Posts Tagged ‘non-profit hospitals’

Guest Blog: The Debt Collector Will See You Now

Tuesday, May 1st, 2012

This entry was originally posted on The Shriver Brief.

When patients seek emergency medical treatment, they expect to speak to doctors and nurses—not debt collectors. But hundreds of documents released last week by the Minnesota attorney general reveal that at least one medical debt collector, Accretive Health, has been working on the front lines in hospitals, often demanding that patients pay before receiving medical treatment.

According to The New York Times, the documents show that the embedded debt collectors may appear to be hospital employees and may even discourage patients from seeking emergency care. They follow scripts, just like debt collectors on the telephone, only they speak to patients in person at a time when they have immediate medical needs.

In addition to its scrutinized work at Fairview Health Services in Minnesota, Accretive Health holds contracts for “revenue cycle operations” with Henry Ford Health System in Michigan, Intermountain Healthcare in Utah, and Catholic Health East, which runs hospitals in eleven states. All of these hospital systems are non-profit corporations, meaning that the Internal Revenue Service (IRS) allows them to operate tax-free in exchange for providing certain benefits to the communities they serve. The tax savings realized by non-profit hospitals aren’t peanuts—$ 4.3 billion in 2002 alone. Non-profit hospitals make up less than 2 percent of non-profit organizations, but they receive 41 percent of federal non-profit tax benefits.

Many non-profit hospitals meet their “community benefit” obligations by providing charity care, also known as “financial assistance,” which helps fill a gap in health coverage for many uninsured and underinsured Americans. But measuring and monitoring hospitals’ community benefit efforts has been a challenge. In fact, in 2005, the IRS noted the prevalence of abuse of the amorphous “community benefit” standard, saying it had difficulty distinguishing between non-profit and for-profit hospitals in their operations.

As Corey Davis of the National Health Law Program and Jessica Curtis and Anna Dunbar-Hester of Community Catalyst explain in their recent article in Clearinghouse Review, Congress responded to this abuse by including in the Patient Protection and Affordable Care Act amendments to sections of the tax code that govern non-profit hospitals. These changes protect low-income and self-pay patients through new billing and collection standards that non-profit hospitals must follow to maintain their tax-exempt status. Unlike some parts of the new health care law, these changes went into effect immediately. According to Section 9007(a) of the Patient Protection and Affordable Care Act, non-profit hospitals now must:

  • • refrain from engaging in “extraordinary collection actions” unless and until they have made “reasonable efforts” to determine if a patient is eligible for financial assistance,
  • • limit charges for emergency or other medically necessary care for patients qualifying for financial assistance to the lowest amount charged to insured patients,
  • • refrain from applying “gross charges” to patients who qualify for financial assistance,
  • • have a written policy to provide emergency medical care regardless of a patient’s ability to pay, and
  • • have a written financial assistance policy describing eligibility criteria, whether free or discounted care is available to low-income patients, how the hospital calculates charges, how it will publicize financial assistance, and how patients can apply for financial assistance.

To monitor and enforce compliance with the new law, the IRS recently revised the Schedule H form that non-profit hospitals must file with their Form 990 tax returns. Schedule H, the vehicle for reporting community benefit activities, now includes questions reflecting the new requirements from the Patient Protection and Affordable Care Act.

But the IRS isn’t the only one paying attention to this issue. After the Minnesota attorney general’s report, a California Congressman asked for an investigation of Accretive Health to probe whether its practices violated other federal laws. Last week a North Carolina newspaper ran a weeklong series highlighting questions around hospital profits, and on Friday afternoon, NPR’s “All Things Considered” featured a story on non-profit hospitals’ “stinginess” with charity care.

Whether the new health care law will prevent scenes such as those described in The New York Times article from recurring in non-profit hospitals remains to be seen. Davis, Curtis and Dunbar-Hester note in their Clearinghouse Review article that the Treasury Department is developing regulations that should define exactly what constitutes an “extraordinary collection action” and will elaborate on other sections of the health care law that could curb such behavior. By anyone’s definition, embedding debt collectors among medical staff seems, at a minimum, “uncharitable.”

