Analysis of Draft Legislation on Health Care Charges for Uninsured & Self-Pay Patients

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Audio Version (34 minutes, listen to in your car or on your smartphone.)

Summary

The proposed Delaware legislation limits charges for uninsured and self-pay patients at Medicare reimbursement rates, aiming to protect patients from excessive medical bills and reduce medical debt. It applies to hospitals, clinics, surgical centers, and physician offices.

1. Legal Implications & Challenges

  • Legality: The law is likely constitutional, as courts have upheld state regulation of healthcare pricing. Providers may challenge it as an unfair “taking,” but legal precedent supports similar measures.
  • Compliance with Federal Law: Aligns with the No Surprises Act, which requires hospitals to provide uninsured patients with a Good Faith Estimate of charges.
  • Provider & Insurer Reactions: Hospitals argue Medicare rates are below cost and may reduce services or push for higher private insurance rates to compensate. Insurers may be neutral or supportive, as the cap limits inflated hospital charges.

2. Economic Impact

  • Effect on Providers: Hospitals and clinics could see revenue declines from uninsured/self-pay patients, as many currently charge far more than Medicare rates. Small or rural providers may struggle more.
  • Impact on Patients: Improves affordability and access, encouraging uninsured individuals to seek care without fear of massive bills. However, some providers may limit non-emergency services for self-pay patients.
  • Cost-Shifting Risks: Hospitals may increase private insurance rates to compensate, potentially leading to higher premiums. There’s also a risk of billing loopholes (e.g., unbundling services or increasing pharmaceutical costs).

3. Comparison with Other States

  • California: Limits charges for uninsured low-income patients (below 350% FPL) to Medicare rates, reducing medical debt significantly.
  • Illinois: Caps hospital bills for uninsured based on cost (+35%), rather than a flat Medicare rate. Includes income-based adjustments.
  • Colorado: Caps bills for low-income patients at Medicare/Medicaid rates and prevents hospitals from billing more than a set percentage of income.
  • Delaware’s law goes further by applying to all uninsured/self-pay patients, regardless of income, making it broader but potentially more financially challenging for providers.

4. Potential Revisions & Improvements

  • Introduce Income-Based Adjustments: Consider limiting the cap to lower-income patients (e.g., <400% FPL) while allowing modestly higher rates for higher-income self-pay individuals.
  • Provider Compensation Support: Create a state fund to offset provider losses or increase Medicaid reimbursement rates to sustain hospitals treating uninsured patients.
  • Stronger Enforcement & Transparency: Require clear patient notifications, tie compliance to hospital licensing, and designate a state agency for oversight.
  • Address Cost-Shifting Risks: Monitor price increases elsewhere, prevent billing loopholes, and explore public insurance options to reduce the uninsured population.

Conclusion

Delaware’s bill would protect uninsured/self-pay patients from extreme charges, aligning with trends in other states. However, economic concerns for providers, potential service reductions, and cost-shifting risks should be addressed. Adjustments like income-based protections, provider support, and stronger enforcement could improve its effectiveness while ensuring healthcare access remains stable.

Comprehensive Review, with links and references (also check audio version above.)

Introduction

Delaware is considering draft legislation to cap health care charges for uninsured and self-pay patients at no more than the Medicare reimbursement rate for the same service (2711530038 Charges to Uninsured 3.3.2025.pdf). In practical terms, this would mean hospitals, clinics, and other providers in Delaware could only bill uninsured or out-of-pocket patients what Medicare would pay, rather than the often much higher list prices. The proposal aims to protect patients from exorbitant bills and reduce medical debt, but it raises important legal, economic, and policy questions. This report analyzes four key aspects of the draft law: (1) legal implications and potential challenges, (2) the economic impact on providers and patients, (3) comparisons with similar measures in other states, and (4) potential revisions or alternatives to improve the policy.

