The Impact of Dropping Charitable Medical Treatments

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Many people are expected to remain uninsured even with the implementation of the Affordable Care Act. This includes those who cannot afford a plan on the exchange (and will likely be penalized) as well as those who live in states where Medicaid was not expanded and have found themselves in the “coverage gap,” meaning their incomes are too high to qualify for Medicaid and too low to qualify for subsidies.

Long before the Affordable Care Act was ever conceived, charitable medical treatments were being performed in communities to aid those who may have a difficult time paying for healthcare.

These treatments continue to be offered and are usually provided to uninsured or underinsured individuals or individuals whose income falls within a pre-set range, which may be up to four times the federal poverty level.

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The Impact of Dropping Charitable Medical Treatments

  1. 1. DROPPING CHARITABLE TREATMENTS MBAA © 2014 Page 1 The Impact of Dropping Charitable Medical Treatments WHAT HAPPENS TO THE UNINSURED?
  2. 2. DROPPING CHARITABLE TREATMENTS MBAA © 2014 Many people are expected to remain u n i n s u r e d e v e n w i t h t h e implementation of the Affordable Care Act. This includes those who cannot afford a plan on the exchange (and will likely be penalized) as well as those who live in states where Medicaid was not expanded and have found themselves in the “coverage gap,” meaning their incomes are too high to qualify for Medicaid and too low to qualify for subsidies. Long before the Affordable Care Act was ever conceived, charitable medical treatments were being performed in communities to aid those who may have a difficult time paying for healthcare. These treatments continue to be offered and are usually provided to uninsured or underinsured individuals or individuals whose income falls within a pre-set range, which may be up to four times the federal poverty level. " In order to provide these services, some facilities require hard evidence of low income, such as tax documents and pay stubs. Others don’t require much more than a simple verbal statement by the patient regarding their inability to pay. Often, patients do not deliver the documentation required after services are rendered, and facilities have been known to generate bills and follow through on collection efforts. If the income is validated (or the statement is accepted by the facility), either a bill is not generated or a sliding-scale statement is calculated based on the patient’s ability to pay. " While charitable treatment is noble, and a literal lifesaver for many who have reaped its benefits, it is found that most hospitals spend just a tiny fraction of their giant revenues Page 2 Many people are expected to remain uninsured even with the implementation of the Affordable Care Act. What’s in it for Them? “
  3. 3. DROPPING CHARITABLE TREATMENTS MBAA © 2014 keeping these programs going. Some spend up to five percent and some spend less than one percent. Given the markup of many hospital services and items (many times the actual cost plus a reasonable profit), officials say it may not be a far reach to say that these facilities really don’t “spend” much at all in giving back to the community. " But why would hospitals continue providing services – especially those that really don’t have to? What benefit is it to them? Some hospital administrations have really grasped the idea that it is much less expensive to provide free care to some patients than it is to continue denying them routine medical services only to have their illness progress to the point where they have to go into the emergency room, where charges get even higher, and overcrowding is already an issue. " Also, tax-exempt hospitals in the U.S. receive an estimated $7-$13 billion per year in tax breaks due to providing community benefits including charitable treatments, plans that are designed to increase public health and monetary shortcomings that go along with servicing patients that are part of research or Medicaid. Some states require hospitals to provide some type of charitable medical treatment, but for many it remains an option. In some states that do mandate charitable treatments, not only are hospitals required to provide free/low-cost treatment, there is a minimum amount that they are required to provide in order to maintain a tax exemption. " For example, in the state of Texas, it is mandatory for both public and private hospitals to deliver a minimum of four percent of their net patient income in charitable medical treatments. Four percent doesn’t seem like much, but again, it can be the difference between life and death or bankruptcy and financial freedom for the patients. In other states, the only requirement is for the non-profit facilities to list which community benefits Page 3 Why Would a Hospital Drop Charitable Benefits?