– Amanda Moore
Staff Attorney-Legal Editor
Sargent Shriver National Center on Poverty Law

 

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Posted in Affordable Care Act implementation, Hospital Accountability/Charity Care | No Comments »

Sunshine in December: Modern Healthcare Goes Deep on Charity Care Spending as IRS Shores Up Future Reporting

Friday, December 23rd, 2011

Two important pieces of news on the health access and transparency front arrived in time for the holidays:

  1. Modern Healthcare’s analysis of non-profit hospital tax reports shows, for the first time ever , what hospitals spend nationally on charity care, and
  2. The IRS held firm on requiring non-profit hospitals to report how they’re complying with ACA requirements on charity care (financial assistance), billing and debt collection for tax year 2011.

Here’s how these pieces connect. Starting with Fiscal Year 2009 tax documents (specifically, Schedule H of Form 990), the IRS finally required hospitals to break down and report community benefit spending, including charity care. After the tax forms were submitted in 2010 and made their way to the not-for-profit service GuideStar, Modern Healthcare took the data and did a comprehensive analysis. It found that half the non-profit hospitals spent 1.52 percent or less of total expenses on charity care, and two-thirds of non-profit hospitals spent 2 percent or less on charity care. The median profit margin was 3.13 percent.

Those numbers—in the aggregate, at least—aren’t pretty. But they’re not the whole story, either. Yes, it’s true that hospitals can choose to spend their community benefit dollars in ways other than charity care, and that those dollars can be well-spent (see Following the Leaders: How Some Hospitals Use Community Benefit Programs to Address Health Equity). But with charity care numbers this low, and unemployment and uninsured rates so high, we have to wonder: are hospitals running their community benefit programs in a way that sidesteps the need for financial assistance in their communities?

Holly Lang, an advocate in Georgia, put the Modern Healthcare findings into context in a “Marketplace” segment on American Public Media, saying that in an experiment she did with 34 hospitals in Georgia last summer, only two provided information about charity care (also called financial assistance) for uninsured patients. Clearly, there is room for improvement in the ways hospitals communicate with patients who need financial help. And we think improvement is on the horizon.

Last week, the IRS announced that, come Tax Year 2011, non-profit hospitals will have to report how they’re complying with new ACA requirements that deal with how hospitals run key parts of their community benefit programs, not just how much they spend. For example, non-profit hospitals will have to report on the contents of their financial assistance policies, including the steps they take to publicize them to the community—just the kind of information Lang found to be in short supply in Georgia last year.

This is an important step. Additional reporting will provide the data necessary for communities to assess their hospitals’ contributions to the community in a broader context than the charity care figures provided on 2009 documents, by including details about the financial assistance policy eligibility criteria, dissemination of the policy, and billing and collections practices. The data will also be crucial to inform further public policymaking.

Will everyone be pleased with these changes? Probably not. The IRS issued a 2010 Schedule H that reflected the requirements of the ACA. But, after pressure from the American Hospital Association and others, the IRS decided to make the reporting optional for 2010. (See our previous blog, Two Steps Forward, One Step Back on Hospital Transparency.)

But we’re glad the IRS has beefed up reporting. We need information about hospital spending and the particulars of key community benefit programs to understand how hospitals meet community needs, and where there’s room for improvement. At the end of the day, we believe transparency and sunshine will drive real change. So the next time Lang has an uninsured patient who needs hospital care in Georgia, we hope more than two provide life-saving information about charity care. Now let’s schedule that follow-up appointment…

– Anna Dunbar-Hester, Policy Analyst

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Two Steps Forward, One Step Back on Hospital Transparency

Tuesday, July 5th, 2011

Last month, we told you about the public availability this year of critical information on hospitals’ Schedule H tax forms regarding their billing, financial assistance and community benefit programs. However, three weeks ago, the IRS announced that it is weakening transparency around hospital financial assistance and community benefit programs for this year by making hospital-specific reporting on financial assistance and community benefit programs optional for the 2010 filing.

