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53 U. Louisville L. Rev. 509 (2015)
Fair Hospital Prices Are Not Charity: Decoupling Hospital Pricing and Collection Rules from Tax Status
Erin C. Fuse Brown*
Abstract
      Among its numerous legal changes and provisions, the Patient Protection and Affordable Care Act (ACA) created new, additional requirements for tax-exempt hospitals. These provisions, codified in § 501(r) of the Internal Revenue Code, were designed in part to address the problem of the uninsured being charged the highest amounts for hospital care and then being hounded by aggressive debt collection efforts, often to the point of financial ruin. Subsection 501(r)’s requirements limit the amounts that tax-exempt hospitals may charge patients who qualify for financial assistance to “amounts generally billed” to insured patients and also prevent such hospitals from using “extraordinary collection actions” before the hospital has made a reasonable effort to determine the patient’s eligibility for financial assistance. In doing so, the ACA shields many financially vulnerable patients from inflated hospital bills and aggressive debt collection tactics. The new § 501(r) rules follow years of litigation, congressional hearings, and media attention on the dichotomy between the ostensibly charitable purposes of tax-exempt hospitals and the financial harm inflicted by these same hospitals on their uninsured patients.
      The Article proceeds in six parts. Following this introduction, Part II defines the problem that § 501(r)’s rules seek to address: unfair hospital pricing and collection practices. Part III describes § 501(r)’s fair pricing and collection rules and their origins, highlighting the patients who remain unprotected. Part IV explains why fairness is not charity and introduces the concept of fairness roulette. A proposal to decouple fair pricing and collection rules from tax status is set forth in Part V, using state laws like the California Hospital Fair Pricing Act as a model. Part VI concludes.
* Assistant Professor, Georgia State University College of Law.