Michigan lawmakers target medical debt, drug costs and a surprising fee

As health care costs continue to skyrocket, Lansing lawmakers are trying to tackle transparency, drug pricing and debt collections
In a legislature marked by bitter partisanship, both parties are lining up behind some of the bill packages
Hospital leader cautions, though: The US health budget is built on a ‘house of cards’

Health care expenses continue to increase faster than Michigan’s household budgets, prompting several efforts in Lansing to rein in the hit on Michigan wallets.

In the crosshairs are aggressive medical debt collectors, a surprising add-on to patient medical bills, drug costs and health care providers that receive millions in drug savings — but may or may not pass those savings to patients.

Medical debt

Two sets of bipartisan bills aim to protect the 690,000 Michiganders facing medical debt, some of which will be turned over to collections agencies. Senate bills 701 and 702 are sponsored by Sen. Sarah Anthony, D-Lansing, and Sen. Jonathan Lindsey, R-Coldwater. They would:

Prevent a large health care facility or medical debt collector from taking “extraordinary collection actions,” including causing someone’s arrest for unpaid medical debt, garnishing their wages or foreclosing on property.
Prohibit a large health care facility or medical debt buyer from charging a late fee or interest that exceeds 3% of the amount of that medical debt per year.
Bar health care facilities or medical debt providers from charging a patient interest or a late fee on medical debt until 90 days after the final invoice for that debt.
Ban deferring, denying or requiring a patient fully pay their medical debt before providing urgent services.
Require a health care facility to, within 60 days, refund a patient who had paid more money than was owed on medical debt after financial assistance was applied.

The two bills are “tie-barred” to a House bills legislative package, House Bills 5254 and 5255, meaning none of the four can be signed into law unless all four pass. State Reps. Angela Rigas, R-Alto, and Laurie Pohutsky, D-Livonia, sponsored the latter two bills.

Supporters have said medical debt unfairly punishes those who are sick.

Related:

“No one chooses to get cancer, or find themselves in a car accident, but things can change overnight,” Lauren Edwards, Director of State Government Affairs for Blood Cancer United, testified in January in front of the Senate Finance committee in support of the bills.

“Michiganders can do everything “right,” but still find themselves with a cancer diagnosis that puts them into debt for decades to come,” she said.

House bills 449, 450 and 451 also aim at medical debt.

Drug savings: Where do they go?

Two bills, House Bill 4878 and Senate Bill 94 — would force more transparency behind the federal 340B drug program.

Established in 1992, the federal program requires drug manufacturers to provide deep discounts on certain outpatient drugs purchased by certain health providers, including larger hospitals and smaller federally qualified health centers.

But those drug savings aren’t usually directly passed onto patients.

Rather, the program offsets costs, allowing hospitals, for example, “to stretch limited federal resources to reduce the price of outpatient pharmaceuticals for patients and expand health services to the patients and communities they serve,” according to the American Hospital Association.

Drug companies and others accuse more profitable health providers of sifting the money into investments and care that doesn’t directly help disadvantaged patients, for example.

The legislation would continue savings to the health providers, but also forces those health providers to be more transparent about where they use the savings.

Prescription drugs

Three Senate bills would establish a Prescription Drug Affordability Board.

The board would review cost and affordability for certain drugs based on their average cost to patients and could opt to cap costs. Critically, the bill would allow the attorney general to pursue civil actions for a violation of an upper payment limit.

The three-bill package was introduced by Senators Darrin Camilleri, D-Trenton, Veronica Klinefelt, D-Eastpointe, and Sue Shink, D-Northfield Township, respectively.

Facility fees

House Bill 5770, introduced by Rep. Curt VanderWall, R-Ludington, would ban hospital outpatient departments from charging “facility fees.”

Facility fees help offset hospitals’ operational costs, such as 24/7 emergence and trauma care, according to the Michigan Health & Hospital Association, which opposes the bill.

Several states have already moved to limit their use or to force providers to be more transparent about them.

Facility fees and 340B savings seem easy targets in conversations about affordability. That’s because it’s more difficult for patients to understand the need for them, said Brian Peters, CEO of the hospital group.

But they are crucial in sustaining hospitals that must tread the unpredictable waters of double-digit drug cost increases, insurance reimbursements that fall short of covering costs and expensive technologies.

Even the costs of protecting sensitive electronic medical records from information breaches and hacking tends to get lost in the calculus.

It’s not an ideal way to fund a national health system, Peters said — but US hospitals over time have had to survive on a billing “house of cards.”

“If you pull out any of the cards, the whole thing collapses.”

(Editor’s note: The Michigan Health & Hospital Association is a sponsor of Bridge Michigan’s Health Watch newsletter. It had no role in the reporting, writing or editing of this article.)

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