1. Legal Implications and Challenges

Constitutional and Legal Considerations: States have broad authority to regulate healthcare costs under their police powers, but price caps can invite legal scrutiny. One question is whether capping charges at Medicare rates could be challenged as an unconstitutional “taking” or violation of due process by depriving providers of property (income). However, courts have generally upheld healthcare price regulations when there is a rational basis and no confiscatory effect. For example, a federal appeals court rejected a hospital’s claim that being forced to accept Medicare-level rates for certain patients was a Fifth Amendment taking, noting that hospitals choose to operate in a heavily regulated industry and participate in programs like Medicare and EMTALA (which require emergency care regardless of ability to pay) (Health Law E-lert — Eleventh Circuit Rejects Constitutional Challenge to Statute Requiring Medicare Rate Compensation for Services) (Health Law E-lert — Eleventh Circuit Rejects Constitutional Challenge to Statute Requiring Medicare Rate Compensation for Services). Similarly, Delaware’s law would likely be deemed a valid exercise of state power to protect consumers, so long as the capped rate (Medicare) is not so low as to be punitive. Providers might argue Medicare rates are below cost, but price controls have survived legal challenge when set to a reasonable benchmark. The law would probably face “rational basis” review – a deferential standard under which the state only needs to show the law is reasonably related to a legitimate goal (here, preventing abusive billing and medical debt). Given the well-documented problem of uninsured patients being charged vastly higher prices than insured patients for the same care (California Law Likely Resulted In Lower Bills, Free Care For Uninsured – KFF Health News) (California Law Likely Resulted In Lower Bills, Free Care For Uninsured – KFF Health News), Delaware’s cap is likely to be viewed as serving a legitimate public interest.

Compliance with Federal Regulations (CMS Policies): The proposed cap also must mesh with federal healthcare laws and regulations. Notably, the federal No Surprises Act already provides some protection to self-pay patients by requiring providers to give uninsured or cash-paying patients a Good Faith Estimate (GFE) of expected charges before scheduled services (Fact Sheet: Hospital Price Transparency | AHA). If the final bill far exceeds the estimate, patients can initiate an independent dispute resolution process under federal rules. Delaware’s law goes further by outright limiting the charge amount, which is not preempted by federal law – states may enact stricter consumer protections. In fact, federal policy encourages limiting medical debt: the Affordable Care Act requires nonprofit hospitals to limit charges for patients eligible under the hospital’s financial assistance policy to no more than the amounts generally billed to insured patients (often calculated based on Medicare or commercial rates) (Limitation on charges – Section 501(r)(5) | Internal Revenue Service). Delaware’s approach is consistent with this trend, effectively extending a similar principle to all uninsured or self-pay individuals, not just those qualifying for charity care. There does not appear to be a direct conflict with Medicare or Medicaid rules, since the law uses Medicare’s fee schedule as a reference point but doesn’t attempt to set Medicare payments. One area to monitor is how the cap interacts with providers’ existing billing agreements – for instance, some insurance contracts prevent providers from charging insured patients more than negotiated rates. If an insured patient opts to pay out-of-pocket (designating themselves “self-pay” under the law) to take advantage of the cap, insurers might object. However, patients generally have the right not to use their insurance, and the law explicitly covers individuals who “do not seek to have a claim submitted” to insurance (2711530038 Charges to Uninsured 3.3.2025.pdf). Providers will need to ensure their billing practices comply with the new cap while still following federal requirements like providing GFEs and honoring emergency care obligations (EMTALA). Overall, as long as Delaware’s law is framed as a consumer financial protection and does not regulate health plans (which could trigger ERISA preemption issues), it should co-exist with federal policies.

