Millions of Americans eligible for Obamacare
premium subsidies are considering whether to buy health insurance
before the March 31 open enrollment deadline. Officials at UnityPoint Health-Trinity, with four hospitals in Iowa and Illinois, are debating how to proceed if their patients don't get coverage.
They are mulling how to handle charity care for uninsured, non-Medicaid-eligible patients who come in for treatment and who could have but did not obtain subsidized coverage through the federal insurance exchange
. Their question is whether such patients should receive full charity care
—either free care or deep discounts on their bills—when they had a source of affordable coverage under the Patient Protection and Affordable Care Act and did not take advantage of it. This discussion does not include Medicaid-eligible patients, who can be signed up anytime at the point of service.
One possibility UnityPoint officials are considering is some type of “fine” for those patients, reducing their charity-care discount by some amount. Trinity leaders fear that without some kind of penalty, patients may see its financial aid as a better deal than having to pay premiums, deductibles and coinsurance under a private plan offered on the exchange, said Amanda Crowell, director of revenue cycle for Trinity, a division of Des Moines, Iowa-based UnityPoint Health. That's even though they might have to pay a tax penalty in 2015 for failure to obtain coverage this year.
A financial penalty for uninsured patients who qualify for hospital financial aid may encourage them to sign up for coverage next year, she said. “We don't want to incentivize people not to enroll.”
With weeks to go before Obamacare's open enrollment ends, hospitals are joining advocacy groups, state exchanges and federal officials in an intense final push to convince millions to buy insurance. By the latest count, nearly 4 million had obtained private coverage, well short of the 7.1 million projected by the Obama administration. Roughly 2.6 million consumers qualified for subsidies as of the end of January.
At the same time, some hospitals around the country are considering whether and how to modify their charity-care and discount policies under the new Obamacare system that offers low- and moderate-income Americans generous federal help in obtaining insurance. For the nation's 2,894 tax-exempt hospitals, which publicly report spending on free and discounted care to justify keeping their tax breaks, the Affordable Care Act's subsidized insurance is raising unprecedented, politically fraught questions about people's responsibility to obtain coverage. Hospitals that take a tough line could face public criticism and pressure from state regulators.
Hospital officials and billing and collection consultants say some hospitals will start offering less-generous financial aid, including requiring uninsured patients to acquire coverage before any medical debt can be waived. Others may push to postpone elective surgery until uninsured patients get coverage.
On the other hand, some are planning to expand financial aid to write off deductibles and copayments for low-income patients who sign up for new exchange plans that require high cost-sharing.
Financial pressure on hospitals, including the Affordable Care Act's Medicare payment cuts, may prompt more hospitals to reconsider their charity-care policies in light of the subsidies for low-income people, said Peter Cunningham, professor of healthcare policy and research at Virginia Commonwealth University, whose research focuses on access for the uninsured. “I don't think there's anything that would stop hospitals from saying, 'We determined you're eligible for subsidies and you didn't enroll and therefore you're not eligible for charity.' ”
Hospital executives and consultants say hospitals will continue to provide charity care, though financial aid may be less generous or eligibility rules may change. “We will all be learning,” said UnityPoint Health-Trinity's Crowell. “It really is a philosophical discussion that needs to happen.”
Efforts to obtain comment from state attorney general offices in Iowa, Maine, New Hampshire, and Vermont on how they would respond to changes in not-for-profit hospitals' charity-care policies were not successful.
It's also an issue for investor-owned systems. While they generally are not required by state not-for-profit rules to provide charity care, some, such as Tenet Healthcare Corp., operate safety-net hospitals for uninsured and low-income patients. And they typically have policies that reduce prices for self-pay patients.
Hospitals will start looking at their charity-care policies in the future because they'll be asking whether people are choosing to remain uninsured, and if so, whether it's right for hospitals to subsidize their care, said Daniel Waldman, senior vice president for public affairs at Tenet, who is spearheading the hospital chain's Obamacare enrollment efforts. Tenet is not currently considering changes in its billing and collection policy for uninsured patients because it's focused on boosting enrollment this year and next year. But he said Tenet will have to reconsider its policy in the future.
