Help with medical bills difficult to access despite hospital charity rules, study finds

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Most U.S. hospitals offer some relief to patients who struggle to pay their bills. These charity care or financial assistance programs can cover all or part of the cost of an outstanding medical bill.

The catch? Hospitals and health systems themselves largely decide how their programs work and who qualifies, which can limit access to this help. That variance also creates a patchwork of eligibility criteria across providers.

In Pennsylvania, a patient from a four-person household with a total income of $96,450 (three times the current federal poverty guideline) could be eligible for free care at UPMC Memorial Hospital in York. Meanwhile, Temple University Hospital in Philadelphia might forgive half of their bill, and Allegheny Health Network would require that person to meet “medical hardship” criteria to qualify for assistance.

Researchers crunched the numbers on this lack of standardization in a recent Health Affairs study, comparing policies at 2,989 nonprofit acute care hospitals across the United States.

Spotlight PA spoke with one of the paper’s authors, Luke Messac, a Boston-based emergency medicine doctor, historian, and board member of Dollar For. The nonprofit helps patients access charity care and provided data for the Health Affairs article. In this conversation, which has been edited for length and clarity, Messac discusses these differing financial assistance policies and how they impact patients.

Spotlight PA: Why do hospitals offer charity care?

Luke Messac: A lot of hospitals were founded explicitly to care for the poor, so some level of charity care has been around for a long time. The IRS has had requirements around charity care since at least the ’50s. Those have changed a lot over time, and then the Affordable Care Act requires all nonprofit hospitals to publish a financial assistance policy. But those can vary pretty widely, so hospitals in most places can determine their own eligibility criteria.

You and your colleagues found that the income limits for these programs can range from 41% to 600% of the federal poverty guideline, depending on the hospital. Did this surprise you?

Yeah, absolutely. You kind of think when you go to one hospital versus another, the bill won’t change that much. But at least for people who may qualify for financial assistance, the criteria can change a whole lot. Some nonprofit hospitals don’t offer any free care at all — they only offer some discounted care. But among those that do, the eligibility criteria vary extremely widely.

The federal poverty guideline … it’s about $30,000 for a family of four. Some hospitals will only offer [free care] if you make less than half of that. Some hospitals will offer it if you make six times that … so it’s a huge variation. I personally didn’t realize that it was that large until we got a good look at the data.

Why is it that these can differ so much from hospital to hospital?

Some of it has to do with policy. Some states … have policies where you have to provide free care or discounted care at certain [income] levels.

But other times, hospitals have a lot of free rein in terms of the criteria that they set. We found some kind of systemic variability — hospitals in areas with higher levels of poverty and uninsurance, those places tend to have less generous criteria, which kind of makes sense in a way. If you have a lot of poor patients in your area, then maybe you can afford to provide less charity care.

But sometimes there’s just hospitals that are more devoted to care for the poor and low-income. And it isn’t always what you’d think. Some of it just has to do with the devotion of the executive level administration to financial assistance.

How do these widely differing policies impact patients?

A lot. If you qualify for free care after a prolonged hospitalization, that will save you from a lot of medical debt. These hospital bills can run from a few hundred dollars to hundreds of thousands of dollars. So, especially if you’re not insured, or even if you have high deductible insurance plans, you can be on the hook for a huge bill.

And these bills, you know, they’re not just bills on paper that you can ignore. If you don’t pay your hospital bill, then some hospitals will take you to court. They can garnish your wages, they can foreclose on your home. They can take your bank account savings.

Whether or not you qualify for a bill at a given hospital is a huge variable in what the rest of your life is going to be like, and it’s one that actually doesn’t have too much rhyme or reason to it.

Beyond income eligibility rules, what other barriers to financial assistance exist for patients who need it?

A lot of patients don’t even know about it. Nonprofit hospitals [are] supposed to publicize [their financial assistance policies] in certain ways. It’s supposed to be in the lobby when you walk in the [emergency department]. It’s supposed to be on your bills. But some hospitals do better or worse jobs of making sure that patients are aware of these financial assistance programs. And in fact, there have been some pretty salacious stories of hospitals that worked very hard to try to prevent patients from learning about them.

[Hospitals] can make it difficult to find it on their website and difficult to apply. You have to send in a lot of paperwork often in order to successfully complete an application — proof of income, proof of assets, residency paperwork, identity paperwork. And then you might have to follow up with the office and see if they’ve actually gotten your application or are processing it or it didn’t get lost somewhere. Sometimes you have to fax the paperwork in, and who has a fax machine?

And then on top of that, then there are these requirements that we documented in the paper — income requirements, residency requirements … that may or may not trip up your application.

How could these issues you named potentially be addressed by public policy?

At the federal level, there was some interest by the Consumer Financial Protection Bureau in medical debt. They were pushing for an end to medical debt credit reporting. Medical debts end up on people’s credit reports and harm their credit scores and impair their abilities to get loans or get a job, and so those started to fall away in the last few years. We’ll see if those hold in the new administration.

Beyond that, a lot of states have started to pass laws about financial assistance and debt collection that do things like ban the sale of medical debt to third parties that might be more aggressive in seeking to collect, that do things like require hospitals to have certain minimum levels of financial assistance eligibility criteria.

And then there’s a thing called presumptive eligibility that some hospitals do already, and some states are starting to require. North Carolina just instituted a new program. [Participating hospitals] can do things like see if you’re enrolled in other state benefits that are means-tested, like SNAP benefits or heating assistance, and if you are, and if your income’s low enough, then they know automatically you qualify, and they can do away with all the application process.

[The] point is to prevent patients from having to go through the whole process of applying if you know that they are very likely to qualify already.

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