Opposition from Providers and Insurers: It is anticipated that hospitals and other healthcare providers may push back strongly against this legislation. The Delaware Healthcare Association and hospital systems are likely to argue that Medicare rates are often below the actual cost of providing care, and that forcing those rates on all self-pay patients could threaten providers’ financial stability (). Hospitals frequently note that Medicare reimburses only a fraction of what private insurance pays – for example, U.S. hospitals on average receive about 80–82% of their costs for Medicare patients (). From the providers’ perspective, a law capping charges to uninsured people at 100% of Medicare (effectively the lowest rate in the payer mix) means every uninsured or cash-paying patient would be a financial loss or barely break-even. Physician groups might also object, especially specialists or surgical centers that rely on higher fee-for-service payments – they could claim the cap will dissuade them from treating uninsured patients except in emergencies. These concerns were evident in Delaware’s recent debate over a broader hospital cost containment measure: hospitals fiercely resisted an earlier proposal to temporarily cap all hospital prices at 250% of Medicare rates, warning of layoffs and service cuts, and lawmakers removed that cap to reach a compromise (Delaware Senate passes hospital oversight board – WHYY) (Delaware Senate passes hospital oversight board – WHYY). We can expect similar lobbying against the current bill. Insurers, interestingly, may have a mixed view. On one hand, insurance companies benefit if hospitals have less incentive to charge extreme rates to uninsured patients (since those inflated “chargemaster” rates often serve as a starting point in negotiations). On the other hand, if hospitals lose revenue from uninsured/self-pay patients, they might try to shift costs to privately insured patients by negotiating higher rates, which could drive premiums up. Insurers could oppose the bill if they believe it will indirectly increase what their plans pay, or they might stay neutral/quietly supportive because it targets hospital billing practices rather than insurers. In any case, significant political and legal challenges are likely. Providers might explore a court challenge (as noted above), but even if the law is ultimately upheld, implementation could be contentious. Enforcement would likely fall to the state health department or attorney general – ensuring compliance may require new regulations, auditing of bills, and penalties for violations (2711530038 Charges to Uninsured 3.3.2025.pdf).

2. Economic Impact

Effect on Provider Revenues and Sustainability: Capping charges at the Medicare rate for uninsured and self-pay patients will almost certainly reduce revenue for Delaware hospitals and clinics from this patient segment. Currently, many healthcare facilities set very high list prices (chargemaster rates) and, in theory, bill uninsured patients those amounts – though in practice they often offer discounts or end up writing off much of that debt. Under the new law, the maximum charge would be drastically lower than typical chargemaster prices. For context, private insurance payments average about 199% of Medicare rates for hospital services nationally (How Much More Than Medicare Do Private Insurers Pay? A Review …), and chargemaster prices can be several times higher still (California Law Likely Resulted In Lower Bills, Free Care For Uninsured – KFF Health News). So an uninsured patient’s bill might drop from, say, $10,000 (chargemaster) to perhaps $3,000 (Medicare allowed rate) for a given procedure. For patients who can afford to pay, providers will collect much less than they do now. Hospitals argue that Medicare rates by themselves are not sufficient to cover all costs – according to industry data, “Medicare and Medicaid do not cover hospitals’ costs of care,” leading to chronic underpayment that providers must offset elsewhere (). If uninsured patients are all charged at Medicare levels, hospitals with slim margins might see a financial hit. For-profit or smaller independent practices could be especially concerned if they rely on a few high-paying self-pay cases (for example, an elective surgery paid in cash) – those will now reimburse at a lower fixed rate. However, it’s important to note that uninsured/self-pay patients make up a relatively small percentage of total hospital volume in Delaware (Delaware’s uninsured rate is only about 6% ([PDF] Delaware)). Many uninsured patients ultimately cannot pay large bills at all, resulting in charity care or bad debt. In those cases, the cap may not change the collected revenue (which was zero or minimal), but it will reduce the “sticker price” of care. This could marginally improve collection rates if patients find the bills more manageable – e.g. a patient might be able to pay a $500 Medicare-rate bill but would have defaulted on a $2,000 bill. Overall, the immediate revenue reduction for providers is real but likely not catastrophic, given that much of the previous charges to uninsured were uncollectible anyway. The state might see providers respond by tightening cost controls or seeking efficiency to live within Medicare-level payments for this group. In the long run, if uncompensated care losses mount, some facilities may lobby for increased state subsidies or higher payments from elsewhere to remain financially sustainable.

