The American Hospital Association in its yearly calculation of the industry's uncompensated-care bill last week for the first time included losses attributed to care for Medicare and Medicaid patients.
The move, which came with the release of its figures for 2005, comes as the AHA and the Catholic Health Association jockey over which numbers are most relevant. The issue has been particularly important in recent months as Congress continues to take a hard look at tax-exempt hospitals' value to communities.
The figures revealed that hospitals' uncompensated care costs, which are the combination of charity care and bad debt, totaled $28.8 billion. In addition, the AHA said U.S. community hospitals lost $15.5 billion caring for Medicare patients and another $9.8 billion on Medicaid patients. While uncompensated care was up, so were donations to not-for-profit hospitals. Estimated charitable contributions to U.S. healthcare institutions belonging to the Association for Healthcare Philanthropy grew a record 16% to $7.09 billion in fiscal 2005, according to data released last week. The figures are based on responses from more than 300 institutions.
Meanwhile, the CHA last month began urging Catholic hospitals to adopt a tighter standard -- one without Medicare losses or bad debt -- when filing 2006 records with the Internal Revenue Service. The CHA also began circulating a five-page form to be included with hospitals' yearly tax records that itemizes hospitals' subsidized care but cautions, "Do not include bad debt. ... Do not count Medicare shortfall as a community benefit."
The two major trade groups first advanced rival reporting criteria this summer in response to congressional, regulatory and public calls for improved disclosure of not-for-profits' community aid and charity care.
Interest in tax-exempt hospitals' aid to low-income, vulnerable and uninsured patients has grown amid broader scrutiny of not-for-profits' executive compensation, billing and collection practices and governance.
Caroline Steinberg, the AHA's vice president for trends analysis, said the decision to highlight Medicare and Medicaid losses this year stems from the association's belief that such costs count toward hospitals' community benefits. "It's important to understand," she said.
Medicare, the nation's federally subsidized insurance for the elderly, serves "a large, important population, and it's a large payer," she said. "It's a critical part of what we do, and it's underfunded," she said.
To calculate hospitals' costs for uncompensated care, the AHA applied a formula to aggregate hospital costs for bad debt and charity care from a survey of 4,936 hospitals. The association used a similar formula to calculate Medicare and Medicaid losses.
Confusion over how much charity care hospitals provide and how such care gets reported has long been a source of complaint from industry watchdogs.