A crucial part of hospitals’ social mission is providing care to all who need it, regardless of their ability to pay. Nonprofit hospitals are required to provide free and discounted care to low-income patients through financial assistance programs.
Given that most Americans cannot afford an unexpected $500 bill without going into debt, having financial assistance available and easily accessible is key for reducing the burden of medical debt in the U.S.
Check out our community benefit policy tracker to see the latest on how states are tackling hospital accountability on this issue!
Trends in financial assistance spending
Unfortunately, several recent reports show that spending on financial assistance (also known as “charity care”) appears to be declining among hospitals overall. A Modern Healthcare analysis found that hospitals’ median financial assistance spending as a percentage of operating expenses declined from 1.21% to 0.99% from 2020 to 2022. Although one might have expected financial assistance spending to increase due to the great need for emergency care during Covid-19, hospitals’ expenses also increased greatly from labor and other costs.
Another 2023 study in Health Affairs found that on average, nonprofit hospital income grew from 2012-2019, but financial assistance declined slightly; in comparison, for-profit hospital spending on financial assistance more than doubled during that time.
Hospitals also differ widely in the amount of free and discounted care they provide. For example, health systems like NYC Health+Hospitals devoted 6.85% of their expenses to financial assistance in 2022, while Baystate Health in Massachusetts spent only 0.16%, according to Modern Healthcare.
I’d like a refund, please
In Washington state, where there are additional state requirements for nonprofit hospitals, the Attorney General has been investigating certain health systems for inappropriately billing patients who should have qualified for free care. Recently, PeaceHealth System agreed to pay $13.4 million in refunds to thousands of patients who should have were eligible for free or discounted care but were billed anyway. This includes $4.2 million in direct refunds for more than 4,500 patients and up to $9.2 million in refunds for approximately 11,000 additional patients if they validate their income for eligibility.
Requiring hospitals to refund patients who were billed erroneously is a growing trend. In Oregon, recent legislation requires hospitals to refund patients who paid for care when they were eligible for assistance. And Maryland is refunding patients who were billed for hospitals services from 2017-2021 when they could have qualified for free care.
Hospital sued patients who should have gotten free care
Some hospitals go beyond billing patients, bringing lawsuits to those unable to pay. Louisville Public Media recently reported that Norton Healthcare filed thousands of lawsuits for unpaid medical bills, despite many of those patients qualifying for free or discounted care. In many cases, patients are unaware they may be eligible for free care, or they face administrative barriers to assistance.
Despite the established regulations around community investment and charity care, the lack of enforcement has resulted in crippling medical debt for thousands of Americans. Let’s hope the recent pressure policymakers and media are putting on hospitals will be encourage them to give more free care, in pursuit of their social mission.