AMA votes for stronger financial assistance standards

Medical debt is a growing problem in the United States with an estimated 20 million Americans affected. Debt can often be attributed to hospital visits where a patient may or may not have been able to access financial assistance. 

Recently, physicians and medical students of the American Medical Association (AMA) voted in favor of supporting standardized financial assistance policies and greater oversight of nonprofit hospitals. 

The AMA voted to support the following policies:

• Developing publicly accessible minimum eligibility standards for nonprofit hospital financial assistance programs
• Required screening of patients for charity care eligibility prior to billing
• Standardizing the definition of what is considered a community benefit
• Increased enforcement on nonprofit hospitals that provide little or no community benefit, including the ability to enact penalities or revoke tax-exempt status

“Failing to standardize the financial assistance process across all nonprofit hospitals makes the benefit inaccessible to many eligible people, “said Bruce A. Scott, MD, president of the AMA. “Often the application process is not clear and requires patients to complete onerous paperwork requests, discouraging patients from completing financial aid applications.”

Why are stronger standards needed? 

Currently, whether or not a patient is eligible for free or discounted care can vary greatly from hospital to hospital. Lown Institute research has shown that while a patient may qualify for financial assistance at one hospital, other hospitals in the same area may have substantially less generous policies that deem the same patient ineligible for help. So which hospital a patient chooses can have a dramatic effect on their medical bill.

Nonprofit hospitals have an obligation to give back

A Lown Institute analysis from earlier this year revealed that 80% of nonprofit hospitals spent less on financial assistance and community investment than the value of their tax breaks, amounting to a whopping $25.7 billion “fair share deficit.” That’s enough to erase 29% of the medical debt in the nation. Financial assistance is a primary way for hospitals to give back to the communities extending them tax breaks, and having standardized policies should reduce misconceptions and confusion over eligibility. As a result, it’s possible fewer patients will delay necessary treatment or avoid care altogether due to fear of cost.

Through this newly adopted policy, the AMA has taken a very public action to signal their support for more socially responsible hospitals. How meaningful this turns out to be will depend on how they match action to their words by following through on their promise of advocacy, and we look forward to it.