Impact on Access to Care for Uninsured/Self-Pay Patients: From the patient’s perspective, this legislation could greatly improve the affordability of care and reduce the fear of bankruptcy from medical bills. Uninsured individuals often delay or avoid medical treatment because they know they’ll be charged exorbitant full rates. By limiting charges to Medicare rates – roughly the level paid by the federal government – the law gives uninsured patients parity (or better) with insured patients in terms of prices. In California, which implemented a similar cap for low-income uninsured, researchers found the law resulted in significantly lower bills for patients and expanded the availability of free or discounted care (California Law Likely Resulted In Lower Bills, Free Care For Uninsured – KFF Health News) (California Law Likely Resulted In Lower Bills, Free Care For Uninsured – KFF Health News). We could expect that uninsured Delawareans, especially those of modest income who don’t qualify for Medicaid, would be more willing to seek care knowing the charges will be constrained. It might also encourage “self-pay” utilization for people who have high-deductible insurance but find it cheaper to pay cash at the Medicare rate – for example, someone with a high deductible might choose not to file insurance and instead pay the capped amount out-of-pocket if it’s comparable. This could marginally increase demand from self-pay patients. The flip side is whether providers, anticipating lower payments, will become less willing to treat uninsured patients (except in emergencies where they have no choice). Doctors’ offices and elective service providers could start requiring upfront payment of the Medicare-rate fee as a condition of service for uninsured patients, or even refuse new uninsured patients, to avoid any risk of non-payment. Hospitals under EMTALA must provide emergency stabilization regardless, so emergency care access won’t change – but non-emergency services could be impacted if providers are more selective. Overall, the access to essential care should improve for uninsured individuals because the cost barrier is reduced, but there is a risk that some services might become harder to obtain unless payment is assured. Policymakers might monitor if wait times or refusal rates for uninsured patients change after implementation. Importantly, the law does not directly expand insurance coverage or subsidies; it just makes being uninsured slightly less financially perilous. Some uninsured patients will still struggle to pay even the Medicare rate (for expensive procedures, Medicare rates can still be thousands of dollars). Those patients would continue to rely on hospital financial assistance or charity care programs. In summary, the charge cap is likely to alleviate some financial hardship and encourage timely care for the uninsured, but it is not a panacea for all access issues.

Cost-Shifting and Other Unintended Financial Consequences: One common concern with healthcare price caps is cost-shifting – if providers lose revenue in one area, they may try to make it up elsewhere. Hospitals already engage in cost-shifting: private insurance payments are often set higher to compensate for shortfalls from Medicare, Medicaid, and the uninsured (). With uninsured patient charges capped, hospitals might attempt to negotiate even higher rates from commercial insurers, potentially pushing insurance premiums upward. However, insurers are generally aware of hospitals’ financial mix and might resist unjustified increases, especially since Delaware is also pursuing cost growth benchmarks and oversight (e.g. the creation of a Hospital Cost Review Board to curb overall spending growth) (Delaware Senate passes hospital oversight board – WHYY). Another possible unintended effect is on billing practices: providers might redefine certain charges to escape the cap. The Delaware bill notably exempts pharmaceutical charges (prescription or over-the-counter drugs) from the cap (2711530038 Charges to Uninsured 3.3.2025.pdf). This could create a loophole where, for instance, a hospital might raise the price of medications or separate supply charges provided during a service to compensate for the capped procedure fee. Regulators will need to guard against creative unbundling or new facility fees that circumvent the spirit of the law. Additionally, if the law as drafted has no income threshold, it applies even to well-off individuals who choose to self-pay. In theory, a wealthy patient without insurance or one who declines to use it would get the Medicare price cap, despite an ability to pay more. This could be seen as an unintended benefit for the affluent uninsured. It might also slightly disincentivize purchasing insurance for some people: if healthy individuals know they can get hospital services at the low Medicare rate, they might be less motivated to carry coverage (though they would still face the risk of large volume of services or catastrophic costs that Medicare rates wouldn’t magically fund, so this effect should be minor). Another economic ripple effect involves provider behavior at the margins: if certain high-cost services become unprofitable at Medicare rates, hospitals might try to reduce or eliminate those services (for example, reducing elective surgeries offered to uninsured patients, or not investing in certain technologies if they expect no payment above Medicare for any self-pay use). However, given that insured patients (who pay more) still make up the majority, hospitals should still have incentive to maintain service lines. Overall, some cost-shifting to insured payers is possible, and the state should be vigilant about monitoring healthcare prices broadly to ensure the cap doesn’t inadvertently raise costs elsewhere. Policymakers may also want to evaluate the law’s impact on the financial health of safety-net providers after a year or two and adjust support (through grants or Medicaid rate adjustments) if needed to keep them whole.

