The nature of charity care is evolving in an era of expanded health care coverage – with important management and policy implications for all organizations providing health care services. Even in the period before the enactment of the Patient Protection and Affordable Care Act of 2010 (PPACA) and its expansion of coverage requirements (elimination of preexisting condition limitations and lifetime coverage limits, behavioral health parity requirements, employer mandates, and Medicaid expansion – to name a few), the pressure on non-profit organizations to more explicitly quantify charity care was growing.
This interest in charity care was driven less from a health policy perspective and more from a tax policy perspective. From the tax perspective, the question is whether tax-exempt non-profit organizations are delivering enough charitable care (with some very specific definitions) to justify their tax-exempt status. For more on this topic, check out these resources in the OPEN MINDS Industry Library:
- Charity Care Vs. Community Benefit
- Charity Care Is In The Eye Of The Beholder
- Do We Need A Stock Market For Charity?
But now that we are in the post-health insurance exchange era, where more Americans than ever are covered by some form of health insurance plan and more Americans have access to coverage (see National Uninsured Rate Among Working Age-Adults Falls To 15% After Marketplace Open Enrollment and How Has The PPACA Moved The Needle On Health Insurance Enrollment?), the health policy issues are different. The coverage map looks different than even just a few years ago. While Medicare coverage (for the 65+ and disabled populations) has remained the same, twenty-eight states covering 57% of the population have expanded Medicaid (see PPACA Created A New U.S. Health & Human Service Map). Just this week, CMS announced approval of the Pennsylvania plan for Medicaid expansion (see Nine Insurers Apply To Offer Healthy Pennsylvania Medicaid Expansion Plans). And, the mandate for employers over 50 employees to offer insurance will become effective after December 31, 2015.
For individuals not falling in any of the categories of coverage above, there is the ability to purchase subsidized insurance on the health care exchange. Consumers earning less than 400% of the federal poverty level (about $46,000 for a single person or $94,000 for a family of four) may be eligible for subsidies (see Kaiser Family Foundation Subsidy Calculator). It is this question of individuals and subsidies that brings the new policy question for health care provider organizations – if a patient is eligible to purchase subsidized coverage through the [federal health] law’s online marketplaces but doesn’t sign up, should a provider organization “provide charity care” to that patient? This is the central question in a very interested recent article, Hospitals Reconsider Charity For Patients Who Decline Health Coverage), that appeared in Kaiser Health News. In the article, Katherine Arbuckle, senior vice president and chief financial officer at Ascension Health – which has assembled a task force to assess whether changes to charity care policy need to be made – was quoted as saying “How do you treat those who decline [coverage]? Do they get free services when others have paid?”
Some provider organizations have already made decisions about the change in charitable care. The article referenced the online charity care policy at Southern New Hampshire Medical Center in Nashua – “applicants who refuse to purchase federally-mandated health insurance [or apply for expanded Medicaid] when they are eligible to do so will not be awarded charitable care.” And, according to The New York Times, other charity care changes around the country include Barnes-Jewish Hospital in Saint Louis charging co-payments to uninsured patients no matter their income level, and Fletcher Allen Health Care in Burlington, Vermont reduced financial aid for uninsured patients who earn twice the poverty level (see Hospitals Look to Health Law, Cutting Charity).
There is no easy answer to the question of policies on charitable care. But there are important policy, tax, and compliance issues (see Health Reform’s New Charity Care Requirements for Hospitals: Achieving Compliance to Avoid Penalties) to be resolved. We’ll keep you posted on new developments in this very fluid area.