  4. 4. DROPPING CHARITABLE TREATMENTS MBAA © 2014 they provide in order to preserve their status as tax- exempt. " For states expanding Medicaid, it would only make sense to see charitable treatments tapering off – mainly because there will be no “coverage gap.” The patient either qualifies for Medicaid, so the hospital has no reason to provide charity treatment, or they qualify for the subsidies under the Affordable Care Act. " Studies have already shown an estimated 30 percent decrease in patients seeking free medical services in those states. These numbers dropped to $1.9 million in the first quarter of 2014 from $2.8 million in the first quarter of 2013. " In contrast, states that have not expanded Medicaid saw a slight increase to $4.2 million in the first quarter of 2014 from $3.8 million in the first quarter of 2013. Some fear that reimbursements and tax cuts may also be at risk as the funds for these programs may be re-directed to cover the Affordable Care Act subsidies. If this happens, hospitals may cut the programs due to lack of tax benefit or reimbursements. " Popular belief among supporters of charitable treatment is that a lower value is placed on the lives of those with less money, and by not offering a comparable healthcare service to them, they are essentially being told they do not matter as much as those who can freely pay for their medical services. " Given the number of dollars these facilities receive due to over billing, double billing and generally higher than necessary fees, it is not considered a far stretch to go ahead and Page 4 What’s the General Belief?
  5. 5. DROPPING CHARITABLE TREATMENTS MBAA © 2014 provide the uninsured, underinsured and low-income individuals with the same quality healthcare as their wealthier counterparts. " Studies have shown that a high number of hospitals do not always disclose the availability of a free or low-cost program to their low-income patients. This may in fact be part of the reason that such a small percentage of revenues are spent on these programs. " The staff may also consider it the responsibility of the patient to speak up and say they need assistance with paying. Understandably, if free or low-cost care is offered to everyone, it will be accepted by most, and more money will be said to be “lost” due to these programs. Although, for those patients who have no idea whether a program like this exists, being without this available resource can obviously lead to needless financial ruin. " It was also found that some for-profit hospitals provided just as much charitable service as some non-profit hospitals. This might be due to the lack of federal minimum requirement on charitable services. " Non-profit facilities have also been found charging uninsured, low-income patients more than patients with health insurance. One explanation for this may be the negotiation on the part of the insurance company; nevertheless, it may be difficult to find any justification in requiring that a poor individual pay more than an enormous corporation for identical services. In states where Medicaid will not be expanded, the discontinuation of charitable medical treatment programs could be detrimental, sending the many patients into financial distress in the event that they need any type of medical service. Even some of the insurance plans available provide minimal benefit financially, and if an ailment struck that happened to be time/cost consuming, these patients could end up with collection accounts or life-altering debt. " In a perfect world, every citizen would have healthcare. No one would go broke because of his or her health, and no one would be turned away without first being treated and allowed Page 5 What About the Patients? Non-profit facilities have also been found charging uninsured, low-income patients more than patients with health insurance.“
  6. 6. DROPPING CHARITABLE TREATMENTS MBAA © 2014 to fully recover. At the very least, charitable treatment programs would have a suitable replacement before being dropped, such as the expansion of Medicaid, giving the poorer demographic a healthcare alternative. " Since that’s not our world, however, these people who fall through the cracks in areas where charitable care is dropped will have very few choices. Many patients who depend on charity care choose to go to the emergency room for care, which is often a counterproductive option for hospital staff and for other patients with true emergencies. " Hopefully, a facility offering charitable treatment would be within a reasonable distance. Either way, these individuals will likely find themselves either in a dangerous debt spiral (if they receive care) or a dangerous health spiral (if they do not). However, a patient can choose to negotiate their medical costs either before or after treatment for a potentially significant price savings. " Understandably, each geographic area cannot be expected to offer the same services at the same levels as a facility in another area. Each area is comprised of different demographics and different levels of uninsured or underinsured people. " An inner-city hospital where a lot of low-income people go for care will absolutely have a greater need to offer charitable medical treatment than a hospital in a more affluent area with a smaller population of low-income individuals. This subject is one that should continue to receive a great amount of media attention until a fair solution is achieved. " Page 6 Call 855-203-7058 or Click the Button to Visit BillAdvocates.com Looking to Dispute Medical Bills?

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