Hospitals challenged by patients who can’t pay

Charity care should be saved for the truly needy

Case managers, along with other hospital staff, are challenged today by an increasing number of patients who can’t pay their bill.

As health insurance costs escalate and employers provide a lower level of coverage for employees or cut out insurance benefits altogether, the number of workers with no health insurance is on the rise. Meanwhile, states are struggling with dwindling funds for Medicaid and are slashing benefits, and an unprecedented number of undocumented workers are seeking care in hospital emergency departments (ED).

The situation has been brought to a head by class-action lawsuits filed against hospitals and health systems alleging that they are overcharging the uninsured. Some of the suits have been settled, with hospitals agreeing to provide discounted or free care to patients without health insurance whose incomes are up to 400% of the federal poverty level.

"In the last few years, we’ve seen the uninsured population keep inching up. Hospitals have to have some way to deal with it," says Rick Wade, senior vice president for communication at the American Hospital Association.

Patients who can’t pay their hospital bills generally fall into four categories: the uninsured, the underinsured, indigent patients, and undocumented patients.

The problem of dealing with patients who can’t pay is universal, but hospitals in smaller cities have the advantage of knowing more about who is in their community and what their needs are than their big-city counterparts where there are ever-changing diverse populations, Wade says.

Hospital case managers need to understand the financial impact that patients who cannot pay have on the hospital and proactively help identify patients who may not be able to pay their bills, says Mark Cameron, MBA, CHFP, BA, MS, health care consulting manager for Pershing Yoakley & Associates in Knoxville, TN, a health care consulting firm with offices throughout the South.

Hospitals should take steps to determine a patient’s ability to pay early in his or her stay. The patient should be treated first, but once the patient is stable or a relative is available, determining the ability to pay needs to be the next step. If patients can’t pay the entire bill, discuss all options available for financial assistance and set them up on a payment plan if they don’t qualify for assistance or charity care, Cameron says.

St.Vincent’s Hospital in New York City has a nurse case manager on every unit who reviews the chart early in the stay, says Kathleen Powers, LCSW, discharge planning specialist. If a patient has no insurance or may be undocumented, the case manager sends a referral to social work for an assessment of the patients social and financial situation to see if he or she might qualify for an entitlement program or will be a private-pay patient.

If the patient may be eligible for Medicaid, the business office is notified and initiates a Medicaid application within 48 hours.

"We have written referral forms to the business office indicating the patient’s name, location, family members’ names, and information that they need Medicaid for home care or nursing home placement," she says.

Once a week, Powers has her clerical staff compile a list of everyone referred for a Medicaid application and meets with the business office to ensure the applications have been completed.

"[Those are] checks and balances to ensure that the patient account representatives are talking with social work and vice versa," she says.

Two senior citizen volunteers work out of an office in a hospital clinic and help patients explore their eligibility for entitlement programs and guide them in how to get services.

The volunteers have been trained to be familiar with entitlement programs and benefits by a local agency and have a manual with details about all the programs that are available.

The working poor remain a major problem because they can’t qualify for Medicaid but they can’t afford to pay their medical bills, Powers says. "We look at their situation on a case-by-case basis and try to see if their family can be of any assistance. If not, we try to hook them up with a clinic and get them on Medicaid if at all possible. It’s often touch-and-go," she says.

Every hospital should develop policies for how to identify, evaluate, and deal with all patients who may not have the ability to pay, Cameron adds. Don’t confuse care for the uninsured with charity care, he urges. Save your charitable resources for the truly indigent, and use your ingenuity to come up with ways to collect at least partial payment from the uninsured if they don’t qualify for some level of charity care, he says.

For instance, some hospitals give their uninsured patients a flat discount, commensurate with the discount they give to certain payers.

"Some of our clients are giving a discount to people who clearly have the ability to pay but who have no insurance. In this way, the organization consistently extends a discount to all uninsured patients to comply with established internal policies and prevent discrimination," Cameron says.