The Squeaky Wheel
As we’ve described, the revamped Schedule H asks every non-profit hospital a series of simple yes or no questions about their compliance with the new ACA requirements. More than a year after the passage of the ACA, these questions should be easy to answer. In fact, let’s take a look. (For those of you with a deep love of all things taxes—and really, isn’t that most of us?—the relevant section is Part V, Section B.)

Here’s Question 13, which asks about how the hospital made the public aware of its financial assistance policy:

Schedule H question 13

There is widespread agreement among advocates and many within the hospital industry that these basic steps to notify the public about financial assistance should be part of a hospital’s standard practice. The following questions build on this by asking hospitals whether their debt collection policies allow aggressive tactics to be used and, if so, what steps the hospital takes to notify patients directly about financial assistance.

Simple, right? Sadly, a number of national and state hospital associations — including the American Hospital Association and associations in California, Florida, New York, Illinois, Massachusetts, and Ohio – do not agree that individual hospitals should be required to respond to these questions. They wrote a letter to the IRS recently saying these new reporting requirements are “onerous and redundant”. They also write that the questions go beyond what the ACA requires.

We disagree on both counts. But, perhaps as a result of their complaints, these questions have been made optional for the 2010 tax year. This could be the first step down a slippery slope to strip the ACA requirements of any real power.

What Does This Mean?
This change in IRS policy indicates a couple of things:

  1. Certain (but certainly not all) segments within the hospital industry are currently using their considerable power to actively stop the implementation of these consumer protections;
  2. Regulators are not considering the impact that these provisions—and a lack of transparency about them—could have on community members.

We need to be clear here: We know and work with a number of great hospitals and hospital associations whose staff believe in the mission of serving low- and moderate-income people, who go far beyond what Schedule H or the ACA require on financial assistance and community benefit. Many of them are working with advocates and communities around the country to offer financial assistance, protect Medicaid, and develop innovative approaches to improving community health. The new ACA requirements aren’t about these hospitals. They’re already doing the right thing. The ACA requirements – and Schedule H reporting – are about the hospitals that have fallen behind.

Consumers — especially vulnerable populations — will suffer because information about these programs isn’t publicly available. We have all learned, time and time again, that enforcement and oversight is key to making sure protections are real for patients. While this is a federal policy issue, the impact is going to be felt close to home—in local communities whose hospitals decide not to report this information and/or are not substantially changing their practices in accordance with the ACA.

What Can We Do?
Recently, Community Catalyst sent a letter to the IRS, Treasury, and the Department of Health and Human Services outlining our disappointment with their recent announcement and calling again for strong, consumer-friendly rules and guidance for these hospital programs. We’re calling on policymakers to hold the line on transparency in the years to come—and to issue regulations that protect consumers this year.

But we can’t do this alone. The advocacy community must unite to send a strong signal to the IRS, Treasury, the public and hospitals. We need to let the IRS know that it isn’t just about too much or too little reporting and “administrative burden.” This is about families and people suffering real harm because of inadequate oversight, poor practice, and lax standards. It’s about creating healthier, more financially secure communities.

The summer is a perfect time to ask your local hospitals what they are doing to implement these portions of the ACA. And, it’s a great time to start spreading the word about the new protections to consumers and patients themselves. After all, if they don’t know what the law does for them, they won’t know what they stand to lose.

– Jessica Curtis, Project Director, Hospital Accountability Project

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Posted in Hospital Accountability/Charity Care | 1 Comment »

Does Your Local Hospital Make the Grade on Community Benefit? Now There’s a Way to Tell

Thursday, May 12th, 2011

This year, the public will have unprecedented access to critical new information about how hospitals in their communities fulfill their obligations to the people they serve.

