Char­ity-care dilemma

Hos­pi­tals split on end­ing aid to unin­sured who pass on Oba­macare

Modern Healthcare - - NEWS - By Melanie Evans

A cer­ti­fied nav­i­ga­tor of Min­nesota’s health in­surance ex­change, work­ing for St. Paul, Minn.based Por­tico Healthnet, helps a client ap­ply for health in­surance.

Hos­pi­tals and health sys­tems across the coun­try are di­vided over whether to deny fi­nan­cial aid to unin­sured pa­tients who are el­i­gi­ble for sub­si­dized health in­surance un­der Oba­macare but did not buy a plan. While a grow­ing num­ber of hos­pi­tals are adopt­ing such poli­cies, oth­ers have cho­sen not to as unin­sured Americans grap­ple with the cost and com­plex­ity of ob­tain­ing cov­er­age. New pro­vi­sos that limit free care and dis­counts have been added to the fi­nan­cial aid poli­cies of Trin­ity Health, an 86-hos­pi­tal Catholic sys­tem; Broward Health, a tax-sup­ported safety net sys­tem based in Fort Laud­erdale, Fla.; and the South­ern New Hamp­shire Health Sys­tem in Nashua. As­cen­sion Health, the largest pri­vate, not-for-profit hos­pi­tal sys­tem, is re­view­ing its char­ity-care pol­icy in re­sponse to the Pa­tient Pro­tec­tion and Af­ford­able Care Act, a spokesman said. Th­ese sys­tems are fol­low­ing oth­ers that scaled back fi­nan­cial aid when the health­care re­form law be­gan of­fer­ing sub­si­dized cov­er­age through the in­surance ex­changes in 2014 to Americans with in­comes from 100% to 400% of the fed­eral poverty level.

Some re­ject new lim­its on aid

The cov­er­age sub­si­dies have pro­voked de­bate among hos­pi­tal ex­ec­u­tives about whether to cur­tail pri­vate aid in re­sponse. Some ques­tion whether it’s ap­pro­pri­ate for their fa­cil­i­ties to al­lo­cate scarce fi­nan­cial re­sources to pa­tients who could get sub­si­dized cov­er­age, and be­lieve re­stric­tions on aid could prod more unin­sured to take ad­van­tage of the Oba­macare op­tions.

Ex­ec­u­tives at Catholic Health Ini­tia­tives, which op­er­ates 96 hos­pi­tals across 18 states, con­sid­ered sev­eral pos­si­ble changes to their fi­nan­cial as­sis­tance pol­icy this year,

in­clud­ing im­pos­ing penal­ties on pa­tients who forgo in­surance, and of­fer­ing fi­nan­cial as­sis­tance to pa­tients to help them pay pre­mi­ums.

But CHI ul­ti­mately de­cided not to deny dis­counts to unin­sured pa­tients who don’t buy a plan, just as the sys­tem does not deny fi­nan­cial as­sis­tance to in­sured pa­tients who face sub­stan­tial out-of-pocket costs, said Su­sanna Laundy, the En­gle­wood, Colo.-based sys­tem’s vice pres­i­dent of rev­enue cy­cle projects.

Con­sumers’ limited ex­pe­ri­ence with the new in­surance mar­kets and the ex­changes’ rocky start were two rea­sons be­hind the decision. “It’s just in its in­fancy,” Laundy said. “We want to watch it ma­ture and see where it goes.”

Lim­its could be­come stan­dard

Keith Hearle, pres­i­dent of Verite Health­care Con­sult­ing in Alexan­dria, Va., said only a small num­ber of hos­pi­tals so far have adopted poli­cies denying char­ity care for pa­tients el­i­gi­ble for sub­si­dized cov­er­age un­der the re­form law. But such lim­its likely will be­come stan­dard in the fu­ture, he pre­dicted.

Hos­pi­tal char­ity-care poli­cies have long played an im­por­tant role in the U.S. health­care safety net by for­giv­ing the med­i­cal bills of the poor and unin­sured. Now that role ap­pears to be chang­ing, al­beit un­evenly and amid con­cerns from hos­pi­tal lead­ers. Some say pub­lic con­fu­sion about the law and tight house­hold bud­gets are good rea­sons to leave fi­nan­cial aid poli­cies un­changed. There also is an over­lay of un­cer­tainty about the law’s fu­ture given con­tin­u­ing po­lit­i­cal op­po­si­tion in Congress and pend­ing court chal­lenges.