3. Comparison with Other States

Several other states have enacted laws or regulations to protect uninsured patients from excessive hospital charges, providing useful comparisons for Delaware. California, Illinois, and Colorado offer three different models of tackling this issue, and their experiences shed light on potential impacts and best practices.

  • California’s Hospital Fair Pricing Act (2006): California was one of the first states to cap what hospitals can charge certain uninsured patients. Its law requires hospitals to offer financial assistance and limits charges for uninsured patients with incomes below 350% of the federal poverty level (and for patients with high medical debt relative to income) to no more than what Medicare would pay for the same service (California Law Likely Resulted In Lower Bills, Free Care For Uninsured – KFF Health News). In effect, California ensured that lower-income uninsured individuals are billed at Medicare rates or less, very similar to Delaware’s proposal (though Delaware’s draft does not include an income cap). The California law led to substantial reductions in bills and debt for patients. A study published in Health Affairs found that from 2004 (before the law) to 2012, the average price actually paid by uninsured patients in California dropped from 6% above Medicare rates to 68% belowMedicare rates (California’s Hospital Fair Pricing Act reduced the prices actually paid …). This dramatic change indicates many hospitals not only stopped charging more than Medicare, but in practice often forgave or discounted bills well under Medicare levels for those who qualified. By 2013, 81% of California hospitals reported complying with the cap for patients under 350% FPL (California Law Likely Resulted In Lower Bills, Free Care For Uninsured – KFF Health News), and a large portion (over 60%) of the poorest uninsured were receiving care for free as charity care. Another outcome is that some hospitals extended the policy beyond what the law strictly required – about one-third of hospitals also charged Medicare-or-lower rates to uninsured patients above the income threshold, voluntarily (California Law Protects Uninsured Patients from High Hospital …). The California approach was seen as effective in curbing the most egregious bills and did not lead to hospital closures or major service reductions; however, it was limited to a defined group (low-to-moderate income uninsured). Enforcement in California has recently been strengthened by the state’s Department of Health Care Access and Information, which now reviews hospital compliance as part of a fair billing program (Hospital Fair Billing Program Laws & Regulations – HCAI – CA.gov). One critique is that California’s law didn’t help uninsured patients above 350% FPL who still faced high charges – though as noted, many hospitals gave voluntary discounts in those cases (California Law Protects Uninsured Patients from High Hospital …). Delaware’s draft, by covering all uninsured/self-pay regardless of income, would go even further than California’s in scope.
  • Illinois’ Hospital Uninsured Patient Discount Act (2008): Illinois took a slightly different tact by tying allowed charges to hospital costs. Under Illinois law, uninsured patients with incomes up to 600% FPL (for urban hospitals; 300% FPL for rural hospitals) are eligible for a cap on hospital bills set at 135% of the hospital’s cost of services(essentially cost + 35%) (Learn More About Your Rights as a Patient – Illinois Hospital Report Card) (Learn More About Your Rights as a Patient – Illinois Hospital Report Card). This generally ends up limiting charges to an amount often in the ballpark of or somewhat above Medicare rates (since Medicare payments are roughly intended to cover costs with a small margin, 135% of cost could be comparable to roughly 150-200% of Medicare in some cases). The Illinois law also put an annual limit on what an uninsured patient can be asked to pay, at 25% of their household income in a year (Learn More About Your Rights as a Patient – Illinois Hospital Report Card). Illinois notably excludes physician charges from its law – it applies to hospital facility bills only (Learn More About Your Rights as a Patient – Illinois Hospital Report Card), meaning an uninsured patient could still get a separate (potentially high) bill from doctors or surgeons, an issue Delaware’s law avoids by covering “any health care provider or facility.” The implementation of Illinois’ discount program requires patients to apply and show proof of income/assets, and hospitals must notify patients of the availability of financial assistance (Learn More About Your Rights as a Patient – Illinois Hospital Report Card) (Learn More About Your Rights as a Patient – Illinois Hospital Report Card). The impact in Illinois has been that most uninsured patients who qualify get substantial discounts off chargemaster rates, although there have been reports that not all eligible patients are aware of or utilize the program (some advocacy groups noted the law helped many, but those just above the income cutoff or who didn’t navigate the application still faced large bills). Illinois’ model, by basing on cost, attempts to ensure hospitals receive at least their cost plus a modest margin from uninsured patients who can pay something. Delaware’s cap is simpler (just peg to Medicare) but does not incorporate an ability-to-pay test or any minimum payment, which could mean even higher-income uninsured benefit without a need-based screen. Illinois and California together suggest that means-testing the protection is a common approach – Delaware is charting new territory by potentially giving a blanket protection to all uninsured/self-pay patients.
  • Colorado’s Hospital Discounted Care Law (2021): A more recent example comes from Colorado, which passed a comprehensive law to protect low-income patients. Colorado’s law requires hospitals to limit charges for patients at or below 250% of FPL to whichever is lower of the Medicare or Medicaid rate for the service (How States Can Protect Patients from Harmful Hospital Pricing Practices). (Medicaid rates are often even lower than Medicare, so this essentially guarantees the cheapest rate if the patient is low-income.) Additionally, Colorado capped how much a low-income patient can be billed in a given time period – no more than 4% of the person’s monthly income by a hospital (or 2% by a clinic) (How States Can Protect Patients from Harmful Hospital Pricing Practices) (How States Can Protect Patients from Harmful Hospital Pricing Practices). This law covers patients regardless of insurance status, meaning it can apply to insured individuals who have high cost-sharing as well. Hospitals in Colorado must screen patients for eligibility and cannot collect more than these limits; the state also banned medical debt from being reported to credit agencies in conjunction with this effort (How States Can Protect Patients from Harmful Hospital Pricing Practices) (How States Can Protect Patients from Harmful Hospital Pricing Practices). Early indications are that Colorado’s approach is providing significant relief to patients in the low-income bracket and preventing new medical debt, though it’s too soon for comprehensive data. The trade-off is that Colorado did not extend the protection to uninsured patients above 250% FPL – those folks might earn “too much” to qualify but still get hit with big bills. Colorado’s framework is one Delaware might consider if it wanted to incorporate income-based tiers or caps on patient responsibility. It also shows an enforcement mechanism by tying into hospitals’ licensing and creating oversight for compliance.

