Charity HealthCare Conundrum Brewing Among Providers

As millions of previously uninsured Americans gain access to affordable healthcare coverage, hospitals and health systems are reconsidering the generosity of their charity care policies.

Improved healthcare coverage access, mainly through Medicaid expansion and the new insurance exchanges, has raised a thorny question for hospitals and health systems: Should low-income people who refuse to obtain affordable coverage be eligible for charity care?

"When do we not look after patients? We don't have an answer for that question, but it's staring us right in the face," Peter Angood, MD, CEO of the Tampa, FL-based American College of Physician Executives, said last week.

While the proportions of responsibility for healthcare costs among patients, providers, and payers are changing, charity care is likely to be a flashpoint in the transformation process, he said. "It's going to get pretty contentious at times."

The future of charity healthcare as it approaches universal-access level is beginning to play out in states that have adopted some form of the prime accessibility mechanisms under the Patient Protection and Affordable Care Act: expansion of Medicaid to more adults and the new public insurance exchanges.

In New Hampshire, Southern New Hampshire Medical Center, a 188-bed, two-campus acute care facility in Nashua, has restricted its charity care policy based on patients' eligibility for health coverage, the Kaiser Family Foundation reported earlier this month.

The new policy states: "Applicants who refuse to purchase federally mandated health insurance when they are eligible to do so will not be awarded charitable care." The new policy also bars charity care aid for those who are eligible for expanded Medicaid, but who decline the coverage. Enrollment in The Granite State's Medicaid expansion program began this summer.

Officials at the New Hampshire Hospital Association say most of its members are waiting to make charity care policy changes until the new public insurance exchange is performing at a higher level.

"Generally speaking, most providers in New Hampshire are proceeding slowly in regard to adjusting their financial assistance polices as they, and the public, learn how the new health insurance marketplace and the operational components on healthcare.gov [are] affecting the delivery of care," NHHA officials said last week in a prepared statement.

"One complicating factor in New Hampshire is that because of the narrow network of providers offered under the only plan available on the health insurance marketplace this year by Anthem Blue Cross and Blue Shield, not all health providers had contracts to provide care to those who were eligible for the new health insurance during the first enrollment period."

With Pennsylvania cutting a deal last week with federal officials to expand Medicaid under the PPACA, 27 states have accepted Washington's offer to help pay for expansion of the program to millions of adults.

In the remaining 22 states that have yet to expand Medicaid, charity care is literally an imperative for hospitals, W. Stephen Love, president and CEO of the Dallas-Fort Worth Hospital Council, said last week.

"Unfortunately, Texas has over 6 million people with no medical health insurance coverage. Many of these people are employed but hover near the federal poverty level. The current Medicaid coverage is generally limited to pregnant women, children and disabled adults," Love said.

Since the state has decided not to expand Medicaid stranding 1 million Texans in a coverage gap where they are not eligible for Medicaid or the health insurance marketplace, Love's organization "would like to implement a 'Texas Way' program to help people caught in the coverage gap with a program similar to other states like Arkansas."

"It appears no [North Texas] hospitals have made significant changes in charity care policies…. We truly are giving our communities these services, but obviously the patients would be better served in the right setting, at the right time of intervention or treatment, with the right coverage and access," Love said.

'No One is Denied Emergency Care'

NHHA officials say there are several factors that contribute to an effective and ethical charity care financing policy currently in place at hospitals in general, and New Hampshire in particular.

"Key factors in determining financial assistance include the clinical needs of the person seeking assistance and their access to affordable health insurance," they said. "No one is denied emergency care due to health insurance or financial issues. Hospitals and medical practices welcome an increase in the availability of health insurance for the people they serve, but also recognize that the new health insurance requirements and options are complicated to understand and implement. Proceeding cautiously with any changes in the financial assistance policies and practices allows time to understand the implications of these new health insurance options."

Love says Texas hospitals have to operate under strict guidelines for charity care and other "community benefits."

"Texas has specific regulations related to tax exempt hospitals regarding community benefits," the hospital council chief said. "The hospitals are required to have 5% of net patient revenue in community benefits, including 4% from charity care and unreimbursed cost of Medicaid and 1% from unreimbursed cost of Medicare. Additionally, all hospitals spend significant dollars on community education, including prevention, wellness and chronic disease management."

Charity care policies must strike a delicate balance and reflect a hospital's commitment to its community, he added. "Obviously, any charity care policy must be flexible, and moral, ethical and legal considerations should be an integral part of any eligibility requirements.