with ensuring that parents can work or obtain job skills training to improve their families' economic security, studies show that quality child care improves children's academic performance, career development and health outcomes.

Yet despite these proven benefits, low-income families often struggle with the cost of child care. Colorado ranks among the top 10 most expensive states in the country for center-based child care. For families with an infant, full-time enrollment at a child care center cost an average of $15,140 a year-or about three-quarters of the total income of a family of three living at the Federal Poverty Level (FPL).

The Colorado Child Care Assistance Program (CCCAP) provides child care assistance to parents who are working, searching for employment or participating in training, and parents who are enrolled in the Colorado Works Program and need child care services to support their efforts toward self-sufficiency. Most of the money for CCCAP comes from the federal Child Care and Development Fund. Each county can set their own income eligibility limit as long as it is at or above 165% of the federal poverty level and does not exceed 85% of area median income.

Unfortunately, while the need is growing, only an estimated one-quarter of all eligible children in the state are served by CCCAP. Low reimbursement rates have also resulted in fewer providers willing to accept CCCAP subsidies.