As Affordable Care Act
requirements take full effect next year, patients with
Newswise,October 29, 2015 — If you don’t have health
insurance, or your insurance coverage still leaves you with big bills,
hospitals are supposed to let you know if you qualify for free or reduced-price
care, and to charge you fairly even if you don’t.
That is, if they want to keep their tax-free nonprofit status
under the Affordable Care Act’s new Section 501(r) rules.
But a new study from the University of Michigan Institute for
Healthcare Policy and Innovation finds many nonprofit hospitals have room to
improve.
Writing in the October 29 issue of the New England Journal of
Medicine, the researchers report results from their review of Internal Revenue
Service forms submitted by more than 1,800 nonprofit hospitals nationally. They
looked at records for 2012, the first year hospitals had to comply with the
ACA’s requirements and the most recent year for which data were available.
A mixed
bag of findings
IHPI post-doctoral fellow Sayeh Nikpay, Ph.D., MPH and IHPI
director John Z. Ayanian, M.D., MPP, call hospitals’ performance “far from
perfect”. Their key findings:
• Nearly all (94 percent) of the hospitals reported having a
written charity care and emergency care policies, to guide them on deciding
which patients could get free or reduced-price care. Though the ACA doesn’t
tell hospitals which patients to offer discounts to, or how generous to be, it
does say they must have such policies and make them known.
• Only 29 percent of the hospitals reported they had begun
charging uninsured and under-insured patients the same rate that they charged
private insurers or Medicare. Such rates are often far lower than the
“chargemaster” rates hospitals set as the starting point for negotiating with
insurers about how much they will actually accept.
• Only 42 percent of the hospitals reported they were
notifying patients about their potential eligibility for charity care before
attempting to collect unpaid medical bills. The ACA requires such notifications
to give patients a chance to apply to get some or all of their costs written
off.
• One in five hospitals had not yet stopped using
extraordinary debt-collection steps when patients failed to pay their medical
bills. Such steps, such as reporting patients to credit agencies in ways that
can damage their credit scores, placing liens on their property or garnishing
their wages, are now banned.
• Hospitals in states that have not expanded Medicaid reported
having less generous charity care policies, and were less likely to have a
policy about notifying patients of charity care options before they left the
hospital. In general, patients have to be poorer to get free or discounted care
in these states than in states that have expanded Medicaid.
• Only 11 percent of hospitals reported having conducted a
community health needs assessment in the past three years as of 2012. Such
assessments, to identify pressing health issues in the population they serve,
don’t necessarily affect charity care.
Playing
by the rules?
Nonprofit hospitals are exempt from paying most taxes, which
was valued at $24.6 billion in 2011. In return, they must justify their
nonprofit status to the IRS each year by showing how much care they write off
for those who cannot pay.
When Congress wrote the ACA, they sought to use the tax tools
available to them to reduce hospitals’ use of aggressive methods to pursue
payment, and perhaps to prevent individual bankruptcies or credit score damage
caused by medical bills.
Though hospitals had to report for tax year 2012, the federal
government did not issue final language about exactly how to comply and
penalties for non-compliance until 2014. Nikpay and Ayanian will continue to
study the issue as new IRS data become available. They are already working on
2013 data.
“Hospitals are generally complying with the part of the rules
that require they establish charity care policies and publicize them, but this
may not impact the amount of charity care they provide,” says Nikpay, who is
also a visiting scholar at the University of California, Berkeley. “So far, it
appears many aren’t complying with the part of the rules that could increase
their charity care.”
Ayanian, a professor at the U-M Medical School with joint
appointments in public policy and public health, says physicians and patients
should familiarize themselves with policies at their hospitals.
“Financial protection for patients is an under-recognized
component of the ACA, and it’s important that hospitals are required to have
policies, that they disclose these policies, and that they enable people to
apply for help in a timely way,” he says.
“This will be most important for patients living in states
that have not expanded Medicaid to cover people with lower incomes. Hospitals
in those states will likely experience additional demand for charity care
because they now need to publicize their charity care policies and comply with
other IRS provisions.”
With these added requirements, hospitals may start to pull
back on how generous they make their charity care policies – and Section 501(r)
of the ACA does not set standards for that, Nikpay notes.
As more Americans enroll in insurance plans that have high
deductibles, they may find they need to ask for financial relief after a
hospital stay. Even a single person earning $40,000 a year, or a family of four
with an income of $80,000, might qualify for discounted care from many
hospitals.
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