Hospitals are supposed to offer financial assistance: free or discounted care for patients who can’t afford to pay. In fact, creating and publicizing a financial assistance policy is a requirement for nonprofit hospitals to maintain their tax-exempt status. But the requirements for financial assistance policies are vague, allowing hospitals to make their own rules around who is eligible and how easy is it to apply.
As the rising costs of healthcare and prevalence of high-deductible plans have put millions of Americans at risk for medical debt, it is more important than ever that nonprofit hospitals are generous with their financial assistance. However, recent investigations have shown that many hospitals do the opposite, putting up obstacles for low-income patients to get free care for which they are eligible.
Financial assistance as a last resort
The first barrier to accessing free care is even knowing that it exists. Sounds simple, but many hospitals train their staff to go to great lengths not to mention financial assistance. For these hospitals, talking about financial assistance is like talking about fight club.
We previously wrote about how Providence Health System’s “Rev Up” program skirted around financial assistance rules to try and wring more money out of patients. The heath system trained their staff to only mention financial assistance as a “last resort” after asking patients for payment and proposing a payment plan, according to the New York Times.
Unfortunately, this type of behavior isn’t as rare as one would hope. A Wall Street Journal investigation of hospital financial assistance practices found examples of many other hospitals training staff to play down or not bring up financial assistance until asking for payment multiple times.
For example, at Augusta Health System in Georgia, a training document directed staff to start the conversation by requesting the entire amount due from the patient. If the patient couldn’t afford to pay, they are supposed to request payment for smaller proportions of the bill (75%, then 50%, then 25%). Only after the patient refuses to pay in installments can the staff bring up financial assistance.
Perhaps most egregiously, if the person wanted to apply for financial assistance, Augusta staffers were told to reschedule the upcoming appointment–essentially delaying care to dissuade patients from applying for assistance.
The Mayo Clinic, one of the most prestigious hospitals in the country, recently sued more than a dozen patients who qualified for financial assistance, according to the Minnesota Post Bulletin. Of 14 patients eligible for financial assistance who were sued, 12 said in interviews that the Mayo Clinic “made no mention of charity care when they called for help with an unaffordable bill, instead suggesting payment plans or assistance outside of Mayo.”
Absurd red tape
Once you know about financial assistance, you then have to apply. The application process can be streamlined, or it can have miles of red tape and even invasive questions. For example, the Wall Street Journal writes about the application for financial assistance at Aspirus Health, a Wisconsin hospital system:
Aspirus Health has a 19-item checklist, including tax returns, pay stubs, retirement-account documentation, mortgage information and three months of bank statements showing all deposits and withdrawals. The form demands the make, model and loan balance on all vehicles, along with the applicant’s monthly costs for 17 categories, from water and sewer charges to cable-TV bills and alimony. It also asks if any member of the household is pregnant. Patients have 10 days to complete the application.
A recent JAMA analysis of changes to hospital financial assistance policies during Covid-19 shows how convoluted policies can be. Eligibility for financial assistance is not just limited by income, but can be restricted based on patients’ assets, residency, citizenship status, what services they received, insurance status, and more. One hospital changed income eligibility cutoff for household to include the income of “housemates.” Others excluded assistance in paying for birth control or care for self-harm.
Hospitals don’t have to have such lengthy applications with so many restrictions. In fact, hospitals can pre-approve patients for financial assistance based characteristics that indicate financial need such as homelessness, unemployment, incarceration, or Medicaid coverage. Some hospitals pay credit reporting companies to prequalify patients based on their loan, credit card, and mortgage information.
However, the Wall Street Journal analysis found that 15% of nonprofit hospitals don’t avail themselves of this option, and even some hospitals that do still hounded patients to pay.
Increasing accountability
How can we improve accountability around financial assistance policies? The current IRS regulations are designed to encourage hospitals to publicize their financial assistance policies, but they don’t have strong teeth. Nonprofit hospitals have to make their policies “widely available” on their website and make paper copies available upon request in the ED and admissions areas. But hospitals don’t have to put it on the home page of their websites or include the policy in their intake forms. Hospitals are also required to “notify and inform” members of the community and patients about the policy, but this notification could be as little as one line on the hospital bill about financial assistance.
States could tighten up these regulations by specifying how hospitals publicize their financial assistance policies and how they tell patients about the policy. Instead of just making the policy available “upon request,” hospitals could be required to give all patients a QR code to scan upon admission that shows them if they are eligible for assistance. Hospitals could be required to screen patients for eligibility upon admission or at least before sending their bill to collections, rather than just “inform” patients about the policy. There could also be regulations around who automatically qualifies for assistance, to reduce some of the onerous administrative hurdles.
States or the IRS could also improve their enforcement of existing regulations. For example, the Washington State attorney general is suing Providence Health for aggressively pursuing payment regardless of whether patients were eligibility for financial assistance.
The nonprofit tax exemption is worth billions to US hospitals– but the IRS rarely revokes hospitals’ tax-exempt status. If the IRS were to crack down on hospitals’ violations and threaten to take away their tax breaks, hospitals might be scared into actually complying with the law.
Lastly, doctors at hospitals can take a stand for their patients. Financial toxicity is a health hazard and should count as patient harm. Dr. Dave Chokshi at the CUNY School of Public Health and Health Policy and Dr. Adam Beckman at Harvard Medical School started a new list of “Never Events” that doctors can get behind to push their hospitals to be more socially responsible.
People shouldn’t have to turn to Tik Tok to learn that financial assistance exists. It’s time for hospitals to earn their charitable designations and stop being stingy with free care.