This edition of our Open Letter to the Community will address the recently announced intent to settle the Richard Scruggs class-action not-for-profit lawsuit. Presently, we have a Memorandum of Understanding (MOU) with the Scruggs law firm to work toward a final settlement. We are working through the details of the settlement and the discussion here pertains to the current agreement. Some of the specifics may change between now and when the settlement is acted upon by the Federal Judge. This is a very complex legal issue, but we will attempt to explain it as best we can.

Why did NMHS settle?

A tremendous amount of time was spent discussing this issue with the Board of Directors, administrative team and our legal counsel. The bottom line is that we felt the disruption caused by a lawsuit of this magnitude would deflect our attention away from dealing with the current issues related to our perception in the community. Also, the cost of defending such a lawsuit would be much greater than the cost associated with the proposed guidelines, which by the way are very close to our current charity care policy. We’ve heard in the community that some people think that we must be hiding something or we’re afraid of disclosure. That is not the case. The decision was based on our need to focus on current community perception issues, our understanding of what it would cost to defend versus settling the lawsuit, and the reasonableness of the proposed discounts.

To whom does this settlement apply?

Patients with incomes at or below 400% of the Federal Poverty Limits (FPL) who are classified as uninsured and patients who received services during the past 3 years who were classified as uninsured at the time of service. Physician fees are included if the physician is employed by NMHS. Fees of private physicians are not included in the settlement. 

We’ve also heard in the community that some people think smaller businesses will simply stop providing health insurance to their employees and direct them to NMHS for healthcare. This was not the intent of the settlement and we’re currently working with Scruggs’ attorneys to clarify this issue.

 What are the financial assistance guidelines? 

Uninsured Patient Financial Assistance Guidelines
Income level (of FPL)	Discount off of discounted rate
0 – 200%	100%
200% - 250%	50%
250% - 300%	40%
300% - 350%	25%
350% - 400%	15%

 

How will the discount be applied?

In order to qualify for a discount, an uninsured patient’s income must be at 400% or below of the FPL. For inpatient services, patients will have their billed charges reduced to the inpatient Medicare rate. That rate will then be further reduced according to the table above. For outpatient services, the billed charges will be reduced to 51% and then further reduced according to the above table.

 

How will the refunds be calculated?

The patients must document that they meet the above FPL, that they were provided services by NMHS and that they actually paid some portion of their bill during the previous three year period. Their refund will then be calculated using the above methodology and table.

 

What are some of the facts and figures associated with NMHS’s uncompensated care?

In 2003, we had about $27 million in charges associated with patients in the uninsured category. Of that, we collected around $1 million, or 3.7%.

 

What’s the $150 million the Scruggs firm referred to?

As best we can tell, this represents the total amount of charges associated with uninsured patients for a multiple year period.

 

What is the process and effective date for this taking place?

The proposed lawsuit, NMHS’s Answer and the proposed settlement have to be filed in the United States District Court for the Northern District of Mississippi. A judge will then review the proposed settlement. We anticipate that this will occur in February. Then, a claims administrator (a company that specializes in administering class-action claims adjudication) will be appointed. That claims administrator will then begin the process of contacting those in the class (i.e., uninsured patients), certifying their eligibility, and processing the requests for refunds. Bottom line – if the Court approves the settlement and there is no material change, refunds would probably be processed in late winter 2005

 

What can those who think they have a claim do now?

According to Andrea Calise, a spokeswoman for the attorney’s coalition, they should work on collecting information about their health care treatment from NMHS facilities, their uninsured status, what they were charged, what they paid and their household income.

 

Does this apply to patients/former patients who have/had insurance or governmental coverage?

No, Scruggs’ lawsuit is only concerned with the uninsured.

 

Our next letter will be published September 12 and will address community concerns, including BlueCross BlueShield.

August 29, 2004