Members of Colorado's Supreme Court swung hard at the charging practices of hospitals on Tuesday, at times veering away from the narrow issues in the case before them and venturing into a broader critique of the American healthcare system.

The appeal at hand centered on the state Court of Appeals' interpretation of charges Lisa Melody French owed to Centura Health Corporation for her 2014 spinal surgery. Although the hospital's pre-surgery estimate was that French herself would pay just under $1,337, complications ballooned her share of the bill to $229,112.

Michael T. McConnell, attorney for Centura Health, told the Supreme Court that when the health services agreement stipulated French would pay "all charges" of the hospital, "she was responsible for paying the hospital charges the insurance company didn't."

"Whatever it was? They could've charged her a billion dollars and your position is she's bound because she agreed all charges means all charges?" asked Justice Richard L. Gabriel.

McConnell began to respond that St. Anthony North Hospital in Westminster, where French had her surgery, set its rates in the bottom 25% of the Denver metro area as a whole, prompting Justice Maria E. Berkenkotter to interrupt.

"Does that mean it can be $250 million instead of a billion?" she quipped.

French's case attracted the attention of multiple industry and nonprofit groups, some of which blasted the notion that consumers should pay whatever billed amount a hospital presents them with following a procedure.

"(H)ospitals bludgeon payers (including self-insured entities) into accepting rates that have no relation to the value of services provided using their 'chargemaster,' a secret list of tens-of-thousands of prices only experts can read set for the sole purpose of increasing profits," the Self Insurance Institute of America, Inc. wrote to the justices. "While resulting in record profits for hospitals, this model harms patients."

Originally, Centura Health sued French in Adams County District Court for its balance due, and a jury decided the phrase "all charges of the hospital" meant French was only obligated to pay the reasonable value of the medical services, and not the amount the hospital set for itself in its chargemaster. The jury slashed French's payment to $767.

A three-judge panel for the Court of Appeals decided the trial judge was wrong to find that "all charges of the hospital" was an ambiguous phrase for a jury to decide. Most states, Judge Terry Fox reasoned, have used the chargemaster for their health services agreements with patients, and Colorado's lawmakers have not acted to limit those charged amounts.

Because hospitals cannot always provide an accurate estimate before a medical procedure about its cost, she added in the May 2020 opinion, "we cannot conclude that an HSA must contain a precise price."

During oral arguments, however, some justices pushed back on Centura Health's assertions that, despite sharing with French a $1,337 estimate prior to surgery, it could not have been more precise about the cost.

"When I bring my car for service, they don't know what's wrong with it, either. But they investigate it and they call me and say you need a new this or a new that and this is what it will cost," said Gabriel.

"Your mechanic isn't a physician," McConnell retorted. "Obviously, you feel that is the way it ought to be. It is not the way it is."

Not so, countered Justice Melissa Hart.

"The hospital did provide an estimate in this case. They did calculate what this was going to cost and (did) tell her that. It seems false to me that they can't do it," she interjected.

While the case narrowly pertained to the meaning of words in a hospital agreement, it also served as an occasion for the justices and lawyers to vent about exorbitant charging practices in the American healthcare system and the complex process of billing patients and their insurers, sometimes at different rates for the same procedure.

In one key detail, the hospital erroneously believed French's insurance was "in-network" when it provided her the $1,337 estimate. Centura Health attempted to excuse its mistake by placing on French the burden of ultimately knowing how much her insurance would pay.

"How can a hospital be in the position of verifying, validating a situation like this one and guaranteeing, in essence, that they understand the patient's insurance better than the patient does?" McConnell argued.

"But the hospital didn't say, 'We don't know whether you're (in network) or not.' They said, 'The estimate is $1,300-some-odd dollars'," responded Justice Carlos A. Samour Jr. "It seems to me a little ironic that you're faulting her for a mistake that the hospital itself made."

In support of Centura Health, Florida-based AdventHealth and CommonSpirit Health in Colorado wrote to the court that physicians are in charge of patient care and not hospital administrators, meaning there could never be a correct estimate beforehand for someone's care. Moreover, it would be impractical for hospitals to only charge patients the reasonable value of health services, given that health systems need to charge more to certain patients to compensate for the lower reimbursement rates the government pays on behalf of Medicare and Medicaid patients.

However, in response to a question from Hart, McConnell admitted that Centura Health had not lost any money on French's surgery, since her insurance had also paid roughly $74,000. According to French's brief to the Supreme Court, Centura Health had collected an average of $63,199.74 for other patients who received the same surgery French had, meaning it actually recovered more for her procedure — even before collecting the balance of $229,000.

Thomas E. "Ted" Lavender III, representing French, pointed out that, even if "all charges" meant the hospital's chargemaster, Centura Health had never shown the chargemaster to French either at the time of service or since. Although federal law now requires the posting of hospitals' standard charges, Justice Monica M. Márquez wondered about the status of French's health services agreement if the hospital failed to disclose the chargemaster.

"Is that still a valid contract?" she asked.

Lavender replied that a contract requires both parties to understand the underlying terms, which French could not do if she was missing a key piece of the puzzle.

"Let's not forget, it's not the patients that are the plaintiffs in these cases. It's the hospitals suing the patients," he said. "They are just simply scared of having to face a jury where the reasonableness of their charges becomes a question."

Overall, Centura Health pleaded with the justices to remember the "economics of American healthcare," which necessitates that hospitals continue to bill patients at chargemaster rates without providing a precise estimate beforehand.

No member of the court appeared ready to embrace that argument.

"I think you can sense uneasiness now on our part about the idea that a hospital can just say, 'You're agreeing to pay all charges,' and then that means the patient is on the hook for whatever the hospital charges. And it can be a billion dollars," Samour summarized to McConnell near the end of oral arguments. "I don't think it's surprising to you that that makes us uneasy."

The case is French v. Centura Health Corporation et al.

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