Patient Access Financial Assistance Policies Face Intense Scrutiny: Two Lawsuits Already Underway
Lawsuits allege charity care withheld from thousands of patients
December 1, 2017
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EXECUTIVE SUMMARY
Two recent lawsuits allege that hospitals withheld charity care from thousands of patients. To comply with state and federal regulations, patient access departments should take several steps.
- Talk with patients about their financial responsibility.
- Determine patients’ eligibility for financial assistance.
- Make financial assistance conversations an integral part of patient access processes.
The way hospitals screen patients for financial assistance is facing intense scrutiny in light of two recent lawsuits. “The implications for patient access are significant,” says Sandra J. Wolfskill, FHFMA, director of healthcare finance policy at the Healthcare Finance Management Association.
Both lawsuits, filed by Washington state attorney general Bob Ferguson against St. Joseph Medical Center in Tacoma and Capital Medical Center in Olympia, allege that the hospitals withheld charity care from thousands of low-income patients.1,2
“More hospitals will be sued, unless they change. Advocates for consumers, as well as the government, expect legal compliance,” warns Ann M. LoGerfo, an attorney with Seattle, WA-based Columbia Legal Services. Failure to screen patients for charity care and then pursue patients for bills they do not owe are violations of the Consumer Protection Act and legal obligations, says LoGerfo. “It is an unfair and deceptive practice, and is a breach of the financial contract with the patient.”
Roadblocks Not Uncommon
The practices alleged in the lawsuits may sound egregious to the general public, but they’re surprisingly common. “Many hospitals set up roadblocks to their financial assistance programs,” says Holly Lang, a New York City-based contractor specializing in healthcare financing, public policy analysis, and nonprofit hospital strategy.
In a 2017 study of nonprofit hospitals on the East Coast, Lang found that about one in seven provided no information at all about their policy online, although it is required by federal law. “That alone is a huge problem,” says Lang, adding that she expects to see similar lawsuits filed at the state level. “I wouldn’t be surprised if we started seeing more federal involvement in this as well.”
Lang says that a well-designed, well-executed financial assistance program isn’t just good for patients — it also benefits the hospital, because of the correlation between bad debt and insufficient charity programs. Additionally, most states have minimum requirements for charity care for hospitals to obtain Certificates of Need for capital construction and expenditures.
“It’s far better to go ahead and qualify patients for charity care if they are eligible, as opposed to putting up roadblocks that place the patient in an even more precarious financial situation, just to have that account end up in bad debt,” says Lang.
High Level of Transparency
Washington state requires hospitals to streamline financial assistance application processes to make it easier for patients to apply. “Washington is one of many states that requires its hospitals to provide a high level of transparency about its financial assistance program,” says Lang.
Based on court filings and the Attorney General’s statements, the hospitals blatantly disregarded these laws, says Lang, and, instead, put in systematic barriers for financially vulnerable patients. “This means the problem started with management, who is alleged to have directed staff to put up these barriers,” she notes.
Washington state law requires hospitals to do the following:
- Provide notice of charity care availability.
- Screen patients for eligibility.
- Require only one income-related document to prove charity care eligibility.
The lawsuits allege the hospitals violated all of these requirements and aggressively demanded payment from patients — without screening them for charity care eligibility.
Cary Evans, vice president of communications and government relations at CHI Franciscan Health, a Tacoma, WA-based health system with eight acute care hospitals, including St. Joseph Medical Center, disputes the allegations in the lawsuit. “As a nonprofit charitable organization, we are committed to providing the highest quality care to everyone who needs it,” says Evans.
Evans adds that the hospital goes beyond what’s required by state law by completely covering the cost of care for people with income below 300% of the federal poverty level: “We provided $20 million in charity care to 19,115 patients in the last year alone.”
Jeff Atwood, senior vice president of marketing and communications at RCCH HealthCare Partners, which operates Capital Medical Center, says, “We are very disappointed to learn of the Office of the Attorney General’s recent filing.”
The hospital made changes to its financial assistance and charity care program after learning of the Attorney General’s concerns in 2016, according to Atwood: “Even though Capital previously addressed the issues included in this lawsuit, and is providing financial assistance and charity care to more individuals than state law requires, the Attorney General filed this lawsuit.” (For more information on patient access processes for financial assistance and what patient access departments should do now, see related stories below.)
Mission of Patient Access: Improve Access to Care
Many patients are transferred to Loma Linda (CA) University Medical Center (a Level 1 trauma center) from other facilities. Some have only minimal coverage or no coverage at all. “We want to see what we can do to help those patients financially,” says admitting director Denise Rotolo.
