Hospital Charity Care: Is it Meeting the Need?

EG1: Carol Johnson is a teaching assistant at a Laconia preschool.

Until two years ago, she worked full time and had benefits.
But the school district laid her off – and rehired her as a part timer.

Now she makes an hourly wage – no vacation or snow days.

And she no longer has health insurance.

Johnson4.wav: As I say it was pretty scary. I walked around for almost an entire school year with my fingers crossed that I would have no health issues.

EG2: But crossing her fingers didn’t work.

Last May, Johnson wound up in the emergency room at Lakes Region General Hospital suffering from congestive heart failure.
She spent a few days in the local hospital and several more at Beth Israel in Boston.

Once she was over her initial health crisis, her worries turned to money – and the huge bills she knew she would receive.

Johnson5.wav: I felt like I was going to lose everything I had. The little that I had, I figured it was going to be gone by the time everything was said and done.

EG3: Carol Johnson’s Lakes Region bill came to twenty thousand dollars.

At Beth Israel, she would owe another thirty thousand.

Normally, Johnson would not have qualified for any financial assistance at Lakes Region because she owns her mobile home, has some savings and a small retirement account.

There are more and more Carol Johnsons around.

They don’t qualify for Medicaid but are cut off from private insurance.

Luckily for Johnson, her cardiologist urged LRG to consider her income but ignore her assets, and give her financial aid.

The hospital took eight thousand dollars off her bill and now provides her with free and discounted continuing care.

Johnson6. wav: I saw my doctor yesterday and I don’t feel that if I go in, I’m gonna walk out with an empty checkbook at the end of my appointment.

EG4: At the time, LRG was making a rare exception.
But as of December it allows people who have up to $150,000 in assets to qualify for aid.

LRG Vice President Henry Lipman says the program is designed to have patients pay what they can afford.

Lipman3.wav: We try to base our financial levels in terms of tying it to both the poverty level but also to livable wages so that the amount we’re asking people to contribute towards their care is in keeping with their income.

EG5: Most New Hampshire hospitals, though, haven’t yet taken this step.

According to the New Hampshire Hospital Association, hospitals provided slightly more than 2 percent of their revenues in charity care every year from 2003 to 2007.

The New Hampshire Insurance Department, however, disagrees, saying hospitals provide slightly more than one percent.

Sean LaFrance runs the New Hampshire Health Access Network, a member organization for hospitals and doctors.
6 years ago, the Network’s 200 members agreed to minimum standards for financial aid.

For instance, a patient making 125% of the federal poverty guidelines, about 13 thousand dollars last year, will qualify for free care at most hospitals.

Those standards have not changed in the last six years.

But LaFrance says members are responding to the erosion in access to health insurance.

He says several providers are exploring whether to allow patients who have retirement and other savings to get a break on their bills.

LaFrance5.wav: The other thing that I think has arisen is that they what they call prompt pay discounts so that if you pay within a certain amount of time or if you pay with cash, they’ll take a percentage off whatever your bill is.

EG6: But even though patients may think they’re receiving a discount, they may actually pay more than insured patients.

Hospitals charge the uninsured the full amount of a procedure – like an auto dealer charging list price on a car.

Almost no insured patients pay that high price.

Commercial insurers negotiate discounts that can be as high as 85 or 90 percent.

Leslie Ludtke is a health policy analyst at the New Hampshire Insurance Department.

Ludtke2.wav: And that’s one of the big problems is that the uninsured, generally, are the least able to pay and yet they end up with the highest charge for the services. 12 secs

EG7: So, says Ludtke, a low-income patient receiving, say, a fifty percent discount, can still wind up owing more than an insured person.

Furthermore, there’s no legal requirement that hospitals provide any charity care.

Under a 10-year old state law, nonprofit institutions must provide what’s called a community benefit in order to maintain their tax exempt status.

That requirement can be satisfied in several ways, from offering charity care to having executives serve on boards of community organizations.

And there are no federal or state requirements about the level of community benefit a nonprofit organization must provide.

For the first time, however, the IRS is shining a light into these community benefit programs.

Starting this month, nonprofit hospitals must fill out a new tax schedule.

They have to spell out just what kinds of community benefits they are providing in return for their tax-exemptions.

Michael Delucia is the director of charitable trusts at the New Hampshire Department of Justice.

Delucia.wav: The Internal Revenue Service for the first time is really getting into the area of asking questions about health care and the level of charity care.

EG8: So too is the state legislature.

State Senator Maggie Hassan heads a study committee on community benefits.

She says whether hospitals are providing enough financial assistance to patients isn’t quite the right question.

Hassan1.wav: One of the reasons I am looking at his issue of how community benefit dollars are spent is should they be spent on charitable care so that you’re writing off the whole cost of a procedure or for a lot less money could you be subsidizing a health care premium for that same patient and then the money could go a lot farther.

EG9: For now, though, some non-profit health care providers, like LRG, say they are doing what they can.

And the New Hampshire Health Access network is beginning to talk with its members about raising income levels to allow more people to get financial aid.

For NHPR News, I’m Elaine Grant.