⠀Other States and Approaches: Beyond these examples, a few other states have addressed uninsured billing in narrower ways. New York and New Jersey have long-standing charity care funds and require hospitals to offer sliding scale discounts to uninsured patients up to certain income levels, though they may not set a specific rate cap statewide. Maryland takes a unique all-payer hospital rate setting approach – an independent commission sets hospital prices for all payers (including self-pay patients) so that everyone effectively pays the same rate. In Maryland, an uninsured patient is charged the regulated rate, which is based on an average cost structure (Maryland’s system has kept hospital cost growth low, but it’s a very regulated model). Delaware’s proposal is more targeted and less radical than an all-payer system, but it reflects a growing willingness of states to intervene in hospital pricing to protect consumers. Importantly, none of these states experienced constitutional invalidation of their laws. Instead, the challenges are practical: ensuring hospitals implement the policies, educating patients about their rights, and fine-tuning the details (like income thresholds, which services are covered, etc.). In California and Illinois, state officials had to step up enforcement and provide guidance to hospitals on compliance (Learn More About Your Rights as a Patient – Illinois Hospital Report Card). Delaware can learn from those enforcement mechanisms by, for example, empowering the Department of Health and Social Services to issue regulations and handle complaints or giving the Attorney General authority to penalize violations.

In summary, California’s cap at Medicare rates for certain uninsured patients successfully reduced what those patients pay (California Law Likely Resulted In Lower Bills, Free Care For Uninsured – KFF Health News) (California Law Likely Resulted In Lower Bills, Free Care For Uninsured – KFF Health News), and Illinois’ and Colorado’s laws added features like income gradations and percentage-of-income limits to balance patient protection with hospital sustainability (Learn More About Your Rights as a Patient – Illinois Hospital Report Card) (How States Can Protect Patients from Harmful Hospital Pricing Practices). Delaware is somewhat more sweeping in covering all uninsured/self-pay individuals with a straight Medicare rate cap. The experiences elsewhere suggest this will indeed shield patients from the worst price gouging, but careful implementation and possibly some tailoring (such as income-based adjustments or exclusions) could be needed to avoid negative side effects.

4. Potential Revisions and Improvements

As Delaware’s draft legislation moves through the process, lawmakers may consider adjustments to strengthen the law’s effectiveness and fairness while avoiding unintended consequences. Below are several potential revisions or complementary policies:

