December 15, 2017
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At the end of 2012, the Indiana Supreme Court issued a ruling in favor of healthcare conglomerate Clarian Health Partners, Inc. (now known as IU Health) that largely went unnoticed.  In the case of Abby Allen, et al. v. Clarian Health Partners, Inc. (49S02-1203-CT-140), the Court held that Clarian and other hospital corporations can charge uninsured patients more than twice what Medicare, Medicaid, and other health insurance companies deem to be “reasonable” charges for its services (Clarian apparently calls this inflated rate the “chargemaster” rate).  But what should concern everyone most, regardless of their insurance status, is that the Court agreed that the hospital can charge this inflated rate, without even disclosing this critical information in the admission agreement the hospital presents to the patient to sign before being seen.

In this case, the patient sought treatment at Clarian North Hospital in Indianapolis.  Before receiving treatment, the patient was asked by hospital staff to sign a form contract, drafted by Clarian, under which the patient agreed to pay all charges associated with her treatment.  There was no price or fee schedule specified in the contract.  Once the patient signed the agreement, Clarian then elected to bill what it calls its “chargemaster” rates for medical services and supplies — which in this case totaled$15,641.64.    According to the complaint, however, had the patient been insured, then Clarian would have accepted $7,308.78 for the same services and supplies — less than half what they charged the uninsured patient to pay out of her own pocket.

There is a long line of legal precedent which holds that when a contract is not specific on price, the charges must be “reasonable.”  The patient’s attorney accordingly argued that because there was no price set forth in the contract, Clarian must charge a “reasonable” price for providing the medical care the patient needed.     Incredibly, however, the Court refused to require Clarian to charge a reasonable fee.  The Court stated that hospitals were “unique” and should therefore be treated differently.     The Court reasoned that because the contract required the patient to pay “the account”, the contract was specific enough and therefore Clarian’s fee did not have to be reasonable.

One could argue that this ruling lets hospital corporations play by a separate set of rules, thus granting them a special license to exploit vulnerable patients in their time of need.  

 

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