Hospitals’ Grade on Charity Care Policies: Needs Improvement

By Stacey Kusterbeck, Editor of Hospital Access Management

Many nonprofit hospitals have room for improvement regarding charity care policies under the Affordable Care Act’s (ACA’s) Section 501(r) rules, according to a just-published study in The New England Journal of Medicine.

Researchers reviewed IRS forms submitted by more than 1,800 nonprofit hospitals in 2012. Here are key findings:

• Nearly all (94%) of hospitals reported having written charity care and emergency care policies.

• Hospitals in states that have not expanded Medicaid reported having less generous charity care polices than those in expansion states. Hospitals in non-expansion states also were less likely to have a policy in place about notifying patients of charity care options before they left the facility.

• Less than half (42%) of nonprofit hospitals notify patients about their potential eligibility for charity care before attempting to collect unpaid medical bills, as required by the ACA.\

• Only 29% of hospitals reported that they had begun charging uninsured and under-insured patients the same rate they charged private insurers or Medicare. If a patient is uninsured or under-insured, tax-exempt hospitals are supposed to charge the patient a fair amount even when the individual doesn't qualify for charity care.

• Four in five hospitals reported they had stopped using extraordinary debt collection steps, such as reporting patients to credit agencies, when patients failed to pay their medical bills. (For information on how patient access leaders are complying with the requirements in their departments, see our upcoming issue of Hospital Access Management).

Sayeh Nikpay, PhD, MPH, the study’s lead author, was surprised to find that there were substantial differences in financial assistance available to low-income patients between the states that have expanded Medicaid and those that have not. “Patient access professionals and financial counselors are the frontlines of this policy, so it’s important that they understand the requirements of Section 501(r),” says Nikpay.