Stethoscope and Money–Health Care Costs,” Wellness Corporate Solutions

October 11, 2019; Washington Post

As NPQ covered last month, nonprofit hospital bills to low-income patients are getting more scrutiny of late, causing some nonprofit hospitals to dial back aggressive collections. Still, this is an ongoing struggle; it may be less than encouraging to point out that, back in January 2015, an NPQ article was headlined, “Feds Crack Down on Nonprofit Hospitals that Collect Bills Too Aggressively.”

This latest story, by Jordan Rau of the Washington Post, will sound familiar. As Rau points out, “Under the Affordable Care Act, nonprofit hospitals…are expected to provide free or discounted care to patients of meager incomes—or risk losing their tax-exempt status.”

Yet Rau reports that “nearly half (45 percent) of nonprofit hospital organizations are routinely sending medical bills to patients whose incomes are low enough to qualify for charity care, according to a Kaiser Health News analysis of reports the nonprofits submit annually to the Internal Revenue Service.” All told, the hospitals estimated that patients were billed $2.7 billion for charges ultimately written off that would have been waived under the hospitals’ own policies if patients had filled out the appropriate forms.

That sum, Rau observes, “may represent an undercount because it is based on self-reported estimates from hospitals and is not independently audited. And it does not include money financially struggling patients eventually paid.”

Rau adds some examples:

In 2017, BJC HealthCare, a large St. Louis-based system, estimated $77 million of its $134 million in bad debt was owed by patients who probably would have qualified free or discounted care.

Hospitals now owned by Ballad Health, in Tennessee, estimated that $60 million of bad debt in 2016, or 70 percent, came from patients who might have been eligible for help.

The Hospital of the University of Pennsylvania said $43 million of its bad debt, or 52 percent, might have involved patients who could have been excused in 2016 from being billed.

Even when a bill is forgiven due to charity care provisions, implementation can be…well, complicated. For example, Rau relates the case of Ashley Pintos, who “went to the emergency room of St. Joseph Medical Center in Tacoma, Wash., with a sharp pain in her abdomen and no insurance.” Ultimately, St. Joseph’s agreed to waive her $839 bill, but she “still owes $1,611 for care from the ER [emergency room] doctors, who have their own practice group and do not have to follow the hospital’s charity care policies.… That bill remains in collections.”

It doesn’t help, of course, that nonprofit hospitals are often—surprise—highly bureaucratic. As Rau writes, “In their IRS filings explaining the bad debt and in interviews, hospitals said that even when they give applications to patients, some fail to submit them or do not provide complete records of their finances, which can include tax returns and bank statements.”

“There is a gap in trust where our patients must not believe that if they are willing to share information, that it will be to their benefit,” June McAllister Fowler, a spokeswoman for the nonprofit BJC HealthCare system, tells Rau.

Shana Tate, a senior vice president at Ballad Health, concedes that expecting low-income—and, by definition, ill—patients to fill out complicated forms to demonstrate “need” doesn’t work. Tate says her nonprofit aims to be more proactive. “We made the assumption that, ‘We give you the information. What more do you need?’ But we realize a lot of patients don’t read it, don’t pay attention,” Tate tells Rau. “They need someone to hold their hand through this process.”