This article was originally published in the Idaho State Business Journal on March 20, 2020
The Idaho Patient Act was passed by the 2020 Idaho Legislature and signed into law by Gov. Brad Little on March 16. To summarize, the IPA establishes a framework for health care providers to follow before resorting to litigation against patients to collect unpaid medical bills. The IPA also significantly limits the amount of attorney fees that can be assessed against patients in such cases.
As proposed legislation, the IPA was notable for several reasons. The IPA seeks to curb what some believe were abusive collection tactics being used by medical debt collection companies. Those tactics include what are perceived to be excessive attorney fees added by courts to the underlying medical debt. The IPA also seeks to add transparency to the medical billing process by providing the patient with a list of all health care providers who provided care during a particular hospital admission and ensure timely receipt of a statement of amounts owed.
The bill’s primary supporter was Melaleuca CEO Frank VanderSloot. VanderSloot’s support of the IPA arose from the case of a Melaleuca employee whose medical bill of $294 led to a request of approximately $5,600 in attorney fees. According to Melaleuca, media coverage of that case led to many others sharing similar stories. Unlike other proposed legislation, the IPA featured its own website (idahopatientact.org), complete with a video from VanderSloot, patient testimonials and a listing of the act’s legislative supporters and opponents. The IPA was even branded with a clever symbol featuring a red map of the state of Idaho, a white checkmark in the middle of the state, with the letters “IP” and “CT” on either side.
The opponents to this legislation argued that this legislation unconstitutionally impairs the rights of medical providers to protect their property rights through Idaho’s legal system. Others argued that the bill imposes an additional layer of regulation on health care providers who are already heavily regulated by the state and federal government — a proposition inconsistent with Gov. Little’s stated desire to cut the regulations government imposes on Idaho’s businesses. In my view, it is likely that at least some of these issues will be the subject of legal challenges in the future.
Now that the IPA has become Idaho law (see Idaho Code § 48-301 through -312), what does it require? Effective Jan. 1, 2021, to preserve its right to file a lawsuit against a patient for the collection of an unpaid medical bill, the IPA requires the following:
First, the health care provider (defined to include hospitals and physicians/other practitioners) must submit its charges to the patient or the patient’s insurance company within 45 days of when the services were provided or the date of discharge from the hospital. Health care providers sometimes struggle to collect copayments and deductibles from patients. In today’s world, many patients now have high-deductible health insurance coverage. As a result, some providers delay submitting charges to the patient’s insurance company in the hope that the patient’s deductible will have been satisfied by payments made to other providers. This allows the late-billing provider to collect a greater portion of the payment from the patient’s insurance company, instead of the patient. The IPA seeks to curtail this practice.
Second, the IPA requires hospitals, within 60 days, to send a patient a consolidated summary of the services received at the hospital. This summary must include the patient’s name and date and duration of the hospital stay. The notice must also provide the name, contact information and the billing company for each health care provider who provided services to the patient during the hospital stay. When a patient receives medical bills after a hospital stay, there is sometimes confusion as to who is billing the patient for what. This arises from a common misunderstanding of some of the basic legal relationships between hospitals and many who provide care there. Hospitals provide direct treatment to patients through nurses and others employed by the hospital. The hospital sends the patient’s insurance company a bill for those services, which often include a facility fee covering the operating room and the hospital staff, the supplies used and equipment used. However, there are others involved in the patient’s care. Hospitals are also places where physicians and others can come and treat their patients. Often the physicians are not employees of the hospital, and the care they provide will often be billed separately by the physician group practice. Similarly, an anesthesia provider and behind-the-scenes radiologists and pathologists will often bill the patient separately. The IPA will provide the patient with information about the providers who cared for them at the hospital.
Third, the health care provider must send the patient a final statement summarizing much of the same contact information from the consolidated summary but to also include the amounts billed by the provider to the patient’s health insurance company. The summary must also show the discounts or contractual adjustments applied to the bill, the amounts paid and the amounts owed by the patient.
As long as providers follow these steps, the hospital or physician may resort to legal action if a patient’s bill has not been paid. The IPA requires that the health care provider wait until 90 days after the final statement and not charge interest until 60 days after the final statement. In that legal action, the IPA limits the amount of attorney fees that can be added by the judge to the patient’s underlying debt. In an uncontested case, the maximum amount of attorney fees awarded against the patient is $350. For a contested case, that amount will be $750. Absent extraordinary circumstances, health care providers will be limited to recovering only these amounts from the patient. Under the IPA, a provider may resort to legal action even if the provider missed the 45-day and 60-day deadlines, but only if the deadlines are met within an additional 45- and 60-day periods. In those circumstances, no award of attorney fees is allowed.
From my perspective, the IPA rightly addresses a problem that needed to be corrected. Unfortunately, the IPA imposes additional obligations on hospitals and physician practices that are already struggling in a burdensome regulatory environment. Complying with the IPA will require hospitals to update their IT systems, and all providers will need to add additional employee hours to meet the requirements of the IPA. With an appropriate clamor to “make health care less expensive,” it is hard to imagine that the IPA won’t drive costs in the other direction and make health care more expensive.
Tom Mortell is chair of Hawley Troxell’s health care law group, as well as a member of the firm’s Board of Partners. His health care practice focuses on advising hospitals and other health care providers on all aspects of health care law. He assists health care providers in business transactions, including the acquisition of competing entities, the formation of entities or facilities jointly-owned by hospitals and physicians, the acquisition of physician practices, and professional services contracts between hospitals and physicians. Additionally, he advises hospital boards on issues relating to physician integration, compliance, governance, and strategic planning.
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