A hospital’s charity care policy may determine patients who qualify for charity care by where they fall into federal poverty-level discounts. For instance, if their income is 200% of the poverty guideline, they may get free care. Those whose income is 300% or 400% of the guideline could get discounts based on a sliding scale.

Bringing up finances

When an uninsured patient registers, the hospital staff should work with family members and the patient to determine his or her ability to pay and should be able to explain to the patient what options he or she has.

"Hospitals need to establish solid financial counseling even if they have only a moderate volume of patients who need some assistance," he says.

If the patient comes to the ED, he or she should be seen and evaluated by a medical professional before the financial matters are brought up, adds Cameron.

It’s a different story in other settings, such as inpatient care and outpatient surgery. If a procedure or hospitalization is scheduled and not urgent, the hospital should provide financial counseling before the treatment to avoid payment delays, he notes.

"There are very few people who don’t want to pay for their care. They just aren’t able," Wade points out. That’s why hospitals are getting creative in working out arrangement for payment, often offering uninsured patients discounted care.

Hospital representatives shouldn’t make people who can’t pay feel guilty. "Unless people feel they have handled themselves properly, they may be afraid to return," he adds.

North Shore-Long Island Jewish Health System implemented a financial program for the uninsured in March, according to Terry Lynam, vice president for public relations.

The program provides assistance to uninsured patients who earn up to three times the federal poverty level but who don’t qualify for any publicly subsidized programs.

"The first order of business is to make sure that someone who comes in with an emergency situation is treated. The issue of payment comes about later in the process when the patient is checking out or when the bill is sent," he says.

Patients who can’t pay are urged to call a toll-free number and talk to a financial assistance representative. They are asked to submit verification of income and assets but the value of their home or 401(k) is not taken into consideration when they apply for financial assistance.

For instance, a patient at the top of the ceiling would pay 35% of the negotiated Medicaid fee for the same service. Patients who qualify for assistance pay a small fee for routine physician visits at the system’s primary care clinics.

"Our health system has provided charity care for years for patients who lacked insurance, but we never had a formalized financial assistance policy that took into account each individual’s ability to contribute," he says.

In the past, someone who was uninsured would get a bill at the full charge, typically a higher rate that what was negotiated with Medicare and Medicaid HMOs. At that point, the hospital would try to negotiate a reduced fee.

"If people are looking at a $10,000 bill representing full hospital charges or they’re looking at a $2,500 bill and they are given the option of setting up a payment plan, most people will make a legitimate attempt to pay the bill. One of the problems of the past is that people were so staggered by the size of the bill that they were scared off and tried to avoid payment at all costs," he says.

In 2004, the hospital system’s charity care and uncompensated care totaled $200 million, about half of which was bad debt.

"If we can collect even 35% of what Medicaid typically pays for a service, it’s not an insignificant amount of money," he says.

Just because a patient falls within a certain level of income, that doesn’t mean there is only one option. Options could be a payment plan, a contract with a finance company, charity care, or a community-based program that is not Medicaid, Cameron says.

Hospitals are trying various strategies to help pay for care for their indigent, uninsured, and underinsured patients.

Some hospitals have established relationships with finance companies that assume the liability for the patient’s bills and extend credit. The finance company pays the hospital and bills the patient.

"It may be an advantage for a hospital to enter into a relationship such as this," Cameron says.

However, if the patient doesn’t have a steady job and has few assets, the finance company may not be willing to extend the credit, he points out.

Some hospitals have worked with local school systems to find children who qualify for community programs and have developed working relationships with churches, schools, local organizations, and community leaders to help people understand how to access the health care system in the most efficient manner.

"The message can’t be stay away from the hospital.’ It should be for them to get care in the right setting," he says.

One community hospital has come up with a barter system for its uninsured patients, Wade says.

Patients who can’t pay can opt to donate time to the hospital to help cover the cost of their care. For instance, a landscaper may work on the hospital grounds, or a computer programmer may volunteer in the hospital’s computer center.

"If you need care and you don’t have the insurance to pay for care, the hospital will work with you," he adds.