Since April, Columbia-St. Mary's in Wisconsin has overhauled its financial aid, simplified its bills and dedicated one full-time collector to handling questions and accounts for uninsured patients with at least $15,000 in debt.
"We have become much more aggressive and much more cognizant of being able to offer charity care," said Christy Smith, director of patient financial services for the four-hospital system. A growing number of the Milwaukee-based system's patients can't afford all or part of their medical bills, said Smith, a trend that's accelerated in the past year. Smith declined to say how much the system spends on charity care.
Columbia-St. Mary's, a not-for-profit, isn't the only one turning a critical eye toward efforts to aid financially vulnerable patients. America's growing number of uninsured, and health plans that leave consumers shouldering a large share of medical bills, have sharpened hospitals' focus on the cost of uncompensated care.
U.S. hospitals saw the cost of caring for patients who can't or don't pay medical bills rise in 2003. Hospitals spent $24.9 billion on uncompensated care for patients in 2003, an 11.7% increase from 2002, when hospitals spent $22.3 billion on uncompensated care, according to American Hospital Association figures released Nov. 29.
The 2003 figures account for just 5.5% of all hospital expenses, a slight increase from 5.4% in 2002. The percentages are the second-lowest and lowest, respectively, since 1983.
Patients who lack insurance haven't enjoyed the discounts that insurers negotiate, and hospitals have in the past contended that federal regulations prohibit them from extending discounts to patients who foot medical bills themselves, though the CMS and HHS each issued guidelines early this year saying the opposite (Nov. 11, p. S6).
As patients struggle with medical expenses, hospital billing and aggressive collection policies have come under intense scrutiny in dozens of class-action lawsuits, congressional hearings and regulatory inquiries. Critics say not-for-profit hospitals are reaping the benefits of tax exemption while overlooking their charitable mission of care to the uninsured.
Uncompensated care is the sum of bad debt, or bills patients did not pay, and charity care, or free or discounted treatment for low-income patients. To calculate aggregate costs, the AHA combines bad debt and charity care from a survey of 4,946 hospitals, then multiplies the total by hospitals' cost-to-charge ratio.
The AHA's lump sum isn't a clear picture of how much hospitals earmark to help patients, nor do most hospitals regularly report charity care alone. Instead, hospitals may report a variety of expenses, donations and financial assistance as "community benefits," a practice critics say further muddies tax-exempt hospitals' policies, making it difficult for regulators to hold not-for-profits accountable (June 21, p.6).
AHA spokeswoman Alicia Mitchell declined to comment on the association's figures.
The executive director of the Universal Health Care Action Network Ohio, Cathy Levine, said without a straightforward itemization of charity care, lawmakers and the public won't fully grasp how many Americans struggle to pay for healthcare or the vital role not-for-profit hospitals play as a safety net for these patients, leaving hospitals open to political and regulatory attacks. Since 2000, Levine has worked with Columbus, Ohio-area hospitals on revising and publicizing charity-care policies.
Hospitals face a changing market where insurers pay less of the bill, leaving hospitals to collect the remainder, said Paul Ginsburg, president of the Washington-based Center for Studying Health System Change. In a June Health Affairs Web exclusive, Ginsburg and co-author Bradley Strunk reported publicly traded insurance plans shifted 2.5% to 3.5% of prem-ium costs to consumers using strategies such as higher copayments or deductibles in 2004. "That certainly is a powerful trend," he said.
Columbia-St. Mary's now awards financial aid based on two factors-patients' income and the size of medical bills-rather than on income alone, said Mary Paul, the system's vice president and chief information officer. Paul said the system stresses early and frequent contact with patients in need of assistance, and its charity-care policies will continue to change.
"We're always learning," she said.