  • Introduce Income-based Tiers or Exemptions: One option is to incorporate a means-tested element similar to other states’ laws. For instance, the cap could apply fully to individuals up to a certain income level (e.g. 400% of the federal poverty line), with perhaps a slightly higher cap (such as 150% of Medicare rates) for those above that income. This would ensure that the primary benefit targets those most in need, while allowing providers a bit more leeway in charging higher-income uninsured patients who might be more able to pay. It could address the scenario of a very wealthy uninsured person benefiting from a low rate. If lawmakers want to keep it universal, another approach is to exclude elective luxury procedures or cosmetic services from the cap (so that the cap focuses on necessary medical care), though as written the law already only covers “health care” as defined in the code (2711530038 Charges to Uninsured 3.3.2025.pdf) (2711530038 Charges to Uninsured 3.3.2025.pdf). Delaware might also consider excluding certain small or rural providers from the cap if evidence shows it would jeopardize their financial viability – for example, carve out critical access hospitals or sole community providers who operate on thin margins. Any exemptions should be narrow, however, to prevent gutting the consumer protection intent.
  • Ensure Fair Compensation for Providers: To mitigate providers’ concerns about Medicare rates being too low, the state could pair the rate cap with measures to help providers. One idea is establishing a state uncompensated care fund or subsidy: if a hospital or clinic can demonstrate significant loss from treating uninsured patients at the capped rate, they could apply for partial reimbursement from a state fund (financed perhaps by a small surcharge on insurers or a budget allocation). This is somewhat analogous to how Medicaid Disproportionate Share Hospital (DSH) payments help hospitals with lots of low-income patients. While Delaware’s uninsured rate is low, a funding backstop could alleviate pressure on certain safety-net hospitals. Another approach is to allow providers to bill for supplemental costs in specific situations – for example, very complex procedures could be exempt or allowed a higher cap if justified. However, such complexity could undermine the simplicity of the law. It may be cleaner to stick with the Medicare benchmark but adjust other policies: Delaware might look at increasing Medicaid reimbursement rates or expanding Medicaid eligibility, so fewer people fall into the uninsured category to begin with (thus providers get Medicaid payment rather than Medicare-level self-pay). Notably, Delaware has expanded Medicaid under the ACA, but exploring a basic health program or state subsidies for those just above Medicaid could reduce the uninsured population further. Ultimately, maintaining provider participation is crucial – the law could include a clause requiring the Department of Health to monitor access and financial impact on providers, and report back after a year with any recommended tweaks (this kind of sunset review can ensure the cap isn’t inadvertently harming the system).
  • Alignment with Federal Law and Clarity in Implementation: Delaware should clarify certain definitions and procedures in the bill to avoid confusion. For example, it should specify what happens if a service does not have a Medicare rate (some pediatric services or new procedures might not be covered by Medicare). Empowering the Department of Health and Social Services to set an alternative benchmark in such cases via regulation (2711530038 Charges to Uninsured 3.3.2025.pdf) would be wise. The law could also explicitly reference the federal No Surprises Act’s requirements – for instance, mandating that the required Good Faith Estimate given to uninsured patients reflect the capped rate. This would ensure providers don’t quote a high charge on the GFE only to later reduce it; patients should know up front what the maximum possible charge is. Another refinement is to coordinate enforcement: designate an agency (perhaps the Consumer Protection unit of the AG’s office) to handle complaints from patients who were overcharged above the Medicare rate. Penalties for violations should be outlined (fines, restitution, etc.), creating an incentive for provider compliance. Additionally, requiring providers to notify patientsof their rights under this law (similar to Illinois’ notice requirement (Learn More About Your Rights as a Patient – Illinois Hospital Report Card)) will be important. Patients should see on their billing statements or admission forms a notice that as an uninsured/self-pay individual, they cannot be charged more than Medicare rates for the care, and whom to contact if they are billed higher. Such transparency will help the law achieve its goal by empowering consumers.
