Many of you may be aware that some laws have changed regarding reporting of medical debt to credit agencies. Those new laws are most favorable to individuals. Particularly for those patients who have frequent doctor visits and accrue numerous bills. However, it is surprising that many patients are not aware of the many programs that can help them pay for medical care that they have amassed. Here is the low-down on what you need to know in order to access these charitable funds if you are going to a non-profit or a for-profit hospital for your care.
What is a Hospital Charitable Program and How Can You Access It?
According to the IRS, Non-Profit hospitals are those hospitals that are not required to pay property-tax, state or federal income tax, or sales tax. Non-profit hospitals account for nearly 58% or three fifths of community hospitals and provide charity programs. Parameters are set by federal regulation in addition to charity-care policies that are set up by individual hospitals. The policies set up by individual hospitals can vary in terms of eligibility criteria, application procedures, and the level of charity provided. Hospitals bear the direct costs of providing charity care, support from donors and federal, state, and local governments may cover some or even all of these expenses.
In exchange for tax-free status, nonprofit hospitals are expected and required to distribute any additional capital back into their surrounding communities. Because of this, non-profit hospitals face additional scrutiny by healthcare policymakers concerned as to whether and how the facilities are following through and contributing to their communities in a meaningful way to justify the tax exemptions that they are receiving. They question how the funds in the communities are being spent.
You should know the type of facility you are visiting. Don’t be afraid to ask. Find out about their charity and community programs. Many states have required that this information be readily available to patients. Unfortunately this isn’t always the case. Ask for a copy of their charity plans and how to access it. Get names and the phone number of people who manage it.
For-profit hospitals are investor-owned. These facilities aim to make profits for their shareholders. Some of the largest for-profit hospital chains in the U.S. include Hospital Corporation of America, and HealthSouth. Not surprisingly, for-profit hospitals are generally among the highest-billing hospitals in the country.
How Do They Compare?
Day to day functions look very much the same between the two types of organizations One very distinct difference however, is that for-profit hospitals typically use considerable portions of their available budget for marketing and advertising initiatives, as compared to non-profit facilities. For-profit hospitals tend to serve lower income populations while nonprofit hospitals are generally found in communities with higher average incomes and fewer under and uninsured patients.
Consequently, nonprofit hospitals maintain higher bad-debt to net patient revenue ratios than for profits, although forprofits with the highest bad debt to net patient revenue ratios tend to maintain higher ratios than nonprofit facilities.
A study done in 2020 found that nonprofit and for-profit hospitals provide similar levels of charity care-another type of uncompensated care-when examined as a percentage of total debt.
The Internal Revenue Service defines charity care or financial assistance, as “free or discounted health services provided to persons who meet the organization’s eligibility criteria for financial assistance and are unable to pay for all or a portion of the services provided”. In some cases depending on their criteria hospitals may provide charity care to both uninsured and insured patients.
Who is Eligible for Hospital Charity Care?
Hospitals have a lot of flexibility to establish their own criteria for charity care. For instance, one analysis of a large sample of nonprofit hospitals that used the Federal Poverty Level (FPL) to determine eligibility for free care in 2018, found that about one in three (32%) of the hospitals required patients to have incomes at or below 200% the FPL or imposed more restrictive eligibility criteria, while the remaining sample (68%) relied on higher income caps. For discounted care, (62%) of nonprofit hospitals in the study limited eligibility to patients with incomes at or below 400% FPL or used lower income levels. The remaining (38%) rely on higher income caps.
The conditions that hospitals put on the free or discounted care can vary. Patients may need to have few assets or must live in hospital service areas. Other criteria may also become determining factors for free or reduced care.
Unfortunately, from my experience, all patients are not getting access to this free reduced care because the information is not readily available or they don't know that they may be eligible. For example, non-profit hospitals have estimated that of the bad debt they reported in 019 reflecting 2017 expenses or earlier, about $2.7 billion came from patients who were likely eligible for charity care but did not receive it. Now it would be interesting to see how this picture has changed post COVID. These numbers are rough estimates coming from unaudited hospital reports and do not account for all facilities or for patients who qualified for charity care but still paid their bills.
Patients have a right to know the cost of care and where they can get help if they qualify. Don’t hesitate to ask what’s available at your care facility. Ask prior to services and after services are provided. Fill out your required documentation and do so in a timely manner. Be empowered to better your physical and financial health.
Diahanna is the Financial Program Director for the HealthTree Coach program. She leads a team of Financial Coaches in providing support and resources to help others with the financial impact of myeloma.
about the author
Diahanna is the Financial Program Manager for the HealthTree Foundation, specializing in financial help for multiple myeloma and AML patients. As a professional financial consultant and former caregiver of her husband who was diagnosed with multiple myeloma, Diahanna perfectly understands the financial issues facing myeloma patients.