About 60% of U.S. hos­pi­tals are not-for­profit, char­i­ta­ble or­ga­ni­za­tions that are re­quired to pro­vide com­mu­nity ben­e­fits such as free and dis­counted care in ex­change for their tax-ex­empt sta­tus. The amount that hos­pi­tals spend on free care as a per­cent­age of their op­er­at­ing ex­penses varies widely. One 2013 study of 1,800 tax-ex­empt hos­pi­tals, pub­lished in the New Eng­land Jour­nal of Medicine, found that the amount of free care they pro­vided did not cor­re­spond to the lo­cal rates of unin­sured.

The Af­ford­able Care Act in­cluded new pro­vi­sions for fi­nan­cial aid and col­lec­tion poli­cies that not-for-profit hos­pi­tals must meet or risk los­ing their tax ex­emp­tion. But the pro­vi­sions stop short of man­dat­ing who should be el­i­gi­ble for fi­nan­cial aid. Fed­eral of­fi­cials have not yet re­leased fi­nal rules, but fi­nan­cial aid poli­cies will likely un­dergo broad re­view at many hos­pi­tals once the rules are pub­lished, Hearle said.

Hos­pi­tals’ new lim­its on fi­nan­cial aid grad­u­ally could prod more unin­sured peo­ple to buy cov­er­age, hos­pi­tal ex­ec­u­tives say. In ad­di­tion, some of the unin­sured will face higher fed­eral in­come tax penal­ties in 2015 for not ob­tain­ing cov­er­age. The levy for those who re­main unin­sured will jump to $325 or 2% of their tax­able in­come, which­ever is greater, from the 2014 penalty of $95 or 1% of tax­able in­come. The penalty in­creases again in 2016 to $695 or 2.5% of in­come.

While HHS es­ti­mates that 9 mil­lion to 10 mil­lion Americans will buy cov­er­age on the ex­changes for 2015, mil­lions of unin­sured peo­ple are not ex­pected to get cov­er­age.

A re­cent fed­eral es­ti­mate said about 15 mil­lion unin­sured peo­ple are el­i­gi­ble to buy cov­er­age through the ex­changes. Among unin­sured adults sur­veyed in early Novem­ber by the Kaiser Fam­ily Foun­da­tion, 4 in 10 said they planned to re­main unin­sured; of those, nearly onequar­ter cited cost as the rea­son. Many, if not most, are likely el­i­gi­ble for pre­mium sub­si­dies.

“It’s (the ex­change) just in its in­fancy. We want to watch it ma­ture and see where it goes.”

Su­sanna Laundy Vice pres­i­dent of rev­enue cy­cle projects Catholic Health Ini­tia­tives

Hos­pi­tals push cov­er­age

Still, hos­pi­tals have grown more in­sis­tent that unin­sured peo­ple buy cov­er­age. At Trin­ity Health hos­pi­tals, pa­tients whose in­comes qual­ify them for sub­si­dized health plans un­der the ACA but who “refuse or are un­will­ing” to buy them may be de­nied dis­counted care. Only pa­tients who are el­i­gi­ble for Trin­ity’s fi­nan­cial aid are also el­i­gi­ble for dis­counts on de­ductibles or co-in­surance. In 2013, Trin­ity for­gave $242.1 mil­lion in med­i­cal bills for pa­tients who qual­i­fied for fi­nan­cial aid. Trin­ity of­fi­cials were not avail­able for an in­ter­view, a spokes­woman said.

Broward Health, a not-for-profit sys­tem which op­er­ates four hos­pi­tals in and around Fort Laud­erdale, re­vised its pol­icy in April “to re­flect that pa­tients would not qual­ify for char­ity care if they were ap­proved for the sub­sidy for the health in­surance ex­change but chose not to en­roll,” said spokes­woman Abi­gail Obre. The sys­tem does not of­fer fi­nan­cial aid to help with de­ductibles or co-in­surance costs.

