ZSFGH could cap out-of-pocket payments for privately insured patients after outcry over billing practices

San Francisco Health officials are considering a cap on out-of-pocket payments made by insured patients receiving emergency services at Zuckerberg San Francisco General Hospital.

The proposal comes in response to growing concerns over unexpectedly high bills resulting from the hospital’s practice of “balance billing,” which leaves insured patients on the hook for the portion of their bill not covered by their insurance companies.

Out of the 100,000 patients treated each year at SF General, 94 percent are uninsured or Medi-Cal and Medicare recipients. For the remaining patients, the hospital is effectively out of network with all private insurance plans, as was first reported by the online news outlet Vox, and bills can easily amount to thousands of dollars.

Balance billing is allowed under state law for Preferred Provider Organizations (PPO) patients and leaves up to 1,700 insured patients at ZSFGH with significant debt each year, officials from the San Francisco Department of Public Health, which manages the public hospital, reported at a Board of Supervisors committee hearing on Thursday.

“What we are proposing is to set a new policy that will limit the total amount that the [insured] patient has to pay based on a policy that takes into account the patient’s income,” said DPH Chief Financial Officer Greg Wagner.

“Instead of the patient paying that whole balance, there would be a limit on how much we would bill the patient for care at Zuckerberg San Francisco General Hospital,” said Wagner.

The proposal also calls for improving communications with patients throughout the billing process to reduce the “trauma of a financial situation they are unable to resolve.”

Also on the table are proposals to overhaul current procedures to assess whether a patient is eligible for financial support programs — which include sliding scale and charity programs — prior to billing the patient, and close current service gaps in those programs.

The financial assistance programs currently cover patients up to 500 percent of the federal poverty level, or about $60,000 in annual income per year.

“Above that 500 percent of the federal poverty level, our financial assistance program coverage is pretty weak,” said Wagner.

A comprehensive plan is being developed on a 90-day timeline set by city leaders earlier this month.

During that period, balance billing has been suspended at the hospital. Wagner said that capping patient payments is a short-term solution that is most financially and administratively feasible given the time restraint.

He added that hospital and public health leaders will also look at policy changes in the long term in the context of a larger effort to ensure that healthcare is equitable and patient-centric on the national level.

Supervisor Aaron Peskin, who sits on the government oversight and audit committee, said that he would also like to more closely monitor the hospital’s billing rates, which come before the Board of Supervisors each year for approval.

“When the billing rates come to the board with a pile of other things, we approve them,” said Peskin. “I don’t think we have had an instance where we question them. We need to contend with the question of whether our billing rates are higher than other similarly situated institutions for the same services.”

While some have called for the hospital to enter into negotiations with the private insurance companies, Wagner said that in most cases hospitals typically offer insurance companies discounted rates in exchange for more patient volume.

ZSFGH is filled to capacity with largely uninsured patients, and so unable to take on more insured patients, he said.

“We will continue to work on it but it’s not a magic bullet solution to the problem,” he said. “In our role, if we were to drive volume it would displace our uninsured patients.”

Balance bills are considered uncollectible after four years. Peskin said that a pipeline of up to 6,000 ZSFGH patients who can still be billed must be informed about financial assistance retroactively.

“I think it’s incumbent on us and this City and DPH to accommodate patients who have been stuck with enormous bills, not just prospectively — we have put a halt on it for 90 days — but also retrospectively,” said Peskin. “We have to take patients out of the middle. This small percentage of patients is being held hostage because we want to get to the insurers.”

Wagner said that the health department is currently in the process of “communicating with those people.”

Board of Supervisors President Norman Yee said that he has personally been affected by balance billing after being hit by a car more than a decade ago.

“It was a nightmare personally, starting with when the car ran me over to trying to recover over several years and getting all these bills… and realizing these are multi-hundred thousand dollars,” said Yee, who was visibly moved. “What I went through shouldn’t happen to people.”

Multiple people who testified during public comment said they were equally shocked after realizing the hospital did not accept their insurance plans.

Nicki Pogue said that she she spent five hours at the hospital for a “viral syndrome” after running a high altitude race. She recovered within a few days, but was flabbergasted when she received a bill for $13,000, of which her insurance covered just over $3,000.

“If I had known they don’t accept insurance, my neighbor might have said, ‘never mind, let’s go to St. Luke’s [Hospital],” said Pogue. “For those people who are unconscious [when hospitalized] or who can’t make that decision, they obviously need to solve for this insurance issue.”

Pogue criticized a statement made by a hospital spokesperson previously that indicated that the hospital was billing insured patients maximum amounts to support its uninsured patients.

“The system is so broken that they are willing to admit that they are subsidizing the care of the uninsured, which I applaud,” said Pogue. “A city hospital needs to provide for the uninsured and people who don’t have access to medical coverage, but not on the backs of people who pay good money to get good health insurance.”

Wagner said that the statement is not representative of the hospital’s mission.

“Our policy is not that we are charging patients rates to subsidize anybody else,” he said.

lwaxmann@sfexaminer.com

Laura Waxmann
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Laura Waxmann

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