Charity disparity

Just as tax-exempt hospitals across the country are preparing to meet a new federal mandate dictating how they advertise their charity-care policies, a public advocacy group has released a report saying many hospitals in the country are failing to meet even the basic voluntary standards already in place.

Researchers from the Boston-based Access Project and Community Catalyst say their report points to a clear need for strict charity-care regulations that are only now being debated by federal officials as part of the rulemaking process following passage in March of the Patient Protection and Affordable Care Act.

However, the American Hospital Association, which is heavily criticized in the report, says the study comes at a curious time as many of the alleged problems highlighted in the report are already under close scrutiny by the Internal Revenue Service. The public is about to receive an avalanche of standardized data on hospital charity-care policies as hospitals meet the statutory deadlines to file their newly enhanced Form 990 tax disclosures.

“I think it's out of sync with the fact that the industry has been moving toward these practices anyway,” said Melinda Hatton, senior vice president and general counsel at the AHA.

Section 9007 of the healthcare law says that in order to qualify for tax-exempt status, a hospital must have a written financial assistance policy that includes: specific eligibility for free or discounted care, the basis and methods for calculating those charges, what actions the hospital may take in the case of nonpayment, and measures to “widely publicize the policy within the community to be served.”

The Access Project study, Best Kept Secrets: Are Non-Profit Hospitals Informing Patients About Charity Care Programs?, was released last week almost exactly five years after an earlier report reached similarly critical conclusions. The new report found that in 2009 only 57 of 99 hospital websites reviewed even mentioned the availability of charity care. And only nine of the 99 hospitals said on their websites specifically how much in discounts is available to needy patients based on varying income levels.

In follow-up phone calls by Access Project staff, every one of the 73 hospitals where a contact person was reached acknowledged that the hospital had a charity-care policy. However, only 23 of the hospital officials could provide an actual application for charity care, while another 15 said they would send an application but never did.

The voluntary AHA guidelines on hospital billing and collection practices, which have been signed by 4,200 community hospitals nationwide, say hospitals should provide financial counseling to patients about their hospital bills and “make the availability of such counseling widely known.” Hospitals should also make their prices for financial-assistance patients “available for review by the public,” but the AHA guidelines don't specify how that should be done.

“The AHA has long maintained that the voluntary guidelines are sufficient,” said Carol Pryor, senior policy analyst at the Access Project and lead author of the report. “Our study shows that voluntary guidelines have not been sufficient.”

Theodore Townsend is president and CEO of a hospital that has long met the guidelines for charity care described by the AHA.

St. Luke's Hospital, a 381-bed facility in Cedar Rapids, Iowa, provides a full write-off for “medically necessary” services rendered to uninsured or underinsured residents at less than twice the federal poverty guidelines—or $44,100 for a family of four for 2010—and a sliding-scale discount for families between two and 10 times the poverty rate.

Townsend said the hospital's financial assistance application process was streamlined several years ago after patients who qualified for reduced charges or free care were avoiding the program. Today, if patients can show they qualify for other types of income-based aid, they get “presumptive eligibility” for discounted billing, he said.

“We were finding that people thought there were a lot of barriers to the process. There was paperwork involved. So we streamlined the process,” Townsend said. “Right now, today, we are trying to fulfill the mission and earn our tax exemption.”

The Rev. Jerry Wagenknecht, senior vice president of mission and spiritual care for eight-hospital Advocate Health Care in Oak Brook, Ill., said his system strives to ensure that the charity-care policy is not just posted publicly, but in whatever languages are appropriate for the community. The Access Project report found that only 34 of the 99 hospitals provided information in languages other than English.

Advocate Illinois Masonic Medical Center, Chicago, which has 348 beds, posts signage about its policy in six languages, reflecting the diversity of the surrounding community. The system has also set up a service so that workers in the patient registration area have 24-hour access to interpreters by telephone in case a financial-need patient doesn't speak English.

Wagenknecht said a board committee was convened years ago to evaluate the effectiveness of the charity-care policy, which offers free or sliding-scale discounted care to uninsured or underinsured patients at up to six times the federal poverty level.

“Part of that process was to take a look at how can we publicize this to our patients, because it does no good if we have one of the most generous charity-care policies in the country, but no one knows how to access it,” he said.