For the past several years, there’s been a need for a well-defined standard by which to judge how well local hospitals support, engage, and invest in the broader health of their communities. Because so many people lack adequate health insurance coverage, this debate has primarily centered on the lack of transparency in how hospitals provide charity care, their methods for billing and collecting on past-due accounts, and the impact of both on access to care in their communities. Many states require minimal reporting on charity care or billing, and often those reports aren’t public.

That is slowly changing, thanks in large part to the Internal Revenue Service (IRS). As the federal agency charged with overseeing federal tax-exempt status, it has a particular interest in understanding whether non-profit hospital behavior on billing, charity care, and related activities is up to snuff. In 2008, it introduced a new mandatory reporting form, Schedule H, that asks non-profit hospitals a series of pertinent questions such as: Did Hospital X have a charity care policy? If so, how did it determine who was eligible, and how did it let patients know such programs were available? How did its billing and collections policies — if it had them — apply to patients who qualified for financial help?

These hospitals have to publicly report not just how they’re spending on community benefit and charity care, but also how much with regard to their total expenses. And that’s where things have gotten interesting.

Short of the Mark: Investigation Shows a Wide Range in Practices
Schedule H data is just becoming available this year, and it’s already being evaluated by industry insiders. A recent survey by Modern Healthcare Magazine found that nine out of 10 hospitals devote less than five percent of their total expenses to charity care — the average amount reported is just 2.5 percent of all hospital expenses. The findings, which are the result of the magazine’s analysis of Schedule H tax reporting of 156 hospitals from 20 large health systems, are detailed in the article Short of the Mark.

The study also draws attention to how hospitals reported the amounts of bad debt they attributed to patients who are unable to pay and fall within the hospital’s charity care guidelines. For community groups and advocates, this data is telling. A high number can signal that hospitals’ processes for identifying and qualifying patients for charity care are lacking, or that hospitals’ standards for eligibility in charity care programs don’t match the demographics of their communities.

So how did hospitals in the sample stack up? Eighty-three of the 156 hospitals reported that none of their bad debt could be traced back to patients eligible for charity care — a good outcome that indicates hospitals made efforts to ensure qualifying patients received charity care. By contrast, 12 hospitals said that at least half of their bad debt costs are made up of bills sent to consumers who would be considered eligible for charity care; some hospitals, like BJC Healthcare, reported that 81 percent of its bad debt could be attributed to patients qualifying for charity care.

Why this matters in a Post-ACA World
Why should people care how much charity care their local hospital is providing? With the Affordable Care Act law of the land, isn’t this an issue for a pre-health reform world?

On the contrary. For one thing, most of the coverage protections in the ACA don’t get phased in until 2014, leaving the approximately 50 million uninsured Americans vulnerable to medical debt. A study released this week by the Department of Health & Human Services showed that most uninsured families can’t pay hospital bills: On average, they can only afford to foot the entire bill of approximately 12 percent of hospital stays. Furthermore, while the ACA makes great progress in covering millions of currently uninsured Americans, not everyone will be covered. Affordability exemptions, immigration status, and enrollment considerations will all play a role in a continued uninsurance rate, even after full implementation. Even then, some newly insured may find it difficult to afford their health care-related costs, making them technically under-insured. This can lead to hospital bills and other kinds of medical debt that can follow a person for years. These populations will still rely on some form of charity care, so it’s critical hospitals get it right.

Second, Schedule H interfaces with the ACA in several key ways. We’ve written before that the law draws a new line in the sand for non-profit hospitals. To qualify for tax-exempt status, hospitals must provide a range of benefits to patients including charity care (now called “financial assistance”) policies and community benefit plans that engage their communities. Schedule H, though new, has already been adjusted to account for the new rules for Tax Year 2010. This time next year, a hospital will also have to report the steps it’s taken to qualify patients for charity care before it sends them to collections. That’s new, courtesy of the ACA, and it’s a powerful starting point for community members who may want to work with the hospital on improving its practice.