Patient access does a great deal of education. Many people lack even a basic understanding of their benefits. “The complexity of coverage has increased tenfold,” says Rotolo. “Trying to help patients understand that has been a big challenge.”
All registration areas hand out a brochure titled Understanding Your Health Care Insurance and Expenses. Terms such as “deductible” and “coinsurance” are defined. “It also informs patients that the hospital has a department to help them with financial assistance, if needed,” says Rotolo.
Insured patients with high out-of-pocket expenses sometimes qualify for some type of charity assistance. This is true even for people with income over 350% of the federal poverty level. “If your insurance pays very little and your responsibility is exorbitant, you’re not going to have to pay anything more than what Medicare would pay us, plus 20%,” says Rotolo.
If patients’ incomes are between 201% and 350% of the federal poverty level, they pay the same amount as Medicare would pay. If their income falls below that level, they’re responsible for only a percentage of what Medicare would pay.
“We have a really good program to help people who are underinsured and on a limited income,” says Rotolo. “It’s something we see every day.”
Some uninsured patients even obtain Medicaid coverage. “Without our robust in-house Medi-Cal program, we would have a significantly higher self-pay population,” says Rotolo. “This would likely end up in bad debt or charity write-offs.” (See the department’s charity and discount payment policy below.)
San Diego-based Sharp HealthCare recently collaborated with regional hospitals to create a marketing campaign on financial assistance policies. The hospital’s policy is posted in registration areas, the business office, and the emergency department.
“It is given to anyone who asks, and always immediately provided to any self-pay patient,” says patient financial services manager Perla Pace.
Patient access asks patients five simple questions to determine the following: their zip code, their citizenship, their household income, where they’re employed, and whether they have any medical conditions or disabilities.
“Based on this five-question survey, we provide a list of any funding programs the patient may be eligible for,” says Pace. These include the hospital’s financial assistance program, County Medical Services (a program that funds medical care for uninsured indigent adult county residents), food stamps, prescription cards, general relief, and Supplemental Security income (a government program that provides benefits to low-income people who are 65 years of age or older, blind, or disabled).
However, patient access does not stop after giving patients the name of a program for which they qualify. Staff help patients to apply, and stick with them through the entire process. “We have an internal Medi-Cal eligibility team who assists the patient through the process of navigating these programs,” says Pace.
The patient is assisted from the initial application until a decision is made — and sometimes even after that. “We often appeal erroneous denials,” explains Pace. “We are passionate about improving access to care for our most vulnerable populations.”
Some patients still may be ineligible for any public program or financial assistance. Patient access offers to help in any way they can. “We assist them in arranging payments by negotiating discounts based on our established guidelines,” says Pace.
SOURCES
- Perla Pace, Patient Financial Services, Sharp HealthCare, San Diego, CA. Phone: (858) 939-3740. Email: [email protected].
- Denise Rotolo, Admitting Director, Loma Linda (CA) University Medical. Email: [email protected].
Charity and Discount Payment: Income Qualification Levels
Uninsured Patients
1. If an uninsured patient’s family income is 200% or less of the established poverty income level, based upon current FPL [federal poverty level] Guidelines, and the patient meets all other financial assistance qualification requirements, the patient qualifies for full charity care.
2. If an uninsured patient’s family income is between 201% and 350% of the established poverty income level, based upon current FPL Guidelines, and the patient meets all other financial assistance qualification requirements, the following will apply:
- If the services are not covered by any third party payer so that the patient ordinarily would be responsible for the full-billed charges, the patient's payment obligation will be a percentage of the gross amount (fully loaded Medicare payment rate, i.e., wage index, IME, DME, etc., and patient payment obligation) the Medicare program would have paid for the service if the patient were a Medicare beneficiary. The actual percentage paid by any individual patient shall be based on the sliding scale shown below:
3. If the patient’s family income is greater than 350% of the established poverty income level, based upon current FPL Guidelines, and the patient meets all other financial assistance qualification requirements, the following will apply:
Sliding Scale Discount Schedule |
||
Family Percentage
|
Discount off M/Care Allowable |
Patient OOP Payment Percentage (of M/Care) |
|
201-260% |
75% |
25% |
|
261-320% |
50% |
50% |
|
321-350% |
25% |
75% |
- If the services are not covered by any third party payer so that the patient ordinarily would be responsible for the full-billed charges, the total patient payment obligation will be an amount equal to 100% of the gross amount (fully loaded Medicare payment rate, i.e., wage index, IME, DME, etc., and patient payment obligation) the Medicare program would have paid for the service if the patient were a Medicare beneficiary.