  • Alternative Strategies (Beyond Price Caps): Lastly, Delaware might consider complementary policies that address the root causes of medical debt and lack of insurance. A price cap is a downstream fix – upstream, the state could work on getting more people insured or reducing the actual cost of care. Options include expanding coverage (for example, enhancing state subsidies on the ACA marketplace to make insurance more affordable, or exploring a public option or Medicaid buy-in for those who remain uninsured). If more people have coverage, the issue of being charged full price diminishes. The state could also strengthen hospital financial assistance requirements, such as requiring all hospitals (including for-profit entities) to provide free or reduced-cost care up to certain income levels – effectively formalizing charity care obligations. In fact, Delaware’s Medical Debt Protection Act already prohibits certain aggressive collection actions and requires hospitals to offer payment plans (Delaware Code Online) (Delaware Code Online); building on that, the new law could dovetail by ensuring that any payment plans for uninsured patients are based on the capped amount and are reasonable relative to income. Another idea is promoting price transparency and competitive self-pay rates: encourage providers to offer cash-pay discounts openly (many providers do give uninsured patients a discount, but it varies). With the cap in place, providers might advertise that “our cash price is the Medicare rate,” which could spur a bit of competition or at least goodwill in the community. Over time, if the healthcare cost benchmark initiative (the Hospital Cost Review Board) succeeds in containing overall cost growth (Delaware Senate passes hospital oversight board – WHYY), the gap between Medicare-based charges and actual cost might narrow, easing the burden on providers under this uninsured cap. Essentially, the cap on charges is one tool in a larger toolbox – Delaware can improve it by tying it into broader efforts on healthcare affordability and access.

⠀Conclusion: The draft Delaware legislation represents a bold step to protect uninsured and self-paying patients from exorbitant medical bills. Legally, the state appears on solid footing to regulate charges, though pushback from the healthcare industry is likely. Economically, while providers may bear some revenue loss and could attempt to shift costs, the benefits to vulnerable patients in reduced debt and improved access are compelling. Other states’ experiences (California’s cap, Illinois’ discounts, Colorado’s limits) demonstrate that such policies can work and significantly ease the burden on patients (California Law Likely Resulted In Lower Bills, Free Care For Uninsured – KFF Health News) (California’s Hospital Fair Pricing Act reduced the prices actually paid …), especially when coupled with enforcement and sensible exceptions. Delaware’s lawmakers can refine the bill with the above considerations in mind – balancing patient protections with provider sustainability – to ensure the policy achieves its aim of fair billing without unintended fallout. In doing so, Delaware could become a leader in health care affordability, joining a vanguard of states addressing the inequity of charging the uninsured the highest prices for healthcare. The ongoing challenge will be to monitor the law’s impacts and adjust as necessary, all while continuing efforts to get more people insured and to rein in the underlying growth of health care costs for everyone.

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Published by drrjv

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