Third, non-profit hospitals benefit considerably from community investment. The Joint Committee on Taxation estimates that non-profit hospitals receive $12.6 billion per year in local, state, and federal tax exemptions. In return for this transfer of revenues from taxpayers, non-profit hospitals are expected to provide some benefit to their communities, including charity care. By making more information publicly available, Schedule H gives hospitals opportunities to broadcast what they are doing to “repay” that investment. It also gives communities unprecedented insight into hospital budgeting, prioritization and policies on debt collection, billing, and financial assistance, seeding questions and informing community partners’ conversations with their local hospitals.

What can advocates do?
The results of the Modern Healthcare survey, combined with new data from HHS about what the uninsured can afford to pay, are troubling. These reports demonstrate that there are critical gaps between what some communities need and what hospitals provide. However, the hospitals that are doing the right things are to be commended, and their practices should stand as a model for others.

Whichever end of the spectrum a community’s hospitals are on, the Schedule H provides advocates with unprecedented access to information and, therefore, critical opportunities to engage. Hospitals that are leaders in this area should be open to hearing from the community about ways that their programs can be tailored and enhanced — especially now that the ACA requires hospitals to regularly assess their communities’ health needs and to seek input from community members and public health experts in the process. Hospitals that have some work to do in this area may benefit from the same consumer input.

Consumer advocates are uniquely positioned to facilitate hospital-community discussions, to help identify areas of common ground and negotiate areas of disagreement, and to play a watchdog role where necessary. Over the next few months, Community Catalyst will offer more information and resources for groups who are interested in working more directly on community benefit issues.

In the meantime, though, we want to hear from you: Have you looked at your local hospitals’ Schedule H? What have you found, and what information would be most helpful to your work in the near future? Please feel free to email Hospital Accountability Project Director Jessica Curtis with responses (jcurtis@communitycatalyst.org).

– Jennifer Lemmerman, Field Coordinator

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The AHA and charity care provisions: Against them before they were for them

Friday, May 14th, 2010

Last week, we talked about the new requirements in national health reform for nonprofit hospitals to provide and make public charity care as a condition of their federal tax-exempt status:

•    Having a written financial assistance policy that clearly spells out eligibility criteria and how to apply
•    Taking steps to notify the public about financial assistance
•    Limiting charges to patients who qualify for financial assistance
•    Making a “reasonable effort” to determine whether patients qualify for charity care before engaging in extraordinary collections activity.

See Community Catalyst’s summary of hospital provisions for the entire list.

The  American Hospital Association’s position on these provisions—and the need for them—has been a moving target during the health reform debate and since.

The AHA has long maintained that voluntary standards were sufficient to make sure hospitals were doing all of the above.  Our report, Best Kept Secrets, blows a hole in that theory: as of late summer 2009, the majority of hospitals surveyed by The Access Project didn’t meet the standards that are now federal law.

But those findings didn’t fit with the story of compliance told by the AHA, which called Best Kept Secrets “out of sync with field practices and the new health reform legislation” (AHA News, May 5, 2010), and criticized reporting requirements the IRS imposed on nonprofit hospitals last year:

The concerns at the heart of [Best Kept Secrets] have been dealt with in the health care reform bill, which we supported.” – Melinda Hatton, AHA General Counsel, (Kaiser Health News, May 5, 2010)

But the AHA did not support these provisions in reform—in fact, it tried to kill them. [From a letter to Congressional leadership Jan. 7, 2010]:

The AHA does not believe that the new requirements for charitable hospitals and their ability to maintain tax exemption in the Senate bill are necessary, and we urge the conferees to remove these provisions from the final health reform conference report.