Insured Patients
1. If an insured patient’s family income is between 201% and 350% of the established poverty income level, based upon current FPL Guidelines, and the patient meets all other Financial Assistance qualification requirements, the following will apply:
- For services received by patients covered by covered by a third party payer such that the patient is responsible for only a portion of the billed charges (i.e., a deductible or co-payment), then the patient’s payment obligation will be an amount equal to the difference between what insurance has paid and the gross amount (fully loaded Medicare payment rate, i.e., wage index, IME, DME, etc., and patient payment obligation) that Medicare would have paid for the service if the patient were a Medicare beneficiary (i.e., if insurance has paid more than the Medicare allowable amount, the patient will owe nothing further, but if the patient’s insurance has paid less than the Medicare allowable amount, the patient will pay the difference between the insurance amount paid and the Medicare allowable amount).
2. If the patient’s family income is greater than 350% of the established poverty income level, based upon current FPL Guidelines, the following will apply:
- For services received by patients covered by a third party payer such that the patient is responsible for only a portion of the billed charges (i.e., a deductible or co-payment), then the patient’s payment obligation will be an amount equal to the difference between what insurance has paid and the gross amount that Medicare would have paid for the service, plus twenty-percent (20%). For example, if insurance has paid more than the Medicare allowable amount plus 20%, the patient will owe nothing further; but if the patient’s insurance has paid less than the Medicare allowable amount plus 20%, the patient will pay the difference between the insurance amount paid and an amount equal to the Medicare allowable amount plus 20%.
Reprinted with permission from Loma Linda University.
Take a Hard Look at Patient Access Policies and Practices
Put patient access staff in shoes of patients living below poverty level
Recent lawsuits and media coverage scrutinizing hospitals’ financial assistance practices send a strong message to patient access: Now is the time to review policies, procedures, and the way staff are trained.
“Ensure they are consistent with what state and federal law requires,” advises Washington State Hospital Association spokeswoman Mary Kay Clunies-Ross. “The law is clear that charity care or financial assistance must be provided to low-income people for what the law considers ‘appropriate hospital-based medical services.’ It’s not a staff judgment call. It’s required by law.”
In Washington state, for instance, all patients must receive notice of charity care availability. Signs with information about how to access charity care must be displayed prominently, and patients who request charity cannot be billed until screening is completed.
“Patient access departments and legal counsel should work together to ensure financial assistance is being offered and that the hospital can show that its policies and practices are aligned with the intent of the law,” says Clunies-Ross.
Are you certain your patient access practices fully comply with state and federal requirements? “This is a chance to further strengthen your policies, by reviewing what you have in place and seeing where it could be better,” says Holly Lang, a New York City-based contractor specializing in healthcare financing, public policy analysis, and non-profit hospital strategy. She says it is important to answer the following questions:
- Do you provide a copy or a plain language summary of your policy to all patients without their asking? Is it in the languages that your patients speak and read?
- Do you make it clear that payment is not required while a patient’s application for assistance is being reviewed?
- Do you keep the application outside of the collections policy in the timeline dictated by state and federal laws, making sure patients who are eligible are not put through the collections process?
- Do you limit charges to eligible patients, making sure they never pay the full sticker price?
When clearing accounts financially, it is important for patient access staff to remember that each account represents an individual hospital patient. “Behind those numbers is someone going through what was likely a traumatic and exhausting experience,” says Lang.
Role-playing exercises can put registrars in the shoes of a patient with an income at or below the hospital’s eligibility threshold. “I think most would quickly learn that living at 300% of the federal poverty level or below for a family of four does not leave much room for discretionary spending, much less large, unexpected health bills,” says Lang.
Checking in with registrars to be sure the job is still a good fit for them is important. “Working with patients and financial counseling can be tiring and lead to high burnout, among even the best employees,” says Lang.
Deficiencies Common
The Washington state lawsuits might be only the tip of the iceberg. “Patient access departments should understand that there are numerous lawsuits and investigations underway relating to the failure to screen for charity care eligibility,” says LoGerfo.
Asking for deposits without first screening to see if a patient may be entitled to full charity care is unlawful, adds LoGerfo, and has cost hospitals millions in settlements. There is increasing evidence that many patient access departments are out of compliance with state and federal regulations.
Columbia Legal Services’ recent analysis found charity care deficiencies among 12 of 20 Washington hospitals.3 The report identified five primary areas in which hospitals were not meeting their obligations.