Broward Health’s pol­icy for sub­sidy-el­i­gi­ble unin­sured pa­tients is sim­i­lar to the sys­tem’s pol­icy for unin­sured pa­tients who may be el­i­gi­ble for Med­i­caid. That pol­icy re­quires pa­tients to ap­ply for Med­i­caid and be de­nied in or­der to qual­ify for char­ity care, as­sum­ing they meet the cri­te­ria, Obre said.

But of­fi­cials at other hos­pi­tals point out that for 2014, many unin­sured peo­ple who tried to en­roll in the Oba­macare ex­changes may have given up due to the ini­tially dys­func­tional web­sites and the daunt­ing task of com­par­i­son shop­ping for plans.

While the ex­changes so far seem to be work­ing more smoothly for 2015 en­roll­ment, con­sumers still re­port sig­nif­i­cant con­fu­sion and lack of in­for­ma­tion, sur­veys show. For ex­am­ple, a high per­cent­age of the unin­sured aren’t aware of the fed­eral pre­mium and cost-shar­ing sub­si­dies that make

cov­er­age more af­ford­able, ac­cord­ing to a Kaiser Fam­ily Foun­da­tion survey.

Even with the pre­mium sub­si­dies, lots of peo­ple may find it un­af­ford­able to ob­tain health­care, given high de­ductibles, coin­sur­ance and co­pay­ments, ad­vo­cates say. The high-de­ductible plans avail­able to in­di­vid­u­als on and off the ex­change mar­ket do lit­tle to make health­care af­ford­able and pro­tect con­sumers, ex­cept for cat­a­strophic events, said De­bra Holm­gren, pres­i­dent of St. Paul, Minn.-based Por­tico Healthnet, a not-for­profit with a state grant to help Min­nesota con­sumers shop on the ex­changes. Some unin­sured who worked with Por­tico to buy in­surance have dropped cov­er­age. “It’s still un­af­ford­able,” she said.

Limited choice another fac­tor

That was one rea­son WakeMed Health & Hos­pi­tals, based in Raleigh, N.C., de­cided not to end its fi­nan­cial aid pro­gram for unin­sured pa­tients who also are el­i­gi­ble for sub­si­dized plans, said Dud­ley Har­ring­ton, the sys­tem’s vice pres­i­dent of rev­enue cy­cle. Another rea­son was the limited choice of health plans on North Carolina’s ex­change.

WakeMed is an­a­lyz­ing out­stand­ing bills for claims that health plans did not pay after con­sumers stopped pay­ing the health plans. “A lot of peo­ple signed up,” Har­ring­ton said. “But a lot of peo­ple also didn’t pay their pre­mi­ums.”

Unin­sured pa­tients who qual­ify for WakeMed’s fi­nan­cial aid com­plete an aid ap­pli­ca­tion, and WakeMed staff re­fer those el­i­gi­ble to lo­cal en­roll­ment agen­cies for help shop­ping for an ex­change plan, he said. WakeMed of­fers free care to those with in­comes up to 250% of the fed­eral poverty level, or about $29,000 for an in­di­vid­ual. Fi­nan­cial aid is avail­able, even if pa­tients fail to ap­ply for health in­surance or later drop cov­er­age. The sys­tem has no plans to change its pol­icy, Har­ring­ton said.

Den­ver Health, that city’s safety net hos­pi­tal, also has no plans to change its fi­nan­cial aid pol­icy. “I don’t feel it’s ap­pro­pri­ate to say you must do this brand-new thing or you can’t get care,” said Dr. Bill Burman, di­rec­tor of Den­ver’s Pub­lic Health Depart­ment, a di­vi­sion of Den­ver Health. He said the im­ple­men­ta­tion of the Oba­macare sub­si­dized in­surance sys­tem “was a big change, and not a sim­ple one.”

Tenet Health­care Corp., a pub­licly traded heath sys­tem, did not re­vise its fi­nan­cial aid pol­icy for sim­i­lar rea­sons, said Heather Smith, vice pres­i­dent of el­i­gi­bil­ity and en­roll­ment ser­vices for the health sys­tem. “There is so much ed­u­ca­tion needed,” she said.

“I don’t feel it’s ap­pro­pri­ate to say you must do this brand-new thing or you can’t get care.”

Dr. Bill Burman Di­rec­tor of the Den­ver Pub­lic Health Depart­ment

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