Not all hospitals worked to  squelch the charity care provisions. In fact, the Catholic Health Association and Alliance for Advancing Nonprofit Healthcare supported them (See this Modern Healthcare piece).

And despite the AHA’s very powerful opposition – and its revisionist version of history– the provisions made it into the bill.

That’s the first step. The next one is making sure they are implemented and enforced. State advocates in California and Pennsylvania, where similar laws currently exist, have found that monitoring is necessary to ensure compliance.

On the federal level, implementation means making sure the IRS puts robust requirements in place through regulation and guidance. (Read and sign-on to Community Catalyst’s letter to the IRS.)

At the state level, that involves comparing the federal law to existing state law and pushing for stronger state oversight and requirements, and/or working with hospital institutions to help bring them into compliance.

–Jessica Curtis, director, Hospital Accountability Project

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Charity Care: Still A Hospital’s Best Kept Secret?

Friday, May 7th, 2010

Back in 2005, [Manny] Lanza was diagnosed with arteriovenous malformation, a serious brain condition. He had been working 50 hours a week at a fast food restaurant, but his job was considered part-time and his employer did not offer him health insurance. He was referred to St. Luke’s-Roosevelt Hospital in Manhattan for treatment, where they reportedly refused to perform a needed procedure unless he was insured.

Manny’s family attempted to enroll him in Medicaid, but the delay in treatment proved deadly. In 2005, at the age of 24, Manny died in his bedroom at home from causes related to his brain disorder.” (full article here.)

At the time Manny died, New York hospitals were receiving $1 billion every year from the state to care for uninsured and underinsured patients. But there were no conditions attached to that money—they didn’t have to offer free or discounted care to actual patients, and they didn’t have to tell them about financial assistance.

Manny’s Law, passed in 2007, now requires New York hospitals to notify patients of charity care upfront.

Non-profit hospitals get tax breaks, and they’re expected to provide “benefit to the community”—including charity care—in return.

But despite Congressional investigations, a prevalence of stories in the press, and similar laws in a handful of states, a new report released this week from The Access Project and Community Catalyst shows non-profit hospitals still failing to inform patients in need about charity care.

Congress, in the recently-passed federal health care reform law, inserted a provision requiring non-profit hospitals to establish clear financial assistance policies—in writing—that specify eligibility criteria and widely publicize these policies. It also prohibits hospitals from taking extraordinary collection actions before making a reasonable effort to determine if patients are eligible for financial assistance

That’s good news for people who find themselves in Manny’s position: uninsured or underinsured, needing health care they know they can’t afford.  But is the problem solved?

Our report suggests it isn’t. The Access Project wanted to know whether patients who needed hospital care and weren’t able to pay could easily find information about charity care.

Using hospital websites and phone calls, researchers surveyed 99 randomly selected non-profit, AHA-member hospitals in the summer of 2009 to see whether hospitals were complying with the AHA’s voluntary guidelines on hospital charity care. Did hospitals:

  • –Make information on hospital-based charity care policies and other known programs of financial assistance available to the public?
  • –Communicate this information to patients in a way that is easy to understand, culturally appropriate, and in the most prevalent languages used in their communities?
  • –Have understandable written policies to help patients determine if they qualify for public assistance programs or hospital-based assistance programs?

The results were pretty grim. Though 85 hospitals mentioned the availability of charity care, fewer than half of these (42) provided application forms, and only about a quarter of the hospitals (26) provided information about who qualified for charity care. Moreover, only about one-third (34) provided information in a language other than English.

And that’s just one survey. From California to Texas to North Carolina, surveys show that hospital notice and provision of charity care is uneven. While it’s true many hospitals do exemplary work to reach out and meet community needs, others just aren’t pulling their weight.

The new requirements for non-profit hospitals go into effect this year.  But given these results, it seems like hospitals have a long way to go to comply.

(Next week, we’ll look at the hospital industry’s response to the report.)

–Jessica Curtis, director, Hospital Accountability Project

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