Health Savings Account Godfather Resurfaces

Posted March 4, 2005 at 6:43pm

J. Patrick Rooney, a millionaire insurance executive, has spent years bankrolling the idea of health savings accounts in Washington. K.B. Forbes, a grass-roots political activist in Los Angeles, wants to help uninsured Hispanics get affordable health care and hold hospitals to account for what he calls price-gouging practices.

Now, in a development that is roiling the hospital industry, Rooney and Forbes appear to be working in tandem to pressure hospitals and federal lawmakers to create a bigger market for HSAs.

Although Forbes denies a connection between the two men’s efforts, the issue that both are focusing on — namely, how hospitals charge and collect from patients — has attracted interest from the House’s Energy and Commerce subcommittee on oversight and investigations. And Forbes is pushing for additional Congressional hearings.

Forbes, a former employee of Rooney’s insurance company, has brought many lawsuits alleging such price gouging by hospitals. Rooney’s company, meanwhile, is embroiled in disputes with many of the same hospitals.

Depending on how the battle plays out, HSAs — a cornerstone of President Bush’s health care reform plans — could get a leg up in the marketplace.

Rooney, who, with his family, has contributed about $1 million to Republican candidates since 1990, is something akin to a godfather of HSAs, a controversial untested approach to health insurance that Bush and some conservatives hope will reduce the ranks of the 45 million uninsured Americans while stemming soaring health care costs.

By pairing tax-free savings accounts with high-deductible insurance policies, the plans are meant to put more health care decisions in the hands of patients. If patients are allowed to keep what they don’t spend on health care, the thinking goes, they’ll have an incentive to make their expenditures carefully. This would add some market-enforced restraint to skyrocketing health care costs.

Rooney has been promoting the plans since the early 1990s, but he won his first major victory in 1996, when a limited number of accounts were approved on a trial basis. In 2003, Congress made HSAs available to anyone by approving a $6.4 billion tax break for the accounts in the Medicare prescription drug bill.

This has meant good news for Rooney on the ideas front. But it is tempered by a complication for the insurance business he owns, Medical Savings Insurance.

Since Rooney has significantly fewer policy-holders than the insurance companies he competes against, he can’t hope to have their negotiating leverage with hospitals.

Rather than grapple with the costly “list prices” charged by hospitals, Rooney has instead decided to set his own prices, offering hospitals a slight increase over rates charged to Medicare patients, hospital officials said. Many hospitals have refused to endorse checks from Rooney, saying they only cover a fraction of what he owes. Some have sued him for the difference.

Enter K.B. Forbes. A former employee of Rooney’s at MSI and a veteran of the presidential campaigns of Pat Buchanan and Steve Forbes (who is no relation), Forbes now heads Consejo de Latinos Unidos, a nonprofit organization based in East Los Angeles that works on immigration and police brutality issues but most notably on hospital pricing.

In 2003, while Tenet Healthcare Corp. was in talks with MSI over unpaid bills, Consejo attacked the health system for hard-line collection practices, filing 10 suits against it. According to BusinessWeek, Tenet forgave MSI’s debt and Consejo, in return, dropped the suits.

In an interview with Roll Call, Forbes vigorously denied the account, and he and Rooney have consistently denied any formal coordination of their efforts.

But earlier this month, Forbes announced the launch of a Web site, https://www.hospitalvictims.com, that encourages visitors to compare the cost of care for uninsured patients at various Florida hospitals with those at Johns Hopkins Hospital in Baltimore, and then contact Consejo. While neither Rooney nor Medical Savings Insurance are mentioned on the site as sponsors, the site’s domain name was registered by Rooney. And Rooney also registered several sites, linked from the main site, that target specific Florida hospitals for their pricing practices.

Rooney could not be reached for comment. In the interview with Roll Call, Forbes called the registration a programming mistake.

“It was a programmer that no longer works with us that put that in there,” he said. “All I can say is he put in the wrong registrant. We paid for everything and we put everything up.”

He said his group gets “technical help from a number of people. You can jump to whatever conclusion you want from that.”

Forbes has acknowledged that Rooney made a pledge of $100,000 in seed money to Consejo, but he adds that he never spent it. He said the group takes no money from insurance companies, organized labor or political parties and is funded by a handful of individuals and foundations. Forbes cites security concerns for his donors in declining to name them.

According to Consejo’s most recent tax filing with the Internal Revenue Service, which reflects activity through 2003, the group has spent all but $65,000 of the nearly $400,000 it has raised. It has not registered any lobbyists, but Forbes said he gets “expensive intelligence help” in Washington, again declining to name names.

The Web site opens a new front in Consejo’s war on hospital pricing, at a time when its adversaries in the hospital industry claim to be making progress on setting standards for their collection practices.

Last summer, a spate of lawsuits filed against hospitals for their charging practices caught the attention of members of the Energy and Commerce subcommittee on oversight and investigations, and the panel held hearings.

The hearings convinced executives of nonprofit hospitals they needed to change their policies on pricing, said Larry Gage, president of the National Association of Public Hospitals and Health Systems.

“Many [nonprofit hospitals] were simply asleep at the switch,” he said. “They were sending out huge bills to patients who couldn’t pay, then following up with very aggressive collection practices. The combination gave hospitals a black eye.”

Gage said that in recent months, the American Hospital Association and state affiliates have been recruiting hospitals to sign a new code of conduct that reins in tougher billing practices.

Forbes called hospital officials who claimed progress on this front “lying sacks of marbles.” On Thursday, he announced that Consejo was filing a “group suit” against the Florida Hospital, in Orlando, Fla., for “price gouging the uninsured.”

The hospital is one of about 25 listed on Consejo’s hospital pricing Web site and is among several on the site engaged in a dispute with Rooney’s MSI over unpaid bills, according to Florida hospital industry officials.

“We just find the coincidences a little too interesting,” said Rich Morrison, a vice president for government relations at Florida Hospital. “To us, it looks like this stuff is very much linked together.”

The hospital has sued MSI for about $700,000 it claims it is owed, Morrison said. The judge in that case has ordered the two sides to try to strike a deal, but Morrison said the hospital “will not acquiesce to a company being able to make up what they want to pay.”

Forbes said he will keep oversight and investigations subcommittee staffers looped in on developments in the Florida Hospital suit in the hopes new hearings will be called.

“We’re praying they’ll follow up,” he said. “We have a friendly relationship with the committee, and we think they will.”

A spokesman for the subcommittee did not return a call for comment, and several hospital officials in Washington said they are skeptical about new hearings.

Meanwhile, Forbes said he is not bothered by suggestions of a link to Rooney.

“The hospitals can talk about all the conspiracies in the world,” he said. “Let’s say I was married to an insurance executive. What difference would it make? They’re still price gouging.”