Dive Brief:
Hospitals’ charity care policies can differ wildly even within the same city, creating discrepancies in care coverage for those with similar financial standings and medical conditions, according to a new report from the Lown Institute.
In one of the more extreme examples, the report found a family of three making $67,000 in Waco, Texas, could be eligible for free care at Ascension Providence, while the same family would have to make $6,000 or less to access free care at Goodall Witcher Hospital.
The differences stem from a lack of federal policy dictating charity care requirements, according to the report. Creating uniform standards for financial assistance, requiring hospitals to screen patients for assistance and regulating hospitals’ use of program restrictions could reduce differences between policies, the Lown Institute said.
Dive Insight:
Most hospitals are required to provide some sort of financial assistance, or charity care, for patients who cannot afford to pay for services.
However, nonprofits and lawmakers have for years criticized hospitals for failing to fully live up to that obligation, despite receiving tax breaks in exchange for offering community care.
Part of the problem is a lack of consensus on what hospitals must offer, according to the report from the Lown Institute, which compares the policies of 2,500 hospitals nationwide.
The Lown Institute argues that federal lawmakers have failed to specify to whom hospitals must offer charity care and under what conditions. In that vacuum, hospitals have crafted their own policies.
The most common approach is to offer free care for those making up to 200% of the federal poverty level, or about $50,900 for a family of three. Fifty-two percent of hospitals included in the analysis offer free care for patients making 200% to 249% of the federal guidelines.
However, some hospitals require patients make far less. Free care thresholds varied from below 100% of the federal poverty level, or about $25,000 for a family of three, up to 600%, or $150,000.
In many cases, the discrepancies are within the same neighborhood.
In Boston for example, Brigham and Women’s Hospital requires patients make 150%, or about $40,000 for a family of three, while down the street Beth Israel Deaconess Medical Center only requires patients to make 400%. The report documented similar swings in New York, Los Angeles, Dallas, Pittsburgh and San Francisco.
In other cases, facilities set their own charity care restrictions based on residency or insurance status, or by type of service. Many hospitals opted not to cover free birth control, infertility treatment, bariatric procedures or vaccines, for example.
The Lown Institute also found 42% of hospitals limited financial assistance to those living in the state or area, and 14% limited financial assistance to uninsured patients.
“This isn’t a case of red states versus blue states, or rural areas versus cities,” said Vikas Saini, president of the Lown Institute, in a statement about the report. “We’re seeing massive disparities in charity care policies between hospitals that are practically around the corner from each other. Unfortunately, low- and middle-income patients are the ones who deal with the consequences.”
Lown highlighted several recent state measures as possible federal models for charity care requirements.
Washington, for example, requires most hospitals to provide free care for patients who make under 200% the federal poverty line and discounted care for those who earn below 300%. Meanwhile, hospitals in Maryland use a common financial assistance application to help standardize and streamline the application process.
Absent such updates, patients will suffer the fallout of unpredictability, especially because some providers can be litigious when collecting claims, according to the report.
Most states allow nonprofit hospitals to engage in “extraordinary collections actions” to pursue outstanding medical debt, so long as they have first checked to ensure the patient was eligible for financial assistance — a significant caveat.
In recent years, major nonprofit health systems have come under fire for not adequately screening patients for financial assistance prior to aggressively pursuing collections. Atrium Health and Mayo Clinic agreed not to sue patients with outstanding medical debt and Northwell Health revamped its litigation policies to ensure proper screening protocols, after state investigations alleged the health systems intentionally obfuscated access to charity care for those who ought to have qualified.
Still, nearly 60% of hospitals analyzed still allow at least one extraordinary collection action, including selling debt, reporting it to consumer credit reporting agencies, denying non-emergency care to patients with outstanding debt and suing to collect claims.
Less than 15% of hospitals explicitly say they won’t take such actions.
Some states are attempting to crack down on hospitals’ aggressive collection actions. New York, for example, prohibits reporting medical debt to credit agencies and bars hospitals from taking legal action to collect debt when patients make less than 400% the federal poverty line.
Saini would like to see a broader push for reform.
“Right now, the burden is on patients to navigate a broken system,” said Saini. “That has to change.”
