A benefits consulting firm is causing in a stir in the health industry by urging its clients—mostly medium-sized employers—to refuse to pay hospital bills if they appear to have charges that bear no relationship to their costs, Jay Hancock reports for NPR's "Shots" blog.
How it works
The firm—ELAP Services—analyzes a hospital's financial filings to determine an amount that it feels employers to should pay hospitals for their services. Employers in turn insist on paying that amount, rather than the amount on the hospital invoice.
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Texas-based Huffines Auto Dealerships—which provides health insurance coverage to 300 workers and their dependents—became an ELAP client a few years ago, and CFO Eric Hartter says, "This is the best form of true health care reform that I've come across."
Huffines' first case with ELAP involved a back surgery with a $600,000 hospital bill. The company's claims administrator said it could get the bill down to $300,000. "I said, 'What's the difference? That doesn't make me feel any better,'" Hartter says.
ELAP analyzed the bill and determined what it thought the company should pay the hospital. "We wrote a check to the hospital for $28,900 and we never heard from them again," Hartter says.
Huffines now uses ELAP to handle every big hospital bill. The company says it has saved so much money through ELAP that its worker health costs have remained unchanged for six years, even with benefits staying at the same level.
ELAP now works with more than 200 employs that provide coverage to approximately 115,000 people. ELAP CEO Steve Kelly says he knows of just one other company offering a comparable service.
What it means for hospitals
According to Hancock, hospitals have struggled to respond to ELAP's approach, which is disrupting regular billing and collection operations.
Enfranchise staff in point-of-service collections
As part of its model, ELAP defends workers from any collection efforts. And although hospitals have tried taking the cases to court, ELAP's legal teams have successfully pushed back on such collection efforts.
But, Kelly says, "Overwhelmingly, the providers just accept the payment" and leave patients be (Hancock, "Shots," NPR, 5/14).
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