February 13, 2012; Source: New York Times | According to a new study by the Community Service Society, New York hospitals divvy up an annual $1 billion-plus pot from New York’s Indigent Care Pool, but they largely ignore legal mandates to provide relief to patients who cannot afford their oversized hospital bills. Incredibly, some hospitals receive millions from the charity care pool without disbursing a dollar of aid.

The law in place demands that hospitals provide aid for patients with income up to 300 percent of the poverty level. Hospitals may pursue judgments and liens, but must first offer aid applications with assistance for completing them, and not seek payment while the application is pending.

Greater New York Hospital Association trade group executive David Rich acknowledges “there’s a law in place,” but defends the nobility of his group’s members, saying that “hospitals are providing a lot of charity care at a loss.”

New York Department of Health spokesman Michael Moran announced that a panel of patient advocates and hospital administrators is convening to improve application of the law. He stated that the department is in the middle of “a comprehensive data integrity project that will include the retention of an outside auditor.”

So how can a hospital receive millions for charity care without actually delivering any of it? Health law enables such grifting by considering unpaid bills the same thing, on paper, as charity care. The windfall is enormous, as hospitals are reimbursed at rates far higher than rates negotiated with insurers. However, a reckoning is nigh; in 2014, the federal health care overhaul will cease this accounting trick and the state pool will lose several hundred million dollars of funding as a result. –Louis Altman