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A large Mississippi hospital agreed Thursday to offer free medical care to some uninsured patients and provide sharp discounts to others, as part of an agreement negotiated with attorneys who are suing the not-for-profit hospital industry.
The North Mississippi Medical Center in Tupelo agreed to the settlement to avoid being sued. It is the first hospital to reach an agreement since high-profile lawyer Richard Scruggs began filing cases against the industry in June, accusing it of overcharging the uninsured.
In addition to free care for those under 200% of the federal poverty level ($18,620 for an individual or $37,700 for a family of four), it will offer discounts to uninsured patients with incomes up to four times the federal poverty level and will refund money or forgive debts to up to 48,000 uninsured patients who received care during the past three years.
''This is very significant and will get the attention of every hospital in this country,'' says Mark Rukavina, director of the Access Project, an advocacy group that has worked for several years on behalf of uninsured patients.
The settlement comes as the hospital industry is targeted by lawsuits, consumer groups and Congress over a long-running practice that often resulted in the uninsured being charged more for the same services as those with insurance. ''This is a win-win for everyone,'' Scruggs says.
Scruggs' law firm, well known for spearheading multibillion-dollar lawsuits against the tobacco industry, is leading a group of firms that have filed 40 lawsuits in federal court against more than 300 not-for-profit hospitals since June. He has also sued the industry's lobbying group, the American Hospital Association (AHA).
The cases allege that the facilities violate their tax-exempt status when they charge uninsured patients more than those with insurance and then take aggressive action if patients fail to pay.
The AHA said the settlement ''would have no bearing on the lawsuit brought against us or any of the hospitals that day in and day out provide outstanding care for patients and their families.''
In a written statement, the 650-bed North Mississippi Medical Center said it agreed to the settlement to ''avoid the distraction and cost associated with a potential lawsuit.'' How much the hospital must refund remains to be seen. Scruggs says the hospital charged $16 million a year in each of the past three years to uninsured patients, but it collected only about 5% of that. Refunds would go only to those who paid their bills.
Looking forward, the hospital may find it sees an increase in patients seeking free care. But Scruggs says the hospital can go back to the judge to seek adjustments if it runs into financial trouble. The settlement also allows the hospital to walk away from the deal if the judge awards attorneys fees the hospital considers excessive, Scruggs says.
He expects the settlement to be a template for agreements with other hospitals. It must still be approved by a federal court judge.
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