In Burlington, Vt., Fletcher Allen Health Care, the state's largest hospital, has tightened its charity-care policy for uninsured patients. The hospital did so to ensure that financial aid was not more attractive than subsidized health insurance and to better comply with regulations, said Shannon Lonergan, director of patient access for Fletcher Allen.
Under the hospital's new policy, uninsured patients who come in for care during the open enrollment period and who qualify for a federal premium subsidy must buy insurance before the hospital will waive medical bills. That could affect a lot of uninsured Vermonters, because the state has the highest percentage of uninsured residents in the country with incomes that qualify them for subsidized coverage, at 52%, according to the Kaiser Family Foundation.
For patients who remain uninsured after open enrollment ends, Fletcher Allen will offer less-generous financial aid. Previously, the hospital required patients to pay a deductible before the hospital would write off the remaining bill. Deductibles ranged from $250 to $1,000 for patients with incomes between 200% and 400% of the federal poverty level. In comparison, a Vermonter with a federal subsidy will pay $1,152 to $4,416 a year for an exchange plan, according to the state exchange website.
Since paying the hospital's deductible would be cheaper than the combined cost of the premium and out-of-pocket costs for a private plan, Fletcher Allen officials feared that continuing the policy would make financial aid more attractive than insurance and discourage people from signing up for coverage. Starting in April, Fletcher Allen will replace the deductible with a requirement that uninsured patients pay a percentage of the bill, based on income.
The hospital is working aggressively to inform uninsured patients about new insurance options and help them navigate enrollment, Lonergan said. Nonetheless, she expects some patients will weigh the cost of getting insurance against the costs of going without and will choose to stay uninsured.
Other hospitals are moving to postpone elective procedures for uninsured patients who were eligible for subsidized Obamacare coverage but did not get it, said Stephen Lutfy, a PricewaterhouseCoopers managing director who advises hospitals on revenue-cycle services.
Two hospitals that have taken this approach are the University of Colorado Hospital, Aurora, and Memorial Hospital, Colorado Springs, both owned by University of Colorado Health. Under their policies, elective procedures may be postponed until uninsured patients sign up for subsidized coverage, said U-C Health spokesman Dan Weaver. The four-hospital health system is developing a systemwide policy around the issue.
On the other hand, some hospitals are considering expanding their charity-care policies to cover the high out-of-pocket costs imposed by many of the new exchange plans, said Steve Levin, CEO of Connance, a Waltham, Mass.-based revenue-cycle company. “It used to be that the provider assumed they did not have to worry about charity if you had insurance,” Levin said “That's not the case anymore. They have insurance and high deductibles and they in fact live in poverty.”
Still other health systems say they won't change charity-care policies as a result of Obamacare's subsidized insurance. Instead, they say they will continue to rely on marketing and outreach to promote enrollment in exchange plans. “The lever we're using is assistance and education,” said Dr. David Shulkin, vice president of Atlantic Health, based in Morristown, N.J., which operates three New Jersey hospitals. “We do not want to raise additional barriers to access.”
Staff at Brewer-based Eastern Maine Healthcare Systems, which operates seven hospitals across the state, previously were reluctant to discuss the issue of getting coverage with uninsured patients because it runs against Maine's culture of rugged individualism, said Jeffrey Sanford, the system's vice president and controller. But with the new availability of subsidized insurance, that's changed. “It becomes unfair to … saddle the hospital if you have the opportunity to have insurance and don't take that and essentially disadvantage us by passing that cost to us.”
Even as it has considered fining patients who don't get coverage, UnityPoint Health in Iowa is reaching out to uninsured patients in its hospitals and in the community. UnityPoint Health-Trinity helped enroll 383 people through late February, according to the system.
Trinity also promoted newly subsidized insurance options in television, radio and newspaper advertisements.
“There's no reason for anyone to not have insurance at this point,” UnityPoint Health's Crowell said.
With Harris MeyerFollow Melanie Evans on Twitter: @MHmevans