- Hospitals are not adequately addressing language barriers.
- Hospitals are not screening patients for charity care eligibility as legally required.
- Hospitals do not adequately inform patients of their charity care rights.
- Many hospitals require an application process that is difficult and demanding for patients, or refuse charity care after the account is assigned to collection.
- Hospitals and debt collectors improperly collect on accounts when the patients actually were eligible for charity care.
The report’s findings were disappointing, but not terribly surprising to the researchers. “We had been hearing through clients and outreach that many hospitals were not fulfilling their social promises or legal obligations around charity care,” says LoGerfo.
When Spanish-speaking callers asked for information about financial assistance, 80% of sites surveyed disconnected the calls at least once. “Treatment of Spanish speakers was worse than we had expected,” says LoGerfo. “But on the plus side, some hospitals had much better policies than we anticipated.”
Presumptive eligibility for patients who clearly are eligible, such as those already enrolled in very low-income-related programs, is one example. Also, some hospitals provide charity care to patients at higher income levels than the law requires.
LoGerfo suggests that initial screening for charity care can be done at the same time patients are registered. “When patients come to the hospital, as long as the patient is stable enough, hospitals ask numerous financial questions, including detailed insurance information, employer information, and other data, to ensure that they will be paid,” notes LoGerfo.
At the same time, registrars also can ask the patient’s family size and income, and notify patients that they can apply for charity care. “Even better, if patients are clearly eligible, the application process should be skipped, and patients should be granted charity care,” says LoGerfo.
Front-end Role
Financial assistance, charity care, and collections used to be “back-end” roles, handled only after the patient was discharged. This has changed dramatically. “Financial assistance is moving from a post-service, back-end process to a part of clearing the patient for services — which is a patient access function,” says Wolfskill.
Earlier financial discussions can prepare patients for higher out of-pocket costs, but it’s not enough to simply set up payment plans for everyone. Conversations need a much broader scope. “Federal IRS 501(r) regulations are very specific about what any 501(c)3 not-for-profit hospital must do in order to maintain their tax-exempt status,” says Wolfskill.
To comply with federal requirements, hospitals must follow several steps.
- Establish written financial assistance and emergency medical care policies.
- Limit amounts charged for emergency or other medically necessary care to individuals eligible for assistance under the hospital’s financial assistance policy.
- Make reasonable efforts to determine whether an individual is eligible for financial assistance before engaging in extraordinary collection actions against the individual.
“The IRS takes compliance with their regulations seriously and is now conducting audits to ensure provider compliance with the regulations,” warns Wolfskill.
REFERENCES
- Washington State Office of the Attorney General. AG Ferguson sues Tacoma’s St. Joseph for withholding charity care from thousands. Sept. 5, 2017. Available at: www.atg.wa.gov/news/news-releases/ag-ferguson-sues-tacoma-s-st-joseph-witholding-charity-care-thousands. Accessed Nov. 1, 2017.
- Washington State Office of the Attorney General. AG Ferguson sues Capital Medical Center for withholding charity care from thousands of low-income patients. Sept. 22, 2017. Available at: www.atg.wa.gov/news/news-releases/ag-ferguson-sues-capital-medical-center-withholding-charity-care-thousands-low. Accessed Nov. 1, 2017.
- Duhamel T, Gonzalez T, Geyman M, et al. Access denied: Washington’s charity care system, its shortfalls, and the effect on low-income patients. Seattle, WA: August 2017. Available at: http://columbialegal.org/sites/default/files/170824CharityCareReportFINAL-DIGITAL.pdf. Accessed Nov. 1, 2017.
SOURCES/RESOURCES
- Holly Lang, New York, NY. Email: [email protected].
- Ann M. LoGerfo, Columbia Legal Services, Seattle, WA. Phone: (206) 287-8615. Email: [email protected].
- Sandra J. Wolfskill, FHFMA, Director, Healthcare Finance Policy, Healthcare Finance Management Association, Westchester, IL. Phone: (708) 531-9600. Email: [email protected].
- The Healthcare Financial Management Association’s Patient Financial Communications Best Practices recommend making financial assistance conversations an integral part of the patient access process. To download a PDF of best practices for the ED, at the time of service, in advance of service, and for all patient financial interactions, go to http://bit.ly/1s2u63E.
- The Baltimore, MD-based Hilltop Institute evaluates each state’s charity care policies. For more information, go to: http://bit.ly/2znQzoi.
Two recent lawsuits in Washington allege that hospitals withheld charity care from thousands of patients. This article will review steps patient access departments can take to comply with state and federal regulations.
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